TEST BANK for Marketing Management, Global Edition 16th Edition by Philip Kotler, Kevin Keller by StudyGuide

TEST BANK for Marketing Management, Global Edition 16th Edition by Philip Kotler, Kevin Keller TABLE OF CONTENTS Chapter 1 Defining Marketing for the New Realities Chapter 2 Marketing Planning and Management Chapter 3 Analyzing Consumer Markets Chapter 4 Analyzing Business Markets Chapter 5 Conducting Marketing Research Chapter 6 Identifying Market Segments and Target Customers Chapter 7 Crafting a Customer Value Proposition and Positioning Chapter 8 Designing and Managing Products Chapter 9 Designing and Managing Services Chapter 10 Building Strong Brands Chapter 11 Managing Pricing and Sales Promotion Chapter 12 Managing Marketing Communications Chapter 13 Designing an Integrated Marketing Campaign in the Digital Age Chapter 14 Personal Selling and Direct Marketing Chapter 15 Designing and Managing Distribution Channels Chapter 16 Managing Retailing Chapter 17 Driving Growth in Competitive Markets Chapter 18 Developing New Market Offerings Chapter 19 Building Customer Loyalty Chapter 20 Tapping into Global Markets Chapter 21 Socially Responsible Marketing

Chapter 1 Defining Marketing for the New Realities 1) Which of these is an accurate characterization of the contemporary view of marketing? A) Marketing is synonymous with selling. B) With the rise of social commerce, company-driven marketing is no longer important. C) Marketing's emphasis within the firm continues to decline. D) To improve efficiency, most firms now restrict marketing activities within the "official" boundaries of the marketing department. E) Marketing is about identifying and meeting human and social needs in a way that harmonizes with the goals of the organization. Answer: E Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 2) With regard to the selling function, what did Peter Drucker have to say about the aim of marketing? A) Selling should replace marketing. B) Selling should have equal importance in the corporate hierarchy. C) It should make selling superfluous. D) The sales function should set strategy, while the marketing function owns tactics. E) Selling and marketing are synonymous. Answer: C Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 3) Which of these was identified as key reason why Nintendo had a hit with the Wii and Apple with the iPad? A) Both companies designed the right product based on thoughtful research. B) Both products were flukes that happened to hit the market at the right time. C) Neither product led its category, but both were sold aggressively. D) Both products underpriced their competition. E) American consumers have enough disposable income to afford luxury gadgets. Answer: A Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking

4) Which of these entities represent the bulk of most countries' marketing efforts? A) Experiences B) Services C) Goods D) Events E) Places Answer: C Diff: 1 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 5) Raw materials, labor, and sources of funding represent which kind of market? A) Basic B) Primary C) Secondary D) Resource E) Business to business Answer: D Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 6) A public service announcement (PSA) encouraging people to wear masks during a pandemic outbreak represents what kind of marketed entity? A) Ideas B) Services C) Experiences D) Information E) Social good Answer: A Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 7) Which of these is NOT one of the five basic markets? A) Resource markets B) Manufacturer markets C) Educational markets D) Consumer markets E) Government markets Answer: C Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking

8) How does successful marketing create jobs? A) By raising the standard of living B) By encouraging conspicuous consumption C) By increasing brand equity D) By promoting capitalism E) By building demand for products and services Answer: E Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 9) In the four flows in a modern exchange economy, what do sellers receive from buyers in addition to money? A) Legal rights B) Legal releases C) Intangible resources D) Information E) Confirmation Answer: D Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 10) The decline of companies such as MySpace and Blockbuster can be attributed at least in part to which of these marketing mistakes? A) Failing to continually improve value offerings and marketing strategies B) Failing to articulate a clear customer message C) Overpricing in a declining economy D) Confusing markets with unclear corporate branding E) Failing to use marketing intermediaries effectively Answer: A Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 11) Which of these reasons was identified as a success factor for the British firm RB (formerly Reckitt Benckiser)? A) Strong sales teams B) Emotional advertising C) Digging deeply into consumer habits D) Government subsidies E) Undercutting competitors on prices Answer: C Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 3

12) Which of these is a reason senior management should encourage fresh ideas from underrepresented groups of employees? A) To challenge company orthodoxy B) To lower costs by engaging lower-paid worker in research C) To avoid charges of discrimination D) To copy what benchmark competitors are doing E) To promote employee morale Answer: A Diff: 1 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 13) Which of the following statements about marketing is true? A) It is of little importance when products are standardized. B) It can help create jobs in the economy by increasing demand for goods and services. C) It helps to build a loyal customer base but has no impact on a firm's intangible assets. D) It is more important for bigger organizations than smaller ones. E) It is seldom used by nonprofit organizations. Answer: B Diff: 1 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 14) management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. A) Marketing B) Knowledge C) Operations D) Strategic E) Distribution Answer: A Diff: 1 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking

15) Identify the correct statement about marketing management. A) It is primarily concerned with the systematic gathering, recording, and analysis of data about issues related to marketing products and services. B) It focuses mostly on monitoring the profitability of a company's products and services. C) It focuses solely on attaining an organization's sales goals in an efficient manner. D) It is defined as the field that deals with planning and managing a business at the highest level of corporate hierarchy. E) It occurs when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. Answer: E Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 16) A social definition of marketing says _. A) effective marketing requires companies to remove intermediaries to achieve a closer connection with direct consumers B) a company should focus exclusively on achieving high production efficiency, low costs, and mass distribution to facilitate the broadest possible access to the company's products C) marketing is the process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others D) marketing is the process of extracting the maximum value from consumers to facilitate corporate growth E) marketing is the process of aggressive selling and promotion to encourage the purchase of products that might otherwise be unsought by the consumer Answer: C Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 17) goods constitute the bulk of most countries' production and marketing efforts. A) Durable B) Impulse C) Physical D) Luxury E) Intangible Answer: C Diff: 1 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking

18) As economies advance, a growing proportion of the economy's activities focuses on the production of . A) products B) events C) experiences D) luxury goods E) services Answer: E Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 19) Car rental firms, hair dressers, and management consultants provide A) goods B) experiences C) events D) services E) information Answer: D Diff: 1 LO: 1.1: Define the scope of marketing. AACSB: Analytical thinking; Application of knowledge

20) Soccer's World Cup is promoted aggressively to both companies and fans. This is an example of marketing a(n) . A) idea B) place C) luxury item D) event E) service Answer: D Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Application of knowledge 21) The "Malaysia, Truly Asia" ad campaign that showcased Malaysia's beautiful landscape and its multicultural society in order to attract tourists is an example of marketing. A) event B) property C) service D) place E) idea Answer: D Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Analytical thinking; Application of knowledge 6

22) In Walt Disney's Magic Kingdom, customers can visit a fairy kingdom, a pirate ship, or even a haunted house. Disney is marketing a(n) . A) experience B) service C) event D) organization E) good Answer: A Diff: 1 LO: 1.1: Define the scope of marketing. AACSB: Analytical thinking; Application of knowledge 23) People in emerging countries today are becoming increasingly health conscious and are seeking healthy food choices. As a result, demand for health foods is rising steadily, creating an opportunity for marketers to exploit this market. A) demographic B) business C) need D) geographic E) service Answer: C Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Analytical thinking 24) Services constitute the bulk of most countries' production and marketing efforts. Answer: FALSE Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Analytical thinking 25) Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies. Answer: TRUE Diff: 1 LO: 1.1: Define the scope of marketing. 26) Properties are tangible rights of ownership to either real property (real estate) or financial property (stocks and bonds). Answer: FALSE Diff: 1 LO: 1.1: Define the scope of marketing.

27) How does the social definition of marketing differ from the managerial definition? Answer: The managerial definition focus on the challenges and responsibilities of managing marketing functions and processes within the organization. The social definition is more of an "outside looking in" definition, as a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Analytical thinking 28) What are the five basic markets in the modern economy? Answer: The five basic markets are resource markets, manufacturer markets, consumer markets, intermediary markets, and government markets. Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 29) Marketing has been described as being both an "art" and a "science." Discuss the differences and similarities between these two marketing thrusts. Provide your theoretical response and a "real-life" example where you have seen both processes work effectively at creating customer value and loyalty. Answer: The student should demonstrate his or her understanding that the marketer must use data to understand customer needs and translate this understanding into properly designed products and services. This requires application of state-of-the art tools and techniques. It is also an art as marketers try to find creative solutions to consumer needs. Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 30) Marketers are involved in marketing 10 types of entities. List and briefly characterize these entities. Answer: The types of entities that are marketed are: • goods – physical goods • services – hotels and car rental services • events – time-based events such as trade shows • experiences – Walt Disney's Magic Kingdom • persons – celebrity marketing • places – cities, states, regions, and even whole nations • properties – intangible rights of ownership of either real property or financial property • organizations – corporate identity • information – information produced and marketed as a product • ideas – marketing the basic idea of a market offering. Diff: 3 LO: 1.1: Define the scope of marketing. AACSB: Analytical thinking; Application of knowledge

31) Selling is not the most important part of marketing. Explain why not. Answer: According to Peter Drucker, "There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available." Diff: 2 LO: 1.1: Define the scope of marketing. AACSB: Reflective thinking 32) Relationship marketing, integrated marketing, internal marketing, and performance marketing are the four pillars of what concept? A) Business to business marketing B) Technology-driven marketing C) Strategic marketing D) Holistic marketing E) Tactical marketing Answer: D Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 33) Which of these is true regarding the growth of data analytics and artificial intelligence platforms? A) Their complexity is beyond the capability of all but the largest firms. B) Their spiraling costs put them out of reach of all but the largest firms. C) Everyone can use them now, so their competitive advantages have disappeared. D) Growth has democratized these technologies, making them available to smaller firms. E) Despite initial promise, they haven't had much impact on contemporary marketing. Answer: D Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 34) What effect have advanced telecommunication technologies and workflow platforms had on global business? A) They have diluted global marketing efforts. B) They have increased nationalistic tendencies in marketing communication. C) They have encouraged a backlash against multiculturalism. D) They have had no measurable impact. E) They have lowered geographic and political barriers. Answer: E Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge

35) Which of these is an identified health risk associated with increased globalization? A) Localized diseases can become worldwide pandemics more easily. B) Governments are less likely to assist with global health crises. C) Misinformation creates anxiety around critical health issues. D) Globalization encourages hoarding of scarce medical resources. E) Globalization interferes with international medical research. Answer: A Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 36) Why are a company's own employees considered vital participants in holistic marketing? A) Employees who feel ignored will lash out on social media. B) Companies can spread out the costs of marketing by involving more people. C) Marketing succeeds only when all departments work together to achieve customer goals. D) A democratic approach to marketing invites everyone in the company to participate. E) Few companies still have traditional marketing departments. Answer: C Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 37) Which of these characterizes the need for internal coordination of the marketing effort? A) A tops-down approach that pushes the marketing concept through the organization B) Concentric alignment with marketing at the center C) Vertical alignment with senior management D) Vertical alignment with senior management and horizontal alignment with other departments E) Horizontal alignment with other departments and vertical alignment with the sales channel Answer: D Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 38) Which of these components of holistic marketing should take priority over the others? A) Internal marketing B) Relationship marketing C) Integrated marketing D) Performance marketing E) None of them take priority over the others Answer: E Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge

39) What is the ultimate outcome of relationship marketing? A) Higher profits B) Sustainable profits C) A marketing network with mutually profitable relationships D) Lower barriers to entry in new markets E) Lower marketing costs through cost-sharing with network partners Answer: C Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 40) Who are the four key constituencies in relationship marketing? A) Investors, news media, customers, and employees B) Suppliers, customers, retailers, and wholesalers C) Customers, retailers, financial analysts, and investors D) Customers, employees, marketing partners, and the financial community E) Manufacturers, customers, service providers, and investors Answer: D Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 41) Why have firms such as Bank of America suspended their blogging efforts in favor of Twitter and Facebook? A) To focus on where their customers are communicating B) To reduce regulatory burdens C) To improve cost efficiencies in corporate communications D) To reduce staff time required to connect with customers E) To reduce their digital footprints Answer: A Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Integration of real-world business experiences 42) If a company rolling out a new marketing communications campaign conducted an employee preview party and training session to help workers understand the significance of the new campaign, the company would be engaging in . A) integrated marketing B) internal marketing C) performance marketing D) relationship marketing E) multichannel marketing Answer: B Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 11

43) marketing recognizes and reconciles the scope and complexities of marketing activities and offers an integrated approach to managing strategy and tactics. A) Niche B) Holistic C) Relationship D) Supply chain E) Demand-centered Answer: B Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 44) What are the four broad components of holistic marketing? A) Relationship, internal, position, and performance marketing B) Integrated, internal, position, and performance marketing C) Relationship, integrated, internal, and performance marketing D) Integrated, relationship, social responsibility, and position marketing E) Relationship, social responsibility, internal, and performance marketing Answer: C Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 45) marketing aims to build mutually satisfying long-term collaboration with key constituents, such as customers, employees, suppliers, distributors, and other marketing partners, in order to earn and retain their business. A) Integrated B) Demand-based C) Direct D) Relationship E) Internal Answer: D Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking

46) Which of the following is most consistent with the integrated marketing approach? A) A good product will sell itself. B) If left alone, consumers are inclined to purchase only inexpensive products. C) All communication to consumers must deliver a consistent message irrespective of the medium. D) In order to succeed, the main focus should be on having an efficient production process in place. E) Online marketing is less important than traditional marketing efforts. Answer: C Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 47) Which aspect of holistic marketing motivates employees and ensures that everyone in the organization embraces appropriate marketing principles, especially senior management? A) Relationship marketing B) Integrated marketing C) Internal marketing D) Network marketing E) Performance marketing Answer: C Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking 48) Financial accountability and social responsibility marketing are elements of marketing. A) performance B) relationship C) internal D) social E) mass Answer: A Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking

49) Companies are recognizing that much of their market value comes from , particularly their brands, customer base, employees, distributor and supplier relations, and intellectual capital. A) variable assets B) value propositions C) intangible assets D) market offerings E) industry convergence Answer: C Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 50) In an attempt to create greater competition and growth opportunities, countries often . A) increase trade barriers B) protect industries C) deregulate industries D) encourage intermediation E) reduce privatization Answer: C Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Diverse and multicultural work environments 51) Which of the four transformational market forces mentioned in the chapter is associated with the number of mobile phones in India recently exceeding 500 million and Boston Consulting Group believing brand marketers must enhance their "digital balance sheets"? A) Demographics B) Accountability C) Social responsibility D) Globalization E) Technology Answer: E Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking

52) The Body Shop, Timberland, and Patagonia incorporate as a way to differentiate themselves from competitors, build consumer preference, and achieve notable sales and profit gains. A) social responsibility B) technology C) globalization D) collaboration E) goodwill Answer: A Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 53) Tracy's is a chain of hair dressing salons for women. They use television, magazines, radio, and newspapers to advertise their services. The owners ensure that all communication channels deliver a common message to prospective customers. Tracy's believes in _ marketing. A) internal B) integrated C) socially responsible D) global E) relationship Answer: B Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking; Application of knowledge 54) The ultimate outcome of relationship marketing is a unique company asset called the , consisting of the company and its supporting stakeholders. A) brand B) supply chain C) marketing network D) value proposition E) service channel Answer: C Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking

55) Which of the following reflects the "people" component of the marketing mix? A) The creativity, discipline, and structure brought to marketing management B) The development of new products by the marketers C) The firm's consumer-directed activities D) The right set of processes to guide activities and programs within the firm E) The internal marketing of the firm Answer: E Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 56) Showrooming is associated with which of the following new consumer capabilities? A) Consumers can tap into social media to share opinions and express loyalty. B) Consumers can actively interact with companies. C) Consumers can use the internet as a powerful information and purchasing aid. D) Consumers can reject marketing they find inappropriate. E) Consumers can communicate on the move. Answer: C Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 57) The drugstore chain CVS uses loyalty-card data to better understand what consumers purchase, the frequency of store visits, and other buying preferences, which is associated with which technology-enhanced company capability? A) Companies can reach consumers quickly and efficiently via social media and mobile marketing, sending targeted ads, coupons, and information. B) Companies can improve purchasing, recruiting, and internal and external communications. C) Companies can improve cost efficiency. D) Companies can collect fuller and richer information about markets, customers, prospects, and competitors. E) Companies can use the internet as a powerful sales channel. Answer: D Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge

58) The success of online purchasing resulted in _ in the delivery of products and services by intervening in the traditional flow of goods through distribution channels. A) disintermediation B) diversification C) reduced competition D) deregulation E) privatization Answer: A Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 59) In response to threats from such companies as Amazon.com, E*TRADE, and dozens of others, established manufacturers and retailers became "brick-and-click" oriented by adding online services to their existing offerings. This is known as . A) reintermediation B) disintermediation C) retail transformation D) e-collaboration E) new-market synchronization Answer: A Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 60) When eBay and Amazon.com cut out the majority of middlemen that normally would participate in the exchange process, it is an example of . A) deregulation B) reverse auctioning C) reintermediation D) disintermediation E) diversification Answer: D Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Integration of real-world business experiences

61) Each of the following is true about the internet's impact on the way business is conducted today, EXCEPT one. Identify the exception. A) It has facilitated high-speed communication among employees. B) It has empowered consumers with easy access to information. C) It can be used as a powerful sales channel. D) It has facilitated mass marketing but not the sale of customized products. E) It enables marketers to use social media to advertise their products. Answer: D Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 62) Industry boundaries are blurring at an incredible rate as companies are recognizing that new opportunities lie at the intersection of two or more industries. Answer: TRUE Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 63) The overabundance of information available on the internet has made it more difficult for consumers to compare product features and prices. Answer: FALSE Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 64) The selling concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Answer: FALSE Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking 65) Integrated marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Answer: FALSE Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 66) Performance marketing requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. Answer: TRUE Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 18

67) What parameters does a company typically monitor within the concept of performance marketing? Answer: Performance marketing involves reviewing metrics assessing market share, customer loss rate, customer satisfaction, and product quality in the evaluation of the effectiveness of marketing activities. Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 68) Characterize how proponents of holistic marketing view the importance of internal marketing. Answer: Proponents of holistic marketing consider internal marketing to be as important as marketing to consumers. Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 69) Characterize the ultimate goal of relationship marketing. Answer: The ultimate outcome of relationship marketing is a unique company asset called a marketing network, consisting of the company and its supporting stakeholders – customers, employees, suppliers, distributors, retailers, and others. Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Application of knowledge 70) Identify three specific ways globalization has affected the marketing environment. Answer: New transportation, shipping, and communication technologies have made it easier for us to know the rest of the world, to travel, to buy and sell anywhere. Globalization has made countries increasingly multicultural. U.S. minorities have much economic clout, and their buying power is growing faster than that of the general population. Globalization changes innovation and product development as companies take ideas and lessons from one country and apply them to another. Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking 71) Discuss the concept of disintermediation and provide an example. Answer: Disintermediation grew out of the rush to embrace the dot-coms and e-commerce. Essentially, the dot-coms removed many of the traditional intermediaries by encouraging consumers to deal directly with the company via the internet. "Brick-and-click" businesses eventually brought some of the intermediaries back through a process called reintermediation. Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Integration of real-world business experiences

72) The digital revolution has placed a whole new set of capabilities in the hands of consumers and businesses. Describe the advantages that you as a consumer have today that your parents or grandparents didn't have. Answer: Responses to this question should include: • a substantial increase in buying power • a greater variety of available goods and services • a great amount of information about practically anything • greater ease in interacting and placing and receiving orders • an increased ability to compare products and services. Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking 73) The internet has given today's companies a new set of capabilities. Among those capabilities is the ability to operate a new information channel. Describe how information can be used by the marketer in this new channel. Answer: Companies can operate a powerful new information and sales channel, the internet, with augmented geographical reach to inform and promote their businesses and products worldwide. By establishing one or more websites, a company can list its products and services, its history, its business philosophy, its job opportunities, and other information of interest to visitors. This provides consumers with a direct access to the company. Almost all websites include a "contact us" section that enables consumers to put forth their queries and interact with the company directly. This in turn allows marketers to be aware of people's opinions and preferences. Diff: 1 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking 74) Define internal marketing and its role in the company. Outline how various departments within the company can demonstrate a customer focus. Answer: Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Internal marketing must take place on two levels. At one level, the various marketing functions must work together. At the second level, other departments must embrace marketing and a "think customer" attitude. Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Reflective thinking

75) Increasingly, a key goal of marketing is to develop deep, enduring relationships with all entities that directly or indirectly affect the success of the firm. Discuss the merits of relationship marketing. From your experience as a consumer, describe the relationship marketing efforts undertaken by a company of your choice. Answer: Students should understand that the relationship between any supplier and customer is not just in the mechanics of the transaction, but more importantly how the customer is treated during the transaction. The better the relationship, the more the likelihood of the customer remaining loyal. They should pick a company that has served them well and made them feel special each and every time. Diff: 2 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking 76) What would be the marketing network elements for a motorcycle company such as Harley-Davidson? Answer: A marketing network consists of the company and its supporting stakeholders. These stakeholders for Harley-Davidson are its customers, employees, suppliers, distributors, retailers, repair services, ad agencies, lobby groups, and motorcycle support clubs. The operating principle is simple: Build an effective network of relationships with key stakeholders, and profits will follow. Diff: 3 LO: 1.2: Describe the new marketing realities. AACSB: Analytical thinking 77) Which marketing approach is based on recognizing the breadth and interdependencies of marketing programs, processes, and activities? A) The marketing concept B) The product concept C) The production concept D) The market-value concept E) The selling concept Answer: D Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 78) Which of these perspectives best reflects the market-value concept? A) Products establish a permanent impression of a company's value. B) Basic needs and customer groups change constantly. C) Products are transient; basic needs and customer groups endure forever. D) Products must be constantly redesigned to reflect unstable basic needs. E) Basic needs really don't change, so fundamental product designs don't need to, either. Answer: C Diff: 3 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 21

79) If a computer manufacturer such as Lenovo changed its strategic viewpoint from "making laptops and desktops" to "helping customers solve digital challenges," it would be adopting which mindset? A) The marketing concept B) The product concept C) The production concept D) The customer concept E) The market-value concept Answer: E Diff: 3 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking 80) If a new CEO announced that from now on the marketing function would be dispersed throughout the organization, with every department expected to contribute to customer success, this would reflect which orientation? A) The market-value concept B) The product concept C) The production concept D) The customer concept E) The marketing concept Answer: A Diff: 3 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking 81) Which of the following holds that consumers prefer products that are widely available and inexpensive? A) The product concept B) The production concept C) The selling concept D) The performance concept E) The marketing concept Answer: B Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking

82) Managers of businesses concentrate on achieving high manufacturing efficiency, low costs, and mass distribution. A) selling-oriented B) product-oriented C) production-oriented D) marketing-oriented E) consumer-oriented Answer: C Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 83) The concept holds that consumers will favor offerings with the best quality, performance, or innovative features. A) product B) marketing C) production D) selling E) holistic marketing Answer: A Diff: 1 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 84) Which of the following categories of goods and services is most likely to require an aggressive use of the selling concept? A) Shopping goods B) Unsought goods C) Necessary goods D) Luxury goods E) Complementary goods Answer: B Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking

85) As a major steel manufacturer, SteelMakers Inc. focuses on having the most efficient manufacturing processes in place. The company believes that its competitive edge lies in its ability to offer the best prices. They also maintain an excellent distribution network that ensures wide availability of their products. SteelMakers has a orientation. A) selling B) production C) product D) marketing E) social Answer: B Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking; Application of knowledge 86) Webmax Inc. produced and marketed cameras. After considerable research and development, they developed a new digital camera that had an array of new features. Webmax was so sure about the new offering that they even reduced their marketing budget. What sort of orientation does Webmax have toward the marketplace? A) production orientation B) product orientation C) selling orientation D) marketing orientation E) holistic marketing orientation Answer: B Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking; Application of knowledge 87) Marketers at Johnny Inc. believe in putting their customers ahead of everything else. Their products are carefully designed to meet customer requirements and the entire focus is on achieving customer satisfaction. Johnny Inc. follows the concept in doing business. A) production B) product C) selling D) marketing E) social responsibility Answer: D Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking; Application of knowledge

88) The concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization's products. A) production B) selling C) marketing D) product E) holistic marketing Answer: B Diff: 1 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 89) Identify the concept that emerged in the mid-1950s as a customer-centered, sense-and-respond philosophy. A) The product concept B) The production concept C) The selling concept D) The marketing concept E) The holistic marketing concept Answer: D Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 90) The marketing concept holds that . A) a firm should find the right products for its customers, and not the right customers for its products B) customers who are coaxed into buying a product will most likely buy it again C) a new product will not be successful unless it is priced, distributed, and sold properly D) consumers and businesses, if left alone, won't buy enough of the organization's products E) a better product will by itself lead people to buy it without much effort from the sellers Answer: A Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 91) The production concept is one of the newest concepts in business. Answer: FALSE Diff: 1 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 92) The marketing concept stresses finding the right customers for the company's products. Answer: FALSE Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 25

93) The selling concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Answer: FALSE Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 94) The product concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependence. Answer: FALSE Diff: 1 LO: 1.3: Explain the role of marketing in the organization. AACSB: Reflective thinking 95) Why is it important for every business to define the role that marketing will play in the organization? Answer: Defining marketing's role is important because whatever philosophy the firm adopts will guide its marketing efforts, determine how to organize and manage the marketing department, and, ultimately, find the best means to build a customer-centric organization that can deliver value to company stakeholders. Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking 96) How does the marketing concept differ from the selling concept in terms of whose needs have priority? Answer: With the selling concept, the company's primary concerns are its own needs. With the marketing concept, the priority shifts to the customer's needs. Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking 97) How might adopting the market-value view of its activities can redefine the market(s) in which a company competes? Answer: By shifting its perspective from "what can we make or sell?" to the broader question of "what do customers want or need in order to be satisfied?" a company might discover new market opportunities. These new opportunities would naturally create new competitive concerns as well, as the company could find itself going up against firms it had never before encountered. Diff: 3 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking

98) Arthur Jones has decided to start a business. He wants to manufacture lawn mowers and believes in the production concept. If this approach is taken, what will be Mr. Jones' primary areas of concentration as he builds his business? Answer: This orientation holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on high production efficiency, low costs, and mass distribution. Jones will also want an efficient production process in place. This approach is also used when a company wants to expand the market. Students may use these facts as they design their answer. Diff: 2 LO: 1.3: Explain the role of marketing in the organization. AACSB: Analytical thinking 99) If the equipment maker John Deere reorganized its marketing department into four groups—homeowners, commercial landscaping, agriculture, and construction—it would be adopting which organizational model? A) Product organization B) Matrix organization C) Functional organization D) Territory organization E) Market organization Answer: E Diff: 3 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Analytical thinking 100) Which of these is a potential advantage of shifting from product-managing at the individual brand level to a higher-level approach managing groups of brands in broader categories? A) A company will need fewer distinct brand names. B) Brands can be combined into fewer visual presentations such as logos and color palettes. C) Companies need to be less concerned with trademark protection at the individual brand level. D) With higher-level coordination at the category level, internal competition for resources can be reduced. E) Brand management can become a more tactical concern that doesn't occupy senior management attention. Answer: D Diff: 3 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

101) Which of these would be a key strategic goal for a CEO who wants her company to adopt a more customer-centric approach to marketing? A) Fostering "creative friction" with healthy interdepartmental competition for resources. B) Aligning reward systems with the goal of creating market value by developing a satisfied, loyal customer base. C) Changing the compensation model for marketing staff to be more like the commission-based scheme used to reward sales staff. D) Periodically rotating responsibility for marketing strategy among the various department heads in production, research and development, finance, and so on. E) Disbanding the traditional marketing department and assigning its tasks to departments that are closer to the problem, so to speak. Answer: B Diff: 3 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Analytical thinking 102) Which of these factors do a majority of CMOs believe will be the primary measure of their effectiveness over the next decade? A) Adoption of digital and smart technologies B) Leadership turnover within marketing departments C) Gross margin linked to marketing activities D) Return on marketing investment E) Return on sales investment Answer: D Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 103) Why do many companies now focus on key marketing processes rather than on departmental divisions and responsibilities? A) Departmental boundaries can be barriers to smooth performance. B) With the rapid shift to virtual offices, few companies still have traditional departments. C) Maintaining a marketing department is too expensive. D) The sales function has eclipsed the marketing function. E) Managing processes is easier than managing departments. Answer: A Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

104) What is a customer touch point? A) Direct interaction with tangible products; does not apply to intangible services B) The "high touch" aspect of personal services, including personal selling C) Any real or virtual point where customers directly or indirectly interact with the company D) Any stage of the marketing process where it's up to the customer to choose whether to interact with the company E) Interaction points that are between a company and its customers, without the involvement of third parties such as channel intermediaries Answer: C Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 105) If the home construction firm PulteGroup adopted a marketing organization that combined regional geographic market managers with product category managers who focus on specific types of houses, this would reflect which organizational model? A) Matrix organization B) Product-geography organization C) Geographic organization with product subsets D) Product organization E) Customer organization Answer: A Diff: 3 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Analytical thinking 106) When Xerox, IBM, and Hewlett-Packard shifted from a geographic model to organizing marketing around specific types of customers, which organization model did they adopt? A) Product needs B) Brand/product management C) Industry category D) Market E) Matrix Answer: D Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

107) To whom does the CMO report in most corporations today? A) The vice president of marketing B) The board of directors C) The president of customer operations D) The chief executive officer (CEO) E) The chief operating officer (COO) Answer: D Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 108) The most common form of marketing organization consists of reporting to a chief marketing officer who coordinates their activities. A) zonal managers B) functional specialists C) product managers D) area market specialists E) brand managers Answer: B Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 109) Which of the following is the main advantage of a functional marketing organization? A) Easy coordination B) Lower staff requirements C) Administrative simplicity D) Reduced competition between functional groups E) Smooth working relationships Answer: C Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 110) A company selling in a national market often organizes its sales force along A) functional groups B) geographic lines C) product teams D) brand groups E) product categories Answer: B Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

111) A product-management organization makes sense if . A) the company's products are quite varied B) there are very few products in the company's portfolio C) the company is pursuing a low cost strategy D) the company's products satisfy similar customer needs E) the company is vertically integrated Answer: A Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 112) A product- or brand-management organization is sometimes characterized as a(n) system. A) hub-and-spoke B) waterfall C) internal marketing D) top-down E) lateral Answer: A Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 113) A disadvantage of the product-management organization is that . A) it marginalizes a company's smaller brands B) it reduces organizational responsiveness to new products in the marketplace C) product managers generally exercise authority outside their areas of responsibility D) it prevents product managers from gaining sufficient expertise in their product areas E) it fails to build long-term strengths as brand managers normally manage brands for only short periods Answer: E Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 114) A product-management organization . A) replaces the functional organization B) simplifies the process of developing a national strategy C) often focuses on building market share rather than customer relationships D) reduces an organization's staffing requirements E) allows product managers to achieve functional expertise Answer: C Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

115) When customers fall into different user groups with distinct buying preferences and practices, a organization is desirable. A) market-management B) product-management C) brand-management D) geographic E) functional Answer: A Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 116) Companies that produce many products for many markets may adopt a organization. A) flat B) brand C) product D) matrix E) top-down Answer: D Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

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117) Which of the following is true regarding a matrix-management organization? A) It proves to be cost-effective in the long run. B) It often creates conflicts regarding authority and responsibility for marketing activities. C) It hampers the flow of information among marketing personnel. D) It fosters a strong sense of accountability for performance among product and market managers. E) It is best suited to companies that offer a small range of products to niche markets. Answer: B Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 118) A functional organization allows for adequate planning as the number of products and markets of a firm increases. Answer: FALSE Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

119) The product-management organization replaces the functional organization in the firm. Answer: FALSE Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 120) An advantage of the product- and brand-management system is that product and brand managers focus the company on building market share rather than customer relationships. Answer: FALSE Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 121) Because the retail trade tends to think of profitability in terms of product categories, some companies are switching to a category management organizational model. Answer: TRUE Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 122) When customers fall into different user groups with distinct buying preferences and practices, a product team structure is desirable. Answer: FALSE Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 123) Many companies now focus on departments as opposed to processes, because processes can be a barrier to smooth performance. Answer: FALSE Diff: 1 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 124) What steps can a CEO take to create a market- and customer-focused company? Answer: To create a true marketing organization, the CEO must convince senior management of the importance of being customer focused. It is also important that the CEO be able to hire strong marketing talent, including a skilled chief marketing officer who not only manages the marketing department but also has the respect of, and influence with, the other C-level executives. the CEO must also facilitate the creation of strong in-house marketing training programs to sharpen the company's marketing and demonstrate a strong commitment to customers. Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

125) What three forces do marketing experts George Day and Robert Malcolm believe will change the role of the CMO in the coming years? Answer: Day and Malcolm believe that three driving forces will change the role of the CMO in the coming years: (1) predictable marketplace trends, (2) the changing role of the C-suite, and (3) uncertainty about the economy and organizational design. They identify five priorities for any successful CMO: act as the visionary for the future of the company, build adaptive marketing capabilities, win the war for marketing talent, tighten the alignment with sales, and take accountability for returns on marketing spending. Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 126) Describe the functional organization of a marketing department in terms of its structure, advantages, and disadvantages. Answer: The most common form of marketing organization consists of functional specialists reporting to a chief marketing officer (CMO). The main advantage of a functional marketing organization is its administrative simplicity. It can be quite a challenge for the department to develop smooth working relationships, however. This form also can result in inadequate planning as the number of products and markets increases and each functional group vies for budget and status. The CMO constantly weighs competing claims and faces a difficult coordination problem. Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 127) Explain the product- or brand-management organization and list its advantages and disadvantages. Answer: Companies producing a variety of products and brands often establish a product- (or brand-) management organization. The product- or brand-management organization does not replace the functional organization, but serves as another layer of management. A product-management organization makes sense if the company's products are quite different, or if the sheer number of products is beyond the ability of a functional organization to handle. Product and brand management is sometimes characterized as a hub-and-spoke system. The product-management organization has several advantages. The product manager can concentrate on developing a cost-effective marketing mix for the product and can react more quickly to new products in the marketplace; the company's smaller brands have a product advocate. The disadvantages are that product managers are not given enough authority, they become experts in their product area but rarely achieve functional expertise. The product-management system is costly and brand managers normally manage a brand only for a short time. The fragmentation of markets makes it harder to develop a national strategy. In addition to this, product and brand managers focus on market share and not in building customer relationships. Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking

128) What is a market-management organization? Answer: Many companies sell their products to differing markets. When customers fall into different user groups with distinct buying preferences and practices, a market-management organization is desirable. Market managers supervise several market-development managers, market specialists, or industry specialists and draw on functional services as needed. Market managers of important markets might even have functional specialists reporting to them. Market managers are staff (not line) people, with duties like those of product managers. They develop long-range and annual plans for their markets and are judged by their markets' growth and profitability. Because this system organizes marketing activity to meet the needs of distinct customer groups, it shares many advantages and disadvantages of product-management systems. Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 129) Define a category-management organization. Answer: A category-management organization is where a company focuses on product categories to manage its brands. Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 130) What is a customer-management organization? When should a customer-management organization be adopted? Answer: A customer-management organization deals with individual customers rather than the mass market or even market segments. It is suitable when a close customer relationship is advantageous, such as when customers have diverse and complex requirements and buy an integrated bundle of products and services. Diff: 2 LO: 1.4: Illustrate how to organize and manage a modern marketing department. AACSB: Reflective thinking 131) Which of these is NOT identified as a reason that creating a superior customer experience is now a priority for companies in nearly every industry? A) The number of brands in the marketplace continues to grow. B) Terms of service (TOS) contracts are now enforceable via federal mandate. C) Consumers have more products and services to choose from. D) Consumers are more knowledgeable about market offerings. E) Consumers have greater ability to influence public opinion about companies and their brands. Answer: B Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking

132) Most companies now realize that the path to creating stakeholder value begins with which of these strategic changes? A) Simplifying organizational structures in order to lower time-to-market B) Simplifying product portfolios in order to put more customer-satisfaction energy behind each product. C) Expanding into as many product and market spaces as possible to capture customers before they lock into competitors' ecosystems D) Re-envisioning the organization as focused on creating long-term customer value E) Lowering fixed and variable costs by automating the customer experience Answer: D Diff: 3 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 133) Which of these groups appears at the top of the traditional organizational pyramid? A) Service managers B) Middle managers C) Customers D) Frontline employees E) Top management Answer: E Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 134) Which of these would be considered the primary job of service managers in a customer-oriented organization? A) Support frontline employees so they can serve customers well B) Push management priorities down through the organization C) Coordinate with fellow middle managers D) Serve as the intermediary between customers and top management E) Respond to customer service demands from the board of directors Answer: A Diff: 3 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking

135) Which of these is a key reason why differentiation is difficult to maintain in today's markets? A) In most product categories, see little functional differences. B) Most advanced economies are "brand saturated," leaving consumers overwhelmed with choices. C) Companies can copy one another's advantages and strategies with increasing speed. D) Recent changes in trademark and patents laws make it virtually impossible to protect product innovations. E) With cost containment a priority, most firms focus on copycat design. Answer: C Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 136) Which of these is the best response the challenge of achieving meaningful differentiation in today's markets? A) Focus on low prices above every other component in the market mix B) Focus on great customer service regardless of the cost C) Outsource customer service to maintain focus on product innovation D) Build capability in strategic innovation and imagination E) Copy the practices of so-called benchmark firms in any given industry Answer: D Diff: 3 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 137) Which of these did Amazon's Jeff Bezos identify as a key advantage of the company's customer-driven focus? A) The ability to shed unprofitable customers quickly B) The ability to react to competitors quickly C) The ability to be proactive, such as increasing customer value before being forced to by competitive pressures D) The freedom to ignore competitive tactics E) The ability to shift investment away from areas where the company is already a leader Answer: C Diff: 3 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking

138) Why were coffeehouse chains such as Starbucks able to take market share away from Nestlé? A) Nestlé was late in seeing the consumer-preference trend toward coffeehouses. B) Nestlé had so much invested in retail-store sales that it couldn't afford to shift strategically. C) Nestlé was locked into exclusive distribution agreements that prohibited expansion into coffeehouses. D) Starbucks operated in stealth mode until it was already an industry powerhouse. E) Nestlé figured premium coffee was a fad that wouldn't last. Answer: A Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 139) Why would an aircraft manufacturer such as Boeing care about trends in consumer spending patterns, given that it doesn't sell to consumers? A) Monitoring consumer spending tells the company how well it is doing in financial markets. B) Travelers could switch to Airbus planes if Boeing doesn't stay on top of consumer trends. C) Consumer preferences have a lot to do with the interior design of aircraft. D) Ignoring consumer demands leave the company vulnerable to class-action lawsuits. E) Monitoring how consumers are spending their leisure time can help the company predict travel patterns and thus future demand for aircraft. Answer: E Diff: 3 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Analytical thinking 140) Which of these is NOT a characteristic of a company with a low degree of customer-centricity? A) Mass market focused B) Product driven C) Process oriented D) Market driven E) Price driven Answer: D Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking

141) Which of these is NOT a characteristic of a company with a high degree of customer-centricity? A) Hierarchical organization B) Market driven C) Outcome oriented D) Value driven E) Teamwork Answer: A Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 142) What effect could an obsession about protecting market share have on a company's long-term prospects? A) Consumers would tire of its "me focus." B) It would invite stronger attacks from competitors intent on stealing customers. C) It could blind itself to major trends in the market. D) It would more or less automatically position itself for sustained profitability. E) It would enjoy increased sales as less-determined competitors eventually give up. Answer: C Diff: 3 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 143) One of the requirements for transforming into a true market-driven company is organizing around . A) sales B) customer segments C) products D) functions E) brands Answer: B Diff: 1 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 144) Which of the following is true of building a creative marketing organization? A) It is enough if firms are customer-oriented. B) Companies must be alert to trends and be ready to capitalize on them. C) Firms should focus more on efficiency rather than innovation. D) Companies should attempt to minimize risks as much as possible. E) Firms should focus on protecting their existing markets and physical resources. Answer: B Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 39

145) Marketing has sole ownership of customer interaction. Answer: FALSE Diff: 1 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 146) Transforming into a true market-driven company involves organizing around products. Answer: FALSE Diff: 1 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 147) Identify three significant factors that underscore the importance of building a customer-centric organization in today's business environment. Answer: Three significant factors that underscore the importance of building a customer-centric organization are the proliferation of products, services, and brands; increased consumer knowledge about market offerings; and consumers' ability to influence public opinion about companies and their offerings. Diff: 1 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 148) How do managers who believe the customer is the company's only true "profit center" consider the traditional organization chart? Answer: Such mangers view the traditional pyramid organization charter, with the president at the top, management in the middle, and frontline people and customers at the bottom, to be obsolete. Instead, many favor a circular visualization in which customers are the highest priority. Diff: 3 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking 149) How has the rise of digital technologies shaped customer expectations regarding a company's responsiveness? Answer: With the rise of digital technologies, increasingly informed consumers expect companies to do more than connect with, satisfy, and even delight them. They expect companies to listen and respond to them. Diff: 2 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking

150) Many companies are beginning to realize that they are not really market and customer driven but rather are product and sales driven. In the attempt to transform themselves into true market-driven companies, many firms must change. Describe and explain what changes are necessary. Answer: To be truly market-driven, companies need to develop a company-wide passion for customers, organize around customer segments instead of around products, and develop a deep understanding of customers through qualitative and quantitative research. Additionally, the organization must be creative; the firm must build capability in strategic innovation and imagination. This capability comes from assembling tools, processes, skills, and measures that let the firm generate more and better new ideas than its competitors. Diff: 1 LO: 1.5: Explain how to build a customer-centric organization. AACSB: Reflective thinking

Chapter 2 Marketing Planning and Management 1) Which of these is NOT a top priority when it comes to strategic planning? A) Managing the company's businesses as an investment portfolio B) Assessing the market's growth rate C) Assessing the company's position in its chosen markets D) Maximizing inventory turnover E) Developing a viable business model Answer: D Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 2) Which of these reflects an important strategic planning responsibility for corporate headquarters? A) Allocating resources to the various business units B) Overseeing product launches C) Resolving resource conflicts within product categories D) Directing product advertising E) Managing business unit product research Answer: A Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 3) Which level of the company has responsibility for deciding which businesses to start or eliminate? A) Strategic business units B) Corporate headquarters C) Divisional headquarters D) Product line departments E) Functional departments Answer: B Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking

4) Which of these is NOT a high-level corporate planning task? A) Defining the corporate mission B) Building the corporate culture C) Establishing strategic business units D) Assigning resources to each strategic business unit E) Organizing cross-functional product teams Answer: E Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 5) When Amazon broadened its focus from being the world's biggest online bookstore to being the world's biggest online retail store, which element of strategic planning did this represent? A) Geographic focus B) Mission C) Price leadership D) Customer service E) Infrastructure Answer: B Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Analytical thinking 6) When does business unit planning occur in the strategic planning process? A) Before corporate planning B) After offering planning C) After corporate planning but before offering planning D) After offering planning but before product planning E) After corporate planning and product planning Answer: C Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 7) Which of these is an accurate definition of the corporate mission? A) A clear, concise, and enduring statement of the reasons for an organization's existence B) A detailed plan for implementing corporate vision C) A short and pithy summarize of the business plan D) An itemized list of the top corporate priorities E) The reasons why a company will excel Answer: A Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking

8) If a firm's new-employee orientation session included a video telling the story of the company's founding and how it overcame various struggles to get to where it is today, which element of strategic management would this represent? A) Corporate mythology B) Corporate culture C) Corporate mission D) Long-term planning E) Top-level strategy Answer: B Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Analytical thinking 9) SBUs with only one or a few product lines are considered to have . A) limited portfolios B) noncompetitive portfolios C) diversified portfolios D) focused portfolios E) specialized portfolios Answer: E Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 10) Which of these is the primary rationale for a diversified business mix? A) To balance areas where management sees a weakness in branding or product competitiveness B) To reduce shared overhead expenses C) To increase cross-portfolio synergies D) To share employee expertise across product lines E) To take advantage of growth opportunities in areas in which the company has no presence Answer: E Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 11) Which two factors are usually assessed when a company is deciding how to allocate resources across its business units? A) Each SBU's competitive advantage and the attractiveness of its markets B) Each SBU's staffing levels and the competitiveness of its markets C) Each SBU's current resources levels and its identified opportunities D) Each SBU's market opportunities and strength of competition E) Each SBU's contribution share of corporate profits and the competitiveness of its markets Answer: A Diff: 3 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 3

12) A strategic business unit with fourteen separate product lines would be considered to have a(n) portfolio A) unfocused B) diversified C) specialized D) overlapping E) market saturation Answer: B Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 13) Identifying the metrics underlying the performance of a given business unit is a key aspect of . A) itemizing corporate report cards B) planning products C) managing brands D) developing portfolio models E) separating product lines into SBUs Answer: D Diff: 3 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 14) SBU portfolio management focuses on (1) opportunities presented by a particular industry or market and (2) . A) the resources needed to take advantage of those opportunities B) the advertising needed to reach those customers C) the cost of those opportunities D) the risk of overlooking other opportunities E) competitive threats to existing business lines Answer: A Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 15) If product divisions within a company found themselves competing against each other for the same customers, this would reflect . A) a healthy means to boost performance from both divisions B) a natural consequence of evolving technology C) a clear sign that one division or the other should be sold off D) a misalignment of advertising strategies E) a failure to establish effective SBU boundaries within the corporation Answer: E Diff: 3 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Analytical thinking 4

16) In addition to assessing each SBU's competitive advantages and market opportunities when deciding how to allocate resources, a corporation should also consider which of these factors? A) Advertising strategies B) Relative age of the SBUs C) Growth prospects D) Synergies between SBUs E) Whether the corporation is publicly or privately held Answer: D Diff: 3 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 17) If General Motors divided its passenger vehicle, commercial truck, financing, and aftermarket parts product lines into four self-contained operations under the GM corporate structure, each of these would be considered a(n) _ . A) product division B) functional business unit (FBU) C) strategic business unit (SBU) D) spinoff E) independent operating unit (IOU) Answer: C Diff: 3 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Analytical thinking 18) The Oregon-based tire retailer Les Schwab is famous for having its service techs run outside to greet customers in the parking lot to give them a friendly welcome. This reflects what aspect of the company? A) Its corporate culture B) Its strategic emphasis C) Its personality D) Its community relations E) Its promotional strategy Answer: A Diff: 3 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Analytical thinking

19) Harvesting an SBU refers to . A) investing in it B) folding it into another SBU C) drawing cash from it D) transferring its products to another SBU E) diversifying its product portfolio Answer: C Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 20) Which of these is potential shortcoming of the well-known BCG matrix used for portfolio analysis? A) Licensing fees that must be paid to Boston Consulting Group B) The difficulty of applying the model internationally C) The model's bias against intangible products D) The model's oversimplified and subjective approach E) The model's inability to track technological changes Answer: D Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 21) "Enriching Women's Lives" is a three-word mantra that is used by Mary Kay. This is an example of which of the following characteristics of good mission statements? A) It is focused on a limited number of goals. B) It is short, memorable, and meaningful. C) It defines the major competitive spheres in which the company will operate. D) It takes a long-term view. E) It stresses the company's major policies and values. Answer: B Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Analytical thinking 22) A clear, thoughtful mission statement provides employees with a shared sense of purpose, direction, and . A) profitability B) target market feasibility C) opportunity D) continuous improvement E) quality products Answer: C Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 6

23) Mission statements are at their best when they reflect a . A) market B) strength C) competency D) vision E) value Answer: D Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 24) Which of the following is one of the five major characteristics of good mission statements? A) They focus on a large number of goals. B) They expand the range of individual employee discretion. C) They define the major markets that the company aims to serve. D) They take a short-term view. E) They are long and comprehensive to ensure that all critical concepts are included. Answer: C Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 25) A characteristic of a unit is that it can be a single business or collection of related businesses that can exist separately from the rest of the company. A) strategic business B) subsidiary C) merged D) niche market E) specialized business Answer: A Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 26) Which of the following terms can be defined as "the shared experiences, stories, beliefs, and norms that characterize an organization"? A) organizational dynamics B) a business mission C) an ethical/value statement D) customer relationships E) corporate culture Answer: E Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Analytical thinking

27) A firm put each of its many product lines in its own SBU; these SBUs can be said to have diversified portfolios. Answer: FALSE Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 28) A corporation's culture can be defined as its shared experiences, stories, beliefs, and norms. Answer: TRUE Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Application of knowledge 29) A strategic business unit (SBU) is an independent company that shares brand names with related companies. Answer: FALSE Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Application of knowledge 30) Assessing each SBU's competitive advantage is an important step in deciding how to allot a corporation's resources. Answer: TRUE Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 31) What is corporate culture? Answer: Corporate culture can be defined as "the shared experiences, stories, beliefs, and norms that characterize an organization." Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 32) What are the three main characteristics of a strategic business unit (SBU)? Answer: (1) An SBU is a single business, or a collection of related businesses, that can exist separately from the rest of the company; (2) it has its own set of competitors; and (3) it has a manager responsible for strategic planning and profit performance, who controls most of the factors affecting profit. Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking

33) What are the portfolio management factors that corporations should focus on when it comes to making resource-allocation decisions across SBUs? Answer: Portfolio management focuses on two types of factors: (1) opportunities presented by a particular industry or market and (2) the company's resources, which determine its ability to take advantage of the identified opportunities. Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 34) Why is it essential to identify the correct metrics when developing portfolio management models? Answer: These metrics are the factors that allow a company to accurately assess the performance of each SBU and the attractiveness of each SBU's market opportunities. For example, technological innovation could be a key underlying success factor for a particular company, so this should be considered when assessing its SBUs. Diff: 3 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 35) What is the difference between a specialized SBU portfolio and a diversified portfolio? Answer: A specialized portfolio involves SBUs with fairly narrow assortments consisting of one or a few product lines. In contrast, a diversified portfolio involves SBUs with fairly broad assortments containing multiple product lines. Diff: 1 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 36) Describe the steps corporations usually take when deciding how to allocate resources across SBUs. Answer: Resource allocation is often done by assessing each SBU's competitive advantage and the attractiveness of the market in which it operates. When assessing individual business units, a company might also consider existing synergies among them. Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 37) Good mission statements are essential to being a success in business. Describe the three major characteristics that good mission statements should have. Answer: Major characteristics of mission statements include the following: • focus on a limited number of goals • stress on the company's major policies and values • a definition of the major markets that the company aims to serve • a long-term view • should be as short, memorable, and meaningful as possible Diff: 2 LO: 2.1 Identify the key tasks required for company and business unit planning. AACSB: Reflective thinking 9

38) Which of these entities represents the space in which a company intends to create and capture value? A) Value market B) Target market C) Industry bloc D) Value proposition E) Market space Answer: B Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 39) Which of these five factors is NOT part of the Five Cs definition of a target market? A) Customers B) Competitors C) Collaborators D) Cost structure E) Context Answer: D Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 40) Which of these most accurately reflects the definition of a firm's marketing strategy? A) Choosing a well-defined target and determining the value it intends to create in this market B) Mapping the product portfolio against customer need profiles C) Allocating resources to SBUs and defining their target markets D) Defining the over-arching message and setting up sales plans E) Defining the key aspects of the offering Answer: A Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 41) At which level of planning does a company detail the attributes of the offering that will create value in the chosen market? A) Corporate B) Tactics C) Annual D) Operations E) Strategy Answer: B Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 10

42) Which of these entities is characterized by social and demographic trends, value systems, religion, language, lifestyles, attitudes, and beliefs? A) Technological context B) Regulatory context C) Economic context D) Sociocultural context E) Physical context Answer: D Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 43) Which of these entities consists of natural resources, geographic location, topography, climate trends, and health conditions? A) Technological context B) Regulatory context C) Economic context D) Sociocultural context E) Physical context Answer: E Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 44) Which of these entities includes taxes, import tariffs, and embargoes, as well as product specification and pricing, communication regulations, and intellectual property laws? A) Technological context B) Regulatory context C) Economic context D) Sociocultural context E) Physical context Answer: B Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 45) Which of these is the BEST definition of a company's competitors? A) Firms recognized to participate in the same industry sectors B) Firms that have traditionally been the company's strongest competitors C) Firms that aim to fulfill the same needs of the same customers D) Any firms that seek economic value from the same target customers E) Any firms that produce similar goods and services Answer: C Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 11

46) Concerns about inflation and currency exchange rates and their effect on customers' purchasing power would fall under which main element of the Five Cs framework? A) Market B) Company C) Context D) Customers E) Collaborators Answer: C Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 47) A company whose reputation is under attack on social media for insensitive religious statements would be grappling with which two factors in the market context? A) Sociocultural and regulatory B) Regulatory and technological C) Economic and sociocultural D) Sociocultural and technological E) Physical and technological Answer: D Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Analytical thinking 48) Which of these is the key component of the target market decision? A) Regulatory constraints on business operations B) The choice of technology platforms C) Financial requirements for market entry D) Staffing specialties required for market entry E) The selection of target customers Answer: E Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 49) How is the Five-C framework similar to the Five Forces framework originated by Michael Porter? A) Both are meant to facilitate analysis of the market in which a company operates. B) Both are concerned with whether the company and its competitors operate within the same industry. C) Both excel at analyzing an offering's ability to create market value. D) Both focus on customer needs rather than industry boundaries. E) Neither can accommodate cross-category competition. Answer: A Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 12

50) Which of the analysis models discussed in the chapter is noted for being particularly relevant for marketers analyzing the competitive structure within a given industry? A) The Five Cs framework B) Michael Porter's Five Forces framework C) The Four Ps model D) Michael Porter's Five Cs framework E) The Seven Ts framework Answer: B Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 51) Which of these represents the marketing offering? A) A company's initial stock offering B) The actual good that the company deploys in order to fulfill a particular customer need. C) A sales proposal designed to promote the ability to fulfill a particular customer need. D) The marketing mix E) The optimal value proposition Answer: B Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 52) Which of these is NOT one of the seven components of the marketing mix? A) Product B) Service C) Brand D) Production cost E) Price Answer: D Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 53) Which three types of value need to be considered when developing a value proposition? A) Strategic value, operational value, and tactical value B) Customer value, collaborator value, and company value C) Economic value, collaborator value, and company value D) Reputational value, collaborative value, and leverage value E) Customer value, social value, and ecological value Answer: B Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking

54) Which component of the value proposition determines why the company would choose to develop one particular offering over other alternatives? A) Collaborator value B) Customer value C) Company value D) Social value E) Economic value Answer: B Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 55) Which of these indicates the attractiveness of a marketing offering to a company's business partners? A) Collaborator value B) Customer value C) Company value D) Social value E) Economic value Answer: A Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 56) The intersection of company value, customer value, and collaborator value is known as the . A) ideal market offering B) strategic focus C) alternative value proposition D) optimal value proposition E) acceptable value proposition Answer: D Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 57) Which of these is an accurate characterization of the optimal value proposition? A) It maximizes value for customers, collaborators, and the company. B) It maximizes value for customers while minimizing value to competitors. C) It prioritizes company value over customer and collaborator value. D) It balances the value for customers, collaborators, and the company. E) It prioritizes customer value over company and collaborator value. Answer: D Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 14

58) What does "optimal" mean in the optimal value proposition? A) Equalizing value outcomes for all participants, even if that means none meet their goals. B) Exceeding the expectations of all three participants–customers, collaborators, and the company itself. C) Delivering an averaged value that is acceptable, even if one or two parties aren't satisfied. D) Maximizing value for the company while meeting the minimum needs of customers and collaborators. E) Creating value for target customers and collaborators in a way that enables the company to achieve its strategic goals. Answer: E Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 59) Which element of the marketing mix do Audi's warranty repair activities represent? A) Product B) Service C) Incentives D) Communication E) Whole value Answer: B Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Analytical thinking 60) Which element of the marketing mix does Amazon's cloud hosting service represent? A) Product B) Service C) Incentives D) Communication E) Whole value Answer: A Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking

61) Why are the elements of the marketing mix considered tactical efforts rather than strategic? A) They are implemented by nonmanagerial employees. B) They are easily outsourced and therefore not of strategic importance. C) They define the specific way the firm will deliver on the strategic promise of the value proposition. D) They don't offer any opportunity for competitive differentiation. E) They are so routinized in most industries that upper management doesn't pay much attention to them. Answer: C Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 62) Which element of the marketing mix is designed to create unique value over and above the product and service aspects of the offering? A) The brand B) The company name C) Personal services D) Low cost E) Subscription pricing Answer: A Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 63) A volume discount is an example of which element of the marketing mix? A) Price B) Services C) Product D) Incentives E) Communication Answer: D Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 64) The process of designing, communicating, and delivering customer value is embodied in which element of marketing management? A) The marketing mix B) Marketing strategy C) SBU strategy D) The marketing plan E) The operational plan Answer: A Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 16

65) What is the function of incentives in the marketing mix? A) To enhance the value of the offering by lowering its costs. B) To enhance the value of the offering by lowering its costs or increasing its benefits. C) To enhance the value of the offering by increasing its benefits. D) To overcome inadequacies in the product element of the marketing mix. E) To communicate about the offering to customers or collaborators. Answer: C Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 66) Which of these is NOT a part of the value-design process? A) Product B) Service C) Brand D) Price E) Communication Answer: E Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 67) Only by creating for target customers, collaborators, and the company can a manager ensure the market success of an offering. A) recognition B) brand awareness C) value D) brand enthusiasm E) profitability Answer: C Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 68) What is the ultimate purpose of the value map? A) To explain the value of the marketing offering B) To help collaborators understand how they fit in the marketing process C) To help customers understand the value of a company's offerings D) To facilitate the development of a viable business model E) To help employees see how their work contributes to the whole Answer: D Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking

69) How is the Four Ps concept of promotion limited in terms of tactical planning? A) It combines communication and incentives, which need to be managed distinctly. B) It blurs the line between incentives and price. C) "Promotion" is too vague in today's world of media fragmentation. D) It can't accommodate two-way communication such as social media. E) "Promotion" as a concept is loaded with ethical questions. Answer: A Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 70) Which of these is an important limitation of the traditional Four Ps model of marketing planning? A) It is difficult to remember. B) It doesn't include pricing. C) It doesn't work for intangible product offerings. D) It combines communication and distribution as one element. E) It regards brand as part of the product, rather than as a separate entity. Answer: E Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 71) Marketing communication tasks fall in which element of marketing management and planning? A) Brand B) Distribution C) The marketing plan D) Strategic planning E) The marketing offering/marketing mix Answer: E Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 72) Which three major components are illustrated in a market value map? A) Target market, value proposition, marketing offering B) Optimum value, customer value, marketing offering C) Optimum value, customer value, marketing mix D) Customers, competition, collaborators E) Customers, context, product Answer: A Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking

73) When compiling a market value map, what is the most fundamental question to consider regarding competition? A) Who have been our main competitors historically in this market space? B) Where do we stand in the hierarchy of competitive price: above, at parity, or below? C) What other offerings aim to fulfill the same need of the same target customers? D) Who are the top three performances in our industry? E) Given our current value offerings, who should we need to target first? Answer: C Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 74) The optimal value proposition seeks to balance value for customers, collaborators, and the company. Answer: TRUE Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Application of knowledge 75) The seven tactics of the market offering are how the company delivers on the promise of the optimal value proposition. Answer: TRUE Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Application of knowledge 76) The market value map is essentially an outline of the promotional message that will be crafted as part of the communication program. Answer: FALSE Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Application of knowledge 77) Strategy involves choosing a well-defined market in which the company will compete and determining the value it intends to create in this market. Answer: TRUE Diff: 1 LO: 2.2 Describe the process of developing a market offering. AACSB: Application of knowledge

78) Explain the difference between marketing strategy and marketing tactics. Answer: Strategy involves choosing a well-defined market in which the company will compete and determining the value it intends to create in this market. Tactics, also called the marketing mix, make the company's strategy come alive: They define the key aspects of the offering developed to create value in a given market. The tactics logically follow from the company's strategy and reflect the way the company will make this strategy a market reality. Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 79) Identify the major types of organizations that make up the collaborators component of the Five Cs model. Answer: Collaborators can include suppliers, manufacturers, distributors (including dealers, wholesalers, and retailers), research-and-development entities, service providers, external sales forces, advertising agencies, and marketing research companies. Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 80) Identify the major elements of the Five Cs framework for identifying the target market. Answer: The five elements are the customers whose needs the company intends to fulfill, the competitors that aim to fulfill the same needs of the same target customers, the collaborators that help the company fulfill the needs of customers, the company that develops and manages the offering, and the context that will affect how the company develops and manages the offering. Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 81) Explain why the widely studied Four Ps model of the market mix is no longer considered adequate by many marketing practitioners. Answer: The Four Ps is simple and therefore easy to remember, but that simplicity limits its usefulness in contemporary marketing. Its limitations include failing to distinguish between the product and service components of the offering, treating brand as part of product rather than as a distinct entity with unique tactical considerations, and failing to distinguish communication activities from incentives. Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 82) Identify the seven components or tactics in the marketing mix. Answer: The seven elements are product, service, brand, price, communication, incentives, and distribution. Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking

83) Contrast the way customers view the value-creation process with the way companies view it. Answer: The company regards value creation as a process of designing, communicating, and delivering value, whereas customers regard the process in terms of the attractiveness, awareness, and availability of the offering. Attractiveness reflects the benefits and costs that target customers associate with the product, service, brand, price, and incentives aspects of the offering. Awareness highlights the methods through which target customers are informed about the specifics of the offering. Availability consists of the ways in which target customers can acquire the offering. Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 84) Identify the five factors that need to be considered when assessing the marketing context. Answer: (1) The sociocultural context is characterized by social and demographic trends, value systems, religion, language, lifestyles, attitudes, and beliefs. (2) The technological context consists of new techniques, skills, methods, and processes for developing, communicating, and delivering market offerings. (3) The regulatory context includes taxes, import tariffs, and embargoes, as well as product specification and pricing, communication regulations, and intellectual property laws. (4) The economic context is made up of economic growth, money supply, inflation, and interest rates. (5) The physical context comprises natural resources, geographic location, topography, climate trends, and health conditions. Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 85) What three elements must be considered to determine optimal value proposition? Answer: The three components of OVP are customer value, collaborator value, and customer value Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 86) What is the aim of the brand element of the market offering or marketing mix? Answer: The aim of the brand is to identify the products and services produced by the company and differentiate them from those of the competition, in the process creating unique value over and above the product and service aspects of the offering. Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking

87) Describe the structure of a market value map. Answer: The market value maps has three major sections: the target market, the value proposition to be presented to that market, and the market offering or marketing mix that fulfills the promise of that value proposition. The target market section has five subsections, discussing customers, collaborators, the company itself, competition, and context. The value proposition section has three subsections: customer value, collaborator value, and company value. The market offering section addresses the seven elements of the marketing mix: product, service, brand, price, communication, incentives, and distribution. Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 88) What are the two purposes of incentives in the marketing mix? Give an example of each. Answer: The two purposes are to enhance the value of the offering by reducing its costs (coupons, for instance) or increasing its benefits (such as bonus features or free add-on products). Diff: 2 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking 89) Do two companies need to make similar products in order to be considered competitors? Explain your answer and provide an example. Answer: No, the key factor that makes firms competitors is that they are trying to fulfill the same needs for the same set of customers. They can do so with similar products or with markedly different ways to solve the customers' problems. In many instances, customer problems can be solved in more than one way. For example, organizations need computing capabilities, and historically they solved this need by buying computer hardware and building their own data centers. However, cloud computing services such as Amazon Web Services (AWS) solve this customer need by providing computing as a service, rather than as a collection of tangible goods (computers, that is). AWS therefore competes with other cloud service providers but also with computer companies that sell data center hardware. Accordingly, AWS needs to convince customers that buying computing as a service is more attractive than buying it as a collection of goods (all the computers required to build a data center). Similarly, Uber, Lyft, taxi services, local bus services, car manufacturers, and bicycle manufacturers all compete to solve the customer need of getting from one place to another. Diff: 3 LO: 2.2 Describe the process of developing a market offering. AACSB: Reflective thinking

90) The S in G-STIC stands for . A) service B) strategy C) synergy D) site planning E) social media Answer: B Diff: 1 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 91) Which two factors are monitored in the control phase of the G-STIC process? A) Company performance and the market environment B) Cost and price C) Company performance and competitive threats D) Customer and collaborator behavior E) Regulatory control and public opinion Answer: A Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 92) What are the two steps in the implementation phase of the G-STIC process? A) Negotiating and implementing collaborator agreements B) Designing and developing the offering C) Developing and deploying the offering D) Researching and developing the product E) Identifying and deploying customer service programs Answer: C Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 93) The methodical approach to action planning outlined in the chapter is known as A) the Four Ps B) the Seven Tactics C) the Five Forces D) G-STIC E) the Five Cs Answer: D Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking

94) Which phase of G-STIC concerns the logistics of creating the offering? A) Implementation B) Goals C) Strategy D) Tactics E) Control Answer: A Diff: 1 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 95) In which phase of the G-STIC process do managers craft the value proposition? A) Implementation B) Goals C) Strategy D) Tactics E) Control Answer: C Diff: 1 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 96) What quantity do temporal benchmarks focus on? A) Economic variables B) Inventory turnover C) Production costs D) Time E) Tactics Answer: D Diff: 1 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 97) A balanced concern for people, planet, and profits is known as the A) triple bottom line B) Three Ps C) performance control D) optimal value proposition E) balanced value proposition Answer: A Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking

98) What are the two components of strategic marketing goals? A) Focus and value B) Benchmarks and value C) Metrics and tactics D) Tactics and plans E) Focus and benchmarks Answer: E Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 99) When a marketing team from General Mills brainstorms names for a new breakfast cereal, which stage of the G-STIC process are they working in? A) Tactics B) Strategy C) Goal D) Control E) Implementation Answer: A Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Analytical thinking 100) Monitoring changes in the market environment occurs in which stage of the G-STIC process? A) Tactics B) Strategy C) Goal D) Control E) Implementation Answer: D Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 101) A goal to achieve $20 million in sales in the coming year is which type of benchmark? A) Quantitative, absolute B) Quantitative, relative C) Metric D) Temporal E) Tactical Answer: A Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking

102) Which of these is NOT a customer readiness-to-buy metric? A) Awareness B) Preference C) Purchase intent D) Trial rate E) Customer churn Answer: E Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 103) Which of these would NOT be a useful metric for evaluating a company's marketing performance? A) Sales volume B) Purchase intent C) Unemployment rate D) Share of shelf space E) Gross rating points Answer: C Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Analytical thinking 104) Which of these was indicated in the chapter as a reason for the success of Amazon, Google, Netflix, Salesforce, Uber, and Express Scripts? A) Setting "stretch" goals that motivated employees to high achievement B) Capitalizing on new technologies for crowdsourced messaging C) Taking advantage of new tax laws that spurred technology investment D) Recognizing the benefits of new technologies and realigning their business models E) Buying out fledgling competitors to block new market entrants Answer: D Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 105) Measuring consumer awareness of a company's brands falls into which phase of the G-STIC process? A) Deployment B) Development C) Implementation D) Control (monitoring the environment) E) Control (evaluating performance) Answer: E Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 26

106) At which stage of G-STIC is the offering established in the market? A) Implementation (commercial deployment) B) Implementation (development of the offering) C) Controls D) Monitoring E) Benchmarks Answer: A Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 107) Which of these would NOT be considered a strategic goal in G-STIC? A) Achieving 20 percent net profit B) Improving brand awareness C) Improving social welfare D) Enhancing corporate culture E) Facilitating employee recruitment Answer: A Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking 108) When Walmart's web team monitors metrics such as click-through rates and shopping cart abandonment, it is engaging in which phase of the G-STIC model? A) Goal B) Strategy C) Tactics D) Control E) Implementation Answer: D Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Analytical thinking 109) What does G-STIC stand for? A) Growth-Synergy-Teamwork-Ideation-Creativity B) Goal-Strategy-Teamwork-Individualism-Creativity C) Goal-Strategy-Tactics-Implementation-Control D) Goal Synergy and Technology Implementation Control E) Growth Strategies, Tactics, and Investment Control Answer: C Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Reflective thinking

110) Quantitative benchmarks must be measured in absolute terms only, never in relative terms. Answer: FALSE Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 111) Strategic goals include such outcomes as net income, profit margins, earnings per share, and return on investment. Answer: FALSE Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 112) Initial commercial deployment is always selective, focusing on specific segments of the target market to allow the company to assess market reaction before embarking on a wider rollout. Answer: FALSE Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 113) Keeping a close eye on the market environment enhances business agility because it helps coordinate company actions with market conditions. Answer: TRUE Diff: 1 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 114) What three main objectives must be specified to implement a company goal in the G-STIC model? Answer: Implementing the company goal requires specifying what the company aims to achieve (goal focus), how much the company wants to achieve (quantitative benchmark), and when the company wants to achieve it (temporal benchmark). Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 115) Identify the five stages of the G-STIC process model. Answer: The five stages are goals, strategy, tactics, implementation, and control. Diff: 1 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge

