Forward-looking marketing metrics are particularly important because they correspond
more closely to internal financial-performance metrics.
The more similar one market is to another, the less likely the possibility that consumers
will substitute products.
In a price-sensitive market, product positioning generally requires a higher price
because this is the only source of differentiation that target customers value.
A narrow market definition, one adopted by design, is not always a limitation.
The share potential index is an estimate of the share performance index if the business
were to achieve maximum levels of performance for each share metric.
Ad copy can best attract customers when it is based on customer needs and situations
that are familiar to customers.
Businesses exercise greater control over service quality when they use direct marketing
channels to market their goods.
In customer relationship management, every interaction with a customer or potential
customer is known as a storyboard.
The whole purpose of backward-looking marketing metrics is to track customer
perceptions and attitudes that precede changes in customer behavior and financial
performance.
The marketing mix strategy involves tactics with respect to the product, price,
promotion, and service.
Marketing strategies often are driven internally by short-run profit objectives rather
than by market-based performance objectives.
A broad market vision enables a business to see unserved needs that no one is
addressing.
In customer relationship management, every interaction with a customer or potential
customer is known as a storyboard.
Customer performance metrics include measures of customer satisfaction, customer
retention, and customer lifetime value.
The primary purpose of a detailed situation analysis is to uncover key performance
issues that normally might go unnoticed in day-to-day business operations.
A competitor analysis is relatively simple and most businesses are inclined to do it on a
continuous basis.
The customer loyalty index (CLI) is a function of total sales, customer lifetime value,
and shareholder dividend.
An umbrella brand refers to a new product that is a vertical brand extension of the core
product.
A marketing return on investment of 150 percent means that for every dollar invested in
marketing and sales expenses, the company is realizing $1.50 in marketing profits.
The number of performance aspects that can be evaluated in a price-performance
trade-off analysis is limited.
Customer awareness, interest, product trial, and customer satisfaction and
dissatisfaction, along with perceptions of relative product quality, service quality, and
customer value, all serve as forward-looking marketing metrics.
Push communications are directed at channel intermediaries.
Marketing strategies rarely affect accounts receivable and inventory assets of a
company.
The total cost of purchase excludes the customer’s ownership costs.
For any business, retaining a higher percentage of customers and improving their
loyalty is an offensive strategic investment that not only affects short-term profits but
also greatly enhances long-run performance.
Minimal customer focus results in a reduction in the cost of marketing and sales.
Marketing return on sales (ROS) and marketing return on investment (ROI) are
marketing profitability ratios that allow a business to evaluate its marketing efficiency.
Benchmark mapping is a technique used to capture customer perceptions of competing
products or services.
For any business, retaining a higher percentage of customers and improving their
loyalty is an offensive strategic investment that not only affects short-term profits but
also greatly enhances long-run performance.
One way to grow net profit is to increase the variable cost per unit.
For the consumer market, marketing channels include direct channels as well as indirect
channels.
The more similar two competitors are from a customer perspective, the more likely
customers are to switch from one to the other.
Companies cannot enjoy high levels of customer retention without having high levels of
customer satisfaction.
An umbrella brand refers to a new product that is a vertical brand extension of the core
product.
Which of the following is true of backward-looking market metrics?
A) They are applied simultaneously with financial performance metrics, normally at the
end of a reporting period.
B) They include relative product and service quality.
C) Their purpose is to track customer perceptions and attitudes that precede actual
changes in customer behavior.
D) They are the indicators of future financial performance.
E) The absence of these metrics can result in customer-dissatisfaction problems being
undetected.
Calculate the net marketing contribution of a product if the market demand for the
product is 4 million units annually, and the product captures 10 percent of this demand
with a price of $50 per unit and a cost of $40 per unit. The total of marketing and sales
expenses is $2.5 million.
A) $3 million
B) $2.5 million
C) $2 million
D) $1.5 million
E) $1 million
Calculate the gross profit generated if 2 million units are sold at a margin price of $200
per unit.
A) $200 million
B) $400 million
C) $100 million
D) $100,000
E) $400,000
Calculate the market share index of a business if its share development index is 85 and
it has a share potential index of 12.2%.
