Life-cycle costs of ownership include acquisition cost, ownership cost, usage cost,
repair/maintenance cost and disposal cost/value.
The customer retention metric acts as a forward-looking metric when it measures the
number of customers retained from one year to the next.
The higher the marketing ROI, the less productive the company’s marketing and sales
strategies.
Marketing strategies often are driven internally by short-run profit objectives rather
than by market-based performance objectives.
The purpose of line extensions under an umbrella brand is to leverage the awareness
and image of the umbrella brand.
Studying the experience of lead users provides insights for improving a product by
adding new features or modifying it in other ways.
Without backward-looking metrics, the business has only an internal measure of
performance.
A selective investment strategy, which invests in customers who have high customer
lifetime value, is detrimental to the strategic objectives of the marketing plan.
The more competitors an industry has, the lower will be the differentiation among those
competitors, and low differentiation increases competitive rivalry.
For any technology, the market demand has an upper limit that can be exceeded without
a change in technology or a new way of using the product.
Lead users are users who purchase a product only after it has been used by the majority
of mainstream users.
Business sophistication, growth orientation, innovativeness, technology, and decision
making are all examples of firm demographic forces that can have a profound impact
on consumer needs.
Companies seeking discontinuous innovations need more than incremental product
improvements that come from lead user analysis.
One of the primary advantages of an unrelated new market entry strategy is decreased
market dependency.
Pre-tax net profit and market share are examples of forward-looking metrics that are
applied during a company’s reporting period.
The core offensive strategies are “invest to grow”,”improve position”, and “new market
entry”.
Price elasticity is almost always a negative number due to the inverse relationship
between price and volume.
Product-markets with low indexes for both market attractiveness and competitive
position have the strongest portfolio position and the best opportunities for profit
performance.
A key benefit of market segmentation is identifying segments that should not be
pursued.
The share development index (SDI) is the ratio of share potential to actual sales.
A share-penetration strategy in an existing market generally takes more time to succeed
than
a strategy to enter a new, undeveloped market.
Service quality affects customer retention and profit in the numerator and accounts
receivable in the denominator of the return on assets equation.
Entry into emerging markets requires significant investment to develop demand.
The combination of market attractiveness and competitive advantage creates a portfolio
position for any given product-market.
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 ratio of total sales to current market demand is known as the share development
index (SDI).
The higher the price-earnings ratio, the greater the risk to investment.
Marketing plans should not be aggressively communicated either internally or
externally to protect competitive position.
The fundamental objective of all share leaders is to invest to protect market share.
We can create a set of preference curves by examining how customers make trade-offs
when choosing among various combinations of price and benefits, using conjoint
analysis.
Minimal customer focus results in a reduction in the cost of marketing and sales.
A product that will eliminate or significantly reduce the usage costs that customers
presently
incur offers a substantial economic value.
Businesses with a low-cost advantage in markets in which price is an important
determinant of customer value can use low prices as a basis for product positioning.
The strategic market planning process begins with a careful assessment of market
attractiveness and competitive position for each product-market that a business serves
or is considering serving.
For the consumer market, marketing channels include direct channels as well as indirect
channels.
Successful implementation of a marketing plan is directly related to the structure of a
business’s marketing effort.
Adapting the marketing plan, a force that contributes to the successful implementation
of a marketing plan, involves ________.
A) conducting a variance analysis
B) using an adaptive rollout
C) creating ownership teams
D) promoting the business-as-usual routine
E) developing and using detailed action plans
Which of the following addresses emotional benefits tied to the customer’s personal
psychological needs?
A) cost of purchase
B) maintenance cost
C) product availability
D) brand personality
E) disposal cost
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.
A scope effect refers to ________.
A) lowering the per-unit manufacturing cost of a product by increasing the volume of
production
B) improving the efficiency by learning new methods of management and production
C) lowering the average unit cost of all products through extension of the product line
D) increasing revenue by increasing the scope of marketing initiatives
E) lowering the marketing costs through increasing the advertising cost efficiency of a
brand extension strategy
Which of the following core defensive strategies is appropriate when a business is
operating in a very unattractive market and has a very weak competitive advantage?
