Chapter 3—The Marketing Environment
ESSAY
1. Given a new brand of barbecue sauce for which to develop a marketing strategy, describe how you
would conduct environmental scanning and analysis.
2. Explain the differences between the competitive structures of a monopoly and an oligopoly.
3. Describe what is meant by a consumer’s buying power. How might this affect a marketing strategy?
4. Contrast recession and depression.
5. Explain how a period of recession might affect the marketing of a product.
6. Explain the difference between procompetitive legislation and consumer protection laws.
7. Describe several ways in which federal agencies influence marketing activities.
8. What roles do the Better Business Bureau and the National Advertising Review Board play in self-
regulation of business?
9. Why must marketers be aware of new developments in technology?
10. What are the major forces that are referred to as sociocultural forces?
11. In what ways is the United States becoming an increasingly diverse nation in terms of culture?
MULTIPLE CHOICE
12. To monitor changes in the marketing environment effectively, marketers must engage in
a.
environmental scanning and analysis.
b.
economic scanning
c.
self-regulatory analysis
d.
marketing research analysis
e.
information collecting
13. Collecting information from secondary sources such as business, government, trade, and general–
interest publications plays an important role in
a.
environmental analysis.
b.
competitive forces.
c.
environmental scanning.
d.
procompetitive legislation.
e.
self-regulatory forces.
14. Three primary methods of collecting information for environmental scanning are
a.
marketing research, company records, and advance orders.
b.
secondary sources, company records, and observation.
c.
executive knowledge, media, and marketing research.
d.
observation, secondary sources, and marketing research.
e.
company database, executive knowledge, and research.
15. The Lazy-Boy Furniture Company collects information about a wide variety of competitive, economic,
political, legal and regulatory, technological, and sociocultural forces that affect its marketing
activities. This process is called
a.
environmental scanning.
b.
survey of environment.
c.
marketing.
d.
environmental analysis.
e.
marketing information processing.
16. The Coca-Cola Company recently introduced the “Freestyler,” a new free-standing soda dispensers
where consumers can chose from over 120 different types of soda and customize their drink.
Freestylers would take the place of typical dispensers where there are only a few different types of
soda brands available. In order to develop the new dispenser, Coca-Cola collected information on the
soda-drinking habits of individuals in several different age groups, as well as information about new
technologies for dispensing liquids from vending machines and the sales of its “fountain” syrup for
national restaurant chains to use in their soda machines. Coca-Cola’s collection of this information is
an example of _____ while the analysis of its impact on the potential for the new “Freestyler” is an
example of _________
a.
environmental scanning; environmental analysis
b.
an environmental force; environmental scanning
c.
environmental analysis; environmental strategy
d.
strategizing; environmental scanning
e.
strategic management; environmental scanning
17. SiriusXM Radio is concerned about how the increasing use of smart phones will affect the future sales
of its satellite radio service. The company decides to gather information about the changing trends in
music access and delivery to prepare for this trend. Sirius XM’s process is called
a.
environmental scanning.
b.
target marketing.
c.
surveying.
d.
environmental analysis.
e.
dynamic responsiveness.
18. According to the textbook, a manager’s duties in an environmental analysis include
a.
checking information for accuracy, resolving inconsistencies, and assigning significance to
the findings.
b.
observation and assessment.
c.
conducting research, assessment, and reporting.
d.
observation, market research, and fact finding.
e.
checking the company database, conducting research, and reporting.
19. When PepsiCo takes the information collected through research and attempts to assess and interpret
what it means for its soft-drink marketing efforts, PepsiCo is engaged in environmental
a.
scanning.
b.
forces.
c.
management.
d.
manipulation.
e.
analysis.
20. Nabisco learned that health-conscious consumers preferred lower fat snack and lower-carbohydrate
foods. At the same time, the firm saw sales of such products slumping and was careful not to launch
any new varieties of these products for a while. Which of the following best describes Nabisco’s
action?
a.
Environmental scanning
b.
Environmental marketing
c.
Demarketing
d.
Segmentation
e.
Environmental analysis
21. After Home Depot gathers information related to its marketing environment, it attempts to define
current environmental changes and predict future changes. This determines possible opportunities and
threats facing the company. It illustrates the process that is called
a.
environmental scanning.
b.
survey of environment.
c.
marketing.
d.
environmental analysis.
e.
marketing information processing.
