Which of the following factors determines that a marketing channel is an indirect
channel rather than a direct channel?
A) The products are complex and require extensive after-sales service.
B) The products are intended for business-to-business markets rather than consumer
markets.
C) At least one marketing intermediary takes ownership of the products and controls
distribution.
D) Telemarketing and digital marketing are an integral part of the distribution system.
E) The marketing channel uses one or more intermediaries who are a part of the
company.
Stephen bought a new Chevrolet Suburban vehicle by putting $10,000 down and
arranging to make monthly payments of $599 for six years. These payments represent
the ________ of the vehicle for Stephen.
A) acquisition costs
B) repair costs
C) maintenance costs
D) ownership costs
E) disposal costs
An ad campaign buys a constant amount of GRPs throughout the year, and increases the
GRP total during the weeks leading up to the most extensive purchasing period of the
year is using a ________ message reinforcement strategy.
A) distributed
B) random
C) deep line-up
D) pulsing
E) heavy-up
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
Which strategy would be used if a business is losing money in a given market and
decides to pursue a quick market exit?
A) a monetize market strategy
B) a disintermediation market strategy
C) a harvest market strategy
D) a divest market strategy
E) an optimize market strategy
Owner’s equity is equal to ________.
A) brand assets minus brand liabilities
B) brand assets divided by brand liabilities
C) company assets minus company liabilities
D) company assets divided by company liabilities
E) company liabilities minus brand liabilities
Calculate the economic profit generated by a business with a capital cost of 10% for $2
billion of capital invested. Its net marketing contribution is $450 million and its other
expenses, including interests and taxes, amount to $200 million.
A) $250 million
B) $200 million
C) $50 million
D) $100 million
E) $150 million
Delta Motors, an American multinational automaker, was the first company to develop
an affordable electric car. Delta Motors aimed to diversify its growth by launching an
environment-friendly, affordable electric car. Which of the following offensive
strategies is Delta Motors pursuing?
A) enter related new market segments
B) harvest for cash flow
C) divest for cash flow
D) enter unrelated new market segments
E) improve customer loyalty
A business realizes a net profit of $3 million and a return on assets of 6%. The total
assets of the business will be ________.
A) $5 million
B) $20 million
C) $18 million
D) $50 million
E) $36 million
Each unit of a product is sold at $5. The cost per unit is $2. What is the percent margin
for the product?
A) 60%
B) 40%
C) 66.6%
D) 16.3%
E) 33.3%
Which of the following is true regarding an oblique strategy?
A) It is based on extensive competitor knowledge but little or no customer knowledge.
B) It leverages a knowledge advantage with respect to customers and competitors.
C) It involves making a direct attack on a competitor’s position.
D) It is an overreaction to competitor moves due to limited customer knowledge.
E) It is an overreaction to customer demands due to limited customer knowledge.
To estimate the lifetime value of a customer at a given rate of customer retention, you
need to compute the ________.
A) net present value of the customer’s cash flow
B) customer satisfaction index
C) future customer value
D) customer loyalty index
E) gross percent margin of the company
Calculate the economic profit generated by a business with a capital cost of 10% for $2
billion of capital invested. Its net marketing contribution is $450 million and its other
expenses, including interests and taxes, amount to $200 million.
A) $250 million
B) $200 million
C) $50 million
D) $100 million
E) $150 million
Which of the following is an operational component of marketing channel
performance?
A) product assortment
B) sales revenue
C) service quality
D) customer value
E) profitability
15 million transactions are made per year at a total cost of $750 million. Calculate the
cost per transaction.
A) $5
B) $50
C) $500
D) $5,000
E) $50,000
Vincent & Rankine is a company that spends billions of dollars annually on marketing
communications, primarily because they have many brand offerings in several product
categories. Some of these expenditures are used on marketing communications targeted
at end-user consumers of their brand, and other expenditures are used on marketing
communications targeted at intermediaries in the channel of distribution.
Mini-Case Question. Since many of Vincent & Rankine’s consumer products are
products used every day to satisfy customer needs, the company advertises frequently.
However, the cost of advertising has increased dramatically over the years and V&R is
concerned about the potential for copy wear-out and customer irritation due to
overexposure. The company decides to address this situation by using alternating
exposure periods. The firm advertises its products over a 4-week exposure, and runs its
advertisements in alternating 4-week periods. In this example, Vincent & Rankine uses
which of the following strategies?
A) a heavy-up message frequency strategy
B) a pulsing message frequency strategy
C) a pull communication strategy
D) a push communication strategy
E) a diversification strategy
To calculate break-even volume, operating income in the formula is ________.
A) multiplied by 100
B) equal to zero
C) equal to industry operating income
D) equal to variable costs
E) equal to fixed costs
Which type of strategic market plan is most appropriate for businesses operating in a
market that has very low market attractiveness score?
A) a pulsing strategy
B) a defensive strategy
C) a disintermediation strategy
D) a decentralization strategy
E) an offensive strategy
Which of the following is true about portfolio diversification?
A) It reduces performance stability.
B) It increases dependence on a single product.
C) It allows a business to take advantage of offsetting product life cycles.
D) It restricts a business to a single market.
E) It reduces opportunity for growth.
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
ABL Inc. is a large consumer goods company that recently released some new shower
gels in the market. Two of the most touted shower gels in this new line of products
failed in the market, while the range of shower gels designed for adolescents called
Rebel did very well in the market. Which of the following, if true, would explain this
outcome?
A) ABL Inc. allocated resources equally for each project management team handling a
new shower gel.
B) ABL Inc. used more traditional advertisements and less social media to promote the
shower gel “Rebel.”
C) The project management team of ABL Inc.that was in charge for “Rebel” advertised
their product less than the other project management teams.
D) The project management team of ABL Inc.that was in charge for “Rebel” adopted a
reduce-market-focus strategy that targeted only adolescents.
E) The two new shower gels that failed in the market were clearly positioned in their
respective market segments.
Calculate the customer loyalty index if the customer history is average, the purchase
amount is below average, the desire to repurchase is high, the product preference is
strong, and there is no customer recommendation.
A) 0
B) 10
C) 50
D) 80
E) 100
Customers in which of the following subsets of consumers take product usage beyond
its intended capability, and act as co-inventors?
A) captive customers
B) prosumers
C) mainstream customers
D) spinners
E) laggards
The current market demand for paper clips is 320 million and its market development
index is 55. Calculate the approximate market potential for paper clips.
A) 463 million
B) 582 million
C) 694 million
D) 720 million
E) 838 million
Which of the following is an internal financial metric?
A) customer awareness
B) market share
C) revenue per customer
D) product defects
E) customer satisfaction
Which of the following is a favorable condition for implementing penetration pricing?
A) quality-sensitive customers
B) less competitors
C) less substitutes
D) high sustainable advantage
E) easy competitor entry
A business’s return on assets is ________.
A) net profit multiplied by assets
B) net profit divided by assets multiplied by 100%
C) assets divided by net profit
D) net marketing contribution divided by assets
E) net marketing contribution multiplied by assets
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
Smith Automotive is a company that produces component parts for automobile engines.
A margin of $4 per unit produces fixed expenses of $80 million. The market demand for
the component parts is 400 million units per year.
Mini-Case Question. Calculate the break-even market share if the break-even volume is
40 million units.
A) 5%
B) 10%
C) 12.5%
D) 15%
E) 20%
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