A) 87.8%
B) 74.6%
C) 14.4%
D) 12.2%
E) 10.4%
Businesses that lack both customer knowledge and competitor knowledge, and make
competitive moves from an internal perspective with no real market knowledge are said
to be working with a(n) ________ strategy.
A) oblique
B) inside-the-box
C) reactive
D) decentralization
E) disintermediation
Smith Automotive is a company that produces component parts for automobile engines.
A margin of $4 per unit produces fixed expenses of $80 million. The market demand for
the component parts is 400 million units per year.
Mini-Case Question. Determine the margin per unit if the company needs to sell 40
million units in order to break even.
A) $10 per unit
B) $8 per unit
C) $4 per unit
D) $2 per unit
E) $1 per unit
Which type of strategy is best utilized for exiting a market by selling or closing down
the business or eliminating the product?
A) a harvest strategy
B) a monetize strategy
C) a horizontal integration strategy
D) a vertical integration strategy
E) a divest strategy
Which of the following is true about portfolio diversification?
A) It reduces performance stability.
B) It increases dependence on a single product.
C) It allows a business to take advantage of offsetting product life cycles.
D) It restricts a business to a single market.
E) It reduces opportunity for growth.
Ace Motors recently introduced a hybrid automobile named Opus. Since its
introduction, this offering has achieved a 1.2% market share in this market. Ace Motors
has conducted research in an effort to assess its opportunity for market share
development. The table below indicates consumers’ current response at each step along
the share performance path for Ace Motors’ Opus hybrid automobile as well as the
potential performance for each of the share performance metrics:
Mini-Case Question. What is Opus’s current market share index?
A) -14%
B) 1.2%
C) 5.9%
D) 6.2%
E) 20.2%
Which of the following is true about a marketing cost scope effect?
A) It refers to a reduction in the sales expenditure, to increase profit margins.
B) It refers to production process improvements that are the result of learning.
C) It refers to the use of innovative marketing strategies to increase market share.
D) It refers to cost efficiencies derived from product line extensions.
E) It refers to the cost efficiency achieved by avoiding brand extensions.
Which of the following involves the transfer of quality perceptions derived from a core
product or brand to product line extensions that use the same brand name?
A) a pure product bundling strategy
B) a mixed bundling strategy
C) a product unbundling strategy
D) an umbrella branding strategy
E) a vertical integration strategy
A valuable planning matrix that will reveal opportunities of growth can be created by
combining the ________.
A) market development index with the share development index
B) market share index with the share potential index
C) market share index with the share development index
D) current market demand with the market potential
E) current market demand with the market development index
The three dimensions of competitive position are: a differentiation position, a cost
position, and a ________.
A) marketing position
B) buyer power position
C) price rivalry position
D) revenue position
E) channel access position
Which of the following communications are primarily intended to stimulate potential
customers to contact the company, visit the company web site, obtain a free sample, and
buy the company’s product?
A) brand-action communications
B) brand-image communications
C) brand-information communications
D) brand-development communications
E) brand-awareness communications
Church & Dwight, Co. is a U.S. manufacturer of household products. The firm owns a
line of toothpastes under the brand name Arm & Hammer Peroxicare. The firm also
sells other products under the brand name Arm & Hammer. Arm & Hammer Peroxicare
is an example of which of the following encoding strategies?
A) company name
B) company and brand name
C) brand and subbrand name
D) company and product name
E) brand name only
The operating income of Carbon Footwear is $10 million. Its net marketing contribution
is derived from sales of $80 million and the marketing and sales expenses amount to
$15 million. The general and administrative expenses and other operating expenses
amount to $20 million.
Mini-Case Question. Calculate the percent gross profit generated by Carbon Footwear.
A) 52.50%
B) 54%
C) 55.75%
D) 56.25%
E) 60%
Which of the following is true of the value-in-use pricing method?
A) The product price is set to provide customers with an attractive savings after
considering the life-cycle costs of the product.
B) The cost of making a product and the desired profit margin are the two primary
determinants in setting a value-in-use price.
C) Price is set by unbundling a product’s features, placing a price on each, and then
allowing customers to select the features they want at a price that they are willing to
pay.
D) It considers neither what the buyer would be willing to pay for product performance
nor the cost of other similar products in the market.
E) Price is set on the basis of the value that customers realize when they compare the
price and benefits of the company’s product with those of a key competitor’s product.
Which of the following is a forward-looking indicator of business success?
