76) The basis of cohort segmentation is that the experiences of key defining moments during the
time when an individual becomes an adult can influence his or her values, preferences, and
buying behaviors for the rest of his or her life.
77) Marketing strategies of firms should not consider the ethnic and racial diversity existing in
their markets.
78) Consumers belonging to the same ethnic group have identical tastes and preferences.
79) Of all illiterate adults in the world, two-thirds are women.
80) Households comprised of single, separated, widowed, and divorced individuals generally
demand larger apartments and expensive appliances, furniture, and furnishings.
81) The available purchasing power in an economy depends on current income, prices, savings,
debt, and credit availability.
82) Industrial economies provide limited marketing opportunities for luxurious goods.
83) Markets with a segment of very wealthy consumers, but high income disparity, present few
opportunities to marketers.
84) Business has responded to increased awareness of nature’s fragility and finiteness by
producing wider varieties of camping, hiking, boating, and fishing gear such as boots, tents,
backpacks, and accessories.
85) Secondary beliefs and values are passed on from parents to children and reinforced by major
social institutions, making them very difficult to change by marketers.
86) Environmental regulations enforced by the government adversely affect automobile and steel
manufacturing companies.
87) Corporate environmentalism recognizes the need to integrate environmental issues into the
firm’s strategic plans.
88) Firms that can develop substitute materials for finite nonrenewable resources have an
excellent opportunity.
89) The time between introduction of products and peak production is shrinking.
90) A growing portion of US R&D expenditures goes to the development as opposed to the
research side.
91) Regulation of technological changes has been relaxed by the US government over recent
years.
92) Environmental laws imposed by the government may at times create new business
opportunities.
93) Crocs clogs, Elmo TMX doll, and Pokemon gifts and toys are examples of megatrends,
which are unpredictable, short-lived, and without social, economic, and political significance.
94) What are the different income-distribution patterns? How does income distribution in the
economies affect the marketing decision of the firms?
95) Discuss the impact of tougher environmental regulations on businesses, citing examples
whenever possible. Also, point out opportunities, if any, presented by these regulations.
96) The United States has one of the world’s highest percentages of college-educated citizens.
What can be the possible implications of this observation to the marketing environment of a US
firm?
97) Suppose the people of Greenworld, an island in the southwest Pacific, are primarily involved
in the direct procurement of edible plants and animals from the wild, foraging and hunting
without significant recourse to the domestication of either. On the contrary people in Newland, a
country rich in petroleum resources, export petroleum to the industrial countries. Which of the
two countries mentioned above is likely to offer greater marketing opportunities for luxurious
goods and why?
98) Why do companies need to search for practical means to harness renewable sources of
energy like wind and water?
99) Assume that you are a marketing manager for a youth clothing manufacturer that has just
read about the megatrend of the “rising Hispanic influence” in the United States. Explain this
megatrend and indicate why it might be important to your company.
100) Companies can prepare as many as ________ different types of demand estimates.
A) 6
B) 30
C) 60
D) 90
E) 150
101) The demand estimates of an organization comprise five space levels: world, country,
region, territory, and ________.
A) zone
B) organization
C) customer
D) product
E) input
102) The ________ market is the set of consumers with an adequate interest, income, and access
to a particular offer.
A) potential
B) available
C) target
D) penetrated
E) reserve
103) The ________ market is the part of the qualified available market the company decides to
pursue.
A) potential
B) available
C) target
D) penetrated
E) reserve
104) The ________ market is the set of consumers who are buying the company’s product.
A) potential
B) available
C) target
D) penetrated
E) reserve
105) When the government of any country restricts the sale of a particular commodity to certain
groups — for example, restricting sales of alcohol to individuals of age 21 and over — the
eligible consumers who have income, interest, access, and qualification constitute the ________
market.
A) accessible
B) target
C) potential
D) qualified potential
E) qualified available
106) Jeanine would like to own a Mercedes but is unable to afford one at this time. Jeanine is
part of the ________ market for this product.
A) potential
B) available
C) target
D) projected
E) penetrated
107) ________ for a product is the total volume that would be bought by a defined customer
group in a defined geographical area in a defined time period in a defined marketing
environment under a defined marketing program.
A) Company demand
B) Area market potential
C) Market demand
D) Company sales potential
E) Total market potential
108) With an increase in marketing expenditure, market demand ________.
A) continues to rise at an increasing rate
B) initially increases and then declines
C) increases first at an increasing rate, then at a decreasing rate
D) decreases first and then spikes
E) continues to increase at a decreasing rate
109) The base sales of an organization that takes place even without any demand-stimulating
expenditures is called ________.
