Using an ownership team keeps the implementation process on track even when some
members of the team are away for extended periods because of business trips, training
programs, illness, or vacations.
A repeat customer buys a lot from many companies and does not have a strong
preference for one over the other.
A key benefit of market segmentation is identifying segments that should not be
pursued.
A business’s operating expenses is its revenues minus its cost of goods sold and its
expenses.
The higher the rate of customer retention, the longer the average customer life
expectancy and the greater the customer lifetime value.
A business implements an oblique strategy because it seeks to gain a competitive
advantage with direct confrontation.
Companies seeking discontinuous innovations need more than incremental product
improvements that come from lead user analysis.
The NMC of any proposed strategy must be lower than the current NMC in order to
increase a business’s net profit.
A company that sells its product for a higher price than its competitor can offer a higher
economic value to customers.
Every marketing channel is basically the same in its cost structure and its customer
reach.
The dimensions of competitive position are differentiation position, cost position, and
marketing position.
When a price is inelastic, a price increase improves all aspects of performance.
The major benefit of a strong customer focus is long-run survival.
Customers who make small purchases are usually profitably served with a direct
channel system.
The major benefit of a strong customer focus is long-run survival.
Market-based pricing is not possible without extensive customer and competitor
intelligence.
A growth strategy to develop an untapped new-market potential offers both high risk
and the possibility of high return.
The whole purpose of backward-looking marketing metrics is to track customer
perceptions and attitudes that precede changes in customer behavior and financial
performance.
An oblique strategy requires superior knowledge of both competitors and customers.
In indirect channel systems, the business interfaces with customers at all contact points
and retains ownership of the product until delivery.
The strategic market plan called “optimize position” is an offensive strategy often used
in the early stages of the product life cycle.
Service quality affects customer retention and profit in the numerator and accounts
receivable in the denominator of the return on assets equation.
A selective investment strategy, which invests in customers who have high customer
lifetime value, is detrimental to the strategic objectives of the marketing plan.
Marketing metrics are too important to be simply an add-on to the marketing or product
manager’s responsibilities.
A repeat customer buys a lot from many companies and does not have a strong
preference for one over the other.
A low level of market attractiveness requires an offensive strategic market plan.
A business with a short-term perspective lacks a strong consumer focus.
A market-based management business gives its dissatisfied customers as much attention
as its “very satisfied” customers.
Businesses with partial knowledge of customers or competitors are less likely to
employ reactive strategies.
A divestment strategy, while unattractive, is always feasible.
All defensive strategies are intended to maximize or protect short-run profits.
Exiting a product-market is simply a way to cut losses quickly and reallocate marketing
resources to more productive endeavors.
Mixed channel systems are unsuitable for marketing specialized and technological
products.
A positive NMC is the result of marketing and sales expenses exceeding gross profit
during the introduction stage of the product life cycle.
The net marketing contribution metric enables a company to measure the profit impact
of a marketing strategy.
The net marketing contribution metric enables a company to measure the profit impact
of a marketing strategy.
Zitko Inc. is a manufacturer of consumer goods products. It has 75 million shares in the
market and generates a net profit of $125 million. Its stock price is $60 and it has a
capital cost of 10% for $850 million of capital invested. Its other expenses, including
interest and taxes, amount to $240 million.
Mini-Case Question. Calculate the earnings per share of Zitko Inc.
A) $2.5 per share
B) $1.7 per share
C) $3.8 per share
D) $4.5 per share
E) $6 per share
Which of the following is true regarding an inside-the-box strategy?
A) It is an overreaction to customer demands due to limited competitor knowledge.
B) It leverages a knowledge advantage with respect to customers and competitors.
C) It is an overreaction to competitor moves due to limited customer knowledge.
D) It is based on minimal customer and competitor knowledge.
E) It is based on extensive competitor knowledge, but little or no customer knowledge.
When a market reaches the maturity stage ________.
A) gains in volume can be achieved only with gains in market share
B) the volume is derived from both market demand and market share
C) declining volumes are avoidable
D) rate of growth increases
E) the net marketing contribution is negative
A(n) ________ includes all the key elements of the situation and the benefits the target
customer is looking for in a given purchase.
A) acid test
B) value proposition
C) storyboard
D) Pareto chart
E) marketing mix strategy
Which of the following is true about monetize strategy?
A) It is an offensive strategy that is used to enter new attractive markets.
B) It is a defensive strategy used in less attractive markets.
C) It is a defensive strategy for exiting a market by selling or closing down the
business.
D) It seeks to improve a business’s competitive position in an attractive segment of the
market.
E) It is used to protect an attractive market position in which the business dominates
with respect to competitive position.
