Vermont Home Builders conducted a study of the customers in the housing sector,
which revealed that there are seven kinds of buyers, each a little different and each
differently profitable. Vermont Home Builders decided to focus their attention on the
three most profitable segments. In this example, Vermont Home Builders uses which of
the following market segmentation strategies?
A) mass-market strategy
B) niche-segment strategy
C) adjacent-segment strategy
D) multi-segment strategy
E) subsegment strategy
The break-even market share for a company is ________.
A) break-even volume divided by fixed expenses
B) break-even volume divided by market demand
C) market demand divided by break-even volume
D) fixed expenses divided by break-even volume
E) market share divided by break-even volume
Crissel Food products has a margin per unit of $5.00 for a high-end brand of pasta, total
fixed expenses of $50 million, and a market demand of 400 million packs per year.
Calculate the break-even market share of the company.
A) 2.5%
B) 5%
C) 7.5%
D) 10%
E) 12.5%
As a business builds more of the same product, there is a greater opportunity for
________ effects.
A) scope
B) network
C) learning
D) Mohring
E) cluster
A ________ indicates the effort that is needed to recover a business’s investment in a
marketing and sales budget.
A) force field analysis
B) situation analysis
C) SWOT analysis
D) break-even analysis
E) bottom-up analysis
In the context of brand name development, ________ names are either built from root
words and morphemes or are poetic constructions based on the rhythm or experience of
saying them.
A) evocative
B) experiential
C) functional
D) invented
E) realistic
Calculate the net marketing contribution, if a business produces 25,000 units at $10
margin per unit, with total marketing and sales expenses of $100,000.
A) $50,000
B) $350,000
C) $100,000
D) $250,000
E) $150,000
Ridgewell Inc. was a pioneer in the cleaning equipment market and sold their products
exclusively through a direct marketing approach. However, after extensive market
research, the firm realized that the majority of sales in this market occurred in retail
stores. To improve its performance, Ridgewell Inc. began selling through specialty
cleaning equipment retailers as well as multiple mass market cleaning equipment stores.
Which of the following offensive strategies does this represent?
A) entering related new market segments
B) building marketing advantage
C) harvesting for cash flow
D) divesting for cash flow
E) lowering costs
The operating income of Carbon Footwear is $10 million. Its net marketing contribution
is derived from sales of $80 million and the marketing and sales expenses amount to
$15 million. The general and administrative expenses and other operating expenses
amount to $20 million.
Mini-Case Question. What is the total amount of Carbon Footwear’s net marketing
contribution?
A) $10 million
B) $20 million
C) $30 million
D) $40 million
E) $50 million
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.
Which of the following is an internal forward-looking metric for a company?
A) sales revenues
B) late payments
C) percent gross profit
D) return on assets
E) net profit before tax
Which of the following is true of businesses with a narrow market vision?
A) Their view of market demand enables them to recognize emerging market
opportunities.
B) Their view of market demand enables them to achieve maximum market potential.
C) They have the ability to see unserved needs that no one is addressing.
D) They do not see beyond the articulated needs of served customers.
E) They include all potential substitute products.
Star Treadmill, manufactured by KM Group of Manufacturers, costs $700. The product
has relative cost of purchase of 90, and a perceived customer value of 40. What is the
relative performance of Star Treadmill?
A) 130
B) 50
C) 77.7
D) 40
E) 2.25
In a customer-focused business, ________.
A) the senior management sets the tone and sends the signal for a strong customer focus
B) the management views customer complaints as negative feedback and avoids them
C) the analysis of customer feedback is performed only by the senior management
D) the business downplays the importance of customer training for new employees
E) the business is overly focused on building products they assume their customer
wants
In a customer-focused business, ________.
A) the senior management sets the tone and sends the signal for a strong customer focus
B) the management views customer complaints as negative feedback and avoids them
C) the analysis of customer feedback is performed only by the senior management
D) the business downplays the importance of customer training for new employees
E) the business is overly focused on building products they assume their customer
wants
The marketing and sales budget of Fisk Inc. is estimated to be $500 million and its
marketing administration cost is estimated to be $120 million. The acquisition cost per
customer is $400 and it is 10 times more than the retention cost per customer. If
320,000 customers are retained, what is the total number of new customers acquired by
Fisk Inc.?
A) 145,000 customers
B) 350,000 customers
C) 918,000 customers
D) 642,000 customers
E) 786,500 customers
Coller Inc. is an American firm that manufactures flat panel LCD computer monitors.
