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Airfare (Scenario)
The airfare for an economy class, one-way ticket from Los Angeles to New York is $500. Due to
the recession, the airline manages to fill only 100 out of the 150 seats at $400 per seat.
64) How much of the sales performance gap is due to price decline?
A) 28.5 percent
B) 37 percent
C) 2.5 percent
D) 71.4 percent
E) 0.4 percent
65) The sales gap due to reduced volume is ________.
A) 0.4 percent
B) 28.5 percent
C) 71.4 percent
D) 2.5 percent
E) 63 percent
66) Which of the following is true about market share?
A) Outside forces affect all companies in the same way.
B) A company’s performance should be judged against the average performance of all
companies.
C) A decline in market share does not necessarily mean the company is performing worse than
other companies.
D) A decline in market share cannot be deliberately engineered.
E) All shifts in market share have marketing significance.
67) A(n) ________ of exactly 100 percent means that a company is tied for the market lead. A
rise in relative market share means the company is gaining on its leading competitor.
A) overall market share
B) served market share
C) potential market share
D) relative market share
E) actual market share
68) Annual-plan control requires making sure the company isn’t overspending to achieve sales
goals. The key ratio to watch is ________.
A) stock turnover
B) gross margin
C) return on capital
D) cash flow return on investment
E) marketing expense-to-sales
69) ________ advocates argue that all costs must ultimately be imputed in order to determine
true profitability.
A) Direct-cost approach
B) Full-cost approach
C) Traceable-cost approach
D) Activity based costing approach
E) Fixed cost approach
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Cabot Cars (Scenario)
Cabot, a large car manufacturer, has four popular car brands in different segments. It has a
manufacturing facility near Detroit, MI, where parts common to all the four brands are
manufactured. Other specific parts like the brake system, windshield, bonnet, locks, and so on
are manufactured in separate plants. Each make has its own product manager and support staff.
All product managers report to the CEO of the company.
70) The CEO’s annual compensation is an example of a ________.
A) direct cost
B) variable cost
C) traceable common cost
D) non-traceable common cost
E) manufacturing cost
71) The cost of the land where the plant which manufactures the common parts is set up falls
under ________.
A) traceable common costs
B) non-traceable common costs
C) variable costs
D) manufacturing costs
E) material costs
72) Suppose the manufacturer pays a commission on every car sold. Then, the salesperson’s
commission is classified as a(n) ________.
A) cost of labor
B) traceable common cost
C) non-traceable common cost
D) advertising cost
E) direct cost
73) The cost of operating the common manufacturing facility is a(n) _____.
A) opportunity cost
B) traceable cost
C) non-traceable cost
D) sunk cost
E) differential cost
74) The manufacturer launches a brand building advertising campaign. The campaign does not
promote any one specific car but is aimed at promoting the company as a whole. Which type of
cost does this fall under?
A) direct costs
B) material costs
C) non-traceable costs
D) traceable costs
E) labor costs
75) Internal marketing requires that everyone in the organization buy into the concepts and goals
of marketing and engage in choosing, providing, and communicating customer value.
76) Marketing has sole ownership of customer interaction.
77) A functional organization allows for adequate planning as the number of products and
markets of a firm increases.
78) Companies producing a variety of products and brands often establish a product- (or brand-)
management organization.
79) The product-management organization replaces the functional organization in the firm.
80) An advantage of the product- and brand-management system is that product and brand
managers focus the company on building market share rather than customer relationships.
81) There are three types of product-teams structures: vertical, triangular, and horizontal.
82) Because the retail trade tends to think of profitability in terms of product categories, some
companies are switching to a category management organizational model.
83) When customers fall into different user groups with distinct buying preferences and
practices, a product team structure is desirable.
84) Market managers are staff people, with duties like those of a product manager.
85) A customer-management organization deals with individual customers rather than the mass
market or market segments.
86) Many companies now focus on departments as opposed to processes, because processes can
be a barrier to smooth performance.
87) Transforming into a true market-driven company involves organizing around products.
88) Firms that are viewed as being socially responsible have the added benefit of being able to
attract employees.
89) Companies must adopt and disseminate a written code of ethics, build a company tradition of
ethical behavior, and hold their people fully responsible for observing ethics and legal guidelines
if they wish to demonstrate ethical behavior.
90) Although salespeople are legally prohibited from saying things about their products that are
not true, they may legally suggest things about competitors’ products that are not true.