22. Marketers who attempt to influence and change the various environmental forces have a(n) ____
response to these forces.
a.
reactive
b.
inactive
c.
variable
d.
positive
e.
proactive
23. Toyota has developed aluminum car bodies that are 100 percent recyclable and light enough to help
conserve fuel. What kind of response is this to environmental forces?
a.
Proactive
b.
Competitive
c.
Reactive
d.
Inactive
e.
Controllable
24. While Silk SoymilkTM engages in environmental scanning and analysis, the company is more likely to
change its products and marketing strategies to adapt to environmental forces rather than trying to
influence these forces. Silk SoymilkTM has a(n) ____ approach to marketing environmental forces.
a.
inactive
b.
reactive
c.
proactive
d.
negative
e.
variable
25. Marketers who view political forces as being beyond their control are taking a(n) ____ response
toward these forces.
a.
reactive
b.
aggressive
c.
proactive
d.
competitive
e.
liberal
26. When marketers define their target market, they simultaneously establish a set of
a.
technologies.
b.
monopolies.
c.
competitors.
d.
government regulations.
e.
sociocultural forces.
27. Companies that market products with similar features, benefits, and prices to the same customer group
are known as ____ competitors.
a.
generic
b.
product
c.
brand
d.
total budget
e.
monopolistic
28. Which of the following would represent a brand competitor for Volkswagen’s Touareg Hybrid sport
utility vehicle?
a.
Honda Pilot
b.
Toyota’s Highlander Hybrid
c.
Honda Civic Hybrid
d.
Taxi ride
e.
Chevrolet Tahoe rented from Avis
29. ____ competitors provide very different products that satisfy the same basic customer need.
a.
Brand
b.
Generic
c.
Total budget
d.
Product
e.
Marketing
30. ____ competitors are those that compete in the same product class, but their products have different
features, benefits, and prices.
a.
Total budget
b.
Generic
c.
Brand
d.
Product
e.
Price
31. Which of the following is not at the generic competitor level for Ford’s Expedition sport utility
vehicle?
a.
Ford’s Escape SUV
b.
Enterprise car rental
c.
Harley Davidson motorcycle
d.
Schwinn mountain bike
e.
Taxi cab ride
32. Marketers primarily focus their environmental analysis on ____ competitors.
a.
brand
b.
product
c.
total budget
d.
generic
e.
monopolistic
33. In today’s marketing environment, competitors can take on many forms. For example, Diet Coke can
be seen as a competitor to Wrigley’s Double Mint chewing gum. In this circumstance, these two
products are described as ____ competitors.
a.
generic
b.
product
c.
total budget
d.
monopolistic
e.
pure
34. Due to limited resources, a consumer decided to serve Hawaiian Punch to a New Year’s Eve party
crowd instead of Korbel champagne. As a result of this action, Korbel and Hawaiian Punch can be
viewed as ____ competitors.
a.
generic
b.
product
c.
total budget
d.
oligopolistic
e.
pure
35. Companies that compete for the same limited financial resources of the same customers are known as
____ competitors.
a.
oligopolic
b.
total budget
c.
generic
d.
product
e.
brand
36. ____ competitors are the most significant to marketers because buyers see the different products of
these firms as direct substitutes for each other.
a.
Oligopolic
b.
Total budget
c.
Generic
d.
Product
e.
Brand
37. Companies delivering mixed concrete know that it cannot be shipped farther than twenty-five miles
because the concrete might harden in the truck. Citrus County Concrete Company is the only supplier
of mixed concrete to customers within a thirty-mile radius. Citrus County Concrete is an example of
which one of the following competitive structures?
a.
Monopoly
b.
Oligopoly
c.
Monopolistic competition
d.
Pure competition
e.
Monopsony
38. The four major competitive structures are
a.
monopolies, oligopolies, oligopolistic monopolies, and pure competition.
b.
pure competition, heavy competition, moderate competition, and light competition.
c.
brand, product, total budget, and generic.
d.
oligopolies, monopolies, monopolistic competition, and pure competition.
e.
monopolies, limited competition, oligopolistic competition, and pure competition.
39. What type of competitive structure exists when a firm produces a product that has no close substitutes?
a.
Monopoly
b.
Oligopoly
c.
Monopolistic competition
d.
