Dow Corning has been a market leader in silicon technology applications for over 50
years. Its products span many market applications in electronics, construction, health
care, and a multitude of industrial applications. However, as some of its product-market
applications reached the mature stage of the product life cycle, they became less
competitive. Dow Corning’s full service consultative engineering approach did not work
in more mature, price-sensitive market applications. It was also unprofitable for Dow to
pursue these customers as they represented a majority of target customers but only
represented 20% of the revenue potential for the total market for their products.
Mini-Case Question. Dow developed a digital marketing channel for its more
price-sensitive customer segment. Which operational component of the channel
performance did Dow improve?
A) product quality
B) after-sales service
C) customer reach
D) sales margins
E) net price
The customer retention metric acts as a(n) ________ metric when it measures the
number of customers retained from one year to the next.
A) net contribution
B) forward-looking
C) backward-looking
D) marketing ROI
E) marketing ROS
The third step in building a marketing plan involves ________.
A) conducting a performance review
B) conducting a situation analysis
C) performing a SWOT analysis
D) developing a performance plan
E) conducting a share valuation process
Which of the following types of budgets is based on the cost of customer acquisition
and retention and the combination of new and retained customers?
A) top-down budget
B) customer-mix budget
C) objective and task budget
D) bottom-up budget
E) total consumer budget
A(n) ________ strategy offers the customer the opportunity to purchase each of the
items separately at a sale price or bundled with an additional level of savings.
A) pure product bundling
B) impure product bundling
C) mixed bundling
D) horizontal brand extension
E) vertical brand extension
Which of the following is true about database marketing?
A) It is at the core of customer relationship marketing.
B) It assumes that all customers have the same needs.
C) It avoids building a more personal relationship between the business and the
customer.
D) It treats all customers as the same, instead of assuming that each customer is unique.
E) It prioritizes creating efficiency through technological advances over building
customer relationships.
Calculate the perceived customer value if the relative performance of the product is 100
and its relative cost of purchase is 75.
A) 25
B) 75
C) 100
D) 125
E) 175
A channel system that accommodates the customers’ credit needs, terms of payment,
warranty needs, desire for delivery at no charge, and easy return of faulty products is
satisfying the quality of ________.
A) transaction services
B) after-sale services
C) availability/delivery
D) product form
E) product assortment
Which of the following statements is true with regard to the strategic market plan?
A) A strategic market plan is the second step of the situation analysis level of market
planning.
B) A strategic market plan uses only past performance as a frame of reference.
C) A strategic market plan does not incorporate the market share indices determined in
the situation analysis step.
D) A strategic market planning portfolio represents the competitiveness attractiveness
of the company.
E) A strategic market plan finalizes and implements a performance review and resolves
any performance deficits of the current plan.
Maxim Computer has a 10 percent of a $250 billion market. Maxim is the low-cost
leader and realizes a 20% margin on sales, and marketing, sales, and administrative
expenses equal 10% of sales. What are Maxim’s sales revenues?
A) $250 billion
B) $25 billion
C) $5 billion
D) $2.5 billion
E) $500 million
Mathis Inc. is a home appliance manufacturing firm based in Vermont that sells its
products under the brand name GoodHome. The firm initially built a reputation in the
household appliances market for its high-quality products. After an extensive market
research, the firm used its brand reputation to expand into the home furnishing industry.
In this example, Mathis Inc. uses which of the following product line extension
strategies?
A) a vertical brand-line extension strategy
B) a horizontal brand-line extension strategy
C) a new product-market brand extension strategy
D) a cobranding extension strategy
E) a product bundling extension strategy
Which of the following is true of needs-based market segments?
A) Relevant demographics that cause differences in needs include investments, size of
investment portfolio, and portfolio diversification.
B) To make the segments actionable, the observable demographics and behaviors have
to be determined.
C) The main advantage is that individual customers who fall into each segment can be
identified.
D) The main disadvantage is that the segments are not directly based on specific
customer needs.
E) The usage behaviors that cause differences in needs include income and assets.
________ are customers who buy because a product is being offered at an attractive
price or with a promotional incentive.
A) Top performers
B) Underachievers
C) High potential customers
D) Misfits
E) Spinners
Which of the following is the strategic objective of the defensive core strategies:
monetize, harvest, and divest?
A) maintain profits
B) grow in existing markets
C) maximize cash flow
D) diversify growth
E) improve competitive position
Consumers can purchase inkjet printers for as little as $30. However, the price of
replacement ink cartridges can be as much or more than the purchase price of the
printer. This is part of the ________ of an inkjet printer.
A) disposal costs
B) acquisition costs
C) usage costs
D) repair costs
E) ownership costs
OrganicMeals Inc. is an American firm that manufactures frozen, vegetarian burgers
made from organic ingredients under the brand name VegDelite. The firm markets a
core product, the Chipotle Veg Burger, under the VegDelite brand. After success of its
core product, the firm adds other burgers under the VegDelite brand, such as the
Crunchy Garden burger, the Vegan Special burger, and the Spicy Trip burger. In this
example, OrganicMeals Inc. uses which of the following strategies?
