The cost of using direct marketing channels is typically higher than that of indirect
marketing channels for manufacturers.
Indirect channels are able to achieve the lowest out-of-pocket marketing and sales
expenses.
Potential strategies used to implement offensive strategic marketing plans are protect
position, optimize position, and monetize strategy.
The reduce-market-focus strategy prescribes a defensive strategic market plan that
involves narrowing market focus and trimming market share in an effort to improve
profit performance.
Indirect channels are able to achieve the lowest out-of-pocket marketing and sales
expenses.
The company’s customer value index is the sum of its performance index and its cost of
purchase index.
Marketing channels make it possible for target customers to buy the product at their
desired points of purchase.
The strategic objective in the protect position defensive core strategy is to maximize
profits.
Service can be an important source of differentiation when it comes to positioning
strategies.
To get started, a company should adopt marketing metrics that are intuitive and
complex.
Businesses with a marketing advantage typically have prices much lower than average
prices.
A reduce-focus pricing strategy calls for price increases with the intent of reducing
volumes and market share in exchange for higher margins.
Insufficient message frequency and poor ad copy both contribute to target customers’
lack of awareness and comprehension.
Market-based pricing does not consider what the customer would be willing to pay for
product performance, but depends on the costs of manufacturing the product.
A positive NMC is the result of marketing and sales expenses exceeding gross profit
during the introduction stage of the product life cycle.
The ultimate goal of a customer relationship management is to build one-on-one
customized relationships between a business and individual customers.
A divest price strategy continues to raise prices slowly with expected decreases in
volume until the business has exited the market.
Marketing channel performance is based on customer reach, operating efficiency, and
service quality.
The first step in optimizing net marketing contribution is to focus on optimal
management of price-volume rather than margin-volume.
The intent of umbrella branding is to enhance the effectiveness of marketing programs
and to increase demand for product line extensions by transferring brand awareness and
perceptions of quality from the umbrella brand.
A narrow market definition, one adopted by design, is not always a limitation.
Consumer response to advertising costs is measured as total revenue.
Pre-tax net profit and market share are examples of forward-looking metrics that are
applied during a company’s reporting period.
Invented names are company or brand names that create a direct connection to
something real and that can be associated with a direct experience.
A share development index (SDI) equal to 35 means that the maximum market share a
business can attain is 35 percent.
A broad market vision enables a business to see unserved needs that no one is
addressing.
The dimensions of competitive position are differentiation position, cost position, and
marketing position.
A “concentrated frequency” strategy would be appropriate for building awareness and
comprehension for seasonal products, political candidates, and special events.
Invented names are company or brand names that create a direct connection to
something real and that can be associated with a direct experience.
Variance analysis allows the company to isolate the components of marketing
performance to understand better how each component contributes to the actual net
marketing contribution.
High-technology markets have rapidly emerging market demand and relatively short
product and market life cycles.
An advantage in brand or company reputation helps to support price and margins, even
in business-to-business markets.
Business sophistication, growth orientation, innovativeness, technology, and decision
making are all examples of firm demographic forces that can have a profound impact
on consumer needs.
An MDI of 62 indicates that the market has many potential customers who for various
reasons have not entered it.
Reverse innovation begins by identifying new product benefits.
Which of the following steps in the segmentation process involves determining the
demographics, lifestyles, and usage behaviors that make one segment meaningfully
different from another?
A) segment strategy “acid test”
B) segment positioning
C) segment attractiveness
D) segment profitability
E) segment identification
Calculate the market potential of Royston light bulbs if it has a current market demand
of 150 million bulbs at a market development index of 30.
A) 45 million
B) 4,500 million
C) 50 million
D) 500 million
E) 450 million
________ serves as the basis for the financial metric known as return on equity.
A) Owner’s equity
B) Customer’s equity
C) Brand equity
D) Value equity
E) Retention equity
Clarion Inc. is a firm that produces components for the manufacturing equipment
market and currently enjoys a 42% market share. Through an analysis of the share
development path, the marketing department of the firm estimates that the firm should
perform at a 95% level in product awareness, 85% in product preference, 80% in
intentions to purchase, 90% in product availability, and 75% in rate of purchase.
Mini-Case Question. What is the share development index (SDI) of Clarion Inc.?
A) 18
B) 85
C) 43.6
D) 77.8
E) 97
MVB Inc.obtains a return of 9.8% from assets worth $248.5 million. Calculate its net
profit.
A) $105.9 million
B) $36.8 million
C) $24.3 million
D) $76.2 million
E) $60.4 million
Which of the following would be considered an income statement component of
performance plan?
A) expenditures
B) marketing profits
C) pricing
D) asset turnover
E) profitability metrics
Owning the marketing plan, a force that contributes to the successful implementation
of a marketing plan, involves ________.
A) developing and using detailed action plans
B) using an adaptive rollout
C) using feedback measurements
D) promoting the business-as-usual routine
E) adapting to changing market conditions
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. What is the company’s net marketing contribution?
A) $640.2 million
B) $538.5 million
C) $458 million
D) $294.6 million
E) $367.5 million
Prices tend to flatten out as products reach the ________ stage of the product life cycle.
