Both consumers and businesses have market needs, and the factors influencing their
needs are essentially the same.
A product-based business can use its order cycle to create important sources of
customer value that the business’s consumer-focused competitors will never see.
If a business fails to deliver acceptable or expected levels of serviceability and
appearance, an advantage in other dimensions of product performance will not matter.
A portfolio analysis model typically has two dimensions of performance: a revenue
model and a cost model.
A marketing mix strategy is a long-term strategy with a 3- to 5-year time horizon and
specific performance objectives.
Share leaders, followers, and niche businesses can all pursue defensive strategies to
protect their market share positions.
Exiting a product-market is simply a way to cut losses quickly and reallocate marketing
resources to more productive endeavors.
All defensive strategies are intended to maximize or protect short-run profits.
The life expectancy of a customer decreases exponentially as a business moves to
higher levels of customer retention.
Customer satisfaction is considered a forward-looking marketing metric.
Unrestrained customer acquisition can result in a negative rather than positive impact
on profits due to the cost of customer acquisition with little offsetting income.
The reduce-market-focus strategy prescribes a defensive strategic market plan that
involves narrowing market focus and trimming market share in an effort to improve
profit performance.
The higher the rate of customer retention, the longer the average customer life
expectancy and the greater the customer lifetime value.
For any technology, the market demand has an upper limit that can be exceeded without
a change in technology or a new way of using the product.
Economic profit is calculated from the ratio of net profit to the number of shares.
A brand-encoding system helps in understanding how to position a product with a brand
name for a specific market and desired image.
When a market is segmented and marketing resources are limited, a business could
elect to pursue a large-segment strategy.
A channel system should enhance customer value by increasing customer benefits,
lowering customer cost of purchase, or both.
Creating awareness among a large number of people is not the objective of most
marketing communications.
A plus-one market-based pricing strategy means a business sets its price 1% higher than
the competitors’ price.
International markets are often blocked by political barriers.
New product-market penetration is determined by customer and product adoption
forces.
Poor customer retention has a powerful impact on financial performance only if a
business is losing market share.
A weak product position with a strong marketing effort will fail to deliver the desired
level of market share.
A low-cost leader in a market is by definition the volume leader.
Consumer response to advertising costs is measured as total revenue.
The strategic objective in the protect position defensive core strategy is to maximize
profits.
Marketing performance metrics include competitiveness metrics and customer metrics,
while financial metrics include service quality, customer value, and product
performance.
The “day-in-the-life-of-a-customer” approach may be described as “stapling yourself to
an order.”
The extent that a market share grows is directly dependent on the strength of a
business’s product positioning and marketing effort.
A marketing and sales budget that specifies each marketing task and the amount needed
to accomplish
it is called a bottom-up marketing and sales budget.
As a business adds more products to its product line, it decreases the risk of
cannibalizing existing product sales.
Which type of strategic market plan is most appropriate for businesses operating in a
market that has very low market attractiveness score?
A) a pulsing strategy
B) a defensive strategy
C) a disintermediation strategy
D) a decentralization strategy
E) an offensive strategy
If four-wheel drive capability is weighed at 40 on relative importance, and your truck
scores 8 out of 10, while the three competitors score 7, 6, and 6, respectively, your truck
has a relative advantage score of ________.
A) 4
B) 12
C) 27
D) 40
E) 80
A company’s marketing and sales budget is estimated to be $150 million. It has retained
360,000 customers and has acquired 25,000 new customers. The acquisition cost per
customer is 5 times more than the retention cost per customer. If the retention cost per
customer is $200, calculate the marketing administration cost of the company.
A) $126 million
B) $98 million
C) $79 million
D) $38 million
E) $53 million
The customer retention metric acts as a(n) ________ metric when it measures the
number of customers retained from one year to the next.
A) net contribution
B) forward-looking
C) backward-looking
D) marketing ROI
E) marketing ROS
Which of the following metrics does a company apply during an operating period rather
than at the end of the operating period?
A) sales revenues
B) market share
C) inventory turnover
D) customer retention
E) return on assets
Maxim Computer has a 10 percent of a $250 billion market. Maxim is the low-cost
leader and realizes a 20% margin on sales, and marketing, sales, and administrative
expenses equaling 10% of sales. What is Maxim’s net marketing contribution?