Pure competition
e.
Mixed competition
40. The type of competitive structure that exists in the case where there are almost no substitutes for a
product is a(n)
a.
monopolistic competition.
b.
oligopoly.
c.
pure competition.
d.
monopoly.
e.
noncompetition.
41. The American automobile industry was historically dominated by “The Big Three,” referring to
General Motors, Ford, and Chrysler. However, as many more foreign competitors began influencing
this market, the American companies had to modify and differentiate their products. The automobile
industry moved from a(n) ____ structure to a(n) ____ structure.
a.
monopolistic; oligopolistic
b.
oligopolistic; pure competition
c.
oligopolistic; monopolistic competition
d.
monopolistic competition; pure competition
e.
monopolistic; monopolistic competition
42. The Decca Electric Corporation produces light bulbs that are used in refrigerator manufacturing.
Currently, only three other companies produce bulbs used in the production of refrigerators, with
Decca as the leader in market share. In this case, Decca Electric Corporation would be considered
a.
an oligopoly.
b.
a monopoly.
c.
involved in monopolistic competition.
d.
involved in perfect competition.
e.
involved in a perfect oligopoly.
43. Which of the following firms would be most likely to have a monopoly for its competitive
environment?
a.
TimeWarner Cable TV
b.
Mitchell Trucking
c.
American Airlines
d.
Rogers Plumbing
e.
Chemlawn Lawn Care
44. Most marketers operate in a competitive environment of either
a.
oligopoly or monopoly.
b.
oligopoly or monopolistic competition.
c.
oligopoly or pure competition.
d.
monopoly or pure competition.
e.
pure competition or monopolistic competition.
45. When a firm has many potential competitors and tries to develop a marketing strategy to differentiate
its products from the competitors’ products, a(n) ____ structure exists in the competitive environment.
a.
oligopoly
b.
monopoly
c.
pure competition
d.
oligopolistic competition
e.
monopolistic competition
46. What type of competitive structure exists when just a few sellers control a large portion of the supply
of a product?
a.
Monopoly
b.
Oligopoly
c.
Monopolistic competition
d.
Mixed competition
e.
Pure competition
47. Changes Salon is part of the hair and personal care service industry. In what type of competitive
environment is Changes Salon most likely operating?
a.
pure competition.
b.
a monopoly.
c.
monopolistic competition.
d.
oligopolistic competition.
e.
an oligopoly.
48. The tobacco industry in the United States is dominated by three large companies. When any one of
these companies changes its price on tobacco products, the other two companies quickly adjust their
prices to match it. From these characteristics, the tobacco industry could best be described as
a.
price sensitive.
b.
opportunistic.
c.
monopolistic competition.
d.
an oligopoly.
e.
a monopoly.
49. J. Pitner Clothing is a medium-size specialty men’s and women’s clothing store in a market with many
other specialty stores, department stores, and discounters. It has established a reputation for offering
high-quality, fashionable merchandise with quality service. J. Pitner’s competitive environment would
best be characterized as
a.
a monopoly.
b.
an oligopoly.
c.
monopolistic competition.
d.
pure competition.
e.
faceted competition.
50. In general, which of the following competitive structures is an organization least likely to operate?
a.
Monopoly
b.
Monopolistic competition
c.
Oligopoly
d.
Elastic competition
e.
Pure competition
51. The two least common competitive structures are
a.
monopolies and oligopolies.
b.
pure competition and monopolies.
c.
monopolistic competition and monopolies.
d.
pure competition and no competition.
e.
oligopolies and pure competition.
52. The best approach for a company to take when monitoring its competitors is
a.
watching for increases and decreases in competitors’ prices and match them.
b.
analyzing all information that is readily available about competitors.
c.
sending employees to competitors’ offices and factories to observe their actions.
d.
developing a system for gathering ongoing information about competitors.
e.
reading important business publications such as The Wall Street Journal.
53. Volkswagen is planning its promotional strategy for its Passat model. When compared to others in its
class, the Passat has average gas mileage, better comfort ratings, more leg room, better interiors,
average dependability, and is made in its plants in Tennessee. Which of the following attributes of a
Volkswagen Passat would be most appropriate to emphasize in television commercials during an
economic recession?
a.
Gas mileage
b.
Dependability
c.
Made in the U.S.A.
d.
Leg room
e.
