Customers with ________ customer satisfaction ratings are profitable but are below the
average customer profitability.
A) Very satisfied
B) Dissatisfied
C) Somewhat dissatisfied
D) Satisfied
E) Somewhat satisfied
A company’s return on capital is ________.
A) invested capital divided by net marketing contribution
B) net profit multiplied by invested capital
C) net profit divided by invested capital
D) net marketing contribution divided by invested capital
E) invested capital divided by net profit
Earnings per share is ________.
A) invested capital divided by number of shares
B) net marketing contribution multiplied by number of shares
C) net marketing contribution divided by number of shares
D) net profit divided by number of shares
E) net profit multiplied by number of shares
Which of the following statements is true?
A) Offensive strategic market plans require investment for growth, which limits
long-run profit performance, but does not limit sales revenue.
B) Defensive strategic market plans promote short-run profit performance but are not
that effective in growing sales revenue.
C) In the long run, all market strategy will shift from an offensive strategic market plan
to a growth-oriented plan.
D) Offensive strategic market plans are geared to deliver above-average performance in
the areas of sales growth, share position, and improved short-run profits.
E) Defensive strategic market plans are not geared towards the protection of market
share.
With reference to the six-category scale, a consumer satisfaction index (CSI) of 20
denotes that the customer is ________.
A) dissatisfied
B) satisfied
C) very satisfied
D) somewhat dissatisfied
E) somewhat satisfied
Calculate the total number of manufacturers, if 15 transactions are made per year with
10,000 retailers. The total number of transactions is 3 million transactions per year.
A) 25
B) 10
C) 20
D) 35
E) 50
Which of the following is true about a pulsing message reinforcement strategy?
A) It is more expensive than maintaining a high level of awareness with traditional
media.
B) It can be used for products that are purchased more frequently at some times of the
year than at others.
C) It involves maintaining a certain level of base advertising at all times.
D) It reduces copy wear-out due to overexposure to the same messaging.
E) It involves increasing the message frequency just before and during the prime buying
period of a product.
A business generates a net profit of $124 million and its return on capital is 12.5%.
Calculate the total capital invested into the business.
A) $992 million
B) $860 million
C) $740 million
D) $668 million
E) $532 million
Red Hot Mexican Grill, a chain of Mexican-style casual dining restaurants in America,
has traditional Mexican dcor throughout the restaurant and the waiters are dressed in
Mexican hats. This is best an example of ________.
A) service reliability
B) service assurance
C) performance
D) appearance
E) responsiveness
The operating income of Carbon Footwear is $10 million. Its net marketing contribution
is derived from sales of $80 million and the marketing and sales expenses amount to
$15 million. The general and administrative expenses and other operating expenses
amount to $20 million.
Mini-Case Question. Calculate the percent gross profit generated by Carbon Footwear.
A) 52.50%
B) 54%
C) 55.75%
D) 56.25%
E) 60%
If there are 20 manufacturers and 500 retailers, and each manufacturer has 15
interactions per year with each retailer at a cost of $200 per transaction, calculate the
total number of transactions.
A) 100,000 transactions per year
B) 150,000 transactions per year
C) 200,000 transactions per year
D) 250,000 transactions per year
E) 300,000 transactions per year
Mathis Inc. is a home appliance manufacturing firm based in Vermont that sells its
products under the brand name GoodHome. The firm initially built a reputation in the
household appliances market for its high-quality products. After an extensive market
research, the firm used its brand reputation to expand into the home furnishing industry.
In this example, Mathis Inc. uses which of the following product line extension
strategies?
A) a vertical brand-line extension strategy
B) a horizontal brand-line extension strategy
C) a new product-market brand extension strategy
D) a cobranding extension strategy
E) a product bundling extension strategy
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%
________ is the ratio of net marketing contribution to a company’s investment in
marketing and sales expenses.
A) Gross profit
B) Marketing ROI
C) Return on equity
D) Marketing ROS
E) Market demand
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
Which of the following is true of marketing using a direct marketing channel system?
A) Direct mail and catalog sales are more labor-intensive than telemarketing, but are
more efficient at customer interaction.
B) Using direct salespeople is generally cheaper than using brokers, sales agents, or
manufacturer’s representatives.
C) Telemarketing provides a better opportunity for a sales communication but is more
labor intensive and usually more expensive than direct marketing.
