Clarence Inc. conducts a market research, which reveals that it has a product quality of
40% relative importance and the attractiveness rating of this factor is 60 (i.e.,
attractive). The firm identifies that its service quality is of 30% relative importance and
scores a rating of 80 (i.e., somewhat attractive); and brand image/reputation is of 30%
relative importance and scores a rating of 80 (i.e., attractive). The firm has a
differentiation advantage factor importance of 50%. Calculate the overall attractiveness
score for the assessed opportunity.
A) 36
B) 74
C) 110
D) 146
E) 220
In the long run, a growth-oriented marketing strategy will shift from a(n) ________
strategic market plan to a(n) ________ strategic market plan.
A) growth; hold
B) hold; growth
C) offensive; defensive
D) investment; tactical
E) harvest; monetizing
A recent Consumer Reports study analyzed flat-screen TVs and found that the average
performance rating for all TVs tested was 80 with an average price of $340. Clarence
flat-screen TV has a perceived customer value of 30, and relative performance of 112.
What is the relative cost of purchase for a Clarence flat-screen TV?
A) 11.34
B) 340
C) 33.6
D) 82
E) 120
George recently purchased a computer from HardDigits Inc., a firm that sells assembled
desktop computers and other electronic products. Included in his purchase were an
inkjet printer, a web camera, and an office software program that included a word
processor, a spreadsheet, and a photo editor. The price he paid for the computer,
software, and accessories was lower than the total price that he would have paid if he
had purchased the products separately. In this example, HardDigits Inc. uses which of
the following product line extension strategies?
A) product diversification
B) umbrella branding
C) product cobranding
D) product bundling
E) disintermediation
Which of the following is considered to be a marketing performance metric rather than
a financial performance metric for a company?
A) gross profit
B) customer retention
C) sales-to-assets ratio
D) accounts receivable
E) earnings per share
An optimize position strategy differs from a harvest strategy in that an optimize
position strategy ________.
A) involves a conscious effort to reduce the customer base in order to reach a more
profitable level of business
B) is used to protect an attractive market position in which the business dominates with
respect to competitive position
C) is an offensive strategic market plan that seeks to improve a business’s competitive
position in an attractive segment of the market
D) is used to maximize profits and cash flow as a business slowly exits a
product-market
E) is used for exiting a market by selling or closing down the business or eliminating
the product
Calculate the price elasticity if a business maintains its current gross profit with a 5
percent price reduction and a 20 percent volume gain.
A) -15
B) -4
C) 4
D) 15
E) 25
The combination of ________ and ________ creates a portfolio position for any given
product-market.
A) market attractiveness; competitive advantage
B) marketing expenditure; sales revenue
C) market share; sales revenue
D) cost of production; competitive advantage
E) brand awareness; financial advantage
Vincent & Rankine is a company that spends billions of dollars annually on marketing
communications, primarily because they have many brand offerings in several product
categories. Some of these expenditures are used on marketing communications targeted
at end-user consumers of their brand, and other expenditures are used on marketing
communications targeted at intermediaries in the channel of distribution.
Mini-Case Question. If Vincent & Rankine realizes a sales increase of 1.2% and an
increase of 4.8% in ad expenses in that period of time, what is the advertising elasticity
for the brand?
A) 0.025
B) 0.25
C) 2.5
D) 25
E) 250
Which of the following is true about pure product bundling strategy?
A) It is shown to be more profitable than mixed bundling strategies.
B) It takes advantage of the potential synergy of two brands that share a common
market space.
C) It involves entering new product-markets.
D) It creates a base from which to introduce line extensions that enhance market
penetration at a lower cost.
E) It involves the sale of two or more products at an overall price that is cheaper than
purchasing the products separately.
Customers in the mainstream market are ________.
A) less dependent on what others think than are most people
B) less willing to put up with less-than-complete solutions
C) more knowledgeable than the average customer
D) less price sensitive than the average customer
E) the first set of buyers for a new product or service
Without specifying the criteria for evaluating competing products, customers are asked
to rate the degree to which they can differentiate two competing products. This
technique of capturing customers’ views about competing products or services is called
________.
A) the rotational axis analysis
B) perceptual mapping
C) the emphatic method
D) benchmarking
E) product positioning
Which of the following refers to a situation where downward price moves by one
competitor force “follower moves” by other competitors in order to minimize lost
profits?
A) a technology trap
B) competitive benchmarking
C) the prisoner’s dilemma
D) a monopoly market
E) a free market situation
Which of the following is true about customer reactive strategies?
A) It refers to overreaction to customer demands due to limited competitor knowledge.
B) It involves viewing each customer as having unique needs.
C) It refers to addressing customer complaints quickly, to avoid escalations.
D) It refers to advertising strategies aimed at encouraging positive customer reactions.
E) It involves measuring and analyzing customer reactions to marketing strategies.
Forward-looking marketing metrics are particularly important because ________.
A) they focus on the past performance of a company
B) they are leading indicators of a business’s future performance
C) they include both customer metrics and competitiveness metrics
D) they allow a business to measure the revenue per customer
E) they are more advanced product-market metrics for companies that are dealing with
pricing issues
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
Which of the following statements is true about branding?
A) The first step in developing a brand identity is to focus on product features rather
than customer benefits.
B) An internally focused business is best prepared to build a brand identity that would
be meaningful to target customers.
C) A brand name provides customers with a way to quickly comprehend the brand’s
primary benefits.
