Calculate the customer loyalty index if the customer history is average, the purchase
amount is below average, the desire to repurchase is high, the product preference is
strong, and there is no customer recommendation.
A) 0
B) 10
C) 50
D) 80
E) 100
A ________ indicates the effort that is needed to recover a business’s investment in a
marketing and sales budget.
A) force field analysis
B) situation analysis
C) SWOT analysis
D) break-even analysis
E) bottom-up analysis
Which of the following is the primary objective of penetration pricing?
A) to increase profit by increasing prices
B) to gain higher margins by reducing market share
C) to build sales volume in a market
D) to increase product differentiation
E) to increase price in order to reduce volumes
Which of the following is true of marketing channels?
A) In a direct marketing channel, intermediaries take a portion of the purchase price for
their services.
B) The net price derived from the use of indirect marketing channels is much higher
than from direct channels.
C) Direct channels are able to capture most, if not all, of the end-user price.
D) The cost of direct marketing channels is generally lower for a manufacturer than that
of other channels.
E) Indirect channels incur the highest out-of-pocket marketing and sales expenses for
manufacturers.
An increase from 80% to 90% in customer retention would have what effect on the
average customer life?
A) an increase of 1 year
B) an increase of 2 years
C) an increase of 5 years
D) an increase of 10 years
E) an increase of 20 years
________ index a business or product against another similar business or product with
respect to product performance, service quality, and brand image.
A) Competitiveness metrics
B) Finance-based performance metrics
C) Market share metrics
D) Internal performance metrics
E) Customer metrics
Microsoft Office 2010 allows buyers and users to quickly identify the Microsoft
product and its newness to older versions of the same brand. This is an example of
using a ________ branding strategy.
A) company name
B) company and brand name
C) brand and subbrand name
D) company, brand, and product name
E) company and brand name, and number
Which of the following is a type of differentiation advantage?
A) service advantage
B) market share advantage
C) channel advantage
D) operating cost advantage
E) product line advantage
Which of the following statements is true about customer retention and customer life
expectancy?
A) The higher the customer retention rate, the lower the short-term profit impact.
B) As customer retention increases, the customer’s life expectancy decreases.
C) Customer life expectancy decreases exponentially with customer retention.
D) In general, it costs five times more to replace than to keep a customer.
E) Higher levels of customer retention have a long-term negative impact on profits.
Calculate the total value of owner’s equity of a business if it realizes a net profit of $240
million at a return of 30%.
A) $8 billion
B) $800 million
C) $720 million
D) $7.2 billion
E) $2.4 billion
Which of the following is a defensive strategy that strives to maximize profits and cash
flow as a business slowly exits a product-market?
A) a harvest strategy
B) a vertical integration strategy
C) a horizontal integration strategy
D) a monetize strategy
E) a divest strategy
Which of the following is true about a pull communication strategy?
A) It uses uses channel marketing instead of direct marketing.
B) It is directed at end-users.
C) It uses tools such as sales incentives and co-op advertising.
D) It motivates retailers to carry a particular product or brand.
E) It aims to build the interest, purchase, inventory, and marketing efforts of its
intermediaries.
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.
In the ________, all elements of a market plan merge into a forecast of percent margins
and marketing profitability.
A) situation analysis
B) performance review
C) profit plan
D) marketing performance plan
E) adjusting marketing plan
Aster Inc. is an American firm that manufactures motorcycles under the brand name
AsterBikes. The firm conducts a market research to identify alternative sources of sales
growth by leveraging its core competencies and competitive advantages. Based on its
market research and analysis, the firm decides to enter the automobile industry, and
introduces a line of Aster ComfortCars. In this example, Aster Inc. is using which of the
following offensive strategies?
A) enter unrelated new markets
B) develop new markets
C) harvest for cash flow
D) divest for cash flow
E) enter related new markets
With reference to the six-category scale, a consumer satisfaction index (CSI) of 60
denotes that the customer is ________.
A) dissatisfied
B) satisfied
C) very satisfied
D) somewhat dissatisfied
E) somewhat satisfied
As an operational component of channel performance, customer reach refers to
________.
A) cost to serve
B) volume
C) operating efficiency
D) service quality
E) retention
Which of the following is true about a strategic market plan?