A) $250 billion
B) $25 billion
C) $5 billion
D) $2.5 billion
E) $500 million
Which of the following formulas is used to calculate the share development index?
A) Share Development Index = Market Share Index/Share Potential Index
B) Share Development Index = Cost Advantage Index + Product Advantage Index
C) Share Development Index = Product Intentions Index + Total Market Share
D) Share Development Index = Cost Advantage Index/Product Advantage Index
E) Share Development Index = Total Market Share/Product Advantage Index
A company’s price-earnings ratio (PE) is ________.
A) stock price divided by earnings per share
B) (stock price multiplied by earnings per share) divided by number of shares
C) stock price divided by (earnings per share multiplied by number of shares)
D) stock price divided by total earnings
E) stock price divided by (total earnings multiplied by number of shares)
Calculate the return on sales for Matt-Brine Inc., which has a net marketing
contribution of $450 million and total sales of $800 million. The other expenses,
including interest and taxes, amount to $250 million.
A) 25%
B) 20%
C) 30%
D) 10%
E) 45%
Which type of strategic market plans are important sources of growth and improving
share position?
A) offensive strategic market plans
B) defensive strategic market plans
C) harvest strategic market plans
D) divest strategic market plans
E) monetize strategic market plans
Which of the following statements is true about a reduce-market-focus defensive
strategy?
A) It involves introducing new lines of products.
B) It requires an increase in the marketing budget.
C) It will likely lead to lower levels of profitability as a percentage of sales.
D) It is most appropriate when a business has the resources to invest in protecting its
current share position.
E) It involves trimming market share in an effort to improve profit performance.
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
A business determines that 75% of its customers are satisfied. This business also learns
that 80% of a leading competitor’s customers are satisfied. If this business implements a
program to reach 80% customer satisfaction, this is called ________.
A) competitive parity
B) focused value proposition
C) managing to the averages
D) wide-angle view of customer satisfaction
E) forward-looking indicator
The fundamental marketing profitability metric for planning purposes is the ________
equation.
A) gross profit
B) market share
C) market demand
D) net marketing contribution
E) variable unit cost
Customer value equals ________.
A) relative benefits divided by number of customers
B) relative price divided by number of customers
C) relative price plus relative benefits
D) relative benefits minus relative price
E) relative price minus relative benefits
The ________ index is calculated using the formula based on hierarchical set of
customer response effects: Exposed to Ad X Aware of Ad X Comprehend the Ad X
Intend to Buy X Buy the Product.
A) customer response
B) marketing benefit
C) market penetration
D) brand awareness
E) market share
Calculate the number of shares held by a business if it earns $8.8 per share and
generates a net profit of $136.4 million.
A) 45 million
B) 24.6 million
C) 15.5 million
D) 36.2 million
E) 8.8 million
A company’s marketing and sales budget is estimated to be $150 million. It has retained
360,000 customers and has acquired 25,000 new customers. The acquisition cost per
customer is 5 times more than the retention cost per customer. If the retention cost per
customer is $200, calculate the marketing administration cost of the company.
A) $126 million
B) $98 million
C) $79 million
D) $38 million
E) $53 million
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. Calculate the share performance gap between the actual and desired
customer response.
A) -14%
B) -6.2%
C) 6.2%
D) 14%
E) 20.2%
HomeVenture Inc. manufactures and sells a line of furniture under the brand name
Elegant Lines. The firm has a 3 percent share of the U.S. furniture market, and
competes with industry giants who have large economies of scale and marketing
resources. However, Elegant Lines holds 65 percent of the overlooked “customized art
furniture” segment, specializing in very expensive custom-designed, furniture. Each of
the Elegant Lines furniture pieces is a unique piece of art. What type of market
segmentation strategy is HomeVenture Inc. pursuing?
A) a mass-segment strategy
B) a niche-segment strategy
C) a large-segment strategy
D) a market-development strategy
E) a mass-market strategy
Which of the following is a factor used to determine the share potential index?
A) product attractiveness
B) market potential
C) product quality
D) market demand
E) product awareness
Which of the following is a differentiation and product positioning strategy?
