A market-based business lays more emphasis on assets and technology than
understanding their customers.
A reduce-focus pricing strategy calls for price increases with the intent of reducing
volumes and market share in exchange for higher margins.
The financial metric of return on equity has owner’s equity as its basis.
A direct marketing channel produces higher margins than an indirect channel, but the
business must bear the cost of channel management and all marketing and sales
expenses.
Marketing plans should not be aggressively communicated either internally or
externally to protect competitive position.
The customer loyalty index (CLI) is a function of total sales, customer lifetime value,
and shareholder dividend.
The perceived customer value is the sum of the relative performance and the relative
cost of purchase.
A divestment strategy, while unattractive, is always feasible.
Advertising effort made in a given period will produce some additional sales response
in subsequent sales periods, and the advertising carryover coefficients range from zero
to less than one.
An MDI of 62 indicates that the market has many potential customers who for various
reasons have not entered it.
The primary purpose of a strategic market plan is to create a set of performance
objectives and to guide the development of marketing mix strategies.
A share-penetration strategy in an existing market generally takes more time to succeed
than
a strategy to enter a new, undeveloped market.
It is during the early stages of market growth that maximum marketing profits are
obtained.
The formula for calculating the customer value index is: Brand Image+Warranty+Price
+Callbacks.
Captive customers are a drain on a business’s profits because the cost of acquiring them
can never be recovered.
Businesses with partial knowledge of customers or competitors are less likely to
employ reactive strategies.
One key benefit provided by a broad market definition is that it concentrates a business’
focus on articulated customer needs.
As a business adds more products to its product line, it decreases the risk of
cannibalizing existing product sales.
Customer use of social media gives marketers complete control over their brands.
Both consumers and businesses have market needs, and the factors influencing their
needs are essentially the same.
The customer retention metric acts as a forward-looking metric when it measures the
number of customers retained from one year to the next.
The first step in optimizing net marketing contribution is to focus on optimal
management of price-volume rather than margin-volume.
The objective of brand-image communications is to trigger an emotional response that
builds a strong connection between the brand and the image the company wants to
create among its target customers.
Asset turnover in an organization is an example of internal company metrics.
Share leaders, followers, and niche businesses can all pursue defensive strategies to
protect their market share positions.
A share development index of 40 means that the business or product has only obtained
40 percent of its share potential.
For products that project a “brand personality,” there is an opportunity to create
customer value through the delivery of emotional benefits.
A business that has a 75 percent customer retention rate has an an average customer life
of 6 years.
The annual NMCs grow and eventually peak in the early growth stage of the product
life cycle.
The more competitors an industry has, the lower will be the differentiation among those
competitors, and low differentiation increases competitive rivalry.
Palmer Enterprises has a net marketing contribution of $60 million. Its general and
administrative expenses and other operating expenses are $20 million and $15 million,
respectively. Calculate its operating income.
A) $95 million
B) $75 million
C) $45 million
D) $40 million
E) $25 million
Which of the following is true regarding lead users?
A) They are customers who are unwilling to purchase products that do not provide a
complete customer solution.
B) They are users who wait to see whether the product or service will deliver
meaningful benefits.
C) They are skilled users who extend the boundaries of a product’s application to
achieve a more desired customer solution.
D) They are skeptical customers who are unwilling to purchase a product unless they
are assured of meaningful benefits associated with using the product.
E) They are the last customers to adopt a new product or service.
Which of the following is true of new customers?
A) They are usually the profit driver of a business.
B) They are a company’s best customers.
C) They have no impact on the net marketing contribution.
D) They are less likely to recommend a company’s product to others.
E) They generally buy more than retained customers.
The net marketing contribution for TRX Inc. is $25 million, and sales revenues equal
$150 million. Calculate the marketing ROS for TRX.
A) 15%
B) 26.3%
C) 25%
D) 306%
E) 16.6%
________ is the amount that is left over after deducting all other business expenses but
before deducting interest and taxes.
A) Sales revenue
B) Operating income
C) Net marketing contribution
D) Marketing expenses
E) Gross profit
In the context of SWOT analysis, which of the following would be a strength for a
company already existing in the market?
A) a growing market
B) a local environment that is conducive to growth of the business
C) an openness of the governmental mechanism to foreign investors in the business
D) a low level of barriers to entry in the market
E) a high level of branding that leads to market recognition
A business is achieving 36% of its potential market share performance at a share
potential index of 24%. Calculate the business’s market share index.
A) 60%
B) 8.6%
C) 12%
D) 66.7%
E) 30%
Customers can create a set of preference curve, by examining how customers make
trade-offs when choosing among various combinations of price and benefits, using
________.
A) conjoint analysis
B) regression analysis
C) an empathic design
D) a focus group
E) the relative performance index
The ________ is the ratio of the market share index to the share potential index.
A) share development index (SDI)
B) market development index (MDI)
C) business share index (BSI)
D) market share index (MSI)
E) sales growth index (SGI)
Which of the following is an external metric for a company?
A) inventory turnover
B) net profit before tax
C) accounts receivable
D) revenue per customer
E) return on assets
Which of the following groups of customers are most likely to have high desire to
repurchase, strong product preference, long customer history, and a very high referral
value?
A) Loyal customers
B) Captive customers
C) Unprofitable customers
D) Repeat customers
E) Customer terrorists
Which of the following measures is used to assess the responsiveness of consumers to
advertising expenditures, calculated by dividing the percent change in sales by the
percent change in advertising expenses?