Comfort
54. In a period of economic recovery, the best marketing strategy for FedEx would be characterized by
which of the following features?
a.
Flexibility
b.
Aggressiveness
c.
Austerity
d.
Retrenchment
e.
Boldness
55. Assuming that inflation is low, high buying power characterizes the ____ stage of the business cycle.
a.
prosperity
b.
depression
c.
recovery
d.
succession
e.
recession
56. During which stage of the business cycle is unemployment low and total income relatively high?
a.
Repression
b.
Prosperity
c.
Recovery
d.
Recession
e.
Depression
57. Total buying power declines during periods of economic
a.
recovery.
b.
prosperity.
c.
recession.
d.
uncertainty.
e.
expansion.
58. Although marketing theory supports the contrary, it is more probable that marketing budgets will be
cut during periods of economic
a.
recovery.
b.
prosperity.
c.
recession.
d.
uncertainty.
e.
expansion.
59. Publix Supermarket is revising its marketing plan for the upcoming quarter. Publix typically focuses
on its wide variety of products and its high quality customer service, having very few weekly “sales.”
However, during the upcoming quarter, Publix plans to focus on price and value, and promote weekly
“values” instead. Publix is most likely in a(n)
a.
inflation period.
b.
prosperity period.
c.
recession.
d.
depression.
e.
recovery period.
60. Consumer confidence is at a low during periods of
a.
recession.
b.
prosperity.
c.
recovery.
d.
slowdown.
e.
depression.
61. Consumer confidence and willingness to spend begins to increase during periods of ____, and
marketers must remain very flexible to make the necessary adjustments.
a.
depression
b.
prosperity
c.
recovery
d.
growth
e.
recession
62. The strength of a person’s “buying power” depends on economic conditions and
a.
level of income.
b.
size of resources that can be traded in an exchange.
c.
how much a consumer will buy.
d.
a consumer’s spending pattern.
e.
levels of median wealth.
63. Why are marketers interested in consumers’ levels of disposable income?
a.
It accurately predicts future buying power.
b.
It increases current buying power.
c.
It is what is left after taxes and savings to buy luxuries with.
d.
It is a ready source of buying power.
e.
It is essential for forecasting future business trends.
64. The amount of money received through wages, rents, investments, pensions, and subsidies is called
a.
income.
b.
wealth.
c.
discretionary income.
d.
prosperity.
e.
credit.
65. If Julio Ruiz has an income of $30,000, pays $6,000 in rent, $1,200 in utilities, and $5,000 in taxes per
year, his disposable income is
a.
$7,800.
b.
$14,000.
c.
$9,000.
d.
$25,000.
e.
$20,000.
66. Which category of income are marketers most interested in?
a.
Wealth
b.
Disposable income
c.
Discretionary income
d.
Total income
e.
Extra income
67. What is the most important factor in distinguishing disposable income from income?
a.
Taxes
b.
Housing
c.
Employment levels
d.
Consumer spending
e.
Saving
68. A person’s buying power is a function of
a.
disposable income.
b.
past income, natural resources, and financial resources.
c.
wages, rents, and investments.
d.
income, wealth, and credit.
e.
discretionary income.
69. Discretionary income is associated with all of the following except
a.
automobiles.
b.
education.
c.
pets.
d.
furniture.
e.
food.
70. Lindsay was reviewing her bank statement for last month. She had paid her rent, her car payment,
electric and phone bills, and made three trips to the grocery. Lindsay had also bought tickets to a Katy
Perry concert and new clothes to wear to the concert. The money spent on Lindsay’s rent, car, electric
and phone bills was likely from her ____ , while the money spent on the concert tickets and new
clothes was from her _____.
a.
Disposable income; savings
b.
Gross income; disposable income
c.
Disposable income; net income
d.
Disposable income; discretionary income
e.
Gross income; Savings income
71. The accumulation of past income, natural resources, and financial resources is known as
a.
income.
b.
collected income.
c.
credit.
d.
wealth.
e.
savings.
72. Which of the following companies would probably be most interested in tracking discretionary income
levels?
a.
Safeway food stores
b.
BMW automobiles
c.
Gulf States Utilities
d.
General Mills
e.
