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Helen has determined that along the share-development path, her business should
perform at a 80% level of product awareness, 50% in product preference, 80% in
intentions to purchase, 90% in product availability, and 70% in rate of purchase. Helen's
actual market share is equal to 9%. What is the approximate share development index
(SDI) for Helen's business?
A) 20
B) 37
C) 45
D) 50
E) 74
A television advertisement achieves 200 GRPs over a 4-week exposure period. The
advertisement is run in alternating 4-week periods in which during the intervening
4-week period no messages are run. This is an example of which of the following
approaches to message reinforcement?
A) benchmarking
B) bundling
C) cobranding
D) pulsing
E) brand encoding
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
Calculate the PE ratio of a company whose stock price is $86 and earnings per share is
$2.4.
A) 8.3
B) 20.7
C) 35.8
D) 28.3
E) 13.5
The offensive strategic market plan to invest marketing and sales resources to expand
the market or a product's position in a market is known as ________.
A) a divest strategy
B) a protect position strategy
C) an invest to grow strategy
D) a harvest investment strategy
E) a monetize strategy
Which of the following refers to using collective intelligence to solve specific problems
or solicit ideas—often as part of a competition or for a reward?
A) onboarding
B) crowdsourcing
C) benchmarking
D) mass collaboration
E) outsourcing
Coller Inc. is an American firm that manufactures flat panel LCD computer monitors.
The firm has a 5% share of a 2 million unit market. The firm's marketing department
calculates that its acquisition cost is $13 million and retention costs is $5 million. The
market for flat panel LCD computer monitors is in the late growth stage of the product
life cycle, and Coller currently sells its product for $2,000 and experiences variable
costs per unit of $1,600.
Mini-Case Question. As the market for this product matures, Coller may need to rethink
its pricing in order to optimize profits as the market growth slows. If the objective is to
optimize profits, is it a good idea for Coller Inc. to decrease the price by 10% in an
attempt to increase market share to 6%?
A) Yes, because sales revenues will increase by $16 million.
B) Yes, because margin per unit will increase by $200.
C) Yes, because gross profit will increase by $16 million.
D) No, because gross profit will decrease by $16 million.
E) No, because variable costs will increase by 10%.
Which of the following is true of unprofitable customers?
A) They produce a referral value that is over three times their customer lifetime value.
B) They are loyal customers in waiting.
C) They buy a lot from many companies and do not have a strong preference for one
over the other.
D) They have a low desire to repurchase but are unable to move easily to another
company's product.
E) They are a result of mismanaged customer selection.
Which of the following is true of value-based pricing?
A) The cost of making a product and the desired profit margin are the two primary
determinants in setting a value-based price.
B) Value-based pricing does not consider what customers require from a product in
terms of performance and price.
C) Value-based pricing takes customer needs into account, but fails to consider
customers' price sensitivity.
D) In value-based pricing, price is developed around a product’s relative strengths to
give customers greater benefits than competing products offer.
E) Value-based pricing is based on features of the product, but fails to consider the
prices of similar products in the market.
Calculate the market development index if the current market demand of the product is
240 million and the potential for market growth is 400 million.
A) 60
B) 80
C) 160
D) 166.67
E) 640
Alex has determined that along the share-development path, his business should
perform at an 80% level in product preference, 50% in intentions to purchase, 90% in
product availability, and 70% in rate of purchase. If the share potential index for Alex's
business is 20%, at what level of product awareness should his business perform?
A) 63%
B) 80%
C) 54%
D) 88%
E) 42%
Why might a business use a combination of direct, indirect, and mixed marketing
channel systems?
A) to have total control over the quality of customer service
B) to lower the risk of distributing products to end-users
C) to attain maximum profits at minimum cost
D) to reach different target markets cost effectively and to deliver the service level
expected by target customers
E) to comply with legal requirements that limit a business from having too much
control over the distribution of products to consumers
Which of the following message frequency strategies would be appropriate for seasonal
products, political candidates, and special events where the goal is to steadily increase
message awareness over a relatively short period of time with no concern about
message awareness decay after the messages stop?
A) a concentrated frequency strategy
B) a distributed frequency strategy
C) a gross frequency strategy
D) an umbrella strategy
E) a constant frequency strategy
Julio lives in Summit County, in Colorado. He has taken health insurance from Pro-Life
Inc., a health maintenance organization in Colorado that has a network of health care
providers. Julio can visit the health care providers in the Pro-Life Inc. network, and get
services at much lower rates. Julio regularly visits Dr. Amy Page, the best general
physician in the Pro-Life Inc. network in Summit County even though he is not satisfied
with her services. When any his friend require medical services, Julio does not
recommend Dr. Amy Page to them. For Dr. Amy Page, Julio is a(n) ________ customer.