The firm has a 5% share of a 2 million unit market. The firm’s marketing department
calculates that its acquisition cost is $13 million and retention costs is $5 million. The
market for flat panel LCD computer monitors is in the late growth stage of the product
life cycle, and Coller currently sells its product for $2,000 and experiences variable
costs per unit of $1,600.
Mini-Case Question. Coller Inc., because of a weak competitive advantage, is unable to
produce desired levels of performance, and considers using a strategic market plan that
allows it to exit the market slowly. The firm decides to improve its short-run
performance by reducing marketing and sales expenses and systematically raising
prices. In this example, Coller Inc. is most likely to be using which of the following
defensive core strategies?
A) a decentralization strategy
B) a disintermediation strategy
C) a harvest for cash flow strategy
D) a divest for cash flow strategy
E) a reduce market focus strategy
A monetize strategy differs from a harvest strategy in that a monetize strategy
________.
A) is a defensive strategy
B) manages prices and marketing resources in a way that maximizes cash flow without
exiting the market
C) is used for maximizing profits and cash flow as a business slowly exits a
product-market
D) protects an attractive market position in which the business dominates with respect
to competitive position
E) is a strategy for exiting a market by selling or closing down the business or
eliminating the product
Calculate the net profit generated by Cabaye Inc. if it obtains a return of 12% from the
owner’s equity amounting to $675 million.
A) $118 million
B) $8.1 million
C) $562 million
D) $5.6 billion
E) $81 million
Which of the following is a defensive strategy that often occurs in the late and mature
stages of the product life cycle when growth potential is limited and competitive
position is set?
A) an optimize position strategy
B) a vertical integration strategy
C) an invest to improve position strategy
D) an invest to grow strategy
E) a new market entry strategy
Which of the following types of pricing considers neither what the buyer would be
willing to pay for product performance nor the pricing of competitive products in the
market?
A) cost-based pricing
B) perceived-value pricing
C) customerization-based pricing
D) value-in-use pricing
E) performance-based pricing
Expenses that change on a per-unit basis when production volume increases or
decreases are known as ________.
A) variable costs
B) manufacturing overhead costs
C) marketing and sales expenses
D) indirect costs
E) operating costs
Red Hot Mexican Grill, a chain of Mexican-style casual dining restaurants in America,
has traditional Mexican dcor throughout the restaurant and the waiters are dressed in
Mexican hats. This is best an example of ________.
A) service reliability
B) service assurance
C) performance
D) appearance
E) responsiveness
Which of the following formulas is used to calculate the share development index?
A) Share Development Index = Market Share Index/Share Potential Index
B) Share Development Index = Cost Advantage Index + Product Advantage Index
C) Share Development Index = Product Intentions Index + Total Market Share
D) Share Development Index = Cost Advantage Index/Product Advantage Index
E) Share Development Index = Total Market Share/Product Advantage Index
Which of the following terms refers to businesses that emulate the dominant design and
enter the market after letting another firm invest in developing the technology,
establishing the design standard, and initiating market development?
A) pioneers
B) first-movers
C) market leaders
D) early followers
E) technological leaders
Calculate the target market reach of a business if it produces an impact of 400 GRPs at
a frequency of 8.
A) 40 percent
B) 50 percent
C) 60 percent
D) 70 percent
E) 80 percent
FunTime Inc., is an American toy manufacturing firm, with its headquarters in New
York. The firm specializes in manufacturing educational toys for children. The table
given below shows the educational toys market segment performance for FunTime Inc.
Mini-Case Question. What is the marketing ROI for FunTime Inc.?
A) 60%
B) 40%
C) 25%
D) 200%
E) 65%
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
Your consumer printer has the following relative advantages for the four purchase
components of the product. What is your relative cost of purchase index?
A) 6.5
B) 126
C) 74
D) 13.5
E) 54
The marketing and sales budget of Cayzon Inc. is estimated to be $250 million and its
marketing administration cost is estimated to be $20 million. The acquisition cost per
customer is $2,000, and it is 10 times more than the retention cost per customer. If
45,000 new customers are acquired, what is the total number of retained customers?
A) 320,000 customers
B) 825,500 customers
C) 460,000 customers
D) 700,000 customers
E) 160,500 customers
Differences in values, attitudes, and interests are examples of ________ forces shaping
consumer needs.
A) demographic
B) lifestyle
C) usage behavior
D) geographic
E) firmographic