116) What are the two key decisions involved in setting a goal? Answer: Two key decisions are identifying the focus of the company's actions and specifying the performance benchmarks to be achieved. Diff: 2 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 117) Identify the two major categories of benchmarks and offer a hypothetical example that incorporates both. Answer: The two categories are quantitative benchmarks that set out specific milestones to be achieved as the company moves toward its ultimate goal and temporal benchmarks that establish time frames and dates for achieving the quantitative benchmark. An example would be Ford establishing the milestone of increasing market share by two percent by the end of the current fiscal year. Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 118) Discus the two fundamental components of a sound marketing strategy. Answer: The first component is the target market in which the company aims to create value. The target is defined by five factors: customers whose needs will be fulfilled by the offering, competitors whose offerings aim to fulfill the same needs of the same target customers, collaborators that help the company meet the needs of target customers, the company managing the offering, and the context in which the company operates. The second component is the value proposition, which defines the benefits and costs of the market offering with which the company plans to meet target customers' needs. The three elements of the value proposition are customer value, collaborator value, and company value. Diff: 3 LO: 2.3 Explain the process of marketing planning. AACSB: Application of knowledge 119) What document is a tangible outcome of a company's strategic planning process? A) The marketing plan B) The advertising plan C) The tactical plan D) The communication plan E) The product roadmap Answer: A Diff: 1 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking

120) Which section typically comes first in a marketing plan? A) Strategy B) Situation overview C) Executive summary D) Goals E) Control Answer: C Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 121) Which section of a marketing plan presents a streamlined and succinct overview of the company's goal and the proposed course of action? A) Abstract B) Synopsis C) Situation overview D) Executive summary E) Overview Answer: D Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 122) What forms the core of the marketing plan? A) G-STIC B) Executive summary C) Situation overview D) Exhibits E) Product roadmap Answer: A Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 123) Which of these is NOT one of the specialized plans that often accompany a marketing plan? A) Inventory plan B) Product development plan C) Service management plan D) Brand management plan E) Media plan Answer: A Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Application of knowledge

124) What is the typical length of the executive summary in a marketing plan? A) One paragraph B) One sentence C) Five pages D) One to two pages E) Ten pages Answer: D Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Application of knowledge 125) Which of these is NOT a target audience of the marketing plan? A) Company employees B) Collaborators C) Shareholders D) Investors E) Customers Answer: E Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 126) Where in the marketing plan would you find details and evidence to support the company's action plan? A) Exhibits B) Executive summary C) Situation overview D) G-STIC E) Abstract Answer: A Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 127) Which two sections make up the situation overview? A) Competitive overview and company overview B) Market overview and financial analysis C) Funding plan and market overview D) Company overview and market overview E) Sales analysis and market overview Answer: D Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Application of knowledge

128) How does the marketing plan compare to the business plan? A) They are two names for the same document. B) The marketing plan is narrower in scope. C) The marketing plan is broader in scope. D) The marketing plan is more current than the business plan. E) The marketing plan is aimed at external rather than internal audiences. Answer: B Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 129) Which of the following elements of a marketing plan can be viewed as the "elevator pitch" for the plan? A) The situation analysis B) The marketing strategy C) The executive summary D) The financial projections E) The short-term targets Answer: C Diff: 1 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 130) Pegasus writes about its target market and demographics in the marketing plan. A) executive summary B) implementation C) situation overview D) strategy E) tactics Answer: C Diff: 3 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Application of knowledge

section of its

131) The marketing plan serves two main functions: describing the company's goal and proposed course of action and informing the relevant stakeholders about the goal and action plan. Answer: FALSE Diff: 1 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 132) The G-STIC section forms the core of the marketing plan. Answer: TRUE Diff: 1 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Application of knowledge 32

133) The ultimate goal of the marketing plan is to defend a company's marketing choices. Answer: FALSE Diff: 1 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Application of knowledge 134) A marketing plan should open with a situation overview. Answer: FALSE Diff: 1 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Application of knowledge 135) Identify some of the specialized marketing plans that a company might create to accompany the main marketing plan. Answer: These can include a product development plan, service management plan, brand management plan, sales plan, promotion plan, and communication plan–which, in turn, can breed even more specific plans. The communication plan, for example, often encompasses activity-specific plans such as an advertising plan, public relations plan, and social media plan. A company might also create specialized marketing plans targeting specific customer segments, such as McDonald's plans for separate customer segments. Diff: 3 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 136) Describe the content of the situation overview section of a marketing plan. Answer: The situation overview provides an overall evaluation of the environment in which the company operates, as well as of the markets in which the company competes and/or will compete. It is composed of two sections: the company overview that outlines the company's history, culture, resources (competencies, assets, and offerings, and the market overview that outlines the markets in which the company currently manages offerings and those that the company could potentially target for future offerings. Diff: 3 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 137) Why are exhibits typically placed at the end of the marketing plan? Answer: Placing exhibits at the end streamlines the marketing plan by keeping tables, charts, and appendices in a distinct section to separate the less important and/or more technical aspects of the plan from the essential information. Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking

138) Identify the three main functions of the marketing plan. Answer: (1) It describes the company's goal and proposed course of action, (2) informs the relevant stakeholders about the goal and action plan, and (3) persuades the relevant decision makers of the viability of the goal and the proposed course of action. Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 139) Describe a marketing plan. Answer: The marketing plan directs and coordinates all company marketing efforts. It is a tangible outcome of a company's strategic planning process, outlining the company's ultimate goal and the means by which it aims to achieve this goal. In order to serve its ultimate purpose of guiding a company's actions, the marketing plan must effectively communicate the company's goal and its proposed course of action to relevant stakeholders–company employees, collaborators, shareholders, and investors. Diff: 2 LO: 2.4 Describe the key components of an actionable marketing plan. AACSB: Reflective thinking 140) The dynamic nature of marketing management is reflected in which element of the marketing plan? A) The control section in the G-STIC portion B) The strategy discussion C) The situation overview D) The goals section in the G-STIC portion E) The tactics section in the G-STIC portion Answer: A Diff: 3 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge 141) Which of these is NOT a reason to update the marketing plan? A) Shifting needs of customers B) Increasing competition C) Hiring a new brand manager D) Changing major collaborators E) Developing new customer assets Answer: C Diff: 3 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge

142) What is the process used to periodically assess the effectiveness of the marketing effort called? A) Six Sigma B) Marketing report card C) Marketing plan D) Marketing process assessment E) Marketing audit Answer: E Diff: 2 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge 143) In response to increasing competition from online retailers, how have traditional brick-and-mortar retailers such as Walmart modified their marketing plans? A) Shifting to online-only sales B) Changing their names C) Becoming multichannel retailers D) Undercutting other brick-and-mortar retailers on price E) Cutting advertising to reduce variable costs Answer: C Diff: 3 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge 144) Which of the following is NOT one of the recommended characteristics of an effective marketing audit? A) Comprehensive B) Systematic C) Unbiased D) Periodic E) Cross-functional Answer: E Diff: 1 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge 145) The marketing audit should follow the G-STIC guidelines to analyze the soundness of the company's goals, strategy, tactics, implementation, and controls. Answer: TRUE Diff: 1 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge

146) Marketing plans should be "living documents" that are updated in order to remain relevant. Answer: TRUE Diff: 1 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge 147) Given the expense and disruption involved, marketing audits should not be conducted until significant problems are detected. Answer: FALSE Diff: 1 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge 148) A marketing audit is always best conducted by the marketing management team. Answer: FALSE Diff: 1 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Application of knowledge 149) What is a marketing audit, and what is its purpose? Answer: A marketing audit is a comprehensive examination of the marketing aspect of an offering or a company's marketing department. It is intended to identify overlooked opportunities and problems areas and to recommend a plan of action to improve the company's performance. Diff: 3 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Reflective thinking 150) Describe the attributes of an effective marketing audit. Answer: An effective marketing audit should be comprehensive (covering all major marketing activities of a business, not just trouble spots–which are covered by functional audits), systematic (examining the operating environment of the organization in an orderly manner–from the company's marketing objectives and strategies down to its specific activities following the G-STIC guidelines), unbiased (conducted by third parties if necessary to achieve the desired degree of objectivity), and periodic (conducted on a regular schedule to anticipate problems rather than waiting for them to occur). Diff: 3 LO: 2.5 Explain how and when to modify the marketing plan. AACSB: Reflective thinking

Chapter 3 Analyzing Consumer Markets 1) Identify the topics that consumer behavior researchers focus on. Answer: Research on consumer behavior explores how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Diff: 2 LO: 3. 1 Identify the key factors that influence consumer behavior. AACSB: Application of knowledge 2) Describe the three phases of the consumer behavior model. Answer: Viewed as a process moving from the left to right, the model works in three stages: 1. The seven tactics of the marketing mix shaping the offering along with the context of the market in which the offering will be sold. 2. Those efforts are filtered through the cultural, social, and personal lenses of target customers, as well as being influenced by consumer motivation, perception, emotions, and memory. 3. Those consumer characteristics, in turn, influences the consumer buying process–a journey that entails recognition of a need, a search for the best means to fulfill that need, and evaluation of the available options to finally arrive at the ultimate decision of what, when, where, and how much to buy, and how to pay for these purchases. Diff: 3 LO: 3. 1 Identify the key factors that influence consumer behavior. AACSB: Application of knowledge 3) What concept does "a way of life among a group of people" refer to? A) Consumerism B) Consumer behavior C) Culture D) Consumer psychology E) Consumer culture Answer: C Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 4) How are the characteristics of a culture passed along from one generation to the next? A) Observation B) Communication and imitation C) Imitation D) Formal education E) Imitation and formal education Answer: B Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking

5) A culture in which people tend to view themselves as independent agents and value personal autonomy would be characterized as . A) individualistic B) collectivistic C) independent D) self-actualized E) self-directed Answer: A Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 6) Consumers who tend to follow the crowd, value long-term reputation, shop for their families, buy from trusted retailers, and prefer traditional brick-and mortar stores probably belong to which of type of culture? A) Individualistic B) Collectivistic C) Independent D) Self-actualized E) Self-directed Answer: B Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 7) Social classes—relatively homogeneous, enduring, and hierarchically ordered divisions in a society whose members share similar values, interests, and behavior—are evidence of in a culture. A) political divides B) partisanship C) traditional viewpoints D) social stratification E) snobbery Answer: D Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking

8) An Instagrammer whose travel videos are so popular that hotel chains and resorts "comp" her with free stays and other incentives would be considered a(n) . A) aspirational group B) dissociative group C) influencer D) brand leader E) consumer leader Answer: C Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking 9) If a group of "fashion rejects" became so popular in social media that large numbers of people began imitating their look, this group would have transitioned from to in the eyes of those mainstream consumers. A) dissociative, associative B) dissociative, aspirational C) aspirational, dissociative D) associative, dissociative E) influential, aspirational Answer: B Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking 10) The A-B-C-D-E segments identified by statisticians and marketers studying the Brazilian consumer market are evidence of . A) target marketing B) consumer targeting C) consumerism D) social consumerism E) social stratification Answer: E Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge

11) After hearing her partner Sara reminisce about family holidays when everyone would gather around a piano and sing, Luna surprised her with a digital piano for her birthday. This is an example of in consumer behavior. A) indirect influence B) direct influence C) situational influence D) nostalgia marketing E) retro marketing Answer: A Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 12) What does "first in, first win" refer to when it comes to marketing to expectant parents? A) Getting the first sale to parents after their last baby is born B) Brand loyalty among families of procreation C) The wide range of products that first-time parents need D) The importance of reaching expectant parents early to win their trust E) The fact that whoever gets the first sale to new parents gets all their business Answer: D Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 13) How do core values relate to behavior and attitude? A) Core values go much deeper than either behavior or attitude. B) Core values are the same as behavior. C) Core values are the same as attitude. D) People never behave in defiance of their core values. E) People attitudes shape their core values, which in turn shape their behaviors. Answer: A Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 14) A person's "pattern of living in the world" refers to his or her . A) attitude B) consumer behaviors C) lifestyle D) belief system E) core values Answer: C Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge

15) Which of the following would be the best illustration of a subculture? A) A religion B) A group of close friends C) Your university D) A fraternity or sorority E) Your occupation Answer: A Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 16) The relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests, and behavior constitute a . A) culture B) subculture C) social class D) family E) group Answer: C Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 17) A person's consist(s) of all the people who have a direct (face-to-face) or indirect influence on his/her attitudes or behavior. A) subculture B) family C) social class D) reference groups E) social networks Answer: D Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 18) A(n) group is one whose values or behavior an individual rejects. A) aspirational B) dissociative C) membership D) primary E) procreational Answer: B Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking

19) Joe is a computer service technician. People in his neighborhood usually depend on his suggestions for purchasing any computer accessory or hardware, as they believe that he has access to far more information on computer technology than the average consumer. The neighbors are also aware that Joe has the required knowledge and background for understanding the technical properties of the products. Within this context, Joe can be called a(n) . A) transactional leader B) opinion leader C) role model D) gate-keeper E) international marketer Answer: B Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking; Application of knowledge 20) High school student Raphael is highly concerned about environmental issues. He is a strong supporter of the afforestation campaigns taken up by the environmental activists in his neighborhood. He wants to become a full time volunteer for their upcoming wildlife protection program and has even saved money to contribute to the cause. This group of environmental activists can be categorized under which of the following reference groups? A) Primary group B) Secondary group C) Aspirational group D) Dissociative group E) Cognitive group Answer: C Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking; Application of knowledge 21) Kamala writes a blog about movies she has seen, books she has read, and concerts she has attended. Her blog provides information and opinions. Feedback from her readers is positive, and they are appreciative of the advice that is given. Which of the following would be the most apt description of the role played by Kamala? A) Silent majority B) Protestor C) Protector D) Adapter E) Influencer Answer: E Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking; Application of knowledge

22) If a direct-mail marketer wished to direct promotional efforts toward the family of efforts need to be directed toward parents and siblings of the family members. A) orientation B) procreation C) immediacy D) intimacy E) reference Answer: A Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 23) The family in a buyer's life consisting of parents and siblings is the . A) family of procreation B) family of influence C) family of efficiency D) family of orientation E) purchasing family Answer: D Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 24) When Gary was a high school student, he enjoyed rock music and regularly purchased hip clothing sported by his favorite rock band. However, five years later, when Gary became an accountant, his preference shifted toward formal clothing. Which of the following personal characteristics is likely to have had the most influence on Gary's preferences during his high school days? A) Education B) Age C) Income D) Gender E) Physiological needs Answer: B Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking; Application of knowledge

25) Marriage, childbirth, and divorce constitute the that shape the consumption pattern of individuals. A) psychological life cycle B) product life cycle C) social status D) post-puberty cycles E) critical life events Answer: E Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 26) Identify an economic circumstance that can greatly affect any product or brand choice. A) Aspirational groups B) Values C) Lifestyle D) Borrowing power E) Relocation Answer: D Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 27) refers to a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. A) Image B) Personality C) Psychological transformation D) Lifestyle E) Acculturation Answer: B Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 28) Consumers often choose and use brands that have a brand personality consistent with how they see themselves, also known as the self-concept. A) actual B) ideal C) others' D) prohibitive E) suggestive Answer: A Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking 8

29) Consumers often choose and use brands that have a brand personality consistent with how they think others view them, also known as the self-concept. A) actual B) others' C) ideal D) dual E) perceptual Answer: B Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 30) Consumers who are highly sensitive to how others see them and who choose brands whose personalities fit the consumption situation are called . A) change agents B) self-motivators C) self-monitors D) self-adapters E) opinion leaders Answer: C Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 31) portrays the "whole person" interacting with his or her environment. A) Attitude B) Personality C) Lifestyle D) Self-concept E) Subculture Answer: C Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 32) IKEA has achieved global recognition by offering consumers leading-edge Scandinavian furniture at affordable prices. IKEA is delivering value to consumers who are constrained. A) money B) time C) brand D) value E) self-concept Answer: A Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking; Application of knowledge 9

33) Marketers who target consumers on the basis of their believe that they can influence purchase behavior by appealing to people's inner selves. A) time famine B) sophistication C) money constrain D) social class E) core values Answer: E Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 34) Social class is the fundamental determinant of a person's wants and behavior. Answer: FALSE Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 35) An example of a subculture would be a person's geographic region. Answer: TRUE Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 36) Members within a social class tend to behave more alike compared to members from two different social classes. Answer: TRUE Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 37) When Ketan went to college he had a burning desire to join a social fraternity; for Ketan, the fraternity would be a dissociative group. Answer: FALSE Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking; Application of knowledge 38) Marketers need to be aware of the status-symbol potential of brands because people usually choose products which reflect their role and their actual or desired status in a society. Answer: TRUE Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking

39) The behavior people exhibit as they pass through certain life-cycle stages, such as becoming a parent, is largely fixed and does not change over time. Answer: FALSE Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 40) For an employee at an organization, an annual appraisal can be considered a critical life event that impacts his or her consumption behavior. Answer: FALSE Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Analytical thinking 41) Whereas economic circumstances can have a profound effect on consumption, occupation does not impact how people spend their money and what they buy. Answer: FALSE Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 42) A person's personality portrays the "whole person" interacting with his or her environment. Answer: FALSE Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 43) Identify the personal characteristics that tend to influence buyers' decisions. Answer: Personal characteristics that influence buyers' decisions include their age and stage in the life cycle, occupation and economic circumstances, personality and self-concept, and lifestyle and values. Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 44) Given roughly equal costs, would consumers who are time-constrained always choose a purchase option that saves the most time? Explain your answer and provide an example. Answer: No, even as important as time is to harried consumers, they don't always choose the most time-efficient product solution, because other factors can influence their decisions. The Hamburger Helper story from the chapter provides a great example: Even when consumers need to save time, there is also the emotional need to feel involved in the preparation of family dinner, so the extra steps and time involved in preparing Hamburger Helper can make it more appealing than a similar microwave meal option. Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 11

45) Explain the differences between culture, subculture, and social class. Answer: Culture is the fundamental determinant of a person's wants and behavior. Subcultures provide more specific identification and socialization of their members. Subcultures include nationalities, religions, racial groups, and geographic regions. Social class is a relatively homogeneous and enduring division in a society, that are hierarchically ordered and whose members share similar values, interests, and behaviors. Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 46) What is a reference group? Answer: Reference groups consist of all the groups that have a direct or indirect effect on a person's beliefs, decisions, and behavior. Reference groups include not only those that individuals belong to, such as friends, neighbors, coworkers, and religious and interest-based groups. Individuals may also be influenced by groups to which they do not belong, such as aspirational groups that they hope to join and dissociative groups whose values or behavior they reject. Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 47) The family is the most important consumer buying organization in society, and family members constitute the most influential primary reference group. We can distinguish between two family categorization in the buyer's life. Name the two families and their impact on buying behavior. Answer: The family of orientation consists of parents and siblings. From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, self-worth, and love. Even if the buyer no longer interacts very much with his or her parents, their influence on behavior can be significant. A more direct influence on everyday buying behavior is the family of procreation – namely, one's spouse and children. Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 48) Each person has personality characteristics that influence his or her buying behavior. What does personality mean in terms of buying traits? Answer: Consumers typically choose and use brands with a brand personality consistent with their actual self-concept (how we view ourselves), although the match may instead be based on the consumer's ideal self-concept (how we would like to view ourselves) or even on others' self-concept of us (how we think others see us). These effects may be more pronounced for publicly consumed products than for privately consumed goods. On the other hand, consumers who are high "self-monitors"–that is, are sensitive to the way others see them–are more likely to choose brands whose personalities fit the consumption situation. Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 12

49) Culture is the fundamental determinant of a person's wants and behavior. The growing child acquires a set of values, perceptions, preferences, and behaviors through his or her family and other key institutions. What values are typical American young children exposed to? Answer: According to the text, a child growing up in the United States is exposed to values such as achievement and success, activity, efficiency and practicality, progress, material comfort, individualism, freedom, external comfort, humanitarianism, and youthfulness. Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 50) An opinion leader is the person in informal, product-related communications who offers advice or information about a specific product or product category, such as which of several brands is best or how a particular product may be used. According to the text, how do marketers try to reach opinion leaders? Answer: Marketers try to reach opinion leaders by identifying demographic and psychographic characteristics associated with opinion leadership, identifying the media read by opinion leaders, and directing messages at opinion leaders. Diff: 2 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Reflective thinking 51) Explain the differences between a role and status. Answer: A role consists of the activities a person is expected to perform. Each role carries a status. For example, a senior vice-president has more status than a sales manager. Diff: 1 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 52) Identify the personal factors that can influence the decision of a buyer. Answer: Personal characteristics that influence a buyer's decision include age and stage in the life cycle, occupation and economic circumstances, personality and self-concept, and lifestyle and values. Because many of these have a direct impact on consumer behavior, it is important for marketers to follow them closely. Diff: 3 LO: 3.2: Explain the role cultural, social, and personal factors play in consumer behavior. AACSB: Application of knowledge 53) From the perspective of consumer behavior, when do needs become wants? A) When the consumer enters the five-step purchasing process B) When the consumer is exposed to product advertising C) When the need is reframed as an unmet desire D) When a need is directed toward specific objects that might satisfy the need E) When the consumer becomes conscious of the need Answer: D Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 13

54) From the perspective of the marketer, when do wants become demands? A) When backed by an ability to pay B) When consumers wants are matched by producer supply C) When consumers express a specific brand desire D) When consumer state purchase intent E) When wants are imagined as specific product solutions Answer: A Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 55) When does a need become a motivation? A) When a specific product has been chosen B) When consumers reduce the known set to the chosen set C) When consumers express specific product interest D) When the need is aroused to a sufficient level of intensity to drive people to act E) When consumers become consciously aware of the need Answer: D Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 56) When motivation researchers want to probe consumers' mindsets indirectly to uncover information that can't be obtained through explicit questioning, what interview approach do they often use? A) Projective techniques B) Observation C) Ethnography D) Online testing E) Group surveys Answer: A Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking

57) An audiophile who has invested $60,000 in a McIntosh home audio system is so brand loyal that he refuses to believe a new equipment review article that says a competing brand's power amplifier is just as good as the McIntosh model he owns. What psychological phenomenon is this person demonstrating? A) Selection attention B) Brand loyalism C) Brand determinism D) Exclusive attention E) Selective distortion Answer: E Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking 58) You drop into a neighborhood sporting goods store to shop for a new fishing rod and to see what sort of new angling gear the shop has on display. You spent 45 minutes in the angling department and left having never noticed that the store now sells cookware and kitchen utensils designed for cooking fish, even though you walked right past the display three times. Which aspect of consumer behavior was at play here? A) Subliminal perception B) Selective distortion C) Selective attention D) Selective memory E) Cognitive dissonance Answer: C Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 59) Nodes and links make up what model of human memory? A) The associative network memory model B) The memory linkage model C) The storage-retention-recall model D) The nodal retrieval model E) The virtual network model Answer: A Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking

60) Memories about events are stored in which type of long-term memory? A) Semantic B) Procedural C) Episodic D) Neural E) Virtual Answer: C Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 61) Facts about the world are stored in which type of long-term memory? A) Semantic B) Procedural C) Episodic D) Neural E) Virtual Answer: A Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 62) Motor skills acquired through repetition are stored in which type of long-term memory? A) Semantic B) Procedural C) Episodic D) Neural E) Virtual Answer: B Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 63) Based on the associative network memory model, we can think of consumer brand knowledge as a _ in memory with a variety of linked associations. A) link B) partition C) network D) node E) cell Answer: D Diff: 1 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking

64) All the brand-related thoughts, feelings, perceptions, images, experiences, beliefs, and attitudes that consumers hold in memory are known as . A) brand associations B) brand staying power C) mind share D) brand share E) brand memory Answer: A Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 65) Reminder advertising is important because brand associations can sometimes be available in memory but not . A) rememberable B) brand-positive C) accessible D) desired E) linked Answer: C Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking 66) Six months after they purchased it, your aunt and uncle still can't stop talking about their amazing, awesome, wonderful new car. You notice they seem to have completely forgotten the fact that their beloved vehicle has already had two serious safety recalls. What memory phenomenon are they demonstrating? A) Interpretive decoding B) Selective decoding C) Selective encoding D) Selective retention E) Ego-defense memory Answer: D Diff: 1 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking

67) In general, memory can be described as a process of and retrieval. A) decoding B) practice C) imprinting D) retention E) encoding Answer: E Diff: 1 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 68) In terms of time and retention, what are the two forms of memory that cognitive psychologists have identified? A) Short-term and long-term B) Temporary and permanent C) Personal and social D) Right-brain and left-brain E) Active and reactive Answer: A Diff: 1 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 69) Retro marketing tactics and products have shown that can pay, as costumed mascots, spinning signs, community gatherings, and billboards continue to capture the attention of customers. A) social memory B) brand memory C) repetition D) nostalgia E) distraction Answer: D Diff: 1 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 70) are mental states that arise spontaneously rather than from conscious effort and reflect people's positive or negative reactions to internal and external stimuli. A) Memories B) Emotions C) Cognitions D) Impulses E) Associations Answer: B Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 18

71) When research subjects express different reactions to the same physical product based on whether it is labeled with a favored brand name, they are exhibiting which psychological phenomenon? A) Selective distortion B) Selective attention C) Selective memory D) Selective recall E) Selective imaging Answer: A Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 72) At the top of Maslow's hierarchy of needs are needs. A) esteem B) self-actualization C) social D) safety E) physiological Answer: B Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 73) is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. A) Consumption B) Perception C) Acculturation D) Assimilation E) Cognitive dissonance Answer: B Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking

74) can work to the advantage of marketers with strong brands when consumers make neutral or ambiguous brand information more positive. A) Selective attention B) Selective distortion C) Selective retention D) Selective choice E) Selective embellishment Answer: B Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking 75) is the tendency to interpret information in a way that will fit our preconceptions. A) Selective retention B) Cognitive dissonance C) Selective distortion D) Subliminal perception E) Selective embellishment Answer: C Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 76) As Ilhan surfs the web looking for a florist, she sees several other products and services advertised. Though interesting on first glance, she quickly returns to her primary task of finding a florist. The items that distracted her from her initial search were most likely stored in which of the following types of memory? A) Short-term memory B) Long-term memory C) Middle memory D) Subconscious memory E) Subliminal memory Answer: A Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking; Application of knowledge 77) The associative network memory model views long-term memory as _ . A) a subliminal perception B) the interplay of drives C) a strong internal stimulus impelling action D) a temporary and limited repository of information E) a set of nodes and links Answer: E Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 20

78) refers to the process in which information gets into memory. A) Memory encoding B) Memory decoding C) Memory classification D) Memory retrieval E) Memorization Answer: A Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking 79) Amtex electronics, a consumer products brand, frequently advertises its products inside supermarkets and retail stores to promote the process of memory and stimulate purchase. A) verification B) retrieval C) decoding D) formation E) augmentation Answer: B Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking 80) Cognitive psychologists believe that memory is , so that once information becomes stored in memory, its strength of association decays very slowly. A) highly perceptual B) somewhat collective C) highly communicative D) often reflective E) extremely durable Answer: E Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 81) In Maslow's Hierarchy of Needs, a sense of belonging and love are examples of social needs. Answer: TRUE Diff: 1 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking

82) According to Maslow's hierarchy of needs model, recognition, self-esteem, and status constitute a person's social needs. Answer: FALSE Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 83) Perception depends only on the physical stimuli experienced by the person. Answer: FALSE Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 84) People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli. Answer: TRUE Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 85) Because of selective retention, we are likely to forget about the good points of competing products. Answer: TRUE Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 86) Memory is a very constructive process. This means people do not remember information and events completely and accurately and often remember only bits and pieces that they fill in based on whatever else they know. Answer: TRUE Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 87) What are the four key psychological processes that influence consumer response? Answer: The four key psychological processes are motivation, perception, learning, and memory. Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Application of knowledge

88) What do we mean when we say that consumers' motivations have both direction and intensity? Answer: Direction specifies the goal consumers have in mind, whereas intensity indicates the level of vigor with which we will pursue the goal. Diff: 1 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Application of knowledge 89) What aspect of memory function prompts even well-known food companies to promote their products inside supermarkets, through packaging and various types of in-store displays? Answer: Information may be available in memory but not be accessible for recall without some additional retrieval cues or reminders. These in-store cues can spur consumers to retrieve positive brand memories that they formed earlier through product usage, exposure to advertising outside the store, recommendations from friends, or other means. If you've ever been shopping for a product whose name you couldn't quite remember and then saw the familiar logo, package colors, or other cues, you've experienced this memorial retrieval phenomenon. Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking 90) Discuss the notion of subliminal perception and its likelihood as an advertising tactic. Answer: Subliminal perception is the supposed practice of embedding covert, subliminal (beneath the level of conscious recognition) messages in ads or packaging that consumers are not consciously aware of but that affect their behavior. Although it's clear that mental processes include many subtle subconscious effects, no evidence supports the idea that marketers can systematically control consumers at that level, especially enough to change strongly held or even moderately important beliefs. Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Analytical thinking 91) People can emerge with different perceptions of the same object because of three perceptual processes. List and briefly describe these processes. Answer: The three processes are selective attention, selective distortion, and selective retention. Selective attention occurs because a person cannot possibly attend to all the stimuli that he or she is exposed to during an average day. Some will be screened out. Selective distortion is the tendency to interpret information in a way that will fit our perceptions. Selective retention occurs because people will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs. Diff: 3 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Application of knowledge

92) Abraham Maslow sought to explain why people are driven by particular needs at particular times. Describe Maslow's hierarchy of needs. How does Maslow's theory help marketers? Answer: Maslow's hierarchy of needs in order of importance are physiological needs, safety needs, social needs, esteem needs, and self-actualization needs. Maslow's theory helps marketers understand how various products fit into the plans, goals, and lives of consumers. Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Application of knowledge 93) List and briefly define Maslow's Hierarchy of Needs. Answer: Beginning with the most basic needs to the most advanced, the need structure is as follows: 1. physiological needs — food, water, shelter 2. safety needs — security, protection 3. social needs — sense of belonging, love 4. esteem needs — self-esteem, recognition, status 5. self-actualization needs — self-development and realization Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Application of knowledge 94) Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. For a marketer, what is the key point of perception? Answer: The key point is that perceptions can vary widely among individuals exposed to the same reality. In marketing, perceptions are more important than the reality, as it is perceptions that will affect consumers' actual behavior. Diff: 2 LO: 3.3: Explain how consumers' needs, emotions, and memory influence their behavior. AACSB: Reflective thinking 95) For consumers seeking product information, commercial sources normally perform an information function, whereas personal sources perform a(n) or evaluation function. A) investigative B) legitimizing C) exploratory D) lexicographical E) social Answer: B Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking

96) Which of these is NOT one of the major information sources listed in the chapter that consumers rely on for purchase-related information? A) Personal B) Commercial C) Public D) Experiential E) Reflective Answer: E Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 97) What is the smallest set of products in the consumer decision-making process? A) Total set B) Awareness set C) Rejected set D) Choice set E) Consideration set Answer: D Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 98) A car buyer who starts her search by looking at all the compact SUVs on the market would be considered . A) type dominant B) brand dominant C) country dominant D) price dominant E) market dominant Answer: A Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 99) Because attitudes economize on , they can be very difficult to change. A) time and energy B) energy and thought C) effort and energy D) processing time E) memory recall Answer: B Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking

100) Someone investing in a new business suit to begin job interviews would be experiencing as a driver of consumer behavior. A) natural depletion B) dissatisfaction with the current offering C) lifestyle and goal changes D) social influences E) peer pressure Answer: C Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 101) Someone replacing a business suit that has grown a bit frayed would be experiencing as a driver of consumer behavior. A) natural depletion B) dissatisfaction with the current offering C) lifestyle and goal changes D) social influences E) peer pressure Answer: A Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 102) The steps consumers typically go through as they research, consider, choose, purchase, and use or dispose of products is often referred to as the . A) marketing spectrum B) marketing process C) consumption process D) consumer decision journey E) consumer decision process Answer: D Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 103) The buying process starts when the buyer recognizes a problem or need triggered by or stimuli. A) internal, external B) commercial, personal C) social, public D) public, private E) passive, active Answer: A Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 26

104) Heightened attention and active information search are two levels of consumer A) resistance B) buy-in C) acceptance D) engagement E) targeting Answer: D Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking

105) Marketers can influence consumer decision making by shaping the , the environment in which consumer decisions are structured and buying choices are made. A) decision architecture B) consumption format C) shopping space D) shopping experience E) consumption architecture Answer: A Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 106) You're watching the NBA All-Star Game and notice the brand of shoe worn by the winner of the slam dunk contest. A little voice pops up in your head and says, "We should get some of those." You have just experienced the effect of a(n) in the elaboration likelihood model. A) brand stimulus B) peripheral cue C) endorsement prompt D) central cue E) peripheral route Answer: B Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking

107) You've just added a new gaming controller to your online shopping cart, and you're ready to check out when you start to worry it might be too flimsy. What if it breaks after a month and you need to start all over again, spending even more time searching for and then buying a replacement? What phenomenon have you just experienced? A) Opportunity risk B) Physical risk C) Personal risk D) Functional risk E) Psychological risk Answer: A Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 108) After making a purchase, a consumer might experience from noticing certain disquieting features of the product he or she has just chosen or hearing favorable things about other brands. A) uncertainty B) disbelief C) rejection D) dissonance E) anger Answer: D Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 109) Which of these postpurchase actions by a customer could be considered the highest level of success from a marketer's point of view? A) Buying the product the next time it is needed B) Buying the product again right now in case it is removed from the market C) Writing a social media post to recommend the product D) Following the company on social media E) E-mailing the company to express satisfaction Answer: C Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking

110) Systematic errors that consumers make by using heuristics to take mental shortcuts while making complex decisions are sometimes referred to as . A) decision biases B) consumer biases C) choice mistakes D) learned errors E) mental laziness Answer: A Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 111) A(n) is a conviction that something is true or real, regardless of whether or not it is. A) attitude B) belief C) desire D) feeling E) emotion Answer: B Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 112) accounting refers to the manner in which consumers tend to place different transactions into different mental accounts, even though there is no logic to doing so. A) Cost B) Financial C) Behavioral D) Mental E) Factual Answer: D Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 113) Which of the following products is most likely to be characterized by low involvement but significant brand difference? A) Toothpaste B) Digital camera C) Packet of salt D) Carton of milk E) Computer desk Answer: A Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 29

114) In the exact moment you run out of laundry detergent and realize you need to pick some up at the store, you are in the stage of the buying decision process. A) information search B) evaluation of alternatives C) problem recognition D) purchase decision E) postpurchase behavior Answer: C Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 115) The milder information search state where a person simply becomes more receptive to information about a product is called . A) active information search B) information search C) heightened attention D) purchase decision E) dynamic information search Answer: C Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 116) The buying process starts when the buyer recognizes a(n) _ A) product B) advertisement for the product C) salesperson from a previous visit D) problem or need E) internal cue Answer: D Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking

117) Which of the following is considered to be a more advanced form of information search wherein the person might phone friends or go online to search for information about a product or service? A) Heightened attention B) Short-term memory processing C) Subliminal processing of information D) Long-term memory processing E) Active information search Answer: E Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 118) Which of the following can be considered an experiential information source? A) Consumer-rating organizations B) Mass media C) Acquaintances D) Websites E) Personal handling and examination Answer: A Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 119) Brands that meet consumers' initial buying criteria are called the A) total B) awareness C) consideration D) choice E) decision Answer: C Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking

set.

120) Maria considers buying a car after she notices the advantages experienced by her best friend from his new car. Which of the following forms of stimulus has activated Maria's problem recognition process? A) External stimuli B) Internal stimuli C) Peer stimuli D) Secondary stimuli E) Marketing induced stimuli Answer: A Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking; Application of knowledge 31

121) A consumer who uses Google to find comparative reports on new automobiles is most likely using which of the following information sources for assistance? A) Personal B) Public C) Experiential D) Commercial E) Under-the-radar Answer: D Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 122) With respect to consumer decision making, the set is the set of strong contenders from which one will be chosen as a supplier of a good or service. A) total B) awareness C) consideration D) choice E) decision Answer: D Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 123) A(n) puts people into a frame of mind, such as liking or disliking an object, moving toward or away from it. A) attitude B) belief C) feeling D) position E) stance Answer: A Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking

124) Marketers need to identify the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed. This process of identifying the hierarchy is called . A) market partitioning B) brand association C) market valuation D) market estimation E) market identification Answer: A Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 125) are a person's enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea. A) Discriminations B) Values C) Beliefs D) Feelings E) Attitudes Answer: E Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 126) The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their . A) needs B) wants C) desires D) brand beliefs E) consuming attitudes Answer: D Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 127) are rules of thumb or mental shortcuts in the decision process. A) Attitudes B) Beliefs C) Heuristics D) Discriminations E) Biases Answer: C Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 33

128) If a consumer is shopping for a smartphone, all the smartphone options available in the market—whether a consumer knows about them or not—is called the set. A) awareness B) total C) consideration D) choice E) inept Answer: B Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 129) Even if consumers form brand evaluations, two general factors can intervene between the purchase intention and the purchase decision. One is unanticipated situational factors; what is the other factor? A) Amount of purchasing power B) Attitudes of others C) Short-term memory capabilities D) Ability to return merchandise E) The self-concept Answer: B Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 130) risk occurs if the product fails to perform up to expectations. A) Physical B) Financial C) Social D) Psychological E) Functional Answer: E Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 131) A key driver of sales frequency is the product rate. A) consumption B) disposal C) refusal D) utility E) option Answer: A Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 34

132) The level of engagement and active processing undertaken by the consumer in responding to a marketing stimulus is called . A) elaboration likelihood B) consumer disengagement C) consumer involvement D) variety seeking E) low involvement Answer: C Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 133) A consumer is persuaded to buy a product by a message that requires little thought and is based on an association with a brand's positive consumption experiences from the past. In this situation, the consumer used a(n) route to arrive at this purchase decision. A) central B) peripheral C) behavioral D) subjective E) objective Answer: B Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 134) Jeremy is concerned about his selection of a new hair spray because he is concerned it will not perform as well as his usual brand, which may result in embarrassing, flat hair in front of others. The type of risk Jeremy perceives is risk. A) physical B) time C) financial D) social E) psychological Answer: D Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge

135) Richard Petty and John Cacioppo's model, an influential model of attitude formation and change, describes how consumers make evaluations in both low- and high-involvement circumstances. A) introspective B) elaboration likelihood C) stimulus-response D) associative network memory E) expectancy-value Answer: B Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 136) Heuristics are simple decision rules or mental shortcuts that consumers use to save time and energy when making choices. Answer: TRUE Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 137) Every consumer must pass through all five stages of the buying process when in a buying situation. Answer: FALSE Diff: 1 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 138) The buying process starts when the buyer decides to, or enters, a store or service provider's facility. Answer: FALSE Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 139) A belief is a person's enduring favorable or unfavorable evaluation, emotional feeling, and action tendency toward some object or idea. Answer: FALSE Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 140) The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs according to importance. Answer: TRUE Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Reflective thinking 36

141) Discuss one advantage and two disadvantages of using heuristics when making complex purchase decisions. Answer: The main advantage of using simple decision rules or mental shortcuts when making complex decisions is the amount of time and energy they can save. Rather than evaluating every purchase option in excruciating detail, you can save time and mental wear-and-tear by simply choosing a product from a company that has served you well in the past, for example. The two main disadvantage of these shortcuts are lower accuracy (you might not be making the best possible choice) and systematic errors (you might repeatedly make the same kind of error, such as letting yourself be influenced too heavily by advertising while ignoring technical shortcomings or quality problems). Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 142) Explain why marketers should stay alert to the market and stay in communication with customers even after they have made their purchases. Answer: Marketers need to stay involved after the purchase to monitor postpurchase satisfaction, postpurchase actions, and postpurchase product uses and disposal. If customers are less than satisfied, they are more likely to choose a different brand in the future, share their unhappiness with other potential customers, or take even more drastic steps such as complaining to government regulators or filing lawsuits. By monitoring postpurchase satisfaction levels, the marketer can take steps to improve the product or improve the customer's experience with it (such as posting information on social media about how to use the product more successfully). Taking action to improve satisfaction can also reduce the costs of product returns and customer service inquires. Keeping in touch with customers through both mass and personalized communication can also influence repurchase decisions. A tire store can send e-mails to customers when their tires are reaching their predicted wear-out time, for example, and invite them to visit the store to choose replacements. Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking 143) Identify three types of risk consumers might perceive in the context of purchasing a car. Answer: Consumers might perceive physical risk (an unsafe car poses a safety risk to the physical well-being of the driver and passengers), a financial risk (the car might be overpriced or may decline in value so rapidly that it will have minimal resale value when the consumer tries to resell it), and a functional risk (the car may not perform to the expectations of the consumer). (Students may identify other risks, including social, psychological, and time risks.) Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking

144) Describe how the problem recognition process works in the five-stage model of the consumer buying process. Answer: The buying process starts when the buyer recognizes a problem or need. With an internal stimulus, one of the person's normal needs rises to a threshold level and becomes a drive; or a need can be aroused by an external stimuli such as an advertisement. Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 145) Through market research a consumer gathers information about the competing brands of a product and their features. The consumer then advances through four sets with respect to brands before a decision is reached. What are those four sets? Answer: The four sets are: 1. total set 2. awareness set 3. consideration set 4. choice set Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 146) Explain the differences between a belief and an attitude. Answer: A belief is conviction that something is true or real, regardless of whether or not it is. An attitude is a person's enduring favorable or unfavorable evaluation, emotional feeling, and action tendencies toward some object or idea. Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 147) What is meant by the term market partitioning? Answer: Marketers need to identify the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed. This process of identifying the hierarchy is called market partitioning. Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 148) How is the expectancy-value model used in the evaluation of alternatives as a consumer engages in a buying process? Answer: The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs–the positives and negatives–according to importance. The model assists consumers in making choices. Diff: 2 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge

149) What four strategies can marketers of low-involvement products employ in an effort to convert their products into ones of higher involvement? Answer: The four strategies are: 1. linking the product to some involving issue 2. linking the product to some involving personal situation 3. designing advertising to trigger strong emotions related to personal values or ego defense 4. adding important features to the product Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Application of knowledge 150) André is focused on how much he likes the jingle for the advertised product and evaluates the product using his association of this brand with his positive feelings toward the song playing in the background. Explain how André is processing the advertisement, using the elaboration likelihood model as a base. Answer: André is using what is described as peripheral route processing from the elaboration likelihood model. If he were focused on the message, or central brand claims, he would be using the central route. Diff: 3 LO: 3.4: Illustrate the key stages of the buying decision process. AACSB: Analytical thinking

Chapter 4 Analyzing Business Markets 1) Business goods are often purchased by trained , who must follow their organizations' purchasing policies, constraints, and requirements. A) shoppers B) ordering agents C) purchasing agents D) technical shoppers E) organizational shoppers Answer: C Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Application of knowledge 2) What impact can business marketers have on total (consumer plus commercial) product demand? A) They can do little to stimulate total demand. B) By selling more efficiently, they can boost total demand. C) By advertising more effectively, they can boost total demand. D) Through co-op marketing programs, they can boost total demand. E) By offering discounts to other business customers, they can boost total demand. Answer: A Diff: 3 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Analytical thinking 3) If the leading manufacturer of electrical cabling offers homebuilders a 10-percent discount, what effect is this likely to have on overall demand for residential wiring products? A) If it is communicated clearly, it will boost demand noticeably. B) It will have no discernible effect; that demand is driven by home buyers. C) It could backfire and reduce demand. D) If other cable suppliers match the discount, together they will increase overall demand. E) A 10-percent discount won't spur demand, but a 20-percent discount probably will. Answer: B Diff: 3 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking

4) If the mechanical engineer in charge of production for a bicycle manufacturer asks the purchasing department to find a lighter grade of the steel used in the company's products, which type of purchase will this initiate? A) Straight rebuy B) Simple rebuy C) Modified rebuy D) New buy E) Improvement buy Answer: C Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Analytical thinking 5) Which purchasing scenario is both the greatest opportunity and the greatest challenge for business marketers? A) Straight rebuy B) Simple rebuy C) Modified rebuy D) New buy E) Improvement buy Answer: D Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 6) Which of these factors was noted by the Institute for the Study of Business Markets as one of the three leading challenges facing B2B marketers? A) Dealing with international competition B) Educating customers on effective product usage C) Explaining product benefits to nontechnical users D) Ensuring the autonomy of sales and marketing departments E) Integrating sales and marketing departments Answer: E Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking

7) How did PPG Industries challenge its maintenance, repair, and operating (MRO) suppliers via its Supplier Added Value Effort? A) To add value to and/or reduce the costs of their offerings B) To better explain their offerings to corporate buyers C) To streamline their product catalogs D) To coordinate more effectively with other MRO suppliers E) To offer better training for PPG employees Answer: A Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 8) refers to the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. A) Marketing channels B) Organizational buying C) Corporate retailing D) Brand auditing E) Inventory control Answer: B Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 9) markets consist of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. A) Business B) Consumer C) E-commerce D) Global E) Domestic Answer: A Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 10) How can a marketer overcome the negative effects of commoditization? A) Convince target consumers that the firm's products are as good as those of competitors B) Convince target consumers that price is irrelevant in determining quality C) Convince target consumers that the firm's products are different from those of competitors D) Convince target customers that buying the highest-priced product is no guarantee of quality E) Convince target customers that all the products in the market are equivalent Answer: C Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 3

11) Which of the following is true for business marketers? A) They deal with more and larger buyers than consumer marketers. B) They deal with more and smaller buyers than consumer marketers. C) They deal with fewer and larger buyers than consumer marketers. D) They deal with fewer and smaller buyers than consumer marketers. E) They deal with the same kind of buyers as consumer marketers. Answer: C Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 12) Which of the following is a challenge in which business marketers differ from consumer marketers? A) The need to understand deep customer needs in new ways B) The feed to find new opportunities for organic business growth C) Geographically concentrated buyers D) Better marketing performance and accountability metrics E) The need to compete and grow in global markets Answer: C Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 13) Pittsburgh-based Consol Energy's coal business largely depends on orders from utilities and steel companies which, in turn, depend on broader economic demand from consumers for electricity and steel-based products like automobiles and appliances because of . A) fluctuating demand B) derived demand C) professional purchasing D) multiple buying influences E) multiple sales calls Answer: B Diff: 3 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Analytical thinking

14) Sometimes a rise of only 10 percent in consumer demand can cause as much as a 200 percent rise in business demand for products for the next period. This is an example of . A) inelastic demand B) direct purchasing C) fluctuating demand D) derived demand E) a straight rebuy Answer: C Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 15) Shoe manufacturers are not going to buy much more leather if the price of leather falls, nor will they buy much less leather if the price rises, unless they can find satisfactory substitutes. This is an example of . A) inelastic demand B) direct purchasing C) the acceleration effect D) a modified rebuy E) a straight rebuy Answer: A Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Analytical thinking 16) Ultimately, the amount of steel sold to General Motors depends on the consumers' demand for GM cars and trucks. From the standpoint of the steel manufacturer, which of the following demand forms is most pertinent? A) Derived demand B) Inelastic demand C) Geographic demand D) Relational demand E) Static demand Answer: A Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Analytical thinking

17) The demand for business goods is ultimately derived from the demand for A) raw materials B) consumer goods C) services D) business solutions E) e-commerce Answer: B Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking

18) The total demand for many business goods and services is only minimally affected by price changes. Thus, this demand is . A) derived B) fluctuating C) accelerated D) multiple E) inelastic Answer: E Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 19) The purchasing department buys office supplies on a routine basis from a pre-approved list of suppliers. This type of purchase is classified as a . A) straight rebuy B) modified rebuy C) new task D) secondary purchase E) procure-to-pay Answer: A Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 20) Kenilworth Inc. is shifting from its rented four-room office to a standalone office building owned by the company itself. This can be classified as a . A) modified rebuy B) regular buy C) straight rebuy D) new rebuy E) new buy Answer: E Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Application of knowledge 6

21) In a purchasing situation, the buyer wants to make some change to existing product specifications, prices, delivery requirements, or other terms. A) new rebuy B) regular buy C) straight rebuy D) modified rebuy E) new task Answer: D Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 22) The business buyer has to make the fewest decisions when involved in a A) modified rebuy B) regular buy C) straight rebuy D) new rebuy E) new task Answer: C Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking

23) The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. Answer: TRUE Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 24) Commoditization strengthens customer loyalty. Answer: FALSE Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 25) The business market is essentially the same market as the consumer market. Answer: FALSE Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking

26) An increase in the demand for plant and equipment can lead to a much larger increase in consumer demand. This is known as the acceleration effect. Answer: FALSE Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 27) The demand for business goods is ultimately derived from the demand for raw materials. Answer: FALSE Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 28) Explain the differences between a straight rebuy, a modified rebuy, and a new buy purchase. Answer: In a straight rebuy, the purchasing department reorders on a routine basis and chooses from suppliers on an approved list. In a modified rebuy, the buyer wants to modify product specifications, prices, delivery requirements, or other terms. Lastly, in the new buy purchase, a purchaser buys a product or service for the first time. Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Analytical thinking 29) If you were a purchasing agent facing a modified rebuy situation, how would you describe that situation? Answer: The buyer wants to modify product specifications, prices, delivery requirements, or other items. The modified rebuy usually involves additional participants on both sides. Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 30) Which type of buying situation would be preferred if the management wants to minimize decision-making time and effort? Answer: The business buyer makes the fewest decisions in the straight rebuy situation and the most in the new buy situation. Hence, a straight rebuy situation would be preferable. Diff: 1 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking

31) Business markets have several characteristics that contrast sharply with those of consumer markets. Name and briefly characterize five of those characteristics. Answer: The characteristics of business markets as compared to consumer markets are: • fewer, larger buyers • close supplier-customer relationship • professional purchasing • multiple buying influences • derived demand • inelastic demand • fluctuating demand • geographically concentrated buyers • direct purchasing See chapter section for brief characterizations. Diff: 3 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 32) Explain how fluctuating demand impacts business markets differently from consumer markets. Answer: The demand for business goods and services tends to be more volatile than the demand for consumer goods and services. A given percentage increase in consumer demand can lead to a much larger percentage increase in the demand for plant and equipment necessary to produce additional output. Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 33) The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. List the major industries that make up the business market. Answer: The major industries making up the business market are agriculture, forestry, and fisheries; mining; manufacturing; construction; transportation; communication; public utilities; banking, finance, and insurance; distribution; and services. Diff: 3 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking 34) Explain the concept of derived demand. Answer: The demand for business goods is ultimately derived from the demand for consumer goods. Consumer demand for business' end products drives their production. Production of those end products drives business demand for the inputs to those production processes. Diff: 2 LO: 4.1: Explain the key aspects of the organizational buying process. AACSB: Reflective thinking

35) What force in the business environment has prompted many companies to upgrade their purchasing departments and elevate the administrators of these departments to vice-presidential rank? A) Government regulation B) Competitive pressures C) Consumer demand D) Stakeholder pressure E) Director oversight Answer: B Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 36) What did GE's ethnographic research into the plastic-fiber industry reveal about the relationship customers wanted with the company? A) Customers wanted collaboration at the earliest stages of product development. B) Customers wanted automated rebuys with no human involvement. C) Customers wanted GE to take over product design. D) Customers wanted to collapse their buying centers to one or two individuals. E) Customers wanted to be able to cobrand their products with the GE name. Answer: A Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 37) Within the buying center, who typically dominates decisions regarding supplier selection? A) Account executives B) Cost accountants C) Product engineers D) Purchasing agents E) Purchasing managers Answer: D Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 38) Which of the following is true about industrial buying decisions? A) They are purely rational. B) They are purely emotional. C) They service both the organization's and the individual's needs. D) Top executives are never insecure about buying products. E) Individual needs legitimate the buying process and its outcomes. Answer: C Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 10

39) is composed of all parties who participate in the purchasing decision-making process and share common goals and risks associated with their decisions. A) The buying center B) The marketing sales team C) Strategic management D) Engineering support E) The logistics center Answer: A Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Application of knowledge 40) In the purchasing decision process, the are those who request that something be purchased. They may be users or others in the organization. A) users B) initiators C) influencers D) deciders E) approvers Answer: B Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Application of knowledge 41) In the purchasing decision process, the are those who have the power to prevent sellers or information from reaching members of the buying center. A) approvers B) buyers C) initiators D) gatekeepers E) deciders Answer: D Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Application of knowledge 42) In the purchasing decision process, the major role of negotiating. A) gatekeepers B) buyers C) initiators D) approvers E) deciders Answer: B Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Application of knowledge 11

is in selecting vendors and

43) If you performed the role of the in a buying center, you would be the person that has the power to prevent sellers or information from reaching other members of the buying center. A) initiator B) influencer C) decider D) gatekeeper E) approver Answer: D Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 44) When purchasing disposable surgical gowns, Mercy Hospital's vice president of purchasing analyzes whether the hospital should buy disposable gowns or reusable gowns. If the findings favor disposable gowns, then the operating-room administrator compares various competitors' products and prices and makes a choice. Surgeons influence the decision retroactively by reporting their satisfaction with the particular brand. In this situation, the operating-room administrator performs the role of the . A) gatekeeper B) initiator C) user D) decider E) influencer Answer: D Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 45) When purchasing disposable surgical gowns, Mercy Hospital's vice president of purchasing analyzes whether the hospital should buy disposable gowns or reusable gowns. If the findings favor disposable gowns, then the operating-room administrator compares various competitors' products and prices and makes a choice. Surgeons influence the decision retroactively by reporting their satisfaction with the particular brand. In this situation, the surgeons perform the role of the . A) decider B) initiator C) user D) gatekeeper E) buyer Answer: C Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking; Application of knowledge

46) Which of these buying center members is performing the role of an influencer? A) Julia in Manufacturing reports back on how the chosen components performed in use. B) Roger in Purchasing has the authority to pick out the supplier and negotiate the terms of purchase. C) Imani in R&D provides the technical information needed to evaluate the alternatives. D) Conrad in Purchasing fields calls from potential suppliers, identifies the best prospects, and refers them to others in the company. E) Dana in Purchasing authorizes the actions of the deciders and buyers. Answer: C Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 47) Which of these buying center members is performing the role of an approver? A) Julia in Manufacturing reports back on how the chosen components performed in use. B) Roger in Purchasing has the authority to pick out the supplier and negotiate the terms of purchase. C) Imani in R&D provides the technical information needed to evaluate the alternatives. D) Conrad in Purchasing fields calls from potential suppliers, identifies the best prospects, and refers them to others in the company. E) Dana in Purchasing authorizes the actions of the deciders and buyers. Answer: E Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 48) Which of these buying center members is performing the role of a gatekeeper? A) Julia in Manufacturing reports back on how the chosen components performed in use. B) Roger in Purchasing has the authority to pick out the supplier and negotiate the terms of purchase. C) Imani in R&D provides the technical information needed to evaluate the alternatives. D) Conrad in Purchasing fields calls from potential suppliers, identifies the best prospects, and refers them to others in the company. E) Dana in Purchasing authorizes the actions of the deciders and buyers. Answer: D Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking

49) Which of the following is true about the buying center? A) In a buying center, one person cannot play more than one role. B) It never has more than five or six members. C) A buying center consists of only mid-level managers and below. D) It is the decision-making unit of a buying organization. E) Gatekeepers in a buying center are people who authorize the proposed actions of deciders or buyers. Answer: D Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 50) Small sellers should first concentrate their marketing efforts on reaching buying center. A) approvers B) buyers C) influencers D) users E) initiators Answer: C Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking

in the

51) If you were an upper-level marketing executive of a large seller of trucks, which of the following strategies would be most appropriate in reaching buying center targets? A) Concentrate on key buying influencers. B) Use in-depth selling to reach as many buying center members as possible. C) Use trade-based promotions. D) Concentrate sales efforts on the support staff. E) Move all operations to the internet. Answer: B Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 52) Which of these most accurately describes the mission of newer, more strategically oriented purchasing departments? A) Make the most profit possible and remain independent of entanglements. B) Approach every purchasing opportunity as means to create interdependency. C) Seek the best value from fewer and better suppliers. D) Outsource the supply function. E) Abandon all strategies except for systems selling and buying. Answer: C Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 14

53) People who authorize the proposed actions of deciders or buyers are initiators. Answer: FALSE Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 54) With respect to the buying center, approvers are people who have the power to prevent sellers or information from reaching members of the buying center. Answer: FALSE Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 55) Influencers shape the buying decision by helping define specifications and providing information for evaluating alternatives. Answer: TRUE Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 56) In the buying center, several people can occupy a given role such as user or influencer, and one person may play multiple roles. Answer: TRUE Diff: 1 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 57) Why would business marketers consider the needs and expectations of their customers' customers? Answer: Many B2B sales are to firms that use the products they purchase as components in products they sell to the ultimate consumers. Business marketers can seek out opportunities to interact with their customers' customers and improve their offerings or even their business models. Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 58) Identify three questions business marketers should consider as they strategize how to sell to potential customers. Answer: Once marketers identify the type of businesses on which to focus their efforts, they must then decide how best to sell to these businesses. Three key questions are (1) Who are the major decision participants (the buying center members, in other words)? (2) What decisions do they influence, and how deeply? (3) What evaluation criteria do they use? Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 15

59) Explain why businesspeople buy more than just "products." Answer: They are buying solutions to two problems: the organization's economic and strategic problem and their own personal need for achievement and reward. In this sense, industrial buying decisions are both "rational" and "emotional," serving the needs of the organization as well as those of the individual. Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 60) How do personality and other individual traits affect the dynamics of the buying center? Answer: In addition to performing their job-related roles in the buying center, business buyers also have personal motivations, perceptions, and preferences influenced by their age, income, education, job position, personality, attitude toward risk, and culture. Some are "keep-it-simple" buyers, or "own-expert," "want-the-best," or "want-everything-done" buyers. Some younger, highly educated buyers are technically proficient and conduct rigorous analyses of competitive proposals before choosing a supplier. Other buyers are "toughies" from the old school who pit competing sellers against one another. In short, although these are business decisions, they are made by individual people working in some sort of administered harmony. Diff: 3 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 61) What is the composition of the buying center? Answer: A buying center is composed of "all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising from the decisions." The buying center includes all members of the organization who play any of seven roles in the purchase decision process: initiators, users, influencers, deciders, approvers, buyers, gatekeepers. Buying centers usually include several participants with differing interests, authority, status, and persuasiveness. Each member of the buying center is likely to give priority to different decision criteria. Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking

62) List the seven roles of people in a buying center. Answer: 1. Initiators – Users or others in the organization who request that something be purchased. 2. Users – Those who will use the product or service. In many cases, the users initiate the buying proposal and help define the product requirements. 3. Influencers – People who influence the buying decision, often by helping define specifications and providing information for evaluating alternatives. Technical personnel are particularly important influencers. 4. Deciders – People who decide on product requirements or on suppliers. 5. Approvers – People who authorize the proposed actions of deciders or buyers. 6. Buyers – People who have formal authority to select the supplier and arrange the purchase terms. Buyers may help shape product specifications, but they play their major role in selecting vendors and negotiating. In more complex purchases, buyers might include high-level managers. 7. Gatekeepers – People who have the power to prevent sellers or information from reaching members of the buying center. For example, purchasing agents, receptionists, and telephone operators may prevent salespersons from contacting users or deciders. Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Reflective thinking 63) BEL is a small seller of specialized auto parts, while MES is a large seller of auto parts. Both firms want to approach the same car company with a view to supplying parts to it. How will their approaches differ? Answer: Small sellers like BEL concentrate on reaching the key buying influencers in order to make the most effective use of their small sales force. Large sellers like MES go for multilevel in-depth selling to reach as many participants as possible to increase sales volumes and strengthen relationships. Diff: 2 LO: 4.2: Define the role of the buying center in an organization. AACSB: Analytical thinking 64) The eight-step buying process model begins with . A) Supplier search B) Product specification C) Proposal solicitation D) Contract negotiation E) Problem recognition Answer: E Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking

65) The Topco group purchasing organization (GPO) in the grocery industry is an example of a . A) buying alliance B) selling alliance C) strategic merger D) vertical market E) spot market Answer: A Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 66) Which of these would be a valid goal of product value analysis? A) Make sure that only well-known brand names are used in a company's manufacturing B) Always top-up inventory so that manufacturing never runs out of supplies C) Ensure that components and materials aren't overengineered for their intended use D) Always buy the lowest-cost components and materials E) Purchase only premium-grade components and materials Answer: C Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Critical thinking 67) Product value analysis would most likely be conducted at which stage of the business buying process? A) Problem recognition B) Need description C) Supplier search D) Performance review E) Product specification Answer: E Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 68) allow buyers to refuse components that are too expensive or that fail to meet specified standards. A) Tightly written specifications B) Legal guidelines C) Company policies D) Influencer brand favorites E) Gatekeepers Answer: A Diff: 1 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 18

69) involve several companies that are buying the same goods joining together to form purchasing consortia in order to streamline the search for suppliers and gain deeper discounts on volume purchases. A) Buying clubs B) Discount warehouses C) Shared buying centers D) Collaborative buying centers E) Buying alliances Answer: E Diff: 1 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 70) are invitation-only online exchanges the link specially selected groups of suppliers and partners. A) Extranets B) Intranets C) Shared buying centers D) Private exchanges E) Collaborative buying centers Answer: D Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 71) E-hubs that focus on such categories as logistics, media buying, advertising, and energy management are known as . A) functional hubs B) vertical hubs C) horizontal hubs D) industrial hubs E) buy-sell hubs Answer: A Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking

72) After qualifying the suppliers they would potentially like to do business with, business buyers' next step is to . A) select the chosen supplier B) solicit proposals from suppliers C) begin contract negotiations D) write specifications E) test samples Answer: B Diff: 1 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 73) A(n) , sometimes called a stockless purchase plan, establishes a long-term relationship in which the supplier promises to resupply the buyer as needed, at agreed-upon prices, over a specified period of time. A) open contract B) contractless buy C) blanket contract D) negotiated purchase E) MRO contract Answer: C Diff: 1 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 74) While exploring the products on display at an annual industry trade show, Ximena discovered some new production-control software that might help her company reduce the inventory issues that have been plaguing production. Which stage of the buying process does this put her in? A) Problem recognition B) Need description C) Product specification D) Supplier search E) Supplier selection Answer: A Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Analytical thinking

75) Ximena is intrigued by some new production-control software she discovered at an industry trade show, but she knows that in order to get her company management to try it out she'll need to make a case for how it could help the manufacturing department. Which phase of the buying process would this put her in? A) Problem recognition B) Need description C) Product specification D) Supplier search E) Supplier selection Answer: B Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Analytical thinking 76) Niran, a purchasing agent for a company that makes home security systems, is scouring a spot exchange for the cable connectors the product engineering team wants to use in a new model. Which phase of the buying process does this put him in? A) Problem recognition B) Need description C) Product specification D) Supplier search E) Supplier selection Answer: D Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Analytical thinking 77) The decision to use one seller to supply all of a company's needs for a given product is known as . A) unified buying B) source consolidation C) single sourcing D) supply streamlining E) consolidated buying Answer: C Diff: 1 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking

78) Which of these is NOT one of the identified advantages of leasing heavy equipment rather than buying it? A) Getting the latest products on a timely basis B) Receiving better service from suppliers C) Conserving a company's capital D) Enjoying certain tax advantages E) Eliminating the supplier search stage Answer: E Diff: 1 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 79) occurs when customers are given a perspective or point of view that allows the seller to "put its best foot forward." A) Gatekeeping B) Commoditization C) Framing D) Rebuying E) Bartering Answer: C Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 80) The approach to cost reduction that studies whether components can be redesigned or standardized or made by cheaper methods of production without adversely impacting product performance is termed as . A) maintenance, repair, and operating (MRO) B) product value analysis (PVA) C) vendor managed inventories (VMI) D) supplier performance management (SPM) E) supplier added value effort (SAVE) Answer: B Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking

81) Business buyers may get new ideas at a trade show, see an ad, read a blog, or receive a call from a sales representative who offers a better product or a lower price compared to their current supplier. These situations motivate the stage. A) problem recognition B) general need description C) order-routine specification D) supplier search E) performance review Answer: A Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Application of knowledge 82) Plastics.com allows plastics buyers to search the best prices among thousands of plastics sellers. Plastics.com is an example of a(n) . A) buying alliance B) barter market C) systems seller D) vertical market E) auction site Answer: D Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Application of knowledge 83) On an online , prices change by the minute. A) buying alliance B) barter market C) systems seller D) spot market E) catalog site Answer: D Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 84) Online buying can be organized around which two types of e-hubs? A) Vertical and horizontal hubs B) Vertical and functional hubs C) Functional hubs and organizational hubs D) Supplier and user hubs E) Manufacturer and supplier hubs Answer: B Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 23

85) Which of the following is an example of a functional hub? A) Plastics.com allows plastics buyers to search the best prices among thousands of plastics sellers. B) ChemConnect.com is an online exchange for buyers and sellers of bulk chemicals. C) SteelMart.com concentrates on steel buyers from the United States. D) SupplyLink.com offers manufacturers from different industries information on ensuring workplace safety. E) PaperTiger.com offers paper buyers a comprehensive look at the prices and quality in the paper market. Answer: D Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Analytical thinking 86) Praxair Limited is a supplier of synthetic graphite to a number of electrode manufacturers in the United States. Its customers have shifted their ordering responsibilities to Praxair and the company regularly monitors its customers' inventory levels and has taken responsibility for replenishing the supplies automatically through continuous replenishment programs. Which of the following systems do Praxair and its customers follow with respect to order-routine specification? A) Supplier added value B) Vendor-managed inventory C) Direct concentrated buying D) Supplier performance management E) Product value analysis Answer: B Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Analytical thinking 87) A plan establishes a long-term relationship in which the supplier promises to resupply the buyer as needed, at agreed-upon prices, over a specified period of time. A) stockless purchase B) direct stock purchase C) defined contribution D) stock purchase E) share purchase Answer: A Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 88) A performance review is the first step in the business buying process. Answer: FALSE Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 24

89) The buying process begins when someone places an order with a sales representative. Answer: FALSE Diff: 1 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 90) Product value analysis is an approach to efficiency that studies whether components can be redesigned or made by more efficient methods of production without adversely impacting product performance. Answer: FALSE Diff: 3 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 91) On spot electronic markets, prices of products or commodities change by the minute. Answer: TRUE Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 92) What are the methods available to the buyer to review the performance of the chosen supplier? What advantage does performance review offer to the buyer? Answer: The buyer periodically reviews the performance of the chosen supplier(s) using one of three methods. The buyer may contact end users and ask for their evaluations, rate the supplier on several criteria using a weighted-score method, or aggregate the cost of poor performance to come up with adjusted costs of purchase, including price. The performance review may lead the buyer to continue, modify, or end a supplier relationship. Many companies have set up incentive systems to reward purchasing managers for good buying performance, in much the same way sales personnel receive bonuses for good selling performance. These systems lead purchasing managers to increase pressure on sellers for the best terms. Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 93) With reference to online buying, what are vertical markets? Give an example of a vertical market. Answer: Companies buying industrial products such as plastics, steel, or chemicals or services such as logistics or media can go to specialized websites (called e-hubs). Plastics.com allows plastics buyers to search the best prices among thousands of plastics sellers. (Student examples may vary.) Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Analytical thinking

94) E-procurement websites are organized around two types of e-hubs. If you were in the advertising business and were seeking to take advantage of e-procurement, what type of e-hub should your company build or join? Answer: The two types of hubs are vertical hubs (centered on industries such as plastics) and functional hubs (centered on functions such as advertising). Therefore, you would construct (or join) a functional hub. Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Analytical thinking 95) Explain the concept of vendor-managed inventory. Answer: Some companies shift the ordering responsibility to their suppliers in systems called vendor-managed inventory. These suppliers are privy to the customer's inventory levels and take responsibility for replenishing automatically through continuous replenishment programs. Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 96) As part of the buyer selection process, buying centers must decide how many suppliers to use. What might motivate a buyer to use multiple sources? Answer: Companies that use multiple sources often cite the threat of a labor strike as the biggest deterrent to single sourcing. Another reason companies may be reluctant to use a single source is that they fear they'll become too comfortable with the relationship and lose their competitive edge. Diff: 2 LO: 4.3: Describe the stages of the decision process in business markets. AACSB: Reflective thinking 97) Buying a total problem solution from one seller is known as . A) all-in-one contracts B) problem-solution buying C) solution buying D) inclusive purchasing E) systems buying Answer: E Diff: 1 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking

98) When Shell Oil manages the oil inventories of its business customers, it does so under . A) an inventory contract B) a management contract C) an operating contract D) systems contracting E) supply contracting Answer: D Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Analytical thinking 99) A "turnkey" solution is one that . A) requires dual security codes B) is ready to go, requiring only turn of a key to operate, so to speak C) is a system in kit form, which must be assembled by the customer D) provides remote control operation E) must be operated by approved personnel only Answer: B Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 100) Systems contracting for MRO requirements helps sellers by lowering operating costs and reducing . A) paperwork B) regulatory burdens C) service callbacks D) customer support E) energy usage Answer: A Diff: 1 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking

101) In addition to providing greater value to their product offerings, adding high-quality services also helps business marketers . A) cross-sell related products B) up-sell to more expensive solutions C) reduce routine usage questions D) establish closer ties with customers E) automate customer support Answer: D Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 102) A particular benefit for companies offering software as a service is that the eliminates the need to constantly try to convince users who have purchased the product in the past to upgrade to the new version. A) intangible offering B) online-only format C) subscription model D) cloud-based delivery E) multi-user contract Answer: C Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 103) In ABB's approach, magazines, posters, brochures, digital communication, and even exhibits were all revamped to give the brand a unified look and strengthen its global market position. A) "one company, one brand" B) "the world as one" C) "one world, one company" D) "new century, new brand" E) "inventing a unified world" Answer: A Diff: 1 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking

104) To achieve a broader presence so it could , Emerson aligned its conglomerate of 60 autonomous companies under a new global brand architecture and identity. A) sell to every customer globally via the same approach B) eliminate expensive on-site sales calls C) reduce web advertising costs D) reduce printing costs E) sell locally while leveraging its global brand name Answer: E Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 105) In general, what effect have strategic sourcing, partnering, and participation in cross-functional teams had on price pressures in business marketing? A) These moves have largely eliminated disagreements over pricing. B) Sellers now prioritize price over product benefits. C) Buyers now prioritize price over product benefits. D) Buyers still spend a great deal of time haggling over price. E) Haggling still occurs from time to time, but it is rare. Answer: D Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 106) A popular approach to making the complete value of the offering (including performance, reliability, and warranty coverage) more transparent to customers is . A) supplier communication seminars B) economic value analysis C) economic return analysis D) optimum value positioning E) return on investment (ROI) pricing Answer: B Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking

107) How was machinery manufacturer Makino noted for using marketing communication to build relationships with customers? A) By hosting industry-specific webinars to help customers use its equipment more effectively B) By holding one-on-one training on using its equipment more effectively C) By advertising to customer executives on the financial payback of buying Makino equipment D) By tweeting a steady stream of product usage tips E) By hosting Facebook chats with machine operators to answer their usage questions. Answer: A Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Analytical thinking 108) How was jet engine manufacturer Rolls-Royce able to use services to increase profits in its business dealings with customers Boeing and Airbus? A) By bundling services into the engine prices B) By offering add-on "power by the hour" long-term repair and maintenance contracts C) By cutting maintenance costs through superior product design D) By promising better service for engine malfunctions E) By designing remote diagnostics into its latest engines Answer: B Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Analytical thinking 109) How do well-regarded supplier brands make it easier for members of the buying center to justify purchases? A) By ensuring the best contractual terms B) By eliminating the need to introduce the supplier to the rest of the buying center C) By offering the peace of mind that comes with demonstrated product quality D) By eliminating lesser-known firms from contention E) By justifying the higher prices of better-known firms Answer: C Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking

110) Governments and other large customers who prefer to deal with a single supplier for complex purchases often use . A) noncompetitive bidding B) systems buying C) open-source bidding D) restrictive vendor selection E) MRO contracting Answer: B Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 111) All the expenses involved in using a product are known as its . A) bundled costs B) total cost of ownership C) net cost liability D) comprehensive costing E) true cost of ownership Answer: B Diff: 1 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 112) Orica Inc. competes in the market for commercial explosives. The company recently changed its business model from just selling explosives to managing an entire blast in a quarry. This customer-solution-based approach to the sale of explosives is an example of . A) systems selling B) straight rebuying C) customer referencing D) derived demand E) channel consolidation Answer: A Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Analytical thinking

113) Many business buyers prefer to buy a total solution to a problem from one seller. This process is also known as . A) channel consolidation B) systems buying C) vertical buying D) horizontal buying E) supply buying Answer: B Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 114) Xerox offers a approach to prospective clients when it offers a complete turnkey solution, including the operation and management of the client's information and communication need. A) guided selling B) fair trading C) systems buying D) cross-selling E) local purchasing Answer: C Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Analytical thinking 115) If Ampex Support Systems is the single supplier for a local manufacturing company's MRO (maintenance, repair, operating) supplies and needs, Ampex Support Systems is considered as providing for the manufacturer. A) guided selling B) purchasing support C) turnkey logistics D) decision support E) systems contracting Answer: E Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Analytical thinking

116) is a key industrial marketing strategy in bidding to build large-scale industrial products such as dams, pipelines, etc. A) Systems contracting B) Systems buying C) Systems selling D) Solutions buying E) Turnkey logistics Answer: C Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 117) In contrast to the situation in consumer markets, marketing communication plays little role in business markets. Answer: FALSE Diff: 1 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 118) Lowering the price and increasing benefits are the only ways to overcome price pressures. Answer: FALSE Diff: 1 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 119) Recognizing that buyers often like to purchase complete solutions, many business marketers have adopted systems selling as a marketing tool. Answer: TRUE Diff: 1 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 120) Explain the meaning of systems contracting. Answer: Systems contracting is a variant of systems selling in which a single supplier provides the buyer with all its maintenance, repair, and operating (MRO) requirements. During the contract period, the supplier also manages the customer's inventory. Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking

121) Characterize the role that services now play in the efforts of many product-focused business marketers. Answer: Services play an increasing strategic and financial role for many business-to-business firms that sell primarily products. Adding high-quality services to their product offerings allows companies to provide greater value and establish closer ties with customers. Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 122) Explain how SAS extended its presence beyond its avid fans in the IT community up to the executives at the C-suite level in customer organizations. Answer: The company created a communication program around the idea that business analytics isn't just a technical topic but a matter of strategic significance–and therefore something that executives at the highest level should know about and care about. Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 123) Explain how economic value analysis can help a business market overcome price pressure without lowering its prices. Answer: EVA helps customers understand the functional benefits of a company's full offering, including such factors as performance, reliability, and warranty coverage. In doing so, it helps increase the perceived value of the offering. Diff: 3 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Reflective thinking 124) KEK is a supplier of paper and paper products to several businesses. Name some contract restrictions that KEK can use to protect its margins when dealing with price-oriented buyers. Answer: KEK can handle price-oriented buyers by setting a lower price but establishing restrictive conditions, such as limited quantities, no refunds, no adjustments, and no services. Diff: 2 LO: 4.4: Explain how organizations develop marketing programs to attract and retain business customers. AACSB: Analytical thinking

125) Greater between buying partners and sellers has helped them transcend merely transacting and instead create more value for both parties. A) executive communication B) cross-functional training C) one-on-one communication D) horizontal coordination E) vertical coordination Answer: E Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking 126) Which of these was NOT noted in the chapter as being a likely factor in building trust in a firm? A) Providing full and honest information B) Taking full advantage of SEO for web communication C) Aligning employee incentives with customer needs D) Partnering with customers to create market value E) Offering value comparisons with competitive products Answer: B Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking 127) is the extent to which customers believe a firm can design and deliver products and services that satisfy their needs and wants. A) Brand loyalty B) Customer loyalty C) Corporate credibility D) Supplier trust E) Accountability Answer: C Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking

128) reflects the extent to which a company is seen as able to make and sell products or conduct services. A) Corporate expertise B) Core competence C) Augmented product offering D) Corporate skill set E) Supplier rating Answer: A Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking 129) reflect(s) the extent to which a company is seen as motivated to be honest, dependable, and sensitive to customer needs. A) Supplier ethics B) Supplier core values C) B2B relationships D) Corporate trustworthiness E) Reputational deficit Answer: D Diff: 1 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking 130) Which of these was identified as one of the key factors in creating the closest working relationships between suppliers and sellers? A) When both parties want the latest technical innovations B) When both parties want to push costs as low as possible C) When the parties are united against new entrants in the market D) When the parties faced procurement obstacles such as complex purchasing requirements E) When the products involved are routine goods requiring little after-sale support Answer: D Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking

131) In the context of corporate credibility, a company's ability to make and sell products or conduct services is known as its . A) corporate expertise B) solutions portfolio C) product mix D) operating expertise E) deliverables expertise Answer: A Diff: 1 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Application of knowledge 132) In buyer-seller relationships, engaging in "undersupply relative to an implicit or explicit contract" is known as . A) skimming B) breach of contract C) one-siding D) opportunism E) underperformance Answer: D Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Application of knowledge 133) Which of these is noted as a common characteristic of customers in the institutional market? A) Limited product expertise B) Short staffing C) A focus on quality D) A focus on service E) Low budgets Answer: E Diff: 1 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking

134) The market consists of schools, hospitals, nursing homes, prisons, and other institutions that must provide goods and services to people in their care. A) vertical B) nonprofit C) spot D) secondary business E) institutional Answer: E Diff: 1 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking 135) Value Central has a partnership of high trust and commitment with certain suppliers and gives them access to its sophisticated and detailed daily, individual store-based sales data. In exchange, those suppliers are responsible for managing Value Central's inventory of their products. This relationship is best described as . A) basic buying and selling B) contractual transaction C) collaborative D) customer supply E) customer is king Answer: C Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking 136) According to research studies, the closest relationships between customers and suppliers arise when . A) supply is important to the customer and there were procurement obstacles B) procurement is simple C) there are many undifferentiated vendors in the marketplace D) the customer is highly price sensitive E) the suppliers charge a premium for their products Answer: A Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking

137) investments are those expenditures tailored to a particular company and value chain partner. A) Diversified B) Pooled C) Specific D) Umbrella E) General Answer: C Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking 138) Which of the following is a form of cheating or undersupply relative to an implicit or explicit contract which usually takes place when buyers cannot easily monitor supplier performance? A) Institutional sale B) Business buying C) Opportunism D) Vertical integration E) Contractual transactionism Answer: C Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Ethical understanding and reasoning 139) In most countries, are the major buyers of goods and services. They typically require suppliers to submit bids and often award the contract to the lowest bidder. A) consumer packaged-goods companies B) government organizations C) health services vendors D) educational institutions E) households Answer: B Diff: 1 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking

140) What is the name of the database that is used to collect, validate, store, and disseminate data in support of government agency acquisitions? A) General Services Administration database B) System for Award Management database C) Customer Value Assessment database D) Vendor-Managed Inventory database E) Proposal Solicitation database Answer: B Diff: 3 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Application of knowledge 141) Corporate credibility depends on corporate expertise, corporate trustworthiness, and corporate likability. Answer: TRUE Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking 142) One of the problems facing business-to-business on the web is that many firms often impose more stringent requirements on their online business partners than they do on non-online partners. Answer: TRUE Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking 143) Contracts are always sufficient to govern supplier transactions and prevent supplier opportunism. Answer: FALSE Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking 144) Boeing is a good example of a customer in the institutional market. Answer: FALSE Diff: 1 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking

145) Why is opportunism an important concern in buyer-seller relationships? Answer: Opportunism is a concern because firms must devote resources to control and monitoring that they could otherwise allocate to more productive purposes. Contracts may be inadequate to govern supplier transactions when supplier opportunism becomes difficult to detect, when firms make specific investments in assets they cannot use elsewhere, and when contingencies are harder to anticipate. Diff: 3 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking 146) How has the U.S. General Services Administration (GSA) taken steps to improve efficiencies for buyers in the federal government? Answer: The GSA sells stocked merchandise through its website for faster ordering and delivery and also creates direct links between buyers and contract suppliers to speed delivery. Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Analytical thinking 147) Vertical coordination can facilitate stronger customer-seller ties but at the same time may increase the risk to the customer's and supplier's specific investments. What are specific investments and why are they risky? Answer: Specific investments are those expenditures tailored to a particular company and value chain partner. These might include investments in company-specific training, equipment, and operating procedures or systems. Because these investments are partially sunk, they lock the firm that makes them into a particular relationship. A buyer may be vulnerable to holdup because of switching costs; a supplier may be more vulnerable to holdup in future contracts because of dedicated assets and/or expropriation of technology/knowledge. Diff: 3 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Ethical understanding and reasoning 148) As a seller in the business market, you have promised your customers that you have corporate credibility as one of your corporate goals. What three factors will have some bearing on whether you will be able to meet your goal and promise? Answer: The three factors are: 1. corporate expertise 2. corporate trustworthiness 3. corporate likability In other words, a credible firm is seen as being good at what it does, it keeps its customers' best interests in mind, and it is enjoyable to work with. Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Ethical understanding and reasoning 41

149) Explain the term opportunism with respect to business relationships. Answer: When buyers cannot easily monitor supplier performance, the supplier might shirk or cheat and not deliver the expected value. Opportunism is "a form of cheating or undersupply relative to an implicit or explicit contract." Diff: 2 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking 150) Your organization is considering selling its products to the institutional market. What type of customers will you be making your appeals to? Answer: The institutional market consists of schools, hospitals, nursing homes, prisons, and other institutions that must provide goods and services to people in their care. Diff: 1 LO: 4.5: Describe how business-to-business marketers build and maintain relationships with customers. AACSB: Reflective thinking

Chapter 5 Conducting Marketing Research 1) Broadly speaking, is the informational function that links a marketing organization with its target customers. A) marketing research B) tactical research C) the marketing tactical plan D) the marketing mix E) the positioning strategy Answer: A Diff: 1 LO: 5.1: Define the scope of marketing research. AACSB: Application of knowledge 2) Which of these is NOT one of the functions of marketing research listed in the chapter? A) Specifies the information required to address marketing issues B) Designs methods for collecting information C) Manages and implements the data collection process D) Communicates the findings and their implications E) Applies research results to the marketing mix Answer: E Diff: 1 LO: 5.1: Define the scope of marketing research. AACSB: Reflective thinking 3) What research insight did Walmart use to shift its reputation away from a purveyor of "cheap" merchandise? A) The emotional lift from feeling anti-elitist B) The logical redefinition of "cheap" to "well-priced" C) The emotional benefit consumers get from feeling like smart shoppers D) The logical benefit of saving money E) The emotional benefit of always getting the best deal Answer: C Diff: 2 LO: 5.1: Define the scope of marketing research. AACSB: Application of knowledge

4) How was Walgreens able to apply marketing research insights to boost revenues in a sluggish economy? A) Repositioning from a low-cost health care brand to a premium health care brand B) Repositioning from a convenience store image to a premium health care brand C) Conveying the key message of everyday low prices D) Improving awareness of local store locations E) Emphasizing convenience over shopping in huge supermarkets Answer: B Diff: 2 LO: 5.1: Define the scope of marketing research. AACSB: Application of knowledge 5) What is the typical marketing research budget as a percentage of company sales? A) 30-40 percent B) Less than 0.5 percent C) At least 10 percent D) 1 to 2 percent E) 10 to 15 percent Answer: D Diff: 3 LO: 5.1: Define the scope of marketing research. AACSB: Application of knowledge 6) provide diagnostic information about how and why we observe certain effects in the marketplace, and what that means to marketers. A) Marketing insights B) Marketing metrics C) Marketing channels D) Marketing information systems E) Marketing-mix models Answer: A Diff: 1 LO: 5.1: Define the scope of marketing research. AACSB: Application of knowledge 7) Which of the following types of marketing research firms gathers consumer and trade information and then sells it for a fee (e.g., Nielsen Company)? A) Custom marketing research firms B) Syndicated-service research firms C) Specialty-line marketing research firms D) Generic marketing research firms E) Focused marketing research firms Answer: B Diff: 1 LO: 5.1: Define the scope of marketing research. AACSB: Application of knowledge 2

8) A field-service firm is a research firm. A) custom marketing B) syndicated-service C) specialty-line marketing D) consumer marketing E) social marketing Answer: C Diff: 2 LO: 5.1: Define the scope of marketing research. AACSB: Reflective thinking 9) You are the marketing research director of a medium-sized manufacturing firm and you would like to engage an outside marketing research firm to conduct field interviews. Which of the following categories of marketing research firms should you use? A) Syndicated-service research firms B) Custom marketing research firms C) Global research management firms D) Specialty-line marketing research firms E) Brand management specialty research firms Answer: D Diff: 2 LO: 5.1: Define the scope of marketing research. AACSB: Analytical thinking 10) Good marketing insights often form the basis of successful marketing programs. Answer: TRUE Diff: 1 LO: 5.1: Define the scope of marketing research. AACSB: Reflective thinking 11) Custom marketing research firms sell field interviewing services to other firms. Answer: FALSE Diff: 1 LO: 5.1: Define the scope of marketing research. AACSB: Reflective thinking 12) Explain why employees can be one of a firm's best sources of marketing insights. Answer: Employees can be a great source of marketing insights because no one may come into more contact with customers and understand a company's products, services, and brands better than they do. Diff: 2 LO: 5.1: Define the scope of marketing research. AACSB: Analytical thinking

13) Describe the observational research that Staples founder Tom Stemberg used to get ideas to improve the company. Answer: Stemberg made weekly unannounced visits to his own stores, competitors' stores, and other stores outside his category, always looking to see what each store was doing well as a way to get ideas for improving Staples. Diff: 2 LO: 5.1: Define the scope of marketing research. AACSB: Reflective thinking 14) Mars Group is a market research firm that sells field interviewing services to a software development firm. Can Mars Group be categorized as a custom market research firm? Give reasons to support your answer. Answer: No, Mars group is a specialty-line marketing research firm as it sells field interviewing services, whereas a custom marketing research firm is hired to carry out specific projects. Diff: 2 LO: 5.1: Define the scope of marketing research. AACSB: Analytical thinking 15) Tracking the movement of visitors through a website is an example of research. A) focus group B) survey C) observational D) behavioral E) experimental Answer: C Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 16) Marketing research that seeks to quantify demand is considered . A) descriptive B) prescriptive C) exploratory D) narrative E) causal Answer: A Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

17) Sales dropped 30 percent from last quarter, but no on can agree on why it happened. Some think it must be a new competitor in the market, some think it was an ill-advised change in the promotional message, some blame short staffing in customer support. What kind of market research should you engage in to find out what factor is behind the sales drop? A) Exploratory B) Descriptive C) Causal D) Open-ended E) Close-ended Answer: C Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 18) Which of these is NOT one of the decisions that goes into designing a research plan? A) Data sources B) Research approaches C) Research instruments D) Sample plan E) Knowledge management archiving Answer: E Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 19) Which of these is NOT one of the five primary data collection methods discussed in the chapter? A) Observation B) Focus groups C) Surveys D) Behavioral data E) Prototyping Answer: E Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

20) What was the point of the "three minutes" approach that Thomson used in its ethnographic research with business customers? A) To find out what users were doing three minutes before and three minutes after using a Thomson product B) To find out how many customers could learn to use Thomson products in three minutes or less C) To gather as much information as possible from each customer in three minutes D) To give each interview subject a three-minute heads-up that the interview was about to start E) To find out how many competitive brands customers could name in three minutes Answer: A Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 21) Your team watched in dismay as three of the seven participants in tonight's focus group swore they would never buy your product again until new features were added. Why would it be a mistake to immediately recommend adding the features they want? A) You can't please everybody—the product would get too expensive. B) It's not wise to generalize results from focus groups; additional research is needed. C) You don't know if these were expert users or newbies with little experience. D) The mood was off in this group for some reason; better to ignore what they said. E) Two of three seemed to have trouble expressing themselves, so you can't trust what they said. Answer: B Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 22) What is an omnibus survey? A) A survey that explores transportation needs B) A survey that asks every major question a company has C) A survey that uses multiple question types D) A survey that has questions from multiple companies E) A survey that is conducted only once per year Answer: D Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

23) Why is it essential to eliminate or control for extraneous factors when conducing a research experiment? A) Additional factors inevitably raise research costs. B) Management has little patience for research results that aren't tightly focused. C) If you can't eliminate or control them, you can't be sure that the results you see were related to the variables you were trying to test. D) Test subjects don't want to be asked about extraneous factors. E) Extraneous factors can make experiments run past schedule. Answer: C Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 24) Which of these is a potentially significant drawback of qualitative research? A) You can't generalize from the small sample sizes typically used. B) No one trusts qualitative results anymore. C) Consumers increasingly refuse to participate in qualitative studies. D) Upper management doesn't understand qualitative methods. E) Without hard data, research is useless. Answer: A Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 25) A(n) is a gathering of 6 to 10 people carefully selected by researchers based on certain demographic, psychographic, or other considerations and brought together to discuss various topics of interest at length. A) target group B) pilot group C) focus group D) customer base E) ethnographic group Answer: C Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

26) When American Airlines decided to review new ideas aimed at first-class passengers on long flights, like an ultra high-speed Wi-Fi service and 124 channels of high-definition satellite cable TV, their first step in the marketing research process was to . A) develop the research plan B) define the problem C) collect the information D) analyze the information E) make the decision Answer: B Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 27) The marketing research process begins by . A) developing a research plan B) defining the problem, the decision alternatives, and research objectives C) analyzing the internal environment D) reading marketing research journals E) contacting a professional research consultant Answer: B Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 28) When American Airlines asked "What types of first-class passengers would respond most to ultra high-speed Wi-Fi service?" and "How many are likely to use it at different price levels?" it was . A) setting specific research objectives B) conducting exploratory research C) outlining decisions D) defining the problem E) designing a research plan Answer: A Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking

29) Which of the following is the last step in the marketing research process? A) Presenting findings B) Analyzing information C) Controlling the environment D) Arriving at a decision E) Drafting the report Answer: D Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 30) If the goal of marketing research is to shed light on the real nature of a problem and to suggest possible solutions or new ideas, the research is said to be . A) descriptive B) quantitative C) primary D) secondary E) exploratory Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 31) Unistar Inc. produces a wide range of offerings such as grocery items and personal care products. If Unistar wants to estimate the demand for its new line of body moisturizers, it should opt for research. A) descriptive B) exploratory C) prescriptive D) causal E) qualitative Answer: A Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking

32) When American Airlines asked how many first-class passengers would purchase in-flight internet service at $25, it was conducting _ research. A) causal B) exploratory C) secondary D) ethnographic E) descriptive Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 33) Researchers usually start their investigation by examining some of the rich variety of low-cost and readily available data, then collect data if the needed data don't exist or are dated, inaccurate, incomplete or unreliable. A) primary; secondary B) secondary; primary C) primary; econometric D) secondary; econometric E) exploratory; econometric Answer: B Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 34) A company would like to study the impact of advertising expenditure on sales volume and sales revenue. This is an example of research. A) prescriptive B) causal C) secondary D) exploratory E) qualitative Answer: B Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking

35) The marketing manager needs to know the cost of the research project before approving it. During which stage of the marketing research process would such a consideration most likely take place? A) Defining the problem B) Analyzing the information C) Drafting the report D) Developing the research plan E) Collecting information Answer: D Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 36) Designing a research plan calls for decisions on all of the following EXCEPT . A) research objectives B) data sources C) research approaches D) research instruments E) sampling plans Answer: A Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 37) data are data that were collected for another purpose and already exist. A) Primary B) Secondary C) Primitive D) Cross-sectional E) Ordinate Answer: B Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge

38) Before Sandra opened her florist shop she read all she could about the floral industry. She also consulted several published research reports to understand growth patterns in the local area with particular interest in the location of florists throughout the city. This helped her to decide on the location of her store. A) primary data B) secondary data C) primitive data D) tertiary information E) licensed information Answer: B Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 39) research approach uses concepts and tools from anthropology and other social science disciplines to provide deep cultural understanding of how people live and work. A) Cognitive B) Inductive C) Archaeological D) Ethnographic E) Deductive Answer: D Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 40) The goal of ethnographic research is to . A) capture cause-and-effect relationships by eliminating competing explanations of the observed findings B) understand consumers' behavior by observing a sample group discussing various topics of interest at length C) study demographic variables such as age, gender, income, education, and so on, in relation to consumer buying patterns D) analyze customers' purchasing behavior through catalog purchases and customer databases E) immerse the researcher into consumers' lives to uncover unarticulated desires that might not surface in any other form of research Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

41) As the marketing manager of Cominform Pvt. Ltd., a manufacturer of health drinks, you have selected 10 individuals who match the profile of your target customer to participate in a discussion on changing lifestyle trends related to health. You have also hired a skilled moderator to facilitate the discussion and ensure that everyone participates and stays focused on the topic. The moderator provides questions and probes based on the script prepared by you. The discussions are also recorded for further analysis. Which of the following methods of acquiring primary data is being used in this case? A) Observational research B) Surveys C) Behavioral data D) Experiments E) Focus groups Answer: E Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 42) Why must researchers avoid generalizing from focus group participants to the whole market? A) Participants' responses are not reliable. B) Most of the participants are likely to be ignorant about the topic of discussion. C) The size of the group is too small and the sample is not drawn randomly. D) Most of the participants are likely to exhibit similar tastes and preferences. E) The participants usually come from diverse backgrounds. Answer: C Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 43) Which of the following is used to assess people's knowledge, beliefs, preferences, and satisfaction and to measure these magnitudes in the general population? A) Observational research B) Descriptive research C) Quantitative research D) Survey research E) Experimental research Answer: D Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

44) Orville Redenbacher popcorn yielded deep consumer insights from its research, which suggested that the essence of popcorn was that it was a "facilitator of interaction." A) cognitive B) inductive C) archaeological D) ethnographic E) deductive Answer: D Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 45) research is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. A) Experimental B) Behavioral C) Observational D) Focus group E) Descriptive Answer: A Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 46) Because of their flexibility, are the most common technique of collecting primary data. A) questionnaires B) telephonic interviews C) behavioral research studies D) experimental designs E) focus groups Answer: A Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

47) questions allow respondents to answer in their own words and often reveal more about how people think. A) Open-end B) Dichotomous C) Likert scale D) Multiple choice E) Semantic differential Answer: A Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 48) Which of the following is true of qualitative research? A) It is a structured measurement approach that permits a range of possible responses. B) It is indirect in nature, so consumers may be less guarded. C) It requires large sample sizes. D) Its results can be easily generalized to broader populations. E) It generally results in similar results and conclusions across researchers. Answer: B Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 49) A scale that connects two bipolar words is called a . A) dichotomous question B) multiple-choice question C) Likert scale D) semantic differential E) word association Answer: D Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

50) A question that respondents can answer in an almost unlimited number of ways is called a question. A) structured B) closed-end C) completely unstructured D) dichotomous E) multiple choice Answer: C Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. 51) "Truancy should be checked in schools: 1) Strongly disagree, 2) Disagree, 3) Neither agree nor disagree, 4) Agree, 5) Strongly agree." This is an example of a . A) Likert scale B) semantic differential C) multiple choice question D) Thematic Appreciation Test (TAT) E) dichotomous question Answer: A Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 52) An item in a questionnaire states that "airlines should not be allowed to charge hidden fees." Respondents are required to provide their answers by choosing any one of the following options: 1) Strongly disagree, 2) Disagree, 3) Neither agree nor disagree, 4) Agree, 5) Strongly agree. This is an example of a _ . A) semantic differential B) word association question C) Thematic Appreciation Test (TAT) D) Likert scale E) dichotomous question Answer: D Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking

53) Word association is a form of questions. A) closed-end B) Likert scale C) open-end D) rating scale E) semantic differential Answer: C Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 54) The question "What is your opinion of the measures taken by the government to control inflation?" is an example of a question. A) semantic differential B) word association C) completely unstructured D) story completion E) dichotomous Answer: C Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 55) In which of the following qualitative methods are subjects asked to complete an incomplete stimulus? A) Word association B) Projective techniques C) Visualization D) Brand personification E) Laddering Answer: B Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

56) requires people to create a collage from magazine photos or drawings to depict their perceptions. A) Brand personification B) Projective technique C) Visualization D) Laddering E) Zaltman Metaphor Elicitation Technique Answer: C Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 57) During her research about people's perceptions of Broadway musicals, Shonda asked people to create collages, on their own, out of magazine photos, which is a technique called . A) brand personification B) projective technique C) visualization D) laddering E) transformation Answer: C Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 58) A common use of is to identify the range of possible brand associations in consumers' minds. A) experimental research B) dashboarding C) laddering D) semantic differentials E) word associations Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

59) The John Deere brand might make someone think of a rugged, Midwestern male who is hardworking and trustworthy, which the brand management folks would learn through research. A) brand personification B) projective technique C) visualization D) laddering E) brand imaging Answer: A Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 60) If a researcher asks a consumer why s/he wants to buy a Nokia cell phone, and learns, "They look well built" (attribute); then asks, "Why is it important that the phone be well built?" and learns "It suggests Nokia is reliable" (a functional benefit); then asks, "Why is reliability important?" and learns "Because my colleagues or family can be sure to reach me" (an emotional benefit), the researcher is using a technique called . A) brand personification B) projective technique C) visualization D) laddering E) brand imaging Answer: D Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 61) With respect to the sampling plan, three decisions must be made: 1) the sampling unit — who is to be surveyed; 2) sample size — how many people should be surveyed; and 3) . A) sample cost — how much does sampling cost B) surveyor skill — who should conduct the survey C) sample security — how should the sample data be protected D) sampling procedure — how should respondents be chosen E) sample supervisor — who leads the sampling effort Answer: D Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

62) According to the concept of , a series of increasingly more specific "why" questions can reveal consumer motivation and consumers' deeper, more abstract goals. A) word association B) projection C) visualizing D) brand personification E) laddering Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 63) Which of the following statements about telephone interviewing is true? A) It usually takes a long time to gather information through telephone interviews. B) The interviewer is unable to clarify questions if respondents do not understand them. C) The response rate for telephone interviews has been typically lower than for mailed questionnaires. D) The U.S. government generally encourages telemarketing by firms. E) Telephone interviewing in the U.S. is getting more difficult because of consumers' growing antipathy toward telemarketers. Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 64) If a marketing researcher wishes to reach those people who would not give personal interviews or whose responses might be biased or distorted by interviewers, he or she should use . A) mail questionnaires B) telephonic interviews C) online interviews D) focus groups E) observational research Answer: A Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

65) Which of the following is considered to be the most versatile of all the contact methods? A) Mail questionnaires B) Telephone interviews C) Personal interviews D) Online interviews E) Field trials Answer: C Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 66) In interviews, researchers stop people at a shopping mall or busy street corner and request an interview on the spot. A) intercept B) arranged C) group D) structured E) behavioral Answer: A Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 67) Which of the following is an advantage of personal interviews? A) It is a relatively inexpensive method of gathering information. B) The possibility of interviewer bias is minimized. C) Participants can choose to respond at their own convenience. D) It facilitates anonymous responses. E) Interviewers can record additional observation about the respondent such as body language. Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking

68) The phase of marketing research is generally the most expensive and the most prone to error. A) contact B) research planning C) questionnaire design D) interview design E) data collection Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 69) After collecting the relevant information, the next step in the marketing research process is to . A) develop the research plan B) define the problem C) present the project report D) make the final decision E) analyze the acquired data Answer: E Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 70) The goal of exploratory research is to shed light on the real nature of a problem and to suggest possible solutions or new ideas. Answer: TRUE Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 71) Secondary data are data freshly gathered for a specific purpose or for a specific research project. Answer: FALSE Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

72) The goal of ethnographic research is to immerse the researcher into consumers' lives to uncover unarticulated desires that might not surface in any other form of research. Answer: TRUE Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 73) Researchers should generalize findings from focus group participants to the whole market. Answer: FALSE Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 74) Qualitative research techniques are relatively structured measurement approaches that permit limited possible responses. Answer: FALSE Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 75) A question that respondents can answer in an almost unlimited number of ways like "What is your opinion of Cracker Barrel?" is a completely unstructured question. Answer: TRUE Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 76) Samples of less than 1% of a population can often provide good reliability, with a credible sampling procedure. Answer: TRUE Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 77) Probability sampling allows confidence limits to be calculated for sampling error and makes the sampling more representative. Answer: TRUE Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 23

78) What are the five steps in the marketing research process? Answer: The five steps are: 1. define the problem 2. develop the research plan 3. collect the information 4. analyze the information 5. make the decision Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge 79) Describe what happens with "bubble exercises." Answer: In "bubble exercises" empty bubbles, like those in cartoons, appear in scenes of people buying or using certain products or services. Subjects fill in the bubbles, indicating what they believe is happening or being said. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 80) If Cadillac's brand management team asked test subjects to name the brand associations that come to mind when they see or hear the Cadillac name, what type of research would the team be using? Answer: The team would be using word association, a common qualitative technique. Diff: 1 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 81) What is the meaning of neuromarketing? Answer: The term neuromarketing describes brain research on the effects of marketing stimuli. Firms are using EEG (electroencephalograph) technology to correlate brand activity with physiological cues such as skin temperature or eye movement and thus gauge how people react to ads. Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

82) Explain the purpose and nature of experimental research. Answer: Experimental research is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. Experiments call for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 83) Discuss the role of data mining in marketing research and list several methods used. Answer: Through data mining, marketing statisticians can extract, from the mass of data, useful information about individuals, trends, and segments. Data mining uses sophisticated statistical and mathematical techniques such as cluster analysis (grouping objects to ensure that objects in the same group or cluster are more similar to one another than to those in other groups), predictive modeling (forecasting outcomes of uncertain events), and cognitive modeling (simulating human decision making and problem solving using a computerized model). Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 84) Explain qualitative research and why it might be useful to marketers. What are its major drawbacks? Answer: Qualitative research techniques are relatively unstructured measurement approaches to permit a range of possible responses, and they are a creative means of ascertaining consumer perceptions that may otherwise be difficult to uncover. Because of the freedom it affords both researchers in their probes and consumers in their responses, qualitative research can often be an especially useful first step in exploring consumers' brand and product perceptions. It is indirect in nature, so consumers may be less guarded and reveal more about themselves in the process. Qualitative research does have its drawbacks. The samples are often very small and may not necessarily generalize to broader populations. And different researchers examining the same qualitative results may draw very different conclusions. Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking

85) What is the chief advantage of using each of the following contact methods: mail questionnaire, telephone interview, and personal interview? Answer: The chief advantage of each contact method mentioned is 1) mail questionnaire–the best way to reach people who would not give personal interviews or whose responses might be biased or distorted by the interviews, 2) telephone interviews–the best method for gathering information quickly and the interviewer is also able to clarify questions if respondents do not understand them, and 3) personal interview–the most versatile method because researchers can ask more questions and record additional observations about the respondent. Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 86) As a marketing researcher for Matrix Private Limited you have been asked to forecast the demand for the company's new range of body wash if a discount of 10 percent is offered on each unit sold. Identify the research category into which this market research falls. Answer: Here the researcher needs to study the effect of the discount on the demand for body wash. The objective of this research is to establish the cause and effect relationship between the discount and the demand for body wash. Therefore, this can be categorized as causal research. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Reflective thinking 87) Highspeed Motors is planning to introduce a new sports bike. It collects data on prices, designs, features, and performance of sports bikes manufactured by other companies from their respective websites. What type of data is being used by Highspeed motors in this case? Answer: Highspeed Motors is using secondary data for this research. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 88) Ryan has been appointed by Target Internationals, a hardware manufacturing firm, as a marketing researcher and has been asked to conduct marketing research to produce new insights of consumer attitude on its vacuum tubes. Ryan begins the research process by defining the problem, the decision alternatives, and research objectives. Mention the next step that Ryan will follow to continue with the research. Answer: After defining the problem, the decision alternatives, and research objectives, the researcher develops the most efficient plan for gathering the needed information, and will estimate the cost of conducting the research. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking

89) Axis Centre, a department store, has installed in-store cameras to record consumer actions. Which research approach has been adopted by Axis and why? Answer: Axis has adopted observational research approach to gather fresh data by observing the consumers' actions in the store. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 90) As a marketing manager of Kids Care, a manufacturer of baby soaps, Mateo plans to analyze customer attitudes by using the focus group research approach. How might he conduct the research in this case? Answer: (Student answers will vary.) Mateo could select 8 to 10 parents who can adequately represent the users you want to target. He would also appoint a skilled moderator to facilitate the discussion among these consumers to ensure everyone participates and stays on track. The moderator would provide questions based on the script prepared by Mateo. The discussions would be recorded for further analysis. Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 91) Greenfoods, a manufacturer of ready-to-eat foods, conducts over 60,000 customer surveys each month through its retail outlets. What risk is Greenfoods likely to face by putting out so many surveys each month? Answer: By putting out so many surveys each month, Greenfoods may run the risk of creating "survey burnout" and seeing response rates drop sharply. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 92) A questionnaire used in a survey contains a question such as "Walmart offers the best everyday prices" and the responses that the respondents can opt for are: "Strongly Disagree," "Disagree," "No opinion," "Agree," "Strongly Agree." Identify and define the type of closed-end question that has been exemplified in this case. Answer: The question mentioned above is a Likert Scale question. A Likert Scale is a statement with which the respondent shows the amount of agreement or disagreement. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Application of knowledge

93) The Bledsoe Marketing Research group has been hired to administer a series of questions to shoppers in a local mall. If questions on the survey questionnaire have only two possible responses (such as "yes/no"), what type of questions are these? Answer: Questions of this type are closed-end questions that are dichotomous in nature. Diff: 2 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 94) Yasmita is a marketing researcher for a mobile operator getting ready to launch its 5G phone service. As she begins to prepare the questionnaire she plans to use, what are the three things that she is required to consider in this step? Answer: After deciding on the research approach and instruments, Yasmita must design a sampling plan. In order to design the plan, she has to decide upon the sampling unit (whom she should survey?), the sample size (how many people should she survey?), sampling procedure (how should she choose the respondents?). Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 95) A marketing research firm has instructed its research associates to collect primary data by stopping people at a shopping mall or busy street corner and request an interview on the spot. Which contact method is being used by the researchers in this case? What probable risk may the researchers face while using this method? Answer: The researchers are using intercept interviewing method for collecting primary data in this case. The researchers run the risk of including nonprobability samples while using this method. Diff: 3 LO: 5.2: Explain the marketing research process, how to gather and analyze market data, and how to develop a research plan. AACSB: Analytical thinking 96) Other things being equal, the company's depends on the relative scale and effectiveness of its market expenditures. A) positioning B) brand loyalty C) market share D) sales potential E) customer service ratings Answer: C Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking

97) The market forecast shows market demand, not maximum market demand. A) past B) average C) reasonable D) guaranteed E) expected Answer: E Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 98) Company sales potential would equal if the company had 100 percent of the market. A) market potential B) sales potential C) expected market demand D) competitive demand E) average total demand Answer: A Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking 99) During a forecasting cycle, companies typically prepare a(n) A) industry B) company C) macroeconomic D) user demand E) reachable demand Answer: C Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking

forecast first.

100) The forecast projects such variables as inflation, unemployment, interest rates, consumer spending, business investment, government expenditures, and net exports. A) industry B) company C) macroeconomic D) user demand E) reachable demand Answer: C Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking

101) Which of these product categories would probably NOT be a good candidate for a survey of buyers' intentions. A) Industrial products B) Consumer durables C) Automobiles D) Next year's iPhone models E) Groceries Answer: E Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking 102) helps determine how consumers value different attributes (such as product features, service benefits, and price) that make up a particular offering. A) Optimum value analysis B) Conjoint analysis C) Competitive analysis D) User needs analysis E) Demand analysis Answer: B Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 103) breaks past sales into four components (trend, cycle, seasonal, and erratic) and projects them into the future. A) Time-series analysis B) Exponential smoothing C) Statistical demand analysis D) Econometric analysis E) Sales force composite Answer: A Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking

104) for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. A) Company demand B) Area market potential C) Market demand D) Company sales potential E) Total market potential Answer: C Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 105) From all the possible levels of investment in a market, only one level of industry marketing expenditure will actually occur. The market demand corresponding to this level is called the . A) market minimum B) market share C) market forecast D) market potential E) company demand Answer: C Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking 106) The sales goal set for a product line, company division, or sales representative of an organization is called . A) sales budget B) company sales forecast C) sales quota D) company sales potential E) market potential Answer: C Diff: 1 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking

107) A is a conservative estimate of the expected volume of sales for a business, primarily for making purchasing, production, and cash flow decisions. A) sales budget B) company sales forecast C) sales quota D) company sales potential E) market potential Answer: A Diff: 1 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 108) A is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. A) sales budget B) company sales forecast C) sales quota D) company sales potential E) market potential Answer: E Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking 109) A is the company's estimated share of market demand at alternative levels of company marketing effort in a given time period. A) sales budget B) market demand C) company demand D) company sales potential E) market potential Answer: C Diff: 1 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 110) A is the sales limit approached by company demand as company marketing effort increases relative to that of competitors. A) sales budget B) market demand C) company demand D) company sales potential E) market potential Answer: D Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 32

111) A company's sales potential would be equal to market potential if . A) the marketing expenditure of the company is reduced to zero B) industry marketing expenditures approach infinity for a given marketing environment C) the market is non-expandable D) market minimum is equal to market potential E) the company gets 100 percent share of the market Answer: E Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 112) A is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A) company demand B) market demand C) company sales potential D) sales quota E) total market potential Answer: E Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 113) Novamalt Inc., a manufacturer of health drinks, plans to introduce its new range of health drinks for women into the market. It involves a specialized marketing research firm to forecast the sales of this product. The research firm analyzes past buying behavior of customers and uses time-series analysis for making the sales forecasts. Which of the following information bases is being used by the research firm in this scenario? A) What people say B) What people do C) What people have done D) What people will do E) What people speculate Answer: C Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking

114) Time-series analysis based on past sales breaks past time series into four components — trend, cycle, seasonal, and . A) regular B) annual C) erratic D) recurring E) periodic Answer: C Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 115) projects the next period's sales by combining an average of past sales and the most recent sales, giving more weight to the latter. A) Time-series analysis B) Statistical demand analysis C) Econometric analysis D) Cost effectiveness analysis E) Exponential smoothing Answer: E Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 116) measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level. A) Time-series analysis B) Statistical demand analysis C) Econometric analysis D) Cost effectiveness analysis E) Exponential smoothing Answer: B Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 117) The sales forecasting method of builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically. A) time-series analysis B) statistical demand analysis C) econometric analysis D) cost effectiveness analysis E) exponential smoothing Answer: C Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 34

118) The absolute limit of company demand is the market potential; the two would be equal if the company captured 100 percent of the market. Answer: TRUE Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 119) Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Answer: TRUE Diff: 1 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 120) The market forecast shows expected market demand corresponding to the actual level industry marketing expenditure, not maximum market demand. Answer: TRUE Diff: 1 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 121) Forecasting is the art of anticipating what buyers are likely to do under a given set of conditions. Answer: TRUE Diff: 1 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 122) Sales reps might have better insight into developing trends than any other group, and forecasting might give them greater confidence in their sales quotas and more incentive to achieve them. Answer: TRUE Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking

123) Describe the adjustments that forecasters typically make to a composite of sales force opinions. Answer: Sales representatives might be pessimistic or optimistic, they might not know how the company's marketing plans will influence future sales in their territory, and they might deliberately underestimate demand so the company will set a low sales quota. Taking these variables into account, experienced forecasters will adjust the composite forecast up or down accordingly. Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 124) When might a company opt for a market test over other forecasting methods? Answer: When buyers don't plan their purchases carefully or experts are unavailable or unreliable, a direct market test can help forecast new-product sales or the sales of established products in a new distribution channel or territory. Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 125) What does total market potential mean? How can it be estimated? Answer: Total market potential is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A common way to estimate total market potential is to multiply the potential number of buyers by the average quantity each purchases, times the price. A variation on this method is the chain-ratio method, which multiplies a base number by several adjusting percentages. Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking 126) Briefly describe the methods of forecasting future demand on the basis of past sales. Answer: The methods are: 1. Time-series analysis, that breaks past time series into four components (trend, cycle, seasonal, and erratic) and projects them into the future 2. Exponential smoothing, that projects the next period's sales by combining an average of past sales and the most recent sales, giving more weight to the latter 3. Statistical demand analysis, which measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level 4. Econometric analysis, which builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically. Diff: 3 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Reflective thinking

127) Suppose 100 million people consume black tea every year, and an average consumer consumes 8 kg of tea at an average price of $3 per kg. Compute the total market potential for tea. Answer: $2.4 billion Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking 128) Simpsons, a manufacturer of air conditioners, finds that its sales potential is less than its market potential even when it spends a sufficient amount on advertisements and after sale services. What is the basic reason behind such an observation by the marketers of Simpsons? Answer: Company sales potential is less than the market potential, even if the firm invests sufficiently in marketing because each firm in the market has a set of loyal consumers unresponsive to other companies' efforts to woo them. Diff: 2 LO: 5.3: Explain how to measure and forecast market demand. AACSB: Analytical thinking 129) Which of these metrics measures interaction and engagement with consumers from automated e-mails? A) Website analytics B) Social media presence C) Permission marketing statistics D) Push statistics E) Pull statistics Answer: C Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Application of knowledge 130) Which of these metrics tracks site navigation and online interaction? A) Website analytics B) Social media presence C) Permission marketing statistics D) Push statistics E) Pull statistics Answer: A Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Application of knowledge

131) The pathway looks at how prospects become customers, from awareness to preference to trial to repeat purchase, or some less linear model. A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) marketing-mix Answer: A Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Application of knowledge 132) The pathway reflects what marketers know about sales of product/service units, such as how much is sold by product line and/or by geography. A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) marketing-mix Answer: B Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Application of knowledge 133) The pathway focuses on how well marketing expenditures are achieving short-term returns on investment. A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) marketing-mix Answer: C Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Application of knowledge

134) The pathway tracks the longer-term impact of marketing through brand-equity measures that assess both the perceptual health of the brand from customer and prospective customer perspectives and the overall financial health of the brand. A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) marketing-mix Answer: D Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Application of knowledge 135) Harley-Davidson and Apple owners who enthusiastically discuss and advocate on behalf of their favorite products are members of . A) focus panels B) customer forums C) metrics groups D) brand communities E) key target segments Answer: D Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 136) Researchers use such as regression analysis to investigate how each marketing element influences brand sales, market share, and other marketing outcomes. A) breakdown metrics B) multivariate analyses C) conjoint analyses D) long-term forecasts E) factoring methods Answer: B Diff: 3 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Application of knowledge

137) Marketing _ are a structured way to disseminate the insights gleaned from the two complementary approaches to measuring marketing productivity within the organization. A) metrics B) decision support systems C) dashboards D) segments E) mix models Answer: C Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 138) Two complimentary approaches to measure marketing productivity are marketing-mix modeling. A) quality ratios B) salesperson satisfaction rates C) marketing metrics D) retailer satisfaction indices E) customer feedback surveys Answer: C Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking

and

139) Which of the following refers to the set of measures that helps firms to quantify, compare, and interpret their marketing performance? A) Marketing diagnostics B) Marketing information systems C) Marketing simulation D) Marketing intelligence E) Marketing metrics Answer: E Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 140) London Business School's Tim Ambler believes the evaluation of marketing performance can be split into two parts: . A) long-term results and changes in brand equity B) short-term results and changes in brand equity C) long-term results and changes in consumer perceptions D) short-term results and changes in profitability E) changes in market share and changes in profitability Answer: B Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 40

141) Marketing _ analyze(s) data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities. A) metrics B) mix models C) forecasting D) intelligence databases E) decision systems Answer: B Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 142) When the marketers of a mobile phone manufacturing company want to determine the impact of individual media such as television and online display ads on sales as well as that of trade activities like every day low price, off-shelf display and so on, they usually use . A) marketing metrics B) market segmentation strategies C) market capitalization techniques D) market basket analysis E) marketing-mix models Answer: E Diff: 3 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Analytical thinking 143) Marketing-mix modeling is used to estimate causal relationships and measure how marketing activity affects outcomes. Answer: TRUE Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 144) Marketing accountability means that marketers must more precisely estimate the effects of different marketing investments. Answer: TRUE Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 145) Especially popular with such packaged-goods companies as Procter & Gamble, marketing-mix modeling is used to allocate or reallocate expenditures. Answer: TRUE Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 41

146) Marketing-mix modeling focuses on baseline sales or long-term effects instead of incremental growth. Answer: FALSE Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 147) Marketing metrics encompass a set of measurements that help marketers quantify, compare, and interpret the performance of their marketing efforts and activities. Answer: TRUE Diff: 1 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 148) What are the two key market-based scorecards that should be incorporated in a marketing dashboard? Answer: Company input to the marketing dashboard should include two key market-based scorecards: one that reflects performance and one that provides possible early warning signals. Diff: 2 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking 149) Why are marketing outcomes so much more difficult to measure than marketing inputs? Answer: The inputs–marketing expenses and investments–are easy to measure because they are quantifiable amounts of time and money that the company has complete control over. However, the resulting outputs (such as broader brand awareness, enhanced brand image, greater customer loyalty, and improved new-product prospects) may take months or years to manifest themselves. Meanwhile, internal changes within the organization and external changes in the marketing environment may coincide with the marketing expenditures, making it hard to separate causation from correlation and therefore to isolate their effects. Diff: 3 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking

150) What are the major shortcomings of marketing-mix modeling? Answer: The major shortcomings of marketing-mix modeling are: • Although marketing-mix modeling helps to isolate effects, it is less effective at assessing how different marketing elements work in combination. • Marketing-mix modeling focuses on incremental growth instead of baseline sales or long-term effects. • The integration of important metrics such as customer satisfaction, awareness, and brand equity into marketing-mix modeling is limited. • Marketing-mix modeling generally fails to incorporate metrics related to competitors, the trade, or the sales force. Diff: 3 LO: 5.4: Define the different approaches to measuring marketing productivity. AACSB: Reflective thinking

Chapter 6 Identifying Market Segments and Target Customers 1) Which of these is NOT one of the requirements of effective targeting? A) Identifying distinct groups of buyers with who differ in their needs and wants B) Selecting one or more market segments to enter C) Establishing and communicating the right benefit(s) for the company's market offering D) Delivering the right benefit(s) for the company's market offering E) Ensuring that the market offering is unique in every respect Answer: E Diff: 3 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 2) The process of identifying customers for whom the company will optimize its offering is called . A) targeting B) dominance C) positioning D) segmentation E) research Answer: A Diff: 1 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 3) In addition to identifying which customers the company will prioritize in its marketing efforts, targeting also identifies which customers the company will . A) ignore B) set as second (and potentially third) priority C) reserve for future focus D) share with competitors E) demarket to in order to reduce demand Answer: A Diff: 1 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking

4) focuses on identifying customers whose needs the company can fulfill by ensuring that its offerings are customized to their needs. A) Tactical targeting B) The marketing mix C) Strategic targeting D) Product customization E) Mass customization Answer: C Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Application of knowledge 5) identifies the ways in which the company can reach those customers it has deemed strategically important. A) Tactical targeting B) The marketing mix C) Strategic targeting D) Product customization E) Mass customization Answer: A Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Application of knowledge 6) is the ability to meet each customer's requirements by preparing products on a mass basis but then individually finalizing the product for each customer, along with corresponding services, programs, and communications. A) Strategic targeting B) Customer focus C) Tactical targeting D) Mass customization E) Mass marketing Answer: D Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 7) How has media fragmentation complicated the strategy of mass marketing? A) By expanding the number of products that need to be produced B) By opening the company up to greater competition C) By making it more difficult and more expensive to reach a mass audience D) By losing messaging control through social media exchanges E) By losing the ability to respond to individual customer communications Answer: C Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 2

8) Which of these is considered the ultimate level of targeting? A) The one-to-one approach B) Mass marketing C) Mass customization D) Personalized service E) Tactical targeting Answer: A Diff: 1 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 9) reflects the company's choice of which customers it will prioritize and which customers it will ignore when designing, communicating, and delivering its offering. A) The marketing mix B) Marketing strategy C) Customer focus D) Targeting E) The customer-first approach Answer: D Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 10) Bespoke tailoring, in which tailors create a unique garment for each individual customer, is an example of . A) mass marketing B) mass customization C) the one-to-one approach D) customer focus E) tactical targeting Answer: C Diff: 3 LO: 6.1: Explain the essence of targeting. AACSB: Analytical thinking 11) strives to reach all strategically important customers in an effective and cost-efficient manner. A) Strategic targeting B) All-segment marketing C) Customer focus D) Tactical targeting E) Customer prioritization Answer: D Diff: 3 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 3

12) In marketing, the firm ignores segment differences and goes after the whole market with one offer. A) niche B) mass C) guerrilla D) segmented E) differentiated Answer: B Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 13) Coca-Cola's original marketing strategy that offered a single drink Coca-Cola Classic in a single sized bottle with the advertising theme "Coke is it," is an example of marketing. A) concentrated B) niche C) differentiated D) micro E) undifferentiated Answer: E Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Analytical thinking 14) Although the one-to-one approach of extreme targeting is an attractive idea, for many companies, the required investment in information collection, hardware, and software may exceed the financial return. Answer: TRUE Diff: 1 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 15) An undifferentiated marketing approach to full market coverage designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers. Answer: TRUE Diff: 1 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 16) The ultimate level of targeting is the one-to-one approach. Answer: TRUE Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking

17) Explain the difference between strategic targeting and tactical targeting. Answer: Strategic targeting focuses on customers whose needs the company can fulfill by ensuring that its offerings are customized to their needs. Tactical targeting identifies the ways in which the company can reach these strategically important customers. Together, strategic and tactical targeting seek to answer two questions, the first focusing on strategy and the second on tactics: Who are the customers that the company can establish a mutually beneficial relationship with? and How can the company reach these customers most effectively and efficiently? Diff: 3 LO: 6.1: Explain the essence of targeting. AACSB: Reflective thinking 18) How does the "configurator" typically found on car companies' websites reflect the concept of mass customization? Answer: These tools, and the manufacturing systems behind them, allow companies to offer a standard vehicle platform (the "mass" part) that customers can then fine tune to their personal preferences by choosing from an array of features and capabilities (the "customization" part). Diff: 3 LO: 6.1: Explain the essence of targeting. AACSB: Analytical thinking 19) How has media fragmentation complicated efforts to engage in mass marketing? Answer: One of the theoretical advantages of mass marketing is the cost efficiency of sharing a single message with a wide audience. However, many critics have pointed to the increased splintering of the market and the proliferation of marketing channels and communication, which make it difficult and increasingly expensive to reach a mass audience. Diff: 2 LO: 6.1: Explain the essence of targeting. AACSB: Analytical thinking 20) Explain the concept of mass marketing. Answer: In mass marketing, the firm ignores segment differences and goes after the whole market with one offer. It designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers via mass distribution and mass communications. Diff: 1 LO: 6.1: Explain the essence of targeting. AACSB: Analytical thinking 21) What is the first step in strategic targeting? A) Designing the product offering B) Pinpointing the customer need(s) the offering will be designed to fulfill C) Crafting the positioning statement D) Outlining the marketing mix E) Deciding how the product line can be promoted Answer: B Diff: 3 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 5

22) Which of these is the difficult trade-off that must always be made in strategic targeting? A) Reducing the workforce to align with chosen targets B) Eliminating part of the product portfolio C) Changing advertising agencies and other strategic partners D) Changing the company's core messaging E) Deliberately foregoing some potential customers Answer: E Diff: 3 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 23) In addition to asking if the company can create superior value for a group of potential customers, what other question must the company ask about these customers? A) Can these customers create superior value for the company? B) Do these customers support the company's image? C) Can the company reach them via advertising? D) Do these customers present a reputational risk? E) Do these customers have the ability to pay? Answer: A Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 24) Companies with large fixed costs and smaller variable costs, as well as young companies in their early stages looking for rapid growth, might target low-margin or even unprofitable customers because of their value. A) scale B) economic C) social D) informational E) feedback Answer: A Diff: 3 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking

25) is a reflection of the company's ability to outdo the competition in fulfilling the needs of target customers—in other words, to create superior customer value. A) Target profitability B) Target compatibility C) Segment ranking D) Segment priority E) Competitive compatibility Answer: B Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge 26) Access to scarce resources gives the company a distinct competitive edge because it . A) allows the company to charge more for its products B) restricts the strategic options of competitors C) gives the company a prestige image D) ensures an uninterrupted supply of materials E) positions the company as the market leader Answer: B Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 27) A has three characteristics: (1) It is a source of competitive advantage and makes a significant contribution to perceived customer benefits, (2) it has applications in a wide variety of markets, and (3) it is difficult for competitors to imitate. A) strategic competency B) company strength C) benefit strength D) core competency E) tactical advantage Answer: D Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge 28) refers to nonmonetary benefits that customers bring to the company. A) Customer-company benefits B) Tactical value C) Perceived value D) Nonmeasurable value E) Strategic value Answer: E Diff: 1 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge 7

29) Lead users or early adopters can present important stages of a product launch. A) information value B) scale value C) monetary value D) confirmation value E) company value Answer: A Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking

to a company in the early

30) Target customers can create two kinds of value for a company: monetary and A) tactical B) financial C) strategic D) market share E) profitability Answer: C Diff: 1 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge

31) reflects the ability of a market segment to create superior value for the company. A) Target attractiveness B) Target value C) Estimated segment profitability D) Tactical value E) Net present value Answer: A Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge 32) Which of these was NOT mentioned in the chapter as one of the essential for the success of a company's targeting strategy? A) Business infrastructure B) Access to scare resources C) First mover advantage D) Skilled employees E) Strong brands Answer: C Diff: 3 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 8

33) The decision to own and nurture the resources and competencies that make up the essence of the business is a decision to focus on . A) strategic priorities B) value-added functions C) core competencies D) essential technologies E) management priorities Answer: C Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 34) Relative to the monetary value of a target market, its potential strategic value is not as readily observable and can be difficult to quantify. Answer: TRUE Diff: 1 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 35) A well-managed company would never knowingly target customers who have little potential to generate profits. Answer: FALSE Diff: 1 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 36) A company's decision to offshore the manufacturing of its products reflects the desire to focus on its core competencies in other business functions. Answer: TRUE Diff: 1 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking 37) Describe a situation in which a company might deliberately target certain customers even if those buyers have little potential to generate profit for the company. Answer: A company might target highly influential customers who might never generate any profit for the company directly because these customers can exert significant influence on broader and more profitable segments of the market that decide to purchase the company's offering. Diff: 3 LO: 6.2: Define the key principles of strategic targeting. AACSB: Reflective thinking

38) What are the two kinds of value that target customers can create for a company? Answer: Target customers can create two kinds of value for a company: monetary and strategic. Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge 39) What are the three main types of strategic value that customers can bring to a company? Answer: The three main types of strategic value are social value, scale value, and information value. Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge 40) Identify and provide examples of six company resources that are essential to success in its targeting strategy. Answer: The six resources are • Business infrastructure (examples include manufacturing infrastructure and service infrastructure such as call centers and customer relationship management solutions) • Access to scarce resources (examples include prime retail locations or unique natural resources) • Skilled employees (including those with valuable technological, operational, and business expertise in such as areas as research and development and consulting) • Technological expertise (including proprietary processes and intellectual property such as patents and trade secrets) • Strong brands (particularly in commoditized industries where only minor differences exist among the competitive products and services; the Coca-Cola brand is a great example) • Collaborator networks (including vertical networks of collaborators in the company's supply chain and horizontal networks of manufacturing and other functional capabilities) Diff: 3 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge 41) What are the three characteristics of a core competency? Answer: The three characteristics are (1) being a source of competitive advantage and makes a significant contribution to perceived customer benefits, (2) having applications in a wide variety of markets, and (3) being difficult for competitors to imitate. Diff: 2 LO: 6.2: Define the key principles of strategic targeting. AACSB: Application of knowledge

42) Which of these is NOT one of the major categories of characteristics that make up an insightful customer profile? A) Demographic factors B) Credit usage factors C) Geographic factors D) Behavioral factors E) Psychographic factors Answer: B Diff: 1 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Application of knowledge 43) Age, gender, income, occupation, level of education, religion, ethnicity, nationality, employment status, population density, social class, household size, and stage in the life cycle are all considered factors. A) personal B) behavioral C) demographic D) psychographic E) geographic Answer: C Diff: 1 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Application of knowledge 44) Product experience, buying frequency, and role in the purchase decision are all factors. A) personal B) behavioral C) demographic D) psychographic E) geographic Answer: B Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Application of knowledge

45) If Walmart divides potential customers into those who prefer to shop online versus those who prefer to shop in person at a Walmart location, it is using a factor. A) personal B) behavioral C) demographic D) psychographic E) geographic Answer: B Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Analytical thinking 46) A company that sends digital coupons to consumers as they roam through the local retail zone with their phones in hand is using a factor to select target buyers. A) personal B) behavioral C) demographic D) psychographic E) geographic Answer: E Diff: 1 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Analytical thinking 47) Of the four categories of factors that make up a customer profile, which is unique in that it includes unobservable characteristics? A) personal B) behavioral C) demographic D) psychographic E) geographic Answer: D Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking 48) A company that analyzes web-surfing habits to infer consumers' interest in cultural activities is using factors to for tactical targeting. A) personal B) behavioral C) demographic D) psychographic E) geographic Answer: D Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Analytical thinking 12

49) The increasing ability that marketers now have to link consumers' psychographic factors with their demographic, geographic, and behavioral characteristics has been made possible by which of these developments? A) Looser regulations regarding digital privacy B) Mobile and online tracking technologies C) A better understanding of consumer psychology D) The performance improvements of 4G and 5G mobile networks E) The consolidation of social media platforms Answer: B Diff: 3 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Analytical thinking 50) identifies the most cost-effective ways to communicate and deliver value to customers by linking customer needs that the offering wants to fulfill with observable customer characteristics. A) Demographic profiles B) Strategic targeting C) The marketing mix D) Tactical targeting E) Marketing planning Answer: D Diff: 3 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Application of knowledge 51) Which of these statements about strategic and tactical targeting is true? A) Tactical targeting is far more important than strategic targeting. B) Strategic targeting is far more important than tactical targeting. C) They are complementary and inseparable facets of the process of identifying target customers. D) With so much customer information available now, companies can often skip tactical targeting. E) It helps to start with tactical targeting and them "back up" to strategic targeting. Answer: C Diff: 1 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking

52) are detailed profiles of hypothetical target consumers, imagined in terms of demographic, psychographic, geographic, or other descriptive attitudinal or behavioral information. A) Personas B) Target customers C) Virtual shoppers D) Brand personalities E) Shopper images Answer: A Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Application of knowledge 53) Which of these is a key advantage of using one or more personas to represent target customers? A) Those personas can become the face of the brand, even to the point of appearing in the company's advertising. B) Doing so eliminates the need to conduct detailed customer research on a broad cross spectrum of consumers. C) Doing so makes it easier to visualize target buyers and understand how they are likely to respond to the offering. D) Because they represent all target customers, they reduce errors in tactical planning and execution. E) They help companies avoid accusations of unfair targeting. Answer: C Diff: 3 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking 54) Unilever's imaginary consumer "Katie," who personifies the haircare needs, perceptions, and attitudes of 20-something women, is a . A) spokesmodel B) brand ambassador C) brand enthusiast D) persona E) brand image Answer: D Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Analytical thinking

55) The principle in tactical targeting reflects the degree to which the company is able to reach all strategically viable customers whose needs can be fulfilled in a way that benefits the company and its collaborators, make them aware of the company's offering, and give them access to the offering. A) effectiveness B) cost-efficiency C) productivity D) payback E) net present value Answer: A Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Application of knowledge 56) The principle mandates that the company's communication and distribution reach only the customers it has targeted. A) effectiveness B) cost-efficiency C) productivity D) payback E) net present value Answer: B Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Application of knowledge 57) Dennis asks his father to buy him a PlayStation for his birthday. With respect to consumer decision roles, which role is Dennis currently playing? A) Initiator B) Influencer C) Decider D) Buyer E) Gatekeeper Answer: A Diff: 2 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Analytical thinking 58) A well-designed persona represents all target customers. Answer: FALSE Diff: 1 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking

59) An essential element of tactical targeting is ascertaining the profile characteristics of strategically important customer segments. Answer: TRUE Diff: 1 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking 60) Differentiate the objectives of strategic and tactical targeting. Answer: Although both processes involve identifying target customers, tactical targeting has a different objective: to determine which customers to target and which to ignore, and to determine how the company's offering can be effectively and cost-efficiently communicated and delivered to the target customers that have already been selected. Diff: 3 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking 61) What is the purpose of creating one or more personas as part of tactical targeting? Answer: Personas are a way for marketing researchers and planners to bring their acquired information and insights to life. By visualizing specific individuals, even if imaginary, marketers can incorporate a well-defined target-customer point of view in all their marketing decision making. Diff: 3 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking 62) What is the risk of relying on personas for tactical targeting? Answer: Personas can oversimplify the marketer's view of target segments because these imagined characters don't represent all target customers. A persona can help the marketer visualize how customers will respond to the offering, but it doesn't take the place of solid statistical research into real customers. Diff: 3 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking 63) How does tactical targeting garner information on strategically targeted customers in order to communicate and deliver the offering to them? Answer: Tactical targeting identifies the most cost-effective ways to accomplish this by linking the customer need that the offering wants to fulfill with observable customer characteristics. These observable factors–the customer profile–involve demographic, geographic, behavioral, and psychographic descriptors. Diff: 3 LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers. AACSB: Reflective thinking

64) Which of these statements about single-segment marketing is true? A) It is the exception to the rule; most companies target multiple segments. B) It is invariably more successful than the unfocused multi-segment approach. C) It is the end goal of most developing companies. D) Companies targeting single segments usually focus on large, vaguely defined groups of customers. E) It is never a good way to achieve a strong market presence. Answer: A Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 65) Which of these is a key benefit that Allegiant Air has enjoyed from its decision to focus on providing leisure travelers with affordable nonstop flights from smaller markets to popular vacation destinations? A) Its reputation as "Party Air" gives it a distinct positioning advantage. B) By staying off the beaten track, it avoids serious competition on most of its routes. C) It can fly to popular destinations multiple times per day. D) As a niche marketer, it doesn't need to worry about profitability. E) It is viewed by major airlines as an innovation leader. Answer: B Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 66) Which of these is an advantage that firms often realize by focusing on a single market segment? A) The ability to concentrate risk B) Greater freedom to raise prices C) Less pressure to meet extreme customer demands D) The opportunity to gain deep knowledge of customer needs E) The lack of viable competition Answer: D Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 67) Which of these is generally true of niche customers? A) They will pay a premium to the firm that best satisfies their needs. B) They are ferocious price shoppers, always in search of the lowest cost. C) They are less demanding than mass-market consumers. D) They value the sense of being unique and don't want multiple product offerings. E) They are invariably less profitable. Answer: A Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 17

68) Which of these is one of the recognized approaches to selective specialization? A) Product specialization B) Brand specialization C) Reputational specialization D) Innovation specialization E) Need specialization Answer: A Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 69) In which of these strategies does a firm concentrate on meeting multiple needs of a given customer group? A) Product specialization B) Brand specialization C) Reputational specialization D) Market specialization E) Need specialization Answer: D Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 70) Which of these is a risk of creating offerings based on product development capability and production capacity, instead of devising offerings designed to satisfy explicit customer needs? A) Creating inventory overages and outages B) Creating offerings that compete for the same customers C) Failing to profit-balance the product portfolio D) Overusing production capacity E) Underusing production capacity Answer: B Diff: 1 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking

71) If Ford markets its Transit van to government agencies, package delivery companies, and airport shuttle firms, it is engaging in the specialization form of multi-segment targeting. A) product B) market C) customer D) brand E) niche Answer: A Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Analytical thinking 72) Volkswagen concentrates on the small-car market and Porsche on the sports car market. These would be examples of what is called . A) single-segment targeting B) selective targeting C) product specialization D) market specialization E) full market coverage Answer: A Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Analytical thinking 73) All of the following are benefits of the approach to target market selection: gaining a strong knowledge of the segment's needs; establishing a strong market presence; and achieving operating economies through specializing in production, distribution, and promotion. A) single-segment targeting B) selective targeting C) product specialization D) market specialization E) full market coverage Answer: A Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking

74) Which of the following best represents the chief advantage of pursuing a selective specialization multi-segment strategy? A) It makes the company almost bulletproof to competitors' actions. B) It minimizes the firm's risk through diversification. C) It creates synergy between markets. D) It is a low-cost strategy. E) It treats all buyers the same and, therefore, lowers promotion costs. Answer: B Diff: 3 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 75) Hallmark has found enduring success in the greeting card industry with a mass marketing approach. Answer: FALSE Diff: 1 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 76) With product specialization, the firm sells a certain product to multiple market segments with different needs. Answer: TRUE Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 77) Most companies today engage in single-segment marketing. Answer: FALSE Diff: 1 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 78) Discuss the problems that can arise when companies targeting multiple segments create offerings based on their product development capability and production capacity, instead of devising offerings designed to satisfy explicit customer needs. Answer: When targeting multiple customer segments, some companies make the mistake of not aligning the attributes of their offerings with the distinct value sought by target customers in each segment. This often occurs when companies create offerings based on their product development capability and production capacity, instead of devising offerings designed to satisfy explicit customer needs. Such an approach is problematic, because unless the company is clear on how its individual offerings will address the needs of each segment targeted, the offerings may end up competing for the same customer segment(s) while the needs of other segments are ignored. In addition, target customers might be confused and find it difficult to distinguish among multiple offerings that lack the ability to deliver the specific value they seek. Diff: 3 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 20

79) Give a good reason why a firm that starts out focusing on a single segment eventually target multiple segment. Answer: One good reason is that the firms initial customers grow and become more diverse, requiring unique responses to their needs. Another reason is that to keep growing–or to survive at all, if its original customer base disappears–the firm may find that it needs to find new markets for its existing products. Competitive pressures may force it to become a market specialist as well. If competing firms begin to offer a full spectrum of product solutions for a given market, customers may pull away from any firm that offers only a single niche offering. Diff: 3 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 80) Can a firm be both a product specialist and a market specialist when it comes to choosing target segments? Explain your answer and provide an example. Answer: Yes, a firm can engage in both product (selling a given product to multiple segments) and market specialization (meeting multiple needs of a given segment). John Deere for example, operates as a product specialist when it sells riding lawn mowers to both homeowners and residential landscape companies. And it operates as market specialist when it offers a diverse range of products to meet multiple needs of farmers, with different machines for planting, spraying, harvesting and other farming needs. Diff: 3 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 81) Why would any firm want to restrict itself to a single segment, when multiple segments suggest the promise of more sales? Answer: There could be several good reasons to remain a single segment company. (1) The simplest reason is that a firm may not be capable of creating and delivering a compelling value offering to more than one segment. It might be limited by technological capabilities, production or service capacity, or geographical reach, for instance. (2) A firm may conclude that focusing its resources and "going deep" in a single segment will generate more revenues and profits than spreading itself thin by "going wide" across multiple segments. (3) When brand image is an important factor, there could be reputational risks for entering some markets. If Rolls-Royce suddenly entered the economy car segment, for instance, this would tarnish the reputation of exclusivity that helps the brand compete in the very top of the luxury car segment. (4) A firm may conclude that even though it can offer compelling customer value to additional segments, some of these segments might not hold out promise of providing adequate company value in return. Bricks-and-mortar retailers, for instance, routinely choose to stay out of geographic market segments that are too thinly populated to support the costs of running stores, even if they could meet the needs of those customers. Diff: 3 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking

82) Briefly describe single-segment targeting with an example. Answer: With single-segment targeting, the firm markets to only one particular segment. Porsche concentrates on the sports car market and Volkswagen on the small-car market – its foray into the large-car market with the Phaeton was a failure in the United States. Through concentrated marketing, the firm gains deep knowledge of the segment's needs and achieves a strong market presence. It also enjoys operating economies by specializing its production, distribution, and promotion. If it captures segment leadership, the firm can earn a high return on its investment. Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 83) Briefly differentiate product specialization and market specialization. Answer: With product specialization, the firm sells a certain product to several different market segments. A microscope manufacturer, for instance, sells to university, government, and commercial laboratories, making different instruments for each and building a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology. With market specialization, the firm concentrates on serving many needs of a particular customer group, such as by selling an assortment of products only to university laboratories. The firm gains a strong reputation among this customer group and becomes a channel for additional products its members can use. The downside risk is that the customer group may suffer budget cuts or shrink in size. Diff: 2 LO: 6.4: Explain how to develop strategies to target multiple market segments. AACSB: Reflective thinking 84) What sort of segmentation is DeBeers using when it markets a "right-hand ring" for unmarried women? A) Demographic—age B) Demographic—life cycle stage C) Psychographic D) Gender E) Race and culture Answer: B Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking

85) What sort of segmentation is Pfizer using when it markets both Centrum Adults and Centrum Silver Adults? A) Demographic—age B) Demographic—life cycle stage C) Psychographic D) Gender E) Race and culture Answer: A Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 86) In addition to being easy to measure, why are demographic variables used so often in consumer marketing? A) Consumers happily supply these data points to help marketers. B) These variables are often associated with consumer needs and wants. C) As much as they don't like to admit it, consumers are driven by social class and income status. D) There are no government regulations to restrict the collection of these variables. E) They are foolproof predictors of consumer purchasing behavior. Answer: B Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 87) A common label for Generation Y, born between 1982 and 2000, is A) the digital divide B) the Silent Generation C) the Net Generation D) Baby Boomers E) Millennials Answer: E Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge

88) Why do marketers often use specific images, phrases, and music when targeting specific generations? A) It's cheaper to keep licensing the same intellectual property. B) Each generation expects advertisers to use creative elements that remind them of their shared youth. C) These communication elements reflect the shared experiences that a generation typically has. D) Generation-specific creative materials help marketers exclude customers they aren't targeting. E) People's emotional connections tend to stagnate as they age, so images of younger days are more appealing. Answer: C Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 89) Why do you think lists of the names of newlyweds so much more expensive than other contact lists sold in the direct-marketing industry? A) Marketing to newlyweds is a prestige segment of marketing. B) Newlyweds often go through a spending burst as they set up households and consolidate spending patterns. C) Newlyweds charge more to sell their personal data. D) Information on new marriages is difficult to find and verify. E) Marriage is an optimistic event so people naturally spend more. Answer: B Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 90) The gigantic "Singles Day" shopping extravaganza in China is a reflection of which variable in demographic targeting? A) Age B) Location C) Income D) Stage in life cycle E) Gender Answer: D Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking

91) Which of these is a potential shortcoming of using income as a consumer segmentation variable? A) Income is nearly impossible to find as a research variable. B) People don't like talking about how much money they make. C) It's discriminatory to only market products to higher-income consumers. D) Income doesn't always track with purchase behavior. E) New U.S. advertising regulations prohibit targeting based on income. Answer: D Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 92) What does the "hourglass" phenomenon reflect in consumer segmentation? A) The hourglass reflects how time-starved most U.S. consumers now are. B) Many consumers are migrating away from middle ground offerings and retailers toward discount and premium offerings. C) Record numbers of consumers now buy luxury products over middle tier offerings. D) It represents online shopping at one end and bricks-and-mortar at the other. E) It represents the collapse of the mainstream shopping mall. Answer: B Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 93) Which of these is an advantage some companies have discovered after targeting lower-income segments of consumers? A) Less competition B) Reputational rebound C) Lower expectations D) More sales channels E) Simpler distribution Answer: A Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking

94) reflects awareness that different ethnic and cultural segments have sufficiently different needs and wants to require targeted marketing activities and that a mass market approach is not refined enough for the diversity of the marketplace. A) The multi-price strategy B) Multicultural marketing C) The end of mass marketing D) Single-segment targeting E) Music-based promotion Answer: B Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 95) divides the market into units such as nations, states, regions, counties, cities, or neighborhoods. A) Spatial segmentation B) Location-based social networking C) GPS targeting D) Geographic segmentation E) Localization Answer: D Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 96) The PRIZM segments the United States to a neighborhood level using A) income data B) postal data C) demographics D) GPS tracking E) geoclustering Answer: E Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge

97) Understanding why certain consumers shun a particular product would be a question raised in segmentation. A) demographic B) behavioral C) psychographic D) geographic E) belief Answer: B Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 26

98) Understanding where consumers are in terms of their readiness to buy a particular product would be a question raised in segmentation. A) demographic B) psychographic C) behavioral D) geographic E) belief Answer: C Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 99) What is a risk associated with targeting heavy users of a given product category? A) Heavy users routinely expect discounts. B) Heavy users can dominate distribution channels. C) Some heavy users are switchers who show no loyalty to any brand and are always looking for the lowest price. D) Heavy users tend to be vocal complainers on social media. E) Supporting several light users is cheaper than supporting one heavy user. Answer: C Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 100) The VALS framework is one of the oldest and best known A) psychographic B) demographic C) geographic D) economic E) behavioral Answer: A Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking

segmentation systems.

