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Indicate whether the statement is true or false.
1. The most direct form of competition occurs among marketers of dissimilar products.
a. True
b. False
2. The first phase of federal regulation of business was aimed at protecting competitors and included the
Robinson-Patman Act, passed in the 1930s.
a. True
b. False
3. Discretionary income is the amount of money people have to spend on buying necessities such as food,
clothing, and housing.
a. True
b. False
4. The competition among Amtrak, Hertz, and Delta Airlines for the travelers’ dollar is considered indirect
competition because these services can be substituted for one another.
a. True
b. False
5. During the recession stage of the business cycle, consumers have enough money to spend, but caution often
restraints their willingness to buy.
a. True
b. False
6. Laura decided to quit her job and travel for a year. She can be considered a part of the population that is
unemployed.
a. True
b. False
7. The industry deregulation phase has focused on increasing the competition in industries such as utilities and
financial services.
a. True
b. False
8. A stay-at-home mother, a high school senior, and a retired government employee are considered unemployed
if they do not have a job and don’t want one.
a. True
b. False
9. Public and private consumer interest groups and self-regulatory organizations are part of the legal
environment.
a. True
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b. False
10. Technological advancement helps reduce prices and offers superior, cost-efficient distribution methods.
a. True
b. False
11. The United States is becoming culturally more diverse and subculture populations are rising.
a. True
b. False
12. Sears offers discount coupons and lowers prices on 1,000 items in the store in order to generate sales. This is
most likely to occur during an economic recession.
a. True
b. False
13. The success or failure of a product is independent of the competitive environment.
a. True
b. False
14. The Direct Marketing Association helps consumers to get their names removed from marketers’ targeted
lists.
a. True
b. False
15. Consumer spending sinks to its lowest level during an economic depression.
a. True
b. False
16. Marketers are usually more concerned with the amount of discretionary income in households.
a. True
b. False
17. Technological innovations create not just new goods and services but also entirely new industries.
a. True
b. False
18. The decision of whether or not to compete should be based on a firm’s resources, objectives, and expected
profit potential.
a. True
b. False
19. Production, promotion, and reclamation of environmentally sensitive products is the basic premise of ethical
marketing.
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a. True
b. False
20. The main purpose for antitrust laws is to maintain a competitive business environment by increasing the
concentration of industry power in the hands of a small number of competitors.
a. True
b. False
21. When a firm acknowledges its limited resources, such as sales personnel or advertising budget, it is
considering the question, “Should we compete?”
a. True
b. False
22. During an economic recession, marketers look to emphasize value in their offerings by reducing prices in
order to help consumers stretch their budget dollars.
a. True
b. False
23. A major constraint on consumer spending is deflation, which devalues money by reducing the products it
can buy through persistent price increases.
a. True
b. False
24. Marketing theory would define Starbucks, Caribou Coffee, and Dunkin’ Donuts as indirect competitors
because some coffee drinkers are particular about the brands they purchase.
a. True
b. False
25. The gross domestic product (GDP) of a nation does not take into consideration the goods and services that
are exported to foreign markets.
a. True
b. False
26. Maros, an agricultural biotechnology company, is the sole supplier of genetically engineered seeds and
controls 84 percent of the market share for genetically modified crops. This is an example of a monopoly.
a. True
b. False
27. The Federal Trade Commission was established to facilitate trade by removing tariffs and other trade
barriers among Canada, Mexico, and the United States.
a. True
b. False
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28. The governmental regulations that affect marketing practices are mainly for advertising and distribution, and
do not place any restrictions and prohibitions on the design and packaging of products.
a. True
b. False
29. In regards to determining a competitive strategy, marketers make pricing, distribution, product, and
promotion decisions when answering the question, “How should we compete?”
a. True
b. False
30. The deregulation movement has ended total monopoly protection for most utilities.
a. True
b. False
31. Long deflationary periods can cause a freefall in business profits, lower returns on most investments, and
widespread job layoffs.
a. True
b. False
32. Decisions about marketing mix variables, such as price or promotion, may be influenced by the dimensions
of the marketing environment.
a. True
b. False
33. The antitrust laws in the United States were designed to protect the interests of organizations having
monopoly positions.
a. True
b. False
34. Deflation is necessarily better for the economy than inflation as inflation devalues money and reduces the
purchasing power of consumers.
