The primary purpose of a detailed situation analysis is to uncover key performance
issues that normally might go unnoticed in day-to-day business operations.
Mixed channel systems are unsuitable for marketing specialized and technological
products.
Service can be an important source of differentiation when it comes to positioning
strategies.
Three fundamental forces that capture the shape of the market growth curve and the rate
of market growth are market potential, market penetration, and the rate at which new
customers enter the market.
The annual NMCs grow and eventually peak in the early growth stage of the product
life cycle.
A competitor analysis is relatively simple and most businesses are inclined to do it on a
continuous basis.
A product’s life-cycle cost is the sum of the purchase price and the costs of acquiring,
using, owning, maintaining, and disposing of the product.
The main difference between crowdsourcing and mass collaboration is the level of
multidirectional interaction.
A weak product position with a strong marketing effort will fail to deliver the desired
level of market share.
Businesses with a marketing advantage typically have prices much lower than average
prices.
With an open system, marketing planners should act as facilitators in the planning
process rather than as developers of a market plan.
In general, businesses in high-share positions in growing or mature markets will use
defensive strategic market plans to maintain cash flow that supports short-run profit
performance and shareholder value.
In the long run, a growth-oriented market strategy will shift from an offensive strategic
market plan to a defensive strategic market plan.
Defensive strategic market plans are usually growth oriented and are more appropriate
for the growth stage of a product-market life cycle.
Empathic design uses statistical surveys to collect quantitative information about
customer needs.
Maintaining a high-share position in an attractive, growing market requires only
minimal investment to sustain a competitive advantage.
The focus on a well-defined target market typically reduces cost efficiency of the
company.
The net price a business can derive from the use of indirect marketing channels is much
higher than that with other channel types.
As a business approaches 100 percent of its share development index, additional growth
based on market share gains becomes increasingly difficult.
A portfolio analysis model typically has two dimensions of performance: a revenue
model and a cost model.
The total cost of purchase excludes the customer’s ownership costs.
Empathic design uses statistical surveys to collect quantitative information about
customer needs.
In developing a performance plan, a business first translates the objectives of the
market share strategy into a revenue plan.
Products that complement a certain product will not be affected whenever that product’s
price changes.
When the total contribution produced by a pricing strategy is lower, overall profits will
also be lower because fixed costs are deducted from the total contribution.
A market-based management system views customers as lifetime partners.
One of the most common reasons a marketing plan fails is because of a lack of
ownership.
A marketing return on investment of 150 percent means that for every dollar invested in
marketing and sales expenses, the company is realizing $1.50 in marketing profits.
The “day-in-the-life-of-a-customer” approach may be described as “stapling yourself to
an order.”
A share development index (SDI) equal to 35 means that the maximum market share a
business can attain is 35 percent.
In the context of competitor analysis, which of the following formulas is used by a
business to calculate the performance gap?
A) Business Performance − Competitor Performance
B) Business Performance – Total Production and Marketing Costs
C) (Market-Based Performance – Operating Performance)/ Average Competitor
Performance
D) Potential Business Performance – Actual Business Performance
E) Business’s Relative Performance – Average Performance of Top Three Competitors
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.
Market-based businesses differ from product-focused businesses in that market-based
businesses ________.
A) focus on products and services
B) are providers of solutions
C) have a narrow view of customers’ underlying problems
D) lack a strong customer focus
E) lack knowledge of customer usage
Uncovering key performance issues that normally might go unnoticed in day-to-day
business operations is the primary purpose of the ________ step of a marketing plan.
A) situation analysis
B) revenue planning
C) performance evaluation
D) performance gap
E) channel strategy
Your brother, Fred, owns ATZ Inc., a company that provides wireless
telecommunications network in several cities in the Midwest region. You are taking a
marketing class in college, and you asked Joe for some information about his business
for a class project. You determined that one of his customers has a long customer
history of 75, an above-average purchase amount of 55, a low repurchase desirability of
20, a weak product preference of 10, and the customer does not recommend ATZ
services to potential customers. The customer is clearly dissatisfied, but since ATZ Inc.
is the only wireless telecommunications network provider in the city he is compelled to
use it.
Mini-Case Question. If the same customer has a high repurchase desirability, a strong
product preference, and recommends ATZ wireless telecommunications services to his
friends and acquaintances, what type of customer would he be?
A) a new customer
B) a captive customer
C) an unprofitable customer
D) a repeat customer
E) a loyal customer
Which of the following is true about an offensive strategic market plan?
A) It is inappropriate for a market with high market attractiveness and low competitive
advantage.
B) It is used for entering a new market with no established share position.
C) It is appropriate if a business wants to improve profits by optimizing its market focus
with minimal investment.
D) It is used to protect the current position of a business.
E) It is used in markets with market attractiveness below 20 where the business has low
competitive advantage.
When additional profits can be made with a slow exit from a market, a(n) ________
strategy can be a good source of short-run profits.
A) monetize
B) invest
C) divest
D) harvest
E) optimize
Which of the following statements is true about prosumers?
A) They are employees who test a product before it is released in the market.
B) They are employees who interact with customers to gather information about
product preferences.
C) The are the first users of a new product.
D) They are advanced users who do not always represent the needs of an overall target
market.
E) They are consumers who purchase a product only when there are some discounts.
If a company’s cost of purchase index is 30 percent below the industry average, it
means that ________.