A) primary demand
B) market potential
C) market minimum
D) optimum demand
E) market demand
110) The distance between the market minimum and the market potential shows the overall
________.
A) marketing sensitivity of demand
B) market share of the firm
C) market forecast of the firm
D) product-penetration percentage
E) sales quota
111) A low market-penetration index indicates ________.
A) it will be expensive for the firms to attract the few remaining prospects
B) substantial growth potential for all firms
C) the rival firms try to capture greater market share by lowering their product price
D) the profit margins of the firms decline
E) the firms cannot raise demand substantially by raising its market expenditure
112) Only one level of industry marketing expenditure will actually occur. The market demand
corresponding to this level is called the ________.
A) market minimum
B) market share
C) market forecast
D) market potential
E) company demand
113) A company can expect to expand its market share to a large extent when ________.
A) it has a high market-penetration index
B) its share-penetration index is low
C) its share-penetration index is high
D) its product-penetration percentage is high
E) it has a low market potential
114) During a recession, the market demand curve, which is a function of marketing expenditure,
________.
A) shifts upward
B) becomes vertical
C) remains unaffected
D) shifts downward
E) slopes downward
115) The sales goal set for a product line, company division, or sales representative of an
organization is called ________.
A) sales budget
B) company sales forecast
C) sales quota
D) company sales potential
E) market potential
116) A ________ is a conservative estimate of the expected volume of sales for a business,
primarily for making purchasing, production, and cash flow decisions.
A) sales budget
B) company sales forecast
C) sales quota
D) company sales potential
E) market potential
117) A ________ is the limit approached by market demand as industry marketing expenditures
approach infinity for a given marketing environment.
A) sales budget
B) company sales forecast
C) sales quota
D) company sales potential
E) market potential
118) A ________ is the company’s estimated share of market demand at alternative levels of
company marketing effort in a given time period.
A) sales budget
B) market demand
C) company demand
D) company sales potential
E) market potential
119) A ________ is the sales limit approached by company demand as company marketing effort
increases relative to that of competitors.
A) sales budget
B) market demand
C) company demand
D) company sales potential
E) market potential
120) A company’s sales potential would be equal to market potential if ________.
A) the marketing expenditure of the company is reduced to zero
B) industry marketing expenditures approach infinity for a given marketing environment
C) the market is non-expandable
D) market minimum is equal to market potential
E) the company gets 100 percent share of the market
121) A ________ is the maximum sales available to all firms in an industry during a given
period, under a given level of industry marketing effort and environmental conditions.
A) company demand
B) market demand
C) company sales potential
D) sales quota
E) total market potential
122) Suppose an individual buyer purchases three pairs of shoes each year at $50 each pair and
that there are 50 million such consumers in the economy. Compute the total market potential for
shoes.
A) $5,000 million
B) $6,500 million
C) $7,500 million
D) $10,000 million
E) $75 billion
123) The ________ method of determining area market potential calls for identifying all the
potential buyers in each market and estimating their potential purchases.
A) group-discussion
B) market-test
C) market-buildup
D) brand development index
E) multiple-factor index
124) An efficient method of estimating area market potentials makes use of the ________,
developed by the US Bureau of the Census in conjunction with the Canadian and Mexican
governments. It classifies all manufacturing into 20 major industry sectors and further breaks
each sector into a six-digit, hierarchical structure.
A) Nielsen Media Research
B) Multiple-Factor Index Method
C) Brand Development Index
D) Market Buildup Method
E) North American Industry Classification System
125) Which of the following organizations is likely to use the multiple-factor index method to
estimate the market potential?
A) a firm that manufactures auto parts
B) a firm that provides facility management services to large offices
C) a company that provides Web site development services for small businesses
D) a company that manufactures diagnostic machines for hospitals
E) a firm that manufactures fashionable clothes for teenagers
126) Which of the following is true of the various elements of the multi-factor index method of
estimating area market potentials?
A) Zip+4 code centers generally have stable boundaries and a population of about 4000.
B) The weights in the buying-power index are somewhat arbitrary.
C) Normally, the lower the BDI, the less room there is to grow the brand.
D) Census tracts are a little larger than neighborhoods.
E) This method is primarily used by business marketers.
127) Suppose Concrete Express, a cement manufacturing firm, finds that its sales have increased
by 3 percent this year, while industry sales have increased by 5 percent. This implies that
________.
A) Concrete Express has acquired additional market share in relation to the cement industry
B) Concrete Express is losing its relative standing in the cement industry
C) other players in the industry are losing market share
D) the absolute market share of Concrete Express has declined
E) Concrete Express’s position in relation to the industry has remain unchanged
128) For which of the following categories of products will demand forecasting be easiest?