a. True
b. False
35. During an 18-month period, sales of Mercedes automobiles, Carnival Cruise vacations, and Florida real
estate increased by at least 20 percent. A marketer might deduce that the business cycle is in the late stages of
recovery or experiencing a period of economic prosperity.
a. True
b. False
36. Fresh Meadows, an organic yogurt manufacturer, organizes camps to assist and encourage farmers in
adopting organic farming practices. Fresh Meadows is engaging in socially responsible marketing.
a. True
b. False
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37. The extent of consumer spending is directly related to the rate of unemployment.
a. True
b. False
38. The cultural diversity of the United States results in various submarkets, each with unique values, cultural
characteristics, purchasing behaviors, and consumer preferences.
a. True
b. False
39. Despite its many advantages, technology can seldom address social concerns.
a. True
b. False
40. The five dimensions of the marketing environment are independent and do not influence each other.
a. True
b. False
41. In addition to planning for change, marketers must set goals to meet the concerns of customers, employees,
shareholders, and members of the general public.
a. True
b. False
42. Understanding the dimensions of the marketing environment is helpful in designing a successful marketing
strategy.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
43. Cabi, a women’s clothing company based in Los Angeles, CA partners with Opportunity International to
make small business loans to female entrepreneurs in developing countries through its “Make a Change
Program” where customers can round-up their purchase to the nearest dollar amount and contribute “change”
for a change. This program is part of the _______ dimension of social responsibility.
a. philanthropic
b. economic
c. legal
d. ethical
44. Recently, a top economist to the Federal Reserve bank predicted that market conditions would be favorable
with low levels of inflation and low unemployment rates. Which of the following might be a response by
marketers to this economic forecast?
a. increasing promotional efforts
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b. limiting new product offerings
c. reducing distribution
d. lower prices
45. Which of the following is not one of the five dimensions of the marketing environment?
a. Distributive
b. Competitive
c. Social-cultural
d. Economic
46. _____ leads to new goods and services for consumers, improves existing products, offers better customer
service, and often reduces prices through new, cost-efficient production and distribution methods.
a. Reintermediation
b. Consumerism
c. Disintermediation
d. Technology
47. The Council of Better Business Bureaus is a national organization devoted to consumer
service and _____.
a. business self-regulation
b. deregulation
c. corporate lobbying
d. socially responsible investing
48. The _____ has the broadest powers of an agency to influence marketing activities.
a. Food and Drug Administration (FDA)
b. Federal Trade Commission (FTC)
c. Better Business Bureau (BBB)
d. Direct Marketing Association (DMA)
49. An example of an indirect competitor for Papa John’s pizza would be:
a. Domino’s.
b. Chipotle.
c. DiGiorno frozen pizza.
d. Blaze wood fired pizza.
50. In marketing, _____ involves accepting an obligation to give equal weight to profits, consumer satisfaction,
and social well-being in evaluating a firm’s performance.
a. greenwashing
b. consumerism
c. social responsibility
d. demarketing
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51. Before accepting a job offer from a restaurant chain, you want to be sure your future employer is in tune with the
social-cultural environment of the United States. You get worried when your interviewer makes a comment on this topic
which is clearly inaccurate. What does she say?
a. We need to cater to retirees, because consumers are getting older.
b. We may need to lower prices in the future, because consumers are making less money.
c. We need to be welcoming to all ethnic groups, because consumers are becoming more culturally diverse.
d. We should buy eco-friendly products, because consumers are concerned about the natural world.
52. The social-cultural trend of consumers becoming more time–starved has resulted in changes to the
competitive environment. Many grocery stores now offer online ordering and grocery pickup or even grocery
delivery. This illustrates that:
a. consumers’ needs should be met regardless of the costs or resources required.
b. decisions about marketing mix variables are made independently.
c. dimensions of the marketing environment influence each other.
d. changes in the competitive environment will alter consumer desires.
53. Which of the following protects the consumer by exerting legal, moral, and economic pressures on business
and government?
a. Consumerism
b. Corporate branding
c. Socialism
d. Capitalism
54. POM Wonderful Pomegranate Juice advertised that drinking 8 ounces of POM Wonderful on a daily
basis would be a preventative measure against artery plaque build-up in healthy individuals. The advertising
campaign featured the slogan, “Floss Your Arteries,” which was believed to be misleading by a regulatory
agency. Which agency likely filed a claim against POM Wonderful?
a. The Food and Drug Administration (FDA)
b. AARP
c. National Advertising Division (NAD)
d. The Direct Marketing Association (DMA)
55. In Australia, consumer spending in the past few months has seen an upward trend, and buyers are willing to
spend more on premium brands. From this pattern, we can say that Australia is in the _____ stage of the
business cycle.
a. recovery
b. prosperity
c. recession
d. depression
56. Best Buy has decided to open small format stores that will focus on selling cellular phones and accessories.
Marketers believe the stores should be located in small strip malls and plan on advertising new locations in
newspaper and magazine advertisements. Best Buy is currently asking themselves which of the questions below
in regards to creating a competitive strategy?
a. How should we compete?
