Which of the following is an example of a company’s external metrics?
A) return on sales
B) employee turnovers
C) manufacturing defects
D) late deliveries
E) retaining customers
________ 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
Calculate the percentage cost of goods sold by a business if the cost advantage index of
the business is 150 and the average percentage cost of goods sold by its top three
competitors are 40%, 50%, and 30%, respectively.
A) 150
B) 40
C) 60
D) 126
E) 70
Within the dimensions of service quality, which of the following is a “quality
enhancer”?
A) service reliability
B) performance
C) customer empathy
D) appearance
E) reputation
Steven & Meyer Inc. is an women’s cosmetics manufacturing firm based in California.
The firm sells its cosmetic products under the brand name GentleCare. After extensive
market research, the firm launches a new line of household care products under the
brand name White Oleander. The firm aims to increase the likelihood that its overall
performance will be consistent because adverse conditions in one product-market will
be offset by favorable conditions in the other. In this example, Steven & Meyer Inc. is
using which of the following strategies?
A) a vertical integration strategy
B) a harvest strategy
C) a monetize position strategy
D) a diversification strategy
E) a horizontal integration strategy
Alex has determined that along the share-development path, his business should
perform at an 80% level in product preference, 50% in intentions to purchase, 90% in
product availability, and 70% in rate of purchase. If the share potential index for Alex’s
business is 20%, at what level of product awareness should his business perform?
A) 63%
B) 80%
C) 54%
D) 88%
E) 42%
Which of the following statements is true about customer retention and customer life
expectancy?
A) The higher the customer retention rate, the lower the short-term profit impact.
B) As customer retention increases, the customer’s life expectancy decreases.
C) Customer life expectancy decreases exponentially with customer retention.
D) In general, it costs five times more to replace than to keep a customer.
E) Higher levels of customer retention have a long-term negative impact on profits.
Which of the following results in a major shift from an old technology to a new
technology that usually offers new customer benefits?
A) discontinuous innovation
B) disruptive innovation
C) continuous innovation
D) market penetration
E) market development
The economic profit generated by a company is its ________.
A) (capital x cost of capital) / net profit
B) net profit / (capital x cost of capital)
C) net profit + (capital x cost of capital)
D) net profit – (capital x cost of capital)
E) (capital x cost of capital) – net profit
Milton-Normand Inc. obtains a return of 13.5% from total invested capital of $790.6
million. Calculate the net profit it generates.
A) $325.3 million
B) $159 million
C) $84.7 million
D) $233.5 million
E) $106.7 million
A firm plans to use a defensive core strategy of protect position, with the strategic
objective of maintaining profits. Which of the following strategies is the firm most
likely to implement as a part of its core strategy?
A) build customer retention
B) enter new related markets
C) harvest for cash flow
D) divest for cash flow
E) develop new markets
A business identifies its key area of competitive weakness and then looks outside its
industry to another company that is recognized as a world-class performer in that area
in an attempt to emulate them. This process is referred to as ________.
A) ideal points mapping
B) product positioning
C) competitive benchmarking
D) perceptual mapping
E) competitive mapping
Which of the following statements is true about maximize net marketing contribution
strategy?
A) It is an offensive core strategy.
B) It results in inefficient use of marketing resources.
C) It requires careful margin management.
D) Its first step is to focus on optimal management of price-volume rather than
margin-volume.
E) It is most effective in very unattractive markets where the firm has a very weak
competitive position.
In ________, the price of a product is set to provide customers with an attractive
savings after considering the life-cycle costs of acquiring, owning, using, maintaining,
and disposing of a product.
A) value-in-use pricing
B) customerization value pricing
C) perceived-value pricing
D) performance-based pricing
E) cost-based pricing
Which of the following is true of improving cost efficiency of the marketing process?
A) If a business does not make products available at customers’ preferred points of
purchase, it lowers the cost of the transaction.
B) For undifferentiated products, customers’ transaction costs are high even when
availability is unrestricted.
C) The more undifferentiated a product is, the greater its perceived value.
D) Customer value can be increased by lowering the cost of reaching customers.
E) The general assumption is that the more intermediaries a channel system has, the
lower the total cost of purchase.