A) commodities which are in the initial stage of their product life cycles
B) products which have many close substitutes in the market
C) goods which are produced in an oligopoly market
D) products whose sales fluctuate widely
E) products whose consumers are highly sensitive to change in price
129) Novamalt Inc., a manufacturer of health drinks, plans to introduce its new range of health
drinks for women into the market. It involves a specialized marketing research firm to forecast
the sales of this product. The research firm analyzes past buying behavior of customers and uses
time-series analysis for making the sales forecasts. Which of the following information bases is
being used by the research firm in this scenario?
A) what people say
B) what people do
C) what people have done
D) what people will do
E) what people speculate
130) Time-series analysis based on past sales breaks past time series into four components —
trend, cycle, seasonal, and ________.
A) regular
B) annual
C) erratic
D) recurring
E) periodic
131) ________ projects the next period’s sales by combining an average of past sales and the
most recent sales, giving more weight to the latter.
A) Time-series analysis
B) Statistical demand analysis
C) Econometric analysis
D) Cost effectiveness analysis
E) Exponential smoothing
132) ________ measures the impact of a set of causal factors (such as income, marketing
expenditures, and price) on the sales level.
A) Time-series analysis
B) Statistical demand analysis
C) Econometric analysis
D) Cost effectiveness analysis
E) Exponential smoothing
133) The sales forecasting method of ________ builds sets of equations that describe a system
and statistically derives the different parameters that make up the equations statistically.
A) time-series analysis
B) statistical demand analysis
C) econometric analysis
D) cost effectiveness analysis
E) exponential smoothing
134) The available market is the set of consumers who have interest, income, and access to a
particular offer.
135) The distance between the market minimum and the market potential shows the overall
product penetration percentage.
136) The absolute limit of company demand is the market potential; the two would be equal if
the company captured 100 percent of the market.
137) If a cheese factory was interested in estimating the market potential for a new light cheese
and estimated the potential by multiplying a base number (population) by several adjusting
percentages (e.g., personal discretionary income per capita, average percentage of discretionary
income spent on food, etc.), it would be using the chain-ratio method to estimate market
potential.
138) Normally, the lower the market-penetration index, the higher the marketing opportunity in
that there is room to grow the brand.
139) Demand estimates prepared by companies are based on four different time periods.
140) The penetrated market is the set of consumers who have an interest in a market offer but do
not have the accessibility.
141) Market demand for a product is the total volume that would be bought by a defined
customer group in a defined geographical area in a defined time period in a defined marketing
environment under a defined marketing program.
142) The market forecast shows expected market demand, not maximum market demand.
143) Companies assume that the lower the product-penetration percentage, the lower will be the
market potential.
144) In order to estimate future demand, companies commonly prepare a company sales forecast
first, followed by an industry forecast, and finally a macroeconomic forecast.
145) Forecasting is the art of anticipating what buyers are likely to do under a given set of
conditions.
146) Sales reps might have better insight into developing trends than any other group, and
forecasting might give them greater confidence in their sales quotas and more incentive to
achieve them.
147) What does total market potential mean? How can it be estimated?
148) Suppose a cotton-textile company wants to estimate the area market potential for its high
quality fabrics in Houston. List the possible steps that the marketers will follow to compute the
area market potential.
149) Briefly describe the methods of forecasting future demand on the basis of past sales.
150) Organix Internationals LLC is planning to introduce its new range of breakfast cereals. List
the different product levels that it considers while formulating the demand estimates for the new
product.
151) Suppose the Belgian government prohibits sale of cigarettes to people below 20 years of
age. Who are likely to comprise the qualified available market for Dunhill, a manufacturer of
herbal cigarettes in Belgium?
152) If the ratio between current and potential levels of market demand is close to one, what can
you infer about the industry’s market-penetration index and the growth potential of the firms in
the industry?
153) How does the marketing environment determine the position of the market demand
function?
154) Suppose 100 million people consume black tea every year, and an average consumer
consumes 8 kgs of tea at an average price of $3 per kg. Compute the total market potential for
tea.
155) Simpsons, a manufacturer of air conditioners, finds that its sales potential is less than its
market potential even when it spends a sufficient amount on advertisements and after sale
services. What is the basic reason behind such an observation by the marketers of Simpsons?
156) Two major methods of computing area market potential are market build-up method and
multiple factor-index method. Which of these methods will Nexus Enterprises, a manufacturer of
auto parts implement to estimate its market potential?
157) Suppose the brand development index of the detergent manufactured by Fasclean in Boston
is 90 and in Austin is 48. Compare the marketing opportunity of Fasclean detergent in the two
cities.
158) Suppose Redbus, a player in the small car market, is planning to launch its new range of
hybrid cars. It decides to estimate the future demand for its new car before launching it in the
market. If interviewing consumers is not practical, what alternative technique might it resort to?