Florida Orange Growers
73. By offering both credit and financing through its GMAC division, General Motors is trying to help
consumers
a.
expand future buying power at the expense of current buying power.
b.
expand disposable income at the expense of discretionary income.
c.
expand current buying power at the expense of future buying power.
d.
expand both disposable income and wealth.
e.
decrease both disposable and discretionary income.
74. When using credit to make purchases, consumers are
a.
decreasing current buying power and increasing future buying power.
b.
increasing their present discretionary income to extend purchasing power.
c.
putting themselves at significant risk of financial disaster.
d.
forgoing the accumulation of wealth to increase current income.
e.
increasing current buying power at the expense of future buying power.
75. Which of the following terms refers to consumers’ propensity to buy?
a.
Disposable income
b.
Discretionary income
c.
Buying power index
d.
Buying power
e.
Willingness to spend
76. Shelby’s new job with the federal government provides a comfortable income and a fairly stable
income. She would like to buy a new car now that she has a job; however, Shelby hesitates to
purchase a new car because she is concerned about how poor economic conditions may affect her
position in the future. Shelby lacks
a.
disposable income.
b.
willingness to spend.
c.
buying power.
d.
credit.
e.
discretionary income.
77. Texas rice farmers wish to get their product into the Japanese market but are hindered by a complex
maze of regulations imposed by the Japanese government. The farmers are most likely to attempt to
influence which aspect of the marketing environment?
a.
Sociocultural
b.
Technological
c.
Competitive
d.
Economic
e.
Political
78. Textile companies historically face issues concerning the use of child labor in foreign countries and the
various regulations created concerning this labor. The type of marketing environment forces
executives for these companies are most likely to try to influence are ____ forces.
a.
economic
b.
competitive
c.
political
d.
environmental
e.
sociocultural
79. Which of the following statements is true?
a.
Political officials can not influence how much a government agency purchases and from
whom.
b.
The U.S. Supreme Court nullified federal laws that restricted political campaign fund
contributions for corporate labor unions.
c.
Company sponsored political advertising can only focus on topics and not on candidates.
d.
Political officials can not accept direct corporate campaign contributions.
e.
Companies can not participate in the political process through lobbying.
80. Which of the following actions is illegal?
a.
Political officials influencing how much a government agency purchases and from whom.
b.
Corporate contributions to candidates.
c.
Corporate contributions to elected officials.
d.
Political officials helping businesses secure foreign markets.
e.
Paying political officials not to enforce a particular law.
81. Which of the following acts was enacted to prevent businesses from restraining trade and
monopolizing markets?
a.
Sherman Antitrust Act
b.
Clayton Act
c.
Federal Trade Commission Act
d.
Robinson-Patman Act
e.
Wheeler-Lea Act
82. If all the gas stations in a city collaborated to determine what gas prices should be charged, they would
be violating the
a.
Wheeler-Lea Act.
b.
Clayton Act.
c.
Robinson-Patman Act.
d.
Sherman Antitrust Act.
e.
Celler-Kefauver Act.
83. Which of the following provides protection for and regulates brand names, brand marks, trade names,
and trademarks?
a.
Sherman Act
b.
Clayton Act
c.
Robinson-Patman Act
d.
Lenham Act
e.
Celler-Kefauver Act
84. Procompetitive laws are those designed to
a.
preserve competition.
b.
protect the consumer.
c.
ensure product safety.
d.
reduce competition.
e.
limit business lobbying of government officials.
85. International Office Supplies Wholesaler charges different prices to its various customers without any
legal justification. This company is in violation of the
a.
Sherman Antitrust Act.
b.
Wheeler-Lea Act.
c.
Lanham Act.
d.
Federal Trade Commission Act.
e.
Robinson-Patman Act.
86. Price discrimination is prohibited by the ____ Act.
a.
Sherman
b.
Wheeler-Lee
c.
Robinson-Patman
d.
Celler-Kefauver
e.
Consumer Goods Pricing
87. The 1990 Nutritional Labeling and Education Act directly prohibits
a.
exaggerated claims made by health and fitness products.
b.
putting the words “cholesterol-free” on any food package.
c.
putting nutritional information on most food products.
d.
exaggerated health claims on food packages.
e.
the use of any health claim on food packaging.
88. Consumer protection legislation deals with all of the following legal concerns except
a.
consumer safety.
b.
sale of hazardous products.
c.
monopolistic practices.
d.
information disclosure.
e.
health claims on food packages.