A) It is a short-term marketing strategy.
B) It is referred to as tactical marketing strategy.
C) It lacks specific performance objectives.
D) It has a 1-year time horizon.
E) It has a 3- to 5-year time horizon.
Calculate the target market reach of a business if it produces an impact of 400 GRPs at
a frequency of 8.
A) 40 percent
B) 50 percent
C) 60 percent
D) 70 percent
E) 80 percent
To achieve above-average levels of profitability, low-share niche businesses need to
focus on their products and ________.
A) keep their market share high
B) divest for cash flow
C) keep expenses low
D) harvest for cash flow
E) expand their product line
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
If the sales effect for period 5 is $125 million and the carryover effect is 0.25, calculate
the total sales impact for period 5.
A) $500 million
B) $31.25 million
C) $166.67 million
D) $93.75 million
E) $156.25 million
A marketing mix strategy differs from a strategic market plan in that a marketing mix
strategy ________.
A) is a long-term strategy
B) needs to be reviewed each year
C) has specific performance objectives
D) has a 3- to 5-year time horizon
E) has a 5-to 10-year time horizon
The actual volume and volume estimated in a business plan are 60,000 units and 55,000
units, respectively. If the volume variance of the business works out to $30,000,
calculate the margin per unit estimated in the plan.
A) $6
B) $10
C) $15
D) $18.5
E) $24.5
Within a company’s competitive position, which of the following is a part of the
company’s differentiation advantage?
A) product quality
B) transaction cost
C) market share
D) marketing expenses
E) distribution
The marketing and sales budget of Cayzon Inc. is estimated to be $250 million and its
marketing administration cost is estimated to be $20 million. The acquisition cost per
customer is $2,000, and it is 10 times more than the retention cost per customer. If
45,000 new customers are acquired, what is the total number of retained customers?
A) 320,000 customers
B) 825,500 customers
C) 460,000 customers
D) 700,000 customers
E) 160,500 customers
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
If 30 million transactions are made per year at $15 per transaction, what is the total
transaction cost?
A) $450 million
B) $200 million
C) $2 billion
D) $4.5 billion
E) $900 million
Which of the following is true about market potential?
A) It refers to the number of customers who purchase a specific product at a given point
in time.
B) It refers to the upper limit of the market demand for any technology.
C) It is preferable to use a time horizon greater than 10 years, while estimating a
market’s potential, as market potential remains constant over time.
D) It is easy to locate published information on the market potential for any given
market.
E) It is easier to find new customers after a market reaches its full potential.
Which of the following is true of single-segment pricing strategy?
A) A single-segment pricing strategy is most likely to be employed during the decline
stage of the product life-cycle.
B) A single-segment pricing strategy is a cost-based pricing strategy rather than a
value-based one.
C) The company does not base the price of a product on the savings that customers
realize over the life of the product.
D) The main goal of single-segment pricing is to lower the cost to potential customers
in order to attract their purchase volume.
E) A single-segment pricing strategy overlooks both competitor’s offerings and price
sensitivity.
Which of the following is true of the financial metrics used to gauge a product’s
performance in the market?
A) They report important ratios for profits, costs, and assets.
B) They provide insight into how the business or product is performing in the market.
C) They include measures of marketing performance, such as customer satisfaction,
retention, and loyalty.
D) They allow a company to estimate its market share and customer value.
E) They are mainly external metrics of a product’s performance in a particular market.
Which of the following communication strategies refers to customer-directed marketing
communications?
A) push communication
B) pull communication
C) channel communication
D) centralized communication
E) lateral communication
Which of the following is the primary objective of penetration pricing?
A) to increase profit by increasing prices
B) to gain higher margins by reducing market share
C) to build sales volume in a market
D) to increase product differentiation
E) to increase price in order to reduce volumes
The most significant impact of satisfying and retaining customers is ________.
A) that a business can redirect marketing efforts to better serve dissatisfied customers
B) that a business can redirect marketing efforts to attaining new customers
C) that a desired increase in the level of profitability requires an increase in sales
volume of only half as much
D) that a business can eliminate the need for advertising
E) that it can result in tremendous financial leverage