101) When Honda discovered that baby boomers were attracted to the Element, which the company was marketing to college-aged drivers and positioning as a "youthful" vehicle, this was an example of which targeting phenomenon? A) Generational boundaries are of little value in marketing. B) Age is not always a good predictor of income. C) Age is not always a good predictor of attitudes. D) Consumers will sometimes sabotage segmentation and target efforts. E) Misunderstanding the role of influencers in the buying decision. Answer: C Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 102) American Airlines' Rainbow Team with its dedicated LGBT staff and website is an example of segmentation. A) demographic B) psychographic C) behavioral D) geographic E) belief Answer: B Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 103) A company is trying to understand why a large segment of a target population shows no loyalty to any of the brands in a particular product category, even though the brands seem to have some noticeable differences. This investigation would fall under segmentation research. A) demographic B) psychographic C) behavioral D) geographic E) belief Answer: C Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking

104) Roland wants to start a mobile vehicle detailing service targeting owners of luxury cars, and he wants to restrict his market to a 20-mile radius around his home. Which two types of segmentation will he need to consider? A) Demographic and geographic B) Demographic and psychographic C) Behavioral and psychographic D) Economic and psychographic E) Behavioral and geographic Answer: A Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 105) Which of the following statements about market segmentation is true? A) It involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market. B) It is a process of evaluating each segment's attractiveness and selecting one or more to enter. C) It is a process of creating an image or identity of the product in the minds of the target market. D) It is a process of identifying and profiling distinct groups of buyers who differ in their needs and wants. E) It is the quality of how marketers go to market with the goal of optimizing their spending to achieve good results. Answer: D Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 106) A consists of a group of customers who share a similar set of needs and/or profile characteristics. A) vertical marketing system B) market basket C) market share D) market segment E) market level Answer: D Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking

107) Hilton Hotels customizes rooms and lobbies according to location. Northeastern hotels are sleeker and more cosmopolitan. Southwestern hotels are more rustic. This is an example of segmentation. A) demographic B) behavioral C) psychographic D) geographic E) cultural Answer: D Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 108) Segmenting on the basis of neighborhoods is the A) demographic B) psychographic C) geographic D) cultural E) behavioral Answer: C Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking

method of segmentation.

109) When the Modern Museum of Art separated its consumers by whether they were culture-oriented or outdoor-oriented for its new exhibit on art that used natural materials, they were using segmentation. A) psychographic B) personality C) behavioral occasions D) social class E) demographic Answer: A Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking

110) Pampers divides its market demographically on the basis of baby, baby, toddler, and preschooler. A) life stage B) gender C) age D) income E) social class Answer: C Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking

into prenatal, new

111) The fact that Honda described its boxy Element as a "dorm room on wheels," but then attracted so many baby boomers that the average age of the Element turned out to be 42 is an illustration of the fact that baby boomers may be _ . A) male-oriented B) female-oriented C) Young Digerati D) Cosmopolitans E) psychologically young Answer: E Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge 112) Newlyweds in the United States buy more in the first six months than an established household does in five years. Newlyweds are an example of a(n) segment. A) life stage B) age C) behavior D) user status E) income Answer: A Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking

113) Jose and Erika have just divorced. Which of the following demographic segmentation subsegment formats might be used by marketers to reach Jose or Erika? A) Life stage B) Benefits C) Age segment D) Personality type E) Social class Answer: A Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge 114) The key to attracting potential users of a product or service, or even possibly nonusers, is . A) understanding the reasons they are not using it B) offering financial incentives for first-time use C) increasing the usage rate of existing users D) developing a new product that better meets their needs E) increasing advertising expenditures Answer: A Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 115) The sale of turkeys in the United States is highest in mid- to late November, as people buy turkeys to serve at Thanksgiving. Grocery stores that specifically advertise turkeys at this time of year are segmenting on the basis of . A) benefits B) user status C) buyer-readiness stage D) demographics E) occasion Answer: E Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking

116) Mingmei was buying all her groceries from Home Needs supermarket for the past 5 years. She recently came across The Convenience Store, another supermarket just a few miles away from her place and started buying her groceries from them. Mingmei can be best described as a(n) . A) split loyal B) antiloyal C) shifting loyal D) hard-core loyal E) switcher Answer: C Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 117) When Amy goes shopping for clothes, she goes into every store in the mall looking for the best deal. She is very price conscious. On the basis of loyalty status, Amy can be described as a(n) . A) switcher B) split loyal C) shifting loyal D) hard-core loyal E) anti-loyal Answer: A Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 118) Mothers-to-be are potential users who will turn into heavy users of infant products and services. By targeting mothers-to-be as future heavy users, producers of these products and services are segmenting consumers on the basis of . A) attitude B) buyer-readiness stage C) loyalty status D) user status E) benefits Answer: D Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking

119) If a buyer rotates among two or three different brands of soap, this buyer's loyalty status can be described as being among the . A) switchers B) shifting loyals C) split loyals D) hard-core loyals E) antiloyals Answer: C Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 120) Binh always buys Purina dog food for his dog because he believes that it is the best value for the nutritional content. Binh's loyalty status is best described as . A) split loyal B) shifting loyal C) consistent loyal D) hard-core loyal E) switcher Answer: D Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 121) A local service company has decided to segment its market based on occupation; therefore, it has chosen a form of demographic segmentation for its approach. Answer: TRUE Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 122) Life stage defines a person's age. Answer: FALSE Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 123) Income always predicts the best customers for a given product. Answer: FALSE Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking

124) Members of the same generational cohort share major cultural, political, and economic experiences and have similar outlooks and values. Answer: TRUE Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 125) The main dimensions of the VALS segmentation framework are consumer motivation and consumer resources. Answer: TRUE Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge 126) Heavy users of a particular product are often a small percentage of the market but account for a high percentage of total consumption. Answer: TRUE Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 127) With respect to loyalty status, if a consumer is loyal to two or three brands, he or she is called shifting loyal. Answer: FALSE Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 128) How clear-cut do you think the boundaries between generations are? Answer: (Student answers will vary here, but they should be able to reflect on the fact that, for example, the first Gen X person born at 12:00 AM on January 1, 1965, probably hasn't had a dramatically different life experience than the last Baby Boomer born a second earlier at 11:59 PM on December 31, 1964.) Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 129) Even if a company finds an attractive segment using psychographic or behavioral variables, why might it need to use demographic segmentation tactics to implement its market offering? Answer: Two reasons mentioned in the chapter for still needing demographic data are to estimate the size of the market and to identify the best media for reaching it effectively. Diff: 1 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge

130) Why is gender becoming less of a clear-cut segmentation variable? Answer: Gender is becoming less of a clear-cut segmentation variable for two key reasons: traditional expectations of gender roles (such as cooking and childcare responsibilities) have changed and many people no longer view gender as a simple male/female dichotomy. Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge 131) Identify the four market segment groups based on brand loyalty status and list what a company can learn from analyzing the degrees of brand loyalty. Answer: Marketers usually envision four groups based on brand loyalty status: 1. hard-core loyals 2. split loyals 3. shifting loyals 4. switchers Hard-core loyals can help identify the products' strengths. Split loyals can show the firm which brands are most competitive with its own. By looking at customers who are shifting away from its brand, the company can learn about its marketing weaknesses and attempt to correct them. Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge 132) What is customer cloning and how is it used? Answer: Customer cloning is a way of identifying new prospects by assuming that the best prospects live where most of a company's existing customers come from. Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Analytical thinking 133) Increasingly, companies are finding that their markets are "hourglass shaped." What does this mean for consumers and for marketers? Answer: Middle-market U.S. consumers are migrating toward both discount and premium products. Companies that miss out on this new market risk being "trapped in the middle" and seeing their market share steadily decline. Diff: 3 LO: 6.5: Describe how to segment consumer markets. AACSB: Reflective thinking 134) Explain psychographic segmentation. Answer: In psychographic segmentation, buyers are divided into different groups on the basis of psychological traits, lifestyle, or values. Psychographic segmentation is important because demographic, geographic, and behavioral characteristics of consumers do not always accurately reflect their underlying needs. Diff: 2 LO: 6.5: Describe how to segment consumer markets. AACSB: Application of knowledge 36

135) What is the phenomenon that describes the opportunity (brought about by e-commerce) to keep selling low-volume products that a company previously might have dropped for not generating enough revenue? A) The long tail B) The Pareto principle C) Product usage segmentation D) Niche marketing E) The one-to-one approach Answer: A Diff: 1 LO: 6.6: Describe how to segment business markets. AACSB: Application of knowledge 136) If a heavy equipment manufacturer decided not to pursue customers who prefer leasing over buying, it would be using which segmentation variable? A) Economic stability B) Operating variables C) Demographic factors D) Purchasing approaches E) Situational factors Answer: D Diff: 1 LO: 6.6: Describe how to segment business markets. AACSB: Analytical thinking 137) Assume you're the CEO of a new company that makes computer networking equipment. For the time being, you have enough capacity to manufacture quality products and provide great customer service for them, but you don't have the staff to provide related consulting services such as designing corporate IT systems. Consequently, you won't pursue customers who will expect consulting services like this. Which segmentation variable are you using to make this decision? A) Economic stability B) Operating variables C) Demographic factors D) Purchasing approaches E) Situational factors Answer: B Diff: 3 LO: 6.6: Describe how to segment business markets. AACSB: Analytical thinking

138) E-commerce has heightened expectations among consumers and businesses alike for fast delivery. Products that used to arrive in a week or two are now expected to arrive overnight or even the same day. However, not all companies are equipped or willing to respond to this new expectation near-immediate delivery. If you chose not to target customers who expected this level of service, which segmentation variable would you be using? A) Economic stability B) Operating variables C) Demographic factors D) Purchasing approaches E) Situational factors Answer: E Diff: 2 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking 139) Urgency, specific application, and size of order are examples of variables for business markets. A) situational factors B) demographic C) purchasing approaches D) personal characteristics E) operating variables Answer: A Diff: 3 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking

segmentation

140) A marketer is interested in segmenting a business market on _ if the marketer intends to segment the market based on industries and geographical areas to serve. A) demographic variables B) situational factors C) operating variables D) purchasing approaches E) personal characteristics Answer: A Diff: 2 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking

141) A marketer is interested in segmenting a business market based on urgency of delivery and the size of the order. Which of the following major segmentation variables would the marketer most likely use to assist with the task? A) Purchasing approaches B) Situational factors C) Operating variables D) Personal characteristics E) Demographic variables Answer: B Diff: 1 LO: 6.6: Describe how to segment business markets. AACSB: Analytical thinking 142) A marketer is interested in segmenting a business market based on technology and customer capabilities. Which of the following major segmentation variables would the marketer most likely use to assist with the task? A) Demographic variables B) Purchasing approaches C) Situational factors D) Personal characteristics E) Operating variables Answer: E Diff: 3 LO: 6.6: Describe how to segment business markets. AACSB: Analytical thinking 143) A marketer is interested in segmenting a business market on _ if the marketer intends to eventually segment the market based on loyalty and attitudes toward risk. A) situational factors B) purchasing approaches C) personal characteristics D) operating variables E) demographic variables Answer: C Diff: 2 LO: 6.6: Describe how to segment business markets. AACSB: Analytical thinking

144) A marketer interested in segmenting a business market based on intends to eventually segment the market based on power structure and nature of existing relationship. A) situational factors B) purchasing approaches C) personal characteristics D) operating variables E) demographic variables Answer: B Diff: 2 LO: 6.6: Describe how to segment business markets. AACSB: Analytical thinking 145) Purchasing approaches segmentation variables in the business marketplace include technology, user and nonuser status, and general purchasing policies. Answer: FALSE Diff: 1 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking 146) Situational factor segmentation variables in the business marketplace include urgency, specific application, and size of order. Answer: TRUE Diff: 1 LO: 6.6: Describe how to segment business markets. AACSB: Analytical thinking 147) How did the industrial manufacturer Timken use segmentation research to improve its profits? Answer: When Timken saw its net income and shareholder returns dip compared with those of competitors, it became concerned that it was not investing in the most profitable areas. To identify businesses that operated in financially attractive sectors and would be most likely to value its offerings, it conducted an extensive market study and discovered that some customers generated a lot of business but offered little profit potential, whereas for others the opposite was true. As a result, Timken shifted its attention away from the auto industry and into the heavy-processing, aerospace, and defense industries. By adjusting its products, prices, and communications to appeal to the right types of firms, Timken experienced record revenue despite a recession. Diff: 2 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking

148) How has the quality of online recommendation systems affected the "long tail" phenomenon? Answer: Some research has found that poor recommendation systems render many very-low-share products in the tail so obscure and hard to find that they disappear before they can be purchased frequently enough to justify their existence. Diff: 2 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking 149) What are some examples of situational factors that can be used to segment business markets? Answer: Urgency, specific application, and size of order are examples of situational factors used for business market segmentation. Diff: 2 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking 150) List the three premises on which Anderson's long tail theory is based and the two aspects of internet shopping that support these premises. Answer: Anderson's long tail theory is based on three premises: 1. Lower costs of distribution make it economically easier to sell products without precise predictions of demand. 2. The more products available for sale, the greater the likelihood of tapping into latent demand for niche tastes unreachable through traditional retail channels. 3. If enough niche tastes are aggregated, a big new market can result. Anderson identifies two aspects of internet shopping that support these premises. First, the increased inventory and variety afforded online permit greater choice. Second, the search costs for relevant new products are lowered due to the wealth of information online, the filtering of product recommendations based on user preferences that vendors can provide, and the word-of-mouth network of internet users. Diff: 3 LO: 6.6: Describe how to segment business markets. AACSB: Reflective thinking

Chapter 7 Crafting a Customer Value Proposition and Positioning 1) The is essentially the total customer benefit minus the total customer cost. A) customer net value B) positioning C) core message D) customer value proposition E) customer economic value Answer: D Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 2) After a company discovers different needs and groups of consumers in the marketplace, it targets those it can satisfy in a superior way and then develops a value proposition and its offerings so the target customers recognize the distinctive benefits of its offerings. A) positions B) sells C) prices D) launches E) designs Answer: A Diff: 1 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 3) When customers are faced with purchase decisions, they tend to be maximizers, within the bounds of search costs and limited knowledge, mobility, and income. A) image B) value C) profit D) return E) self-esteem Answer: B Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking

4) Which of these is NOT one of the constraints on consumers' value maximization as they face purchase decisions? A) Search costs B) Limited knowledge C) Mobility D) Income E) Self-belief Answer: E Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 5) Depending on the needs of customers, an offering can create value across three domains: , psychological, and monetary. A) functional B) financial C) emotional D) logical E) social Answer: A Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 6) Performance, reliability, durability, compatibility, ease of use, customization, form, style, and packaging are all elements of value. A) monetary B) social C) functional D) psychological E) repeatable Answer: C Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 7) Which component of value relates to an offering's performance from the customer's perspective? A) Social value B) Monetary value C) Psychological value D) Functional value E) Self-reflective Answer: D Diff: 1 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 2

8) When Anker promotes its USB hubs as fast, reliable, and expandable, it is focusing on which component of customer value? A) Social value B) Monetary value C) Psychological value D) Technological value E) Functional value Answer: E Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Analytical thinking 9) Which element of customer value goes beyond functional value to create emotional benefits? A) Functional B) Financial C) Psychological D) Logical E) Social Answer: C Diff: 1 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 10) In addition to the functional and monetary domains of customer value, an offering can also have value for buyers A) repeatable B) psychological C) validating D) financial E) logical Answer: B Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking

11) is the perceived value of the bundle of functional, psychological, and monetary benefits customers expect from a given market offering because of the product, service, and image. A) Customer perception B) Positioning C) Total customer benefit D) Product bundling E) Emotional return Answer: C Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 12) is the perceived bundle of functional, psychological, and monetary costs customers will incur in evaluating, obtaining, using, and disposing of the given market offering. A) Total customer cost B) Incurred cost C) Net value D) The consumer pain point E) Product drawback Answer: A Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 13) The is based on the difference between benefits the customer gets and the costs he or she assumes for different choices. A) customer net benefit B) market position C) psychological position D) augment product value E) customer value proposition Answer: E Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking

14) How does the value proposition relate to the positioning? A) The value proposition is the same thing as the positioning. B) The value proposition is more encompassing and includes the entire cluster of customer benefits. C) The value proposition is a subset of the positioning. D) The value proposition is a customer-facing statement whereas the positioning is a company-facing statement. E) The value proposition can be viewed as the conceptual opposite of the positioning. Answer: B Diff: 3 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 15) To reveal the company's strengths and weaknesses relative to those of various competitors, marketing managers can conduct a(n) . A) marketing audit B) segmentation test C) customer value analysis D) test market launch E) advertising A/B test Answer: C Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 16) What is the first step in conducting a customer value analysis? A) Identify the relevant attributes and benefits that customers value. B) Assess the relative importance of these attributes and benefits. C) Assess the company's and competitors' performance on the key attributes/benefits. D) Monitor customer value over time. E) Conduct a full costing review to determine a feasible market price. Answer: A Diff: 1 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 17) How did the makers of the Mederma scar-treatment product reposition the offering after learning how customers valued the self-esteem benefit it provided? A) By repricing it as a premium product B) By de-emphasizing the product's functional value C) By de-emphasizing the product's monetary value D) By adding an emotional component to the message E) By relaunching it as a cosmetic product rather than a medical product Answer: D Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 5

18) Why does a positioning need to be somewhat aspirational in nature? A) Consumers identify with brands that dare to dream big. B) An aspirational positioning can distract from the offering's shortcomings. C) Nobody wants to buy a product that is "just good enough." D) An aspirational positioning gives the brand room to grow and improve. E) Consumers care more about what a brand could be than what it is. Answer: D Diff: 3 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 19) Unlike the value proposition, which articulates all benefits and costs of the offering, the zeroes in on the key benefits that will provide consumers with a reason to choose the company's offering. A) price proposition B) peak value statement C) marketing strategy D) positioning E) tactical plan Answer: D Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 20) If the proposed positioning for a new Ducati motorcycle would work just as well for a model from Suzuki or Moto Guzzi, the positioning would be failing the _. A) brand substitution test B) brand perception test C) reputational test D) trademark test E) targeting test Answer: A Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking

21) is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market. A) Positioning B) Valuation C) Pricing D) Commercialization E) Launching Answer: A Diff: 1 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Application of knowledge 22) The goal of positioning is to . A) instill the brand in the minds of consumers to maximize the potential benefit to the firm B) discover the different needs and groups existing in the marketplace C) target those customers marketers can satisfy in a superior way D) collect information about competitors that will directly influence the firms' strategy E) help the firm anticipate what the actions of its competitors will be Answer: A Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 23) Which of the following best describes this car company's value proposition? A) We charge a 20 percent premium on our cars. B) We target safety-conscious upscale families. C) We sell the safest, most durable station wagon. D) We are the market leader in the small car category. E) We focus on expanding in faster-growing markets. Answer: C Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Analytical thinking 24) A good positioning should contain rational but not emotional components. Answer: FALSE Diff: 1 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking

25) Identify some of the factors other than the product's cost that can be elements of monetary value for buyers. Answer: Although monetary value is typically associated with costs, an offering can also include such monetary benefits as monetary bonuses, cash-back offers, cash prizes, financial rewards, and low-interest financing. Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 26) Explain how effective positioning helps guide marketing strategy, and explain why it is essential for everyone in the company to be aware of the firm's positioning strategies. Answer: Effective positioning helps guide marketing strategy by clarifying the brand's essence, identifying the goals it helps the consumer achieve, and showing how it does so in a unique way. Everyone in the organization should understand the brand positioning and use it as the context for making decisions and guiding their individual work activities. Diff: 3 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 27) What are the requirements for deciding on a positioning strategy? Answer: Positioning requires that marketers define and communicate similarities and differences between their brand and its competitors. Specifically, deciding on a positioning requires: • determining a frame of reference by identifying the target market and relevant competition • identifying the optimal points of parity and points of difference brand associations given that frame of reference Diff: 2 LO: 7.1: Explain how a company should develop a value proposition and a positioning strategy. AACSB: Reflective thinking 28) When the Automobile Association, a roadside-assistance company in the UK, positioned itself as the "fourth emergency service" (along with police, fire, and ambulance services), it was making what kind of positioning move? A) Choosing a frame of reference that positioned it alongside well-known and highly regarded emergency services B) Conveying the idea that its services are free C) Conveying the idea that its services are delivered by local government authorities D) Choosing a frame of reference that disguises the fact that it is a commercial organization, not a government agency E) Choosing a frame of reference relating to transportation services Answer: A Diff: 2 LO: 7.2: Describe how a company chooses a frame of reference. AACSB: Analytical thinking

29) refers to the products or sets of products with which a brand competes and which function as close substitutes. A) Consumer profitability analysis B) Competitive frame of reference C) Category membership D) Value membership E) Demand field Answer: C Diff: 1 LO: 7.2: Describe how a company chooses a frame of reference. AACSB: Analytical thinking 30) When Coca-Cola determines the bottled-water competitors for its Dasani brand by identifying the products or sets of products with which the brand competes and which function as close substitutes, it is determining Dasani's . A) customer-focused value proposition B) points of parity C) points of difference D) category membership E) brand statement Answer: D Diff: 2 LO: 7.2: Describe how a company chooses a frame of reference. AACSB: Application of knowledge 31) A brand's category membership refers to the products that function as close substitutes for it. Answer: TRUE Diff: 1 LO: 7.2: Describe how a company chooses a frame of reference. AACSB: Application of knowledge 32) A company is more likely to be hurt by current competitors than by emerging competitors or new technologies. Answer: FALSE Diff: 2 LO: 7.2: Describe how a company chooses a frame of reference. AACSB: Reflective thinking

33) Explain why category membership is a good way for a marketer to begin to define a frame of reference for an offering. Answer: The frame of reference serves as a benchmark against which customers can evaluate the benefits of a company's offering and compare them to known alternatives. To even be considered within a particular frame of reference, an offering has to be established as a member of the category that the frame of reference is all about. For example, if Razer wants to define the frame of reference for its line of gaming-optimized laptop PCs, it needs to let potential customers know that these products are indeed gaming PCs (rather than PCs for general business or consumer use). Diff: 3 LO: 7.2: Describe how a company chooses a frame of reference. AACSB: Reflective thinking 34) Before marketers can define appropriate points of difference and points of parity for a product, which of these steps must they do first? A) Define the frame of reference B) Promote product benefits C) Promote product features D) Make sure they have a competitive advantage that is infinitely sustainable E) Let customers define the frame of reference Answer: A Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 35) The extent to which consumers perceive a brand to be faithful to its essence and its reason for being is known as . A) brand loyalty B) brand truthfulness C) brand authenticity D) positioning E) core messaging Answer: C Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking

36) When the National Grape Cooperative reinforces the Welch's brand credentials by focusing on its local sourcing of ingredients, it is using as a point of difference. A) locavorism B) geographic segmentation C) emotion D) brand authenticity E) regionalism Answer: D Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 37) The makers of Chanel No. 5 perfume claim to be the quintessentially elegant French perfume and support this claim by noting the long association between Chanel and haute couture (high fashion). Which of these conditions must be true for this positioning effort to be effective? A) The notion of French elegance must be a desirable factor for consumers. B) There can be no other significant French perfumes on the market. C) Consumers must value French elegance over that of any other country or culture. D) The price must be high enough to align with the haute couture market. E) Chanel No. 5 must be endorsed by leading figures from the fashion industry. Answer: A Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 38) When Monster introduced its energy drink line in a larger 16-ounce can, the purpose was to . A) push profits by selling at higher volume B) differentiate itself from category leader Red Bull C) prove that it could deliver on its product promise D) show that it could deliver a desirable consumer benefit E) visually convey the "Monster" name Answer: B Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking

39) When Method Products highlights the environmentally friendly aspects of its products and overall business model, it is attempting to differentiate itself in the cleaning products category via . A) popularity B) consumer wishes C) up-market appeal D) transparency E) authenticity Answer: E Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 40) How can a brand succeed if it has some perceived points of weakness in terms of competitive parity? A) If it can convince consumers those weaknesses don't matter B) If it can explain to consumers that they have misunderstood the product C) If it can "break even" in those disadvantageous areas and achieve advantages in other areas D) If it can show that competitors have weaknesses, too E) If it ignores those weakness to avoid bringing attention to them. Answer: C Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 41) How did Visa attempt to achieve competitive parity with American Express in the matter of exclusivity, which has been a competitive point of difference for American Express? A) By explaining to consumers that cards are cards; there is nothing elegant or exclusive about them. B) By humorously explaining in it adds that its level of prestige was "good enough for most people" C) By introducing more-exclusive gold and platinum cards with more up-market benefits D) By explaining that those premium benefits aren't really all that impressive E) By explaining how expensive those premium benefits really are Answer: C Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking

42) Marketers can use to reveal "holes" or "openings" that suggest unmet consumer needs and marketing opportunities. A) positioning B) perceptual maps C) brand maps D) gap analysis E) segmentation Answer: B Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 43) Occasionally, a company will be able to two frames of reference with one set of points of difference and points of parity. A) leap B) straddle C) connect D) split E) invert Answer: B Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 44) If consumers believe that low-priced luxury car can't possibly be very luxurious, the company is wrestling with the problem of attributes or benefits. A) misunderstood B) false or faux C) misaligned D) inversely related E) misframed Answer: D Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking

45) When Splenda sugar substitute overtook Equal and Sweet'N Low to become the leader in its category by explaining that, unlike those two brands, it was derived from sugar, the company was using to establish this point of difference. A) deliverability B) desirability C) differentiability D) consumer perception E) benefit segmentation Answer: C Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 46) The typically ineffective "lowest common denominator" positioning is a consequence of . A) confusing the market B) not listening to consumers C) trying to be all things to all people D) ignoring competitors E) trying to cover the market with too few products Answer: C Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 47) Which of the following terms is most closely associated with the statement: "attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand"? A) Points of inflection B) Points of difference C) Points of parity D) Points of value E) Points of presence Answer: B Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking

48) Points of are product associations that are not necessarily unique to the brand but may in fact be shared with other brands. A) parity B) difference C) inflection D) presence E) divergence Answer: A Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 49) The three criteria that determine whether a brand association can truly function as a point of difference are . A) comparability, authenticity, deliverability B) desirability, peculiarity, deliverability C) deviance, peculiarity, deformity D) desirability, deliverability, differentiability E) differentiability, authenticity, desirability Answer: D Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 50) The three criteria that determine whether a brand association can truly function as a point of difference include desirability, , and differentiability. A) discrimination B) customerization C) implementation D) deliverability E) demand Answer: D Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 51) Which of the following criteria relates to consumers seeing the brand association as personally relevant to them? A) Deliverability B) Authenticity C) Desirability D) Differentiability E) Feasibility Answer: C Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 15

52) Which of the following criteria relates to the company having the internal resources and commitment to feasibly and profitably create and maintain the brand association in the minds of consumers? A) Differentiability B) Peculiarity C) Desirability D) Believability E) Deliverability Answer: E Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 53) Which of the following criteria relates to consumers seeing the brand association as distinctive and superior to relevant competitors? A) Desirability B) Differentiability C) Believability D) Deliverability E) Deviance Answer: B Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 54) are attributes or benefits that consumers view as essential to a legitimate and credible offering within a certain product or service class. A) Category points of difference B) Conceptual points of parity C) Competitive points of parity D) Category points of parity E) Competitive points of difference Answer: D Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking

55) Philip Morris bought Miller Brewing and launched low-calorie beer at a time when consumers had the impression that low-calorie beer does not taste as good as normal beer. What does the company assure by stating that the beer tastes good? A) Points of difference B) Points of presence C) Points of parity D) Points of conflict E) Points of inflection Answer: C Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 56) When BMW first made its strong competitive push into the U.S. market in the early 1980s, it positioned the brand as the only automobile that offered both luxury (competing with Cadillac) and performance (competing with the Corvette), which is known as because it uses points of difference and points of parity across categories. A) a competitive frame of reference B) zone of tolerance positioning C) straddle positioning D) red-ocean thinking E) perceptual mapping Answer: C Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 57) Philip Morris bought Miller Brewing and launched low-calorie beer at a time when consumers had the impression that low-calorie beer does not taste as good as normal beer. What did the company try to build when it conveyed the fact that the beer contained one third less calories and hence it is less filling? A) Points of difference B) Points of conflict C) Points of parity D) Points of presence E) Points of inflection Answer: A Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking

58) Consumers might not consider a hand sanitizer truly a hand sanitizer unless it is a gel designed to apply topically, contains alcohol that kills the germs present on the skin, and was developed for use after washing hands or for those times when soap and water are not available. These product attributes are considered . A) competitive points of difference B) competitive points of parity C) category points of difference D) category points of parity E) conceptual points of parity Answer: D Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 59) Nivea became the leader in the skin cream class on the "gentle," "protective," and "caring" platform. The company further moved into classes such as deodorants, shampoos, and cosmetics. Attributes like gentle and caring were of no value unless consumers believed that its deodorant was strong enough, its shampoo would cleanse, and its cosmetics would be colorful enough. This is an example of . A) competitive points of parity B) competitive points of difference C) category points of parity D) category points of difference E) competitive points of presence Answer: C Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 60) are associations designed to overcome perceived weaknesses of the brand. A) Conceptual points of parity B) Category points of difference C) Competitive points of parity D) Competitive points of difference E) Category points of parity Answer: C Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking

61) As a marketing manager, which of the following would be the best purpose for your organization's competitive points of parity? A) To point out competitors' points of difference B) To emphasize competitors' points of difference C) To rationalize competitors' perceived points of difference D) To globalize competitors' perceived points of difference E) To negate competitors' perceived points of difference Answer: E Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 62) A marketer who wants to anchor a point of difference for Dove soap on brand benefits might emphasize which of the following? A) The soap is one-quarter cleansing cream. B) Dove products include bar soaps and shampoos. C) Dove soap helps users have softer skin. D) The soap brand has global presence. E) The brand has recently launched soap for men. Answer: C Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 63) Marketers typically focus on brand in choosing the points of parity and points of difference that make up their brand positioning. A) equity B) awareness C) benefits D) architecture E) extensions Answer: C Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 64) are visual representations of consumer perceptions and preferences. A) Brand narratives B) Share of mind variables C) Perceptual maps D) Exemplars E) Points of parity Answer: C Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 19

65) Straddle positions . A) help firms to analyze who their competitors are B) allow brands to expand their market coverage and potential customer base C) are a necessity while creating a firm's vision and mission statement D) assist firms in collecting information on competitors that will directly influence their strategy E) are ambiguous moral principles behind the operation and regulation of marketing Answer: B Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 66) One common difficulty in creating a strong, competitive brand positioning is that many of the attributes or benefits that make up the points of parity and points of difference are . A) inversely related B) always correlated C) directly proportional D) never correlated E) positively correlated Answer: A Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 67) If a brand is developing an offering with multiple frames of reference, which of the following is NOT advisable? A) Create a combined positioning that addresses all competitors B) Prioritize competitors C) Choose the most important set of competitors to serve as the competitive frame D) Pursue lowest common denominator positioning by trying to be all things to all customers E) Develop the best possible positioning for each type or class of competitors Answer: D Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 68) If Starbucks considers quick-serve restaurants and convenience shops in its competitive frame of reference, then intended might be quality, image, experience, and variety, while intended might be convenience and value. A) PODs; POPs B) POPs; PODs C) substantiators; image variables D) design variables; personality variables E) image variables; personality variables Answer: A Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 20

69) Subway restaurants are positioned as offering healthy, good-tasting sandwiches. When the competitive frame of reference is quick-serve restaurants like McDonald's, what is the POD? A) Health B) Taste C) Convenience D) Price E) Brand Answer: A Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 70) Subway restaurants are positioned as offering healthy, great-tasting sandwiches. positioning allows the brand to create a point of parity (POP) on taste and a point of difference (POD) on health with respect to quick-serve restaurants such as McDonald's and Burger King and, at the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. A) Category-based B) Need-based C) Noncomparative D) Straddle E) Price-quality Answer: D Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Application of knowledge 71) Associations that make up points of difference are based exclusively on product features. Answer: FALSE Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 72) Points of parity are attributes or benefits consumers strongly associate with a brand and believe that they could not find to the same extent with a competitive brand. Answer: FALSE Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 73) Points of parity may be shared among two or more brands. Answer: TRUE Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 21

74) Category points of parity are unique to a brand. Answer: FALSE Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 75) Category points of parity may change over time due to technological advances, legal developments, or consumer trends. Answer: TRUE Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 76) Category points of parity are associations designed to overcome perceived weaknesses of the brand. Answer: FALSE Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 77) A competitive point of parity negates competitors' perceived points of difference. Answer: TRUE Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 78) Straddle positioning refers to a brand using different positioning with different categories of competitors. Answer: FALSE Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 79) Perceptual maps provide quantitative portrayals of market situations and the way consumers view different products, services, and brands along various dimensions. Answer: TRUE Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 80) A good illustration of inversely related attributes or benefits is good taste versus bad taste. Answer: FALSE Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking

81) Can a brand survive in a tough market being just "good enough" on one or more points of competitive parity? Explain your answer. Answer: Yes, such brands can survive–if they can achieve competitive distinction in other areas that are important to target customers. If they are only just good enough in every major attribute, chances are they will fade from the market sooner or later. Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 82) What investigative tool could marketers use to look for "holes" or "openings" in a market? Answer: They could use a perceptual map to look for areas in which customers value some combination of benefits or attributes but no one yet "owns" that position in the minds of customers. Diff: 1 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 83) If a particular offering has an important attribute that is both desirable to consumers and deliverable by the company but not necessarily differentiable, can this attribute function as a point of difference? Explain your answer. Answer: No, if the attribute can't truly be distinguished from competitors, it can't be established as a true POD simply because it doesn't qualify as a competitive difference. It might still be important as a POP, though. Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 84) With respect to positioning, explain points of parity and points of difference. Answer: Points of difference (PODs) are attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand. Points of parity (POPs), on the other hand, are associations that are not necessarily unique to the brand but may in fact be shared with other brands. Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking

85) With the help of an example, explain straddle positioning. Answer: (Student answers will vary.) Occasionally, a company will be able to straddle two frames of reference with one set of points of difference and points of parity. In these cases, the points of difference for one category become points of parity for the other and vice versa. Subway restaurants are positioned as offering healthy, good-tasting sandwiches. This positioning allows the brand to create a POP on taste and a POD on health with respect to quick-serve restaurants such as McDonald's and Burger King and, at the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. Straddle positions allow brands to expand their market coverage and potential customer base. Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 86) There are three key consumer criteria that determine whether a brand association can truly function as a point of difference. When the Westin Stamford hotel in Singapore advertised that it was the world's tallest hotel, it attempted to create a point of difference (POD). Explain why the hotel may not have been successful in its attempt to create its POD. Answer: (Student answers will vary.) Consumers must see the brand association as personally relevant to them. Staying in the tallest hotel might not be a necessary need for most tourists; there might be other factors that are more important. The hotel was not successful in its attempt to create its POD because of the desirability criteria associated with PODs. Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 87) Belling is a chain of coffee shops. Give an example of a category point of parity and imagine a competitive point of parity for the company. Answer: (Student answers will vary.) A category point of parity for Belling could be its freshly brewed coffee and friendly atmosphere. A competitive point of parity could be its fast customer service times if the company is noticeably better in that attribute. Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 88) Belling is a chain of coffee shops. Imagine an example of a point of parity and a point of difference for the company. Answer: (Student answers will vary.) Points of parity for Belling could be its freshly brewed coffee or friendly atmosphere. Points of difference could be its unusual interior design or laid-back attitude. Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking

89) Give an example of the use of straddle positioning. Answer: (Student answers will vary.) Subway restaurants are positioned as offering healthy, good-tasting sandwiches. This positioning allows the brand to create a POP on taste and a POD on health with respect to quick-serve restaurants such as McDonald's and Burger King and, at the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. Diff: 3 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Analytical thinking 90) Provide three examples of inversely related attributes and benefits. Answer: (Student answers will vary.) Some examples of inversely related attributes and benefits are low price versus high quality, taste versus low calories, strong versus refined, powerful versus safe, and ubiquitous versus exclusive. Diff: 2 LO: 7.3: Discuss how a company identifies points of parity and points of difference. AACSB: Reflective thinking 91) When Dollar Shave Club stresses price as an advantage over competitors, which strategy is it using to create competitive advantage? A) Introducing a new attribute B) Differentiating on an existing attribute C) Building a strong brand D) Noting points of parity E) Downgrading the competition Answer: B Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Analytical thinking 92) Nest's innovative machine learning feature in home thermostats used which strategy to create competitive advantage? A) Introducing a new attribute B) Differentiating on an existing attribute C) Building a strong brand D) Noting points of parity E) Downgrading the competition Answer: A Diff: 1 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Analytical thinking

93) All home cleaning liquids obviously come in some kind of packaging; Method Products' aesthetically pleasing packaging used which strategy to create competitive advantage? A) Differentiating on an existing attribute B) Introducing a new attribute C) Building a strong brand D) Noting points of parity E) Downgrading the competition Answer: B Diff: 3 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Analytical thinking 94) One of the competitive advantages of top-of-mind brand awareness is that the brand considered first often becomes . A) the most profitable B) the most copied C) a reference point for consumers D) the only brand consumers ever consider E) the most often recommended to friends Answer: C Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 95) To build a strong brand and avoid the commodity trap, marketers must start with the belief that it is possible to differentiate an offering by creating . A) a sustainable competitive advantage B) the lowest-cost product C) the highest-rated product D) the most talked-about product E) competitive parity at least Answer: A Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 96) How has Geico become the brand that many consumers think of when they think about car insurance? A) By having the funniest commercials B) By having a catchy tagline C) By undercutting every competitor on every deal D) By dominating TV advertising to the extent that competitors' ads are lost E) By effectively using humor Answer: D Diff: 1 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 26

97) Why did PepsiCo reposition the Sierra Mist brand? A) To respond to rising consumer interest in natural and organic products B) To avoid confusion with other brands with "Sierra" in their names C) To move away from copycat products in the category D) To create opportunities for higher margins E) To better fit it family of soft drink brands Answer: A Diff: 1 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 98) When TOMS chose to differentiate itself from traditional shoe manufacturers by its "buy one, give one" social responsibility program, it used which strategy to create competitive advantage? A) Differentiating on an existing attribute B) Introducing a new attribute C) Building a strong brand D) Noting points of parity E) Downgrading the competition Answer: B Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 99) Differentiation through brand power is of particular value in product categories. A) regulated B) monopolized C) commoditized D) premium E) business Answer: C Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 100) What approach have Tylenol, Advil, and Aleve taken to maintain market leadership in a product category filled with functionally identical low-priced generics? A) By using product features to create market entry barriers B) By dominating advertising to maintain top-of-mind awareness C) By appealing to consumer emotions D) By relying on patents to keep out new competition E) By undercutting rising threats on price Answer: B Diff: 3 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Analytical thinking 27

101) Harley-Davidson built an enduring competitive advantage by . A) differentiating on an existing attribute B) introducing a new attribute C) building a strong brand D) noting points of parity E) downgrading the competition Answer: C Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Analytical thinking 102) By its nature, vodka is difficult to differentiate on attributes of the physical product. How has Grey Goose gained the ability to charge premium prices? A) Effective branding B) Exclusive distribution C) Attractive packaging D) Exclusive endorsement deals E) Patent restrictions Answer: A Diff: 1 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Analytical thinking 103) is an offering's ability to perform in one or more ways that competitors cannot or will not match. A) Brand positioning B) Market research C) Competitive advantage D) Competitor analysis E) Competitive intelligence Answer: C Diff: 1 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 104) A advantage is one that a company can use as a springboard to new advantages. A) sustainable B) leverageable C) realistic D) rational E) distinct Answer: B Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 28

105) Suppliers who are dependable in their on-time delivery, order accuracy, and order-cycle time are most likely to be differentiated based on _ . A) resilience B) innovativeness C) insensitivity D) reliability E) expertise Answer: D Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 106) A supplier creates better information systems, and introduces barcoding, mixed pallets, and other methods of helping the consumer. The supplier is most likely to be differentiated on its . A) innovativeness B) reliability C) insensitivity D) resilience E) accuracy Answer: A Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 107) Competitive advantage is a company's ability to perform in one or more ways that competitors cannot or will not match. Answer: TRUE Diff: 1 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 108) A leverageable advantage is one that a company can use as a springboard to new advantages. Answer: TRUE Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking

109) Why is differentiation through brand power of particular value in commoditized product categories? Answer: By definition, commodity products cannot be significantly distinguished via attributes or benefits of the product itself. Branding is one of the few remaining options to create the perception of difference, even if the difference is in the brand image or personality, rather than in the product itself. Diff: 3 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Reflective thinking 110) What three core strategies are integral to designing a value proposition that makes an offering stand out from the competition? Answer: The three core strategies are to differentiate on an existing attribute, introduce a new attribute, and build a strong brand. Diff: 2 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Application of knowledge 111) Why are so few products able to create an enduring competitive advantage? Answer: Competitive advantage is difficult to sustain because in most cases, whatever one company did to build an initial advantage can eventually be copied or surpassed by another company. Even with the most exotic or complex products, there's no magic to it. It may take a lot of money, time, hard work, and perhaps some clever innovating to get around patent exclusivities, but if competitors sense a profitable opportunity, they can usually find a way to create enough of a perceived match to begin taking away business. About the closest thing companies have to magic is branding, in creating the belief that no one else can match a consumer's favored product and in creating a mythology of sorts that consumers believe they are part of. Diff: 3 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Application of knowledge 112) Define leverageable advantage and provide an example. Answer: (Student answers will vary.) A leverageable advantage is one that a company can use as a springboard to new advantages. Examples may vary, but the text notes that Microsoft has leveraged its operating system to Microsoft Office and then to networking applications. In general, a company that hopes to endure must be in the business of continuously inventing new advantages that can serve as the basis of points of difference. Diff: 3 LO: 7.4: Define the key strategies for creating a sustainable competitive advantage. AACSB: Application of knowledge

113) A positioning statement clearly articulates the offering's target customers and the that will provide customers with a reason to choose the company's offering. A) marketing mix B) core message C) key benefit D) value proposition E) top five attributes Answer: C Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 114) Many marketers tend to focus on as the pillar(s) of the offering's positioning. A) value proposition B) core message C) price D) benefits E) customer value proposition Answer: D Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 115) When Hertz says it "offers a fast, convenient way to rent the right type of car at an airport," which part of the positioning statement does this phrase represent? A) The value proposition B) The target customers C) The marketing mix D) The offering E) The core message Answer: A Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking

116) Which of these is true about the attributes of an offering in the context of positioning and promotion? A) They are the same as the benefits. B) They are more important than the benefits. C) They generally play a supporting role, proving claims about benefits. D) They are rarely considered or expressed in a positioning statement. E) They are the most important part of the offering from a customer's perspective. Answer: C Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 117) When Singapore Airlines boasts about its superior customer service, what role do the company's highly trained flight attendants and strong service culture play in the positioning effort? A) They are typically shown visually rather than described verbally in a positioning statement. B) They represent the value proposition component of the positioning statement. C) They are the two key benefits of the positioning claim. D) They are the key attributes that support the benefit claim (superior customer service). E) They are benefits that support the customer service attribute. Answer: D Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 118) When HBO uses the slogan "It's Not TV, It's HBO," what role does it play in the company's positioning effort? A) By claiming not to have membership in the TV category, HBO sets itself apart from regular TV programming. B) HBO is trying to claim category membership with theaters, not TV. C) HBO is claiming membership in the cable TV category, not broadcast TV. D) By putting itself at the same conceptual level as television, HBO is claiming to be a completely new and different form of entertainment. E) The company wants viewers to know its content is not for everybody. Answer: A Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking

119) What consumer emotion did Ally Bank tap into to create its initial position as an alternative to traditional banks? A) Fear of inflation B) Distrust of financial institutions C) Fear of bank collapses D) Fear of not having enough money for retirement E) Frustration with complex financial services Answer: B Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 120) When Ford decided to call its X-Trainer/Freestyle model a "sports wagon," what was it doing with that particular label? A) Relying on the product descriptor to convey category membership B) Overcoming negative stereotypes about people who drive station wagons C) Making fun of people who drive station wagons D) Relying on the product descriptor to convey the key benefit E) Claiming it was the same as all other sports wagons Answer: A Diff: 1 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 121) Narrative branding is essentially . A) social media branding B) crowdsourced messaging C) storytelling D) unstructured branding E) nonpromotional branding Answer: C Diff: 1 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking

122) Tums claims to have the most acid-reducing components of any antacid. In what way is the brand's category membership being conveyed? A) Comparing to exemplars B) Relying on the product descriptor C) Announcing category benefits D) Focusing on reliability E) Persuasion based on believability Answer: C Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 123) In which of the following examples is a company communicating category membership using a product descriptor? A) Use Zipex for quick and thorough cleaning. B) Barry's Oats, when you want nutrition and flavor. C) Clarity offers you the best prices for the best quality. D) Choose Grissom's for an unparalleled shopping experience. E) Chloe: All you need for a beautiful you. Answer: B Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 124) Industrial tools claiming to have durability, and antacids announcing their efficacy convey a brand's category membership by . A) relying on the product descriptor B) comparing to exemplars C) announcing category benefits D) communicating deliverability variables E) identifying counter examples Answer: C Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking

125) The typical approach to positioning is to inform consumers of a brand's category membership before stating its point of . A) parity B) difference C) conflict D) weakness E) presence Answer: B Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 126) Which of the following ways to convey a brand's category membership relates to well-known, noteworthy brands in a category helping a brand specify its category membership? A) Comparing to exemplars B) Communicating deliverability variables C) Identifying counter examples D) Announcing category benefits E) Relying on the product descriptor Answer: A Diff: 1 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 127) SJC is a new retailer that targets the youth market. SJC needs to make an impression using advertising, and decides to use funny or irreverent ads to get its point across. Each ad features one of SJC's competitors and conveys an advantage SJC has over that competitor. Which of the following is the company using to convey its membership in the retail segment? A) Announcing category benefits B) Comparing to exemplars C) Relying on the product descriptor D) Using channel differentiation E) Maximizing negatively correlated attributes Answer: B Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking

128) When Tommy Hilfiger was an unknown brand, advertising announced his membership as a great U.S. designer by associating him with Geoffrey Beene, Stanley Blacker, Calvin Klein, and Perry Ellis, who were recognized members of that category. Tommy Hilfiger conveyed the brand's category membership by . A) relying on the product descriptor B) focusing on reliability C) comparing to exemplars D) announcing category benefits E) identifying counter examples Answer: C Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 129) Ford Motor Co. invested more than $1 billion on a radical new 2004 model called the X-Trainer, which combined the attributes of an SUV, a minivan, and a station wagon. To communicate its unique position—and to avoid association with its Explorer and Country Squire models—the vehicle, eventually called Freestyle, was designated a "sports wagon." According to the given scenario, Ford Motor Co. conveyed the product's category membership by . A) announcing category benefits B) identifying counter examples C) relying on the product descriptor D) focusing on reliability E) comparing to exemplars Answer: C Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 130) is based on deep metaphors that connect to people's memories, associations, and stories. A) Cultural branding B) Narrative branding C) Brand journalism D) Emotional branding E) Personal branding Answer: B Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Application of knowledge

131) Which element of a brand story framework relates to the time, place, and context of the brand story? A) Cast B) Pitch C) Narrative arc D) Setting E) Language Answer: D Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Application of knowledge 132) Which element of a brand story framework relates to the way the narrative logic unfolds over time, including actions, desired experiences, defining events, and the moment of epiphany? A) Language B) Pitch C) Cast D) Setting E) Narrative arc Answer: E Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Application of knowledge 133) Which element of a brand story framework relates to the authenticating voice, metaphors, symbols, themes, and leitmotifs? A) Narrative arc B) Context C) Language D) Setting E) Cast Answer: C Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Application of knowledge 134) Brands are never affiliated with categories in which they do not hold membership. Answer: FALSE Diff: 1 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking

135) There are situations in which consumers know a brand's category membership but may not be convinced the brand is a valid member of the category. Answer: TRUE Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 136) The typical approach to positioning is to inform consumers of a brand's membership before stating its point of difference. Answer: TRUE Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 137) The product descriptor that follows the brand name is often a concise means of conveying category origin. Answer: TRUE Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 138) If a company compares its products to those of leaders in the field, it is conveying category membership by "comparing to exemplars." Answer: TRUE Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Application of knowledge 139) Explain the concept of primal branding. Answer: Primal branding views brands as complex belief systems. Proponents argue that diverse brands such as Google, MINI Cooper, the U.S. Marine Corps, Starbucks, Apple, UPS, and Aveda all have a "primal code" or DNA that resonates with their customers and generates their passion and fervor. There are seven assets that make up this belief system or primal code: a creation story, creed, icon, rituals, sacred words, a way of dealing with nonbelievers, and a good leader. Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking

140) How can a cohesive digital strategy make a small company brand appear "bigger and better" than it might otherwise? Answer: Social media, online advertising, and e-commerce allow small firms to have a larger profile than they would likely have if restricted to the physical realm and conventional marketing alone. For example, fans of a small firm might use their social media accounts to share their positive experiences with hundreds or thousands of contacts, as opposed to the few dozen at most they would be able to communicate with otherwise. Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 141) Describe three methods by which a brand can communicate category membership. Answer: There are three main ways to convey a brand's category membership: 1. Announcing category benefits. To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers frequently use benefits to announce category membership. 2. Comparing to exemplars. Well-known, noteworthy brands in a category can also help a brand specify its category membership. 3. Relying on the product descriptor. The product descriptor that follows the brand name is often a concise means of conveying category origin. Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 142) Give an example of how a brand can be affiliated with a category in which it does not hold membership. Answer: Student answers will vary. DiGiorno's frozen pizza has adopted a positioning strategy that identifies with a different category from its own — instead of putting it in the frozen pizza category, the marketers have positioned it in the delivered pizza category with ads that claim, "It's Not Delivery, It's DiGiorno!" Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 143) Belling begins most advertising messages by announcing category benefits and then moving on to its specific positioning. What is the primary reason Belling may adopt this strategy. Answer: To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers such as Belling frequently use benefits to announce category membership. Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking

144) What methods can the coffee shop chain Belling use to convey its category membership? Answer: The three main ways to convey a brand's category membership are announcing category benefits, comparing to exemplars, and relying on the product descriptor. Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 145) As a company seeks to establish a category membership designation, how does the company approach points of difference? What is done first? Answer: The typical approach to positioning is to inform consumers of a brand's membership before stating its point of difference. Presumably, consumers need to know what a product is and what function it serves before deciding whether it dominates the brands against which it competes. Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 146) What are the three main ways to convey a brand's category membership? Provide an example of each. Answer: Announcing category benefits (e.g., a brownie mix might attain membership in the baked desserts category by claiming the benefit of great taste and support this claim by including high-quality ingredients [performance] or by showing users delighting in its consumption [imagery]); comparing to exemplars (e.g., when Tommy Hilfiger was an unknown, advertising announced his status as a great U.S. designer by associating him with recognized members of the category); relying on the product descriptor (e.g., Ford's X-Trainer/Freestyle was designated a sports wagon). Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 147) What are the five elements of narrative branding? Answer: Some researchers see narrative branding as based on deep metaphors that connect to people's memories, associations, and stories. They identify five elements of narrative branding: 1. The brand story in terms of words and metaphors 2. The consumer journey in terms of how consumers engage with the brand over time and touch points where they come into contact with it 3. The visual language or expression for the brand 4. The manner in which the narrative is expressed experientially in terms of how the brand engages the senses 5. The role/relationship the brand plays in the lives of consumers Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 40

148) Some researchers see narrative branding as based on deep metaphors that connect to people's memories, associations, and stories. Briefly describe their framework for a brand story. Answer: Based on literary convention and brand experience, narrative branding uses the following framework for a brand story: • Setting. The time, place, and context • Cast. The brand as a character, including its role in the life of the audience, its relationships and responsibilities, and its history or creation myth • Narrative arc. The way the narrative logic unfolds over time, including actions, desired experiences, defining events, and the moment of epiphany • Language. The authenticating voice, metaphors, symbols, themes, and leitmotifs Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Reflective thinking 149) How can a loyal brand community support the positioning and branding of a small business? Provide an example to support your explanation. Answer: (Student answers will vary.) Creating a vibrant brand community among current and prospective customers can be a cost-effective way to reinforce loyalty and help spread the word to new prospects. Evernote has several dozen "power users" who serve as passionate ambassadors to spread the word about the personal-organization application brand touted by the online company as the everything-in-one-place "external brain" for its customers. Diff: 2 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking 150) Sugar & Spice is a boutique bakery that specializes in cupcakes. Give some methods by which it can position itself without spending a lot on promotions. Answer: (Student answers will vary.) Potential positioning techniques for small businesses include finding a compelling performance advantage, focusing on one or two strong brands based on one or two key associations, encouraging product trials, develop a cohesive digital strategy, creating buzz and a loyal brand community, employing a well-integrated set of brand elements, and leveraging as many secondary associations as possible. As two examples, Sugar & Spice could emulate See's Candies' free sample tactic to encourage new customers and repeat sales and use social media to create a vibrant brand community among current and prospective customers can also be a cost-effective way to reinforce loyalty and help spread the word to new prospects. Diff: 3 LO: 7.5: Identify alternative strategies to communicate the positioning of a company's offerings. AACSB: Analytical thinking

Chapter 8 Designing and Managing Products 1) The basic capability of any product is known as its . A) main operating mode B) prime function C) core functionality D) value proposition E) customer purpose Answer: C Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 2) Nokia reportedly dismissed the original iPhone with its large glass surface partly because it failed one of Nokia's own ruggedness tests (surviving a five-foot drop onto concrete). This apparently helped convince Nokia to ignore the new direction in which Apple was about to lead the mobile phone market. What is a logical conclusion to draw from Nokia's experience in this regard? A) Five feet is too stringent; two or three feet would have been more reasonable. B) The iPhone should have been stronger. C) Apple should have enforced stronger quality controls. D) Nokia prioritized that attribute more highly than the market did. E) Consumers should have paid more attention to Nokia's high standards. Answer: D Diff: 3 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 3) With each feature it considers adding to a new product, a company must balance versus how much it will cost the company to add the feature. A) customer value B) market perception C) brand labeling potential D) size and weight E) distributor value Answer: A Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking

4) is the level at which the product's primary characteristics operate. A) Conformance quality B) Performance quality C) Expected quality D) Minimal quality E) Guaranteed quality Answer: B Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 5) If the taste of your favorite energy drink varies to an unacceptable degree from can to can, this represents a problem with the product's . A) conformance quality B) performance quality C) expected quality D) minimal quality E) guaranteed quality Answer: A Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 6) If the sound quality of your new Bluetooth headphones is simply unacceptable to you, this represents a problem with the product's . A) conformance quality B) expected quality C) performance quality D) minimal quality E) guaranteed quality Answer: C Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 7) Engineers often speak of the metric mean time between failures (MTBF), which is the average time a product or system operates under normal conditions before an unexpected breakdown or other unplanned loss of service. MTBF is therefore a measure of . A) durability B) performance quality C) predictability D) reliability E) initial quality Answer: D Diff: 3 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 2

8) A commodity offering that can't be meaningfully differentiated on the basis of the product itself or any associated services might still achieve differentiation through . A) branding B) sales channels C) financing D) reliability E) initial quality Answer: A Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 9) A particular automobile has so many high-tech functions that drivers are getting confused, sometimes dangerously so. This car can be said to be suffering from . A) poor training by the dealer B) feature fatigue C) a bad owners manual D) lazy drivers E) poor targeting or segmentation Answer: B Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 10) The extraordinary look of Jaguar automobiles relates to the element of product design. A) form B) style C) customization D) performance quality E) conformance quality Answer: B Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking

11) A customer judges a product offering by three basic elements: product, service, and . A) performance B) utility C) tangibility D) brand E) availability Answer: D Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 12) When a consumer purchases a mountain bike costing $1,000 or more, he or she expects the bike to exhibit a high level of , the level at which the product's primary characteristics operate. A) features B) conformance quality C) durability D) performance quality E) reliability Answer: D Diff: 3 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 13) Many products can be differentiated in terms of their , which are their size, shape, or physical structure. A) form B) prototype C) architecture D) model E) blueprint Answer: A Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking

14) Buyers expect products to have high , which is the degree to which all produced units are identical and meet promised specifications. A) durability B) compatibility C) conformance quality D) form E) performance quality Answer: C Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 15) If the Lotus Evora is designed to accelerate to 60 miles per hour within 4.0 seconds, and every Evora coming off the assembly line does this, the model is said to have high . A) reliability B) conformance quality C) durability D) compatibility E) interoperability Answer: B Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Analytical thinking 16) describes the product's look and feel to the buyer. A) Design B) Style C) Durability D) Conformance E) Reliability Answer: B Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 17) For to be valued for products like vehicles and kitchen appliances, it should not command an excessive price premium and the product must not be subject to rapid technological obsolescence. A) conformance quality B) performance quality C) reparability D) durability E) style Answer: D Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 5

18) Performance quality is the level at which the product's primary characteristics operate. Answer: TRUE Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 19) Durability is a measure of the probability that a product will not malfunction within a specified time period. Answer: FALSE Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 20) Marketing planning begins with formulating an offering to meet target customers' needs or wants. Answer: TRUE Diff: 1 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 21) To avoid "feature fatigue," companies must be careful to prioritize those features that are included and find unobtrusive ways to provide information about how consumers can use and benefit from the feature. Answer: TRUE Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 22) Firms should always design the highest performance level possible for their products. Answer: FALSE Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 23) As a selling point, durability commands a particularly high pricing premium, especially for products that are subject to rapid technological obsolescence, as are personal computers and video cameras. Answer: FALSE Diff: 3 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking

24) Explain how the commonly heard design mantra "less is more" relates to the issue of "feature fatigue." Answer: Feature fatigue is a phenomenon in which companies attempt to make their products more competitive by packing them with lots of features but wind up mentally wearing out their users with the resulting level of complexity. The "less is more" approach to design can help companies carefully prioritize which features are truly beneficial to target customers and thereby create products that are just as adept at solving problems while being easier for customers to use. Diff: 3 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 25) Explain the difference between performance quality and conformance quality. Answer: Performance quality is the level at which the product's primary characteristics operate. One of the primary characteristics of a video game controller, for instance, is lag time or responsiveness. A controller that introduces a noticeable lag between the user's action (such as pressing a button) and the system's response has an unacceptable level of performance quality. In contrast, conformance quality is the degree to which all produced units are identical and meet promised specifications. If you have two controllers for your game system, and the buttons on one of the controllers feel weirdly "squishy" but the buttons on the other have a firm, confident feel, your controllers suffer from a problem with conformance quality. Diff: 3 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 26) Explain the difference between durability and reliability. Answer: Durability is a measure of the product's expected operating life. The brush head for an electric toothbrush can be reasonably expected to last several months before needing to be replaced, for example. In contrast, a finely crafted woodworking chisel can be expected to outlive several generations of woodworkers. The two products have different degrees of durability, in line with their prices and customer expectations. Reliability is a statistical measure that offers a prediction of whether a product is likely to fail within a given period of time. A car that has a 4.2 percent chance of breaking down during any 12-month period is less reliable than a car that has only a 2.3 percent chance of breaking down during the same time frame. Diff: 3 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 27) Explain the difference between form and style. Answer: Form is the size, shape, or physical structure of a product. All shoes share the same general form, and subcategories such as basketball shoes share the same basic physical form as well. Style describes the product's look and feel. The materials, colors, and other stylistic details of one shoe model distinguish it from another model, even those both models have the same basic product form. Diff: 2 LO: 8.1: Explain how companies use product differentiation to create market value. AACSB: Reflective thinking 7

28) Herman Miller office furniture, Viking ranges and kitchen appliances, and Kohler kitchen and bathroom fixtures and faucets stand out in their respective product categories in large part due to their . A) visual design B) low prices C) extensive distribution networks D) relentless advertising E) lack of strong competition Answer: A Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 29) is a very data-driven approach with three phases: observation, ideation, and implementation. A) Product design B) Brainstorming C) Design thinking D) Engineering E) Prototyping Answer: C Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 30) Oxo's approach creates products that can be comfortably used by everyone from kids to seniors without frustrations that accompany so many traditional kitchen and home gadgets. A) planned design B) universal design C) pan-generational D) human form factor E) naturalistic Answer: B Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking

31) Ethnography is part of the phase of design thinking. A) ideation B) implementation C) brainstorming D) engineering E) observation Answer: E Diff: 1 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 32) The phase of design thinking falls between observation and implementation. A) ideation B) implementation C) brainstorming D) engineering E) observation Answer: A Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 33) What does Samsung mean with its "Make It Meaningful" slogan about product design? A) Products should incorporate verbal design elements. B) Products must be "profound." C) Products should have intuitive designs that customers will integrate into their lifestyles. D) Products should inspire conversation and reflection. E) Products should reflect the meaning of the Samsung name (which means "three stars" in Korean). Answer: C Diff: 3 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 34) If engineers from Harley-Davidson observe riders at one of the major motorcycle events such as the annual rally in Sturgis, South Dakota, or European Bike Week to find out how riders use various product features, they are engaging in as part of the observation phase of design thinking. A) ethnography B) consumer spying C) on-site probing D) interviewing E) statistical research Answer: A Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 9

35) Italy is particularly noted in the chapter for leading designs in the areas of A) textiles B) apparel and furniture C) traditional kitchenware D) computers E) candy Answer: B Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking

36) Design is the totality of features that affect the way consumers perceive a product's look, feel, and . A) weight B) function C) color D) texture E) price Answer: B Diff: 1 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 37) Design offers functional and aesthetic benefits and appeals to both our emotional sides. A) personal B) social C) rational D) tactile E) performative Answer: C Diff: 1 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking

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38) The Danish consumer electronics firm Bang & Olufsen (B&O) is particularly noted for its product . A) design B) pricing C) strategy D) durability E) reliability Answer: A Diff: 1 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 10

39) A key reason that Oxo kitchen implements have become so popular is that they are . A) pleasurable to use B) cheap but long-lasting C) cool and stylish D) colorful E) unique in their function Answer: A Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 40) Design thinking is a data-driven approach with three phases: observation, implementation. A) engineering B) planning C) ideation D) brainstorming E) imagineering Answer: C Diff: 3 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking

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41) In our culture, transmitting brand meaning and positioning through design is critical. A) celebrity-driven B) consumerist C) affluent D) visually oriented E) divided Answer: D Diff: 3 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 42) Effective product design appeals to both the rational and emotional sides of consumers' brains. Answer: TRUE Diff: 1 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking

43) Design thinking is an intuitive, "gut feel" approach that doesn't rely on data to make choices about form and style. Answer: FALSE Diff: 1 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 44) Design thinking requires intensive ethnographic studies of consumers, creative brainstorming sessions, and collaborative teamwork to decide how to bring the design idea to reality. Answer: TRUE Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 45) What are some design choices an automaker might make if it adopted Oxo's "incremental improvement" philosophy? Answer: (Student answers will vary.) Any changes that are adaptations, improvements, or extensions of existing car features and functions would qualify as incremental improvements. For example, improving the mileage of a gasoline engine by 10 percent would quality as an incremental improvement, as opposed to replacing the gas engine with a fuel cell motor or something equally dramatic. Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 46) What are the three stages of design thinking? Answer: The three stages are (1) observation to see how people use or would potentially use a product, (2) ideation to come up with new products or new capabilities for existing products to meet user needs more successfully, and (3) implementation to design and launch the new or improved products. Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking

47) Marketers are generally advised to study consumer needs and opinions closely when designing new products, but Bang & Olufsen trusts its designers to follow their own instincts rather than relying on consumer input. How can this unconventional approach work for the company? Answer: A key challenge with designing products based on how users describe what they want is that users often can't see beyond the products they already have in order to imagine entirely new capabilities or new ways of doing things. Particularly in the case of a company such as B&O, whose products are known for their unique and distinctive designs, trusting the talent, training, and instincts of professional designers is more likely to meet the goal of designing products that stand apart from everything else on the market. This isn't to say these products ignore user needs, to be sure. B&O audio equipment, for example, meets the functional needs of consumers. It just does so with unconventional style that probably wouldn't emerge from a consensus- or research-driven approach. Diff: 3 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 48) Why is emotion such an important consideration in product design? Answer: Smart marketers know that consumers (and business buyers to an extent) don't rely solely on logic to make purchase decisions. How a product contributes to their emotional well-being is essential. In many categories, the functional capabilities of the product can be expressed in a variety of forms and styles that evoke different emotions. For instance, you can buy a computer mouse with a Hello Kitty design or one with Razer's three-headed snake design—the products perform the same basic function but evoke decidedly different emotions. Even with something as mundane as dish soap, Method Products demonstrated that attractive packages that add a "designer touch" to the kitchen appeal to consumers at an emotional level because people want to feel good about the environment in which they live. Diff: 3 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking 49) What is the significance of design for a company's products and services? Answer: Design offers a potent way to differentiate and position a company's products and services. Design is the totality of features that affect how a product looks, feels, and functions to a consumer. Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides, is often the only way to stand out in a crowded market segment, and can shift consumer perceptions to make brand experiences more rewarding. Diff: 2 LO: 8.2: Explain the role of product design in differentiating market offerings. AACSB: Reflective thinking

50) A(n) encompasses all products offered by a company, including various product categories and product lines. A) offering B) marketing offering C) marketing mix D) product portfolio E) product map Answer: D Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 51) Ford Motor Company has business units that make the Ford and Lincoln brand vehicles, develop self-driving vehicles, and provide leasing and financing services. Together, all these offerings make up its . A) product portfolio B) market offering C) business model D) product map E) product plan Answer: A Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 52) Which of these is NOT one of the four dimensions of a product portfolio? A) Width B) Length C) Complexity D) Consistency E) Depth Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 53) Assume a sporting goods company has four product lines with 12, 12, 24, and 48 individual products. What is the average length of its product lines? A) 12 B) 24 C) 96 D) 48 E) 16 Answer: B Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 14

54) If Nordstrom began offering office furnishings in addition to its various clothing and shoe lines, this would be an instance of increasing the and decreasing the of its product portfolio. A) length; consistency B) width; consistency C) length; depth D) consistency; length E) width; length Answer: B Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 55) Companies seeking high generally carry longer product lines. A) market share and market growth B) profitability C) market visibility D) ROI on R&D investments E) consistency Answer: A Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 56) Companies emphasizing high carry shorter lines consisting of carefully chosen items. A) market share and market growth B) profitability C) market visibility D) ROI on R&D investments E) consistency Answer: B Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

57) Electrolux sells household appliances such as refrigerators, dishwashers, and vacuum cleaners under different brand names in the discount, middle-market, and premium segments, in part as a(n) against the economy moving up or down. A) competitive blocking tactic B) customer capture tactic C) hedge D) up-sell strategy E) down-sell strategy Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 58) Companies often plan improvements in their product lines to encourage customer to higher-value, higher-priced items. A) default B) bias C) expansion D) up-stretching E) migration Answer: E Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 59) Hewlett-Packard's inclusion of complimentary products in its product portfolio, such as computers and printers, facilitates . A) up-selling B) down-selling C) customer capture D) cross-selling E) product giveaways Answer: D Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 60) To re-energize sales in the wake of a recession, Crocs decided to its product line. A) trim B) consolidate C) diversify D) unify E) eliminate Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 16

61) Gap's decision to launch the Old Navy brand was an example of a(n) _ . A) down-market stretch B) up-market stretch C) two-way stretch D) cross-selling E) line consolidation Answer: A Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 62) If Apple decided to introduce a "mid-plus" iPad to address consumer demand for a tablet that was bigger than the normal iPad but not as expensive as the large iPad Pro, this would be an example of . A) an up-market stretch B) an interior stretch C) line filling D) a down-market stretch E) a two-way stretch Answer: C Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 63) When companies design in a product line "path" for consumers to follow when they are ready for more sophisticated products, this is known as having a(n) strategy. A) migration B) mitigation C) customer capture D) up-selling E) down-selling Answer: A Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

64) Why did Honda, Nissan, and Toyota create new and unrelated brand names when they launched luxury vehicle lines? A) Consumers were confused about where these vehicles came from. B) The existing brand names faced trademark battles in several regions. C) The existing brand names didn't translate well for a global market. D) Consumers were tired of the old brand names. E) Consumers might not have given the brand "permission" to stretch upward. Answer: E Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 65) If Toyota decided to launch an entirely new line of cars that were somewhat more luxurious than the current Toyota range but not as expensive as the Lexus line, this would be an example of . A) line filling B) an interior stretch C) an up-market stretch D) a down-market stretch E) a two-way stretch Answer: A Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 66) BMW's strategy of having the MINI Cooper line and the BMW 1-series gives it a clear in the event buyers of these cars are ready to move up to a more expensive BMW model. A) down stretch B) line-filling plan C) migration strategy D) defensive position E) two-way stretch Answer: C Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

67) Ford's infamous Edsel flop was an example of a(n) move that didn't work out. A) line filling B) up-market stretch C) down-market stretch D) cross-selling E) two-way stretch Answer: A Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 68) P&G's decision to expand its Charmin line with the Charmin Basic product was an example of a(n) . A) line filling B) up-market stretch C) down-market stretch D) cross-selling E) two-way stretch Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 69) The visual tool that marketers can use to see all their competitors at a glance is a A) competitive landscape B) product plan C) product map D) market profile E) tactical map Answer: C Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 70) Selling salsa to customers who already buy your tortilla chips would be an example of . A) up-selling B) down-selling C) cross-selling D) line filling E) line expansion Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

71) Introducing a new product that winds up inadvertently taking sales away from an existing product is known as . A) cannibalization B) line filling C) line overlap D) line confusion E) down-stretching Answer: A Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 72) General Electric's GE Profile brand of large appliances was an example of A) an up-market stretch B) a down-market stretch C) line filling D) cannibalization E) cross-selling Answer: A Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

73) A food manufacturer's strawberry jam product portfolio has 17 variants, taking into account the various sizes and specific product formulations. This figure is a measure of . A) consistency B) depth C) intensity D) range E) width Answer: B Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 74) The of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. A) consistency B) depth C) width D) length E) composition Answer: A Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 20

75) The of the product mix refers to the total number of items in the mix. A) width B) length C) depth D) breadth E) range Answer: B Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 76) In offering a product line, companies normally develop a and modules that can be added to meet different customer requirements. A) convenience item B) flagship product C) staple item D) potential product E) basic platform Answer: E Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 77) The of a product mix refers to how many variants are offered of each product in the line. A) width B) length C) depth D) consistency E) height Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 78) Which of the following is a benefit of product mapping? A) Studying market matrices B) Integrating target markets C) Identifying market segments D) Educating consumers E) Integrating target matrices Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

79) What occurs when a company lengthens its product line beyond its current range? A) Market overreach B) Brand dilution C) Product adaptations D) Cannibalization E) Line stretching Answer: E Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 80) A company positioned in the "middle" market introduces a lower-priced product line. What type of line-stretching is this? A) Home stretch B) Up-market stretch C) Down-market stretch D) Maintenance stretch E) Two-way stretch Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 81) Moving down-market carries risks that include the core brand's quality image and cannibalizing sales of the core brand. A) erasing B) confusing C) eliminating D) diluting E) replacing Answer: D Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 82) A manufacturer of hiking boots experiences long-time decline in its premium line of "serious hiker" boots and decides to enter the low-price arena with new offerings. This is an example of using a(n) to reach a new market. A) down-market stretch B) up-market stretch C) two-way stretch D) marketing research E) disintermediation Answer: A Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 22

83) Marriott Corporation now contains hotels and motels from the "budget" end of the consumer spectrum to the "premium" end with their JD Marriott flagship locations. This is an example of a firm that successfully performed a(n) to reach more consumers and ventures that are more profitable. A) upstream integration B) two-way stretch C) up-market stretch D) down-market stretch E) downstream integration Answer: B Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 84) If line filling is overdone, it could result in and customer confusion. A) sales paralysis B) manufacturing inefficiencies C) cannibalization D) disintermediation E) ineffective management Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 85) When Mercedes successfully introduced its C-Class cars at $30,000 without injuring its ability to sell other Mercedes cars for $100,000, it was an example of a successful . A) two-way stretch B) line pruning C) down-market stretch D) up-market stretch E) choice reduction Answer: C Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 86) The width of the product portfolio reflects how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Answer: FALSE Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

87) Line filling means to add more products within an existing product range. Answer: TRUE Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 88) The product-line length can be obtained by averaging the number of variants within the brand groups. Answer: FALSE Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 89) Companies in the "middle market" should never attempt to stretch their line in both directions. Answer: FALSE Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 90) If the variants within the Tide product under P&G's detergent line included Tide with Acti-Lift, Tide Plus Febreze Freshness Sport, Tide Plus Febreze, Tide Free, Tide Plus Downy, Tide Coldwater, Tide TOTALCARE, and Tide Free for Coldwater, and all were available in Pods, Liquids, Liquids for HE machines, and Powder formats, the width of the product mix would be 32 because there would be 32 distinct variants. Answer: FALSE Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Application of knowledge 91) Identify the four dimensions of the product portfolio. Answer: The four dimensions are width (number of different product lines), length (total number of items in the product mix), depth (number of variants for each product), and consistency (how closely the various products are related). Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 92) What is the definition of a product line? Answer: A product line is a group of related products sold by the same company. Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking

93) Why might a company decide not to use an existing brand name for either a down-market stretch or an up-market stretch? Answer: For a down-market stretch, the company might want to avoid diluting the existing brand name by associating it with a lower-cost product. For an up-market stretch, it might conclude that the existing brand name will hold back its aspirations to go up-market because customers associated it too strongly with the middle market. Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 94) The Mercedes C-Class launch was a successful example of what type of line stretch? Answer: The C-Class was a successful down-market stretch; the company was able to introduce these relatively inexpensive models without impacting sales of its higher-end models. Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 95) Describe the symptoms of a line filing effort that was overdone or ill-advised. Answer: Line filling is overdone if it results in cannibalization, causes confusion, or merely does not address the needs of any customer segment. Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 96) In the case of Honda's, Nissan's, and Toyota's introduction of luxury lines, what does the chapter mean by consumers potentially not giving the companies "permission" to use their existing brand names for these more up-market offerings? Answer: "Permission" in this case refers to customers not accepting the concept of luxury offerings from companies that were well-known for solidly middle-market cars. While all three companies were well-regarded for the quality of their cars, each firm determined that customers wouldn't accept the idea that they were capable of offering cars on a par with BMW, Mercedes, and other up-market brands. Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 97) Explain the concepts of product-mix width, length, depth, and consistency. Answer: The width of a product mix refers to how many different product lines the company carries. The length of a product mix refers to the total number of items in the mix. The depth of a product mix refers to how many variants are offered of each product in the line and is determined by dividing the total number of items by the number of lines. The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Diff: 3 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 25

98) Explain the concept of line stretching and the three uses for it. Answer: Line stretching occurs when a company lengthens its product line beyond its current range. It includes down-market stretch (introduce a lower-priced line), up-market stretch (introduce an upscale line), or two-way stretch (introduce both an upscale line and a down-scale line). Diff: 2 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Reflective thinking 99) A shoe company plans to add two additional models to its existing mid-range offerings. The first pair will retail for $40 and has as its target market the "bargain" shopper. The second pair will retail for $200 and is targeted at the "sophisticated shopper." In relation to product-line strategy, what is the company trying to accomplish with these two new items? Answer: This is an example of the company trying a "two-way stretch," introducing products at both ends of the consumer market simultaneously. Diff: 1 LO: 8.3: Discuss the key aspects of designing product portfolios and product lines. AACSB: Analytical thinking 100) How many products does a supermarket shopper typically pass by every minute? A) 30 B) 300 C) 900 D) 1,200 E) 1,500 Answer: B Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 101) If you wanted to connote friendliness and fun, combining both energy and warmth, you would do well to choose as the primary color in a product's packaging. A) orange B) red C) yellow D) blue E) green Answer: A Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking

102) Which of these colors is most closely associated with dependability, trust, competence, and integrity? A) Orange B) Red C) Yellow D) Blue E) Green Answer: D Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 103) Which of these colors is frequently used to convey excitement, energy, passion, courage, and boldness? A) Orange B) Red C) Yellow D) Blue E) Green Answer: B Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 104) Which of these colors symbolizes nobility, wealth, and wisdom? A) Orange B) Red C) Yellow D) Purple E) Green Answer: D Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 105) To ensure that packaging will stand up under normal conditions, companies conduct after the packaging has been designed. A) dealer tests B) engineering tests C) consumer tests D) visual tests E) buyer tests Answer: B Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 27

106) Why did consumers reject an environmentally friendly new packaging material for Frito-Lay's Sun Chips snacks? A) It was too noisy. B) It was too flimsy. C) The printing came off in their hands. D) They thought the design was ugly. E) The bags exploded in sunshine. Answer: A Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 107) Which of these is NOT a typical function of product labeling? A) Identifying the product or brand B) Grading the product C) Describing the product D) Discussing the company E) Promoting the project Answer: D Diff: 1 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 108) In the United States, the requires processed-food producers to include nutritional labeling. A) Consumer Products Safety Commission B) Department of Agriculture C) Food and Drug Administration D) Department of Education E) Bureau of Product Information Answer: C Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Application of knowledge 109) In 1914, the U.S. Federal Trade Commission Act held that false, misleading, or deceptive labels or packages . A) were protected free speech B) were not protected free speech C) were acceptable "puffery" D) did not fall under government purview E) constitute unfair competition Answer: E Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Application of knowledge 28

110) Which of these risks did Tropicana discover when it redesigned its orange juice packaging? A) Competitors will steal good design ideas. B) Changing an iconic package can confuse consumers. C) People interpret color in different ways. D) Most consumers don't read package labels. E) Retailers will drop products with confusing labels. Answer: B Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Analytical thinking 111) Which of these companies is defined in the eyes of many consumers by its iconic blue box? A) Tiffany's B) Kay Jewelers C) Blue Nile D) Apple E) Dell Answer: A Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 112) Which of these is NOT an aesthetic consideration in packaging design? A) Size and shape B) Material C) Color D) Graphics E) Weight Answer: E Diff: 1 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 113) Which parcel delivery service's branding strategy is intimately associated with the color brown? A) FedEx B) DHL C) UPS D) USPS E) Prime Answer: C Diff: 1 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking

114) How did Kiwi Express Shine shoe polish create a consumer benefit through packaging? A) The package is the product dispenser, simplifying the process of shining shoes. B) The package can keep the product viscous and usable for up to 20 years. C) The package protects the polish from fading due to sunlight. D) The package makes it easy to stack multiple bottles of polish. E) The package makes it easy to distinguish difference shades of polish. Answer: A Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Analytical thinking 115) How has consumer affluence contributed to the increased importance of packaging in consumer markets? A) Affluent consumers refuse to buy products associated with lower socioeconomic status. B) Affluent consumers are better attuned to design nuances such as typeface and color palettes. C) Affluent consumers are willing to pay more for the convenience, appearance, dependability, and prestige of better packaging. D) Affluent consumers reject old-fashioned designs. E) Affluent consumers demand authenticity. Answer: C Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 116) After months of tinkering, your product development lab has perfected a way to infuse pancake batter with kale and spinach without significantly altering the taste. You know parents will be delighted at finding a new way to sneak healthy vegetables into their children's diets. Now you need a package design that jumps off crowded grocery store shelves so parents can find it when they shop. Given the nature of the innovation, which of these highlight colors would be the most logical choice? A) Red B) Green C) Blue D) Orange E) Purple Answer: B Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Analytical thinking

117) We define packaging as all the activities of designing and producing the container for a product. This includes up to three levels of material: primary package, secondary package, and package. A) retailer B) design C) shipping D) consumer E) supplier Answer: C Diff: 1 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 118) Which of the following factors is one of the contributors to the growing use of packaging as a marketing tool? A) Consumption aid B) Consumer affluence C) Consumer influence D) Conformance qualities E) Brand identification Answer: B Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 119) Color carries different meanings in different cultures and market segments. Answer: TRUE Diff: 1 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 120) Today's consumers universally embrace environmentally friendly packaging. Answer: FALSE Diff: 1 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 121) Packaging includes the activities of designing and producing a container for a product. Answer: TRUE Diff: 1 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking

122) Why do governmental regulators need to get involved in the use of labeling terms such as "low fat" and "light"? Answer: Without transparent, agree-upon standards for what these terms mean, they can be extremely misleading. Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 123) What labeling requirements does the U.S. the Food and Drug Administration (FDA) place on the makers of processed foods? Answer: The FDA requires processed-food producers to include nutritional labeling that clearly states the amounts of protein, fat, carbohydrates, and calories contained in products, as well as vitamin and mineral content as a percentage of the recommended daily allowance. Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 124) What do we mean when we say that packaging can have a "billboard" effect in the retail environment? Answer: Shoppers are visually overwhelmed in the typical store interior, particularly in drug stores and grocery stores, where thousands of products can be on display. An eye-catching package design sitting on the shelf can have much the same effect on shoppers as highway billboards can have in catching the attention of passing drivers. Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 125) How can colors be "loaded with meaning" if those meanings are inconsistent and can vary from culture to culture? Answer: The meanings of color tend to be consistent within a culture, but there is no universal requirement that they convey those same meanings around the world. A good example is the use of green to represent money. This works in the United States, where paper money is in fact green, but it makes little sense in countries whose paper currencies aren't green. Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 126) Why is packaging considered a "five-second commercial" for a product? Answer: Packaging is important because it is the buyer's first encounter with the product. A good package draws the consumer in and encourages product choice in the same way that advertising can. Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking

127) Various factors have contributed to the increased importance of packaging as a marketing tool. List and briefly describe these factors. Answer: • Self-service — an increasing number of products are being sold without any personal interaction, on a self-service basis. • Consumer affluence — rising consumer affluence means consumers are willing to pay a little more for convenience, appearance, dependability, and prestige of better packages. • Company and brand image — packages contribute to instant recognition of the company or brand. • Innovation opportunity — innovative packaging can bring large benefits to consumers and profits to producers. Diff: 3 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking 128) Your research shows that over 60 percent of purchases in your company's target segments are made on impulse. As you sit down with your packaging design team, list the sales tasks that packaging must now perform due to the increase in self-service sales. Answer: These tasks are to attract attention, describe the product's features, create consumer confidence, and make a favorable overall impression. Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Application of knowledge 129) In discussions with your packaging design team, you note that they do not have a firm design objective for the final package. In a memo to your boss, outline the objectives (both company and consumer oriented) that you wish to see implemented by the design team. Answer: The objectives of packaging are to identify the brand; convey descriptive and persuasive information; facilitate product transportation, protection, and storage; and aid product consumption. Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Analytical thinking 130) List the functions that can be provided by a product's label. Answer: A label identifies the product, and it might grade, describe, and promote the product. depending on the product category, a label may also contain information required by law. Diff: 2 LO: 8.4: Describe the key decisions involved in managing product packaging. AACSB: Reflective thinking

131) Which of these is NOT a way in which guarantees are beneficial to the company that provides them? A) Providing some leeway in meeting quality assurances B) Intensifying focus on the customer experience C) Establishing accountability D) Expediting development of performance standards E) Providing guidelines for recovering from failure Answer: A Diff: 1 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 132) usually cover the repair or replacement of the purchased item and usually do not allow the customer to return the product for a refund. A) Guarantees B) Warranties C) Terms of service D) Operating contracts E) Performance promises Answer: B Diff: 1 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Application of knowledge 133) Whereas are always provided free of charge and require no additional payment from customers, extended are available to increase the coverage that comes with the product. A) guarantees; warranties B) warranties; guarantees C) guarantees; performance stipulations D) terms of service; warranties E) performance promises; warranties Answer: A Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking

134) In addition to assuring buyers about product quality, Hyundai's and Kia's 10-year/100,000-mile warranty programs _. A) assured buyers of the stability of the companies B) matched the terms offered by other car companies C) were designed to encourage 10-year car ownership D) promoted the stylish design of the companies' cars E) had little impact on sales Answer: A Diff: 3 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 135) A(n) guarantee applies to a particular aspect of the product, such as performance, reliability, or durability. A) limited liability B) limited coverage C) specific attribute D) parts and service E) overall satisfaction Answer: C Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 136) If a headphone manufacturer guaranteed the durability of its products for one year but made no promises relating to audio performance, this would constitute a(n) guarantee. A) limited liability B) limited coverage C) parts and service D) specific attribute E) overall satisfaction Answer: D Diff: 3 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Analytical thinking 137) A(n) guarantee that applies to any facet of the product experience, whether it involves the actual quality of the product or the customer's assessment of product quality. A) limited liability B) limited coverage C) parts and service D) specific attribute E) overall satisfaction Answer: E Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 35

138) By allowing customers to return a writing instrument for any reason at any time, A.T. Cross is providing a(n) guarantee. A) overall satisfaction B) unlimited coverage C) parts and service D) specific attribute E) unlimited liability Answer: A Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Analytical thinking 139) A(n) , which is always provided free of charge, ensures that if a product fails to function as promised by the company or as customers expect, the company will provide some type of compensation to the purchaser. A) warranty B) guarantee C) extended warranty D) performance promise E) unlimited usage warranty Answer: B Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 140) Effective product guarantees and warranties need to be relevant, easily understood, and . A) free B) expressed in less than one page C) available in multiple media formats D) easy for the customer to invoke E) on display in the store Answer: D Diff: 1 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking

141) If the guarantee for a hammer covered the steel head and the fiberglass handle, neither of which tend to break, but not the joint where the handle connects to the head, which is much more prone to breaking, it would fail which of the criteria for effective product guarantees and warranties? A) Being easy to understand B) Being relevant C) Being easy to invoke D) Being available to read before purchase E) Being worth the added cost Answer: B Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Analytical thinking 142) How might an excessive number of limitations and exclusions cause a warranty to fail the test of effective guarantees and warranties? A) By making the warranty harder to understand B) By making the warranty harder to invoke C) By making the warranty harder to understand and to invoke D) By making the warranty more expensive to buy E) By making the warranty sound less impressive Answer: C Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 143) Why might a new entrant in a market segment decide to offer extremely generous guarantee or warranty terms, even to the point of foregoing profits to do so? A) To overcome the fact that it is unknown to buyers B) To convince buyers that other companies' products are unreliable C) To underprice the competition D) To get the attention of retailers E) To prevent third-party services from getting repair business Answer: A Diff: 3 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Analytical thinking

144) Guarantees are most effective in two situations. The first is when the company or products are not well known. The second is when the product's quality is competition. A) not known to B) different from C) inferior to D) equivalent to E) superior to Answer: E Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 145) Guarantees and warrantees are legally identical. Answer: FALSE Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 146) Extended warranties and service contracts can be extremely lucrative for manufacturers and retailers. Answer: TRUE Diff: 1 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Application of knowledge 147) Guarantees are most effective when the product is well known and/or similar in performance to other brands in the market. Answer: FALSE Diff: 1 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 148) Explain how warranties can be a source of profits for companies. Answer: Many companies sell extended warranty contracts that add additional time to the base warranty that comes with the products. Although these extended warranties can be of dubious value to customers, they do provide some peace of mind. Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 149) What two conclusions might potential buyers reach if a product they are considering has much weaker warranty coverage than products from other suppliers? Answer: Buyers could conclude that (a) the product is less reliable and/or (b) the company providing it is less stable than the other suppliers. Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking 38

150) What are the situations in which guarantees and warranties are most effective? Answer: Guarantees are most effective when either the company or the product is not well known, so a "money-back" guarantee in that case would reduce the buyer's perceived risk and provide them with confidence in purchasing the product. The second area is when the product/service is superior to competition in quality and performance. Diff: 2 LO: 8.5: Explain how companies design and manage product guarantees and warranties. AACSB: Reflective thinking

Chapter 9 Designing and Managing Services 1) Services high in qualities have characteristics that the buyer can evaluate before purchase. A) privacy B) experience C) credence D) search E) stock Answer: D Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 2) Which of the following is a characteristic of a service? A) The service is essentially tangible. B) The service does not result in the ownership of anything. C) The service's production is majorly tied to a physical product. D) Services are typically produced and consumed at different times. E) A client's presence is not required for rendering a service. Answer: B Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 3) Which of the following is an example of a pure tangible good? A) Massage B) Shampoo C) E-mail D) Restaurant meal E) Air travel Answer: B Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 4) To which of the following categories of services does a cell phone belong? A) Major service with accompanying minor services B) Major service with accompanying minor goods C) Pure service D) Pure tangible good E) Tangible good with accompanying services Answer: E Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 1

5) A computer falls into the category of service mix. A) pure tangible good B) tangible good with accompanying services C) hybrid D) major service with accompanying minor goods E) pure service Answer: B Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 6) Which of the following is an example of a hybrid service? A) Teaching B) Car C) Restaurant meal D) Soap E) Air travel Answer: C Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 7) A flight with complementary drinks is an example of a A) major service with accompanying minor goods and services B) pure service C) pure tangible good D) tangible good with accompanying services E) hybrid Answer: A Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 8) Which of the following is an example of a pure service? A) Air travel B) Psychotherapy C) Baby oil D) A laptop E) A restaurant meal Answer: B Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge

9) Which of the following is true for services? A) All services are people-based, while goods are equipment-based. B) Service providers can be either for-profit or nonprofit. C) All service companies follow the same process to deliver their services. D) The client's presence is a hindrance during the service delivery process. E) Service providers develop similar marketing programs for personal services and business services. Answer: B Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 10) When banks try to make their positioning strategies tangible through the dimension, they make sure the exterior and interior have clean lines, the layout of the desks and the traffic flow are planned carefully, and waiting lines are not overly long. A) people B) symbols C) equipment D) place E) communication material Answer: D Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 11) Some services require that the client be present to conduct the service. Which of the following is an example of such a service? A) Pest control B) Furniture polishing C) Surgery D) Car repairing E) Tax services Answer: C Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge

12) Services high in qualities have characteristics that the buyer can evaluate after purchase. A) privacy B) experience C) credence D) search E) stock Answer: B Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 13) Services high in qualities are those services that have characteristics the buyer normally finds hard to evaluate even after consumption. A) trial B) search C) experience D) privacy E) credence Answer: E Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 14) Which one of the following would be considered high in credence qualities? A) An interior of a house B) A restaurant C) A haircut D) Psychotherapy E) A computer Answer: D Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 15) Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought. This is known as the aspect of services. A) inseparability B) intangibility C) variability D) perishability E) heterogeneity Answer: B Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 4

16) Which of the following will most help service providers overcome the limitation of intangibility of services when positioning itself? A) Using brand symbols B) Sharing services C) Working with larger groups D) Cultivating nonpeak demand E) Creating a service blueprint Answer: A Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 17) refer(s) to logos, symbols, characters, and slogans that service providers use in order to make the service and its key benefits more tangible. A) Brand engagement B) Brand orientation C) Brand elements D) Brand loyalty E) Brand equity Answer: C Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 18) Which of the following is true regarding services? A) Services are typically produced, stored, and then consumed. B) Services are generally low in experience and credence qualities. C) Service providers develop similar marketing programs for personal services and business services. D) There is less risk associated with the purchase of services than with the purchase of goods. E) Provider-client interaction is a special feature of services marketing. Answer: E Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 19) The fact that services are typically produced and consumed simultaneously is known as the aspect of services. A) perishability B) intangibility C) heterogeneity D) inseparability E) variability Answer: D Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 5

20) Service quality depends on who provides them, when and where they are provided, and to whom they are provided. Thus, services are highly . A) inseparable B) tangible C) variable D) perishable E) intangible Answer: C Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 21) Which of the following will help a service provider overcome the challenges imposed by the inseparability of services? A) Using differential pricing B) Working with larger customer groups C) Providing complementary services D) Concentrating on physical evidence and presentation E) Standardizing the service process Answer: B Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 22) Which of the following steps will help service firms to increase their quality control? A) Standardizing the service-performance process B) Providing complementary services to customers C) Giving personnel authority in handling situations D) Adopting differential pricing E) Cultivating nonpeak demand Answer: A Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 23) In order to map out the service process, the points of customer contact, and the evidence of service from the customer's point of view, service firms should develop a . A) marketing plan B) service floor plan C) Gantt chart D) business plan E) service blueprint Answer: E Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 6

24) Jake had an appointment at the doctor's office, but couldn't make it on time due to traffic. By the time he arrived, the doctor had already begun with the next patient. This illustrates the of services. A) variability B) heterogeneity C) perishability D) intangibility E) homogeneity Answer: C Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 25) When a theater sells matinee movie tickets at low prices, it aims to shift some demand from the peak to the off-peak period. What is the strategy that the theater is said to be adopting? A) It is providing complementary services. B) It is increasing peak-time efficiency. C) It is using linear pricing. D) It is using differential pricing. E) It is sharing services. Answer: D Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 26) A car rental agency offers weekend discounts for car rentals. What can be deduced from this? A) It is increasing peak-time efficiency. B) It is using differential pricing. C) It is using linear pricing. D) It is cultivating peak demand. E) It is providing complementary services. Answer: B Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking

27) In which of the following cases is a service provider trying to increase nonpeak demand? A) A fine dining restaurant is promoting a breakfast service in addition to its popular lunch and dinner options. B) An upscale restaurant has a cocktail lounge where customers can wait until a table is ready. C) AXA Bank set up automated teller machines so that its customers could avoid standing in line. D) Chesterton College hired part-time teachers as enrollment increased significantly. E) Big department stores usually hire extra staff to handle the rush during the holiday season. Answer: A Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 28) The Caesar Park Hotel generally caters to business customers during the week, but has now decided to promote mini-vacation weekends for non-business customers as well. What is the Caesar Park Hotel trying to do? A) It is implementing premium pricing. B) It is trying to cultivate nonpeak demand. C) It is promoting complementary services. D) It is putting reservation systems in place. E) It is implementing differential pricing. Answer: B Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 29) Cocktail lounges in restaurants are examples of A) differential pricing B) cultivating nonpeak demand C) complementary services D) reservation systems E) shared services Answer: C Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking

30) Which of the following is an example of a complementary service? A) Big department stores usually hire extra staff to handle the rush during the holiday season. B) The Caesar Park Hotel generally caters to business customers during the week, but has now decided to promote mini-vacation weekends for non-business customers as well. C) More paramedics are on hand to assist physicians during times when emergency admissions are highest. D) AXA Bank set up automated teller machines so that its customers could avoid standing in line. E) Chesterton College hires part-time teachers when enrollment goes up. Answer: D Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 31) Walmart has decided to hire extra clerks during the holiday season. It is said to be A) matching its supply with the existing demand B) generating nonpeak demand C) increasing its customer participation D) sharing its services E) facilitating for its future expansion Answer: A Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 32) Kaya, a chain of skincare clinics, requests each new visitor to fill in their own details on a touchscreen tablet. This is a step in . A) increasing its peak-time efficiency B) creating nonpeak demand C) increasing consumer participation D) sharing its services E) facilitating its future expansions Answer: C Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Analytical thinking 33) A service is essentially intangible. Answer: TRUE Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking

34) A service results in ownership on the part of the client. Answer: FALSE Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 35) Soap is an example of a pure tangible good. Answer: TRUE Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 36) Salt is an example of a hybrid offering. Answer: FALSE Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 37) A hybrid offering consists of unequal parts of goods and services, with services being in the majority. Answer: FALSE Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 38) A pure service requires a capital-intensive good, but the primary item is a service. Answer: FALSE Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 39) All services require the client to be present. Answer: FALSE Diff: 1 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 40) Intangibility with regards to a service means that the service cannot be duplicated across providers. Answer: FALSE Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking

41) Inseparability in the context of a service means that there is a provider-client interaction involved as the provider is part of the service. Answer: TRUE Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 42) A service provider may try to work with larger groups of customers to get around the challenges of inseparability. Answer: TRUE Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 43) List and briefly explain with examples the five categories of service offerings. Answer: The five categories of service offerings are: 1. Pure tangible goods: These are tangible goods with no accompanying services. For example, soap or toothpaste. 2. Tangible good with accompanying services: The tangible good is accompanied by one or more services. Typically, the more technologically advanced the product, the greater the need for high-quality supporting services. For instance, car or computer. 3. Hybrid: It is an offering of equal parts goods and services. For example, a meal in a restaurant. 4. Major service with accompanying minor goods and services: This offering requires a capital-intensive good, but the primary item is a service. For instance, an air travel that is accompanied by snacks and drinks. 5. Pure service: This refers primarily to an intangible service. For example, psychotherapy or massage. Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking

44) List and briefly explain the four distinctive characteristics of services. Answer: The four distinctive service characteristics that greatly affect the design of marketing programs are: 1. Intangibility: Services cannot be seen, tasted, felt, heard, or smelled before they are bought. To reduce uncertainty, buyers will look for evidence of quality by drawing inferences from the place, people, equipment, communication material, symbols, and price. 2. Inseparability: Services are typically produced and consumed simultaneously. Both the provider and the client are a part of the service. 3. Variability: Because services depend on who provides them and when and where, and to whom, services are highly variable. Service buyers are aware of this variability and often talk to others before selecting a service provider. 4. Perishability: Services cannot be stored, so their perishability can be a problem when demand fluctuates. That is why public transportation companies must own much more equipment because of rush-hour demand than if demand were even throughout the day. Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 45) List three steps that service firms can take to increase quality control over services and reduce variability. Answer: Three steps that service firms can take to increase quality control and reduce variability in services are: 1. Invest in good hiring and training procedures: Recruiting the right employees and providing them with excellent training is crucial, regardless of whether employees are highly skilled professionals or low-skilled workers. Better-trained personnel exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness, and communication. 2. Standardize the service-performance process throughout the organization: A service blueprint maps out the service process, the points of customer contact, and the evidence of service from the customer's point of view. 3. Monitor customer satisfaction: Service firms can employ suggestion and complaint systems, customer surveys, and comparison shopping. Customer needs vary in different areas. This allows firms to develop region-specific customer satisfaction programs. Firms can also develop customer information databases and systems for more personalized service, especially online. Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking

46) Several strategies exist for managing the supply and demand of services. List the strategies for managing each and give an example of each strategy. Answer: (Student answers will vary.) Several strategies can produce a better match between service demand and supply. On the demand side, these strategies include the following: • Differential pricing: This will shift some demand from peak to off-peak periods. For example, low matinee movie prices and weekend discounts for car rentals. • Nonpeak demand: This can be cultivated. For instance, McDonald's pushes its breakfast service, and hotels promote mini-vacation weekends. • Complementary services: These can provide alternatives to waiting customers. For example, cocktail lounges in restaurants and automated teller machines in banks. • Reservation systems: These are one of the many ways to manage the demand level. For instance, airlines, hotels, and physicians employ them extensively. On the supply side, these strategies include the following: • Part-time employees: They can serve peak demand. For example, colleges add part-time teachers when enrollment goes up and stores hire extra clerks during holiday periods. • Peak-time efficiency routines: These routines can allow employees to perform only essential tasks during peak periods. For instance, paramedics assist physicians during busy periods. • Increased consumer participation: This frees service providers' time. For example consumers can fill out their own medical records or bag their own groceries. • Shared services: These can improve offerings. For instance, several hospitals can share medical-equipment purchases. • Facilities for future expansion: This can be a good investment. For example, an amusement park can buy surrounding land for later development. Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Reflective thinking 47) There are five categories of service offerings depending upon whether or not the service component is minor or major. In which of the five categories would you place a haircut? Answer: A hair salon would be considered a pure service because the service provided by a hair salon is primarily intangible in nature. Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 48) Give an example of a pure service. Answer: (Student answers will vary.) Examples of a pure service include babysitting, psychotherapy, career counseling, or a massage. Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge

49) Bryson's is a mid-sized hotel chain that is entering a competitive market. The chain needs to differentiate its service from that of competitors, positioning itself as a hotel with excellent service at an affordable price. However, the intangible nature of services makes this difficult to demonstrate. How can Bryson's convey its message effectively to prospective guests using the place dimension of services marketing? Answer: (Student answers will vary.) Bryson's should try to demonstrate its service quality through physical evidence and presentation. The use of place centers around the hotels themselves, starting by designing the hotels to reflect its desired attributes. The hotel design should not be too ornate or fancy, but not too basic either. Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 50) In developing a service blueprint, The Flower Shop has outlined each step in the delivery process of the service it provides. Which characteristic of services is The Flower Shop attempting to minimize? Answer: By developing a service blueprint, the company is trying to reduce the variability of the service. Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 51) Fingerpainted organizes art camps and craft activities for children. The company has noticed that demand is highest during summer vacations and drops during the year. What can Fingerpainted do to attract customers at other times of year? Answer: (Student answers will vary.) Fingerpainted can use differential pricing to shift some demand from peak to nonpeak periods, pricing courses outside vacations lower than vacation courses. It can try to generate nonpeak demand by introducing specialized courses for weekends or a few evenings a week. Diff: 3 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge 52) Shonda's is a specialty bakery that sees a huge volume of orders during the holiday season. The owner knows that orders triple during the three-month period and the current staff cannot handle the volume. What supply strategy can the company use to handle the demand? Answer: Shonda's can employ people on contract just for the holiday season to help the company cope with the spike in demand. Diff: 2 LO: 9.1: Define the distinctive characteristics of services. AACSB: Application of knowledge

53) The Covid-19 pandemic accelerated the of services by forcing many companies to change course and adapt their businesses by integrating technology to fundamentally change how they deliver value to their customers. A) virtualization B) digital transformation C) socialization D) outsourcing E) insourcing Answer: B Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 54) Which of these is a true statement regarding the marketing prowess of service firms versus manufacturing firms? A) Because of the human element, service firms have always beat manufacturing in terms of marketing skill. B) Marketing has always been vital in the service sector but significantly less so in the manufacturing sector. C) Service firms once lagged behind manufacturers in terms of marketing skill, but some of the best marketers are now service firms. D) The two sectors have generally had comparable interest in and talent for marketing. E) It's impossible to judge the relative marketing skill of the two sectors. Answer: C Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 55) Which of these is NOT one of the recognized benefits that the internet and cloud computing bring to service delivery and customer relationships in the service sector? A) Eliminating service delivery errors B) True interactivity C) Customer-specific personalization D) Situational personalization E) Real-time adjustments of the firm's offerings Answer: A Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking

56) means seeing the world in general, and a company's services in particular, from the customer's point of view. A) Outbound marketing B) Customer-centricity C) Inbound marketing D) Customer service E) A service focus Answer: B Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 57) Which of the following is NOT one of the key tactics presented in the chapter for attracting and retaining top-quality customer service staff? A) Present customer service opportunities as a satisfying career rather than just a job B) Design sound training programs C) Use close supervision to ensure conformance quality D) Support employees E) Reward employees for good performance Answer: C Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 58) What does "customer citizenship" mean in a service context? A) Encouraging patriotism from customers B) Encouraging customers to help one another C) Making mutual loyalty part of the customer contract D) Discouraging customers from patronizing competitors E) Encouraging customers to take responsibility for service breakdowns Answer: B Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 59) The "Easy" program that Staples implemented to take the hassle out of ordering office supplies represented which type of solution to customer errors? A) Redesign processes and redefine customer roles to simplify service encounters. B) Incorporate the right technology to aid employees and customers. C) Create high-performance customers by enhancing the clarity of their role, their motivation, and their ability to perform their role. D) Encourage "customer citizenship" so customers will help one another. E) Offer discounts to customers who create fewer headaches for support staff. Answer: A Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 16

60) Service companies can create by enhancing the clarity of their role, their motivation, and their ability to perform their role. A) low-hassle customers B) high-performance customers C) more profitable customers D) less-frustrating customers E) low-risk customers Answer: B Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 61) Which of these is a frequent outcome of letting customers be more engaged in the service process? A) Customers believe they derive more value from the exchange. B) Customers can teach entry-level employees how to serve them better. C) Stress on employees is reduced. D) Employee satisfaction goes up thanks to working with more diverse customer mindsets. E) Customers quickly tire of being asked to participate. Answer: A Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 62) How does Delta Airlines' Delta Assist team help the company respond to the new era of customer empowerment? A) By monitoring social media and responding quickly to questions or complaints B) By monitoring social media to report disgruntled customers C) By using social media to replace the traditional call center D) By using social media to educate customers on how to be more successful travelers E) By using social media to "poach" unhappy customers of other airlines Answer: A Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking

63) Customers today want separate prices for each service element, and they also want the right to select the elements they want. Customers are said to be pressing for services. A) complementary B) perishable C) variable D) unbundled E) shared Answer: D Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 64) Often, a service problem arises from a customer's lack of understanding or ineptitude. Which of the following can help to minimize customer failures? A) Giving customers exclusive primary service packages B) Redesigning processes to simplify service encounters C) Using differential pricing and shared services D) Minimizing service intangibility E) Working with more customers at the same time Answer: B Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 65) Customers increasingly want unbundled services, with separate prices for each service element and the right to select the elements they want. Answer: TRUE Diff: 1 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 66) When golf courses provide rules for playing and behaving appropriately, and customers encourage other customers to follow the same rules, they are encouraging customer citizenship via customer coproduction. Answer: TRUE Diff: 1 LO: 9.2: Explain the new realities that service firms face. AACSB: Application of knowledge 67) An estimated one-third of all service failures are caused by customers. Answer: TRUE Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking

68) A person who has a bad customer experience is more likely to talk about it to some people, but someone who has a good experience will talk to more people. Answer: FALSE Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 69) What is a "high-performance customer"? Answer: A high-performance customer is one who has been adequately prepared for and motivated to excel in his or her role in the delivery of a service. Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 70) Describe the impact that digital technologies have had on customer empowerment in the service sector. Answer: Two major effects of the digital transformation are that (1) customers are becoming more sophisticated about buying product-support services and are pressing for "unbundled services" and the right to select the elements they want and (2) thanks to social media, customers now have a powerful voice when it comes to sharing good and bad experiences. Companies have been forced to respond by being more flexible and more responsive while increasing the quality of their offerings. Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 71) Discuss the challenge of attribution in service delivery. Answer: Preventing service failures is crucial because recovery is always challenging. One of the biggest problems is attribution. Customers often feel that the firm is at fault or that, even if it is not at fault, it is still responsible for righting any wrongs. Unfortunately, even though many firms have well-designed and well-executed procedures to deal with their own failures, they find managing customer failures—service problems arising from a customer's mistake or lack of understanding—much more difficult. Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 72) How is the growing shift toward self-service technologies expected to affect the percentage of service-delivery errors that are caused by customers? Answer: The growing shift to self-service technologies is likely to increase the percentage of problems caused by customers. Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking

73) What does customer coproduction mean, and what are its implications for service quality? Answer: Customers do not merely purchase and use a service; they play an active role in its delivery. Their words and actions affect the quality of their service experiences and those of others, as well as the productivity of frontline employees. Customers often believe they derive more value, and feel a stronger connection to the service provider, if they are actively engaged in the service process. This coproduction can put stress on employees, however, and reduce their satisfaction, especially if they do not share the same values, interests, or knowledge with their customers. Moreover, one study estimated that one-third of all service problems are caused by the customer, and the growing shift to self-service technologies is likely to increase this percentage. The implication of this phenomenon for service quality is that managers need to redesign processes, use technology to aid customers and employees, and take other steps to reduce the probability that customers can make mistakes. Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 74) Zappos competes in a fairly price-sensitive market (clothing and shoes) and could save money by outsourcing the customer-service function. Why has it chosen to keep this function in house? Answer: Customer service is one of Zappos's competitive strengths, part of its corporate culture, and a key element in its customer value proposition. As such, it is one of the firm's core competencies and thus considered too important to outsource. Diff: 3 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 75) Define customer failures and list four methods to tackle them. Answer: Customer failures refer to situations where service problems arise from a customer's lack of understanding or ineptitude. Some of the methods to solve such situations include the following: • Redesigning processes and redefining customer roles to simplify service encounters • Incorporating the right technology to aid employees and customers • Creating high-performance customers by enhancing their role clarity, motivation, and ability • Encouraging "customer citizenship" so that customers help customers Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 76) What are the four factors that employees who thrive in customer contact positions have an internal drive to do? Answer: They have an internal drive to pamper customers, accurately read customer needs, develop a personal relationship with customers, and to deliver quality service to solve customers' problems. Diff: 2 LO: 9.2: Explain the new realities that service firms face. AACSB: Reflective thinking 20

77) Which of these is a way that Singapore Airlines demonstrates customer-centricity? A) Letting customers participate in on-board services B) Promoting customer-centricity in its advertising C) Charging less for comparable flights D) Investing heavily in employee training so staff are better equipped to serve customers E) Encouraging customers to air grievances on social media as a way to keep the staff on its toes Answer: D Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 78) Which of these is NOT one of the identified best practices of top service companies? A) Customer-centricity B) Automation at every step of the customer journey C) Service quality D) Catering to high-value customers E) Managing customer complaints Answer: B Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 79) Delegating authority to frontline service employees helps to enhance _ A) internal marketing B) external marketing C) interactive marketing D) cross-functional marketing E) hands-off marketing Answer: C Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking

80) Frontline employees who , advocate the interests and enhance the image of the firm to consumers, and take the initiative to engage in conscientious behavior in dealing with customers can be a critical asset in handling complaints. A) pay for their own off-hours training B) treat all customers like their own mothers C) role play with customers D) adopt extra-role behaviors E) role play with colleagues Answer: D Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 21

81) Adopting extra-role behaviors to manage customer complaints refers to A) role playing with customers to imagine solutions B) going beyond one's job description to solve customer problems C) role playing with colleagues to test solution scenarios D) putting oneself in the customer's role E) rewriting one's job description to solve customer problems Answer: B Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking

82) On average, what percentage of customers who have a bad service experience will stop doing business with the company involved? A) 40 percent B) 10 percent C) 80 percent D) 90 percent E) 2 to 3 percent Answer: A Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge 83) According to the chapter, how have voice assistants such as Amazon's Alexa, Google Home, and Apple's Siri applied artificial intelligence to simplify product ordering? A) By predicting consumer preferences B) By eliminating the product selection stage C) By ordering products before customers know they need them D) By ordering products based on what similar customers have ordered E) By suggesting alternatives customers may not have considered Answer: A Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge

84) How did Baxter Healthcare simplify the ordering process for its hospital customers? A) By giving every hospital employee a clip-on, voice-activated ordering gadget they can wear on their scrubs B) By using AI to predict what each hospital needs and ordering it automatically C) By placing order takers in each facility to ask hospital staff each day what they need D) By supplying hospitals with computer terminals employees can use to send orders directly to the firm. E) By placing order takers in each facility to observe product usage and place refill orders as needed Answer: D Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge 85) Align Technology's use of digital scanning technology in measuring patients for its Invisalign dental braces was an effort to _. A) ease the ordering process B) sell more braces C) disintermediate orthodontists D) reduce the stigma of wearing braces E) make wearing braces cool Answer: A Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 86) Many firms now have that link the information systems of their suppliers, manufacturing plants, distribution centers, and retailing outlets to improve delivery. A) dedicated ordering teams B) third-party ordering services C) machine-learning systems D) internal Wi-Fi systems E) computerized quick-response systems Answer: E Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking

87) Gillette's BLADES text-response program and Amazon's Dash Wi-Fi devices are examples of companies trying to _ . A) make ordering easier B) get consumers to buy more than they really need C) outsource order processing D) add consulting services to product sales E) add training services to product sales Answer: A Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 88) To make private aviation accessible to a larger market of customers, NetJet pioneered . A) rent-to-own B) fractional ownership C) leaseback ownership D) maintenance-only contracts E) per-hour fares Answer: B Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 89) When a consumer orders a pair of shoes from Zappos but then returns them because they hurt his feet, this is an example of a(n) . A) controllable return B) uncontrollable return C) controlled loss D) anticipated return E) anticipated loss Answer: B Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Analytical thinking 90) What percentage of holiday purchases are returned by consumers, according to the estimate cited in the chapter? A) 1 to 2 percent B) 4 to 5 percent C) 10 to 15 percent D) 20 to 25 percent E) 40 to 50 percent Answer: C Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge 24

91) Which of these was NOT identified in the chapter as one of the main opportunities for differentiating services? A) Ease of ordering B) Staff reputation C) Installation, training, and consulting D) Speed and timing of delivery E) Maintenance and repair Answer: B Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 92) marketing refers to the normal work of preparing, pricing, distributing, and promoting the service to customers. A) Interactive B) Internal C) External D) Promotional E) Direct Answer: C Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 93) marketing refers to training and motivating employees to serve customers well. A) External B) Promotional C) Direct D) Internal E) Interactive Answer: D Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 94) marketing describes the employees' skill in serving the client. A) External B) Internal C) Promotional D) Direct E) Interactive Answer: E Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 25

95) Many firms have decided to raise fees and lower service for those customers who barely pay their way and to coddle big spenders to retain their patronage as long as possible. This is an example of organizing customers by . A) retailer convenience B) profit tiers C) psychographic characteristics D) social influence E) customer preference Answer: B Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 96) Charles Schwab's best customers are instantly directed to customer service representatives, while other customers have to wait longer. Charles Schwab is trying to . A) monitor its service systems B) empower the customers C) retain the patronage of its most profitable customers D) increase consumer participation E) standardize the service-performance process Answer: C Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge 97) rates the various elements of the service bundle and identifies required actions. A) Company performance analysis B) Voice of customer measurement C) Customer factor measurement D) Importance-performance analysis E) Customer importance analysis Answer: D Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking

98) During a recession, Zappos decided to stop offering complimentary overnight shipping to first-time buyers and offer it to repeat buyers only, which is an example of the best practice of top service companies. A) strategic concept B) profit tiers C) top-management commitment D) high standards E) monitoring systems Answer: B Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge 99) External marketing describes the training and motivation required by employees in order to properly serve the customers. Answer: FALSE Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 100) Interactive marketing describes the employees' skill in serving the client. Answer: TRUE Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 101) Importance-performance analysis rates the various elements of the service bundle and identifies required actions. Answer: TRUE Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 102) Is a 99 percent customer satisfaction rate an acceptable level of service performance? Explain your answer. Answer: This really can't be answered without some context, because what constitutes "acceptable" varies widely from industry to industry and even from service to service within an industry. For instance, 99 percent satisfaction means a very different thing to a car wash service than it does to a surgical hospital. That 1 percent deviation from full satisfaction probably isn't a huge deal for the car wash customers, but it could literally be a matter of life and death to surgical customers. Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking

103) Describe a potential upside of product returns. Answer: Although returns can be costly, physically returning a product can get the consumer into the store, maybe for the first time. One research study found that a lenient return policy left customers more willing to make other purchases and to refer the company to others. Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 104) Explain how retail health clinics such as Quick Care, RediClinic, and MinuteClinic reimagined health services to create a new business model in healthcare. Answer: The conventional healthcare is designed to treat a small number of complex cases, generally speaking, which makes it an inefficient way to treat simple cases such as colds and minor injuries. These firms saw an opportunity to flip the model on its head and instead treat a large number of simple cases. Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Analytical thinking 105) Explain the difference between controllable and uncontrollable returns. Answer: The key difference is whether the seller can do anything to eliminate the need for a return. Controllable returns result from problems or errors made by the seller or customer; they can be largely eliminated with improved handling or storage, better packaging, and more effective transportation and logistics by the seller or its supply chain partners. Uncontrollable returns result from the need for customers to actually see, try, or experience products in person. Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 106) Describe four best practices that top performing companies use to achieve service excellence. Answer: (1) Customer-centricity: putting customers and their needs and perspectives at the center of the business model. (2) Set high standards for service quality and implement processes to meet them. (3) Cater to high-value customers to make sure they don't leave for competitors. (4) Manage customer complaints effectively and use these episodes as opportunities to foster long-term customer loyalty. Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 107) How does Cemex use its 24/7 LOAD program to distinguish itself in the cement industry? Answer: Cemex's program guarantees delivery within a 20-minute window, providing important flexibility in an industry where delays are costly but common. Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge

108) Appliance makers such as LG, Kenmore, and Miele have introduced products that can transmit self-diagnostic data over the phone to a customer-service number that electronically describes the nature of any technical problems. This technology can clearly be a benefit to the manufacturers, but how can it make like easier for customers as well? Answer: This technology can simply life for consumers by removing the burden of trying to describe problems that might be beyond their technical acumen and providing accurate information to repair technicians can presumably improve the speed and quality of repair services. Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 109) Why are uncontrollable returns considered uncontrollable? Answer: They are uncontrollable because the return is initiated by consumer responses, not by any performance breakdowns within the company itself. Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 110) How did the Drybar hair salon chain reimagine services in the salon industry? Answer: Drybar recognized that consumers often want blow-dry-only service without cut or coloring services and don't want to pay full salon prices for this limited service offering. By rethinking what a salon could be, Drybar created a new segment within the salon industry. Diff: 1 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 111) Why do you think Ticketmaster's addition of interactive seat maps helped increase ticket sales? Answer: By giving customers control over where they would be seated during an event, Ticketmaster eliminated a key uncertainty in the purchase decision process (the worry about getting bad seats). By making the decision less fraught with uncertainty and anxiety, the company removed a potential barrier to sales. Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking

112) Marketing excellence with services requires excellence in three broad areas. List and explain the three areas. Answer: The three areas in which services require excellence are: 1. External marketing: This describes the normal work of preparing, pricing, distributing, and promoting the service to customers. 2. Internal marketing: This describes training and motivating employees to serve customers well. 3. Interactive marketing: This describes the employees' skill in serving the client. Clients judge service not only by its technical quality but also by its functional quality. Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Reflective thinking 113) When Hayley had some problems with the applications on her cell phone, she gave the phone to a service center for a software update. The service center returned the phone to her the next day with the software update complete. Two days later, the service center called Hayley to enquire if the phone was functioning well. Which area of services marketing does this incident illustrate? Why is this important? Answer: This situation illustrates interactive marketing, which deals with the employees' skill in serving the client. This is important because clients judge a service not only by its technical quality (how successful it was) but also by its functional quality (the attitude of the employees performing the service). Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Analytical thinking 114) Some WesternSlope Cleaning customers have long-term contracts for full-service cleaning, while others call the company as and when they require a particular service. The long-term customers have their queries handled by the company's customer service representative. The rest of its customers are directed towards voice messages when they want their inquiries to be processed. What strategy is the company adopting to achieve marketing excellence? Answer: The company is trying to differentiate its high-profit tier customers from its low-profit tier customers. Diff: 3 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Analytical thinking 115) Retail chain REB wants to find out how its customers perceive its services and what it can do to improve these. What methods can the company use to discover this? Answer: REB can audit service performance, both their own and competitors', on a regular basis. It can collect voice of the customer (VOC) measurements to probe customer satisfiers and dissatisfiers. It can use comparison shopping, mystery or ghost shopping, customer surveys, suggestion and complaint forms, and service-audit teams to find out customer reactions to the company. Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge 30

116) Bryson's is a mid-sized hotel chain that is entering a competitive market. The chain needs to differentiate its service from that of competitors, positioning itself as a hotel chain with excellentservice at an affordable price. How can it achieve this using internal marketing? Answer: (Student answers will vary.) Internal marketing describes training and motivating employees to serve customers well. Employees must be trained to provide the required service quality, as well as motivated to achieve that level. Bryson's can use incentives for the best performers in order to encourage this. Diff: 2 LO: 9.3: Identify the key strategies to achieve service excellence. AACSB: Application of knowledge 117) The dimension of service quality refers to the appearance of physical facilities, equipment, staff, and communication materials. A) empathy B) assurance C) responsiveness D) reliability E) tangibles Answer: E Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Application of knowledge 118) The dimension of service quality refers to the willingness to help customers and provide prompt service. A) empathy B) assurance C) responsiveness D) reliability E) tangibles Answer: C Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Application of knowledge 119) The dimension of service quality refers to the provision of caring, individualized attention to customers. A) empathy B) assurance C) responsiveness D) reliability E) tangibles Answer: A Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Application of knowledge 31

120) Which of these Big Data techniques are some companies using to match call center employees with specific customers? A) Myers-Briggs personality mapping B) Empathy profiling C) Personal attribute matching much like dating services D) Customer service scoring E) Psychoanalytics Answer: A Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Application of knowledge 121) Which of these is NOT a typical step in the evolution of service delivery models in the manufacturing sector? A) Manufacturers usually start by providing all maintenance and repair services themselves. B) Over time, manufacturers begin to shift some maintenance and repair services to authorized distributors. C) Over time, manufacturers begin to shift some maintenance and repair services to dealers. D) Later in an industry's evolution, third-party service provides appear and take some service business away from distributors and dealers. E) At some point, customers become skilled enough that the industry stops offering ancillary services. Answer: E Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Application of knowledge 122) Which of the following represents an aspect of the Empathy dimension of SERVQUAL? A) Providing service as promised B) Readiness to respond to customers' requests C) Giving customers individual attention D) Making customers feel safe in their transactions E) Visually appealing facilities Answer: C Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking

123) MGC Inc. organizes a company-wide picnic once a year. The organizers arranged for the best possible menu thinking that food would be a priority, but the staff were disappointed because the activities were very poorly planned. What kind of a gap is apparent here? A) Gap between perceived service and expected service B) Gap between service delivery and external communications C) Gap between service-quality specifications and service delivery D) Gap between management perception and service-quality specification E) Gap between consumer expectation and management perception Answer: E Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 124) Which of the following is an example of a gap between management perception and the service-quality specifications? A) The college brochure showed state-of-the-art classrooms, but when the visitors walked in, they saw peeling walls and dull lighting. B) A nurse visits a patient to show care, but the patient interprets this as an indication that something is very wrong. C) The hotel administrators think that guests want better food, but guests are more concerned with the courtesy of the waiters. D) A service center manager has asked his subordinates to provide fast service, but has not specified a time for the service to be performed. E) Customer service representatives are asked to give ample time to each customer, but must serve a minimum of 50 customers a day. Answer: D Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 125) The customer service representatives at a call center have been asked to handle each call within five minutes. A recent customer survey by the company revealed that customers appreciate it when employees take as much time as needed to answer their questions fully and listen to their grievances, which frequently takes longer than five minutes. What kind of service gap is apparent here? A) Gap between perceived service and expected service B) Gap between service delivery and external communications C) Gap between service-quality specifications and service delivery D) Gap between management perception and service-quality specification E) Gap between consumer expectation and management perception Answer: C Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking

126) Which of the following is an example of a gap between service delivery and external communications? A) The employees at GBL have been asked to take time to listen to customers, but they must serve them fast as well. B) Amanda chose to shop at Alison's Fashions because the store's website offered on-the-spot alterations. However, when she did buy a dress, she had to wait a week to get it altered. C) Customers at LUX appreciate the personalized services the salespeople offer, but do not like the store design. D) Clearwater Spa attendants are well-trained in massage therapy and the services they offer, but customers rarely return because they don't like the attendants' impersonal service. E) When sales dropped, Styx modernized its stores in order to retain customers, but didn't realize that the product quality was the main problem. Answer: B Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 127) Fernanda came across an ad for a new restaurant that promised authentic French cuisine. When she ate there, however, she was disappointed to find that the food was mediocre and not very authentic. Which of the following gaps of service performance does this demonstrate? A) Gap between service-quality specifications and service delivery B) Gap between perceived service and expected service C) Gap between service delivery and external communications D) Gap between consumer expectation and management perception E) Gap between management perception and service-quality specification Answer: C Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 128) When Faizan went to his doctor for his annual checkup, he was asked to undergo a number of tests. Although the doctor assured him the tests were routine, Faizan thinks the doctor is hiding a grave problem from him. What kind of a gap is apparent here? A) Gap between perceived service and expected service B) Gap between service delivery and external communications C) Gap between service-quality specifications and service delivery D) Gap between management perception and service-quality specification E) Gap between consumer expectation and management perception Answer: A Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking

129) As one of the key dimensions of service quality, refers to the ability to perform the promised service dependably and accurately. A) empathy B) assurance C) responsiveness D) reliability E) tangibles Answer: D Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Application of knowledge 130) Josh gets his motorcycle serviced at Dean's Garage even though there's another garage much closer to home. He prefers Dean's because the work is usually done quickly and the staff try to solve the issues with the bike as soon as possible. Dean's Garage excels at which of the following five determinants of service quality? A) Reliability B) Responsiveness C) Assurance D) Empathy E) Tangibles Answer: B Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking; Application of knowledge 131) The determinant of service quality refers to the knowledge and courtesy of employees and their ability to convey trust and confidence in the service they provide. A) conscientious B) assurance C) empathy D) reliability E) responsiveness Answer: B Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Application of knowledge

132) Leo's manager has asked him and his teammates to demonstrate caring towards customers. They are instructed to learn customers' names and use names while interacting with them. Repeat customers should get special attention, and the team members should remember their preferences and habits. The manager is asking the team to be _ . A) assuring B) candid C) empathetic D) reliable E) responsive Answer: C Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 133) Gloria goes to the same bagel shop every morning because the workers there remember her name and remember her order. They always make her feel welcome. The employees of this bagel shop excel at which of the following determinants of service quality? A) Reliability B) Responsiveness C) Assurance D) Empathy E) Tangibles Answer: D Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 134) The zone of is a range where a service dimension is deemed satisfactory, anchored by the minimum level consumers are willing to accept and the level they believe can and should be delivered. A) immunity B) tolerance C) reliability D) assurance E) flexibility Answer: B Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking

135) According to the dynamic process model, two different types of expectations have opposite effects on perceptions of service quality. One of these is that overall service quality. A) increasing customer expectations of what the firm will deliver improves the perceptions of B) increasing customer expectations of what the firm will deliver decreases the perceptions of C) decreasing customer expectations of what the firm should deliver decreases the perceptions of D) decreasing customer expectations of what the firm will deliver improves the perceptions of E) increasing customer expectations of what the firm should deliver improves the perceptions of Answer: A Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking 136) Responsiveness is a company's willingness to help customers and provide prompt service. Answer: TRUE Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking 137) Reliability refers to the company's willingness to help customers and provide them with prompt service. Answer: FALSE Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking 138) The zone of tolerance for a service is the perceived economic benefit in relationship to the economic cost. Answer: FALSE Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking 139) The customer service representatives at G.K.'s customer service center must know as much about the products as possible so that they can help customers solve their difficulties without sounding hesitant or unsure of themselves. Which of the determinants of service quality are they being asked to demonstrate? Answer: These reps are being asked to excel at the assurance dimension of service quality. Diff: 1 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking

140) What did Chili's discover about product sales after it installed self-service ordering and payment screens on every table? Answer: The chain discovered that diners tended to buy more food and drinks when using the self-service screens. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 141) Discuss the role of consumer expectations in terms of the perceived quality of service encounters. Answer: Much work has validated the role of expectations in consumers' interpretations and evaluations of the service encounter and in the relationship they adopt with a firm over time. Consumers are often forward-looking in terms of their likely behavior and interactions with a firm when deciding whether to keep or drop a service relationship. Any marketing activity that positively affects current or expected future usage can help to solidify a service relationship. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 142) The service-quality model highlights the main requirements for delivering high service quality. Which are the five gaps that cause unsuccessful delivery? Answer: The five gaps that cause unsuccessful customer service delivery are as follows: 1. The gap between consumer expectation and management perception: The management does not always correctly perceive what customers want. 2. The gap between management perception and service-quality specification: The management might correctly perceive customers' wants but not set a performance standard. 3. The gap between service-quality specifications and service delivery: The employees might be poorly trained, or incapable of or unwilling to meet the standard, or they may be held to conflicting standards, such as taking time to listen to customers and serving them fast. 4. The gap between service delivery and external communications: The consumers' expectations are affected by statements made by company representatives and ads. 5. The gap between perceived service and expected service: This gap occurs when the consumer misperceives the service quality. Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking

143) Based on the service-quality model, researchers have identified five determinants of service quality. List and briefly explain each. Answer: The five determinants of service quality are: 1. Reliability: It is the ability to perform the promised service dependably and accurately. 2. Responsiveness: It refers to the willingness to help customers and to provide prompt service. 3. Assurance: It is the knowledge and courtesy of employees and their ability to convey trust and confidence. 4. Empathy: It refers to the provision of caring, individualized attention to customers. 5. Tangibles: It is the appearance of physical facilities, equipment, personnel, and communication materials. Diff: 3 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Reflective thinking 144) Clearwater Spa operates on the premise that service quality is the main reason that customers come to the spa, and the attendants are trained to provide excellent service. Despite this, the spa rarely has repeat customers. Clearwater began collecting feedback from customers to find out the reason for this. The management realized that although the customers were happy about the services, they did not like the ambience. What kind of a gap is causing the unsuccessful service delivery in this situation? Answer: In this situation, there is a gap between the consumers' expectations and the managements' perception. Management does not always correctly perceive what customers want. The spa management believes that customers want service quality, when the ambience is the real customer demand. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 145) The manager of a computer service center knows that quick service is the top priority for customers. Accordingly, the employees are encouraged to solve customer difficulties fast, but there is no set time period for service delivery. Which gap could cause unsuccessful service delivery in this situation? Answer: In this situation, there exists a gap between the management perception and the service-quality specification. Although, the management has correctly perceived the customers' want, it has not set a specific performance standard for employees. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking

146) In the customer support center where Carl works, employees are taught to make conversation to put customers at ease. As customers don't like being kept waiting, they must also try to minimize the time that customers spend waiting for service. Thus, when there are a number of customers lined up, Carl usually has to decide whether to answer a customer's questions in detail or move on quickly to the next customer. The firm's standards are not clear on how they want him to perform. When asked, his boss answers, "You make the decision." This is an example of which service-quality gap? Answer: This is an example of a gap between the service-quality specifications and service delivery. Employees are held to conflicting standards, having to decide between taking time to listen to customers and serving them fast. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 147) The advertisement for a pool reads "a vinyl pool from Parker's for just $5,000." When David contacted the firm for the pool, the customer service representative tells David that the total cost will be $8,000. When David enquires about the extra $3,000, the customer service representative says that is for installation. Which service-quality gap does this situation demonstrate? Answer: This is an example of a gap between service delivery and external communications. Consumer expectations are affected by statements made by company representatives and ads. Here, the ad promised a pool for one price, but the actual price is much higher than the consumer is led to expect. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 148) The last time Betty visited Zing's, the food was excellent. Tonight is her anniversary and she was looking forward to an enjoyable evening. After the meal, she starts feeling that the service was not up to par and the evening was not as successful as she had hoped. According to the service-quality model, which gap is obvious here? Answer: The gap prevalent here is the gap between perceived service and expected service. This gap occurs when the customer misperceives the service quality. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking 149) A cosmetics store sees to it that customers who walk in are assisted by store personnel. Personnel are trained to ask customers questions, find out what they want, and make suggestions accordingly. Which of the five determinants of service quality is reflected here? Answer: The determinant of service quality that is reflected here is empathy. The outlet not only cares about its customers, but also gives them individualized attention. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking

150) Emilio travels often on business trips. He usually uses the services of the Sunshine Cab Company to take him to the airport and pick him up from the airport. Though the fares are usually higher than those of other private taxi companies, he prefers to use Sunshine cabs because they're always on time and have well-maintained cabs. Which determinant of service quality does this demonstrate? Answer: This demonstrates the determinant of reliability, which is the ability to perform the promised service dependably and accurately. Diff: 2 LO: 9.4: Explain how service firms can manage quality effectively. AACSB: Analytical thinking