A) low cost of purchase
B) brand encoding
C) product elimination
D) bundling and unbundling
E) product line extensions
If there are 20 manufacturers and 500 retailers, and 15 transactions are made per year at
a cost of $200 per transaction, calculate the total number of transactions.
A) 150,000 transactions per year
B) 200,000 transactions per year
C) 250,000 transactions per year
D) 300,000 transactions per year
E) 350,000 transactions per year
A business’ sales are the product of ________.
A) average selling price and average margin percentage
B) market potential and market demand
C) market demand in units and price per unit
D) market share and price per unit
E) market demand in units and market share
When a market reaches the maturity stage ________.
A) gains in volume can be achieved only with gains in market share
B) the volume is derived from both market demand and market share
C) declining volumes are avoidable
D) rate of growth increases
E) the net marketing contribution is negative
In which of the following ways of creating a new company, brand, or subbrand name,
the names are derived from the basic benefit provided by the product?
A) evocative names
B) experiential names
C) functional names
D) invented names
E) realistic names
If a company’s product has an overall perceived performance score of 125, it means that
________.
A) the product has a product performance advantage of 125%
B) the company is showing a 25% increase in sales in the annual report
C) the relative cost of purchase index for the product is equal to 125
D) the business is 25 percent ahead of its competition
E) the company is showing a 25% increase in profits in the annual report
Customers in which of the following subsets of consumers take product usage beyond
its intended capability, and act as co-inventors?
A) captive customers
B) prosumers
C) mainstream customers
D) spinners
E) laggards
A(n) ________ strategy offers the customer the opportunity to purchase each of the
items separately at a sale price or bundled with an additional level of savings.
A) pure product bundling
B) impure product bundling
C) mixed bundling
D) horizontal brand extension
E) vertical brand extension
As a business adds products to its product line that have the same purchased materials
and similar manufacturing processes, it is able to lower the average unit cost of all
products, producing a ________ effect.
A) network
B) scope
C) Mohring
D) scale
E) cluster
Calculate the number of shares held by a business if it earns $8.8 per share and
generates a net profit of $136.4 million.
A) 45 million
B) 24.6 million
C) 15.5 million
D) 36.2 million
E) 8.8 million
Compare and contrast a narrow market definition with a broad market definition. List
three key benefits of using a broad market definition.
Discuss three customer adoption forces and three product adoption forces affecting new
product-market penetration.
Compare and contrast push and pull communication strategies.
Explain the importance of market metrics, and name and describe the two types of
market metrics, providing examples of specific metrics for each.
Discuss three customer adoption forces and three product adoption forces affecting new
product-market penetration.
Explain the classification of customer loyalties and the contrasts in their range of
behaviors.
Name and describe three offensive strategic market plans and three defensive strategic
market plans.
Name and describe the three different types of cost advantage a business can achieve to
attain a competitive advantage. Be sure to explain how each type results in a
competitive advantage.
Name and describe the four fundamental offensive strategic market plans that can be
used to increase a business’s penetration of an existing market.
The strategic marketing planning process requires a careful assessment of market
attractiveness and competitive position. Briefly describe what is involved in this
assessment and identify three main factors for each.
Name and discuss the six sources of economic benefit and value creation.
Explain the three marketing metrics that should be incorporated into every company’s
financial reporting.
Explain the importance of market metrics, and name and describe the two types of
market metrics, providing examples of specific metrics for each.
Explain the advantage of using marketing performance metrics, and name and describe
the four classes of marketing performance metrics. Give two examples of metrics used
in each type of marketing performance metric.
Compare and contrast the different ways in which new brand names are created and
provide an example of each.
Explain the three marketing metrics that should be incorporated into every company’s
financial reporting.
Identify the operational components of channel performance. Explain how each impacts
channel performance, and describe how these factors are influenced by the type of
channel system used.
Give three reasons why, at some point, every business needs to examine growth
opportunities outside the markets it serves. Name and describe four fundamental
offensive strategic market plans for entering new markets.
Explain how channel systems build customer value.
Compare and contrast a narrow market definition with a broad market definition. List
three key benefits of using a broad market definition.