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b. Should we compete?
c. In what markets should we compete?
d. When should we compete?
57. Companies often reorganize their operations which might include lay-offs, divestiture of business units, or
other decisions linked to their ability to maximize profitability. Which dimension of social responsibility is
related to a firm’s desire to maximize profits?
a. economic
b. legal
c. ethical
d. philanthropic
58. All of the following are laws aimed at maintaining a competitive environment except:
a. Sherman Antitrust Act
b. Federal Trade Commission Act
c. Robinson-Patman Act
d. Clayton Act
59. Which of the following ethical issues is associated with firms’ product strategies?
a. Exclusive territories
b. False and deceptive advertising
c. Planned obsolescence
d. Bait-and-switch advertising
60. Consumers who are part of the Millennial generation rely on social media and the influence of peers when
making decisions about purchasing products and brands compared to Baby Boom generation consumers who
might prefer to read reviews by sources such as Consumer Reports. This distinction is important to marketers
and part of the ______ environment.
a. social-cultural
b. economic
c. technological
d. demographic
61. Air travel today is not very glamorous and takes a lot of patience but many changes have occurred to
enhance convenience for travelers. First, consumers can book their own travel via the Web rather than use a
travel agent. Before their flight, they can check-in remotely via their smartphone or other mobile device and
print their boarding pass. Alternately, they can use their smartphone to display their boarding pass to the gate
agent who scans the digital image. Once on-board and safely cruising, some airlines offer in-flight Wi–Fi to
enable travelers to check their e-mail, send documents, surf the Web or catch up on a Netflix series or movie.
These conveniences are most related to the ________ environmental factor.
a. technological
b. social-cultural
c. political-legal
d. economic
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62. In times of prosperity, marketers respond to consumer buying behavior by:
a. launching special value-priced products that are likely to appeal to cost-conscious buyers.
b. holding down costs and offering superior services at lower prices.
c. lowering prices and increasing promotions that include special offers to stimulate demand.
d. offering new products, increasing their promotional efforts, and expanding distribution.
63. Which of the following agencies supports consumer rights through its initiative of informing consumers of
their right to modify or discontinue receiving solicitations?
a. The Federal Trade Commission
b. The Direct Marketing Association
c. The Council of Better Business Bureaus
d. The Consumer Product Safety Commission
64. The technological environment that a company operates in represents all the discoveries made via science,
inventions and innovation that impacts the firm’s marketing strategy. Which one of the following statements is
false regarding the impact of technology on the firm’s marketing endeavors?
a. Technology can lead to new goods and services
b. Technology can improve existing products and customer service
c. Technology can reduce prices through new production and distribution methods
d. Since it is equally accessible by all competitors, it offers limited competitive advantages
e. It can help address social concerns
65. Widespread adoption of wireless networks and in-home Internet use has led to an increased availability of
“smart” products for the home such as thermostats, lighting, security, systems and smoke detectors. Which
environmental factor is most related to the new smart home products?
a. technological
b. social-cultural
c. economic
d. political-legal
66. Which of the following has ended total monopoly protection for most utilities such as natural gas, electricity,
water, and cable TV service?
a. Deregulation movement
b. Disinvestment
c. Temporary monopoly
d. Perfect competition
67. Discount retailer, Target, has technology that can track where customers are in the store and send them
appropriate notifications through text message that alerts the customer to specials such as sale prices or limited
edition products. Target likely does not use this technology because:
a. it does not provide any new marketing opportunities.
b. Target would be forced to raise prices on their products in order to implement the technology.
c. the technology wouldn’t provide any benefit to the company or consumers.
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d. customers have concerns about the privacy implications that are impacted by this technology.
68. Dine&View Movie Theaters has decided to close its east side location. It had been consistently understaffed,
resulting in poor dining and viewing experiences for many customers. Recognizing that its resources were too
limited to operate three locations, it will move employees from the east side location to the two remaining
locations. Dine&View was likely asking:
a. “In what markets should we compete?”
b. “Should we compete?”
c. “How should we compete?”
d. “Why should we compete?”