A) a vertical brand-line extension strategy
B) a horizontal brand-line extension strategy
C) a new product-market brand extension strategy
D) a cobranding strategy
E) a product bundling strategy
The relative market share of a business is equal to the ________.
A) product of the business’s market demand and market share
B) product of the business’s market demand, market share, and product price
C) ratio of the business’s market share to its gross profit
D) difference between the business’s market share and its marketing and sales expenses
E) ratio of the business’s market share to the total share of its three largest competitors
What change in customer retention results from an increase from 5 to 10 years of an
average customer life?
A) a decrease of 5%
B) an increase of 5 %
C) an increase of 10%
D) a decrease of 10%
E) the value remains the same
Calculate the total marketing and sales expenses incurred by a business if it produces
30,000 units at $15 per unit and its net marketing contribution is $225,000.
A) $300,000
B) $150,000
C) $625,000
D) $225,000
E) $450,000
Calculate the volume(units) if a firm has a gross profit of $60 million and a margin
price of $300 per unit.
A) 180,000 units
B) 18,000 units
C) 200,000 units
D) 30,000 units
E) 16,000 units
Pell buys disk drives from Leagate and computer chips from Lentel to incorporate into
the computer systems it manufactures. Which company or companies would be
considered an original equipment manufacturer (OEM)?
A) Pell
B) Leagate
C) Lentel
D) Leagate and Lentel
E) Pell, Leagate and Lentel
Calculate the margin per unit if 250,000 units generates a gross profit of $50 million.
A) $2,000
B) $125
C) $1,250
D) $200
E) $500
Ace Motors recently introduced a hybrid automobile named Opus. Since its
introduction, this offering has achieved a 1.2% market share in this market. Ace Motors
has conducted research in an effort to assess its opportunity for market share
development. The table below indicates consumers’ current response at each step along
the share performance path for Ace Motors’ Opus hybrid automobile as well as the
potential performance for each of the share performance metrics:
Mini-Case Question. What is Opus’s market share potential index?
A) 6.2%
B) 14%
C) 20.2%
D) 31.5%
E) 38.9%
The idea that the advertising effort made in a given period will produce some additional
sales response in subsequent sales periods is known as the ________.
A) advertising elasticity effect
B) pulsing effect
C) advertising carryover effect
D) pull effect
E) push effect
The market demand for a certain product from Silkskin Cosmetics is 10,000 units. The
market share is 20%. The average selling price of a unit is $10 and the average cost
price is $5. Calculate the gross profit for the product.
A) $10,000
B) $5,000
C) $20,000
D) $15,000
E) $30,000
Which of the following refers to a person who is highly devoted to the action plan and
can lead its successful implementation?
A) an entrepreneur
B) a champion
C) an intrapreneur
D) a scapegoat
E) an in-process manager
In general, it costs ________ times more to replace a customer than it costs to keep a
customer.
A) two
B) three
C) four
D) five
E) six
Which of the following terms refers to highly knowledgeable and skilled users who
often extend the boundaries of a product’s application to achieve a more desired
customer solution?
A) mainstream users
B) captive users
C) lead users
D) spinners
E) laggards
Which of the following service quality dimensions refers to employee competency with
respect to knowledge and courtesy?
A) service reliability
B) service assurance
C) extended services
D) customer empathy
E) appearance
Sparks Inc., a firm that manufacturers low voltage halogen lamps, currently has a 40%
share of a 1 million unit market. The firm has extensive customer knowledge, as well as
extensive competitor knowledge. The three largest competitors of Sparks Inc. have
market shares of 5%, 10%, and 15%, respectively.
Mini-Case Question. The percentage cost of goods sold by Sparks Inc. is 40%. The
percentage cost of goods sold by its three largest competitors is 30%, 30%, and 20%.
What is the cost advantage index of Sparks Inc.?
A) 80
B) 120
C) 43
D) 150
E) 62
A ________ is a long-term strategy with a 3- to 5-year time horizon and specific
performance objectives.
A) tactical marketing plan
B) workhorse plan
C) marketing mix strategy
D) vertical integration strategy
E) strategic market plan
VitaMind manufactures a line of vitamins and supplements, and distributes them
through retail health food and organic grocery stores. While this young company is
currently realizing profits, the owners want to plan for future growth and are beginning
the formal market planning process.
Mini-Case Question. In which of the following steps of the market planning process
will VitaMind need to monitor the marketing and profit performance in light of the
timeline outlined by the marketing plan?
A) marketing profit plan
B) SWOT analysis
C) performance review
D) marketing and sales budget
E) break-even analysis