D) A brand-encoding system refers to the measures taken to protect a brand name.
E) Functional names refer to brand names that are associated with an experience.
Which of the following is true regarding competitive rivalry?
A) The more competitors an industry has, the higher will be the differentiation among
them.
B) High differentiation among competitors increases competitive rivalry.
C) Excess capacity within an industry can cause competitors to intensify their moves
against one another.
D) Intense competitive rivalry leads to higher prices and margins.
E) Intense competitive rivalry leads to lower marketing and sales expenses for retaining
customers.
ABL Inc. is a large consumer goods company that recently released some new shower
gels in the market. Two of the most touted shower gels in this new line of products
failed in the market, while the range of shower gels designed for adolescents called
Rebel did very well in the market. Which of the following, if true, would explain this
outcome?
A) ABL Inc. allocated resources equally for each project management team handling a
new shower gel.
B) ABL Inc. used more traditional advertisements and less social media to promote the
shower gel “Rebel.”
C) The project management team of ABL Inc.that was in charge for “Rebel” advertised
their product less than the other project management teams.
D) The project management team of ABL Inc.that was in charge for “Rebel” adopted a
reduce-market-focus strategy that targeted only adolescents.
E) The two new shower gels that failed in the market were clearly positioned in their
respective market segments.
If a business produces 800,000 units and the market demand for the product is 4 million
units, what is its percentage of market share?
A) 8%
B) 20%
C) 16%
D) 40%
E) 80%
In a direct channel marketing system, ________.
A) the manufacturer retains title of all products until they are delivered to the customer
B) wholesalers and retailers take ownership of the products for sale
C) the cost of customer sales contact is lower than that in indirect marketing systems
D) the opportunities for sales communication and customer interaction are nonexistent
E) customers who make infrequent, small purchases can be profitably served
Calculate the total share of the three largest competitors of a firm, if the firm has a
market share of 60% and relative market share of 200.
A) 40%
B) 30%
C) 72.5%
D) 20%
E) 60%
Vincent & Rankine is a company that spends billions of dollars annually on marketing
communications, primarily because they have many brand offerings in several product
categories. Some of these expenditures are used on marketing communications targeted
at end-user consumers of their brand, and other expenditures are used on marketing
communications targeted at intermediaries in the channel of distribution.
Mini-Case Question. Since many of Vincent & Rankine’s consumer products are
products used every day to satisfy customer needs, the company advertises frequently.
However, the cost of advertising has increased dramatically over the years and V&R is
concerned about the potential for copy wear-out and customer irritation due to
overexposure. The company decides to address this situation by using alternating
exposure periods. The firm advertises its products over a 4-week exposure, and runs its
advertisements in alternating 4-week periods. In this example, Vincent & Rankine uses
which of the following strategies?
A) a heavy-up message frequency strategy
B) a pulsing message frequency strategy
C) a pull communication strategy
D) a push communication strategy
E) a diversification strategy
Maher and Russell Inc. is a firm that manufactures home alarm systems Maher and
Russell Inc. has an overall perceived performance score of 85. This indicates that
Maher and Russell home alarm systems ________.
A) have a relative advantage of 85% due to the brand reputation
B) have a relative market share of 15%
C) have a relative cost of purchase index of 85
D) are 15 percent behind the competition
E) are 85% above the average relative performance
Which of the following allows a business the potential to own the market until other
competitors venture to enter?
A) a decentralization strategy
B) the cluster effect
C) a low barrier to entry
D) a first-mover advantage
E) a network effect
Which of the following is a defensive strategic market plan?
A) a new market entry strategy
B) an improve position strategy
C) a harvest strategy
D) a vertical integration strategy
E) a horizontal integration strategy
GTB Electronics enters a new market and needs to set its pricing strategy for the
market. Which of the following is a favorable condition for implementing skim pricing?
A) There is little differentiation between competing products in the market.
B) The market has many well-established competitors.
C) Entry into that particular market is difficult.
D) There are many substitute products available, with a wide range of prices and
features.
E) GTB’s product position is about the same as competitors’ positions in every area of
product and service quality.
Your brother, Fred, owns ATZ Inc., a company that provides wireless
telecommunications network in several cities in the Midwest region. You are taking a
marketing class in college, and you asked Joe for some information about his business
for a class project. You determined that one of his customers has a long customer
history of 75, an above-average purchase amount of 55, a low repurchase desirability of
20, a weak product preference of 10, and the customer does not recommend ATZ
services to potential customers. The customer is clearly dissatisfied, but since ATZ Inc.
is the only wireless telecommunications network provider in the city he is compelled to
use it.
Mini-Case Question. Based on the customer loyalty index (CLI) for the customer, what
type of customer would you tell Fred that he has?
A) loyal customer
B) repeat customer
C) captive customer
D) new customer
E) unprofitable customer
Expenses that change on a per-unit basis when production volume increases or
decreases are known as ________.
A) variable costs
B) manufacturing overhead costs
C) marketing and sales expenses
D) indirect costs
E) operating costs
What condition would make it impossible for a business to achieve maximum
marketing profits in later stages of the product life cycle?
A) low customer retention
B) a price increase
C) decreasing volume
D) lower level of sales expenses
E) lower level of marketing expenses
Calculate the total number of transactions made per year if the total transaction cost is
$2 billion at $50 per transaction.
A) 25 million transactions per year
B) 10 million transactions per year
C) 100 million transactions per year
D) 40 million transactions per year
E) 250 million transactions per year