D) Compared to indirect marketing channel systems, direct marketing channel systems
maximize the number of customers that a business can profitably reach.
E) Digital marketing channels have a greater customer reach than other channels, but
are also more expensive.
Kate owns a women’s fashion apparel manufacturing firm. She has determined that the
customers for her business’ products can be segmented into three distinct segments
differing in primary needs, demographics, lifestyle, and purchase behaviors. She now
wants to develop a value proposition that delivers value to target customers in each
segment. Which stage of the needs-based market segmentation process does this
represent?
A) segment identification
B) segment attractiveness
C) segment profitability
D) segment positioning
E) segment marketing mix strategy
The goal of a monetize strategy is to ________.
A) diversify growth
B) develop new markets
C) extract the maximum short-run cash flow from the market
D) slowly withdraw a product from the market
E) quickly withdraw a product from the market
What is the customer retention for a company given an average customer life of two
years?
A) 40%
B) 50%
C) 75%
D) 80%
E) 100%
The first step in building a marketing plan is the step of ________.
A) revenue planning
B) performance plan
C) situation analysis
D) marketing strategy
E) performance review
In ________ pricing, the price is set on the basis of the value that customers realize
when they compare the price and benefits of the company’s product with those of a key
competitor’s product.
A) life-cycle value
B) customerization
C) perceived-value
D) value-in-use
E) cost-based
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
The purchase price of commercial food grinders has a relative importance of 30. Your
food grinder has a purchase price rating of 6, and three of your competitors have a
rating of 4, 3, and 5. What is your relative advantage with regards to the purchase price
of your product?
A) 30
B) 180
C) 20
D) 60
E) 6
A business could elect to pursue a large-segment strategy when ________.
A) it wants to provide customized products
B) a market is segmented and marketing resources are limited
C) demographics are not distinctive
D) differences in customer needs are small
E) it wants to carve out a niche within a segment using a highly refined marketing effort
directed at an overlooked group of customers
We-Move-It Inc. is a moving company located in Athens, Ohio. The firm has its
heaviest business during the summer months. Thus, the firm maintains a GRP of 40
throughout the year and a GRP of 100 during April and May, which is the prime buying
period for its services. In this example, We-Move-It Inc. uses which of the following
approaches to message reinforcement?
A) a heavy-up exposure pattern
B) an average frequency strategy
C) a gross frequency strategy
D) a pulsing strategy
E) a benchmarking strategy
AVB Inc. is a business that produces automobile parts. The plan and the actual
performance of the business are shown in the table.
Mini-Case Question. Calculate the net marketing contribution variance of the business.
A) -$20,000
B) $20,000
C) $140,000
D) -$26,000
E) $26,000
Dynamo Inc., a motor company, started by selling sturdy, affordable, low-maintenance
motorcycles in the U.S. Initially the firm pursued a single-segment focus, and targeted
the middle-income group. When the company reached the point of full market
penetration of the middle-income group, it marketed to a closely related attractive
segment by introducing a line of luxury motorcycles for the high-income group of
consumers. Which of the following type of market segmentation strategy does Dynamo
Inc. use when it targets the high-income group of consumers?
A) multi-segment strategy
B) adjacent-segment strategy
C) mass-customization strategy
D) niche-segment strategy
E) mass-market strategy
Which of the following would be considered a break-even analysis component of
performance plan?
A) expenditures
B) marketing profits
C) pricing
D) asset turnover
E) profitability risk
A company’s operating income as a percentage of sales is equal to the ________ minus
other expenses as a percentage of sales.
A) gross profit
B) marketing ROI
C) sales-to-assets ratio
D) marketing ROS
E) net marketing contribution
As an operational component of channel performance, operating efficiency refers to
________.
A) cost to serve
B) volume
C) customer reach
D) return on sales
E) retention
Calculate the percent gross profit for a company if the sales revenue generated is $200
million, and the firm sells 60 products that cost $2 million each to produce.
A) 20%
B) 40%
C) 50%
D) 60%
E) 80%
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
As the sales force is given more products to sell to the same customers, a(n) ________
effect is created.
A) umbrella marketing
B) network
C) learning
D) marketing cost scope
E) cluster
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
Margin per unit equals ________
A) demand x sales
B) total sales contribution – marketing and sales expenses
C) price – fixed unit cost
D) price – variable unit cost
E) price – total unit cost