Advertising elasticity is calculated as the ________.
A) absolute change in sales divided by the percent change in advertising expenses
B) percent change in sales divided by the percent change in advertising expenses
C) absolute change in advertising expenditures divided by the percent change in
revenue
D) percent change in advertising expenses divided by the percent change in revenue
E) percent change in sales minus the percent change in advertising expenditures
The actual margin per unit and margin per unit estimated in the plan are $6 and $8,
respectively. The actual volume and the volume estimated in the plan are 5,000 units
and 10,000 units, respectively. What is the margin variance of the business?
A) -$10,000
B) $10,000
C) -$20,000
D) $20,000
E) $5,000
Which of the following is the strategic objective of the defensive core strategy, protect
position?
A) maintain profits
B) improve competitive position
C) maximize cash flow
D) diversify growth
E) grow in existing markets
A business’s channel strategy determines the framework adopted by the business for
________.
A) evaluating its competitiveness and attractiveness in the industry in which it operates
B) enhancing the total cost of purchase index for its products and services in the market
C) establishing a revenue plan that matches projections and available resources
D) marketing its current profitability from conducting business
E) selling and delivering its products and services to target customers
Under a defensive strategic market plan, calculate the market share of a company that
generates sales revenue of $50 million in a market where the total demand is $493
million.
A) 5.6%
B) 10.14%
C) 25%
D) 32.3%
E) 5.89%
A gross rating point equals ________.
A) reach multiplied by frequency
B) frequency multiplied by response
C) frequency multiplied by impact
D) impact multiplied by response
E) reach multiplied by response
Which of the following is the first level of the customer response hierarchy?
A) aware of the ad
B) comprehend the ad
C) exposed to the ad
D) intend to buy
E) buy the product
The product of market demand, market share, average selling price, and channel
discounts is the ________.
A) marketing and sales expenses
B) net marketing contribution
C) net sales
D) operating income
E) marketing return on investment
Juliet repairs, buys, and sells old video games to a growing customer base of collectors
and fans. She finds that as the products get scarcer, she can charge higher prices for her
services and products. This is an example of ________.
A) reduce-focus pricing
B) skim pricing
C) low-cost-leader pricing
D) plus-one pricing
E) harvest pricing
Calculate the number of units produced by a business if the net marketing contribution
and marketing and sales expenses are $625,000 and $175,000, respectively. The margin
per unit is estimated to be $25.
A) 50,000
B) 25,000
C) 32,000
D) 76,000
E) 43,000
The relative performance metric can be created by ________.
A) dividing the performance rating of a product by the average performance rating of
all products in the market
B) dividing the overall rating of a product’s performance by the rating of the
top-performing brand
C) dividing the overall rating of a product’s performance by its price
D) dividing the overall rating of a product’s performance by the average price for
products in that product category
E) dividing the overall rating of a product’s performance by the cost of manufacturing
the product
A growth strategy to develop an untapped new market potential offers ________ and
the ________.
A) low risk; potential for high return
B) high risk; potential for high return
C) low risk; potential for low return
D) high risk; potential for low return
E) low risk; potential for increased competition
Which of the following is true of skim pricing?
A) Skim pricing is most profitably used in the decline stage of the product life-cycle.
B) Skim pricing is most useful to a business when there are many competitors in the
market offering equivalent products.
C) Skim pricing is most effective when product differentiation is diminishing, potential
customers are price sensitive, and many competitors or substitutes exist.
D) In skim pricing, a company tries to keep its costs as low as possible and to offer a
low price that no competitor can beat.
E) Skim pricing is viable when a business has a sustainable differentiation advantage in
a quality-sensitive market with few competitors.
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. Sparks Inc. uses its superior knowledge of both customers and
competitors to devise a market-based strategy to achieve desired gains without
sustaining excessive losses. The firm seeks to gain a competitive advantage through a
nonconfrontational approach. Which of the following competitive strategies is Sparks
Inc. most likely to be using?