69. Technological changes and the increased use of Wi–Fi has enabled companies such as Netflix to create a
large consumer following and changed consumer’s viewing habits. Netflix has emerged as an entertainment
company offering original content that’s not available on cable or satellite networks. Netflix is a _____
competitor to cable and satellite companies.
a. direct
b. indirect
c. insignificant
d. substitute
70. It has been seen that periods of major innovations often lead to:
a. reduced personal consumption.
b. higher standards of living.
c. decreased annual spending.
d. reduced discretionary income.
71. Which of the following statements is true regarding a monopoly?
a. It is enjoyed by an organization that is the sole supplier of a good or service.
b. It is common in the telecommunications industry.
c. It cannot be achieved temporarily, even through the use of patents and similar legal devices.
d. It is the most common type of competition in the U.S. market.
72. When marketers offer new products, increase their promotional efforts, and expand their distributional
limits, it is a sign of:
a. low inflation and low unemployment.
b. low inflation and high unemployment.
c. high inflation and high unemployment.
d. high inflation and low unemployment.
73. _____ can lead to a damaging downward spiral, causing a freefall in business profits, lower returns on most
investments, and widespread job layoffs.
a. Deflation
b. Lower interest rates
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d. A federal budget surplus
74. During which phase in the business cycle do marketers consider lowering prices and increasing promotions
that include special offers to stimulate demand?
a. Prosperity
b. Recession
c. Growth
d. Maturity
75. Marketing raises a number of ethical questions about the how, when, what, where, and who of marketing
implications on individuals and society at large. Ethics are of concern in every aspect of marketing.
Your company offers cash rewards to consumers in return for them giving you information that you could use in
your own marketing or that you could sell to direct marketers. Which category of ethics does this scenario
represent?
a. Ethics in product strategy
b. Ethics in promotion
c. Ethics in pricing
d. Ethics in customer relationship management
76. The Public Health Cigarette Smoking Act prohibits advertising of cigarettes and tobacco products on radio
or television. The FCC argued for the act because equal air time was not given to advertisements explaining that
tobacco use was dangerous. This government regulation aims to do which of the following?
a. Deregulate industries
b. Maintain a competitive environment
c. Regulate competition
d. Protect consumers
77. The amount of money available with people after buying necessities such as food, clothing, and housing is
referred to as _____.
a. basic income
b. gross income
c. discretionary income
d. personal income
78. Since the latter part of the 19th century, the U.S. government has played an activist role in the financial
markets and the market for goods and services. The emphasis of their role has varied over this time as different
issues and dynamics were at the forefront of business and economic trends. The first phase of the U.S.
government’s active regulatory role, in the early part of the 20th century, can be best described as which of the
following?
a. The cyberspace phase
b. The consumer protection phase
c. The protecting consumers phase
d. The antimonopoly phase
e. The industry deregulation phase
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79. Indirect competition occurs among marketers of:
a. similar products.
b. products that satisfy different needs.
c. products that can be easily substituted.
d. products that belong to different categories.
80. Which of the following is a trend usually observed during an economic depression?
a. Consumers are willing to spend more for premium versions of well-known brands.
b. Consumers have money to spend, but caution often restrains their willingness to buy.
c. Consumers focus on more basic, functional products that carry lower price tags.
d. Businesses offer new products, expand distribution, and raise prices to widen profit margins.
81. Because of competitive pressures, some firms have used packaging and labeling practices that are
questionable, misleading, deceptive, and unethical. This is an example of issues related to __________.
a. ethics in customer relationships
b. ethics in pricing
c. ethics in product strategy
d. ethics in promotion
82. Which of the following components of the marketing environment consists of factors that influence
consumer buying power and marketing strategies?
a. Competitive environment
b. Cultural environment
c. Economic environment
d. Regulatory environment
83. Which of the following devalues money and reduces its purchasing power through persistent increase in
prices?
a. Disinflation
b. Stagflation
c. Inflation
d. Deflation
84. JP Video Rentals is offering a “Rent 2 get 1 free” video rental coupon. They have been accused of deceptive
advertising throughout the United States. Which division of the Council of Better Business Bureaus is
designated to handle such cases?
a. The National Advertising Division
b. The Advertising Standards Authority
c. The Direct Marketing Association
d. The Institute of Sales Promotion