91) Some business practices, such as deceptive advertising, exclusive dealing, and predatory
competition, sharply divide critics regarding whether they are clearly unethical or illegal.
92) Often, the more committed a company is to sustainability and environmental protection, the
more dilemmas that can arise.
93) Sustainability ratings exist, but there is no consistent agreement about what metrics are
appropriate.
94) Because of insincere firms jumping on the “green” bandwagon, consumers bring a healthy
skepticism to environmental claims, but they are also unwilling to sacrifice product performance
and quality.
95) Corporate philanthropy as a whole is on the rise.
96) Cause-related marketing efforts are unlikely to backfire as customers generally view the
company’s motives as genuine.
97) Cash donations are the most productive contribution that businesses can make to a nonprofit
or community group.
98) Many companies focus on multiple cause-related marketing programs to simplify execution
and maximize impact.
99) Social marketing is a new trend in marketing.
100) Social marketing programs designed to motivate people to donate blood or attract people
for mass immunization are examples of cognitive campaigns.
101) Social marketing programs take little time to develop and are generally easy to implement.
102) The actual success of a social marketing program should be evaluated in terms of the
program objectives.
103) Desktop marketing gives marketers information and decision structures on computer
dashboards.
104) Profitability control is the prime responsibility of line and staff management.
105) Annual-plan control involves the use of financial analysis to evaluate the performance of
marketing plans.
106) The annual plan control process begins with measuring performance.
107) Repurchase rate is a sales metric that is used to evaluate the performance of marketing
plans.
108) The ratio of promoters to detractors is a customer metric that is used to evaluate the
performance of marketing plans.
109) A marketing audit is an orderly examination of the organization’s macro- and
micromarketing environments, marketing objectives and strategies, marketing systems, and
specific activities.
110) Self-audits tend to provide more objective information than audits conducted by external
consultants.
111) A marketing audit only benefits a company that is in trouble; companies in good health do
not need to conduct them.
112) To succeed in the future, marketing must be more holistic and less departmental.
113) In the future, there will be greater emphasis on precision marketing as opposed to mass
marketing.
114) In the context of overall market share, customer loyalty refers to the percentage of all
customers who buy from the company.
115) The first step in conducting a marketing profitability analysis involves assigning functional
expenses to marketing entities.
116) Operating management is most effective in controlling direct costs and traceable common
costs.
117) List and define some of the important shifts that have taken place in business and marketing
practices.
118) Describe the functional organization of a marketing department in terms of its structure,
advantages, and disadvantages.
119) Explain the product- or brand-management organization and list its advantages and
disadvantages.
120) What is a market-management organization?
121) Many companies are beginning to realize that they are not really market and customer
driven, they are product and sales driven. In the attempt to transform themselves into true
market-driven companies, firms are required to change. Describe and explain what changes are
necessary.
122) What is sustainability? How is it related to the concept of greenwashing?
123) Identify some of the brand benefits that can accrue to a company that engages in cause
marketing.
124) Identify three key success factors in developing and implementing a social marketing
program.
125) Briefly explain the concept of annual-plan control.
126) What is a marketing audit? Explain the four characteristics of a marketing audit.
127) What is a brand-asset management team (BAMT)?
128) Define a category-management organization.
129) What is a customer-management organization? When should it be adopted?
130) What are some of the forces that are driving companies to practice corporate social
responsibility?
131) How can firms promote ethical behavior among their employees?
132) Corporate philanthropy can pose problems even when done with the best intentions.
Explain.
133) Explain the concept of greenwashing along with an example.
134) Define cause-related marketing. What is the difference between cause-related marketing
and social marketing?
135) Give an example of a cognitive social marketing campaign.
136) Suicide is one of the leading causes of death worldwide. Develop the possible objectives of
a social marketing campaign which aims to change people’s cognitions, values, behaviors, and
actions related to suicide.
137) Define marketing implementation.
138) What is marketing control? List the four types of marketing control.
139) What is the purpose of profitability control?
140) How can a firm periodically reassess its strategic approach to the marketplace?
141) List some of the marketing trends that are likely to emerge in the near future.
142) Define sale-variance analysis and microsales analysis.
143) What are the steps involved in marketing profitability analysis?
144) What are direct, traceable common, and nontraceable common costs? Give an example of
each.
145) What is the full-cost approach of evaluating a marketing entity’s performance?
146) Full costing allocates nontraceable common costs to marketing entities and has three major
weaknesses. What are they?