A) a disintermediation strategy
B) an inside the box strategy
C) an oblique strategy
D) a frontal attack strategy
E) a benchmarking strategy
The operating income of a company is $10 million, the net marketing contribution is
$30 million and general and administrative expenses are $5 million. Calculate the other
operating expenses.
A) $10 million
B) $5 million
C) $15 million
D) $20 million
E) $25 million
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
Which of the following statements is true?
A) The average profiles for profitable high-share and profitable low-share businesses
are almost identical.
B) A low-share business with above-average customer value is more profitable than a
high-share business with below-average customer value.
C) A low-share niche business’s prices are slightly above the average relative price
index of 100.
D) Profitable low-share niche businesses tend to have a wide product breadth.
E) Profitable low-share niche businesses tend to spend more on advertising relative to
the competition.
The current market demand for flat-screen TVs is 4 million units per year. It is
estimated that the market potential for this industry is expected to be 25 million units.
What is the market development index for this industry?
A) -21
B) 16
C) 21
D) 84
E) 625
Which of the following statements is true about trade promotions?
A) They involve offering price reductions to end-users.
B) They aim to build awareness, attraction, and loyalty in end-user.
C) They are a part of pull communications strategy.
D) They are customer-directed sales promotions.
E) They stimulate intermediaries to engage in aggressive customer promotion efforts.
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
Which of the following is considered a market access factor that influences a market’s
attractiveness?
A) market size
B) growth rate
C) buyer power
D) channel access
E) price rivalry
In the context of customer relationship management, every interaction with a customer
or a potential customer is a(n) ________.
A) value proposition
B) irrelevant cost
C) service contact
D) touch point
E) sales contact
A company has an operating income of $20 million and total fixed expenses of $10
million. 5 million units are produced at a margin of $6 per unit. What should the margin
per unit be if the company needs to achieve a break-even volume for the same number
of units?
A) $1 per unit
B) $2 per unit
C) $3 per unit
D) $4 per unit
E) $5 per unit
Which of the following is a characteristic of cost-focused sustainers?
A) They have a high level of formal education at the leadership level.
B) They look for new ways to invest and grow their business.
C) They have a very high revenue per customer.
D) They are willing to buy value-added solutions.
E) They have a limited or no financial plan.
Martha has determined that along the share-development path, her business should
perform at a 91% level of product awareness, 73% in product preference, 86% in
intentions to purchase, and 76% in product availability. If the share potential index for
Martha’s business is 26%, at what level of purchase rate should her business perform?
A) 90%
B) 80%
C) 70%
D) 60%
E) 50%
Which of the following defensive strategies allows a business to exit the market
rapidly?
A) a monetize market strategy
B) a disintermediation market strategy
C) a divest market strategy
D) a harvest market strategy
E) an optimize market strategy
Which of the following statements is true with regard to a percent-of-sales marketing
and sales budget?
A) It works by implementing a harvest strategy that requires more than the normal
percentage of sales to achieve share and sales objectives.
B) An aggressive growth strategy in this budget slowly reduces marketing and sales
expenses as a percentage of sales while market share is harvested over time.
C) The cost of customer acquisition and retention is the primary determinant of the
budget and resource allocation under this approach to budgeting.
D) It focuses on previous experience, but it could vary from past experience depending
on the nature of the strategic market plan.
E) It specifies each marketing task and the amount needed to accomplish it, given a
particular strategic market plan and the task-related marketing mix strategies.
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
The ________ is an estimate of the share performance index if the business were to
achieve maximum levels of performance for each share metric.
A) market share index
B) share development index
C) share potential index
D) market development index
E) bond market index
The net marketing contribution for TRX Inc. is $25 million, and sales revenues equal
$150 million. Calculate the marketing ROS for TRX.
A) 15%
B) 26.3%
C) 25%
D) 306%
E) 16.6%
Which of the following terms refers to the number of customers who have entered a
market at a certain point in time?
A) current market potential
B) market penetration
C) maximum market entry
D) market potential index
E) rate of entry
The average life expectancy of a customer for a company with 75% customer retention
is ________.
A) 1 year
B) 2 years
C) 3 years
D) 4 years
E) 5 years
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