Chapter 10 Building Strong Brands 1) combines the design and implementation of marketing activities and programs to build, measure, and manage brands to maximize their value. A) Brand planning B) Strategic brand management C) Tactical brand management D) Brand targeting E) Brand positioning Answer: B Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Application of knowledge 2) Which of these is NOT one of the recognized benefits that companies gain from brand loyalty? A) Providing predictability of demand B) Providing security of demand C) Creating barriers to entry D) Creating customer willingness to pay more E) Eliminating all forms of competitive threats Answer: E Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 3) Which of these would generally be the most difficult for a competitor to duplicate? A) Lasting impressions of favorable product experiences B) Manufacturing processes C) Materials sourcing D) Product design details E) Brand slogans Answer: A Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking

4) Why did large numbers of consumers reject New Coke even though the new formulation scored higher in blind taste tests than the classic formulation? A) Consumers found out the new formulation was higher in sugar. B) Consumers had an emotional attachment to the Coke brand. C) Consumers felt tricked by the blind taste tests. D) Competitive ads from Pepsi created resentment toward Coke. E) The new formulation was in short supply after it was launched. Answer: B Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 5) The approach to measuring brand equity examines the investment made in developing the brand, including marketing research, brand design, communication, management, and legal services. A) market B) financial C) cost D) valuation E) calculation Answer: C Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Application of knowledge 6) The approach to measuring brand equity measures the difference between the sales revenues from a branded offering against those of an identical unbranded offering, adjusted for the expense of building the brand. A) market B) financial C) cost D) valuation E) calculation Answer: A Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Application of knowledge

7) The approach to measuring brand equity evaluates the net present value (NPV) of a brand's future earnings. A) market B) financial C) cost D) valuation E) calculation Answer: B Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Application of knowledge 8) The monetary value of a brand is called brand _ and reflects the premium that is placed on a company's valuation because of its ownership of the brand. A) loyalty B) equity C) preference D) identity E) licensing Answer: B Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Application of knowledge 9) The first step in the strategic brand management process is A) measuring consumer brand loyalty B) identifying and establishing brand positioning C) planning and implementing brand marketing D) measuring and interpreting brand performance E) growing and sustaining brand value Answer: B Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking

10) The American Marketing Association defines a as "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors." A) copyright B) trademark C) slogan D) brand E) logo Answer: D Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 3

11) The essence of branding is . A) all about creating unanimity between products B) the process of performing market research and selling products or services to customers C) endowing products and services with the power of a brand D) the process of comparing competing brands available in the market E) use of online interactive media to promote products and brands Answer: C Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 12) is the differential effect that brand knowledge has on consumer response to the marketing of that brand. A) Mission-driven equity B) Brand power C) Product-driven equity D) Brand equity E) Function-based equity Answer: B Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Application of knowledge 13) A fundamental challenge for marketers in building a strong brand is . A) ensuring that customers have the right type of experiences with their products and marketing programs to create the desired brand knowledge B) pricing the product at a point that maximizes sales volume C) minimizing the number of people to whom the product is targeted in order to provide consumers with a personalized experience D) minimizing the impact of customer brand equity E) avoiding the usage of an established brand to introduce a new product in the market Answer: A Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 14) Which of the following is a marketing advantage of strong brands? A) No vulnerability to marketing crises B) More elastic consumer response to price increases C) Guaranteed profits D) Additional brand extension opportunities E) More inelastic consumer response to price decreases Answer: D Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 4

15) BENGAY aspirin, Cracker Jack cereal, Frito-Lay lemonade, and Fruit of the Loom laundry detergent are examples where consumers' dictated that the extensions were inappropriate for the brand. A) brand knowledge B) brand equity C) brand stature D) power grid E) brand salience Answer: A Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Application of knowledge 16) are a means of understanding where, how much, and in what ways brand value is being created to facilitate day-to-day decision making. A) Internal marketing campaigns B) Brand portfolio audits C) Brand value chains D) Sales cycles E) Brand-tracking studies Answer: E Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 17) Branding has the ability to reduce perceived risk for consumers. Answer: TRUE Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 18) Brand power arises from differences in the consumer responses that a brand evokes. Answer: TRUE Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 19) Consumers may evaluate identical products differently depending on how they are branded. Answer: TRUE Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking

20) The indirect approach to assessing brand power assesses the actual impact of brand knowledge on consumer response to different aspects of marketing. Answer: FALSE Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Analytical thinking 21) One of the advantages of having a strong brand is the ability to have a more elastic consumer response to price decreases of the brand. Answer: TRUE Diff: 1 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 22) The brand audit can be used to set or redirect the strategic direction for the brand. Answer: TRUE Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 23) What do we mean when we say that effective branding creates mental structures for consumers? Answer: The mental structure here is essentially an organizational outline that consumers use to categorize, store, and recall information about brands. Good branding creates mental structures that help consumers organize their knowledge about products and services in a way that clarifies their decision making. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 24) Where do brand ultimately reside? Answer: Although firms provide the impetus for brand creation through marketing programs and other activities, ultimately a brand resides in the minds and hearts of consumers. It is a perceptual entity rooted in reality but reflecting the views and idiosyncrasies of consumers. Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking

25) Can branding strategies be successful and create value for the company if consumers are not convinced that there are meaningful differences among brands in a particular product or service category? Explain your answer. Answer: No, for branding strategies to be successful and create brand value, consumers must be convinced that there are meaningful differences among brands in the product or service category. Usually, this involves differences in the products and services themselves. However, the differences might be mostly or even entirely about the experience of shopping for, purchasing, and owning the product or experiencing the service. For instance, a low-cost handbag can serve the same practical function as a $1,000 designer handbag and might even look as attractive to most people, but the experience of purchasing and owning the luxury product has a different meaning to the buyer of this product and thus provides a foundation for a brandable difference. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 26) What do we mean when we say that marketers can apply branding virtually anywhere a consumer has a choice? Answer: Anywhere in the customer journey where the customer has the freedom to make a choice presents the opportunity to apply branding techniques to create a particular set of ideas in the consumer's mind. Products, services, retail outlets, ideas, countries–any time a consumer has a choice, there's an opportunity for branding. Even if it's the exact same product being sold through, say, a discount outlet and a luxury boutique, this shopping experience presents a meaningful difference and therefore an opportunity for branding. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 27) How can branding simplify decision making for consumers? Answer: When faced with high-risk purchasing decisions or an overwhelming number of choices, consumers' brand knowledge can provide both assurances and decision-making shortcuts. If you are nervous about buying your first car, and your parents always swore by a particular brand of auto, your awareness of their experience would probably lead you to trust that brand more than others. Rather than spending weeks researching every brand and taking multiple test drives, you can reassure yourself that a car from the company that always served your parents well would probably work out for you too. Alternatively, if you went to buy shampoo and saw dozens and dozens of brands on the shelf, you might (consciously or not) save time by eliminating those brands you've never heard of. A few brands might jump out because you've used them before or seen their advertising, both of which create a certain level of brand knowledge and make you more comfortable with those brands. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking

28) Explain the role of brand equity in the accounting term goodwill. Answer: Brand equity is a part of goodwill, which is the monetary value of all intangible assets of a company. Goodwill not only documents the company's tangible assets, such as property, infrastructure, materials, and investments, but also incorporates the intangible assets that a company owns, including brands, patents, copyrights, know-how, licenses, distribution arrangements, company culture, and management practices. Thus, goodwill is a much broader term than brand equity and includes both the value of the company's brand and the value of the company's other intangible assets. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 29) Why do you think brand power is sometimes called customer-based brand equity? Answer: Brand power is sometimes called customer-based brand equity because it reflects the degree to which the brand influences the way consumers think, feel, and act with respect to the brand. In other words, it is the differential effect that brand knowledge has on consumer response to the marketing of that brand. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 30) Distinguish between brand equity and brand valuation. Answer: Brand equity is the added value endowed to products and services. Brand valuation is the job of estimating the total financial value of the brand. Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 31) What valuable functions can brands perform for a firm? Answer: Brands perform a number of valuable functions for firms. First, they simplify product handling or tracing. Brands help to organize inventory and accounting records. A brand also offers the firm legal protection for unique features or aspects of the product. The brand name can be protected through registered trademarks; manufacturing processes can be protected through patents; and packaging can be protected through copyrights and proprietary designs. These intellectual property rights ensure that the firm can safely invest in the brand and reap the benefits of a valuable asset. A credible brand signals a certain level of quality so that satisfied buyers can easily choose the product again. Brand loyalty provides predictability and security of demand for the firm, and it creates barriers to entry that make it difficult for other firms to enter the market. Loyalty also can translate into customer willingness to pay a higher price. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking

32) Assume you are a marketing manager and want to adopt strategic brand management. List the four main steps that you would most likely go through to accomplish this task. Answer: The steps would be: 1. identifying and establishing brand positioning 2. planning and implementing brand marketing 3. measuring and interpreting brand performance 4. growing and sustaining brand value Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Analytical thinking 33) How does the American Marketing Association (AMA) define the term brand? Answer: A brand, according to the AMA, is "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors." Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 34) Define brand equity. Answer: Brand equity is the monetary value of a brand and reflects the premium that is placed on a company's valuation because of its ownership of the brand. Brand equity encompasses the net present value of the total financial returns that the brand will generate over its lifetime. Diff: 3 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 35) What is positive brand power? Answer: A brand is said to have positive brand power when consumers react more favorably to a product and the way it is marketed when the brand is identified, than when it is not identified. Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 36) How does brand knowledge contribute to brand power? Answer: Brand knowledge consists of all the thoughts, feelings, images, experiences, beliefs, and so on that become associated with the brand. If that knowledge is a net positive, it adds to the brand power. Conversely, if that knowledge is a net negative for whatever reason, brand knowledge diminishes brand power. Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking

37) How does consumer knowledge play a role in the success of new products associated with existing brands? Answer: Customers' brand knowledge dictates what they consider to be appropriate future directions for the brand. Consumers will decide, based on what they think and feel about the brand, where they believe the brand should go and through their purchasing behavior grant permission to any marketing action or program. Many new products can fail because consumers find them inappropriate extensions for the brand. Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Reflective thinking 38) Given that the power of a brand resides in the minds of consumers and how it changes their response to marketing, there are two basic approaches to measuring brand power. Briefly, describe each of these approaches. Answer: The two approaches are: 1. an indirect approach that assesses potential sources of brand power by identifying and tracking consumer brand knowledge structures 2. a direct approach that assesses the actual impact of brand knowledge on consumer response to different aspects of the marketing Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Analytical thinking 39) Describe the function of brand-tracking studies. Answer: In brand tracking studies, the brand audit is used as input to collect quantitative data from consumers over time, providing consistent, baseline information about how brands and marketing programs are performing. Brand-tracking studies help us understand where, to what degree, and in what ways brand value is being created to facilitate day-to-day decision making. Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Analytical thinking 40) Describe the meaning and function of a brand audit. Answer: To better understand the sources of brand equity and how they affect outcomes of interest, marketers often need to conduct brand audits. A brand audit is a focused series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. Marketers should conduct a brand audit when setting up marketing plans and when considering shifts in strategic direction. Conducting brand audits on a regular basis, such as annually, allows marketers to keep their finger on the pulse of their brands so they can manage them more proactively and responsively. A good brand audit provides keen insights into consumers, brands, and the relationship between the two. Diff: 2 LO: 10.1: Explain the role of brands in creating market value. AACSB: Analytical thinking

41) represent a special type of brand symbol—one with human characteristics that both enhance likability and tag the brand as interesting and fun. A) Brand characters B) Brand icons C) Logos D) Logotypes E) Brand personalities Answer: A Diff: 1 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Application of knowledge 42) Which of these is NOT a secondary brand association that a company would typically seek to establish for its brands? A) Source of company funds B) The company itself C) Countries or regions D) Channels of distribution E) Spokespeople Answer: A Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Analytical thinking 43) A brand is a three- to five-word articulation of the heart and soul of the brand and is closely related to other branding concepts like "brand essence" and "core brand promise." A) mantra B) personality C) identity D) position E) revitalization Answer: A Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Application of knowledge 44) Brand are devices that can be trademarked and serve to identify and differentiate the brand. A) elements B) value propositions C) perceptions D) images E) extensions Answer: A Diff: 1 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Application of knowledge 11

45) If a brand element can be used to introduce new products in the same or different categories, the brand element is said to be . A) memorable B) meaningful C) likeable D) transferable E) adaptable Answer: D Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 46) If consumers can easily recall and recognize a brand element, the brand element is said to be . A) meaningful B) protectable C) adaptable D) transferable E) memorable Answer: E Diff: 1 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 47) Which of the following is a defensive criterion for choosing brand elements? A) adaptable B) memorable C) meaningful D) likeable E) significance Answer: A Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking

48) With respect to powerful brand elements, is an extremely efficient means to build brand equity. This element functions as a useful "hook" to help consumers grasp what the brand is and what makes it special. A) the tangibility of a product B) a product's shape C) a slogan D) a patent E) a copyright Answer: C Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Analytical thinking 49) Names that become synonymous with product categories like Kleenex, Kitty Litter, Jell-O, and Xerox, need to ensure they retain their brand names remain _ so they can retain their trademark rights and avoid becoming generic. A) meaningful B) likable C) protectable D) transferable E) adaptable Answer: C Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Application of knowledge 50) Brand is the job of estimating the total financial worth of the brand. A) tracking B) auditing C) equity D) valuation E) harmonization Answer: D Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Analytical thinking

51) Which of the following statements about brand mantras is true? A) They guide only major decisions, they have no influence on mundane decisions. B) Their influence does not extend beyond tactical concerns. C) They are used by employees only, not external marketing partners. D) They can provide guidance about what ad campaigns to run and where and how to sell the brand. E) They average one paragraph in length. Answer: D Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 52) American Express's "World-Class Service, Personal Recognition," Mary Kay's "Enriching Women's Lives," Hallmark's "Caring Shared," and Starbucks' "Rewarding Everyday Moments" are examples of brand . A) mantras B) parity C) identity D) architecture E) extension Answer: A Diff: 3 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Analytical thinking 53) Nike's "Just Do It," BMW's "The ultimate driving machine," American Express' "Don't leave home without it," New York Times' "All the news that's fit to print," and AT&T's "Reach out and touch someone" are all examples of brand . A) slogans B) personalities C) missions D) architectures E) mantras Answer: A Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Analytical thinking

54) A brand mantra should be . A) original, ambiguous, and straightforward B) unique, complex, and inspirational C) communicative, simple, and inspirational D) competitive, sensitive, and simple E) unique, sensitive, and explanatory Answer: C Diff: 3 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 55) Brand mantras typically are designed to capture the brand's points-of, that is, what is unique about the brand. A) conflict B) parity C) inflection D) difference E) presence Answer: D Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 56) For brands in more stable categories where extensions into more distinct categories are less likely to occur, the brand mantra may focus more exclusively on points of . A) difference B) presence C) inflection D) parity E) conflict Answer: A Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 57) The more important brand elements are often those that capture intangible characteristics. Answer: TRUE Diff: 1 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 58) Brand equity is essentially the same as brand valuation. Answer: FALSE Diff: 1 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 15

59) One of the selection criteria for creating a successful brand element is that it should be protectable. Answer: TRUE Diff: 1 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 60) The purpose of brand mantras is to ensure that employees and external marketing partners understand what the brand is in order to represent it to the customers. Answer: TRUE Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 61) Brand mantras must communicate both what a brand is and what it is not. Answer: TRUE Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 62) How did Amazon demonstrate the transferability criterion of brand element design by not calling itself something like Books 'R' Us, even though it began as an online book store? Answer: Books were simply the first product that Amazon chose to sell through its then-revolutionary business model. Giving itself a category-agnostic name such as Amazon allowed it to grow into whatever product categories it decided to add to its retail mix, a mix that has come to include nearly every conceivable type of product. Diff: 2 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Application of knowledge 63) List the six criteria used in creating brand elements. Answer: The six criteria are 1. memorable 2. meaningful 3. likable 4. transferable 5. adaptable 6. protectable Diff: 3 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Application of knowledge

64) As a brand manager you would like to have your brand (brand name) be protectable. Explain what you mean by "protectable" and give an illustration. Answer: As a brand manager you would need to consider questions like, "How legally protectable is the brand element?" "How competitively protectable is the brand element?" and "Can it be easily copied?" It is important that names that become synonymous with product categories — such as Kleenex, Kitty Litter, Jell-O, Scotch Tape, Xerox, and Fiberglass — retain their trademark rights and not become generic. Diff: 3 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Reflective thinking 65) Define a brand mantra and provide an example. Answer: (Student answers will vary.) A brand mantra is an articulation of the heart and soul of the brand and is closely related to other branding concepts like "brand essence" and "core brand promise." Brand mantras are short, three- to five-word phrases that capture the irrefutable essence or spirit of the brand positioning. As an example, McDonald's "Food, Folks, and Fun" captures its brand essence and core brand promise. Diff: 3 LO: 10.2: Describe the key principles in designing brand elements and associations. AACSB: Analytical thinking 66) The reflects the way in which a company's brands are related to a company's products and services, as well as to one another. A) brand family B) brand ladder C) brand DNA D) brand hierarchy E) brand blueprint Answer: D Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 67) A involves individual or separate family brand names. A) house-of-brands B) branded-house C) sub-brand strategy D) brand ladder E) brand network Answer: A Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge

68) A involves a corporate umbrella or company brand name. A) house-of-brands B) branded-house C) sub-brand strategy D) brand ladder E) brand network Answer: B Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 69) A combines two or more corporate, family, or individual product brand names. A) house-of-brands B) branded-house C) sub-brand strategy D) brand ladder E) brand network Answer: C Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 70) A is a product that best represents or embodies the brand as a whole to consumers. A) category killer B) key brand product C) flagship product D) market leader E) brand champion Answer: C Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 71) Many companies are introducing , which are specific brand lines supplied to specific retailers or distribution channels. A) branded variants B) regional brands C) channel brands D) distribution brands E) retailer brands Answer: A Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge

72) creates brand equity for materials, components, or parts that are necessarily contained within other branded products. A) A brand alliance B) Ingredient branding C) Internal branding D) Production branding E) Recipe branding Answer: B Diff: 1 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 73) The in the brand value chain determines the extent to which the value created in the minds and hearts of customers affects market performance. A) customer multiplier B) market multiplier C) shareholder value D) program multiplier E) price elasticity Answer: A Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 74) The in the brand value chain determines the extent to which the value shown by the market performance of a brand is manifested in shareholder value. A) customer multiplier B) market multiplier C) shareholder value D) program multiplier E) price elasticity Answer: B Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 75) A structured approach to assessing the sources and outcomes of brand equity and the manner in which marketing activities create the financial worth of the brand is called . A) the brand value chain B) the brand portfolio C) the brand life cycle D) brand partitioning E) brand positioning Answer: A Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 19

76) Competitive reactions and channel support are factors that influence the of the brand value chain. A) program B) customer C) brand D) profit E) market Answer: B Diff: 3 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 77) Distinctiveness, relevance, and value are factors that influence the the brand value chain. A) program B) brand C) market D) customer E) profit Answer: A Diff: 3 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking

multiplier

multiplier of

78) Apple's iPad Pro is an example of . A) a sub-brand B) a parent brand C) family brand D) a brand mix E) an umbrella brand Answer: A Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Analytical thinking 79) A major advantage of a strategy is that the company does not tie its reputation to the product. A) blanket family name B) licensing C) separate family brand name D) category extension E) brand revitalization Answer: C Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 20

80) A brand is the set of all brands and brand lines a particular firm offers for sale to buyers in a particular category or market segment. A) architecture B) position C) portfolio D) extension E) image Answer: C Diff: 1 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 81) The hallmark of an optimal brand portfolio is . A) the ability of each brand to maximize equity in combination with all the other brands in the portfolio B) the ability of each brand to maximize its individual equity in isolation C) maximum brand overlap D) the eventual reduction of brand differentiation to create a unified brand appearance E) maximum internal competition within the firm Answer: A Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 82) The in the brand value chain determines the marketing program's ability to affect the customer mindset and is a function of the quality of the program investment. A) customer multiplier B) market multiplier C) shareholder value D) program multiplier E) price elasticity Answer: D Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge

83) A is the set of all brands and brand lines that a particular firm offers for sale in a particular category or market segment. A) brand portfolio B) co-brand C) generic brand D) licensed product E) sub-brand Answer: A Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Application of knowledge 84) Westin Hotels' Heavenly Bed initiative that promotes the comfort of its beds is an example of ingredient branding. Answer: TRUE Diff: 1 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Analytical thinking 85) In Hershey Kisses candy, Hershey would be considered a branded variant. Answer: FALSE Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Analytical thinking 86) Increasing retail shelf presence is one of the reasons for introducing multiple brands in a category. Answer: TRUE Diff: 1 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 87) What are the requirements for successful ingredient branding? Answer: First, consumers must believe the ingredient matters to the performance and success of the end product. Ideally, this intrinsic value is easily seen or experienced. Second, consumers must be convinced that the ingredient is superior. To this end, the company must coordinate a communication campaign–often with the help of the manufacturers of the final products and the retailers carrying these products–that helps consumers understand the advantages of the branded ingredient. Finally, a distinctive symbol or logo must clearly signal that the host product contains the ingredient. Ideally, this symbol or logo functions like a "seal" and is simple and versatile, credibly communicating quality and confidence. Diff: 3 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking

88) What are the three multipliers in the brand value chain? Answer: (1) The program multiplier determines the marketing program's ability to affect the customer mindset. (2) The customer multiplier determines the extent to which the value created in the minds and hearts of customers affects market performance. (3) The market multiplier determines the extent to which the value shown by the market performance of a brand is manifested in shareholder value. Diff: 3 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 89) What conditions are essential for a cobranding effort to succeed? Answer: For cobranding to succeed, the two brands must separately have brand equity— adequate brand awareness and a sufficiently positive brand image. The most important requirement is a logical fit between the two brands, to maximize the advantages of each while minimizing disadvantages. Consumers are more apt to perceive co-brands favorably if they are complementary and offer unique quality, rather than being overly similar and redundant. Diff: 3 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 90) What role do flagship products play in the brand portfolio? Answer: Flagship products play a key role in the brand portfolio in that marketing them can have short-term benefits (increased sales) as well as long-term benefits (improved brand equity for a range of products). Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 91) What are the potential disadvantages of cobranding? Answer: The potential disadvantages of cobranding are the risks and lack of control involved in becoming aligned with another brand in consumers' minds. Consumer expectations of co-brands are likely to be high, so unsatisfactory performance could have negative repercussions for both brands. And if one of the brands enters into a number of cobranding arrangements, overexposure may dilute the transfer of any meaningful association. Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking

92) As a brand manager, you have recommended to your board of directors a corporate policy of umbrella branding. What are the advantages that your company might gain from this? Answer: Many firms, such as Heinz and GE, use their corporate brand as an umbrella brand across their entire range of products. A corporate umbrella brand name has a number of advantages. Development cost is less because there is no need research to research or spend heavily on advertising to create brand-name recognition. Furthermore, sales of the new product are likely to be strong if the manufacturer's name is good. Corporate-image associations of innovativeness, expertise, and trustworthiness have been shown to directly influence consumer evaluations. Finally, a corporate branding strategy can lead to greater intangible value for the firm. Diff: 3 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 93) Define brand variants. Answer: Brand variants are specific brand lines supplied to specific retailers or distribution channels. They result from the pressure retailers put on manufacturers to provide distinctive offerings. Diff: 1 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 94) Kellogg's uses its corporate brand name with its individual product brands as with Kellogg's Rice Krispies, Kellogg's Raisin Bran, and Kellogg's Corn Flakes. Which branding strategy is being used by the company? Answer: Kellogg's employs a sub-brand or hybrid branding strategy by combining the corporate brand with individual product brands as with Kellogg's Rice Krispies, Kellogg's Raisin Bran, and Kellogg's Corn Flakes. Diff: 2 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Reflective thinking 95) Identify and describe the four value stages of the brand value chain. Answer: The brand value creation process begins when the firm invests in a marketing program targeting actual or potential customers. Next, customers' mindsets are assumed to change as a result of the marketing program. This change affects the way the brand performs in the marketplace through the collective impact of individual customers deciding how much to purchase and when, how much they'll pay, and so on. Finally, the investment community considers market performance and other factors such as replacement cost and purchase price in acquisitions to arrive at an assessment of shareholder value in general and the value of a brand in particular. Diff: 3 LO: 10.3: Discuss how a company should design the hierarchy of its brands. AACSB: Analytical thinking

96) When marketers combine a new brand with an existing brand, the brand extension can also be called a , such as Hershey Kisses candy and Courtyard by Marriott hotels. A) child brand B) spinoff brand C) merged brand D) sub-brand E) hybrid brand Answer: D Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 97) The Dannon yogurt products Fruit on the Bottom, All Natural flavors, Danonino, and Light & Fit are all examples of from the original Dannon brand. A) down-market stretches B) up-market stretches C) line extensions D) brand extensions E) family brands Answer: C Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 98) What percentage of new products in a typical year are brand extensions? A) 4 to 5 percent B) 8 to 10 percent C) 15 to 20 percent D) 50 to 60 percent E) 80 to 90 percent Answer: E Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 99) When Honda applied that brand name to snowblowers, lawnmowers, and other non-automotive products, it was engaging in . A) cobranding B) brand architecting C) brand extensions D) line extensions E) laddering Answer: C Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 25

100) Marketers must judge every potential brand extension by how effectively it leverages existing brand equity from the parent brand, as well as by how effectively it can . A) mask holes in the brand portfolio B) contribute to the parent brand's equity C) reduce marketing costs D) amortize family brand investment E) provide new brand naming opportunities Answer: B Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 101) Why was Ralph Lauren able to extend its brand name from fashion to something as far removed as paint? A) The brand was known for its fashionable style, which extended easily to home décor. B) Consumers like to consolidate all style-related purchases, whether fashion or home goods. C) There is little competition in the paint sector. D) The paint sector had become stale, with few innovations in color palettes. E) Color became a strong secondary brand association, so a move into paint was natural. Answer: C Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Analytical thinking 102) When Giorgio Armani wanted to execute a down-market stretch, what did it do to protect the core Giorgio Armani brand from dilution and cannibalization while still leveraging its strong presence in the luxury market? A) Created the sub-brands Armani Jeans and Armani Exchange. B) Shied away from any mention of the core Giorgio Armani brand with the new line. C) Called the new line Armani Econo. D) Called the new line GA to echo the core brand without mentioning it explicitly. E) Kept the original brand name of Giorgio Armani and simply priced the new products lower. Answer: A Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge

103) Brand occurs when consumers no longer associate a brand with a specific or highly similar set of products and start thinking less of the brand. A) erasure B) dilution C) minimization D) consolidation E) negation Answer: B Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 104) To minimize repercussions after a brand crisis, the company's response must be seen as both swift and . A) economical B) complete C) efficient D) sincere E) comprehensive Answer: D Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 105) Which of these is NOT one of the four guidelines to help firms manage their brands through a public crisis? A) Empathy: Get even closer to consumers and customers. B) Value: Put forth the most compelling value proposition. C) Strategy: Be authentic and true to the brand promise. D) Vision: Convince investors that the company is staying true to its long-term plans. E) Innovation: View the crisis as an opportunity to improve plans and products. Answer: D Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 106) Nike's shift to use its technical expertise to develop Personal Protective Equipment (PPE) when the Covid-19 crisis hit was an example of which crisis-management guideline? A) Empathy: Get even closer to consumers and customers. B) Value: Put forth the most compelling value proposition. C) Strategy: Be authentic and true to the brand promise. D) Vision: Convince investors that the company is staying true to its long-term plans. E) Promotion: View the crisis as an opportunity to demonstrate expertise. Answer: A Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Analytical thinking 27

107) Which of these was an effect observed on digital marketing during the first few months of the Covid-19 crisis? A) Most U.S. companies dialed back their social media activities to avoid being seen as opportunistic. B) Social media as a percentage of the marketing budget rose sharply, from 13 to 23 percent. C) Many brands turned there social media accounts over to customers to let them crowdshare ideas for getting through lockdowns. D) Most firms used social media during this time to re-emphasize their most compelling value propositions. E) Most firms disabled the commenting features on their social media accounts to avoid getting pulled into the political debates raging at the time. Answer: B Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 108) What misstep did Gerber make after glass shards were discovered in some jars of its baby food, helping to trigger a significant slump in its market share? A) Not reassuring consumers that there were no problems in its manufacturing facilities B) Not communicating with the press C) Refusing to pull all its baby food products from store shelves D) Blaming the problem on one of its glass suppliers E) Minimizing the impact of the danger Answer: C Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 109) Which of these is a challenge that Coca-Cola faced when trying to extend its brand into the health and energy drinks category? A) Low consumer trust B) A strong association with carbonated colas C) Counterattacks from PepsiCo D) Consumer boredom with the health and energy drinks category E) Limited distribution opportunities Answer: B Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking

110) Which of these is a potential advantage of brand extensions? A) Eliminating the need for a high-profile launch B) Eliminating the need for consumer education C) Making it easier to convince retailers to carry the new product D) Eliminating the need for channel partner education E) Making it easier to convince employees to get behind the new product Answer: C Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 111) Which of these would probably be the most difficult brand to execute a brand extension from? A) One with multiple positive associations B) One with multiple positive secondary brand associations C) One seen as prototypical of its product category D) One viewed as particularly edgy or innovative by its fans E) One that faces strong competition in its core category Answer: C Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 112) Jewelry maker Bulgari's expansion into hotels is an example of a(n) _ A) up-scale stretch B) line filling C) brand extension D) line extension E) rebranding Answer: C Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge

113) What impact did the introduction of an SUV and a four-door sedan have on Porsche's brand image in the minds of some critics? A) Hard-core fans ignored these new models. B) Some critics thought these models diluted the sports-car brand. C) Long-time Porsche sports car drivers embraced the new models. D) The company lost its reputation as a maker of sports cars. E) The company is no recognized as a "family" brand. Answer: B Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking

114) When a firm uses an established brand to introduce a new product, it is called a brand . A) harmonization B) valuation C) extension D) positioning E) parity Answer: C Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 115) A parent brand that is associated with multiple products through brand extensions is also called a(n) . A) category brand B) subbrand C) extension brand D) family brand E) line brand Answer: D Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 116) The introduction of Diet Coke by the Coca-Cola Company is an example of A) line extension B) brand harmonization C) category extension D) brand dilution E) co-branding Answer: A Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Analytical thinking

117) Starbucks introduced ice creams in the same flavors as the Frappuccinos it sold in its coffee shops. This is an example of . A) brand dilution B) co-branding C) brand variants D) brand extension E) brand harmonization Answer: D Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Analytical thinking 30

118) Two advantages of are that they can facilitate new-product acceptance and help clarify the meaning of the parent brand. A) product licensing B) brand extensions C) brand architecture D) brand audits E) brand dilutions Answer: B Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 119) Even if sales of a brand extension are high and meet targets, the revenue may be coming from consumers switching to the extension from existing parent-brand offerings—in effect the parent brand. A) diluting B) cannibalizing C) reinforcing D) eroding E) revamping Answer: B Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 120) The longer a firm takes to respond to a crisis, the more likely consumers are to form negative impressions from unfavorable media coverage or word of mouth. Answer: TRUE Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 121) Brand dilution occurs when consumers no longer associate a brand with a specific or highly similar set of products and start thinking less of the brand. Answer: TRUE Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 122) When a parent brand covers a new product within a product category it currently serves, it is called a line extension. Answer: TRUE Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking

123) Brand extensions can reduce the costs of introductory launch campaigns by eliminating the new to launch a new brand while simultaneously launching a new product. Answer: TRUE Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 124) A brand that is seen as prototypical of a product category is easy to extend outside the category. Answer: FALSE Diff: 1 LO: 10.4: Explain how a company should manage its brands over time. 125) What are the potential repercussions on brands of public scandals and crises? Answer: Potential repercussions include lost sales, reduced effectiveness of marketing activities, increased sensitivity to rivals' marketing activities, and reduced impact of the firm's marketing activities on competing brands. To protect the brand, key executives and sometimes even company founders might have to step down. Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 126) What are the potential outcomes of brand extensions that consumers deem inappropriate? Answer: If a firm launches extensions that consumers deem inappropriate, they may question the integrity of the brand or become confused or even frustrated: Which version of the product is the right one for them? Do they know the brand as well as they thought they did? Retailers reject many new products and brands because they don't have the shelf or display space for them. Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 127) What questions should marketers ask when weighing the potential success of an extension? Answer: Marketers should ask such questions as these: Does the parent brand have significant power? Is there a strong basis of fit? Will the extension have the optimal points of parity and points of difference? How can marketing programs enhance extension equity? What implications will the extension have for parent brand equity and profitability? Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge

128) What steps did General Motors use to reposition the once-fading Cadillac brand? Answer: General Motors's rescue of its fading Cadillac brand was fueled by a complete overhaul of its product lineup with new designs that redefined its look and styling, such as the SRX crossover, the XTS and CTS sedans, the Escalade SUV, and the ATS sports sedan. A healthy dose of breakthrough marketing, including the first use of Led Zeppelin's music in advertising, also helped. Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 129) Provide an example of brand revitalization. Evaluate its success and note any factors that contributed to or possibly hurt its success. Answer: (Student responses will vary.) Examples from the text include Burberry, GM/Cadillac, Harley-Davidson, PBR, Mountain Dew, Old Spice. Brand revitalization of almost any kind starts with the product. Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Application of knowledge 130) In what ways can brand extensions improve the odds of new-product success? Answer: Consumers make inferences and form expectations about the composition and performance of a new product based on what they already know about the parent brand and the extent to which they feel this information is relevant to the new product. By setting up positive expectations, extensions reduce risk and may make it easier to convince retailers to stock and promote a brand extension because of increased customer demand. From a marketing communications perspective, an introductory campaign for an extension doesn't need to create awareness of both the brand and the new product, but instead can concentrate on the new product itself. Diff: 3 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 131) Nichepro Technologies, who were mainly into producing personal computers and laptops, have now decided to produce Nichepro health care products. Explain the branding strategy advocated by the company. Answer: Nichepro Technologies is advocating a brand extension strategy by using the parent brand to enter a different product category. Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Analytical thinking

132) Tide laundry detergent maintains the same market share it had 50 years ago because of the sales contributions from its various line extensions. It can be said that Tide employs a preemptive cannibalization strategy in generating line extensions. What does this mean? Answer: When there is a threat of losing consumers to a competing brand, companies sometimes opt for preemptive cannibalization. This causes consumers to switch between the same brand's products, preventing loss of customers. Even though Tide's various line extensions may cannibalize sales of its other products, if the extensions had not been introduced, then customers would have defected to another brand offering the same type of extension. In this way, Tide has maintained its market share through preemptive cannibalization. Diff: 2 LO: 10.4: Explain how a company should manage its brands over time. AACSB: Reflective thinking 133) Which of these is NOT discussed as one of the common components of luxury brands? A) Craftsmanship B) Anonymity C) Heritage D) Authenticity E) History Answer: B Diff: 1 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking 134) What element is in the center of the Bull's-Eye Framework for developing brand positioning? A) The brand mantra B) Points of parity C) Points of difference D) Substantiators E) Brand values Answer: A Diff: 1 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Application of knowledge 135) If Starbucks wanted its positioning to include the attributes of contemporary, thoughtful, and caring, where would these qualities appear in its Bull's-Eye Framework? A) The brand mantra B) Points of parity C) Points of difference D) Substantiators E) Brand values, personality, character Answer: E Diff: 1 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Analytical thinking 34

136) In addition to helping time-pressed customers research products before coming into retail stores, what is another reason many high-end fashion brands such as Dior, Louis Vuitton, and Fendi have unveiled e-commerce sites? A) To eliminate the costly retail channel B) To be seen as young and hip C) To eliminate the need for retail sales personnel D) To combat fakes sold online E) To meet new government data privacy regulations Answer: D Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking 137) Which of these observations is generally true about the global luxury market? A) The United States remains the largest market for luxury goods. B) The social status that brands can convey remains the most important driver of consumer behavior. C) Luxury is timeless, and consumer behavior with regard to luxury brands has changed little in the past few decades. D) Luxury has become more about style and substance than status, combining personal pleasure and self-expression. E) The true luxury market has largely disappeared as consumer pull back spending globally. Answer: D Diff: 3 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking 138) Which of these statements is true about the impact of digital technology on global brands? A) Brands that don't have a digital component of some kind are disappearing. B) Many luxury marketers are finding ways to integrate digital experience with the in-store experience. C) Digital is seen as a mass-market thing and has little appeal in the luxury goods market. D) Digital technology is applied fairly extensively to luxury services but rarely to luxury goods. E) Luxury brands that have tried to integrate a digital component have lost some of their luster. Answer: B Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking

139) The common denominators of luxury brands are quality and A) uniqueness B) practicality C) global appeal D) contemporary E) goodwill Answer: A Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking

140) A winning formula for many brands is craftsmanship, heritage, authenticity, and history (which is often critical to justifying a sometimes extravagant price). A) design B) nondurable C) durable D) ingredient E) luxury Answer: E Diff: 1 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking 141) The brand promise for is that it " unites fine European craftsmanship with time-honoured designs, bringing pieces to life that emanate classic heritage and refined creation. Just as a soul remains long after its body is gone, our pieces are crafted to perform superbly and symbolize elegance for many lifetimes." A) Hermès B) Montblanc C) Patrón D) Sub-zero Refrigerators E) Armani Answer: B Diff: 3 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Application of knowledge

142) has overtaken the United States as the world's largest luxury market; it's forecast that one-third of all high-end goods will be sold there in the coming years. A) China B) India C) South Africa D) Brazil E) South Korea Answer: A Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking 143) Which of the following is NOT one of the guidelines for managing luxury brands? A) All marketing decisions associated with luxury brands–product, service, pricing, sales incentives, communication, and distribution–must be aligned to ensure that purchase and consumption experiences are consistent with the image of the brand. B) Luxury branding typically includes the creation of a premium, aspirational image. C) Luxury brands frequently span categories, and as a result, their competitors are often defined broadly. D) Unlike mass market brands, luxury brands generally don't need to worry about protecting their identity or aggressively combating trademark infringement and counterfeits. E) All attributes of luxury brands must be aligned with the image of the brand. This includes brand identifiers such as names, logos, symbols, and packaging, as well as brand associations such as personalities, events, countries, and other entities. Answer: D Diff: 3 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking 144) Competition for luxury brands is always defined narrowly. Answer: FALSE Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking 145) Explain why luxury brands are considered one of the purest examples of the role of branding. Answer: Luxury brands are one of the purest examples of the role of branding because the brand and its image frequently offer key competitive advantages that create immense value for both the company and its customers. Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking

146) What do we mean we say that luxury brand marketers are often "selling a dream"? Answer: Luxury brands tend to have an aspirational and self-defining aspect to them, creating images that are anchored in product quality, status, and prestige. You don't buy a $30,000 Hermès handbag just to hold your stuff; you buy it because of the way it helps you feel about yourself and your place in the world. Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Analytical thinking 147) How does offering exclusive personal experiences add to the allure of luxury brands? Answer: The trend for luxury brands to wrap exclusive personal experiences around the products helps create the feeling that consumers are indeed buying into a rarefied lifestyle that most people will never attain. Few people outside the film industry get invited to the Cannes Film Festival, but a big spender can go there courtesy of Gucci, which adds to the exclusive allure of the Gucci brand. Diff: 2 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Analytical thinking 148) Which attributes of luxury brands must be aligned with the image of the brand? Answer: With luxury branding, it is essential that all attributes of the luxury brand are aligned with the image of the brand. This includes brand identifiers such as names, logos, symbols, and packaging, as well as brand associations such as personalities, events, countries, and other entities. Diff: 3 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Analytical thinking 149) Why was Montblanc, known for its pens, able to successfully expand into fragrances, when Bic, also known for its pens, failed at a similar brand extension? Answer: The key difference in these two brand extension attempts is that Montblanc is a luxury brand that consumers associated with elegance, glamour, and exclusivity. In contrast, Bic is known as a maker of reliable but decidedly unglamourous pens and lighters. Its strong association with low cost serves it well in the utilitarian, down-market segment of everyday pens and lighters. However, perfumes and colognes are highly emotional products with little utilitarian value. Few people are interested in wearing a "cheap" perfume, no matter how good the actual product itself might be. A Montblanc fragrance would make consumers feel better about themselves, whereas the same might not be true for a Bic fragrance. Diff: 3 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Analytical thinking

150) What are the key guidelines for managing luxury brands? Answer: • All marketing decisions associated with luxury brands–product, service, pricing, sales incentives, communication, and distribution–must be aligned to ensure that purchase and consumption experiences are consistent with the image of the brand. • Luxury branding typically includes the creation of a premium, aspirational image. • Luxury brands frequently span categories, and as a result, their competitors are often defined broadly. • Luxury brands must protect their identity and aggressively combat trademark infringement and counterfeits. • All attributes of luxury brands must be aligned with the image of the brand. This includes brand identifiers such as names, logos, symbols, and packaging, as well as brand associations such as personalities, events, countries, and other entities. Diff: 3 LO: 10.5: Describe the key aspects of luxury branding. AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 11 Managing Pricing and Sales Promotion 1) Which of these is an accurate observation about pricing in today's business environment? A) With ubiquitous online price matching, pricing decisions are more or less automatic these days. B) Many companies do not handle pricing well and fall back on familiar methods that aren't as effective as they should be. C) Across industries and regions, most companies now use the same pricing methods. D) The internet empowered buyers but doesn't help sellers optimize their pricing. E) The hope of offering personalized price promotions hasn't really panned out. Answer: B Diff: 3 LO: 11.1: Describe the role that pricing plays in marketing management. AACSB: Reflective thinking 2) Which of these has been a complaint some marketers have about Groupon and its coupon deals? A) Few consumers know about Groupon, so businesses must spend money to educate them. B) Groupon doesn't try hard enough to sell the service. C) The money-saving coupons attract only deal-seekers who rarely become long-term customers. D) Consumers are getting bored with shopping and couponing apps. E) Nobody pays attention to "buzz" anymore; they all crave authentic engagement. Answer: C Diff: 2 LO: 11.1: Describe the role that pricing plays in marketing management. AACSB: Reflective thinking 3) Price is one of the two elements of the marketing mix that produces revenue. Answer: FALSE Diff: 1 LO: 11.1: Describe the role that pricing plays in marketing management. AACSB: Reflective thinking 4) Traditionally, price was never a major determinant of buyer choice. Answer: FALSE Diff: 1 LO: 11.1: Describe the role that pricing plays in marketing management. AACSB: Reflective thinking

5) What are the most common mistakes that companies make when it comes to setting and managing prices? Answer: Many companies do not handle pricing well and fall back on "strategies" such as "We calculate our costs and add our industry's traditional margins." Other common mistakes are not revising prices often enough to capitalize on market changes; setting prices independently of the rest of the marketing program, rather than as an intrinsic element of market-positioning strategy; and not varying prices enough for different product items, market segments, distribution channels, and purchase occasions. Diff: 3 LO: 11.1: Describe the role that pricing plays in marketing management. AACSB: Reflective thinking 6) What is surge pricing? Answer: Surge pricing is the practice of dynamically adjusting prices based on real-time demand and specifically the tactic of raising prices when demand is peaking. Diff: 1 LO: 11.1: Describe the role that pricing plays in marketing management. AACSB: Application of knowledge 7) —various visual, verbal, and numerical indicators that convey information about price—are an important part of the psychology of pricing. A) Pricing cues B) Price tags C) Bar codes D) QR codes E) Quality labels Answer: A Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 8) Which of these psychological pricing tactics is likely going on when a seller positions a dress among expensive competitors and away from the less-expensive garments in the store? A) The retailer has demanded strict partitioning by designer label. B) The seller is trying to manipulate consumers' reference prices through the quality-price assumption. C) "Name" designers refuse to have their wares located near other well-known designer labels. D) The most expensive clothes are always in the back of the store. E) The most expensive clothes are always in the front of the store. Answer: B Diff: 3 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking

9) is especially effective with ego-sensitive products such as perfumes, expensive cars, and designer clothing. A) Exclusive pricing B) Price matching C) Hidden price tagging D) Image pricing E) Value-perception pricing Answer: D Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 10) When consumers examine products, they often compare an observed price to an internal price they remember. This is known as a(n) price. A) markup B) reference C) market-skimming D) accumulated E) target Answer: B Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 11) price refers to what the consumers feel the product should cost. A) Fair B) Typical C) Usual discounted D) List E) Maximum retail Answer: A Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking

12) While shopping at the mall, Jane was asked by one of the sales representatives at the cosmetics counter to try out a new lipstick that her company was test marketing. The company representative asks her how much she would be willing to pay for the lipstick. After trying it out, Jane is of the opinion that $5 is just the right price for it. What type of a reference price is Jane using? A) Usual discounted price B) Fair price C) Maximum retail price D) Last price paid E) Historical competitor price Answer: B Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Analytical thinking 13) The reservation price, the maximum that most consumers will pay for a given product, is known as the price. A) expected future B) usual discounted C) upper-bound D) typical E) historical competitor Answer: C Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 14) Which of the following is NOT one of the possible consumer reference prices? A) Typical price B) Actual future price C) Last price paid D) Expected future price E) Upper-bound price Answer: B Diff: 3 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking

15) A company decided to conduct a market survey for its new MP3 player that the company had priced at $150. In the survey, 95 percent of participants said that the maximum they would pay for the MP3 player is $100. This is an example of which of the following possible consumer reference prices? A) Historical competitor price B) Expected future price C) Usual discounted price D) Upper-bound price E) Last price paid Answer: D Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Analytical thinking 16) The minimum price that most consumers would pay for a given product is known as the price. A) everyday low B) usual discounted C) fair D) typical E) lower-bound Answer: E Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 17) A company has developed the prototype of a mobile phone that it plans to launch in the next few months. The phone comes equipped with the most advanced technological features. As part of its marketing research efforts, the company allows customers to examine and use the prototype and also gathers feedback regarding product features and price. The results of this research show that customers are willing to pay at least $500, considering the phone's various features. As such, the company has discovered customers' . A) last paid price B) expected future price C) lower-bound price D) upper-bound price E) typical price Answer: C Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Analytical thinking

18) Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of pricing is the company depending on? A) Going-rate pricing B) Image pricing C) Market-skimming pricing D) Target pricing E) Markup pricing Answer: B Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Application of knowledge 19) Pricing cues such as sale signs and prices that end in 9 are more influential when . A) customers have substantial knowledge about prices B) customers purchase the particular item regularly C) product quality is standardized D) product designs vary over time E) prices do not vary from time to time Answer: D Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 20) Today, consumers are price takers and accept prices at face value or as given. Answer: FALSE Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 21) Pricing cues such as sale signs and prices that end in 9 are more influential when consumers are experienced in the category. Answer: FALSE Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 22) Although consumers may have fairly good knowledge of the range of prices involved, very few can accurately recall specific prices of products. Answer: TRUE Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking

23) When examining products, consumers compare an observed price to an internal reference price they remember or an external frame of reference. Answer: TRUE Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 24) Many consumers use price as an indicator of quality and value. Answer: TRUE Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 25) Is the traditional economics assumption that consumers accept prices at face value or as a given generally true? Answer: No. Many economists traditionally assumed that consumers were "price takers" who accepted prices at face value or as a given. Marketers, however, recognize that consumers often actively process price information, interpreting it in the context of prior purchasing experience, formal communication (advertising, sales calls, and brochures), informal communication (friends, colleagues, or family members), point-of-purchase or online resources, and other factors. Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 26) When other sources of information about quality aren't readily available, what role does price place in consumers' evaluation process? Answer: When information about true quality is available, price becomes a less significant indicator of quality. However, when this information is not available, price acts as a signal of quality. Diff: 1 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 27) Discuss the potential overuse of "sale" signs. Answer: "Sale" signs next to prices spur demand, but only if not overused. Thus total category sales are highest when some—but not all—items in a category have sale signs; past a certain point, sale signs may cause total category sales to fall. Diff: 3 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking

28) What are the different possible consumer reference prices? Answer: Possible reference prices include the following: • "fair price" (what consumers feel the product should cost) • typical price • last price paid • upper-bound price (reservation price, or the maximum most consumers would pay) • lower-bound price (lower price threshold, or the minimum most consumers would pay) • competitor price • expected future price • usual discounted price Diff: 3 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Reflective thinking 29) When Abe goes shopping, he comes across a T-shirt that is priced at $35. Although he wants to buy it, judging from the material used, he feels that the T-shirt should only cost $20. What reference price is Abe using here? Answer: Abe perceives $20 to be the fair price for the product. Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Analytical thinking 30) NV Inc. has launched a mobile phone in the Indian market priced at Rs 9500. Although many people are checking it out and showing interest in purchasing it, the majority of them are holding themselves back because they feel that it is not worth Rs 9500. They compare the phone's features with those from competitors offering the same features and conclude that it is worth Rs 8500 at most. What kind of a reference price are the consumers using? Answer: The consumers are using the upper-bound price. Upper-bound price refers to the reservation price or the maximum that most consumers would pay. Diff: 3 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Analytical thinking 31) Yolanda paid $450 for a jacket that carried a well-known designer's name. A few days later, she came across a jacket of identical design that was priced at only $175. She didn't give this a second thought because she was convinced that the designer label she bought was worth it. What can be deduced from this? Answer: Yolanda was using the price as an indicator of quality, an element of image pricing. This kind of pricing is especially effective with ego-sensitive products such as perfumes, expensive cars, and designer clothing. Diff: 2 LO: 11.2: Identify the key psychological factors that influence how consumers perceive prices. AACSB: Analytical thinking

32) How many pricing tiers are there in most markets? A) Several dozen B) 1 to 2 C) 10 to 15 D) 3 to 5 E) 8 to 10 Answer: D Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 33) What is the normal relationship between price and demand in a demand curve? A) The higher the price, the lower the demand B) The lower the price, the higher the demand C) The higher the price, the higher the demand D) The lower the price, the lower the demand E) Price and demand move in the same direction Answer: A Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 34) reflects the degree to which a change in price leads to a change in quantity sold. A) Supply elasticity B) Demand variance C) Price-demand D) Price elasticity of demand E) The price effect Answer: D Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 35) The , the more likely it is that raising the price can increase sales revenues. A) more information in the marketplace B) the higher the price elasticity C) more sensitive consumers are to price D) more similar competitive products are E) lower the price elasticity Answer: E Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

36) The zone in which prices can fluctuate with negligible effect on demand is known as the . A) negligence band B) price indifference band C) negative elasticity zone D) customer indifference band E) price ignorance band Answer: B Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 37) Which of these is a condition that usually contributes to low price elasticity? A) There are many substitutes for a product. B) Consumers readily notice price increases. C) Part or all of the cost is borne by another party. D) Consumers don't believe price hikes are justified. E) Consumers are quick to change their buying habits. Answer: C Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 38) Which of these is a major risk of experience-curve pricing? A) There is a point beyond which the company can lower its prices no further. B) The more the company produces, the less money it earns. C) The company will reach a point where it can no longer afford to keep building production capacity. D) A competitor may innovate with lower-cost technology, leaving the leader stuck with old technology. E) Aggressive pricing is viewed as socially irresponsible. Answer: D Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 39) Which of the following is the first step in setting a pricing policy? A) Selecting a pricing method B) Selecting the pricing objective C) Determining demand D) Estimating cost E) Analyzing competitors' costs, prices, and offers Answer: B Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 10

40) After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy? A) It should analyze its competitors' costs, prices, and offers. B) It should select its pricing method. C) It should select its final price. D) It should determine the demand for its product. E) It should estimate the cost of its product. Answer: D Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 41) After estimating the demand and costs associated with alternative prices, a company has chosen to price its product in such a way that it gains the highest rate of return on its investment. The company is looking to . A) maximize market share B) skim the market C) become a product-quality leader D) survive in the market E) maximize current profit Answer: E Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 42) Companies that believe higher sales volume leads to lower unit costs and higher long-run profits are attempting to . A) maximize their market share B) skim the market C) become a product-quality leader D) merely survive in the market E) maximize their current profits Answer: A Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge

43) A company that is looking to maximize its market share would do well to follow pricing. A) markup B) market-penetration C) market-skimming D) survival E) target-return Answer: B Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 44) A market-penetration pricing strategy is most suitable when . A) a low price slows down market growth B) production and distribution costs fall with accumulated production experience C) a high price dissuades potential competitors from entering the market D) the market is characterized by inelastic demand E) a low price encourages actual competition Answer: B Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 45) When a company introduces a product at a high price and then gradually drops the price over time, it is pursuing a strategy. A) market-penetration pricing B) market-skimming pricing C) value-pricing D) switching cost E) loss-leader pricing Answer: B Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 46) When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt? A) Loss-leader pricing B) Market-penetration pricing C) Market-skimming pricing D) Target-return pricing E) Value pricing Answer: C Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 12

47) Starbucks, Aveda, and BMW have been able to position themselves within their categories by combining quality, luxury, and premium prices with an intensely loyal customer base. These companies are employing a strategy. A) market-skimming B) market-penetration C) survival D) market share maximization E) product-quality leadership Answer: E Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 48) The first step in estimating demand is to . A) analyze competitors' cost B) select a pricing method C) understand what affects price sensitivity D) calculate fixed costs E) decipher the experience curve Answer: C Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 49) Consumers are less price sensitive . A) to high cost items B) when they frequently change their buying habits C) when there are more substitutes D) when there are more competitors E) when they do not readily notice higher prices Answer: E Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 50) Consumers are less price sensitive when . A) price is only a small part of the total cost spent on the product over its lifetime B) they perceive the higher prices to be unjustified C) they change their buying habits regularly D) there are many substitutes and competitors in the market E) they are buying high-cost items Answer: A Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 13

51) If demand hardly changes with a small change in price, the demand is said to be A) strained B) marginal C) inelastic D) flexible E) unit elastic Answer: C Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

52) If consumers were largely indifferent to a $0.05 increase in the price of a gallon of milk, the price rise is said to fall within customers' . A) price indifference band B) experience curve C) arm's-length price D) learning curve E) net price index Answer: A Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 53) Rent, heat, interest, and salaries are examples of costs. A) total B) average C) activity-based D) variable E) fixed Answer: E Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 54) Which of the following is true regarding price elasticity? A) The higher the elasticity, the lesser is the volume growth resulting from a 1 percent price reduction. B) Within the price indifference band, price changes have little or no effect on demand. C) If demand is elastic, sellers will consider increasing the price. D) Price elasticity does not depend on magnitude and direction of the contemplated price change. E) When demand is inelastic, sellers should lower prices in order to increase total revenue. Answer: B Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

55) Costs that do not vary with production levels or sales revenue are known as A) fixed B) variable C) average D) opportunity E) total Answer: A Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

costs.

56) Costs that differ directly with the level of production are known as costs. A) fixed B) overhead C) opportunity D) target E) variable Answer: E Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 57) cost is the cost per unit at that level of production; it equals total costs divided by production volume. A) Target B) Average C) Marginal D) Opportunity E) Fixed Answer: B Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 58) The decline in the average cost of production with accumulated production history is called the . A) demand curve B) supply chain C) experience curve D) value chain E) indifference curve Answer: C Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

59) Experience-curve pricing . A) assumes competitors are weak followers B) allows products to project a high quality image C) is applicable only to manufacturing costs D) focuses on reducing fixed costs E) is generally risk-free Answer: A Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 60) Which of the following is the most elementary pricing method? A) Value pricing B) Going-rate pricing C) Markup pricing D) Target-return pricing E) Perceived-value pricing Answer: C Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 61) Which of these is a reason markup pricing remains popular despite its weaknesses? A) Sellers can determine demand much more easily than they can estimate costs. B) By tying the price to cost, the pricing task becomes more sophisticated. C) When all firms in the industry use markup pricing, price competition flourishes. D) Sellers take advantage of buyers when the latter's demand becomes acute. E) Many people feel that cost-plus pricing is fairer to both buyers and sellers. Answer: E Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 62) A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company's target-return price for this product. A) $18.10 B) $18.23 C) $20.25 D) $20.70 E) $25.50 Answer: C Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking

63) An umbrella manufacturing company's fixed costs are $275,000. The variable cost per unit is $5 and each umbrella is sold at $10. How many units does the firm need to sell in order to break even? A) 1,819 B) 5,500 C) 18,000 D) 27,500 E) 55,000 Answer: E Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 64) pricing takes into account a host of inputs, such as the buyer's image of the product performance, the channel deliverables, the warranty quality, customer support, and attributes such as the supplier's reputation, trustworthiness, and esteem. A) Economic-value-to-customer B) Value C) Going-rate D) Auction-type E) Markup Answer: A Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 65) The key to economic-value-to-customer pricing is to . A) reengineer the company's operations B) deliver more unique value than competitors C) adopt subtle marketing tactics compared to competitors D) deliver more value but at a lower cost E) invest heavily in advertising in order to convey superior value Answer: B Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 66) In pricing, the firm bases its price largely on competitors' prices. A) going-rate B) auction-type C) markup D) target-return E) perceived-value Answer: A Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 17

67) Which of the following auctions is characterized by one seller and many buyers? A) Walrasian auctions B) English auctions (ascending bid) C) Closed auctions D) Sealed-bid auctions E) Reverse auctions Answer: B Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 68) In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts? A) A Dutch auction with one buyer and many sellers B) An English auction with one seller and many buyers C) An ascending bid auction D) A sealed-bid auction E) A Dutch auction with one seller and many buyers Answer: E Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 69) In a(n) , the buyer announces something he or she wants to buy, and potential sellers compete to offer the lowest price. A) Dutch auction with one buyer and many sellers B) English auction with one buyer and many sellers C) English auction with one seller and many buyers D) sealed-bid auction E) ascending auction Answer: A Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 70) auctions let would-be suppliers submit only one bid, and they cannot know the amounts of other bids. A) Descending bid B) Sealed-bid C) English D) Dutch E) Reverse Answer: B Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 18

71) When supermarkets and department stores drop the price on well-known brands to stimulate store traffic, they are said to be following pricing. A) value B) loss-leader C) special event D) high-low E) everyday low Answer: B Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 72) In , the seller charges a separate price to each customer depending on the intensity of his or her demand. A) second-degree price discrimination B) third-degree price discrimination C) psychological discounting D) special-customer pricing E) first-degree price discrimination Answer: E Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 73) In second-degree price discrimination, the seller charges . A) less to buyers of larger volumes B) different prices depending on the season, day, or hour C) a separate price to each customer depending on the intensity of his or her demand D) different prices for different versions of the same product E) different prices for the same product depending on the channel through which it is sold Answer: A Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 74) In , the seller charges different amounts to different segments of buyers. A) perceived value pricing B) third-degree price discrimination C) first-degree price discrimination D) second-degree price discrimination E) psychological discounting Answer: B Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 19

75) When museums charge a lower admission fee to students and senior citizens, this form of price discrimination is known as pricing. A) location B) channel C) customer-segment D) special-customer E) loss-leader Answer: C Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 76) When Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine, this form of price discrimination is known as pricing. A) product-form B) loss-leader C) special event D) channel E) location Answer: D Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 77) The prices of tickets to the opera vary depending on where the person would like to be seated. This is an example of pricing. A) channel B) time C) image D) product-form E) location Answer: E Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking; Application of knowledge

78) When hotels drop their rates on the weekends, this form of price discrimination is known as pricing. A) channel B) image C) product-form D) time E) location Answer: D Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 79) The airline and hospitality industries use , by which they offer discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires. A) special-customer pricing B) yield pricing C) cash rebates D) location pricing E) customer-segment pricing Answer: B Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 80) refers to selling below cost with the intention of destroying competition. A) Bid rigging B) Loss-leader pricing C) Predatory pricing D) Price discrimination E) Price penetration Answer: C Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

81) For price discrimination to work, . A) the market must be segmentable and the segments must show similar intensities of demand B) members in the lower-price segment must be able to resell the product to the higher-price segment C) competitors must be able to undersell the firm in the higher-price segment D) the practice must not breed customer resentment and ill will E) the extra revenue derived from price discrimination must not exceed the cost of segmenting and policing the market Answer: D Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 82) When a movie theater charges a lower ticket fee for children and senior citizens, it is engaging in pricing. A) product-form B) image C) customer-segment D) location E) time Answer: C Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 83) If firms wish to maximize their market share, they should opt for market-skimming pricing. Answer: FALSE Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 84) In the case of prestige goods, the demand curve sometimes slopes upward. Answer: TRUE Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 85) A marketer who has unit costs of $16 and wants to earn a 20 percent markup on sales would charge a markup price of $20. Answer: TRUE Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking

86) Price elasticity depends upon the magnitude and direction of the contemplated price change. Answer: TRUE Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 87) When a product is distinctive with few or no substitutes, it is likely to experience low price sensitivity. Answer: TRUE Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 88) Total costs consist of the sum of the fixed and the variable costs for any given level of production. Answer: TRUE Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 89) Price elasticity tends to be lower for durable goods than for other goods. Answer: FALSE Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 90) In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes. Answer: FALSE Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 91) Price discrimination in all forms is illegal in the United States. Answer: FALSE Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 92) If a firm's offer contains features not offered by the closest competitor, how should it factor that difference into its pricing? Answer: If the firm's offer contains features not offered by the nearest competitor, it should evaluate their worth to the customer and add that value to the competitor's price when setting its own price. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 23

93) What effect have low price/high quality innovators such as Aldi, Lidl, JetBlue Airways, and Southwest Airlines had on consumer behavior? Answer: By finding innovative ways to upset the traditional model of high quality = high price, these innovators have changed consumer expectations about the trade-off between quality and price. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 94) When considering whether to set up separate low-cost operations to compete with new value-priced competitors, what two questions should market incumbents ask themselves? Answer: One school of thought is that companies should set up their own low-cost operations to compete with value-priced competitors only if (1) their existing businesses will become more competitive as a result and (2) the new business will derive some advantages it would not have gained if it were independent. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 95) In framing the boundaries of possible prices for a product, what sets the floor, or the lowest level at which the price should be set? Answer: Costs set a floor for the price. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 96) In framing the boundaries of possible prices for a product, what sets the ceiling, or the highest level at which the price should be set? Answer: Customers' assessment of unique features establishes the price ceiling. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 97) In framing the boundaries of possible prices for a product, what establishes an orienting point between the floor and the ceiling? Answer: Competitors' prices and the price of substitutes provide an orienting point. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

98) Is any pricing method that ignores current demand, perceived value, and competition likely to lead to the optimal price? Explain your answer. Answer: No, any method that ignores current demand, perceived value, and competition is not likely to lead to the optimal price. Any of these external factors could point to a price above or below the level suggested by manufacturing cost or some other internal factor. As a result, the company could price its product below what the market would bear (thereby leaving money on the table) or price it above a competitive level (thereby losing sales opportunities). Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 99) Identify the weaknesses of target-rate-of-return pricing. Answer: Although target-rate-of-return pricing is relatively easy to calculate and may lead a firm in the direction of a particular financial goal, it suffers from many of the same drawbacks as markup pricing in that it doesn't take customer perceptions of value, competitive prices, or current demand into account. The price that yields the target rate of return may have little relationship with current conditions in the market, generating a price that is too low or too high. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 100) What are some of the elements of perceived value beyond the core product that companies such as Caterpillar and PACCAR could use to justify higher prices for their equipment? Answer: These elements include superior durability, superior reliability, superior service, longer warranties, higher trade-in value, or a more satisfying user experience. Broadly speaking, anything that contributes to lower cost of ownership or higher customer satisfaction has the potential to generate a valid price boost. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 101) When a firm is searching for a set of prices that maximize profits on its total product mix, what are the six main situations calling for product-mix pricing? Answer: The six main situations calling for product-mix pricing: • Loss-leader pricing (lowering prices on one or more products to boost store traffic) • Optional-feature pricing (charging separately for the primary product and various optional features) • Captive-product pricing (charging a low price for a product such as a printer and higher prices for the ink cartridges required to operate it) • Two-part pricing (splitting the price into fixed and variable components) • By-product pricing (generating revenue by selling by-products created in the manufacturer for the primary product or products) • Product-bundling pricing (bundling products and services in various ways to make them more profitable or more compelling to customers) Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 25

102) Briefly describe the different types of pricing objectives. Answer: The are four major objectives available to a company: 1. Short-term profit. Companies can try to maximize their current profit by estimating the demand and costs associated with alternative prices and choosing the price that produces maximum current profit, cash flow, or rate of return on investment. This strategy assumes the firm knows its demand and cost functions, but in reality, these are difficult to estimate. 2. Market penetration. Companies that want to maximize their market share believe that a higher sales volume will lead to lower unit costs and higher long-run profit. They set a low price, assuming the market is price sensitive. 3. Market skimming. Companies unveiling a new technology favor setting high prices to "skim the cream" off the market by selling at a high price to customers willing to pay more to avoid waiting, with the plan to slowly drop the price over time. 5. Quality leadership. Companies that aim to be product quality leaders charge relatively high prices in order to be able to invest in research and development, production, and service delivery. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 103) What are the most common different price-setting methods? Briefly describe each of them. Answer: The five most common price-setting methods: 1. Markup pricing. This is the most elementary pricing method wherein a standard markup is added to the product's cost. 2. Target-rate-of-return pricing. Here, the firm determines the price that yields its target rate of return on investment. 3. Economic-value-to-customer pricing. This bases price on the value a product represents to the target customers, incorporating a host of inputs, such as the buyer's image of the product performance, the channel deliverables, the warranty quality, customer support, and softer attributes such as the supplier's reputation, trustworthiness, and esteem. Companies must deliver the value promised by their value proposition, and the customer must perceive this value. 4. Competitive pricing. Also known as going-rate pricing, this methods bases price largely on competitors' prices. 5. Auction pricing. There are three major types of auctions and their separate pricing procedures: a. English auctions (ascending bids). These have one seller and many buyers; the highest bidder gets the item. b. Dutch auctions (descending bids). These can feature one seller and many buyers or one buyer and many sellers. In the first kind, an auctioneer announces a high price for a product and then slowly decreases the price until a bidder accepts. In the other, the buyer announces something he wants to buy, and potential sellers compete to offer the lowest price. c. Sealed-bid auctions. These allow to would-be suppliers submit only one bid. The suppliers have no knowledge about the other bids. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 26

104) When Juan's company introduced its new product in the market, it introduced it at the lowest possible price assuming that the demand for the product is going to be highly responsive to the introduction price. It also believes that a higher sales volume will lead to lower unit costs and higher long-run profit. What can be said about the company's objective? Answer: The company's objective is to maximize its market share. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 105) When Sony introduced the world's first high-definition television to the Japanese market in 1990, it was priced at $43,000. This helped Sony to scoop the maximum amount of revenue from the various segments of the market. The price dropped steadily through the years—a 28-inch Sony HDTV cost just over $6,000 in 1993, but a 40-inch Sony HDTV cost only $450 in 2014. What pricing strategy did Sony use here? Answer: Sony used a market-skimming pricing strategy. This is a favorite for companies unveiling a new technology. Companies using this introduce their product at a high price and slowly drop the price over time. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 106) When setting its price, what should a company do if a competitor's product contains features that are not available in its own product? Answer: In such a situation, the company should subtract the value of those features from the price of its product. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 107) A toaster manufacturer that has invested $1 million in the business wants to set a price to earn a 20 percent return on investment. What pricing method should it choose? Answer: The toaster manufacture should go for a target-rate-of-return pricing. While using this pricing method, companies determine the price that yields its target rate of return on investment. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 108) On sites such as eBay, the seller puts up an item and bidders raise the offer price until the top price is reached. What kind of auctions are these? Answer: eBay is a perfect example of English auctions. Such auctions have one seller and many buyers and the highest bidder gets the item. Diff: 2 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking

109) What is third-degree price discrimination? Answer: In third-degree price discrimination, the seller charges different amounts to different classes of buyers, as in the following cases: • Customer-segment pricing. Different customer groups pay different prices for the same product or service. For example, museums often charge a lower admission fee to students and senior citizens. • Product-form pricing. Different versions of the product are priced differently, but not proportionately to their costs. • Channel pricing. Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine. • Location pricing. The same product is priced differently at different locations even though the cost of offering it at each location is the same. A theater varies its seat prices according to audience preferences for different locations. • Time pricing. Prices are varied by season, day, or hour. Public utilities vary energy rates to commercial users by time of day and weekend versus weekday. Diff: 3 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Reflective thinking 110) Movie matinees are priced lower than the evening shows at local theaters; television advertising costs less when run after midnight. These are examples of what type of price discrimination? Answer: These are examples of time pricing or price discrimination based on time. Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Analytical thinking 111) When the airline industry offers discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires, what kind of a pricing technique are they said to be using? Answer: The airline industry is using yield pricing. Diff: 1 LO: 11.3: Explain the factors that a manager must consider when setting prices. AACSB: Application of knowledge 112) A major circumstance provoking price increases is , wherein rising costs unmatched by productivity gains squeeze profit margins and lead companies to regular rounds of price increases. A) cost inflation B) production overruns C) cost miscalculations D) low rates of return E) failures to secure supplies at reasonable prices Answer: A Diff: 1 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking 28