Niche-segment strategies differ from mass-market strategy in that niche-market
strategies ________.
A) address one set of core customer needs of a large market segment
B) have no segment focus
C) are used when demographics are not distinctive
D) are used when the company markets to a closely related attractive segment first
E) involve highly refined marketing effort directed at an overlooked, small group of
customers
The maximum market demand for running shoes is 560 million and its worldwide
market development index is 75. Calculate the current market demand for running
shoes.
A) 75 million
B) 150 million
C) 240 million
D) 320 million
E) 420 million
Which of the following service quality dimensions refers to a service obsession to get it
right when things go wrong?
A) service reliability
B) service assurance
C) performance
D) customer empathy
E) responsiveness
The net marketing contribution for TRX Inc. is $20 million. The marketing and sales
expenses come up to $4 million. Calculate the marketing return on investment for the
company.
A) 66.6%
B) 300%
C) 500%
D) 100%
E) 50%
Which of the following is true regarding lead users?
A) They are customers who are unwilling to purchase products that do not provide a
complete customer solution.
B) They are users who wait to see whether the product or service will deliver
meaningful benefits.
C) They are skilled users who extend the boundaries of a product’s application to
achieve a more desired customer solution.
D) They are skeptical customers who are unwilling to purchase a product unless they
are assured of meaningful benefits associated with using the product.
E) They are the last customers to adopt a new product or service.
HomeVenture Inc. manufactures and sells a line of furniture under the brand name
Elegant Lines. The firm has a 3 percent share of the U.S. furniture market, and
competes with industry giants who have large economies of scale and marketing
resources. However, Elegant Lines holds 65 percent of the overlooked “customized art
furniture” segment, specializing in very expensive custom-designed, furniture. Each of
the Elegant Lines furniture pieces is a unique piece of art. What type of market
segmentation strategy is HomeVenture Inc. pursuing?
A) a mass-segment strategy
B) a niche-segment strategy
C) a large-segment strategy
D) a market-development strategy
E) a mass-market strategy
Without defining the desired product positioning and value proposition for a specific
target market, the ________ process would quickly deteriorate into an internal process
that was built around product features rather than customer benefits.
A) brand naming
B) brand identification
C) brand encoding
D) brand equity
E) brand extension
Within the dimensions of product performance, a poor performance in which of the
following would be a “quality killer”?
A) serviceability
B) features
C) appearance
D) conformance
E) reputation
When considering marketing metrics for a company, market share is most likely to be
________.
A) an internal forward-looking metric
B) an external backward-looking metric
C) an internal metric that is used after the reporting period
D) an external metric that is used during the reporting period
E) an internal metric that can be used either during or after the reporting period
Which of the following marketing metrics is an internal forward-looking metric for a
firm?
A) market share
B) customer retention
C) revenue per customer
D) inventory turnover
E) customer satisfaction
Which of the following is true of price elasticity?
A) When the price elasticity equals 0, we have unitary elasticity where the percentage
change in volume is equal to the percentage change in price.
B) Price elasticity is almost always a negative number due to the inverse relationship
between price and volume.
C) Prestige products that can see an increase in demand when their prices are increased
have negative price elasticity.
D) Price elasticities between –1 and –10 are inelastic because the percentage change in
volume is greater than the percentage change in price.
E) Price elasticities between zero and -1 are considered elastic, as the percentage
change in volume is less than the percentage change in price.
Which of the following is true of cash-and-carry wholesalers?
A) They undertake delivery of the product from manufacturer to consumer.
B) They offer a greater variety of services than retailers and dealers.
C) They do not offer credit facilities to customers.
D) They do not take title to the manufacturer’s products.
E) They are full-function wholesalers.
Calculate the gross rating points of an ad if it has a target market reach of 70 percent
and a frequency of 5.
A) 14
B) 70
C) 75
D) 250
E) 350
Earnings per share is ________.
A) invested capital divided by number of shares
B) net marketing contribution multiplied by number of shares
C) net marketing contribution divided by number of shares
D) net profit divided by number of shares
E) net profit multiplied by number of shares
Calculate the total number of retailers interacting with 120 manufacturers if 10
transactions are made per year. The total number of transactions is 15 million
transactions per year.
A) 7,900
B) 4,800
C) 12,500
D) 16,500
E) 22,000
The break-even volume for a company is ________.
A) operating income minus fixed expenses
B) operating income plus fixed expenses divided by margin per unit
C) fixed plus variable expenses minus sales
D) fixed expenses divided by margin per unit
E) company sales divided by industry sales
Which of the following is a factor used to determine the share potential index?
