Common to most assessments of segment attractiveness are measurements of market
demand, competitive intensity, and market access.
A decline in relative product and service quality means that actual product or service
quality has declined.
The objectives of a pull marketing communication are to build awareness, attraction,
and loyalty and to reduce search costs.
The marketing cost of retaining customers is much higher than the cost of replacing
them.
Followers with above-average profits tend to invest more aggressively in marketing as a
percentage of sales, as well as on a relative basis when compared with competitors with
below-average profits.
The net marketing contribution as a percentage of sales is called the marketing ROI.
In developing a performance plan, a business first translates the objectives of the
market share strategy into a revenue plan.
Sales revenues, net profits, return on sales, assets as a percentage of sales, and return on
assets are measures of internal financial performance that provide a market-based view
of performance.
Return measures of performance are valid indicators of financial health.
At any point in time, a business has an existing pool of current and prospective
customers who make up current market demand and a potential pool of prospective
customers who provide the opportunity to grow market demand.
Marketing channel performance is based on customer reach, operating efficiency, and
service quality.
Adding the market development index and share development index to a sales forecast
provides a way to understand the potential for future sales growth.
At any point in time, a business has an existing pool of current and prospective
customers who make up current market demand and a potential pool of prospective
customers who provide the opportunity to grow market demand.
For a segment marketing mix strategy to be successful, the strategy needs to include
only certain elements of the marketing mix.
During the rapid-growth phase of market development, customer needs become more
salient and numerous, and segments begin to form.
One of the primary advantages of an unrelated new market entry strategy is decreased
market dependency.
A combination of market growth and market share growth decreases the number of
customers but increases the amount of revenue per customer.
The primary forces that shape the needs of consumers are demographic influences,
lifestyle influences, and usage behaviors.
Developing a broad vision of a market is the first step in understanding market demand.
The NMC of any proposed strategy must be lower than the current NMC in order to
increase a business’s net profit.
A marketing and sales budget that specifies each marketing task and the amount needed
to accomplish
it is called a bottom-up marketing and sales budget.
The combination of market attractiveness and competitive advantage creates a portfolio
position for any given product-market.
Successful implementation of a marketing plan is directly related to the structure of a
business’s marketing effort.
Quality aesthetics as a source of differentiation are of value only when all other aspects
of quality are met with respect to customer quality expectations.
A business with a short-term perspective lacks a strong consumer focus.
A low-cost leader in a market is by definition the volume leader.
Unrestrained customer acquisition can result in a negative rather than positive impact
on profits due to the cost of customer acquisition with little offsetting income.
The more similar two competitors are from a customer perspective, the more likely
customers are to switch from one to the other.
The share development index (SDI) is the ratio of share potential to actual sales.
In any competitive environment, reputation is the principal source of competitive
advantage.
A company’s return on equity is equal to ________.
A) net profit divided by retention equity
B) net profit divided by value equity
C) net profit divided by customer’s equity
D) net profit divided by owner’s equity
E) net profit divided by company’s liability
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
Defensive strategic market plans are strategies that ________.
A) have a 3- to 5-year time horizon
B) require investment in order to produce sales growth
C) are not particularly effective at growing sales revenue
D) limit short-run profit performance
E) improve the long-run share position
Which of the following would be considered a competitiveness metric for a company?
A) marketing return on investment
B) relative service quality
C) marketing return on sales
D) capacity utilization
E) gross profit
A price elasticity of -2 means that a price reduction of one percent will result in
________.
A) a decrease in volume by 2%
B) a decrease in volume by 20%
C) an increase in volume by 2%
D) an increase in market share by 20%
E) a decrease in market share by 2%
Javier’s Pizza Point has a margin per unit of $2.00 for a typical pizza, total fixed
expenses of $10,000, and average variable costs of $3.00 per pizza. How many pizzas
must Javier sell to break even?
A) 2,000
B) 3,334
C) 5,000
D) 20,000
E) 30,000
Which of the following is a branding and brand-management strategy?