113) Which of these signals a condition where competitors are most likely to react to a price change? A) When the firm has a weak value proposition B) When the firm enjoys a monopoly C) When there are few competing firms D) When the product is heterogeneous E) When buyers have limited information Answer: C Diff: 2 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking 114) When a company requires customers to pay today's price and all or part of any inflation increase that takes place before delivery, it is known as . A) special-customer pricing B) an escalator clause C) delayed quotation pricing D) unbundling E) time pricing Answer: B Diff: 2 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking 115) When a company maintains its price but removes or prices separately one or more elements that were part of the former offer, such as free delivery or installation, this is known as . A) escalating B) differentiation C) unbundling D) reverse discounting E) delayed quotation pricing Answer: C Diff: 2 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking 116) Companies sometimes initiate price cuts in an attempt to dominate the market through lower costs. Answer: TRUE Diff: 1 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking

117) Escalator clauses are found in contracts for major industrial projects, such as aircraft construction and bridge building. Answer: TRUE Diff: 2 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking 118) What are two circumstances in which a company might practice anticipatory pricing, raising prices more than increases in production costs would indicate? Answer: Companies often raise their prices by more than the cost increase in anticipation of further inflation or government price controls. Diff: 1 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Application of knowledge 119) What are the potential drawbacks of initiating price cuts to keep customers or beat competitors? Answer: Cutting prices to keep customers or beat competitors often encourages customers to demand price concessions and trains salespeople to offer them. A price-cutting strategy can lead to other possible drawbacks, such as consumers assuming quality is low. Furthermore, low price buys market share but not market loyalty—the same customers will shift to any lower-priced firm that comes along. In addition, competitors might respond by lowering their prices even more, triggering a price war. There is also the possibility that higher-priced competitors will match the firm's lower prices but will have greater staying power because of lower cost structure. Diff: 3 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Application of knowledge 120) What techniques can a firm use to help consumers avoid sticker shock and a hostile reaction when prices rise? Answer: One technique is to maintain a sense of fairness, such as giving customers advance notice so they can do forward buying or shop around. Sharp price increases also need to be explained in understandable terms. Making low-visibility price moves first is also a good technique: Eliminating discounts, increasing minimum order sizes, and curtailing production of low-margin products are examples, and contracts or bids for long-term projects should contain escalator clauses based on such factors as increases in recognized national price indexes. Diff: 3 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Application of knowledge

121) How can a firm anticipate a competitor's reactions to a price change? Answer: One way is to assume the competitor reacts in the standard way to a price being set or changed. Another is to assume the competitor treats each price difference or change as a fresh challenge and reacts according to self-interest at the time. Now the company will need to research the competitor's current financial situation, recent sales, customer loyalty, and corporate objectives. If the competitor has a market share objective, it is likely to match price differences or changes. If it has a profit-maximization objective, it may react by increasing its advertising budget or improving product quality. The problem is complicated because the competitor can put different interpretations on lowered prices or a price cut: that the company is trying to steal the market, that it is doing poorly and trying to boost its sales, or that it wants the whole industry to reduce prices to stimulate total demand. Diff: 3 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Application of knowledge 122) What should a firm consider if a competitor lowers its prices? Answer: A firm should consider the following: • Why did the competitor change the price? To steal the market, to utilize excess capacity, to meet changing cost conditions, or to lead an industry-wide price change? • Does the competitor plan to make the price change temporary or permanent? • What will happen to the company's market share and profits if it does not respond? Are other companies going to respond? • What are the competitors' and other firms' likely responses to each possible reaction? Diff: 3 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking 123) What are three possible responses to low-cost competitors? Answer: Three possible responses to low-cost competitors are: 1. further differentiate the product or service 2. introduce a low-cost venture 3. reinvent as a low-cost player Diff: 3 LO: 11.4: Discuss how to respond to competitive prices cuts. AACSB: Reflective thinking

124) are sales promotion tools, mostly short-term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade. A) Giveaways B) Ethical bribes C) Slotting allowances D) Incentives E) Lures Answer: D Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 125) Which of these is a consumer franchise building incentive? A) Price-off packs B) Frequency awards C) Contests D) Refund offers E) Sweepstakes Answer: B Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 126) By monitoring the proportion of customers receiving discounts, the average discount, and any tendency for salespeople to rely too heavily on discounting, managers use to arrive at the "real price" of an offering. A) net price analysis B) discount analysis C) price research D) price monitoring E) price trending Answer: A Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 127) Which of these is NOT a typical objective for consumer incentive programs? A) Encouraging more frequent purchases B) Fostering trial use among nonusers C) Encouraging the purchase of larger-sized units D) Helping a brand move up-market in consumers' eyes E) Attracting switchers away from competitors' brands Answer: D Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 32

128) A(n) uses the manufacturer's sales force, trade promotion money, or other means to induce intermediaries to carry, promote, and sell the product to end users. A) push strategy B) incentive plan C) promotional plan D) pull strategy E) co-op program Answer: A Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 129) In a(n) the manufacturer uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it. A) push strategy B) consumer enticement C) pull strategy D) frequent traveler/shopper program E) end-around tactic Answer: C Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 130) aim to increase the attractiveness of an offering for the members of the distribution channel. A) Push programs B) Pull programs C) Trade incentives D) Consumer incentives E) Coupons Answer: C Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge

131) are offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and recordkeeping. A) Consumer promotions B) Quantity discounts C) Allowances D) Seasonal discounts E) Trade-in allowances Answer: C Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 132) When hotels, motels, and airlines offer discounts in slow selling periods, they are said to be offering . A) trade discounts B) quantity discounts C) functional discounts D) seasonal discounts E) trade-in allowances Answer: D Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 133) are certificates that entitle the bearer to a stated saving on the purchase of a specific product. A) Samples B) Coupons C) Rebates D) Price packs E) Premiums Answer: B Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 134) are consumer promotion tools that provide a price reduction after purchase rather than at the retail shop. A) Rebates B) Cents-off deals C) Price packs D) Coupons E) Premiums Answer: A Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 34

135) Premiums, as a consumer promotion tool, are defined as . A) offers to consumers of savings off the regular price of a product, flagged on the label or package B) certificates entitling the bearer to a stated saving on the purchase of a specific product C) programs providing rewards related to the consumer's frequency and intensity in purchasing the company's products or services D) merchandise offered at a relatively low cost or free as an incentive to purchase a particular product E) values in cash or in other forms that are proportional to patronage of a certain vendor or group of vendors Answer: D Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 136) Which of the following terms describes the practice of retailers purchasing a greater quantity during a sales promotion period than they can immediately sell? A) Diverting B) Panic buying C) Straight rebuy D) Buyout E) Forward buying Answer: E Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 137) Which of the following retailer practices involves buying more units than needed of a product under a sales promotion in a region where the manufacturer offers a promotion deal and shipping the surplus to their stores in non-deal regions? A) Diverting B) Panic buying C) Hoarding D) Stockpiling E) Forward buying Answer: A Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge

138) A is a sales force promotion tool that aims at inducing the sales force or dealers to increase their sales results over a stated period, with prizes (money, trips, gifts, or points) going to those who succeed. A) trade show B) frequency program C) sales contest D) sweepstake E) patronage award Answer: C Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 139) Consumer incentives often attract brand switchers, who are primarily looking for low price, good value, or premiums. Answer: TRUE Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 140) Incessant price reductions, coupons, deals, and premiums can devalue a product in buyers' minds. Answer: TRUE Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 141) Having relied on zero percent financing, hefty cash rebates, and special lease programs during sluggish economic times, what have auto manufacturers learned about the consequences of these efforts as they relate to long-term consumer behavior? Answer: The auto manufacturers have found it difficult to wean consumers from discounts ever, essentially training buyers to wait for or demand discounts before they will consent to buy. Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Analytical thinking 142) What do the payment terms "2/10, net 30" on an invoice mean? Answer: This code indicates a payment discount offer where payment is due within 30 days but the buyer can deduct 2 percent by paying within 10 days. Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge

143) Identify the six steps marketers need to take when planning an incentive program. Answer: In deciding to use a particular incentive, marketers must first determine its size. The incentive must be meaningful to target customers if the promotion is to succeed. Second, the marketing manager must establish conditions for participation. Incentives might be offered to everyone or to select groups. Third, the marketer must decide on the duration of the promotion. Fourth, the marketer must choose a distribution vehicle. For example, coupons can be distributed in the product package, in stores, by mail, online, or in advertising. Fifth, the marketing manager must establish the timing of the promotion. And finally, the total sales promotion budget must be set. The cost of a particular promotion consists of the administrative cost (printing, mailing, and promoting the deal) and the incentive cost (cost of premium or cents-off, including redemption costs), multiplied by the expected number of units sold. Diff: 3 LO: 11.5: Explain how to design and manage incentives. AACSB: Application of knowledge 144) Identify the typical objectives for consumer incentive programs. Answer: For consumer incentives, objectives include encouraging more frequent purchases or the purchase of larger-sized units among users, fostering trial of one's product among nonusers, and attracting switchers away from competitors' brands. If some of the brand switchers would not have otherwise tried the brand, incentives can yield long-term increases in market share. Ideally, consumer incentives have short-run sales impact and long-run effects on brand equity. Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 145) Identify the typical objectives for retailer incentive programs. Answer: For retailer incentives, objectives include persuading the retailer or wholesaler to carry the brand; persuading the retailer or wholesaler to carry more units than the normal amount; inducing retailers to promote the brand by featuring, display, and price reductions; and motivating retailers and their sales clerks to push the product. Diff: 2 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 146) What does it mean if salespeople determine that a company's list price is "soft"? Answer: A "soft" price means there are probably ways to offer customers a lower price than the listed amount. To earn commissions or hit their sales quotas, motivates salespeople are always on the lookout for ways to make a sale happen, and being able to offer customers a lower price is a powerful tool for them. Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking

147) What do we mean when we say a consumer incentive is not "franchise building"? Answer: This means that an incentive might trigger sales in the short term, but it won't do much to build the brand or foster customer loyalty long term. Diff: 1 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 148) What is a push strategy? Answer: A push strategy uses the manufacturer's sales force, trade promotion money, or other means to induce intermediaries to carry, promote, and sell the product to end users. In other words, it aims to "push" the product through the distribution channel toward the final customer. Diff: 3 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 149) What is a pull strategy? Answer: In a pull strategy the manufacturer uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it. In other words, it aims to generate interest among the target buyers, who will then "pull" the product through the distribution channel by seeking it out from retailers or other distribution partners. Diff: 3 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking 150) What challenges do marketers face in managing trade incentives? Answer: The growing power of large retailers has increased their ability to demand trade promotions at the expense of consumer promotion and advertising. The company's sales force and its brand managers are often at odds over trade promotion. The sales force says local retailers will not keep the company's products on the shelf unless they receive more trade promotion money, whereas brand managers want to spend their limited funds on consumer promotion and advertising. Manufacturers face several challenges in managing trade promotions. First, they often find it difficult to police retailers to make sure they are doing what they agreed to do. Manufacturers increasingly insist on proof of performance before paying any allowances. Second, some retailers are doing forward buying–that is, buying a greater quantity during the deal period than they can immediately sell. Third, some retailers are diverting, buying more cases than needed in a region where the manufacturer offers a deal and shipping the surplus to their stores in non-deal regions. Manufacturers handle forward buying and diverting by limiting the amount they will sell at a discount, or by producing and delivering less than the full order in an effort to smooth production. Diff: 3 LO: 11.5: Explain how to design and manage incentives. AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 12 Managing Marketing Communications 1) What is the last buyer-response stage that consumers pass through before making the purchase? A) Knowledge B) Conviction C) Preference D) Awareness E) Action Answer: B Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 2) What is the first step in developing an effective marketing communication program? A) Setting the objectives B) Identifying the audience C) Crafting the message D) Deciding on the media E) Developing the creative approach Answer: A Diff: 1 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 3) If a consumer flipping through TV channels mishears a commercial, this represents a failure in which element of the macromodel of the communication process? A) Encoding B) Noise C) Decoding D) Messaging E) Media Answer: C Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Analytical thinking

4) Your company's latest ad appears on a popular news website alongside ads from several other companies. What element in the macromodel of the communication process do these other ads represent? A) Encoding B) Noise C) Decoding D) Messaging E) Media Answer: B Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 5) refers to the means by which firms attempt to inform, persuade, and remind consumers—directly or indirectly—about the products and brands they sell. A) Human resource development B) Marketing communications C) Financial management D) Operations management E) Planning Answer: B Diff: 1 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 6) Which of the following factors found in the macromodel of the communications process refers to random and competing messages that may interfere with the intended communication? A) Negative feedback B) Noise C) Attenuation D) Phase lag E) Selective distortion Answer: B Diff: 1 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking

7) Which of the following is the correct order of stages that a buyer is assumed to pass through in the classic response hierarchy models? A) Cognitive stage—affective stage—behavioral stage B) Affective stage—cognitive stage—behavioral stage C) Behavioral stage—affective stage—cognitive stage D) Cognitive stage—behavioral stage—affective stage E) Affective stage—behavioral stage—cognitive stage Answer: A Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 8) LCH is a leading electronics company that produces and markets its own brand of desktop and laptop computers for both consumers and businesses. Which of the following sequences of consumer responses is relevant as a marketing communications model for LCH's products? A) Learn-do-feel B) Feel-learn-do C) Do-feel-learn D) Feel-do-learn E) Do-learn-feel Answer: C Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Analytical thinking 9) Classic response hierarchy models of the communication process assume the buyer passes through cognitive, affective, and behavioral stages, in that order. Which of the following product categories lends itself most appropriately to such a "learn-feel-do" sequence? A) Clothes B) Dishwashers C) Real estate D) Personal computer E) Air tickets Answer: C Diff: 3 LO: 12.1: Explain the role of marketing communications. AACSB: Application of knowledge

10) When planning communications for a detergent brand, which of the following sequences of buyer responses should the marketer base the communications program on? A) Feel-do-learn B) Do-feel-learn C) Feel-learn-do D) Learn-do-feel E) Learn-feel-do Answer: D Diff: 3 LO: 12.1: Explain the role of marketing communications. AACSB: Application of knowledge 11) Regardless of its specific impact, a marketing communication campaign cannot contribute to customer equity. Answer: FALSE Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 12) Marketing communications allow companies to link their brands to other people, places, events, brands, experiences, feelings, and things. Answer: TRUE Diff: 1 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 13) The less the sender's field of experience overlaps that of the receiver, the more effective the message is likely to be. Answer: FALSE Diff: 1 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 14) Classic response hierarchy models assume that a buyer passes through affective, cognitive, and behavioral stages, in that order. Answer: FALSE Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 15) A "do-feel-learn" response sequence is considered appropriate when the audience has high involvement but perceives little or no differentiation within the product category. Answer: TRUE Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 4

16) What four phases must consumers generally pass through before they will develop the conviction to buy a product? Answer: The four phases are awareness, knowledge, liking, and preference. Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 17) Explain how marketing communications can contribute to brand equity. Answer: It can contribute to brand equity by establishing the brand in memory and creating a brand image, as well as by driving sales and affecting shareholder value. Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 18) Briefly describe the macromodel of the marketing communications process. Answer: The macromodel of the communications process has nine key factors in effective communication. Two represent the major parties–sender and receiver. Two represent the major tools–message and media. Four represent major communication functions–encoding, decoding, response, and feedback. The last element in the system is noise, random and competing messages that may interfere with the intended communication. Senders must know what audiences they want to reach and what responses they want to get. They must encode their messages so the target audience can decode them. They must transmit the message through media that reach the target audience and develop feedback channels to monitor the responses. The more the sender's field of experience overlaps that of the receiver, the more effective the message is likely to be. Diff: 3 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 19) Describe the effort that marketers must make to increase the odds of success for a marketing communication campaign. Answer: To increase the odds of success for a communication campaign, marketers must attempt to increase the likelihood that every step from awareness through purchase occurs. Thus, the communication campaign must ensure (1) that the right consumer is exposed to the right message at the right place and at the right time, (2) that the offering is correctly positioned in terms of desirable and deliverable points of difference and points of parity, (3) that the consumer pays attention to the campaign and adequately comprehends the intended message, and (4) that consumers are motivated to consider purchasing and using the offering. Diff: 3 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking

20) Gravity is a company that markets customized T-shirts to its customers. Gravity runs an ad that seeks to attract more customers. Apply the macromodel of the communications process to describe the communication between Gravity and its target customers. Answer: The macromodel of the communications process comprises nine key factors in effective communication. Two represent the major parties—sender (Gravity) and receiver (audience). Two represent the major tools—message (content of the ad) and media (print, TV, radio, etc.). Four represent the major communications functions—encoding (creation and transmission of the ad by Gravity), decoding (the reception and comprehension of the ad by the audience), response (either ignoring the message or buying Gravity shirts), and feedback (customers providing information about the ad to measure its effectiveness). The last element is noise, random and competing messages that may interfere with the intended communication. Examples of noise in this case could be misunderstood messages from the ad, similar ads from competitors, and other distractions in the audience's environment. Diff: 3 LO: 12.1: Explain the role of marketing communications. AACSB: Analytical thinking 21) Alan is an executive with an ad agency that has been entrusted with accounts for a used-car showroom, a home appliances maker, and a soap company. With reference to response hierarchy models, how does Alan plan communication strategies for the three accounts effectively? Answer: The classic response hierarchy models assume that the buyer passes through cognitive (learn), affective (feel), and behavioral stages (do), in that order. Since buying a car, used or new, represents a significant investment for the buyer, it can be said that the buyer has involvement in the purchase decision and perceives high differentiation with the product category. Hence a "learn-feel-do" sequence is considered appropriate for the used-car showroom account. Similarly, a buyer intending to purchase home appliances, such as a dishwasher or a refrigerator, has high involvement in the purchase decision, even though he perceives little differentiation within the product category. Hence, a "do-feel-learn" approach may be appropriate when planning communications for the home appliances account. Finally, a buyer has low involvement in purchasing soap that has very little differentiation within its category. For the soap company account, Alan should consider a "learn-do-feel" sequence for planning communications. Diff: 3 LO: 12.1: Explain the role of marketing communications. AACSB: Analytical thinking

22) Provide a general description of the classic response hierarchy models. Answer: Micromodels of marketing communications concentrate on consumers' specific responses to communications. The classic response hierarchy models assume the buyer passes through cognitive, affective, and behavioral stages, in that order. This "learn-feel-do" sequence is appropriate when the audience has high involvement with a product category perceived to have high differentiation, such as an automobile or house. An alternative sequence, "do-feel-learn," is relevant when the audience has high involvement but perceives little or no differentiation within the product category, such as an airline ticket or personal computer. A third sequence, "learn-do-feel," is relevant when the audience has low involvement and perceives little differentiation, such as with salt or batteries. By choosing the right sequence, the marketer can do a better job of planning communications. Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 23) What are the steps involved in developing effective marketing communications? Answer: The key steps in developing effective communications are (1) setting the communication objectives, (2) identifying the target audience, (3) crafting the communication message, (4) selecting the communication channels, (5) developing the creative aspect of communication, and (6) measuring communication effectiveness. Diff: 2 LO: 12.1: Explain the role of marketing communications. AACSB: Reflective thinking 24) Which of these is NOT one of the main factors to consider when setting the marketing communication budget? A) Stage in the product life cycle B) Degree of product differentiation C) Market share D) Product development cost E) Message complexity Answer: D Diff: 1 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 25) The objective "raise brand awareness to at least 40 percent among consumers 18 to 49" is missing which critical element of an actional objective? A) Quantitative benchmark B) Qualitative benchmark C) Temporal benchmark (a deadline) D) Definition of "awareness" E) Details of how awareness will be raised Answer: C Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 7

26) If a marketing department sets its budget by establishing goals and identifying the action items needed to achieve those goals, it is using budgeting. A) objective-and-task B) objective-based C) objective-driven D) task-based E) goal-driven Answer: A Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 27) Offerings in categories often require more advertising to establish a unique image than do offerings that provide distinct benefits. A) impulse buy B) more differentiated C) breakout D) less differentiated E) up-market Answer: D Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 28) In addition to guiding the development of a communication campaign, quantitative and temporal benchmarks are important for determining . A) next year's communication budget B) next quarter's communication budget C) which media and channels to use D) which creative strategies to use E) the effectiveness of the company's communication activities Answer: E Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking

29) involves communicating an offering's ability to meet a currently relevant consumer need. A) Building preferences B) Inciting action C) Counter competitors D) Creating awareness E) Recognition advertising Answer: A Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 30) Which of these statements is true about the nature of brand recognition and brand recall? A) Brand recall is easier to achieve than brand recognition. B) Brand recognition is easy to achieve in consumer markets but much harder in industrial markets. C) Brand recognition is easier to achieve than brand recall. D) Brand recall is much more important than brand recognition. E) Brand recognition is much more important than brand recall. Answer: C Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 31) Which of these is the first decision that needs to be made when crafting a communication objective? A) The communication benchmarks B) The focus of the objective C) The communication budget D) Competitive spending E) The temporal benchmark Answer: B Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 32) Creating awareness can involve highlighting awareness of the need (stimulating demand) or awareness of the specific offering (stimulating demand). A) push; pull B) upstream; downstream C) selective; primary D) primary; selective E) channel; end user Answer: D Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 9

33) Which of these advertising messages is a positively oriented consumer need? A) Make that unpleasant laundry room odor disappear B) Easily sop up oil spills in your garage C) Stimulate creativity with this robotics kit D) Improve your mobile phone reception E) End cravings with this pre-meal fiber drink Answer: C Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking 34) Money-saving coupons reflect which specific type of communication objective? A) Building brand awareness B) Building brand recall C) Building brand preference D) Inciting action E) Stimulating positive needs Answer: D Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking 35) Which of these is the overarching principle of allocating the marketing budget to communication programs? A) Spending on communication should reflect roughly 33 percent of the overall marketing budget. B) If it builds long-term brand equity, spending on communication doesn't need to show short-term positive returns. C) The marginal profit from every communication dollar should be greater than or equal to the marginal profit from every dollar spent on other marketing activities. D) Communication should be the first consideration in the marketing budget. E) Communication should be the last consideration in the marketing budget. Answer: C Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking

36) Although marketing communication is treated as a current expense, part of it can be considered a long-term investment in building brand equity and . A) customer loyalty B) employee morale C) company pride D) marketing agility E) employee recruiting Answer: A Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 37) Which method for establishing the total marketing communications budget sets communication budgets to achieve the same amount of share-of-voice as competitors? A) Comparative-parity method B) Objective-and-task method C) Affordable method D) Competitive-parity method E) Percentage-of-sales method Answer: D Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 38) One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following is a negatively oriented relevant brand need? A) Normal depletion B) Sensory gratification C) Social approval D) Intellectual stimulation E) Value enhancement Answer: A Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking

39) One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following is a positively oriented relevant brand need? A) Problem removal B) Social approval C) Normal depletion D) Problem avoidance E) Incomplete satisfaction Answer: B Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 40) One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following relevant brand needs is most likely emphasized by an advertisement for a luxury car? A) Problem removal B) Sensory gratification C) Normal depletion D) Intellectual stimulation E) Problem avoidance Answer: B Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking 41) Which of the following is a characteristic of the affordable method of establishing a marketing communications budget? A) Fixed annual budget B) Suitable for long-range planning C) Priority given to role of promotion as an investment D) Calculated to reflect what the company can spare for marketing communications E) Based on the immediate impact of promotion on sales volume Answer: D Diff: 1 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking

42) Which of the following is an advantage of using the percentage-of-sales method to determine the marketing communications budget? A) It is practical in terms of implementation. B) The percentage-of-sales method views sales as the determiner of communications rather than as the result. C) The percentage-of-sales method leads to a budget set by market opportunities rather than the availability of funds. D) The percentage-of-sales method encourages experimentation with countercyclical communication or aggressive spending. E) The percentage-of-sales method encourages building the communication budget by determining what each product and territory deserves. Answer: A Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 43) Which of the following is a disadvantage of using a percentage-of-sales method to determine the marketing communications budget? A) It discourages stability when competing firms spend approximately the same percentage of their sales on communications. B) By using a percentage-of-sales method, communication expenditures tend to be extremely high irrespective of what a company can afford. C) It discourages management from thinking of the relationship among communication cost, selling price, and profit per unit. D) It can lead to impractical allocation of a company's resources, ultimately yielding an ineffective communication campaign. E) The percentage-of-sales method views sales as the result in itself rather than the determiner of communications. Answer: D Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Application of knowledge

44) Gabrielle is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They pore over the sales reports and other financial records and determine the amount of resources they can spare for marketing communications, after resources have been allocated to other functions, such as R&D, logistics, etc. What method did Gabrielle and Trent use to arrive at the marketing communications budget? A) The objective-and-task method B) The affordability method C) The competitive-parity method D) The activity-based method E) The percentage-of-sales method Answer: B Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking 45) Gabrielle is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They decide to trust in the prevailing collective wisdom of the industry as a whole, and not wanting to instigate a communications war, settle on spending only as much as their nearest market rival does on marketing communications. What method did Gabrielle and Trent use to arrive at the marketing communications budget? A) Objective-and-task method B) Affordable method C) Competitive-parity method D) Activity-based method E) Percentage-of-sales method Answer: C Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking 46) Problem removal and normal depletion are examples of positively oriented relevant brand needs. Answer: FALSE Diff: 1 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 47) What is basing the communication budget exclusively on the available resources likely to produce for large companies and for smaller firms? Answer: Basing the communication budget exclusively on the available resources is likely to lead to overspending for large companies and underspending for smaller firms. Diff: 1 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 14

48) Why are other companies' communication budgets generally a poor guide for a firm's own spending, even if those companies are in the same industry? Answer: Competitive-parity budgeting is problematic because there are no grounds for believing competitors are more knowledgeable about what the optimal communication budget should be. Company reputations, resources, opportunities, and objectives differ so greatly that communication budgets are hardly a guide for others. And there is no evidence that budgets based on competitive parity discourage communication wars. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 49) List the main factors to consider when setting the communication budget. Answer: The factors are • Stage in the product life cycle • Degree of product differentiation • Market share • Message complexity • Challenges related to reaching the target audiences • Competitive communication • Available resources Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 50) What attributes must a communication objective have in order to be actionable? Answer: To be actionable, a communication objective must have a clearly articulated focus as well as clearly defined quantitative and temporal benchmarks. Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 51) Identify the two types of marketing communication benchmarks. Answer: Broadly speaking, there are two types of communication benchmarks: quantitative and temporal. Quantitative benchmarks quantify a particular objective. For example, quantitative benchmarks might determine the level of awareness that the communication campaign must achieve, the desired strength of preferences among the target audience, and the specifics of the action that the communication campaign must create. Temporal benchmarks, on the other hand, define the time frame within which a particular outcome has to be achieved. Quantitative and temporal benchmarks are closely related and interdependent: Setting a particular time frame is contingent on the magnitude of the desired outcome, and vice versa. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking

52) Identify the circumstances when brand recall is important versus when brand recognition is important. Answer: Brand recall tends to be important for consumers who have received marketing communications outside the store when the company's offerings are not readily visible and available for purchase. In contrast, brand recognition tends to be important inside the store when consumers can readily see and purchase the company's offering. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 53) Describe several conditions that could lead an advertiser to conclude that the best objective for its advertising would be to convince the market of the brand's superiority. Answer: The best objective might be to convince the market of the brand's superiority if (1) the product class is new, (2) the company is not the market leader, or (3) the brand is superior to the leader. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 54) Identify the three categories of communication objectives. Answer: Communication objectives can be classified according to whether they aim to create awareness by informing the target audience about the offering, to build preference by persuading the audience of the benefits of the offering, or to incite action by nudging the audience to act in a way that benefits the company and its offering. Diff: 2 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 55) Describe the conditions under which comparative communications work best. Answer: Comparative communication works best when it elicits cognitive and affective motivations simultaneously and when consumers process the advertising in a detailed, analytical mode. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking

56) Marco is working on promoting his company's Glazer brand of electronic razors. Preliminary surveys have revealed that even though a sizable portion of the target market has developed a liking for the product due to innovative advertising, few customers would actually consider replacing their current razors with Glazers. How might Marco modify the communications program to get customers to favor Glazers over other brands? Answer: (Student answers will vary.) Since customers are comfortable with their present electronic razors, Marco's communications strategy should aim to build preference for Glazers. Customers have already developed a liking for Glazers. So, Marco should focus on comparing the quality of Glazers with that of competing brands. This can be done by illustrating the improved features of Glazers that provide clean and hassle-free use. Marco could do well to compare the Glazers with other brands in terms of value, utility, and performance factors as well. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking 57) Marco is working on promoting his company's Glazer brand of electronic razors. Market research suggests that the target audience possesses an intent to use Glazers, but is dithering over actually making the purchase. How might he modify the communications program to get customers to purchase Glazer razors? Answer: (Student answers will vary.) Marco's task, once the intent to make a purchase has been fostered in consumers, is to lead them to the actual buying action. This can be achieved by offering the razors at a low introductory purchase to encourage initial use among customers, offering a discount on the price, or holding a promotional event where they can actually try out the product firsthand. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking 58) When asked about their preferred brand of instant noodles outside a supermarket setting, customers could not remember Nissin's name, but relied on the distinct packaging to help them spot the noodles while shopping. Describe how this problem can be addressed through the objective of Nissin's marketing communications. Answer: (Student answers will vary.) The objective for Nissin's marketing communications objective should be to build brand awareness, i.e. fostering the consumer's ability to recognize or recall the brand within the category, in sufficient detail to make a purchase. Recognition is easier to achieve than recall — consumers asked to think of a brand of frozen entrées are more likely to recognize Stouffer's distinctive orange packages than to recall the brand. Brand recall is important outside the store; brand recognition is important inside the store. Brand awareness provides a foundation for brand equity. Diff: 3 LO: 12.2: Define meaningful communication objectives. AACSB: Analytical thinking

59) Briefly describe brand awareness as an objective of marketing communications. Answer: Brand awareness refers to fostering the consumer's ability to recognize or recall the brand within the category, in sufficient detail to make a purchase. Recognition is easier to achieve than recall. Brand recall is important outside the store; brand recognition is important inside the store. Brand awareness provides a foundation for brand equity. Diff: 1 LO: 12.2: Define meaningful communication objectives. AACSB: Reflective thinking 60) Which of these is NOT included the creative brief? A) Key message B) Target audience C) Communication objectives D) Sales training plan E) Media choices Answer: D Diff: 1 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 61) When crafting communications programs, marketers are always seeking the that resonates with consumers rationally and emotionally, distinguishes the brand from competitors, and is broad and flexible enough to translate into different media, markets, and time periods. A) positioning statement B) value proposition C) unique selling point D) big idea E) creative brief Answer: D Diff: 2 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 62) In selecting a message strategy, management searches for appeals, themes, or ideas that will tie in to the and help establish points of parity or points of difference. A) brand positioning B) value proposition C) unique selling point D) big idea E) creative brief Answer: A Diff: 2 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 18

63) Identifying the target audience and developing the are the two key components that define the strategy of a company's communication campaign. A) unique selling proposition B) value proposition C) communication message D) sales plan E) positioning Answer: C Diff: 2 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 64) How many core selling propositions does a good ad normally focus on? A) Never more than one B) One or two C) Always two D) Three to five E) Five to eight Answer: B Diff: 1 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 65) Though the target audience can be profiled in terms of demographic, psychographic, or behavioral segments, it is often useful to do so in terms of usage and loyalty. Answer: TRUE Diff: 1 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 66) Provide an example of when the target market and the target audience are not the same group of people. Answer: Student answers will vary, but they should recognize that in some market segments, the people who make the purchase choice are not the same as those who make or heavily influence the decision. The chapter provides the example of breakfast cereals, where the target audience for ads is often children but the target market is actually the parents who make the purchases. Diff: 2 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking

67) When crafting the communication message, what is the "big idea"? Answer: The "big idea" is the idea or concept that resonates with consumers rationally and emotionally, distinguishes the brand from competitors, and is broad and flexible enough to translate into different media, markets, and time periods. Diff: 2 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 68) What is the purpose of the creative brief? Answer: The creative brief is an elaboration of the positioning strategy that includes considerations such as key message, target audience, communication objectives (to do, to know, to believe), key brand benefits, support for the brand promise, and media. Diff: 3 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 69) What do managers look for when selecting a message strategy? Answer: In selecting a message strategy, management searches for appeals, themes, or ideas that will tie in to the brand positioning and help establish points of parity or points of difference. Some of these appeals or ideas may relate directly to product or service performance (the quality, economy, or value of the brand); others may relate to more extrinsic considerations (the brand as being contemporary, popular, or traditional). Diff: 3 LO: 12.3: Describe how a company should identify target customers and craft the communication message. AACSB: Reflective thinking 70) Using social media, marketers can influence naturally occurring word of mouth as well as help to create word of mouth by a message that is likely to engage consumers and lead to word-of-mouth communication related to the company and its offerings. A) seeding B) outlining C) buying D) broadcasting E) narrowcasting Answer: A Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

71) are streams in which consumers, the press, or other outsiders voluntarily communicate something about the brand via word of mouth, buzz, or viral marketing methods. A) Earned media B) Owned media C) Paid media D) Placed media E) Integrated Answer: A Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 72) A company website is an example of _. A) earned media B) owned media C) paid media D) placed media E) integrated Answer: B Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 73) A magazine ad is an example of . A) earned media B) owned media C) paid media D) placed media E) integrated Answer: C Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

74) We can evaluate integrated marketing activities in terms of the and with which they affect brand awareness and create, maintain, or strengthen brand associations and image. A) efficiency; innovation B) effectiveness; novelty C) effectiveness; efficiency D) speed; timing E) efficiency; timing Answer: C Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 75) The identifies the different modes of communication that a company will use to inform the target audience about its offerings. A) marketing mix B) marketing plan C) creative brief D) communication media mix E) strategic plan Answer: D Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 76) Two particular strengths of mobile communication from a marketing point of view are its and . A) timeliness; pervasiveness B) timeliness; immediacy C) immediacy; invasiveness D) broad reach; lack of regulatory oversight E) lack of regulatory oversight; pervasiveness Answer: A Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

77) Which of these communication formats can be especially helpful if a company needs to challenge consumers' misconceptions? A) Advertising B) Mobile communication C) Direct marketing D) Publicity and public relations E) Personal selling Answer: D Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 78) The appeal of public relations and publicity is based on its . A) high credibility B) simplicity C) immediacy D) lack of interference E) control over the message Answer: A Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 79) Which of these categories of media is likely to have the highest credibility with audiences? A) Earned media B) Owned media C) Paid media D) Private media E) Public media Answer: A Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

80) is a measure of the qualitative value of an exposure through a given medium. A) Reach B) Impact C) Frequency D) Familiarity E) Likeability Answer: B Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 81) is the number of times within a specified time period that an average person or household is exposed to an advertising message. A) Reach B) Impact C) Viewership D) Frequency E) Timeliness Answer: D Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 82) is the number of different persons or households exposed to a particular media schedule at least once during a specified time period. A) Reach B) Impact C) Viewership D) Frequency E) Timeliness Answer: A Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

83) Which of these is NOT one of the four key strategies for microscheduling advertising? A) Continuity B) Concentration C) Overlap D) Flighting E) Pulsing Answer: C Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 84) As scheduling strategy, alternating periods of communication activity with periods of no communication is known as . A) Continuity B) Concentration C) Overlap D) Flighting E) Pulsing Answer: D Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 85) Continuous communication at low levels, reinforced periodically by waves of heavier activity, is the scheduling strategy. A) Continuity B) Concentration C) Overlap D) Flighting E) Pulsing Answer: E Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

86) With products that exhibit a high purchase frequency, the recommended media scheduling strategy is . A) Continuity B) Concentration C) Overlap D) Flighting E) Pulsing Answer: A Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 87) Reach times average frequency times average impact equals . A) number of exposures B) impacted exposure C) weighted number of exposures D) total number of exposures E) weighted reach Answer: C Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 88) is the most important media scheduling variable when there are strong competitors, a complex story to tell, high consumer resistance, or a frequent purchase cycle. A) Reach B) Impact C) Media quality D) Frequency E) Subscriber turnover Answer: D Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

89) Which of the following elements of the marketing communications mix refers to any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor via print, broadcast, network, and display media? A) Advertising B) Personal selling C) Sales promotion D) Direct marketing E) Public relations Answer: A Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 90) refer to the marketing communications element that involves company-sponsored activities and programs designed to create daily or special brand-related interactions with consumers. A) Publicity campaigns B) Trade promotions C) Advertisements D) Public relations E) Events and experiences Answer: E Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 91) Which of the following elements of the marketing communications mix includes a variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media to promote or protect a company's image or its individual product communications? A) Direct marketing B) Public relations and publicity C) Personal selling D) Advertising E) Sales promotion Answer: B Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

92) Which of the following elements of the marketing communication mix involves use of mail, telephone, e-mail, online messaging, or in-person interaction to communicate with or solicit response or dialogue from specific customers and prospects? A) Advertising B) Personal selling C) Direct marketing D) Public relations E) Sales promotion Answer: C Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 93) is an element of the marketing communications mix that involves the passing of information from person to person by oral communication or social media. A) Personal selling B) Sales promotion C) Word of mouth D) Public relations E) Advertising Answer: C Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 94) Which of the following elements of the marketing communications mix is a process in which a seller tries to convince a buyer to purchase a particular product or service and typically involves face-to-face communication? A) Advertising B) Sales promotion C) Word-of-mouth marketing D) Public relations E) Personal selling Answer: E Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

95) Which of the following is an example of an events and experiences activity? A) Fairs and trade shows B) Continuity programs C) Factory tours D) Sales presentations E) Community relations Answer: C Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 96) Which of the following is an example of a public relations and publicity communication activity? A) Lobbying B) Company museums C) Street activities D) Company blogs E) Incentive programs Answer: A Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 97) Which of the following is an example of a word-of-mouth marketing communication activity? A) Social media B) Billboards C) Factory tours D) Incentive programs E) Trade shows Answer: A Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

98) is the number of different persons or households exposed to a particular media schedule at least once during a specified time period. A) Frequency B) Reach C) Width D) Depth E) Range Answer: B Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 99) Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Answer: TRUE Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 100) Explain what it means to "seed" a marketing message in social media. Answer: Marketers can influence naturally occurring word of mouth as well as help to create word of mouth by "seeding" a message that is likely to engage consumers and lead to word-of-mouth communication related to the company and its offerings. The idea is to share intriguing, helpful, or entertaining bits of content that people are likely to share with their social media communities. Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 101) Identify four factors that media planners should take into account when developing a media plan. Answer: Media planners should consider these four factors: • Audience quality: How well does the readership/viewership of a particular platform align with the target audience for the campaign? • Audience-attention probability: How carefully do readers/viewers of a particular platform engage with its content? Are they deep readers, for instance, or "content snackers" who bounce from one platform to the next? • Editorial quality: How do people perceive the prestige and believability of the platform? • Ad placement policies and extra services: What practical considerations do we need to plan for, and what additional services can a platform offer? Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 30

102) Why is the perceived editorial quality of a magazine, TV show, or other advertising vehicle an important consideration? Answer: Editorial quality, meaning the prestige and believability of a particular platform, is important in media planning because people are more likely to believe advertising messages when they appears within editorial content they like. Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 103) Why do many advertisers believe that the multimillion-dollar costs of advertising during the Super Bowl make good economic sense? Answer: Many advertisers believe in the value of Super Bowl advertising for two reasons. First, the telecast has a huge audience, typically more than 100 million people, so even with a $5 million ad slot, the cost per viewer can be less than with a cheaper ad buy in a regular program. Second, thanks to social media, Super Bowl ads have become cultural events that are widely discussed before, during, and after the game itself. As a consequence of this phenomenon, millions of people engage with the advertising content to a deeper degree than they are likely to do with regular advertising. Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 104) Why are publicity and public relations considered particularly beneficial when a company needs to challenge consumers' misconceptions? Answer: The appeal of public relations and publicity in this regard is based on credibility: News stories and features are more authentic and credible to readers than ads. Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 105) How can the mere presence of mass-media advertising have an effect on sales? Answer: The mere presence of mass-media advertising might have an effect on sales because consumers might believe a heavily advertised brand must be of good quality. Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

106) What effect can packaging have as a marketing communications medium? Answer: Packaging is an effective form of communication, especially in the case of decisions that are made at the point of purchase. The product's styling, the shape and color of the package, the store décor, and the company's stationery all communicate an image to buyers and deliver an impression that can strengthen or weaken a customer's view of a company. Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 107) If a company "leaks" its upcoming TV commercial online in the hopes of generating some buzz before the ad is broadcast, which of the nine communication modes is it employing with this tactic? Answer: The company is attempting to use word of mouth by "seeding" social media conversations. Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Analytical thinking 108) What is the difference between paid media and owned media? Answer: Paid media include TV, magazine and display ads, paid search, and sponsorships, all of which allow marketers to show their ad or brand for a fee. In contrast, owned media are communication channels that marketers actually own, such as a company or brand brochure, product packaging, website, blog, Facebook page, or Twitter account. Diff: 2 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 109) If a company is launching a new product or an extension of a well-known brand, which of the three media planning variables should it be most concerned with? Answer: In either of these scenarios, reach would be the most important variable. Diff: 1 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking

110) What are the elements of the marketing communications mix? Answer: The marketing communications mix consists of eight major modes of communication: 1. Advertising. Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor via print, broadcast, network, and display media. 2. Online and social media communication. Involves online activities and programs designed to engage customers or prospects and directly or indirectly raise awareness, improve image, or elicit sales of products and services (websites, e-mails, search ads, display ads, company blogs, third-party chat rooms, forums, Facebook and Twitter messages, and YouTube channels and videos). 3. Mobile communication. A special form of online communication that places messages on consumers' cell phones, smart phones, or tablets (text messages, online communication, and social media communication). 4. Direct marketing. Use of mail, telephone, e-mail, online messaging, or in-person interaction to communicate directly with or solicit response or dialogue from specific customers and prospects. 5. Events and experiences. Company-sponsored activities and programs designed to create daily or special brand-related interactions with consumers, including sports, arts, entertainment, and cause events as well as less formal activities. 6. Word of mouth marketing. Involves the passing of information from person to person by oral communication. Social media can be viewed as a specific instance of word of mouth, where personal communication occurs online and is observable by others. 7. Public relations and publicity. A variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media to promote or protect a company's image or its individual product communications. 8. Personal selling. Face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders. 9. Packaging. An effective form of communication, especially in the case of decisions that are made at the point of purchase. Diff: 3 LO: 12.4: Explain how a company should decide on the communication media mix and develop a media plan. AACSB: Reflective thinking 111) Informational appeals assume of the communication on the consumer's part. A) hostile skepticism B) strictly emotional processing C) a balance of rational and emotional processing D) strictly rational processing E) logical rejection Answer: D Diff: 1 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

112) An ad that uses the slogan "Live Your Best Life" is using a(n) appeal. A) informational B) aspirational C) transformational D) informal E) motivational Answer: C Diff: 1 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Analytical thinking 113) Which of these is a risk of attention-getting tactics such as "borrowed interest" devices? A) Somebody is bound to dislike whatever device is used. B) Attention-getting tactics may detract from comprehension. C) Most national advertisers use the same tactics. D) They invariably raise production costs. E) Media outlets are getting increasingly tough on advertising standards. Answer: B Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 114) A consumer who dislikes a celebrity sees that celebrity endorsing a favorite product and winds up feeling slightly more positive about the celebrity. What effect just took place? A) Congruity B) Distinction C) Positioning D) Attention transfer E) Linkage Answer: A Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Analytical thinking

115) In the ADPLAN framework, communicates whether the target audience will remember the creative execution. A) attention B) linkage C) distinction D) amplification E) positioning Answer: B Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 116) In the ADPLAN framework, captures whether individuals' thoughts about an advertisement are positive or negative. A) attention B) linkage C) distinction D) amplification E) positioning Answer: D Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 117) When using negative appeals, messages are most persuasive when they . A) moderately disagree with audience beliefs B) state only what the audience already believes C) strongly disagree with what the audience already believes D) gently make fun of the audience for their beliefs E) explain that disagreements are fine Answer: A Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

118) The term creative strategies refers to the . A) way marketers translate their messages into a specific communication B) amount of creative content in a communications message C) degree of innovation involved in the marketing of a product D) novelty of a marketing communication E) type of medium used to deliver a marketing communication Answer: A Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 119) A(n) appeal is a creative strategy that elaborates on product or service attributes or benefits. A) aesthetic B) informational C) bandwagon D) emotional E) transformational Answer: B Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 120) A(n) appeal is a creative strategy that elaborates on a nonproduct-related benefit or image. A) logical B) transformational C) reasonable D) informational E) rational Answer: B Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

121) Which of the following ads uses a transformational appeal? A) Thompson Water Seal can withstand intense rain, snow, and heat. B) DIRECTV offers better HD options than cable or other satellite operators. C) NBA phenomenon LeBron James pitching Nike, Sprite, and McDonald's. D) Pringles advertised "Once You Pop, the Fun Don't Stop" for years. E) Excedrin stops the toughest headache pain. Answer: D Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Analytical thinking 122) Which of the following ads uses an informational appeal? A) Thompson Water Seal can withstand intense rain, snow, and heat. B) The California Milk Processor Board ran the successful "Got Milk?" ad to boost declining sales. C) VW advertised to active, youthful people with its famed "Drivers Wanted" campaign. D) Pringles advertised "Once You Pop, the Fun Don't Stop" for years. E) KFC has marketed its fast-food products under the slogan, "Finger Lickin' Good." Answer: A Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Analytical thinking 123) is one of the sources of a spokesperson's credibility that refers to the specialized knowledge that he or she claims to possess. A) Trustworthiness B) Expertise C) Acquaintance D) Likability E) Professionalism Answer: B Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

124) is a source of a spokesperson's credibility that describes how objective and honest the spokesperson is perceived to be. A) Likability B) Expertise C) Experience D) Trustworthiness E) Compassion Answer: D Diff: 1 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 125) Which of the following sources of a spokesperson's credibility describes his or her attractiveness? A) Expertise B) Trustworthiness C) Likability D) Integrity E) Experience Answer: C Diff: 1 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 126) Which of the following marketing communications principles implies that communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience? A) Principle of closure B) Principle of duality C) Principle of delegation D) Principle of congruity E) Principle of neutrality Answer: D Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

127) Qualities such as candor, humor, and naturalness make a spokesperson , which is an important component of spokesperson credibility. A) likable B) an expert C) trustworthy D) transformational E) informational Answer: A Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 128) Communications effectiveness depends solely on the content of a message, irrespective of how it is expressed. Answer: FALSE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 129) Volkswagen's famed "Drivers Wanted" advertising campaign aimed at attracting active, youthful people uses a transformational appeal as its creative strategy. Answer: TRUE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 130) One-sided presentations that praise a product are found to be more effective than two-sided arguments that also mention shortcomings. Answer: FALSE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 131) Two-sided messages are more effective with more educated audiences and those who are initially opposed. Answer: TRUE Diff: 1 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

132) In a one-sided message, presenting the strongest argument first arouses attention and interest, important in media where the audience often does not attend to the whole message. Answer: TRUE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 133) Fear appeals work best when they are rather strong and reinforce what the audience already believes. Answer: FALSE Diff: 1 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 134) Motivational or "borrowed interest" devices—such as the presence of cute babies, frisky puppies, popular music, or provocative sex appeals—are often employed to attract attention and raise involvement with an ad. Answer: TRUE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 135) Celebrities are likely to be effective when they are credible or personify a key product attribute. Answer: TRUE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 136) Trustworthiness is that source of a spokesperson's credibility that describes his or her attractiveness. Answer: FALSE Diff: 1 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

137) The most highly credible source would score high on at least two of the three dimensions—expertise, trustworthiness, and likability. Answer: FALSE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 138) The principle of congruity implies that communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience. Answer: TRUE Diff: 2 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 139) What are the six dimensions of the ADPLAN framework? Answer: The ADPLAN framework encompasses six dimensions: attention, distinction, positioning, linkage, amplification, and net equity. Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 140) What does net equity refer to in the ADPLAN framework? Answer: Net equity pertains to how an advertisement fits with a brand's heritage and established associations. For example, the BMW brand is associated with high performance. As a consequence, one of BMW's objectives is to make sure that new advertisements do not threaten or undermine this equity. Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

141) Describe what research has revealed about information appeals and the use of one-sided versus two-sided arguments in marketing communication. Answer: One might expect one-sided presentations that praise a product to be more effective than two-sided arguments that also mention shortcomings, but two-sided messages may be more appropriate, especially when negative associations must be overcome. Two-sided messages are more effective with better-educated audiences and those who are initially opposed. The order in which arguments are presented is also important. In a one-sided message, presenting the strongest argument first arouses attention and interest, which is important in media where the audience often does not attend to the whole message. With a captive audience, a climactic presentation might be more effective. For a two-sided message, if the audience is initially opposed, it is better to start with the other side's argument and conclude with your own strongest argument. Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking 142) Compare and contrast the use of negative and positive appeals in advertising messages. Answer: Communicators use negative appeals such as fear, guilt, and shame to get people to do things (brush their teeth, have an annual health checkup) or stop doing things (smoking, abusing alcohol, overeating). Fear appeals work best when they are not too strong, when source credibility is high, and when the communication promises, in a believable and efficient way, to relieve the fear it arouses. Messages are most persuasive when moderately discrepant with audience beliefs. Stating only what the audience already believes at best just reinforces beliefs, and if the messages are too discrepant, audiences will counterargue and disbelieve them. Communicators also use positive emotional appeals such as humor, love, pride, and joy. Motivational or "borrowed interest" devices—such as the presence of cute babies, frisky puppies, popular music, or provocative sex appeals—are often employed to attract attention and raise involvement with an ad. These techniques are thought necessary in the tough new media environment characterized by low-involvement consumer processing and competing ad and programming clutter. Attention-getting tactics are often too effective. They may also detract from comprehension, wear out their welcome fast, and overshadow the product. Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Reflective thinking

143) An ad agency has landed an account for Savola, a brand of healthy cooking oil. Describe how the new ad campaign can effectively incorporate negative appeals in its messages. Answer: (Student answers will vary.) Negative appeals such as fear, guilt, and shame are used by communicators to get people to do things (brush their teeth) or stop doing things (smoking). The cooking oil ad can use fear appeals to get consumers to start using its product. This can be achieved by depicting health risks associated with using cooking oils other than Savola, such as hypertension, heart attacks, etc. Guilt appeal can be used to depict a family grieving the death of someone who did not use Savola. Shame appeal could illustrate the case of a parent who cannot play catch with his kids because his fitness is compromised by not using Savola. However, the ad agency should take care to ensure that the negative appeals do not come across as too strong to the audiences, the credibility of the source in the ads is high, and the ad promises to relieve fears of health risks in a believable and efficient way. The ad is most persuasive when moderately discrepant with audience beliefs. If the ad merely says that using unhealthy oil leads to health risks, it only serves to reinforce the belief, and if the message exaggerates the health risks of not using Savola, audiences will only counterargue and disbelieve the ad. Diff: 3 LO: 12.5: Describe the creative strategies involved in developing an effective communication campaign. AACSB: Analytical thinking 144) is the proportion of company advertising of that product to all advertising of similar competitive products. A) Share of consumers' minds/hearts B) Share of advertising expenditures C) Share of voice D) Share of market E) Share of investment Answer: C Diff: 1 LO: 12.6: Identify actionable metrics for measuring communication effectiveness. AACSB: Reflective thinking 145) Communication effectiveness can be measured from two perspectives: . A) strategy; tactics B) awareness; action C) brand recall; brand recognition D) supply side; demand side E) channel; consumer Answer: D Diff: 1 LO: 12.6: Identify actionable metrics for measuring communication effectiveness. AACSB: Reflective thinking

and

146) Communication inputs such as press clippings or the number of ads broadcast can give marketing managers the key insights they need to judge the success of a communication campaign. Answer: FALSE Diff: 2 LO: 12.6: Identify actionable metrics for measuring communication effectiveness. AACSB: Reflective thinking 147) Discuss the four stages of how advertising investment leads to market share. Answer: A company's (1) share of advertising expenditures produces a (2) share of voice (proportion of company advertising of that product to all advertising of similar competitive products) that earns a (3) share of consumers' minds and hearts and, ultimately, a (4) share of market. Diff: 3 LO: 12.6: Identify actionable metrics for measuring communication effectiveness. AACSB: Reflective thinking 148) Describe the variables that are measured on the supply side and the demand side. Answer: On the supply side, measuring communication effectiveness aims to assess the media coverage–for example, the number of seconds the brand is clearly visible on a television screen or the column inches of press clippings that mention the brand. In contrast, on the demand side, measuring communication effectiveness aims to assess the effect a company's campaign has on the target audience. To this end, members of the target audience are asked whether they recognize or recall the message, how many times they saw it, what points they recall, how they felt about the message, what their previous attitudes toward the product and the company were, and what their current attitudes are. Diff: 3 LO: 12.6: Identify actionable metrics for measuring communication effectiveness. AACSB: Reflective thinking 149) Discuss the risks involved in using celebrity endorsers in advertising campaigns. Answer: If a campaign is doing well, a celebrity might hold out for a larger fee at contract renewal or might even withdraw. And just like movies and album releases, celebrity campaigns can be expensive flops. A celebrity might lose popularity or, even worse, get caught in a scandal or embarrassing situation that reflects poorly on the brand. Diff: 2 LO: 12.6: Identify actionable metrics for measuring communication effectiveness. AACSB: Reflective thinking

150) Describe the process of measuring the results of marketing communications. Answer: After implementing the communication plan, marketers must measure its effectiveness. Research on the impact of communication seeks to determine the degree to which a company's communication has been effective in achieving its goals. Communication effectiveness can be measured from two perspectives: supply side and demand side. On the supply side, measuring communication effectiveness aims to assess the media coverage–for example, the number of seconds the brand is clearly visible on a television screen or the column inches of press clippings that mention the brand. Although supply-side methods provide quantifiable measures, equating media coverage with advertising exposure ignores the content of the respective communications. The advertiser uses media space and time to communicate a strategically designed message. Media coverage and telecasts only expose the brand and don't necessarily embellish its meaning in any direct way. Although some public relations professionals maintain that positive editorial coverage can be worth five to 10 times the equivalent advertising value, sponsorship rarely provides such favorable treatment. On the demand side, measuring communication effectiveness aims to assess the effect a company's campaign has on the target audience. To this end, members of the target audience are asked whether they recognize or recall the message, how many times they saw it, what points they recall, how they felt about the message, what their previous attitudes toward the product and the company were, and what their current attitudes are. Diff: 3 LO: 12.6: Identify actionable metrics for measuring communication effectiveness. AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 13 Designing an Integrated Marketing Campaign in the Digital Age 1) Which of these is mentioned in the chapter as a challenge that results from the growing complexity of the communication landscape? A) Dealing with the consolidation of social media B) Dealing with the decline of social media C) Coordinating communication to deliver a consistent message across channels D) Coordinating internal and external communication activities E) Coordinating sales messages with marketing messages Answer: C Diff: 2 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 2) As a result of the growing complexity of the communication landscape, companies are adopting as an approach to designing, communicating, and delivering a message through multiple strategies that work together and reinforce one another. A) integrated marketing communications B) fully digital communication C) integrated marketing strategies D) crowdsourced communication E) values-driven communication Answer: A Diff: 1 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 3) To facilitate one-stop shopping for marketers, media companies and ad agencies have acquired all these types of service firms EXCEPT . A) promotion agencies B) custom manufacturing facilities C) package-design consultancies D) public relations firms E) social media experts Answer: B Diff: 1 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking

4) Which of these is NOT one of the levels at which integrated marketing communication works? A) Horizontal integration B) Vertical integration C) Internal integration D) External integration E) Virtual integration Answer: E Diff: 2 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 5) integration involves coordinating all relevant marketing actions—including packaging, pricing, sales promotions, and distribution—with the communication campaign to achieve maximum customer impact. A) Horizontal B) Vertical C) Internal D) External E) Virtual Answer: A Diff: 1 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 6) integration involves aligning the communication objectives with the higher-level goals that guide the company's overarching marketing strategy. A) Horizontal B) Vertical C) Internal D) External E) Virtual Answer: B Diff: 1 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking

7) communication involves sharing the relevant information from different departments—including product development, market research, sales, and customer service—with the communication team to create an effective and cost-efficient campaign. A) Horizontal B) Vertical C) Internal D) External E) Virtual Answer: C Diff: 1 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 8) communication coordinates a company's communication activities with those of outside collaborators—including advertising, social media, and public relations agencies; event organizers; and campaign co-sponsors. A) Horizontal B) Vertical C) Internal D) External E) Virtual Answer: D Diff: 1 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 9) Without an explicit focus on , a company's communication can easily become a random compilation of unrelated (and sometimes even conflicting) messages, designed by different creative teams working in isolation from one another, and distributed though disparate media channels in a way that fails to emphasize their joint impact and might ultimately confuse rather than inform and persuade target customers. A) cost B) effectiveness C) customers D) consistency E) value Answer: D Diff: 2 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 10) In developing an integrated marketing communications program, the marketer's overriding goal is to create the most effective and efficient communication program possible. Answer: TRUE Diff: 2 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 3

11) Identify and describe the six criteria that help ensure truly integrated communications. Answer: The six criteria are as follows: • Coverage—the proportion of the audience reached by each communication option employed, as well as the amount of overlap among those options. • Contribution—the inherent ability of a marketing communication to elicit the desired response from consumers, and to exert communication effects on them, in the absence of exposure to any other communication option. • Commonality—the extent to which common associations are reinforced across communication options. • Complementarity—the degree to which different associations and linkages across communication are emphasized. • Conformability—the extent to which a marketing communication option works for both new and current consumers. • Cost—a measure of how efficient a program is. Diff: 3 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 12) Contrast the concepts of commonality and complementarity in integrated marketing communications. Answer: Commonality is the extent to which common associations are reinforced across communication options—that is, the extent to which different communication options share the same meaning. Complementarity, on the other hand, involves emphasizing different associations and linkages across communication options. For example, sponsorship of a cause may improve perceptions of a brand's trust and credibility, but TV and print advertising may be needed to communicate its performance advantages. Diff: 3 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking 13) Explain the range of benefits that an integrated approach to communication provides. Answer: An integrated marketing communication effort can produce greater message consistency, help build strong brands, and create more sales impact. It forces management to think about all the ways the customer comes in contact with the company, how the company communicates its positioning, the relative importance of each vehicle, and timing issues. It gives someone the responsibility—where none existed before—to unify the company's brand image and messages as they are sent through thousands of company activities. Integrated marketing communications should improve the company's ability to reach the right customers with the right messages at the right time and in the right place. Diff: 3 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Reflective thinking

14) If Apple makes the effort to explain the LiDAR scanner in its new iPhones and iPads in a way that helps both current users and people who are still considering an Apple mobile device, which criterion of successful communication integration is it demonstrating? Answer: Ensuring that a message works for customers who are new to the brand and those who are already familiar with it is the notion of conformability. Diff: 3 LO: 13.1: Describe the key principles in managing an integrated marketing campaign. AACSB: Analytical thinking 15) In addition to the fleeting nature of TV commercials, is/are another reason that product-related messages and the brand itself can be overlooked. A) overuse of celebrity endorsers B) overreliance on well-known pop songs C) lack of creativity D) distractive creative elements E) wide diversity in screen sizes Answer: D Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 16) Which of these is a key reason that magazines and newspapers can provide detailed product information and effectively communicate user and usage imagery? A) Heavy readers are heavy shoppers. B) People are turning away from electronic media to read more. C) Readers consume them at their own pace. D) People nowadays prefer more technical details in ads. E) The lower information density compared to TV commercials makes print more appealing. Answer: C Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 17) Which of these can diminish the impact of newspaper advertising? A) Short "shelf life" B) Reader weariness with the news C) Politicization of the news D) Lack of photography E) Trend toward recycling newspapers Answer: A Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking

18) Which of these creative elements in the long-running series of TV commercials for Aflac is credited with their success? A) A duck that interviews Aflac customers B) The "Don't take any flack" tagline C) The dancing ducks D) A duck that squawks the company name E) The brightly colored animation Answer: D Diff: 1 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 19) Even though the cost per viewer for online video ads can be cheaper than conventional TV commercials, which of these is a potential disadvantage of online ads? A) Content-licensing headaches B) Lack of sound C) The smaller mobile screens on which they are often viewed D) Limited color palettes E) Inability to overlay text on images Answer: C Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 20) In a well-done print ad, what percentage of the audience typically reads most of the copy? A) Between 50 and 75 percent B) The percentage is unmeasurable C) Perhaps as high as 90 percent D) Fewer than 10 percent E) 30 to 40 percent Answer: D Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 21) AutoZone is the largest chain of automotive parts and accessories retail stores in the United States. If it creates a top-notch ad to run in leading newspapers around the country, what percentage of readers should it expect will notice the ad? A) At least 75 percent, possibly as high as 90 percent B) 60 percent if the ad is really well done C) Less than 50 percent D) Around 10 percent E) At least 5 percent, but no more than 10 percent Answer: C Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Analytical thinking 6

22) Radio is a particularly effective medium . A) in the morning B) in the evening C) at lunchtime D) in the workplace E) on weekends Answer: A Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 23) Which of these is NOT one of the advantages that online ads have over other formats? A) Marketers can track how many visitors click on an ad. B) Marketers can track how long visitors spend on an ad. C) Marketers can track what visitors do on an ad. D) Marketers can track how long visitors where visitors go after seeing an ad. E) Marketers can track whether visitors approve of the sites on which an ad is placed. Answer: E Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 24) involves materials resembling the publication's editorial content but intended to promote the advertiser's product. A) Fake advertising B) Native advertising C) Promoter content D) Sponsor editorial E) Paid media Answer: B Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 25) Which of these is NOT one of the identified advantages of radio as an advertising medium? A) Narrow targeting B) Low cost C) Short closings for scheduling D) Multimedia E) Listener engagement Answer: D Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking

26) Which of these is NOT one of the identified advantages of online advertising? A) Lowest cost of all formats B) User tracking C) Contextual placement D) Variety of content types E) Options for testing different messages Answer: A Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 27) Paying to have products appear in TV shows and movies is known as A) entertainment advertising B) in-show promotion C) native advertising D) product placement E) stealth advertising Answer: D Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking

28) If a semiconductor manufacturer such as AMD writes a technical article discussing its latest CPU chip and pays to have it run in an engineering magazine alongside regular editorial content, this is an example of . A) entertainment advertising B) in-show promotion C) native advertising D) product placement E) stealth advertising Answer: C Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Analytical thinking 29) When Reebok pays to have its ads appear on websites with sports- and fitness-related content, this is an example of . A) contextual placement B) editorial promotion C) native advertising D) product placement E) stealth advertising Answer: A Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Analytical thinking 8

30) Place advertising, or out-of-home advertising, is a broad category that includes many creative and unexpected forms to grab consumers' attention, including all of the following EXCEPT . A) billboards B) yellow pages C) public spaces D) product placement E) point of purchase Answer: B Diff: 1 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 31) Which of the following is generally acknowledged as the most powerful advertising medium and reaches a broad spectrum of consumers at low cost per exposure? A) Television B) Radio C) Newspapers D) Magazines E) Billboards Answer: A Diff: 1 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 32) Which of these is one of television's three primary advantages? A) The low volume of nonprogramming material on television makes it difficult for consumers to ignore or forget ads. B) It provides detailed product information and effectively communicates user and usage imagery. C) It can vividly demonstrate product attributes and persuasively explain their corresponding consumer benefits. D) TV channels are very targeted, ads are relatively inexpensive to produce and place, and short closings allow for quick response. E) It lets companies achieve a balance between broad and localized market coverage. Answer: C Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Analytical thinking

33) According to researchers, what is the order of importance of the content elements of print ads (from most important to least important)? A) Picture, headline, copy B) Copy, picture, headline C) Headline, copy, picture D) Picture, copy, headline E) Copy, headline, picture Answer: A Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 34) Which of the following is the main advantage of radio as an advertising medium? A) Low competition B) More attention than television C) Longer duration of ad exposure D) Flexibility E) Standardized rate structures Answer: D Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 35) Which of the following is an advantage of using newspapers as an advertising medium? A) Long life span B) High reproduction quality C) Huge "pass-along" audience D) High level of targeting E) Good local market coverage Answer: E Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 36) Which of the following is a disadvantage of using television as an advertising medium? A) High relative cost B) Low audience attention C) Lack of reach among audience D) High audience selectivity E) Absence of clutter Answer: A Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking

37) Which of the following is an advantage of using radio as an advertising medium? A) Higher attention than television B) Standardized rate structures C) Long duration of ad exposure D) High quality reproduction E) Pervasive reach Answer: E Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 38) Contextual placement refers to the ability marketers have to buy ads on websites related to their own offerings. Answer: TRUE Diff: 1 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 39) Print advertising in newspapers and magazines is generally acknowledged as the most powerful advertising medium. Answer: FALSE Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 40) Researchers studying print advertisements report that the picture, headline, and copy matter in that order. Answer: TRUE Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 41) The rationale behind place advertising is that marketers are better off reaching people where they work, play, and shop. Answer: TRUE Diff: 1 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 42) What are the three common formats of native advertising? Answer: Native ads come in three common formats: (1) content recommendations, such as suggested articles that appear below an article featuring editorial content, (2) "in-feed" advertisements that appear in the news feed on social networks, and (3) search listings and promoted listings that appear above the results of an organic Google search. Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 11

43) Discuss the appeal of point-of-purchase advertising and identify P-O-P common formats. Answer: The appeal of point-of-purchase advertising is that consumers make many brand decisions in the store. There are many ways to communicate at the point of purchase, including ads on shopping carts, cart straps, aisles, and shelves and with in-store demonstrations, live sampling, and instant coupon machines.16 Some supermarkets are selling floor space for company logos and experimenting with talking shelves. Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 44) Why are advertisers increasingly turning to public spaces to create memorable impressions? Answer: The key reason for this is the continuing decline in effectiveness of many traditional means of communicating. Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Analytical thinking 45) Identify at least six ways advertisers use public spaces to communicate brand messages. Answer: Ads are appearing in such unconventional places as movie screens, airplane bodies, and fitness equipment, as well as in classrooms, sports arenas, office and hotel elevators, and other public places. Transit ads on buses, subways, and commuter trains have become a valuable way to reach working men and women. "Street furniture"—bus shelters, kiosks, and public areas–is another fast-growing option. Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 46) Why is outdoor advertising often called the "15-second sell"? Answer: Outdoor advertising is often called the "15-second sell" because consumers have a fleeting exposure to the ad and must grasp its message almost instantly. Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 47) Identify the four main categories of place advertising. Answer: Popular options include billboards, public spaces, product placement, and point of purchase. Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking

48) Discuss the common disadvantages of online advertising. Answer: Consumers can effectively screen out most messages. Marketers may think their ads are more effective than they really are if bogus clicks are generated by software-powered websites. Advertisers also lose some control over their online messages, which can be hacked or vandalized. Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 49) Why does contextual placement of online ads appeal to marketers? Answer: Contextual placement, meaning paying to have ads appear on sites with content related to the marketer's product offerings, is appealing to marketers because people who are interested in the content on such sites are likely to be interested in related products as well. Contextual placement provides a way to narrow down the vast online audience to those people who have at least some level of interest in the general product area. Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Analytical thinking 50) What improvements do display ads need to make to reach their full potential? Answer: Display ads still hold great promise compared to popular search ads. But ads need to be more attention-getting and influential, better targeted, and more closely tracked. Diff: 2 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 51) How important are images in print advertising? Answer: Research suggests that images are the most important element in a print ad, with the headline coming in second, and the body copy coming in last. The image or picture's primary job is to draw attention so that readers will take time to engage with the rest of the content. Diff: 1 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking

52) Briefly describe the role of television as an advertising medium. Answer: Television is generally acknowledged as the most powerful advertising medium and reaches a broad spectrum of consumers at low cost per exposure. TV advertising has three particularly important strengths. First, it can vividly demonstrate product attributes and persuasively explain their corresponding consumer benefits. Second, it can dramatically portray user and usage imagery, brand personality, and other intangibles. Third, television has the opportunity to tap a captive audience during live programming at important events (e.g., the Super Bowl, Oscars, and unfolding news stories). Because of the fleeting nature of the ad, however, and the distracting creative elements often found in it, product-related messages and the brand itself can be overlooked. Moreover, the high volume of nonprogramming material on television creates clutter that makes it easy for consumers to ignore or forget ads. Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking 53) What is the role of print media in advertising? What are the major advantages and disadvantages associated with print advertising media? Answer: Print media offer a stark contrast to broadcast media. Because readers consume them at their own pace, magazines and newspapers can provide detailed product information and effectively communicate user and usage imagery. At the same time, the static nature of the visual images in print media makes dynamic presentations or demonstrations difficult, and print media can be fairly passive. The two main print media–magazines and newspapers–share many advantages and disadvantages. Although newspapers are timely and pervasive, magazines are typically more effective at building user and usage imagery. Newspapers are popular for local—especially retailer—advertising. Although advertisers have some flexibility in designing and placing newspaper ads, relatively poor reproduction quality and short shelf life can diminish the ads' impact. Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Reflective thinking