A) intermediate
B) loyal
C) captive
D) repeat
E) unprofitable
Dow Corning has been a market leader in silicon technology applications for over 50
years. Its products span many market applications in electronics, construction, health
care, and a multitude of industrial applications. However, as some of its product-market
applications reached the mature stage of the product life cycle, they became less
competitive. Dow Corning's full service consultative engineering approach did not work
in more mature, price-sensitive market applications. It was also unprofitable for Dow to
pursue these customers as they represented a majority of target customers but only
represented 20% of the revenue potential for the total market for their products.
Mini-Case Question. Dow developed a digital marketing channel for its more
price-sensitive customer segment. Which operational component of the channel
performance did Dow improve?
A) product quality
B) after-sales service
C) customer reach
D) sales margins
E) net price
Lucy has determined that along the share-development path, her business should
perform at a 74% level of product awareness, 68% in product preference, 92% in
intentions to purchase, and 85% in rate of purchase. If the share potential index for
Lucy's business is 18%, at what level of product availability should her business
perform?
A) 94%
B) 81%
C) 72%
D) 59%
E) 46%
Calculate the market development index if the current market demand of the product is
240 million and the potential for market growth is 400 million.
A) 60
B) 80
C) 160
D) 166.67
E) 640
Which of the following is true about lead customers?
A) They are more price sensitive.
B) They are benefit driven.
C) They possess less market knowledge.
D) They are more dependent on what others do or think than most people.
E) They do not purchase products that the mainstream market does not buy.
Costigan's Skates Inc., a firm that manufactures and exports skateboards, wants to grow
financially, but decides that the market for skateboards is fairly saturated. The firm's
management team decides to expand into manufacturing snowboards, as they believe
the Costigan brand will have credibility in this area and the market will not be
saturated. In this example, Costigan's Skates Inc. is using the ________ offensive
strategy.
A) divest for cash flow
B) enter related new markets
C) develop new markets
D) harvest for cash flow
E) enter unrelated new markets
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.
Number of employees, sales volume, number of locations, years in business, and
financial situation are all examples of ________ forces shaping business market needs.
A) demographic
B) firm demographic
C) company culture
D) usage behavior
E) lifestyle
A push marketing strategy differs from a pull marketing strategy in that a push
marketing strategy ________.
A) is directed at end-users
B) is directed at channel intermediaries
C) is a form of direct marketing
D) uses social media and media advertising
E) aims to build awareness, attraction, and loyalty and to reduce search costs
Which of the following would be considered an income statement component of
performance plan?
A) expenditures
B) marketing profits
C) pricing
D) asset turnover
E) profitability metrics
Calculate the approximate relative market share of a company whose market share is
76%, while the market shares of its three largest competitors are 13%, 22%, and 26%.
A) 125
B) 81
C) 150
D) 46
E) 27
In order for a company to use single-segment pricing, it is necessary that ________.
A) the company set a higher price than competitors for its product
B) the company first use a price skimming strategy when entering the market
C) the total cost of ownership of the company's product be less than that of competing
products
D) the company set the lowest product price among similar products
E) there be no other competitor in the market
Moreno Motors Inc. identifies that bikers are usually the first users of their newly
launched products. The firm sends consultants to biker rallies to discover how bikers
who use Moreno motorcycles modify them to extend their usage, as well as the desired
benefits. Recent visits revealed that bikers were seeking items, such as bolt-on chrome
products, horsepower performance enhancers, and improved braking systems in
Moreno motorcycles. In this example, Moreno Motors Inc. is studying which of the
following groups of customers?
A) lead users
B) mainstream customers
C) laggards
D) captive customers
E) spinners
Which of the following is a potential problem that a customer can face at the order
entry stage of the customer order cycle?
A) The order is in process but the customer is not aware of order status.
B) The product is delivered late or damaged.
C) The wrong product is delivered.
D) The order is priced incorrectly.
E) The product's user manual is inadequate.
Calculate the average relative price of the product of a business that has a customer
value of 36, and a below-average relative product quality of 114.
A) -78
B) -36
C) 150
D) 78
E) 36
Under a defensive strategic market plan, a particular product generates sales revenue of
$32 million at a market share of 15 percent. If the business generates a gross profit of
$7 million, calculate the percent margin on sales realized by the business.
A) 21.8%
B) 46.8%
C) 10.5%
D) 38.6%
E) 15%
The maximum market demand for running shoes is 560 million and its worldwide
market development index is 75. Calculate the current market demand for running
shoes.
A) 75 million
B) 150 million
C) 240 million
D) 320 million
E) 420 million
Customers for whom the offerings of the current business do not fit their needs are
called ________.
A) misfits
B) spinners
C) captive customers
D) customer terrorists
E) underachievers
A business with a competitive price and a large value advantage is most likely to
________.
A) lower its price to create a comparable value on the basis of positioning
B) choose not to compete in this segment of the market
C) improve performance on the basis of customer price-performance preferences to
create customer value
D) charge more for its product and still offer a good value
E) lower its price, as its price is high relative to the value it offers
What is the customer retention for a company given an average customer life of two
years?
A) 40%
B) 50%
C) 75%
D) 80%
E) 100%
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
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