A) product attractiveness
B) market potential
C) product quality
D) market demand
E) product awareness
Within the dimensions of product performance, which of the following is a product
performance enhancement factor?
A) reliability
B) conformance
C) durability
D) serviceability
E) improvements
The growth in the gaming console market led to the emergence of a gaming consoles
segment for products priced under $1,000. Though its current product line-up begin at
$3,000, Sentinel Inc., an American gaming equipment manufacturer, responded to this
need by launching a product, the Cerebro Console, priced at $920, designed for the
price-performance needs of the segment. Which of the following offensive strategies
did Sentinel Inc. use?
A) improve customer retention
B) improve customer loyalty
C) enter new market segments
D) harvest for cash flow
E) divest for cash flow
The difference between the company’s performance index and its cost of purchase index
gives us the ________.
A) market share index
B) share potential index
C) customer value index
D) profitability index
E) market development index
Which of the following statements is true about prosumers?
A) They are employees who test a product before it is released in the market.
B) They are employees who interact with customers to gather information about
product preferences.
C) The are the first users of a new product.
D) They are advanced users who do not always represent the needs of an overall target
market.
E) They are consumers who purchase a product only when there are some discounts.
Captive customers differ from unprofitable customers in that captive customers
________.
A) are the result of mismanaged customer selection
B) are simply “big spenders”
C) are a drain on a business’s profits because the cost of acquiring them can never be
recovered
D) have a low desire to repurchase but are unable to move easily to another company’s
product
E) produce a referral value that is over three times their customer lifetime value
In the context of SWOT analysis, opportunities refer to ________.
A) unique sources of advantage that the plan should leverage
B) circumstances that limit performance and should be addressed
C) potentialities that would improve profitability and should be addressed
D) current and possible factors that could impede performance
E) aspects of the internal environment that strengthen the stand of the business at
present
A business is achieving 36% of its potential market share performance at a share
potential index of 24%. Calculate the business’s market share index.
A) 60%
B) 8.6%
C) 12%
D) 66.7%
E) 30%
Which of the following statements is true of pricing decisions?
A) Market-based pricing starts with a good understanding of customer needs and the
benefits that a product offers relative to competitors’ products.
B) The business with the lowest price will always offer customers the best economic
value.
C) It is possible to implement market-based pricing with low levels of customer and
competitor intelligence.
D) Competitors’ product-price positioning and company product-price positioning are
the two primary determinants in setting a cost-based price.
E) Cost-based pricing takes into account what the customer would be willing to pay for
a certain level of product performance.
The net marketing contribution for a firm is the firm’s ________.
A) profits
B) profits – (other operating expenses)
C) gross profit – (marketing and sales expenses)
D) (all revenues) – (all expenses)
E) (sales revenues) – (cost of goods sold)
________ are tools that marketing managers use to assess the merits of a proposed
marketing communication and the strategy behind it.
A) Touch points
B) Value propositions
C) Storyboards
D) Strategy functions
E) Remote segments
Which of the following is the best example of a mixed marketing channel?
A) Wellspring Cosmetics sells its products exclusively through its monthly catalogs,
mailed to a subscriber list.
B) GTB Computers uses its own sales force to initiate sales contacts, but uses external
local dealers to provide products and after-sales services.
C) Radix Inc., a manufacturer of automotive parts, sells its products to a number of
automobile companies.
D) More4Less.com buys products from manufacturers and sells them to consumers
through its Web site.
E) Apparel retailer UrbanScene elected to close all its brick-and-mortar stores and sell
products only through its online storefront.
Norton has determined that along the share-development path, his business should
perform at an 85% level of product awareness, 76% in product preference, 68% in
product availability, and 92% in rate of purchase. If the share potential index for
Norton’s business is 25%, at what level of purchase intentions should his business
perform?
A) 55%
B) 97%
C) 83%
D) 74%
E) 62%
Which of the following events occur when there is minimal focus on customers?
A) high customer loyalty
B) reduction in customer turnover
C) below-average profits
D) long-run strategies to improve sales
E) low cost of marketing and sales
Name and describe the seven key steps in a needs-based market segmentation process.
Explain the three shareholder metrics used in market-based management.
Give three reasons why, at some point, every business needs to examine growth
opportunities outside the markets it serves. Name and describe four fundamental
offensive strategic market plans for entering new markets.
List and briefly discuss the fours steps in developing new customer solutions with the
help of a product’s lead users.
Name and describe the appropriate defensive strategic market plans for a business
operating in a very unattractive market. At which level of competitive advantage would
each strategy be appropriate? Within those types, what are the strategies and when
should each be used?
Explain the classification of customer loyalties and the contrasts in their range of
behaviors.