A) a harvest strategy
B) a monetize strategy
C) an optimize strategy
D) a protect strategy
E) an invest strategy
A firm plans to use a defensive core strategy of optimize position, with the strategic
objective of maximizing profits. Which of the following strategies is the firm most
likely to implement as a part of its core strategy?
A) enter new related markets
B) reduce market focus
C) develop new markets
D) divest for cash flow
E) harvest for cash flow
Gross profit equals ________.
A) unit volume multiplied by margin per unit
B) unit volume divided by unit margin
C) (price minus variable cost) divided by unit volume
D) unit volume multiplied by price
E) market demand multiplied by market share
Which of the following message frequency strategies would be appropriate for seasonal
products, political candidates, and special events where the goal is to steadily increase
message awareness over a relatively short period of time with no concern about
message awareness decay after the messages stop?
A) a concentrated frequency strategy
B) a distributed frequency strategy
C) a gross frequency strategy
D) an umbrella strategy
E) a constant frequency strategy
Which of the following terms refers to the development of technology and improved
products for a
given product market?
A) discontinuous innovation
B) radical innovation
C) continuous innovation
D) market penetration
E) market development
A company’s fixed marketing administrative expense was estimated to be $12 million. It
has retained 245,000 customers and has acquired 36,000 new customers. The
acquisition cost per customer is 10 times more than the retention cost per customer. If
the retention cost per customer is $180, calculate the marketing and sales budget of the
company.
A) $236.6 million
B) $338.4 million
C) $183.9 million
D) $120.9 million
E) $85.8 million
Differences in values, attitudes, and interests are examples of ________ forces shaping
consumer needs.
A) demographic
B) lifestyle
C) usage behavior
D) geographic
E) firmographic
The marketing and sales budget of Wilson Inc. is estimated to be $250 million. It has
retained 450,000 customers and acquired 100,000 new customers. The marketing
administration cost of the company is $90 million. If the retention cost per customer is
$75, calculate the acquisition cost per customer.
A) $450
B) $1,262.5
C) $1,580.5
D) $676
E) $980
________ are customers who buy because a product is being offered at an attractive
price or with a promotional incentive.
A) Top performers
B) Underachievers
C) High potential customers
D) Misfits
E) Spinners
Which of the following segmentation strategies involves using a highly refined
marketing effort directed at an overlooked, small group of target customers?
A) a mass-market strategy
B) an adjacent-segment strategy
C) a multi-segment strategy
D) a large-segment strategy
E) a niche-segment strategy
Which of the following is a mode of pull marketing communication?
A) channel marketing
B) sales incentives
C) channel financing
D) direct marketing
E) co-op advertising
A firm plans to use a defensive core strategy of monetize, harvest, and divest, with the
strategic objective of maximizing cash flow. 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) develop new markets
D) manage for cash flow
E) improve customer loyalty
Which of the following is a lifestyle influence that shapes customer needs?
A) income
B) age
C) education
D) occupation
E) interests
David has determined that there are meaningful differences in customer needs within
the health supplements market segment in the U.S., that are not being met by the
current segmentation strategy used by the businesses in the sector. What market
segmentation strategy would be appropriate for David to use to capitalize on this
opportunity?
A) mass-market strategy
B) market penetration strategy
C) subsegment strategy
D) large-market strategy
E) undifferentiated strategy
If TRX Inc’s sales total $150 million, and the cost of goods sold is $50 million,
calculate the percent gross profit for TRX.
A) 33.3%
B) 25%
C) 66.6%
D) 15%
E) 75%
Calculate the number of transactions made per year if a total of 20 million transactions
are made in a year by 40 manufacturers and 4,000 retailers.
A) 250
B) 125
C) 75
D) 50
E) 175
Which of the following is used to determine a product’s life-cycle cost?
A) disposal cost
B) direct materials cost
C) direct labor cost
D) cost of satisfaction
E) distribution cost
During the ________ stage of reverse innovation, a firm must communicate and deliver
a value proposition that is built around the unique customer benefits of the product.
A) developing
B) listening
C) choosing
D) launching
E) identifying
Which of the following statements is true of marketing channels?
A) A direct marketing channel removes a business from the end-user customer.
B) A direct marketing channel offers higher margins than an indirect channel, but the
company must bear the cost of marketing expenses.