A) the company’s shares are more expensive than other companies in the industry
B) the consumers feel that they are required to pay less for the company’s products or
services when compared to other companies in the industry
C) the consumers feel that they receive less real value from the goods and services they
purchase from the company for the price they pay
D) the company’s goods and products are rated 30 percent lower in terms of quality than
those offered by the other companies in the industry
E) the company’s market share is estimated to be 30 percent smaller than its largest rival
company in the industry
A(n) ________ strategy presents a generic value proposition built around the core
customer need and the business’s generic positioning strategy.
A) mass-market
B) large-segment
C) adjacent-segment
D) multi-segment
E) niche-segment
A firm has a gross profit of $60 million and a net marketing contribution of $14 million.
The firm has a market share of 6% and a margin per unit of $70. Calculate the
marketing and sales expenses of the firm.
A) $46 million
B) $70 million
C) $ 420,000
D) $10,000
E) $14 million
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. Calculate the share development index (SDI) for Clarion Inc. for
an 8 percent reduction in market share.
A) 78
B) 92
C) 56
D) 34.6
E) 15.7
In general, businesses in high-share positions in growing or mature markets will use
which type of strategic market plans to maintain cash flow that supports short-run profit
performance and shareholder value?
A) offensive strategic market plans
B) defensive strategic market plans
C) decentralized strategic market plans
D) concentrated strategic market plans
E) multi-segment strategic market plans
Which of the following allows a company to isolate the components of marketing
performance to understand better how each component contributes to the actual net
marketing contribution?
A) a SWOT analysis
B) a situation analysis
C) a performance analysis
D) a post-hoc analysis
E) a variance analysis
Service quality affects customer retention and profit in the numerator and ________ in
the denominator of the return on assets equation.
A) total income generated
B) return on sales
C) customer satisfaction
D) accounts receivable
E) accounts payable
The uptime of database servers is weighed at 80 on relative importance, and your
database server scored 7 out of 10. Your four competitors score 5, 6, 8, and 3. What is
the relative advantage score of your database server with regards to uptime?
A) 60
B) 560
C) 7
D) 80
E) 40
Which of the following metrics would a company most likely evaluate at the end of an
operating period?
A) inventory turnover
B) product defects
C) market share
D) customer satisfaction
E) late deliveries
Calculate the customer value for the product of a business that has an average relative
price of 125 and the relative product quality of 200.
A) 325
B) 75
C) -75
D) -125
E) 200
Karl-Mart, a chain of American department stores, spreads its promotional budget
evenly over the year. The firm ensures that its target customers receive advertising
messages throughout the year with the aims of building and maintaining its target
customer awareness and comprehension. Karl-Mart uses which of the following
strategies?
A) a concentrated frequency strategy
B) a distributed frequency strategy
C) a gross frequency strategy
D) an umbrella strategy
E) a heavy-up scheduling strategy
Which of the following is a component of the marketing strategy step of building a
marketing plan?
A) situation analysis
B) SWOT analysis
C) break-even analysis
D) communications strategy
E) marketing profitability strategy
The operating income for TRX Inc. is $100 million. If the cost of goods is $30 million,
SGA expenses are $15 million, and other operating expenses are $5 million, find the
sales revenues for TRX.
A) $200 million
B) $100 million
C) $50 million
D) $150 million
E) $25 million
Which of the following is a backward-looking market metric?
A) customer awareness
B) market share
C) product trial
D) customer satisfaction
E) perceptions of relative product quality
Which of the following is true about defensive portfolio strategies?
A) They are more growth oriented than offensive portfolio strategies.
B) They aim to protect important strategic market positions.
C) They are most commonly implemented in attractive markets by businesses with a
weak competitive position.
D) They are most commonly implemented in unattractive markets by businesses with a
high competitive position index.
E) They aim to reduce short-run cash flow and profit performance, to promote growth
in the long-run.
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
Calculate the return on assets for Nestor Inc., which generates a net profit of $45
million from its assets worth $780 million.
A) 57.1%
B) 45%
C) 28.5%
D) 17.5%
E) 5.7%
Which of the following is true about an optimize position strategy?
A) It is used for maximizing profits and cash flow as a business slowly exits a
product-market.
B) It is usually used by a business when the growth potential is limited and competitive
position is set.
C) It is an offensive strategic market plan that seeks to improve a business’s competitive
position in an attractive segment of the market.
D) It involves making a conscious effort to increase customer base in order to reach a
more profitable level of business.
E) It requires a large investment in marketing resources.
Which of the following is true of an indirect channel system?
A) The business retains ownership of the products until delivered to customers.
B) The cost of indirect customer sales contact is high and increasing.
C) An indirect marketing channel system includes telemarketing and digital marketing.
D) An indirect marketing channel system is particularly important for specialized and
technological products.
E) An indirect marketing channel system involves an intermediary that takes over
ownership and sales.
Once the market share has exceeded the outlet share, the rate of market share growth
________ with further increase in outlet share.
A) becomes zero
B) becomes infinity
C) remains constant
D) increases
E) decreases
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
In the context of SWOT analysis, opportunities refer to ________.
A) unique sources of advantage that the plan should leverage
B) circumstances that limit performance and should be addressed
C) potentialities that would improve profitability and should be addressed
D) current and possible factors that could impede performance
E) aspects of the internal environment that strengthen the stand of the business at
present
Erb Manufacturing Group is an American manufacturer of electrical wire and cable
based in Pennsylvania. The firm offers price reductions to its distributors and retailers,
as well as offers them financial incentives to promote and provide greater shelf space to
Erb products. In this example, Erb Manufacturing Group uses which of the following
communication strategies?
A) a push communication strategy
B) a pull communication strategy
C) a cobranding communication strategy
D) a centralized communication strategy
E) a lateral communication strategy
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