Chapter 4—The Marketing Environment
TRUE/FALSE
1. Marketers can control the external environment in which their organizations operate.
2. Champion Lyte is a sugar-free sports drink designed to replenish electrolytes lost during activity or
illness. Since the product was designed primarily for diabetics, health care professionals who treat
diabetics are its primary target market.
3. Companies use environmental management when they implement strategies that attempt to shape the
external environment within which they operate.
4. Social change is perhaps the most difficult external variable for marketing managers to forecast,
influence, or integrate into marketing plans.
5. The practice of choosing goods and services that meet one’s diverse needs and interests rather than
conforming to a single, traditional lifestyle is known as aggregate lifestyles.
6. The phenomenon of working women has had a greater effect on marketing than has any other social
change.
7. Psychography is the study of people’s vital statistics such as their ages and locations.
8. The clothing style worn by tweens reflects that of their parents.
9. Generation Y is the most ethnically diverse generation the nation has ever seen.
10. Generation Y is the first generation of latchkey children—products of dual-career and/or divorced
households.
11. Baby boomers represent a monolithic group.
12. Almost half of all U.S. residents is a minority.
13. The Hispanic population is driving minority growth in the United States.
14. Multiculturalism occurs when all major ethnic groups in an area are roughly equally represented.
15. Rising incomes mean a higher standard of living.
16. Inflation is a measure of the decrease in the value of money, expressed as the percentage reduction in
value since the previous year.
17. An economic recession increases demand for products and services.
18. Basic research attempts to develop new or improved products.
19. Champion Lyte is a sugar-free sports drink. In developing the product, its manufacturer thoroughly
studied the legal restrictions on the drink’s ingredients, packaging, manufacturing, and labeling and has
abided by all such restrictions. In this way, the manufacturer of Champion Lyte drinks conducted its
examination of all political and legal factors that might affect the product’s marketing.
20. The Sherman Act of 1890 establishes protection for trademarks.
21. Marketers need a thorough understanding of the laws established by the federal government, state
governments, and regulatory agencies.
22. After Hal Li purchased and installed a woodburning stove to heat his family home, the stove caught
fire and damaged much of the house. He believes the stove had inadequate insulation. Li should voice
his concerns to the Federal Trade Commission (FTC).
23. Privacy policies for companies in the United States are largely voluntary and there are almost no
regulations on the collection and use of personal data.
24. The Gramm-Leach-Bliley Act is aimed at the healthcare industry.
25. The competitive environment of a business encompasses the number of competitors the firm must
face, the relative size of these competitors, regulatory agencies, and the degree of interdependence
within the industry.
MULTIPLE CHOICE
1. A(n) _____ is a defined group that managers feel is most likely to buy a firm’s product.
a.
target market
b.
buying center
c.
aggregated unit
d.
consumer cluster
e.
demographic sample
2. Which of the following statements best describes the typical target market?
a.
A target market will remain stable over time, including the same group of consumers.
b.
Target markets change over time as consumers drop in or out of the market, and as tastes
change.
c.
Target markets are not strongly affected by changes in the external environment.
d.
Target markets only change when the features and benefits of the product offering change.
e.
Target markets cannot be specifically defined according to age, income, or location
because these factors are continually changing
3. Colorific recently began competing with Crayola coloring products. At the beginning of the school
year, the _____ for Colorific products consists of back-to-school shoppers.
a.
target market
b.
buying center
c.
mass market
d.
consumer sample
e.
aggregated demography
4. The publisher of Ebony magazine has forged an alliance with Dan River, Inc. to create luxury bed and
bath products for the newly developed Ebony Home brand. Ebony Home will use the publisher’s long
history and expertise to market to the African American market. The African American market is the
_____ for the Ebony Home brand.
a.
target market
b.
buying center
c.
aggregated unit
d.
consumer cluster
e.
demographic sample
5. The external environment _____.
a.
can be controlled in much the same manner as the internal marketing mix
b.
cannot be influenced by marketing managers
c.
does not change over time
d.
does not have an impact on Fortune 500 companies
e.
must be continually monitored by marketing managers
6. The external environment is a strong influence on a target market and can provide _____ for the
marketing manager.
a.
opportunities and threats
b.
threats and strengths
c.
environmental loopholes
d.
opportunities and weaknesses
e.
product myopia
7. All of the following are factors in the external environment affecting marketing EXCEPT:
a.
marketing mix
b.
economic conditions
c.
technology
d.
political and legal factors
e.
competition
8. Susan is the director of marketing for a company that sells recreational vehicles and is developing a
marketing plan to cover the next five years of business. Which of the following is an uncontrollable
factor Susan must consider in her plan?