A) early growth
B) maturity
C) late growth
D) decline
E) introduction
Which of the following is true of the financial metrics used to gauge a product’s
performance in the market?
A) They report important ratios for profits, costs, and assets.
B) They provide insight into how the business or product is performing in the market.
C) They include measures of marketing performance, such as customer satisfaction,
retention, and loyalty.
D) They allow a company to estimate its market share and customer value.
E) They are mainly external metrics of a product’s performance in a particular market.
Which of the following statements is true of customer needs?
A) Satisfying customer needs is the first step in successful market segmentation.
B) All potential customers have the same needs.
C) Solving customer problems requires knowing the identity of target customers.
D) A business with a strong market orientation rarely divides its served market into
customer segments.
E) The factors influencing the needs of both consumers and businesses are the same.
The fundamental marketing profitability metric for planning purposes is the ________
equation.
A) gross profit
B) market share
C) market demand
D) net marketing contribution
E) variable unit cost
In which of the following situations would a firm most likely pursue a low-cost leader
strategy?
A) There are no competitors in the market and the firm is the market leader.
B) The nature of its products does not allow the firm to maintain a volume advantage in
the market.
C) The company’s product is a niche product and appeals to only a few customers.
D) The market is quality-sensitive rather than price-sensitive.
E) The firm can minimize its operational expenses in order to sell higher volumes of
products.
A market-based strategy that leverages a knowledge advantage with respect to both
customers and competitors, and can be implemented with a nonconfrontational
approach that minimizes losses, is known as a(n) ________ strategy.
A) inside-the-box
B) disintermediation
C) oblique
D) mass-personalization
E) reactive
Frosty Inc. is an American firm that manufactures and markets a line of ice creams
under the brand name Frosty Delight. Together with Magic Bakes, a popular brand of
baking mixes and canned frostings, the firm introduces a line of Frosty Magic Bakes, a
line of ice cream cake mixes. The new product line, Frosty Magic Bakes, uses the logos
of both Frosty Delight and Magic Bakes. This is an example of ________.
A) franchising
B) cobranding
C) pure product bundling
D) mixed product bundling
E) licensing
The ________ is equal to current market demand divided by market potential.
A) share development index (SDI)
B) market development index (MDI)
C) business share index (BSI)
D) market share index (MSI)
E) sales growth index (SGI)
A ________ market-based pricing strategy product position is one in which a business
can equal competitors on all areas of product and service quality but can find one area
of meaningful performance in which it is clearly superior.
A) penetration
B) multi-segment
C) plus-one
D) reduce-focus
E) harvest
Which of the following is an approach to message reinforcement that maintains
awareness, reduces copy wear-out, and is cost-efficient?
A) benchmarking
B) bundling
C) pulsing
D) cobranding
E) brand encoding
The end result of underwhelming customers and shareholders is ________.
A) an unfocused value proposition
B) a higher pressure for short-run results
C) an above-average profit performance
D) a low rate of customer turnover
E) a high level of customer loyalty
If a company sold 54 million units of a particular product, which represents a 6%
market share, calculate the market demand for the product.
A) 900 million
B) 90 million
C) 9 million
D) 324 million
E) 648 million
Mikon Inc. generates a net profit of $64 million from $160 million of invested capital.
Calculate its return on capital.
A) 4%
B) 40%
C) 16%
D) 61%
E) 24%
Calculate the net profit generated by Toby Inc. for a return of 8.6% from sales of $240
million.
A) $20.6 million
B) $78.4 million
C) $120 million
D) $206 million
E) $12.6 million
________ market metrics include customer retention and revenue per customer.
A) Competitiveness
B) Forward-looking
C) Backward-looking
D) Digital-media
E) Ongoing
The marketing team at Wallace Waterworks has been working on a marketing plan for
the impending quarter. The team completed a SWOT analysis and incorporated its
results into a strategic market plan. After evaluating the company’s competitiveness and
creating a revenue plan, the team now has to determine the resources necessary to meet
the performance objectives of the strategic market plan. Which of the following steps
will help the company determine the resource allocation for the coming quarter?
A) marketing and sales budget
B) situation analysis
C) SWOT analysis
D) strategic market plan
E) marketing mix plan
Repeat customers differ from loyal customers in that repeat customers ________.
A) have a loyalty score between 70 and 100
B) have a high product preference score
C) are likely to recommend a company’s product
D) are often simply “big spenders”
E) have low profit potential
An ad program’s marketing ROI refers to ________.
A) the net marketing contribution divided by the cost of the ad program
B) the total sales divided by the net marketing cost
C) the customer response index divided by the net marketing cost
D) the total sales multiplied by the net marketing cost
E) the net marketing contribution plus the cost of the ad program
Which of the following is the strategic objective of the optimize position defensive core
strategy?
A) divest for cash flow
B) maximize profits
C) diversify growth
D) improve competitive position
E) grow in existing markets
Which of the following would be considered a strategic market plan component of
marketing strategy?
A) revenue plan
B) investment
C) profits
D) customer needs
E) customer profile
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.
The ________ represents the ongoing monitoring of marketing and profit performance
in light of the marketing plan’s timeline.
A) marketing budget
B) industry analysis
C) force field analysis
D) situation analysis
E) performance review
