The strategic market plan called “optimize position” is an offensive strategy often used
in the early stages of the product life cycle.
Compared to a direct marketing channel, an indirect marketing channel has lower
margins and also, lower costs of marketing and channel management.
Variance analysis allows the company to isolate the components of marketing
performance to understand better how each component contributes to the actual net
marketing contribution.
International markets are often blocked by political barriers.
What is the marketing return on sales (marketing ROS) for a product line that generates
$20 million in sales revenues with a net marketing contribution of $5 million?
A) 20%
B) 25%
C) 34%
D) 35%
E) 40%
________ pricing involves raising prices incrementally to the point where the best
combination of volume and margin is achieved during the mature stage of the product
life-cycle.
A) Low-cost-leader
B) Penetration
C) Harvest
D) Reduce-focus
E) Skim
In order to increase the net profit of a business, the NMC of any proposed strategy must
________.
A) be equal to the current NMC
B) be equal to the difference of the current NMC and the marketing and sales expenses
C) be equal to the total operating income
D) be lower than the current NMC
E) exceed the current NMC
Calculate the total volume of units produced if there is a market demand of 50,000 units
at a market share of 10%.
A) 292,560
B) 440,650
C) 500,000
D) 325,000
E) 100,000
Which of the following service quality dimensions refers to employee competency with
respect to knowledge and courtesy?
A) service reliability
B) service assurance
C) extended services
D) customer empathy
E) appearance
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%
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%
When considering marketing metrics for a company, market share is most likely to be
________.
A) an internal forward-looking metric
B) an external backward-looking metric
C) an internal metric that is used after the reporting period
D) an external metric that is used during the reporting period
E) an internal metric that can be used either during or after the reporting period
Which of the following statements is true of pricing decisions?
A) Market-based pricing starts with a good understanding of customer needs and the
benefits that a product offers relative to competitors’ products.
B) The business with the lowest price will always offer customers the best economic
value.
C) It is possible to implement market-based pricing with low levels of customer and
competitor intelligence.
D) Competitors’ product-price positioning and company product-price positioning are
the two primary determinants in setting a cost-based price.
E) Cost-based pricing takes into account what the customer would be willing to pay for
a certain level of product performance.
Which of the following is true of channel advantage?
A) It allows a business to control market access, but not channels in a market.
B) It is dependent on cost advantage.
C) It is dependent on differentiation advantage.
D) It is achieved through the use of reactive strategies.
E) It is a source of marketing advantage.
Calculate the gross profit if the net marketing contribution is $40 million, the market
share is 5%, the acquisition cost is $10 million and the retention cost is $7 million.
A) $57 million
B) $23 million
C) $230,000
D) $60 million
E) $2.85 million
An advertising elasticity of 0.35 means that for every one percent change in advertising
expenditures there will be an estimated ________ percent change in volume sold.
A) 0.0035
B) 0.035
C) 0.35
D) 3.5
E) 35
In television advertising, the combined impact of message frequency and reach
produces an index called ________.
A) customer response index
B) marketing penetration index
C) advertising elasticity index
D) gross rating points
E) market share index
Which of the following is a component of customer loyalty index?
A) customer satisfaction
B) average customer life
C) customer’s income level
D) desire to repurchase
E) customer’s demographic details
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
The brand equity of many oil companies is lower when associated with oil spills or
controversial drilling practices. Which type of brand liability does this best represent?
A) customer dissatisfaction
B) poor record on social issues
C) product or service failures
D) inadequate product line development
E) poor product conformance
With few, if any, competitors in an untapped new market, a business has the opportunity
to pioneer a portion of the market largely ignored by competitors. This is known as
________.
A) network advantage
B) economies of scale advantage
C) horizontal integration advantage
D) first-mover advantage
E) vertical integration advantage
Which of the following is used to determine a product’s life-cycle cost?
A) disposal cost
B) direct materials cost
C) direct labor cost
D) cost of satisfaction
E) distribution cost
Which of the following approaches to message reinforcement is most effective for
products that are purchased more frequently at some times of the year than at others?