A) umbrella brand
B) brand differentiation
C) brand encoding
D) bundling and unbundling
E) flanker brand
Dow Corning has been a market leader in silicon technology applications for over 50
years. Its products span many market applications in electronics, construction, health
care, and a multitude of industrial applications. However, as some of its product-market
applications reached the mature stage of the product life cycle, they became less
competitive. Dow Corning’s full service consultative engineering approach did not work
in more mature, price-sensitive market applications. It was also unprofitable for Dow to
pursue these customers as they represented a majority of target customers but only
represented 20% of the revenue potential for the total market for their products.
Mini-Case Question. When considering Dow’s product offerings, if the channel system
can build an image among quality-conscious customers, the company is improving
customer value by increasing ________.
A) product assortment
B) after-sale services
C) availability/delivery
D) transaction services
E) brand reputation
A captive customer is most likely to ________.
A) have a low purchase amount
B) recommend a brand or company to others
C) have a weak product preference
D) have a high customer loyalty index
E) have a high desire to repurchase
SetPro Inc., a software firm, collects information about its marketing communication.
The firm finds that 60% of the firm’s target market is exposed the marketing
communication, and 50% of that group is aware of the offering. Amongst the people
who are aware of the offering, 70% understand the message. And 60% of that group
intends to purchase, and 90% of that group actually does purchase. What is the
customer response index for the buying group?
A) -1.13%
B) 1.13%
C) 11.3%
D) 90%
E) 60%
Calculate the share potential index if a business is achieving a share development index
of 45 at a market share index of 25%.
A) 20%
B) 55.6%
C) 70%
D) 35%
E) 60%
Which of the following market segments is most likely to be considered attractive by a
firm?
A) a market segment with many substitute products
B) a market segment with limited product differentiation
C) a market segment with low barriers to competitor entry
D) a market segment with high price competition
E) a market segment with cost-effective access to customers
Which of the following terms is used to describe the success of many Japanese
marketing plans because of the Japanese management’s ability to adapt when a
marketing plan is not working and to stick with the plan?
A) vertical integration
B) adaptive persistence
C) horizontal integration
D) decentralization
E) standardization
The third step in building a marketing plan involves ________.
A) conducting a performance review
B) conducting a situation analysis
C) performing a SWOT analysis
D) developing a performance plan
E) conducting a share valuation process
Which of the following is an external backward-looking metric for a company?
A) intent to repurchase
B) customer awareness
C) perceived performance
D) customer satisfaction
E) customer retention
Marketing channel performance is evaluated based on the operational components of
________.
A) customer reach, operating efficiency, and service quality
B) customer value, sales revenues, and profitability
C) return on sales, brand image, and sales margin
D) product quality, product assortment, and product form
E) product costs, branding strategy, and customer loyalty
Which of the following is true of backward-looking metrics?
A) They tell a company where it stands with respect to current performance.
B) They provide insights on future performance.
C) They are applied at regular intervals during an operating period.
D) They include company metrics such as late deliveries and late payments.
E) They include marketing metrics such as customer awareness and customer
satisfaction.
The share development index is equal to ________.
A) market share index multiplied by share potential index
B) market share index divided by share potential index
C) market share index divided by the total volume of units sold
D) share potential index divided by the total volume of units sold
E) share potential index multiplied by the total volume of units sold
Which of the following service quality dimensions refers to a service obsession to get it
right when things go wrong?
A) service reliability
B) service assurance
C) performance
D) customer empathy
E) responsiveness
During the ________ stage of the product life cycle, the negative NMC is the result of
marketing and sales expense exceeding the gross profits.
A) introduction
B) middle growth
C) late growth
D) maturity
E) decline
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%
A business has 75 million shares and its net marketing contribution is $550 million. The
other expenses, including interest and taxes, amount to $280 million. Calculate the
earnings per share for the business.