a.
place or distribution factors
b.
media buying factors
c.
economic factors
d.
promotional literature
e.
pricing strategy for warranty services
9. Marketing managers cannot control _____, but they can sometimes influence it.
a.
where advertising is placed
b.
the external environment
c.
the sales force
d.
the distribution strategy
e.
product pricing
10. When a company engages in _____, it is implementing strategies that attempt to shape the external
environment in which it operates.
a.
synergistic control
b.
environmental management
c.
environmental control
d.
market control
e.
reactive management
11. The Michigan State Legislature tried to pass a bill requiring concert promoters and venue operators to
print parental warnings on tickets and advertisements for concerts and shows by performers whose
recordings had content advisory labels. Promoters and venue operators prevented the passage of this
bill, arguing that it would require them to make value judgments for which they were ill-equipped. The
promoters and operators engaged in_____.
a.
internal marketing
b.
illegal practices
c.
environmental management
d.
reengineering
e.
corporate espionage
12. _____ factors are environmental factors that include our attitudes, values, and lifestyles.
a.
Social
b.
Economic
c.
Political
d.
Competitive
e.
Demographic
13. Which of the following is the most difficult for marketing managers to forecast, influence, or integrate
into marketing plans?
a.
technology
b.
social factors
c.
demography
d.
competition
e.
economic conditions
14. Many people in the United States choose to drink light beer because they value thin and fit bodies. In
Europe, light beers have had little success because flavor is valued more highly. For international beer
manufacturers, this difference illustrates how _____ influence(s) marketing.
a.
demography
b.
competition
c.
social factors
d.
economic conditions
e.
technology
15. In Asia, Procter & Gamble (P&G) discovered that consumers like to experiment with different brands
of shampoos and shy away from the family-size bottles so popular with Americans. Now it sells
single-use sachets of shampoo in Asia. P&G responded to _____ factors when it changed its Asian
packaging.
a.
demographic
b.
competitive
c.
technological
d.
social
e.
component lifestyle
16. Shark fin soup is a favorite Thai food. When a San Francisco-based organization claimed that the
leading producer’s soup contained mercury poison, its sales plummeted. The popularity of this soup in
Thailand represents a(n) _____ factor while Thailand’s lax enforcement of environmental protection
and consumer protection regulations are a(n) _____ factor.
a.
economic; technological
b.
social; technological
c.
social; political and legal
d.
competitive; economic
e.
social; technological
17. Consumers’ concern for health issues affects the way food is marketed. For example, marketers must
now list the number of grams of transfat on a product’s nutrition label because it has recently come to
light that this type of fat is harmful. Consumers’ concern for health issues is a(n) _____ factor.
a.
economic
b.
political and legal
c.
technological
d.
demographic
e.
social
18. Quaker Oats and other cereal manufacturers have developed what they call “breakfast-with-one-hand”
products—no-mess breakfast bars and drinks that can be consumed while commuting. The popularity
of on-the-go food is largely the result of changes in _____ factors.
a.
natural environmental
b.
demographic
c.
technological
d.
social
e.
political
19. What do self-sufficiency, upward mobility, work ethic, and conformity have in common?
a.
These are no longer valued attitudes
b.
They are attitudes that can easily be changed
c.
These are three perceptions that Americans have of the Asian lifestyle
d.
These are three of the core values that influence lifestyles in the United States
e.
They are the determinants of a component lifestyle
20. A(n) _____ is the practice of choosing goods and services that meet one’s diverse needs and interests
rather than conforming to a single, traditional lifestyle.
a.
aggregated lifestyle
b.
component lifestyle
c.
psychographic mode of living
d.
demographically defined lifestyle
e.
targeted lifestyle
21. Lance is a 30-year old, single professional who enjoys hiking, college sports, and poetry. He lives
with his girlfriend but does not have plans to get married in the near future. He leads a life much
different from his father who married right after high school, had children, and worked for the same
company his entire career. More and more in the U.S., consumers like Lance are enjoying _____,
piecing together a variety of interests, products, and services instead of conforming to traditional
stereotypes.
a.
well-defined segments
b.
component lifestyles
c.
simple multipurpose products
d.
conformity and cohesiveness
e.
modular market mixes
22. Kendra teaches high school science. She is also a wine expert, a PTA president, and an accomplished
sculptor. Her other interests include scrapbooking, gourmet cooking, and NASCAR. Marketers would
categorize Kendra as _____.
a.
fitting into a caregiver segment
b.
a member of the typical education-based target segment
c.
not belonging to any target market
d.
having a component lifestyle
e.