A) an average frequency strategy
B) a gross frequency strategy
C) a pulsing strategy
D) a benchmarking strategy
E) a heavy-up exposure pattern
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.
In general, it costs ________ times more to replace a customer than it costs to keep a
customer.
A) two
B) three
C) four
D) five
E) six
Calculate the advertising elasticity if a company has a 1.3% change in sales and a 5.2%
change in ad expenses.
A) 0.25
B) 0.52
C) 0.4
D) 4.0
E) 6.5
With reference to the six-category scale, a consumer satisfaction index (CSI) of 20
denotes that the customer is ________.
A) dissatisfied
B) satisfied
C) very satisfied
D) somewhat dissatisfied
E) somewhat satisfied
Stephen bought a new Chevrolet Suburban vehicle by putting $10,000 down and
arranging to make monthly payments of $599 for six years. These payments represent
the ________ of the vehicle for Stephen.
A) acquisition costs
B) repair costs
C) maintenance costs
D) ownership costs
E) disposal costs
Sally always purchases groceries at Dillard’s Department store. Every time she visits the
store, she spends exorbitant amounts on various items. Sally seldom recommends
Dillard’s Department store to her friends and acquaintances. The marketing manager at
Dillard’s calculates that she has a loyalty index of 50, and an average lifetime value. To
Dillard’s, Sally is a(n) ________ customer.
A) captive
B) loyal
C) unprofitable
D) repeat
E) intermediate
If 63% of consumers are aware of JM Manufacturers Inc.’s 3-D television, 38% of that
group likes the product’s benefit, 54% of that group finds the price acceptable, 21% of
that group intend to buy the product, and 48% of that group actually purchase the
product from JM Manufacturers, then the share potential index for the 3-D television is
________.
A) 1.3%
B) 2.7%
C) 3.4%
D) 6.2%
E) 10.1%
What is the marketing return on sales (marketing ROS) for a product line that generates
$20 million in sales revenues with a net marketing contribution of $5 million?
A) 20%
B) 25%
C) 34%
D) 35%
E) 40%
Which of the following strategic market plans is more likely to occur in the latter stages
of a product-market life cycle and is often designed to protect important share positions
and be a large contributor to short-run sales revenues and profits?
A) disintermediation strategies
B) defensive strategies
C) offensive strategies
D) centralization strategies
E) decentralization strategies
A close examination of profitable high-share and profitable low-share niche businesses
reveals only two areas of commonality: relative sales force expense and ________.
A) relative price
B) product breadth
C) relative product quality
D) relative advertising
E) product depth
Zitko Inc. is a manufacturer of consumer goods products. It has 75 million shares in the
market and generates a net profit of $125 million. Its stock price is $60 and it has a
capital cost of 10% for $850 million of capital invested. Its other expenses, including
interest and taxes, amount to $240 million.
Mini-Case Question. What is the company’s net marketing contribution?
A) $640.2 million
B) $538.5 million
C) $458 million
D) $294.6 million
E) $367.5 million
Offensive strategic market plans are strategies that ________.
A) have a 1-year time horizon
B) are ineffective at growing sales revenue
C) reduce the long-run share position
D) limit short-run profit performance
E) result in short-term profits without any additional investment
The whole purpose of ________ market metrics is to track customer perceptions and
attitudes that precede changes in customer behavior and a business’s financial
performance.
A) financial
B) static
C) competitiveness
D) forward-looking
E) backward-looking
A firm uses a core offensive strategic market plan of investing to grow sales in existing
markets. The strategic objective of the firm is to grow in existing markets. Which of the
following strategies is the firm most likely to use?
A) reduce market focus
B) harvest for cash flow
C) enter related new markets
D) divest for cash flow
E) expand market demand
The idea that the advertising effort made in a given period will produce some additional
sales response in subsequent sales periods is known as the ________.
A) advertising elasticity effect
B) pulsing effect
C) advertising carryover effect
D) pull effect
E) push effect
Customer life expectancy increases ________ with customer retention.
A) exponentially
B) linearly
C) cubically
D) parabolically
E) hyperbolically