C) Customers who make small purchases are usually profitably served with a direct
channel system.
D) An indirect marketing channel is often expensive, so it limits the number of
customers a business can profitably reach.
E) Original equipment manufacturers (OEMs) are part of a direct marketing channel
system.
Which of the following is true of the product life cycle?
A) In the early stages of the product life cycle, the NMC is positive.
B) As the product moves into the declining stage, it reaches a break-even NMC.
C) As the market matures, flat market demand, and lowered marketing and sales
expenses results in higher NMCs.
D) At a break-even NMC, the gross profit is equal to the marketing and sales expenses.
E) At the early growth stage, the annual NMCs grow and eventually peak.
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
The main purpose of a reduced-market-focus strategy is to ________.
A) enter new market-segments
B) become more efficient
C) increase market share
D) develop new markets
E) increase customer loyalty
A channel system that provides a wide range of products required in order to achieve
the desired level of customer appeal is satisfying the product performance factor of
________.
A) quality
B) assortment
C) form
D) delivery
E) after-sale service
Jack is examining his company’s financial performance measures. Which of the
following would be on the list?
A) net marketing contribution
B) market ROI
C) relative service quality
D) customer satisfaction
E) return on sales
Which of the following is an internal forward-looking metric for a company?
A) sales revenues
B) late payments
C) percent gross profit
D) return on assets
E) net profit before tax
In the long run, a growth-oriented marketing strategy will shift from a(n) ________
strategic market plan to a(n) ________ strategic market plan.
A) growth; hold
B) hold; growth
C) offensive; defensive
D) investment; tactical
E) harvest; monetizing
Modern Shades, a firm that manufactures cosmetic products for women, should have
had a market share of 8% in the cosmetics market, but owing to a variety of other
factors, its actual market share was only 5%. Furthermore, it was estimated that the
business’ market share index potential would be 15% if the business achieved the
desired level of customer response along the share development path. What is Modern
Lip’s share development index (SDI)?
A) 20
B) 33.3
C) 53.3
D) 67.5
E) 86.7
If 30 million transactions are made per year at $15 per transaction, what is the total
transaction cost?
A) $450 million
B) $200 million
C) $2 billion
D) $4.5 billion
E) $900 million
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 benefits would accrue to
ABL Inc. from the success of “Rebel” in the market?
A) reduced barriers of entry
B) increased cost-efficiency
C) reduced need for quality controls
D) reduced customer retention rates
E) increased break-even sales figures
Name and describe the appropriate defensive strategic market plans for a business
operating in a very unattractive market. At which level of competitive advantage would
each strategy be appropriate? Within those types, what are the strategies and when
should each be used?
Explain the three shareholder metrics used in market-based management.
List and briefly describe in order the steps in the process of building a marketing plan.
List and briefly discuss the fours steps in developing new customer solutions with the
help of a product’s lead users.
Discuss the three major forces that contribute to success or failure in implementing a
marketing plan.
Name the hierarchical categories of product performance and for each, name and
describe two dimensions of product performance that can serve as bases for product
differentiation.
Name and describe four of the six industry forces that shape the attractiveness of a
competitive environment.
Identify the operational components of channel performance. Explain how each impacts
channel performance, and describe how these factors are influenced by the type of
channel system used.
Name and describe three offensive strategic market plans and three defensive strategic
market plans.
Name the hierarchical categories of product performance and for each, name and
describe two dimensions of product performance that can serve as bases for product
differentiation.
Price is the most visible cost of any purchase. List the seven types of non-price
life-cycle costs. How can an understanding of these costs enable a business to charge a
higher price than the competition?
Compare and contrast the three types of customer relationship marketing strategies.
Explain how channel systems build customer value.
How do follower businesses with above-average profitability and below-average profit
performance differ in terms of competitive advantage and investment and asset
management?
Price is the most visible cost of any purchase. List the seven types of non-price
life-cycle costs. How can an understanding of these costs enable a business to charge a
higher price than the competition?
Compare and contrast push and pull communication strategies.
Name and describe the three different types of cost advantage a business can achieve to
attain a competitive advantage. Be sure to explain how each type results in a
competitive advantage.
Compare and contrast the different ways in which new brand names are created and
provide an example of each.