having a conforming lifestyle
23. Lee Siracca owns two horses, brews his own beer, participates in the civic arts commission, enjoys talk
radio, hikes on wilderness trails, and competes in rodeos. All of these diverse needs and interests
influence his choices of the goods and services he buys. Lee has a_____.
a.
component lifestyle
b.
demographically oriented lifestyle
c.
multicultural demographic position
d.
fragmented market orientation
e.
segmented buying strategy
24. If you were to ask Americans what they most desire to make their lives easier, most will want more
time. This feeling that there are not enough hours in a day is an example of a(n) _____ factor that has
strongly influenced the marketing environment.
a.
social
b.
economic
c.
legal
d.
demographic
e.
component lifestyle
25. The growth of dual-income families has resulted in:
a.
burnout
b.
a sense of entitlement
c.
decreased discretionary income
d.
decreased GNP
e.
increased purchasing power
26. Which of the following events has had the greatest effect on marketing?
a.
the growing number of one-child families
b.
the increasing number of immigrants from Northern Europe
c.
the growing number of people on the Internet
d.
the increasing number of working women
e.
the growing number of people of retirement age who are continuing work
27. The study of people’s vital statistics, such as their ages, births, deaths, and locations, is called:
a.
cultural sociology
b.
psychometrics
c.
ecology
d.
ethnography
e.
demography
28. Zimmer Centralpulse is the world’s largest producer of replacement hips and knees for orthopedic
surgery. It is particularly interested in marketing in the southwestern United States, where a large
aging population lives. Which external environmental element most directly explains its continued
growth?
a.
economic conditions
b.
political conditions
c.
culture
d.
demography
e.
social forces
29. Which of the following is NOT a demographic characteristic of a population?
a.
income level
b.
age
c.
values
d.
education
e.
birthrate
30. Riot Media is a media and toy company that capitalizes on the “gross-out” humor that boys ages 8
through 14 greatly enjoy. In other words, it targets _____.
a.
members of Generation X
b.
a cohort generation
c.
tweens
d.
baby boomers
e.
the baby bridging generation
31. Girls between the ages of 8 and 14 are one of the growing markets for high-end shoe manufacturers.
These girls want styles that are both youthful and grown-up looking. They are _____.
a.
members of Generation X
b.
a cohort generation
c.
tweens
d.
baby boomers
e.
the baby bridging generation
32. Merissa Champlain designs and sells clothes for young working women. Her marketing managers
recently told her that she’ll be in financial trouble unless she starts designing clothes suited to Gen
Yers. Why is this?
a.
Gen Yers are picky
b.
Gen Yers are more multicultural
c.
Baby boomers provide all of the disposable income for Gen Y members
d.
Demographically, Gen Yers are an extremely large group of consumers
e.
Gen Yers are easily swayed by traditional promotion media
33. _____ are strongly attached to technology, tend to be skeptical consumers, and demand the latest
fashion trends in record time.
a.
Generation Xers
b.
members of the cohort generation
c.
baby boomers
d.
Generation Yers
e.
members of the baby bridging generation
34. Consumers born between 1965 and 1978 form a group called _____.
a.
tweens
b.
yuppies
c.
cohort markets
d.
America’s mass market
e.
Generation X
35. You are a marketing consultant for a firm that wants to target members of Generation X. Based on
your knowledge of this demographic group, your advice to this firm would be to _____.
a.
emphasize freedom from work and commitment
b.
emphasize the importance of their children’s education
c.
avoid topics dealing with materialistic possessions
d.
emphasize the baby boom culture
e.
concentrate on social networking as the best way to reach this group
36. The group of people in the United States who were born between 1946 and 1964 are known as:
a.
Generation Xers
b.
gray markets
c.
synergistic cohorts
d.
the baby bust generation
e.
baby boomers
37. Which of the following represents the largest group of consumers in the United States?
a.
tweens
b.
Gen Y
c.
Gen X
d.
baby boomers
e.
boomerangs
38. All of the following are segments into which baby boomers have been subdivided into EXCEPT?
a.
“at ease” boomers
b.
“confident and living well” boomers
c.
“looking for balance” boomers
d.
“age–defying” boomers
e.
“overwhelmed” boomers
39. Which of the following statements characterizes the growing ethnic markets in the United States
today?
a.
Marketers are modifying products to appeal to different ethnicities
b.
The United States is becoming a multicultural society
c.
The United States is moving away from being a society dominated by whites and rooted in
Western culture
d.
The percentage of whites in the United States’ population will decline relative to other
minority groups
e.
All of the statements characterize the demographic transition in the United States today
40. The majority of Hispanic Americans are of _____ descent.
a.