Calculate the net profit generated by Key Inc.,which has a capital cost of 10% for $450
million of capital invested and generates an economic profit of $20 million.
A) $48.5 million
B) $110 million
C) $78.5 million
D) $65 million
E) $135 million
A firm uses a core offensive strategic market plan of investing to improve competitive
position. The strategic objective of the firm is to improve margins. Which of the
following strategies is the firm most likely to use?
A) reduce market focus
B) harvest for cash flow
C) enter unrelated new markets
D) divest for cash flow
E) improve marketing productivity
Reduce-focus pricing is most likely to occur in the ________ stage of the product life
cycle.
A) early
B) growth
C) mature
D) extinction
E) decline
Logic teach Inc., a software manufacturing firm, specializes in inventory management
and billing software for supermarkets and hotels. The product has a price of $500,
acquisition cost of $100, installation cost of $300, and usage and maintenance cost of
$300. What is the life-cycle cost of Logic Tech’s inventory management software?
A) $1,200
B) $300
C) $600
D) $1,000
E) $500
In order for a company to use single-segment pricing, it is necessary that ________.
A) the company set a higher price than competitors for its product
B) the company first use a price skimming strategy when entering the market
C) the total cost of ownership of the company’s product be less than that of competing
products
D) the company set the lowest product price among similar products
E) there be no other competitor in the market
Ford sells the Ford Fiesta automobile. This is an example of using a ________ branding
strategy.
A) company name
B) company and brand name
C) brand and subbrand name
D) company and product name
E) company, brand, and product name
The net and economic profits generated by Hoddle Inc. are $320 million and $16
million, respectively, at 8% cost of capital. Calculate the total capital invested.
A) $3.8 billion
B) $5.6 billion
C) $1.25 billion
D) $8.8 billion
E) $840 million
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
Which of the following formulas is used to calculate a company’s relative market share?
A) (Company’s Market Share/Company’s Potential Market Share) x 100
B) (Company’s Total Sales/Total Sales of the Largest Competitor) x 100
C) Company’s Targeted Sales – Company’s Net Sales
D) (Company’s Market Share/Total Share of Three Largest Competitors) x 100
E) Total Sales of the Largest Competitor – Company’s Total Sales
The actual price per unit and price per unit estimated in the plan are $15 and $20,
respectively. The actual volume of units produced is 25,000 units. Calculate the price
variance.
A) $125,000
B) -$125,000
C) $500,000
D) -$375,000
E) $375,000
The market development index is equal to the ________.
A) product of current market demand and market potential
B) ratio of market potential and market growth
C) ratio of the current market demand to net marketing expenditure
D) ratio of current market demand to market potential
E) product of market potential and market growth
If a business had a 100 percent market share, then ________.
A) it would be unable to achieve full market potential
B) it would see beyond the articulated needs of served customers
C) its sales would equal the market demand
D) its net marketing contribution would be negative
E) marketing and sales expenses would exceed gross profit
Ryan’s friends consider him an expert on electronic products. Ryan purchased quick
read, one of the first electronic books launched by EasyTech Inc. years before any of his
friends did. Ryan paid four times more for this product than they did. He wanted the
benefits of an electronic book and was not concerned that his friends thought he was
foolish to buy electronic reader when they first came out on the market. For EasyTech
Inc., John is most likely to be classified as a(n) ________ customer.
A) captive
B) lead
C) mainstream
D) laggard
E) early majority
The table given below shows four aspects of product performance that customers seek
in commercial scanners. The product performance ratings are shown for PrintWorth
Inc., an American firm that manufactures commercial scanners, and three of its
competitors.
Mini-Case Question. What is the overall relative advantage score of PrintWorth Inc. for
image quality?
A) 0
B) -40
C) 26.66
D) 13.34
E) 6
The net marketing contribution for Doldrum Inc. is $600 million and its total assets are
worth $2 billion. The other expenses, including interest and taxes, amount to $400
million. Calculate the company’s return on assets.
A) 5%
B) 10%
C) 15%
D) 20%
E) 25%
Calculate the total market demand if a business sells 48,000 units, which represents a
market share of 32%.
A) 224,500
B) 265,000
C) 196,000
D) 150,000
E) 125,300