A) net sales expenditure
B) gross advertising index
C) advertising elasticity
D) advertising return on investment
E) push rating
Which of the following would be considered a strategic market plan component of
marketing strategy?
A) revenue plan
B) investment
C) profits
D) customer needs
E) customer profile
________ is the ratio of net marketing contribution to a company’s investment in
marketing and sales expenses.
A) Gross profit
B) Marketing ROI
C) Return on equity
D) Marketing ROS
E) Market demand
Which of the following is true of the product life cycle?
A) In the early stages of the product life cycle, the NMC is positive.
B) As the product moves into the declining stage, it reaches a break-even NMC.
C) As the market matures, flat market demand, and lowered marketing and sales
expenses results in higher NMCs.
D) At a break-even NMC, the gross profit is equal to the marketing and sales expenses.
E) At the early growth stage, the annual NMCs grow and eventually peak.
A channel system that accommodates the customers’ credit needs, terms of payment,
warranty needs, desire for delivery at no charge, and easy return of faulty products is
satisfying the quality of ________.
A) transaction services
B) after-sale services
C) availability/delivery
D) product form
E) product assortment
Which of the following would be considered a competitiveness metric for a company?
A) marketing return on investment
B) relative service quality
C) marketing return on sales
D) capacity utilization
E) gross profit
Which of the following statements is true with regard to a marketing plan?
A) A marketing plan must focus on the larger market without breaking it down into its
constituent markets.
B) A marketing plan can lose focus by looking at niche markets to promote the
business.
C) A marketing plan must be highly formalized to be successful in the real scenario.
D) A good marketing plan will avoid profiling target customers.
E) A marketing plan can help a company clearly position itself in a variety of market
segments.
Which of the following statements is true of a pull communication strategy?
A) It aims to create interest among customers and motivate them to acquire more
information.
B) It is directed at channel intermediaries and channel influencers.
C) It is of limited use when the company seeks to enhance consumer retention among
current consumers.
D) It focuses on focused on trade associations and industry influencers.
E) It does not include digital communication methods.
A company’s return on capital is ________.
A) invested capital divided by net marketing contribution
B) net profit multiplied by invested capital
C) net profit divided by invested capital
D) net marketing contribution divided by invested capital
E) invested capital divided by net profit
SetPro Inc., a software firm, collects information about its marketing communication.
The firm finds that 60% of the firm’s target market is exposed the marketing
communication, and 50% of that group is aware of the offering. Amongst the people
who are aware of the offering, 70% understand the message. And 60% of that group
intends to purchase, and 90% of that group actually does purchase. What is the
customer response index for the buying group?
A) -1.13%
B) 1.13%
C) 11.3%
D) 90%
E) 60%
Which of the following industry forces is most likely to give a new business a far better
chance of succeeding?
A) intense rivalry among competitors
B) high customer power
C) high barriers to entry
D) high supplier power
E) many product substitutes
Which of the following is most likely to occur when price is inelastic?
A) A price decrease increases unit margin.
B) A price decrease increases gross profit.
C) A price increase reduces gross profit.
D) A price decrease hurts sales.
E) A price decrease reduces unit volume.
A firm plans to use a defensive core strategy of monetize, harvest, and divest, with the
strategic objective of maximizing cash flow. Which of the following strategies is the
firm most likely to implement as a part of its core strategy?
A) build customer retention
B) enter new related markets
C) develop new markets
D) manage for cash flow
E) improve customer loyalty
Which of the following is true of an indirect channel system?
A) The business retains ownership of the products until delivered to customers.
B) The cost of indirect customer sales contact is high and increasing.
C) An indirect marketing channel system includes telemarketing and digital marketing.
D) An indirect marketing channel system is particularly important for specialized and
technological products.
E) An indirect marketing channel system involves an intermediary that takes over
ownership and sales.
Which of the following is the strategic objective of the optimize position defensive core
strategy?
A) divest for cash flow
B) maximize profits
C) diversify growth
D) improve competitive position
E) grow in existing markets
If the price per unit is $34 and the variable cost per customer is $17, calculate the
margin per unit.
A) $2
B) $51
C) $25.5
D) $8.5
E) $17
A business’s return on assets is ________.
A) net profit multiplied by assets
B) net profit divided by assets multiplied by 100%
C) assets divided by net profit
D) net marketing contribution divided by assets
E) net marketing contribution multiplied by assets
A business’s market share is 6% and it has a share development index of 72. Calculate
its share potential index.
A) 14.6%
B) 22.8%
C) 36%
D) 18.5%
E) 8.3%
Sparks Inc., a firm that manufacturers low voltage halogen lamps, currently has a 40%
share of a 1 million unit market. The firm has extensive customer knowledge, as well as
extensive competitor knowledge. The three largest competitors of Sparks Inc. have
market shares of 5%, 10%, and 15%, respectively.
Mini-Case Question. The current relative market share of Sparks Inc. is ________.
A) 166.7
B) 133.3
C) 105.5
D) 75.5
E) 60
A business’s channel strategy determines the framework adopted by the business for
________.
A) evaluating its competitiveness and attractiveness in the industry in which it operates
B) enhancing the total cost of purchase index for its products and services in the market
C) establishing a revenue plan that matches projections and available resources
D) marketing its current profitability from conducting business
E) selling and delivering its products and services to target customers
Prices tend to flatten out as products reach the ________ stage of the product life cycle.
A) early growth
B) maturity
C) late growth
D) decline
E) introduction