Mexican
b.
Puerto Rican
c.
Spanish
d.
South American
e.
Cuban
41. Which ethnic group has the highest average family income?
a.
Hispanic Americans
b.
African Americans
c.
Asian Americans
d.
South Americans
e.
Cuban Americans
42. Which of the following is the largest Asian American segment?
a.
Chinese
b.
Filipino
c.
Vietnamese
d.
Korean
e.
Japanese
43. A multicultural society is characterized by:
a.
a population of recent immigrants that are closely related by custom and tradition
b.
a conglomeration of small and large ethnic groups that have little in common
c.
even distribution of all ethnic groups in a geographic region
d.
effective mass-marketing techniques
e.
one large dominating racial or ethnic group in a geographic area
44. Consider a small southern town where almost half the residents are African Americans and the rest
whites. Nearly all of the residents can trace their ancestors’ arrivals in the community back at least four
generations. This town is an example of a:
a.
market aggregation
b.
mass market
c.
psychographic target market
d.
metropolitan statistical area
e.
multicultural society
45. A company that specializes in planning and organizing large family reunions has hired you to identify
25 geographic target markets that are also examples of multicultural societies. What types of locations
should you offer this firm?
a.
cities that have historically had low immigration rates
b.
traditional test markets
c.
regions that are dominated by one ethnic group and that have multiple smaller ethnic
groups
d.
unindustrialized areas
e.
locations in which all major ethnic groups in the area are roughly equally represented
46. Interest rates, inflation, and consumer income that influence the marketing environment are called
_____ factors.
a.
economic
b.
socio-demographic
c.
political
d.
government
e.
consumption
47. After-tax income is referred to as:
a.
gross income
b.
marginal income
c.
purchasing income
d.
unencumbered income
e.
disposable income
48. China’s new 5 percent tax on disposable wooden chopsticks, reflecting concerns about deforestation,
has been praised by environmentalists. The move is hitting hard at the Japanese who consume 25
billion sets of wooden chopsticks annually. Almost all of the chopsticks used in Japan come from
China. The price of wooden chopsticks in Japan has increased by almost 50 percent. The price increase
influences which factor of the external environment of restaurant owners in Japan?
a.
economic
b.
technological
c.
demographic
d.
social
e.
ethnicity
49. Four dollar a gallon gasoline was unimaginable when mechanical gas pumps first appeared in the
United States in the 1930s. Their spinning dials cannot register sales beyond $99.99, which will not fill
up many SUVs. The pumps can be modernized for about $650, but the company that provides this
service has a huge backlog. This is an example of how _____ factors affect small convenience stores
and service stations.
a.
technological and cultural
b.
competitive and natural
c.
economic and technological
d.
cultural and economic
e.
demographic and marketing mix
50. _____ is measured by comparing the relative cost of a standard of goods and services in different
geographic areas.
a.
Gross individual profit
b.
Purchasing power
c.
Net profit
d.
Relative pricing
e.
Price escalation
51. The higher your _____, the higher your purchasing power:
a.
gross income
b.
social class
c.
disposable income
d.
cost of living
e.
inflation index
52. All of the following are taken into account in a cost of living index EXCEPT:
a.
income
b.
housing
c.
food and groceries
d.
health care
e.
entertainment
53. _____ is measure of the decrease in the value of money, expressed as the percentage reduction in value
since the previous year.
a.
Inflation
b.
Recession
c.
Depression
d.
Consumer break-even
e.
Price escalation
54. A period of economic activity characterized by negative growth, which reduces demand for goods and
services, is called:
a.
stagnation
b.
inflation
c.
recession
d.
price escalation
e.
parity
55. The main product for Zamperla Industries is gondola cars for amusement park rides and ski lifts. Its
marketing department constantly monitors trends in the external environment that might affect the
firm. Which economic factor may pose a major threat to this company?
a.
few competitors in this industry
b.
technological improvements that are automating production of cars
c.
a recession
d.
increasing interest in the environment and recycling
e.
existing legislation requiring licensing of all amusement park rides
56. Shabby Chic fashion boutique has responded to economic trends by placing an emphasis on improving
the quality of merchandise it offers, improving customer service, and reducing its cost of goods sold
because consumers are not shopping as much as they used to due to lower purchasing power. Shabby
Chic is apparently dealing with which level of economic activity?
a.
stagflation
b.
recession
c.
inflation
d.
stagnation
e.
distension
57. All of the following are appropriate tactics for marketers to use during a time of economic recession
EXCEPT:
a.
promote product value
b.
maintain and improve customer services
c.
reduce prices
d.
reduce inventories
e.
increase price