A) customer satisfaction
B) shareholder dividends
C) sales
D) market share
E) ROI
Which of the following is a demographic force that shapes consumer needs?
A) marital status
B) attitudes
C) interests
D) political views
E) quantity used
Organic Harvest Inc. is an American manufacturing firm based in California. The firm
manufactures and sells a line of organic fruit juices under the brand name
OrganicDrinks. The firm also markets a line of medicinal health drinks, under the brand
name HerbalDrinks.
Mini-Case Question. Organic Harvest Inc. offers five flavors under the OrganicDrinks
brand. Based on the success of these flavors, the firm introduces three new flavors of
OrganicDrinks: Pink Pomegranate, Cool Coconut Water, and Spicy Apple Cider. In this
example, Organic Harvest Inc. uses which of the following product-line extension
strategies?
A) vertical brand-line extension
B) horizontal brand-line extension
C) new product-market brand extension
D) cobranding
E) product bundling
Offensive portfolio strategies differ from defensive portfolio strategies in that offensive
portfolio strategies ________.
A) add significantly to short-run cash flow
B) are more growth oriented
C) protect important strategic market positions
D) are less likely to be used in attractive markets
E) hinder long-run profit performance
________ provides a measure of marketing profits that demonstrates how much the
company’s investment in marketing and sales contributes to company profits.
A) Return on equity
B) Marketing ROS
C) Net marketing contribution
D) Marketing ROI
E) Sales-to-assets ratio
A business has a market demand of 300,000 units at a market share of 20%. The price
per unit and variable cost per customer are $25 and $10, respectively. If the net
marketing contribution of the business is $450,000, calculate the total marketing and
sales expenses incurred by the business.
A) $250,000
B) $160,000
C) $520,000
D) $300,000
E) $450,000
Which of the following types of marketing intermediaries assumes the selling
responsibility for a business and receives a commission when a sale occurs, as part of a
direct channel system?
A) retailers
B) brokers
C) wholesalers
D) commercial distributors
E) dealers
The formula used to calculate the operating income is ________.
A) operating income = sales revenues + cost of goods
B) operating income = sales revenues – cost of goods – SGA expenses – other operating
expenses
C) operating income = cost of goods + SGA expenses + other operating expenses
D) operating income = sales revenues – SGA expanses
E) operating income = sales revenues + cost of goods + SGA expenses + other
operating expenses
Calculate the cost advantage index if the percentage cost of goods sold by the business
is 40% and the average percentage cost of goods sold by its top three competitors are
50%, 60%, and 70%, respectively.
A) 20
B) 40
C) 57
D) 67
E) 80
Which of the following is true of the net marketing contribution of a firm?
A) It sets a benchmark to gauge improving or deteriorating marketing profitability.
B) General and administrative expenses are included to assess the net marketing
contribution.
C) It is an internal in-process financial metric.
D) It is equal to the revenues of the firm.
E) It includes all operating expenses.
Bruce has determined that along the share-development path, his business should
perform at a 70% level of product awareness, 80% in product preference, 60% in
intentions to purchase, 90% in product availability, and 80% in rate of purchase. His
business’s share development index is 25. What is the business’s approximate market
share index?
A) 6%
B) 20%
C) 32%
D) 45%
E) 64%
________ represents the net marketing contribution as a percentage of sales.
A) Return on equity
B) Marketing ROS
C) Gross profit
D) Marketing ROI
E) Market demand
If 63% of consumers are aware of JM Manufacturers Inc.’s 3-D television, 38% of that
group likes the product’s benefit, 54% of that group finds the price acceptable, 21% of
that group intend to buy the product, and 48% of that group actually purchase the
product from JM Manufacturers, then the share potential index for the 3-D television is
________.
A) 1.3%
B) 2.7%
C) 3.4%
D) 6.2%
E) 10.1%
Which of the following groups of customers are characterized as skeptics, who wait to
see whether the product or service will really deliver meaningful benefits ?
A) innovators
B) laggards
C) early majority
D) late majority
E) early adopters
What are the two broad categories of market metrics?
A) process metrics and product metrics
B) forward-looking metrics and backward-looking metrics
C) marketing profitability metrics and customer metrics
D) customer metrics and competitiveness metrics
E) revenue metrics and cost metrics