A) $2.4 per share
B) $6 per share
C) $1.2 per share
D) $3.6 per share
E) $4.8 per share
Which of the following is true about customer relationship marketing?
A) It is more focused on what happens before a customer is acquired.
B) It aims to develop a short-term customer relationship to lower the cost of marketing.
C) It has the same meaning as customer relationship management.
D) It is a high-level program for developing ongoing individualized relationships with
certain customers when both company and customer value are very high.
E) It is a range of one-on-one relationship marketing programs based on the level of
company and customer value.
Which of the following is true regarding a reactive strategy?
A) It is based on extensive customer and competitive knowledge.
B) It seeks to gain a competitive advantage without direct confrontation.
C) It refers to making competitive moves from an internal perspective with no real
market knowledge.
D) It leverages a knowledge advantage with respect to customers and competitors.
E) It is an overreaction to competitor moves due to limited competitor knowledge.
The actual variable cost per customer and variable cost per customer estimated in the
plan are $3 and $8, respectively. The actual volume and the volume estimated in the
plan are 30,000 units and 20,000 units, respectively. Calculate the cost variance.
A) $250,000
B) $100,000
C) -$100,000
D) -$150,000
E) $150,000
Functional names differ from evocative names in that functional names ________.
A) are derived from the basic benefit provided by the product
B) do not have any association with a core customer benefit
C) are built from root words and morphemes
D) are poetic constructions based on the rhythm of saying them
E) are associated with positive attributes or feelings
Which of the following is most likely to be considered when using a cost-based pricing
strategy?
A) price sensitivity in the market
B) company product-price positioning
C) competitors’ product-price positioning
D) customer performance needs
E) desired profit margin
Clarence Inc. conducts a market research, which reveals that it has a product quality of
40% relative importance and the attractiveness rating of this factor is 60 (i.e.,
attractive). The firm identifies that its service quality is of 30% relative importance and
scores a rating of 80 (i.e., somewhat attractive); and brand image/reputation is of 30%
relative importance and scores a rating of 80 (i.e., attractive). The firm has a
differentiation advantage factor importance of 50%. Calculate the overall attractiveness
score for the assessed opportunity.
A) 36
B) 74
C) 110
D) 146
E) 220
Which of the following is a form of the emphatic design?
A) creating a database of customers’ demographic details
B) filming customer product use
C) conducting an online survey of customers’ preferences
D) using social media to interact with customers
E) creating a database of customers’ buying habits
Disruptive innovation differs from discontinuous innovation in that disruptive
innovation ________.
A) refers to a major shift from an old technology
B) usually offers new customer benefits
C) refers to change along the technology innovation curve
D) refers to the development of technology and improved products for a given product
market
E) allows for the development of products that are more expensive
Calculate the total sales of a product if the market demand for the product now in the
early growth stage of the product life cycle is 2 million units annually, and the product
captures 15 percent of this demand with a price of $50 per unit.
A) $100 million
B) $15 million
C) $30 million
D) $50 million
E) $75 million
The offensive strategic market plan to invest marketing and sales resources to expand
the market or a product’s position in a market is known as ________.
A) a divest strategy
B) a protect position strategy
C) an invest to grow strategy
D) a harvest investment strategy
E) a monetize strategy
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 relative product performance index for PrintWorth Inc.?
A) 100
B) 130
C) 25
D) 48
E) 62.9
Which of the following expenses would be included under the manufacturing overhead
of a firm?
A) advertising expenses
B) fixed expenses for a building’s facilities
C) cost of office supplies
D) income taxes
E) cost of materials for production
Which of the following is true of marketing channels?
A) In a direct marketing channel, intermediaries take a portion of the purchase price for
their services.
B) The net price derived from the use of indirect marketing channels is much higher
than from direct channels.
C) Direct channels are able to capture most, if not all, of the end-user price.
D) The cost of direct marketing channels is generally lower for a manufacturer than that
of other channels.
E) Indirect channels incur the highest out-of-pocket marketing and sales expenses for
manufacturers.