54) What are the advantages and disadvantages of online marketing communications? Answer: Online ads offer several advantages. Marketers can easily trace their effects by noting how many unique visitors click on a page or ad, how long they spend with it, what they do on it, and where they go afterward. This enables companies to test different messages and creative solutions, which in turn allows them to optimize the advertising campaign in a way that is most likely to elicit the desired consumer response. Online advertising also has the advantage of contextual placement, which means marketers can buy ads on sites related to their own offerings. They can also place advertising based on keywords that customers type into search engines to reach people when they've actually started the buying process. Furthermore, online advertising allows for a plethora of content types–from text-only ads to print-style advertisements, video commercials, and fully interactive experiences. The disadvantage of online ads starts with the fact that consumers can effectively screen out most messages. Marketers may think their ads are more effective than they really are if bogus clicks are generated by software-powered websites. Advertisers also lose some control over their online messages, which can be hacked or vandalized. But the pros clearly can outweigh the cons, and the share of online advertising has shown continuous growth in the past decade. Diff: 3 LO: 13.2: Define the key aspects of managing an effective advertising campaign. AACSB: Analytical thinking 55) describes activities designed to improve the likelihood that a link for a brand ranks as high as possible in the order of all nonpaid links when consumers search online for relevant terms. A) Search engine marketing (SEM) B) Search marketing C) Search engine optimization (SEO) D) Paid search E) Search targeting Answer: C Diff: 1 LO: 13.3: Explain how to design and manage online communications. AACSB: Reflective thinking 56) describes activities whereby the company pays search engine companies to be featured in the results of particular keyword searches that serve as a proxy for the consumer's product or consumption interests. A) Search engine marketing (SEM) B) Search marketing C) Search engine optimization (SEO) D) Paid search E) Search targeting Answer: A Diff: 1 LO: 13.3: Explain how to design and manage online communications. AACSB: Reflective thinking

57) Of the total time U.S. consumers spend with all media, is spent online. A) one-quarter B) one-third C) two-fifths D) more than half E) 20 percent Answer: D Diff: 2 LO: 13.3: Explain how to design and manage online communications. AACSB: Reflective thinking 58) Individual webpages or clusters of pages that function as supplements to a primary website are . A) search engine optimization B) pay-per-click ads C) delighters D) microsites E) touch points Answer: D Diff: 1 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 59) J.D. Power found that consumers who were "delighted" with an automotive manufacturer's website were more likely to test drive one of its vehicles as a result. Answer: TRUE Diff: 1 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 60) One of the key recommendations for managing website privacy "touch points" is preventing human intrusion by using automation whenever possible. Answer: TRUE Diff: 1 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 61) Search engine optimization (SEO) describes activities designed to improve the likelihood that a link for a brand is as high as possible in the rank order of all nonpaid links when consumers search for relevant terms. Answer: TRUE Diff: 1 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences

62) If Apple wanted to generate or convert sales leads as part of its SEO efforts, it should focus on broader, rather than narrower, search terms. Answer: FALSE Diff: 3 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 63) Why is search engine marketing (SEM) more expensive than search engine optimization (SEO)? Answer: Because SEO involves optimizing the company's own website without paying a third party to generate traffic, it is significantly less costly to implement than search engine marketing, which requires marketers to pay search engine companies to be featured in search results. Diff: 3 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 64) What are two elements of user-centric privacy controls that are recommended to improve the online user experience? Answer: These two elements are avoiding multiple intrusions and preventing human intrusion by using automation whenever possible. Diff: 3 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 65) What technique is McDonald's doing when it pays Google for its information to appear among the results generated when consumers search for a particular word or phrase, such as "burger," "French fries," or "fast food"? Answer: This is an example of search engine marketing (SEM). Diff: 2 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 66) What is a microsite? Provide an example of a firm that is likely to benefit from the use of a microsite. Answer: Microsites are individual Webpages or clusters of pages that function as supplements to a primary site. They're particularly relevant for companies selling low-interest products. People rarely visit an insurance company's website, for example, but the company can create a microsite on used-car sites that offers advice for buyers of used cars and a good insurance deal at the same time. Diff: 2 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences

67) Identify three general guidelines for search engine optimization and paid search ads. Answer: Here are three guidelines: • Broader search terms (("iPhone" or "burger") are useful for general brand building; more specific ones identifying a particular product model or service ("Apple iPhone XS Max") are useful for generating and converting sales leads. • Search terms need to be spotlighted on the appropriate pages of the marketer's website so search engines can easily identify them. • Any one product can usually be identified by means of multiple keywords, but marketers must bid on each keyword according to its likely return on revenue. It also helps to have popular sites link back to the marketer's website. Diff: 3 LO: 13.3: Explain how to design and manage online communications. AACSB: Integration of real-world business experiences 68) Some believe viral marketing efforts are driven more by the rules of rules of selling. A) marketing B) entertainment C) e-commerce D) distraction E) engagement Answer: B Diff: 1 LO: 13.4: Describe the key aspects of managing social media. AACSB: Reflective thinking

than by the

69) The term refers to the use of a popular online figure to promote a product, service, or brand within his or her social media feed. A) influencer marketing B) celebrity endorsement C) social commerce D) e-commerce E) influencer commerce Answer: A Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences

70) Strictly speaking, influencer marketing can be viewed as a mix of endorsement that takes place in the context of social media. A) entertainment B) advertising C) publicity D) press relations E) place advertising Answer: C Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences

and paid

71) Which of these online entities are consumers LEAST likely to engage with? A) charities B) news media C) fashion D) consumer goods E) social causes Answer: D Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 72) Apple hosts a large number of , which become customers' primary source of product information after warranties expire and are organized by product lines and type of user (consumer or professional). A) niche networks B) social networks C) microblogs D) blogs E) online communities Answer: E Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 73) Which of the following is NOT a benefit of a social media presence for a brand? A) Social media allow marketers to establish a public voice and presence online. B) Social media can cost-effectively reinforce other communication activities. C) Social media can encourage companies to stay innovative and relevant. D) Social media can be used to build or tap into online communities. E) Social media allow companies to have a short-term focus. Answer: E Diff: 1 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 19

74) Which of the following extrinsic factors is most likely to sway a consumer's decision about whether to contribute to social media? A) Whether they are having fun B) Whether they are learning C) Whether it affects their self-image D) Whether the brand is novel E) Whether their family is having fun Answer: C Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 75) Which of the following is NOT an example of viral marketing? A) Quicksilver puts out surfing videos and surf-culture books for teens. B) Johnson & Johnson has a popular parenting advice website. C) Walmart places videos with money-saving tips on YouTube. D) Mountain Dew has a record label and offers free downloads. E) Hasbro places a Facebook ad about its TV channel. Answer: E Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 76) Online customer reviews are the second-most trusted source of brand information. What is the most trusted source? A) Print advertising B) Recommendations from friends and family C) Salesperson recommendation D) Celebrity endorsements E) Facebook recommendations Answer: B Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 77) Which of the following is NOT generally true of online reviews? A) People value positive reviews more than negative reviews. B) Online reviews can be biased. C) Raters are influenced by previous, positive ratings. D) Social influence can lead to disproportionally positive online ratings. E) Online reviews can be fake. Answer: A Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Reflective thinking

78) Social media allow consumers to become engaged with a brand at perhaps a deeper and broader level than ever before. Answer: TRUE Diff: 1 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 79) Social media allow marketers to build or tap into online communities, inviting participation from consumers and creating a long-term marketing asset in the process. Answer: TRUE Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 80) Bloggers do not need to disclose their relationship with marketers whose products they endorse. Answer: FALSE Diff: 1 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 81) When it comes to social media, only some consumers want to engage with some brands, and, even then, only some of the time. Answer: TRUE Diff: 1 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 82) Consumers are more likely to share a viral video ad when the brand uses pulsing so it is not too intrusive in the video. Answer: TRUE Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 83) A Nielsen survey found that online customer reviews were the most trusted source of brand information. Answer: FALSE Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 84) Social influence can lead to disproportionally positive online ratings. Answer: TRUE Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 21

85) How has "always-on" connectivity made life more challenging for social media marketers? Answer: The phenomenon of "always-on" connectivity has conditioned consumers to expect an almost instant company response to news, events, and customer problems. This, in turn, forces companies to develop new communication capabilities enabling them to react to problems and opportunities in real time by shaping the social media conversation and taking actions to rectify problems and take advantage of opportunities. Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 86) Given how negative and downright nasty social media can be at times, do companies today have a choice as to whether they want to engage with the public on social media? Explain your answer. Answer: Companies have a choice, strictly speaking, but any company that chooses not to engage loses a significant opportunity to participate in and shape conversations that affect its brands and very future as a company. Whether a company chooses to engage in social media or not, the internet will always permit scrutiny and criticism from consumers and organizations. By using social media and the internet in a constructive, thoughtful way, firms at least have a means to create a strong online presence and to offer credible alternative points of view if negative feedback occurs. And if the firm has built a strong online community, members of that community will often rush to defend the brand and play a policing role regarding inaccurate or unfair characterizations. Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 87) How can members of brand communities and other interested stakeholders help companies in the event they are attacked on social media? Answer: If a firm has built a strong online community, members of its brand community and other fans will often rush to defend the brand and play a policing role regarding inaccurate or unfair characterizations. Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 88) What major problem has arisen in influencer marketing thanks to the high fees collected by influencers and the lack of accurate measures of their market impact? Answer: The high fees collected by influencers and the lack of accurate measures of their market impact have also created a global marketplace for social media fraud. A growing number of companies specialize in selling Twitter followers and retweets, views on YouTube, and endorsements on LinkedIn to users who want to appear more popular and influential in the social media space. Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 22

89) Describe the general sense of how consumers prefer to engage with brands on social media. Answer: Consumers are most likely to engage with media, charities, and fashion and least likely to engage with consumer goods. Although consumers may use social media to get useful information, deals, and promotions or to enjoy interesting or entertaining brand-created content, a much smaller percentage use social media to engage in two-way "conversations" with brands. In short, marketers must recognize that when it comes to social media, only some consumers want to engage with some brands–and even then, only some of the time. Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 90) Identify the most common forms of online communities and forums. Answer: Online communities and forums come in all shapes and sizes. Many are created by consumers or groups of consumers with no commercial interests or company affiliations. Others are sponsored by companies whose members communicate with the company and with one another through postings, text messaging, and chat discussions about special interests related to the company's products and brands. Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 91) In general, how much online content "goes viral?" Answer: Much online content is not necessarily shared and does not go viral. Only a small fraction of content ends up "cascading" to more than one person beyond the initial recipient. Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 92) Describe the impact that online customer reviews can have on consumer behavior. Answer: Customer reviews can be especially influential in shaping customer preferences and buying decisions. One Nielsen survey found that online customer reviews were the second most trusted source of brand information (after recommendations from friends and family). Research has shown that social influence can lead to disproportionately positive online ratings, and subsequent raters are more likely to be influenced by previous positive ratings than by negative ones. Consumers posting reviews are susceptible to conformity pressures and to adopting the norms of others. Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences

93) Why are social media important to marketers? Answer: Social media provide a means for consumers/companies to share text, images, audio, and video information with each other and with companies/consumers. Social media allow marketers to establish a public voice and presence online. They can cost-effectively reinforce other communication activities. Because of their day-to-day immediacy, they can also encourage companies to stay innovative and relevant. Marketers can build or tap into online communities, inviting participation from consumers and creating a long-term marketing asset in the process. Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 94) What are the four main platforms for social media? Answer: Here are the four main platforms for social media: 1. online communities and forums 2. blogs 3. social networks 4. customer reviews Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 95) What advice does Harvard Business School viral video expert Thales Teixeira have for getting a viral ad shared? Answer: Utilize brand pulsing so the brand is not too intrusive within the video; open with joy or surprise to hook those fickle viewers who are easily bored, build an emotional roller coaster within the ad to keep viewers engaged throughout, and surprise but don't shock–if an ad makes viewers too uncomfortable, they are unlikely to share it. Diff: 3 LO: 13.4: Describe the key aspects of managing social media. AACSB: Integration of real-world business experiences 96) What are the two most trusted sources of brand information? Answer: Recommendations from friends and family and online customer reviews. Diff: 2 LO: 13.4: Describe the key aspects of managing social media. AACSB: Reflective thinking

97) Which of these phenomena has prompted many marketers to begin making relevant and timely offers to consumers on their mobile phones at or near the point of purchase? A) Decline of in-store traffic B) Visual clutter in retail stores C) Declining redemption rates for traditional coupons D) Increase in the number of individual SKUs in retail outlets E) Panic buying during times of social unrest Answer: C Diff: 2 LO: 13.5: Explain how to manage mobile communications. AACSB: Integration of real-world business experiences 98) On which of these media formats do U.S. consumers spend the most time? A) Radio B) Mobile C) Newspapers D) Magazines E) Billboard Answer: B Diff: 2 LO: 13.5: Explain how to manage mobile communications. AACSB: Integration of real-world business experiences 99) Which of the following is NOT one of the four distinctive characteristics of a mobile device? A) It is tied to one user. B) It automatically blocks marketing messages. C) It is virtually always "on." D) It allows for immediate consumption as it is a distribution channel with a payment system. E) It is highly interactive given it allows for geotracking and picture and video taking. Answer: B Diff: 2 LO: 13.5: Explain how to manage mobile communications. AACSB: Integration of real-world business experiences 100) Marcel downloaded an episode of his daughter's favorite program to his cell phone to ward off a tantrum while they were shopping. Which of the four distinctive characteristics was most critical to enable this action? A) It is tied to one user. B) It allows marketers to personalize messages. C) It is virtually always "on." D) It allows for immediate consumption as it is a distribution channel with a payment system. E) It is highly interactive given it allows for geotracking and picture and video taking. Answer: D Diff: 1 LO: 13.5: Explain how to manage mobile communications. AACSB: Integration of real-world business experiences 25

101) Which of the following best characterizes average consumers' current media consumption patterns? A) Consumers spend more time listening to the radio than on their mobile phones, but less time on magazines and newspapers. B) Consumers spend more time reading magazines and newspapers than on their mobile phones, but less time listening to the radio. C) Consumers spend more time on mobile devices than on radio, magazines, and newspapers combined. D) Consumers spend an average of two hours and 52 minutes on radio, magazines, and newspapers combined. E) Consumers spend an average of one hour and 46 minutes on mobile devices. Answer: C Diff: 3 LO: 13.5: Explain how to manage mobile communications. AACSB: Integration of real-world business experiences 102) Are consumers more engaged at attentive when online via a computer or when using their smartphones? Answer: Consumers are more engaged and attentive when using their smartphones than when they are online. Diff: 1 LO: 13.5: Explain how to manage mobile communications. AACSB: Integration of real-world business experiences 103) Provide an example of how a company could use location-specific promotions to reach mobile phone users. Answer: (Student answers will vary.) The chapter provides the example of how Sonic Corp. used GPS data and proximity to cell towers in Atlanta to identify when those customers who had signed up for company communications were near one of roughly 50 Sonic restaurants in the area. When that was the case, the company sent customers a text message with a discount offer or an ad to entice them to visit the restaurant. Diff: 2 LO: 13.5: Explain how to manage mobile communications. AACSB: Integration of real-world business experiences 104) When a company sponsors a local blood drive, it is most likely focusing on which key reason for sponsoring an event? A) To identify with a particular target market or lifestyle B) To create or reinforce perceptions of key brand image associations C) To create experiences and evoke feelings D) To express commitment to the community or on social issues E) To build commercial interest in its brand name Answer: D Diff: 1 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Analytical thinking 26

105) Which of these is identified as a risk of event sponsorship? A) Events can be unpredictable and beyond the sponsor's control. B) The true costs of sponsorship are difficult to calculate. C) Many employees resent having company budgets allocated to social events. D) It's impossible to measure the outcome of event sponsorship. E) Too many companies now sponsor events. Answer: A Diff: 2 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Reflective thinking 106) Corporate museums fall under which type of marketing activity? A) Event sponsorship B) Experiences C) Publicity D) Free advertising E) Social media Answer: B Diff: 1 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Analytical thinking 107) Rather than focusing on selling, aim(s) to let customers experience how the company's offering fits in their life. A) lifestyle marketing B) consumer trade shows C) experiential marketing D) lifestyle communications E) social outreach Answer: C Diff: 1 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Analytical thinking 108) Factory tours fall under which type of marketing activity? A) Event sponsorship B) Experiences C) Publicity D) Free advertising E) Social media Answer: B Diff: 1 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Analytical thinking

109) Rolex calls itself the "Official Timekeeper" of the Wimbledon and Australian Open lawn tennis championships, by virtue of its sponsorships of the marquee events. What is the most likely objective for Rolex's sponsorship deal with these events? A) To permit merchandising or promotional opportunities B) To express commitment to the community or on social issues C) To create experiences and evoke feelings D) To identify with a particular target market or lifestyle E) To increase salience of the Rolex brand Answer: E Diff: 3 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Analytical thinking 110) Becoming part of a personally relevant moment in consumers' lives through broaden and deepen a company or brand's relationship with the target market. A) advertisements B) events and experiences C) sales promotions D) public relations E) direct marketing efforts Answer: B Diff: 2 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Application of knowledge

can

111) Mountain Dew is a brand known for sponsorships of adventure events such as snowboarding and skateboarding competitions. What is the most likely objective of Mountain Dew's sponsorship of these events? A) To enhance corporate image B) To express commitment to the community or on social issues C) To entertain key clients or reward key employees D) To create perceptions of key brand image associations E) To become part of a personally relevant moment in consumers' lives Answer: D Diff: 2 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Analytical thinking

112) Audi models featured prominently in the blockbuster Iron Man movies, including main character Tony Stark's personal R8 Spyder. Which of the following is the most rational explanation for Audi's decision to associate itself with the movies? A) To express commitment to the community or on social issues B) To identify with a particular target market or lifestyle C) To create experiences and evoke feelings D) To become part of a personally relevant moment in consumers' lives E) To entertain key clients or reward key employees Answer: C Diff: 2 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Application of knowledge 113) JBJ Sports is a leading sporting goods manufacturer from Atlanta. It has recently initiated a program in association with the Food4Kids Foundation, which raises funds to promote nutritional awareness of young children. The company plans to donate $1 for every item it sells in the North American market. Also, JBJ has roped in professional sports teams associated with it to wear the Food4Kids logo on their team gear. Which of the following best describes the motivation for JBJ's involvement in the program? A) Entertaining key clients or rewarding key employees B) Expressing commitment to the community or on social issues C) Permitting merchandising or promotional opportunities D) Stimulating quicker or greater purchase of particular brands E) Identifying with a particular target market or lifestyle Answer: B Diff: 2 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Analytical thinking 114) Provide an example of how event sponsorship could be used to boost employee morale. Answer: (Student answers will vary.) A good example is when a company sponsors a sporting or cultural event and gives tickets to employees or gives them an opportunity to get involved in a fun or meaningful community activity. Diff: 2 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Reflective thinking 115) Why did Toyota use its Tundra pickup brand to sponsor fishing tournaments and country music tours? Answer: Toyota sponsored these events to toughen its image and appeal to the heartland. Diff: 1 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Reflective thinking

116) List the major objectives of events and experiences as promotion tools. Answer: The major objectives of events and experiences as promotion tools are 1. To identify with a particular target market or lifestyle 2. To increase salience of company or product name 3. To create or reinforce perceptions of key brand image associations 4. To enhance corporate image 5. To create experiences and evoke feelings 6. To express commitment to the community or on social issues 7. To entertain key clients or reward key employees 8. To permit merchandising or promotional opportunities Diff: 3 LO: 13.6: Explain how to design meaningful events and experiences. AACSB: Reflective thinking 117) Viral marketing relies on that encourages consumers to pass along audio, video, or written information about company-developed products and services to others online. A) website advertising B) video sponsorship C) word of mouth D) promoted tweets E) Facebook ads Answer: C Diff: 2 LO: 13.7: Describe the role of word of mouth in marketing communications. AACSB: Reflective thinking 118) Which of these is NOT a platform for word of mouth communication? A) Social media discussions B) Personal blogs C) Product reviewers' YouTube channels D) Twitter E) A company newsletter Answer: E Diff: 2 LO: 13.7: Describe the role of word of mouth in marketing communications. AACSB: Reflective thinking

119) Which of these was NOT one of the word of mouth tactics that SodaStream used to promote conversation about the brand? A) Extensive television advertising B) Product placement C) Product sampling D) Engagement with boaters and RV owners E) Engagement with environmental groups Answer: A Diff: 2 LO: 13.7: Describe the role of word of mouth in marketing communications. AACSB: Reflective thinking 120) Which of the following increases the likelihood a brand is discussed in face-to-face, oral communications? A) Brand novelty B) Brand salience C) Brand excitement D) Brand surprise E) Brand edginess Answer: B Diff: 3 LO: 13.7: Describe the role of word of mouth in marketing communications. AACSB: Reflective thinking 121) It is not possible for a marketer to manage or facilitate word of mouth. Answer: FALSE Diff: 2 LO: 13.7: Describe the role of word of mouth in marketing communications. AACSB: Reflective thinking 122) How did Blendtec, a maker of commercial-grade blenders and food mills use word of mouth to expand its brand recognition in the consumer market? Answer: Blendtec gained name recognition through a serious of amusing videos in which the CEO tried pulverizing various items in one of the company's blenders to show how powerful the products are. Importantly, these videos are tied to current events, so they are able to tap into word of mouth conversations that were already happening in the public sphere. Diff: 3 LO: 13.7: Describe the role of word of mouth in marketing communications. AACSB: Reflective thinking

123) How does word of mouth differ from a company's regular social media communication? Answer: The key difference with word of mouth is that it is consumers or other stakeholders driving the conversation, not the company. A company can seed a conversation by releasing an amusing video or some other tactics, but it is ultimately up to the general public to decide if the topic is worthy of sharing. Diff: 3 LO: 13.7: Describe the role of word of mouth in marketing communications. AACSB: Analytical thinking 124) Which of these is NOT one of the popular PR media formats identified in the chapter? A) Publications B) Employee training C) News D) Speeches E) Identity media Answer: B Diff: 2 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 125) Which of these is NOT an objective that publicity is usually employed to achieve? A) Building awareness B) Building credibility C) Boosting channel enthusiasm D) Holding down promotion costs E) Recruiting new employees Answer: E Diff: 2 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 126) The "I Love New York" campaign is a classic example of using publicity to A) reposition a mature product B) launch a new product C) building interest in a product category D) building corporate image E) counter a competitive PR campaign Answer: A Diff: 2 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking

127) Which of the following is a true statement about publicity? A) There are never any costs associated with publicity. B) As conventional advertising becomes more powerful, the appeal of publicity as a communication tool is waning. C) Publicity involves securing paid space in the media. D) The primary goal of publicity is to attract attention to the company or its offerings. E) Publicity's greatest appeal is that it can be directly controlled by the company. Answer: D Diff: 3 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 128) Which of these is NOT a true statement about public relations? A) The best PR departments counsel top management to adopt positive programs and eliminate questionable practices. B) PR activities must be initiated before a crisis hits; they have little value in responding to a crisis after it happens. C) PR includes a variety of programs to promote or protect a company's image among the relevant stakeholders. D) One of the major tasks of PR professionals is to find or create favorable news about the company, its products, and its people. E) Many companies have PR departments that perform three main functions. Answer: B Diff: 3 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 129) is a marketing communications tool that includes a variety of programs to promote or protect a company's image or individual products. A) Public relations B) Advertising C) Sales promotion D) Personal selling E) Direct marketing Answer: A Diff: 1 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking

130) Which of the following functions of public relations departments involves presenting news and information about the organization in the most positive light? A) Corporate communications B) Product publicity C) Lobbying D) Counseling E) Press relations Answer: E Diff: 2 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 131) Which of the following describes the public relations function of lobbying? A) Sponsoring efforts to publicize specific products B) Advising management about public issues, and company positions and image during good times and bad C) Presenting news and information about the organization in the most positive light D) Dealing with legislators and government officials to promote or defeat legislation and regulation E) Promoting understanding of the organization through internal and external communications Answer: D Diff: 2 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 132) What function does a company's public relations department perform when it promotes understanding of the organization through internal and external communications? A) Lobbying B) Corporate communications C) Press relations D) Product publicity E) Counseling Answer: B Diff: 1 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking

133) When a public relations department of a company advises management about public issues, and company positions and image during good times and bad, it is performing the function of . A) counseling B) corporate communications C) product publicity D) lobbying E) press relations Answer: A Diff: 1 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 134) refers to the task of securing editorial space—as opposed to paid space—in print and broadcast media to promote or "hype" a product, service, idea, place, person, or organization. A) Advertising B) Media planning C) Communication design D) Publicity E) Copy testing Answer: D Diff: 1 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 135) Which of the following is a medium of visual identity for a company? A) Annual reports B) Dress codes C) Press releases D) Seminars E) Trade shows Answer: B Diff: 1 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 136) The public relations function of lobbying involves advising management about public issues as well as company positions and image during good times and bad. Answer: FALSE Diff: 1 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking

137) Creative public relations can affect public awareness at a fraction of the cost of advertising. Answer: TRUE Diff: 2 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 138) What are identity media? Provide several examples. Answer: Identity media create a company's visual identity that the public immediately recognizes. The visual identity is carried by company logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, and dress codes. Diff: 3 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 139) What role can a company's PR team have in advising top management? Answer: The best PR departments counsel top management to adopt positive programs and eliminate questionable practices so negative publicity doesn't arise in the first place. Diff: 2 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 140) What advantages does publicity have over traditional advertising? Answer: Publicity has important advantages over traditional advertising. First, publicity is free–even though the advertiser might have to pay an agency to secure media coverage, the advertiser does not pay for cost of the media itself (e.g., television and radio time or newspaper and magazine space). In addition, because the source of the message is a third party rather than the company, publicity is more credible and is more likely to influence the target audience. Diff: 3 LO: 13.8: Summarize how to manage publicity and public relations. AACSB: Reflective thinking 141) Which of these is a true statement about packaging? A) E-commerce has drastically reduced the importance of packaging design. B) Packaging can be a determining factor in piquing the buyer's interest. C) For most products, packaging serves no real communication function. D) Packaging and advertising communicate the same types of information in the same ways. E) Packaging and advertising communicate the same types of information in different ways. Answer: B Diff: 5 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking

142) Which of these is NOT listed in the chapter as a primary function of labeling? A) Communicating information that facilitates identification of the offering B) Streamlining manufacturing resource planning C) Describing the offering's key attributes D) Highlights the offering's benefits E) Instructing buyers on the proper use, storage, and disposal of the product Answer: B Diff: 2 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking 143) Which of these is one of the core principles of successful package design from a marketing communications perspective? A) Visibility B) Brand socialization C) Internal branding D) Manufacturability E) Transferability Answer: A Diff: 1 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking 144) Why is packaging often a determining factor in piquing buyer's interest? A) Consumers subconsciously choose products based on their favorite colors. B) Most consumers choose the most strikingly packaged product, regardless of brand. C) Packaging is usually perceived during a buyer's first encounter with the product. D) Although most consumers claim not to be superficial, packaging matters greatly to them. E) People remember whether they found the package appealing when deciding whether to rebuy an item. Answer: C Diff: 2 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking 145) Which principle of package design helped Method's distinctive teardrop shaped package contribute to the brand's success? A) Transparency B) Differentiation C) Visibility D) Manufacturability E) Cost efficiency Answer: C Diff: 1 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking 37

146) Clearly communicating the value of the offering to its target customers via packaging relates to the design principle of . A) Transparency B) Differentiation C) Visibility D) Manufacturability E) Cost efficiency Answer: A Diff: 2 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking 147) How does the element of time distinguish the communication functions of advertising and packaging? A) Advertising takes more time to prepare. B) Packaging takes more time to prepare. C) The impact of packaging on the purchase decision is more immediate than the impact of advertising. D) The impact of advertising on the purchase decision is more immediate than the impact of packaging. E) Advertising takes longer than packaging to make an impact on buyers' minds. Answer: C Diff: 3 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking 148) Which of these is the easiest way to create and measure social media's payoff? A) Include a contest, sweepstake, or promotion B) Count hashtags C) Count retweets D) Include a toll-free phone number in the social media content E) Use Google search alerts Answer: A Diff: 2 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking 149) Effective packaging can cut through the information clutter in the retail environment. Answer: TRUE Diff: 1 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking

150) Describe the functions and importance of labeling. Answer: The label is a highly visible and important element of packaging. Labels include written, electronic, or graphical communication placed directly on the packaging, as well as anything associated with and attached to the product, such as an information tag. The label's primary functions are to communicate, to consumers, channel members, and the company, information that facilitates identification of the offering; describes the offering's key attributes; highlights the offering's benefits; instructs buyers on the proper use, storage, and disposal of the product; increases the offering's aesthetic appeal; and leverages and enhances the brand associated with the offering. Diff: 3 LO: 13.9: Discuss the role of product packaging as a communication tool. AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 14 Personal Selling and Direct Marketing 1) involves direct interaction with one or more prospective buyers for the purpose of making presentations, answering questions, and procuring orders. A) Direct marketing B) Personal selling C) Direct selling D) Sales consulting E) Order taking Answer: B Diff: 1 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 2) Which of these tactics is the most effective tool at later stages of the buying process, particularly in influencing buyer preferences, conviction, and action? A) Personal selling B) Direct marketing C) Interactive advertising D) Database marketing E) Direct mail Answer: A Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 3) marketing, also known as network marketing, works by recruiting independent businesspeople who act as distributors. A) Team-based B) Virtual C) Multilevel D) Distributed E) One-to-one Answer: C Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking

4) Which of these is NOT one of the recommended tactics for handling psychological and logical objections? A) Maintain a positive approach B) Ask the buyer to clarify the objection C) Emphasize that no other prospects were bothered by that objection D) Turn the objection into a reason for buying E) Probe with questions that prompt buyers to answer their own objections Answer: C Diff: 1 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 5) Amway uses the model to reach its global market of consumers. A) multilevel marketing B) direct marketing C) direct mail D) infomercial E) virtual selling Answer: A Diff: 1 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 6) Which of these is a notable benefit of the FABV approach to selling? A) It helps salespeople allocate their time for a more balanced approach to selling. B) It focuses sales presentations and demonstrations on product features. C) It encourages salespeople to spend more time describing product features. D) It encourages salespeople to spend less time on value and more on advantages. E) It encourages salespeople to spend less time on benefits and more on value. Answer: A Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 7) A prospect who is stalling on buying a new phone because she is reluctant to let go of a phone that has served her well for five years is exhibiting . A) logical resistance B) cognitive dissonance C) buyer's remorse D) psychological resistance E) product empathy Answer: D Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Analytical thinking

8) If the purchasing team for an industrial firm shifts starts asking questions about delivery schedules after viewing a product demonstration, how should the visiting sales rep respond? A) Recognize that the prospect is exhibiting logical resistance and back away from any attempt to close the sale. B) Recognize that the prospect is exhibiting psychological resistance and back away from any attempt to close the sale. C) End the presentation with an offer to look into delivery details and get back to the prospect at a later date. D) Recognize that the prospect is motivated to buy and begin the closing process. E) Recognize that the purchasing team is stalling because it doesn't have final authority to buy. Answer: D Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Analytical thinking 9) What should salespeople do immediately after closing a sale? A) Immediately move on to the next prospect; time is money when it comes to sales B) Immediately cement any necessary details about delivery time and other matters important to the customer C) Ask the customer if he or she can recommend any other prospects who might be interested in the same product. D) Begin a new sales cycle by asking if the customer has any other needs. E) Try up-selling the customer to a higher-tier product. Answer: B Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 10) Which of the following is the first step in the process of personal selling? A) Prospecting and qualifying B) Sales pre-approach C) Sales presentation D) Unearthing objections E) Demonstrating advantages Answer: A Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking

11) A salesperson who is contacting possible buyers by mail or phone to assess their level of interest and financial capacity is in the step of the selling process. A) pre-approach B) prospecting C) qualifying D) following up E) objection handling Answer: B Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 12) In which of the following stages of personal selling does a salesperson tell the product story to the buyer? A) Pre-approach B) Prospecting C) Presentation D) Closing E) Objection handling Answer: C Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 13) IBM and other firms use the BANT acronym during which stage of the sales process? A) Prospecting and qualifying B) Sales pre-approach C) Sales presentation D) Unearthing objections E) Demonstrating advantages Answer: A Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge 14) In the BANT acronym, B stands for . A) budget B) background C) baseline D) benchmark E) basic Answer: A Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge

15) In the BANT acronym, A stands for _. A) action B) authority C) activate D) austerity E) autonomy Answer: B Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge 16) In the BANT acronym, N stands for _. A) noticeable B) necessary C) need D) necessity E) notify Answer: C Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge 17) In the BANT acronym, T stands for _. A) touch B) tempt C) team D) timeline E) turn over Answer: D Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge 18) Which of the following questions is LEAST relevant during the pre-approach stage of the sales process? A) How is the purchasing process conducted at the company? B) How is the purchasing department structured? C) How can I overcome psychological resistance? D) Is purchasing centralized? E) What is the best contact approach? Answer: C Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking

19) In the FABV approach, describe(s) the economic, technical, service, and social pluses delivered. A) features B) advantages C) benefits D) value E) macroenvironment Answer: C Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 20) If Jose is describing a computer's processing speeds and memory capacity, he is describing the of his firm's offering in the FABV approach. A) features B) advantages C) benefits D) value E) macroenvironment Answer: A Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge 21) In the FABV approach, if the salesperson is discussing the monetary terms associated with the offering, s/he is talking about . A) features B) advantages C) benefits D) value E) macroenvironment Answer: D Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 22) includes resistance to interference and an anxious attitude toward money. A) Psychological resistance B) Logical resistance C) Price sensitivity D) Relationship inertia E) Reactance Answer: A Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 6

23) If a prospective client does not want to buy from you because he has a preference for an established supply source, you are facing an objection due to . A) psychological resistance B) logical resistance C) price sensitivity D) relationship inertia E) reactance Answer: A Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge 24) might consist of objections to the price, delivery schedule, or product or company characteristics. A) Psychological resistance B) Logical resistance C) Price sensitivity D) Relationship inertia E) Reactance Answer: B Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 25) If a prospective client does not want to buy from you because she feels the price is too high, you are facing an objection due to . A) psychological resistance B) logical resistance C) apathy D) relationship inertia E) reactance Answer: B Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Application of knowledge 26) Closing signs from the buyer include physical actions, statements or comments, and questions. Answer: TRUE Diff: 1 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking

27) Describe the three notable qualities of personal selling that distinguish it from other marketing methods. Answer: Personal selling has three notable qualities: • It is customized, meaning that the message can be designed to appeal to any individual. • It is relationship oriented, meaning that personal-selling relationships can range from a matter-of-fact selling relationship to a deep personal friendship. • It is response oriented, meaning that the buyer is often given personal choices and encouraged to respond directly. Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 28) Explain the need to find the right balance between quantity and quality of leads. Answer: If a firm has too many leads, even of high quality, the sales force may be overwhelmed and allow the most promising opportunities to fall through the cracks. If it has too few or low-quality leads, the sales force may become frustrated or demoralized. Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 29) Why is it critical during the pre-approach stage to choose the best contact approach for each prospect? Answer: The right approach—whether it is a personal visit, phone call, e-mail, or letter—is crucial because it has become harder for sales reps to get into the offices of purchasing agents, physicians, and other time-starved and internet-enabled potential customers. Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 30) Explain how the FABV approach helps the sales force adequately allocate the effort when promoting different aspects of the product. Answer: The FABV approach helps the sales force provide a balanced presentation of features, advantages, benefits, and value. This is important because salespeople often spend too much time on product features (a product orientation) and not enough time stressing benefits and value (a customer orientation), especially in highly competitive markets or when selling individualized or premium-priced products. Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking

31) Describe how many markers are going beyond the BANT approach these days. Answer: Many marketers are going beyond the BANT approach and getting increasingly sophisticated in their pursuit of qualified leads. Using inputs as diverse as prospects' hiring practices, job boards, and sample tweets from customers and employees, companies use data analytics and artificial intelligence to classify prospects as worth a call or offer—or not. Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 32) Characterize the importance of after-sale servicing. Answer: Follow-up and maintenance are necessary to ensure customer satisfaction and repeat business. Providing a service that goes beyond the actual sale can demonstrate to customers that the seller stands behind its products and services and is committed to building a relationship with the buyer. Using after-sale servicing can help build a long-term relationship that benefits both parties by improving the overall purchase experience and creating a sense of trust between the buyer and seller. Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 33) Do professional salespeople always seek a sales transaction when approaching prospects? Explain your answer. Answer: Many of the principles of personal selling and negotiation are largely transaction oriented because their purpose is to close a specific sale. But in many cases, the company seeks not an immediate sale but rather a long-term supplier-customer relationship. Today's customers prefer suppliers who can sell and deliver a coordinated set of products and services to many locations, who can quickly solve problems in different locations, and who can work closely with customer teams to improve products and processes. Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Analytical thinking 34) How should sales representatives decide when to move from the persuasion stage to the closing stage? Answer: To determine when to start closing, sellers pay close attention to buyers' behavior, looking for signs that the buyer is ready to finalize the purchase decision. Closing signs from the buyer include physical actions, statements or comments, and questions. Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking

35) What tactics can salespeople use to initiate the closing process? Answer: Sales representatives can ask for the order, recapitulate the points of agreement, offer to help write up the order, ask whether the buyer wants A or B, get the buyer to make minor choices such as color or size, or indicate what the buyer will lose by not placing the order now. Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 36) What activities should salespeople engage in with key customers outside the context of making specific sales? Answer: Salespeople working with key customers must do more than e-mail or call when they think customers might be ready to place orders. They should also get in touch at other times and make useful suggestions about the business to create value. They should monitor key accounts, know customers' problems, and be ready to serve them in a number of ways, adapting and responding to different customer needs or situations. Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 37) What are the six steps in personal selling? Answer: The six steps are 1. Prospecting and qualifying 2. Pre-approach 3. Presentation and demonstration 4. Persuasion 5. Closing 6. Servicing Diff: 3 LO: 14.1: Define the key aspects of the selling process. AACSB: Reflective thinking 38) You work as a sales representative in a company that manufactures surgical equipment. Before calling on an important prospect, you decide to search the internet and find out details about him. What step in the selling process is being carried out here? What is the importance of this step? Answer: This step is called pre-approach. This helps to understand aspects such as how the purchasing process is conducted at the company, how is purchasing structured, number of purchasing departments in larger companies, and so forth. This information is useful to qualify the prospect, gather information, or make an immediate sale. Diff: 2 LO: 14.1: Define the key aspects of the selling process. AACSB: Analytical thinking; Application of knowledge

39) After grouping customers into size classes according to annual sales volume, what is a company's next step in the workload approach to sizing the sales force? A) Determine the average number of customer interactions a sales representative can make per year. B) Establish desirable contact frequencies for each customer class. C) Figure out how many sales managers are needed to oversee the sales force. D) Split the sales force into inside and outside sales reps. E) Multiply number of accounts by desired call frequency to reach the total annual workload. Answer: B Diff: 3 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 40) Which of these is NOT one of the four components of sales force compensation? A) The fixed amount B) The variable amount C) Recognition D) Expense allowances E) Benefits Answer: C Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 41) Which component of sales force compensation is designed to stimulate and reward effort? A) The fixed amount B) The variable amount C) Recognition D) Expense allowances E) Benefits Answer: B Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 42) Which component of sales force compensation is designed to provide income stability? A) The fixed amount B) The variable amount C) Recognition D) Expense allowances E) Benefits Answer: A Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking

43) A company that sells one product line to one industry with customers in many locations would organize its sales force . A) by customer size B) by customer needs C) by geographic territories D) by after-market services E) by customer priority Answer: C Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 44) Sales reps who coordinate communication and fruitful contact between people in the buying and selling organizations can be thought of as . A) order arrangers B) missionary salespeople C) account managers D) team sellers E) sales managers Answer: C Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 45) A sales force that doesn't visit customer locations and works via online and telephone communication is a(n) _ sales force. A) captive B) inside C) passive D) interactive E) distribution Answer: B Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 46) Which of these is NOT a benefit of a leveraged sales force? A) Outside reps can focus more complex and customized products to large accounts. B) Management needs to oversee only a single sales team. C) Inside teams and online ordering handles low-end selling. D) Outside salespeople are removed from post-sales service and support. E) Salespeople no longer need to worry about lead generation. Answer: B Diff: 3 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 12

47) As a compensation scheme, provide a secure income, encourage reps to complete non-selling activities, and reduce incentive to overstock customers. A) straight-salary plans B) straight-commission plans C) annual bonus plans D) commission-only plans E) profit-sharing plans Answer: A Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 48) As a compensation scheme, attract higher performers, provide more motivation, require less supervision, and control selling costs. A) straight-salary plans B) straight-commission plans C) annual bonus plans D) non-commission plans E) profit-sharing plans Answer: B Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 49) is common in jobs with a high ratio of non-selling to selling duties and in jobs where the selling task is technically complex and requires teamwork. A) Variable compensation B) Commission-only compensation C) Bonus-only compensation D) Straight-commission E) Fixed compensation Answer: E Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 50) When a company is trying to decide between staffing its own sales force or using an outside sales agency to sell its products, its first step is to . A) interview sales agencies B) ask customers what they would prefer C) prepare a sales test in which it tries using both methods for at least three months D) estimate the costs of selling different volumes through each channel E) estimate the dollar volume of sales each alternative is likely to generate Answer: E Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 13

51) In addition to smaller firms, sales agents tend to be used by . A) large firms in smaller territories where the volume is low B) any firm with territories in which volumes are too high to handle internally C) low-cost consumer packaged goods manufacturers D) companies in the agricultural and construction sectors E) companies with complex, high-tech products Answer: A Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 52) The original and oldest form of direct marketing is . A) billboards B) banner advertising C) mail campaigns D) outbound telemarketing calls E) personal sales calls Answer: E Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 53) Which of the following tasks of the sales force refers to conducting market research and doing intelligence work? A) Servicing B) Communicating C) Targeting D) Prospecting E) Information gathering Answer: E Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 54) The process of deciding how to allocate company's time among prospects and customers is called . A) targeting B) prospecting C) allocating D) dispersing E) delegating Answer: A Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 14

55) Which of the following refers to the process of deciding which customers will get scarce products during product shortages? A) Delegating B) Prospecting C) Allocating D) Dispersing E) Targeting Answer: C Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 56) A company uses sales representatives for selling the company's more complex and customized products to large accounts, while using inside salespeople and online ordering for low-end selling. Which of the following describes the company's sales force best? A) Demand creators B) Direct marketing force C) Missionary sellers D) Technical sales force E) Leveraged sales force Answer: E Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Application of knowledge 57) Your company has customer-service representatives who provide you with leads, write up proposals, fulfill orders, and provide post-sales support. Your responsibilities are to concentrate on the larger accounts with more complex and customized needs. Your company most likely has a sales force. A) distributive B) territory based C) leveraged D) decentralized E) parallel Answer: C Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Application of knowledge

58) Being alert to potential problems, suggesting solutions, alleviating concerns, and reaffirming the buyer's positive attitude toward the purchase are examples of the task in the selling context. A) information gathering B) targeting C) communicating D) servicing E) allocating Answer: D Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Application of knowledge 59) sales force consists of manufacturers' reps, sales agents, and brokers who earn a commission based on sales. A) Virtual B) Domestic C) Contingent D) Contractual E) Decentralized Answer: D Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 60) Part-time paid employees who work exclusively for the company are a part of the sales force. A) direct B) virtual C) contractual D) implicit E) brokered Answer: A Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 61) Fixed compensation receives more emphasis in sales rep jobs with A) a high ratio of selling to non-selling duties B) a high requirement for individual initiatives C) an intensive focus on selling activities D) very little need for teamwork E) technical complexities Answer: E Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Application of knowledge 16

62) Identify the first step in the workload approach to establish sales force size. A) Grouping customers into size classes according to annual sales volume B) Establishing desirable call frequencies for each customer class C) Determining the total workload for the country in terms of sales calls per year D) Determining the average number of calls a sales representative can make per year E) Calculating the total number of sales reps needed Answer: A Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 63) U.S. firms spend more on sales forces and sales force materials than on any other promotional method. Answer: TRUE Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 64) More than 20 percent of the total workforce works full time in sales occupations, both nonprofit and for profit. Answer: FALSE Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 65) To manage costs, many companies are choosing a leveraged sales force that focuses reps on selling the company's more complex and customized products to large accounts and uses inside salespeople and online ordering for low-end selling. Answer: TRUE Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 66) Targeting refers to the process of deciding which customers will get scarce products during product shortages. Answer: FALSE Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 67) Information gathering refers to the act of conducting market research and doing intelligence work. Answer: TRUE Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 17

68) Sales representatives who are paid mostly in commissions require more supervision than other salespeople. Answer: FALSE Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. 69) A contractual sales force consists of part-time employees who work exclusively for the company. Answer: FALSE Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 70) The first step in the workload approach for designing sales force size is to establish desirable call frequencies for each customer class. Answer: TRUE Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 71) The fixed amount in a salesperson's salary is primarily designed to stimulate and reward efforts from salespeople. Answer: FALSE Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 72) Variable compensation is common in jobs where the selling task is technically complex and requires teamwork. Answer: FALSE Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 73) Describe the inherent conflict between what sales reps want and sales managers want in terms of compensation. Answer: To attract top-quality reps, the company must develop an attractive compensation package. Sales reps want income regularity, extra reward for above-average performance, and fair pay for experience and longevity. Management wants control, economy, and simplicity. Some of these objectives will conflict, such as management's desire to keep costs predictable and under control while reps want to earn as much as possible every year. Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking

74) Contrast the impact of straight-salary and straight-commission plans. Answer: Straight-salary plans provide a secure income, encourage reps to complete non-selling activities, and reduce incentive to overstock customers. For the firm, these plans deliver administrative simplicity and lower turnover. Straight-commission plans attract higher performers, provide more motivation, require less supervision, and control selling costs. On the negative side, they emphasize getting the sale over building the relationship. Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 75) Would a company ever want a sales compensation plan that deemphasizes sales volume? Explain your answer. Answer: Yes, and in fact this is one current trend in sales force compensation. Such schemes deemphasize sales volume in favor of gross profitability, customer satisfaction, customer retention, or other strategic goals. Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 76) Explain why using a sales agency can pose a control problem for a manufacturer. Answer: Using a sales agency can pose a control problem because agents may concentrate on the customers who buy the most, not necessarily on those who buy the manufacturer's goods. And they might not master the technical details of the company's product or handle its promotion materials effectively. Diff: 3 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 77) Describe the cost relationship between hiring a sales force or engaging an outside sales agency. Answer: Engaging a sales agency is initially less expensive than using the company's sales force, but costs rise faster because the sales agents get larger commissions. As sales volume increases, the company will reach at point at which using an outside agency becomes more expensive than hiring its own sales force. Diff: 3 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 78) Contrast the nature of inside and field sales. Answer: Inside salespeople conduct business from the office (or increasingly, virtually from home) and receive visits from prospective buyers. In contrast, field salespeople travel and visit customers. Diff: 1 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking

79) Describe the general nature of the conflict that occur between marketing and sales. Answer: Too often marketing and sales are in conflict: The sales force complains that marketing isn't generating enough leads, and marketers complain that the sales force isn't converting them. Improved collaboration and communication between these two can increase revenues and profits. To improve mutual understanding, some companies move marketers into sales (and vice versa) when appropriate, as well as getting them together for joint meetings throughout the year. Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 80) Explain how the best salespeople go beyond the customer's stated problems. Answer: The best salespeople go beyond the customer's stated problems to offer fresh insights into the customer's business model and identify unrecognized needs and unarticulated problems. Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 81) What are the five variables a company must consider when designing its sales force? Answer: In designing the sales force, the company must develop sales force objectives, strategy, structure, size, and compensation. Diff: 3 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 82) Other than price, what are some of the other variables that customers and salespeople might negotiate to close a deal? Answer: Although price is the most frequently negotiated issue—especially in tight economic times—others include contract completion time, quality of goods and services offered, purchase volume, product safety, and responsibility for financing, risk taking, promotion, and title. Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 83) Briefly explain the various tasks that the salespeople of an organization perform. Answer: The following are the basic tasks that salespeople perform: • information gathering: conducting market research and doing intelligence work • targeting: deciding how to allocate time among prospects and customers • communicating: communicating information about the company's products and services • selling: approaching, presenting, answering questions, overcoming objections, and closing sales • servicing: providing various services to the customers – consulting on problems, rendering technical assistance, arranging financing, expediting delivery • allocating: deciding which customers will get scarce products during product shortages Diff: 3 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 20

84) You are appointed as the B-to-B sales representative of a manufacturing company. What are the various tasks that you will have to perform as a B-to-B salesperson? Answer: The following activities have to be performed by a salesperson: • information gathering • targeting • communicating • selling • servicing • allocating Diff: 3 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Reflective thinking 85) You are the sales manager of a company that manufactures and markets server computers. The company's products require high-involvement from the sellers and require salespeople to provide complex and technical information. What kind of a compensation structure do you select for your sales representatives? Answer: The salespeople in the given scenario should have a pay structure that gives prominence to fixed pay. Fixed compensation is common in jobs with a high ratio of non-selling to selling duties, and jobs where the selling task is technically complex and requires teamwork. Diff: 2 LO: 14.2: Explain how to design an effective sales force organization. AACSB: Analytical thinking 86) Some companies rely on a(n) sales force to create new interest and open new accounts. A) advance B) missionary C) scout D) senior E) master Answer: B Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking

87) To cut costs, reduce time demands on their outside sales force, and leverage technological innovations, many companies have their inside sales force. A) increased the size and responsibilities of B) eliminated C) reduced compensation for D) decreased the size and responsibilities of E) reduced the responsibilities of Answer: A Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 88) What is the average turnover rate of sales reps across all industries? A) Less than 5 percent B) Between 5 and 10 percent C) Nearly 20 percent D) Between 30 and 40 percent E) Nearly 60 percent Answer: C Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 89) Which of these has been shown to be reliable predictor of performance in professional sales? A) Attitude B) Lifestyle C) Personality D) Composite tests E) Background Answer: D Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 90) Which of these has been shown to the most-valued employee reward? A) Pay B) Promotion C) Personal growth D) Sense of accomplishment E) Recognition Answer: A Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking

91) Which of these is NOT a type of report that salespeople are typically required to submit to their sales managers? A) Call reports B) Territory-marketing plans C) New-business reports D) Lost-business reports E) Competitor analysis reports Answer: E Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 92) Today's customers expect a salesperson to have extensive product knowledge, to be efficient and reliable, and to provide ideas to improve the customer's operations. These demands are forcing companies to make higher investments in . A) sales training B) internal selling C) management controls D) advertising E) sales promotions Answer: A Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 93) Which of the following is NOT a main function of managing the sales force? A) Recruiting and selecting sales representatives B) Identifying prospects for sales representatives C) Training sales representatives D) Motivating sales representatives E) Evaluating sales representatives Answer: B Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 94) helps sales representatives understand how they spend their time and how they might increase their productivity. A) Time-and-duty analysis B) A sales quota C) A feed-forward approach D) An expense allowance E) A norm for prospect calls Answer: A Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 23

95) Kate is coaching members of her field sales team to help them understand how they spend their time and how they might increase their productivity. She is using to provide them with feedback. A) time-and-duty analysis B) a sales quota C) a feed-forward approach D) an expense allowance E) a norm for prospect calls Answer: A Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Application of knowledge 96) Key indicators of sales performance include all of the following EXCEPT A) average number of sales calls per salesperson per day B) average revenue per sales call C) advanced marketing cost per sales call D) average cost per sales call E) entertainment cost per sales call Answer: C Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Application of knowledge 97) Which of the following is NOT one of the advantages of inside selling? A) Inside selling is less expensive than in-person selling. B) Inside salespeople free outside reps from spending time checking inventory. C) Inside salespeople free outside reps from spending time following up orders. D) Inside salespeople free outside reps from spending time phoning smaller accounts. E) Inside salespeople free outside reps from spending time on major accounts. Answer: E Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking

98) Compensation plans may need to vary depending on the type of salespersons. Which type of salesperson benefits from no ceiling or caps on commissions, overachievement commissions for exceeding quotas, and prize structures that allow multiple winners? A) Stars B) Core performers C) Dogs D) Cash cows E) Laggards Answer: A Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Interpersonal relations and teamwork 99) Randi is most motivated when there is no ceiling or caps on her commissions, she can earn overachievement commissions for exceeding quotas, and she benefits from prize structures that allow multiple winners. In sales terminology, she is probably a . A) Star B) Core performer C) Dog D) Cash cow E) Laggard Answer: A Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Application of knowledge 100) Compensation plans may need to vary depending on the type of salespersons. Which type of salesperson benefits from multitier targets that serve as stepping stones for achievement and sales contests with prizes that vary in nature and value? A) Stars B) Core performers C) Dogs D) Cash cows E) Laggards Answer: B Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Interpersonal relations and teamwork

101) Compensation plans may need to vary depending on the type of salespersons. Which type of salesperson benefits from consistent quarterly bonuses and social pressure? A) Stars B) Core performers C) Dogs D) Cash cows E) Laggards Answer: E Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Interpersonal relations and teamwork 102) Managers use feed-forward sales supervision when they communicate what their sales repsshould be doing and motivates them to do it. Answer: TRUE Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 103) Characterize the typical amount of time that new sales reps spend in training. Answer: New reps may spend a few weeks to several months in training. The median training period is 28 weeks in industrial-products companies, 12 in service companies, and 4 in consumer-products companies. Training time varies with the complexity of the selling task and the type of recruit. Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 104) Do companies typically believe that sales forces should be conversant in the broader aspects of marketing? Explain your answer. Answer: To maintain a market focus, salespeople should know how to analyze sales data, measure market potential, gather market intelligence, and develop marketing strategies and plans. Especially at the higher levels of sales management, they need analytical marketing skills. Marketers believe sales that forces are more effective in the long run if they understand and appreciate marketing as well as selling. Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking

105) How have formal tests figured in the sales force recruiting strategies of major companies such as IBM, Prudential, Procter & Gamble, and Gillette? Answer: Although scores from formal tests are only one element in a set that includes personal characteristics, references, past employment history, and interviewer reactions, they have been weighted quite heavily by companies such as IBM, Prudential, and Procter & Gamble. Gillette claims that tests have reduced turnover and scores have correlated well with the progress of new reps. Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 106) What are three costs associated with sales force turnover? Answer: Sales force turnover leads to lost sales, the expense of finding and training replacements, and (often) pressure on existing salespeople to pick up the slack. Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 107) What do today's customers expect from salespeople? Answer: Today's customers expect salespeople to have deep product knowledge, add ideas to improve operations, and be efficient and reliable. Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 108) Why are some companies dropping traditional quotas for their sales forces? Answer: Setting sales quotas can create problems. If the company underestimates demand, and the sales reps easily achieve their quotas, it has overpaid them. If it overestimates sales potential, the salespeople will find it hard to reach their quotas and will be frustrated and may possibly quit. Another downside is that quotas can drive reps to get as much business as possible, often ignoring the service side of the business. The company gains short-term results at the cost of long-term customer satisfaction. For these reasons, some companies are dropping quotas. Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 109) What are the two primary types of sales reports? Answer: Sales reports are divided between activity plans and write-ups of activity results. Diff: 1 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking

110) Can sales reps be successful even if they are not highly rated by the customers they call on? Explain your answer. Answer: Yes, even if she or he is effective in producing sales, the rep may not rate highly with customers. Success may come because competitors' salespeople are inferior, the rep's product is better, or new customers are always found to replace those who dislike the rep. Sales reps can analyze the success or failure of a sales call and how they would improve the odds during subsequent calls. Their performance could be related to internal factors (effort, ability, and strategy) and/or external factors (task and luck). Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 111) What impact can inside sales reps have on the productivity and effectiveness of a company's outside reps? Answer: The inside sales force frees outside reps to spend more time selling to major accounts, identifying and converting new major prospects, and obtaining more blanket orders and systems contracts. Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 112) Contrast the typical costs of sales contacts made by inside salespeople and field salespeople. Answer: Each contact made by an inside salesperson might cost a company $25 to $30, compared with $300 to $500 for a field staff person with travel expenses. Diff: 2 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking 113) Most companies set annual quotas. Quotas can be on dollar sales, unit volume, margin, selling effort, or activity and product type. Compensation is often tied to the degree of quota attainment. What problems does the setting of quotas present to both the company and to the sales representative? Answer: If the company underestimates and the sales reps easily achieve their quotas, the company has overpaid its reps. If the company overestimates sales potential, the salespeople will find it very hard to reach their quotas and be frustrated or quit. Another downside is that quotas can drive reps to get as much business as possible—often resulting in their ignoring the service side of the business. Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking

114) What key indicators of sales performance do sales managers extract from call reports? Answer: These reports provide raw data from which sales managers can extract key indicators of sales performance: • average number of sales calls per salesperson per day • average sales call time per contact • average revenue per sales call • average cost per sales call • entertainment cost per sales call • percentage of orders per hundred sales calls • number of new customers per period • number of lost customers per period • sales force cost as a percentage of total sales Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Reflective thinking

115) What can you learn from John Smith from the sales report reflected in the table? Territory: Midland Sales John Smith 1. Net sales product A 2. Net sales product B 3. Net sales total 4. Percent of quota product A 5. Percent of quota product B 6. Gross profits product A 7. Gross profits product B 8. Gross profits total 9. Sales expense 10. Sales expense to total sales (%) 11. Number of calls 12. Cost per call 13. Average number of customers 14. Number of new customers 15. Number of lost customers 16. Average sales per customer 17. Average gross profit per customer

2011 $251,300 423,200 674,500

2012 $253,200 439,200 692,400

2013 $270,000 553,900 823,900

2014 $263,100 561,900 825,000

95.6

92.0

88.0

84.7

120.4

122.3

134.9

130.8

$50,260

$50,640

$54,000

$52,620

42,320 92,580 $10,200

43,920 94,560 $11,100

55,390 109.390 $11,600

56,190 108,810 $13,200

1.5 1,675 $6.09

1.6 1,700 $6.53

1.4 1,680 $6.90

1.6 1,660 $7.95

320

328

334

$2,108

$2,137

$2,512

$2,470

$289

$292

$334

$326

Answer: The sales manager can learn many things about rep John Smith from this table. Total sales increased every year (line 3). This does not necessarily mean Smith is doing a better job. The product breakdown shows he has been able to push the sales of product B further than the sales of product A (lines 1 and 2), though A is more profitable for the company. Given his quotas for the two products (lines 4 and 5), Smith could be increasing product B sales at the expense of product A sales. Although he increased total sales by $1,100 between 2013 and 2014 (line 3), gross profits on total sales actually decreased by $580 (line 8). Sales expense (line 9) shows a steady increase, though total expense as a percentage of total sales seems to be under control (line 10). The upward trend in total dollar expense does not seem to be explained by any increase in the number of calls (line 11), though it might be related to success in acquiring new customers (line 14). Perhaps in prospecting for new customers, this rep is neglecting present customers, as indicated by an upward trend in the annual number of lost accounts (line 15). The last two lines show the level and trend in sales and gross profits per customer. These figures become more meaningful when compared with overall company averages. If Smith's average gross profit per customer is lower than the company's average, he could be concentrating on the wrong customers or not spending enough time with each customer. A review of annual number of calls (line 11) would need to be evaluated in comparison with other reps. If he is making fewer calls than the average salesperson in the company, for instance, his manager could work with him to diagnose why. If distances in the territory are similar to those in other territories, he might not be putting in a full workday, might be poor at sales planning and routing, or might be spending too much time with certain accounts. Diff: 3 LO: 14.3: Explain how to manage a sales force. AACSB: Application of knowledge 116) Direct marketing is the use of consumer-direct channels to reach and deliver goods and services to customers without . A) using digital media B) using conventional mail C) using intermediaries D) any previous marketing contact E) brand-building communication Answer: C Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 117) Which of the following is NOT a potential advantage of direct marketing? A) It is often more cost-effective than traditional marketing. B) It eliminates the need to engage in long-term brand building. C) It can provide invaluable information about customers' current needs. D) It can provide invaluable information about customers' future needs. E) It can enable the company to offer a superior service experience. Answer: B Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 31

118) Which of the following is NOT true about robo-calls? A) They are not legal to use for selling products and services. B) They are not legal to use for election campaigns. C) They cannot be used to issue credit card fraud alerts. D) They are no longer used to deliver routine information such as doctor appointment reminders. E) They can no longer be used by airlines to share flight change information. Answer: B Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 119) A 30- or 60-minute television commercial dedicated to selling complicated or technologically advanced products is . A) an infomercial B) a long-form commercial C) a sales episode D) a demonstration commercial E) direct TV Answer: ADiff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 120) Which of these statements about direct marketing is NOT true? A) It can reach prospects at the moment when they want a solicitation. B) It lets marketers test alternative media. C) It lets marketers test alternative messages. D) It makes the company's offer and strategy more visible to competitors. E) It can measure responses to campaigns to decide which have been the most profitable. Answer: D Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 121) Which of these is NOT a practice engaged in by successful direct marketers? A) Focusing on transactional efficiency over relationship building B) Viewing every customer interaction as an opportunity to up-sell or cross-sell C) Making sure they know enough about each customer to customize and personalize offers and messages D) Developing a plan for lifetime marketing to each valuable customer E) Carefully orchestrate each element of their campaigns Answer: A Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 32

122) Which of these is true about telemarketing? A) Its use has increased in all sectors, both for-profit and nonprofit. B) It has lost much of its effectiveness in recent years in all markets. C) It has lost much of its effectiveness in recent years, but its use in B-to-B marketing is increasing. D) Its use is now limited to political campaigns and fundraising. E) Its use is generally restricted to inbound telemarketing. Answer: C Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 123) Why do response rates typically understate a direct marketing campaign's long-term impact? A) It's impossible to measure response rates accurately. B) By themselves, response rates they don't measure such non-sales factors as awareness and word of mouth. C) Many consumers buy as soon as they receive direct marketing materials. D) It's impossible to separate a direct marketing campaign's effects from other marketing activities. E) So many companies now use direct marketing that it is impossible to measure the impact of any single campaign. Answer: B Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 124) The catalog you receive from a large apparel store, displaying its new summer collection, is an example of marketing. A) buzz B) direct C) virtual D) word-of-mouth E) interactive Answer: B Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking

125) A salesperson sends e-mails to persuade prospects to buy the products of his company. This is a type of marketing. A) buzz B) virtual C) word-of-mouth D) direct E) viral Answer: D Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 126) Which of the following is NOT one of the advantages of direct mail? A) The cost per thousand is lower than for mass media. B) It permits target market selectivity. C) It can be personalized. D) It allows early testing and response measurement. E) It is flexible. Answer: A Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 127) Greta is marketing a product that is technologically advanced and requires a great deal of explanation. Which direct response tool should she use? A) Direct mail B) E-mail C) Infomercial D) Inbound telemarketing E) Outbound telemarketing Answer: C Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Application of knowledge

128) OrdOnline, a company offering online auctioning, decides to launch a promotional program to increase its sales. The company identifies customers who have made at least three purchases and spent at least $150 in the past six months and offers discount coupons to these customers. Which of the following strategies is used here for targeting customers? A) Viral marketing B) Objective screening C) Internal targeting D) Catalog marketing E) RFM formula targeting Answer: E Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Analytical thinking; Application of knowledge 129) Which of the following is a major advantage of using direct mail? A) Direct mail permits target market selectivity. B) It is the best suited tool for selling complex products. C) Campaign testing is not needed for direct mail. D) Direct mail has very high conversion rates. E) It is the best method to sell industrial products. Answer: A Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 130) Which of the following is a factor considered when a customer is evaluated based on the RFM formula? A) The amount of time passed after the customer's last visit B) The product categories purchased by the customer C) The mode of payment used by the customer D) The location from which the customer has bought goods E) The type of feedback provided by the customer Answer: A Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 131) Which of the following is an element of an offer strategy? A) Copy platform B) The number of customers in the locality C) The vision of the company D) The skills required for production E) The details of customer order received Answer: A Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 35

132) The practice of having call center employees receive calls from customers and provide service by taking orders and answering queries is called . A) customer response marketing B) guerilla marketing C) reactive marketing D) internal marketing E) inbound telemarketing Answer: E Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 133) In outbound telemarketing, call center employees . A) sell high-involvement products B) initiate calls from a location closer to prospects C) offer huge discounts to customers D) initiate calls to prospects and customers E) answer the queries of consumers who call for information Answer: D Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 134) The management of Raleigh Bicycles observes that the company's selling costs are affected by the increased number of visits that salespeople make to meet dealers. The company decides to reduce its personal selling costs by making sales calls to dealers via telephone. This marketing strategy used by Raleigh is an example of . A) inbound telemarketing B) search marketing C) internal marketing D) outbound telemarketing E) paid-search marketing Answer: D Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Analytical thinking

135) Which of the following is a disadvantage of direct marketing? A) Invasion of privacy B) Inability to build brand awareness C) Low chances of customers avoiding messages D) Inability to control marketing communication E) Inability to maintain information security Answer: A Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 136) One of the shortcomings of direct marketing is that the firm cannot easily measure the response. Answer: FALSE Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 137) A company's best prospects are customers who have never bought its products. Answer: FALSE Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 138) Direct marketing has the ability to test different elements of an offer strategy under real marketplace conditions. Answer: TRUE Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 139) Points are established for varying RFM levels; the more points, the more attractive the customer. Answer: TRUE Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 140) Direct marketers use the RFM formula to select customers according to how much time has passed since their last purchase, how many times they have purchased, and how much they have spent since becoming a customer. Answer: TRUE Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking

141) In general, who are a company's best sales prospects? Answer: A company's best prospects are customers who have bought its products in the past. Diff: 1 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 142) If a company selects its target customers for a direct mail campaign based on (1) how much time has passed since their last purchase, (2) how many times they have purchased, and (3) how much they have spent since becoming a customer, which planning formula is it using? Answer: The company in this case is using the RFM (recency, frequency, monetary amount) formula. Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Analytical thinking 143) What is direct marketing? What are the various channels that direct marketers use? Answer: Direct marketing is the use of consumer-direct channels to reach and deliver goods and services to customers without using marketing middlemen. Direct marketers can use a number of channels to reach individual prospects and customers: direct mail, catalog marketing, telemarketing, interactive TV, kiosks, websites, and mobile devices. They often seek a measurable response, typically a customer order, through direct-order marketing. Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 144) How do successful direct marketers view customer interactions? Answer: Successful direct marketers view a customer interaction as an opportunity to up-sell, cross-sell, or just deepen a relationship. They make sure they know enough about each customer to customize and personalize offers and messages and develop a plan for lifetime marketing to each valuable customer, based on their knowledge of life events and transitions. They also carefully orchestrate each element of their campaigns. Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 145) Why is direct mail popular among marketers? What are its weaknesses? Answer: Direct mail is a popular medium because it permits target market selectivity, can be personalized, is flexible, and allows early testing and response measurement. Although the cost per thousand is higher than for mass media, the people reached are much better prospects. Direct mail can produce prospect leads, strengthen customer relationships, inform and educate customers, remind customers of offers, and reinforce recent customer purchase decisions. The success of direct mail, however, has also become its liability — so many marketers are sending out direct-mail pieces that mailboxes are becoming stuffed, leading some consumers to disregard the blizzard of solicitations they receive. Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 38

146) How do direct mail response rates relate to a campaign's long-term impact? Provide an example. Answer: Response rates typically understate a campaign's long-term impact. Suppose only 2 percent of the recipients who receive a direct-mail piece advertising Samsonite luggage place an order. A much larger percentage became aware of the product (direct mail has high readership), and some percentage may have formed an intention to buy at a later date (either by mail or at a retail outlet). Some may mention Samsonite luggage to others as a result of the direct-mail piece. To better estimate a promotion's impact, some companies measure the impact of direct marketing on awareness, intention to buy, and word of mouth. Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Application of knowledge 147) Most direct marketers apply the RFM formula to select customers. Explain this formula and how it is used to select customers. Answer: Most direct marketers apply the RFM (recency, frequency, monetary amount) formula to select customers according to how much time has passed since their last purchase, how many times they have purchased, and how much they have spent since becoming a customer. Suppose a company is offering leather jackets. It might make this offer to the most attractive customers, those who made their last purchase between 30 and 60 days ago, who make three to six purchases a year, and who have spent at least $100 since becoming customers. Points are established for varying RFM levels; the more points, the more attractive the customer. Diff: 3 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 148) Why do companies use infomercials? Answer: Infomercials combine the selling power of television commercials with the draw of information and entertainment. Infomercials promote products that are complicated or technologically advanced or that require a great deal of explanation. Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Reflective thinking 149) DB Bank is launching a new investment product targeting senior citizens in the United States. The company decides to use direct marketing for selling the product. What direct marketing strategy would allow the company early testing and response measurement of the product? Answer: The company can use direct mail to communicate with prospects. It permits target market selectivity, can be personalized, is flexible, and allows early testing and response measurement. Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Analytical thinking

150) Integron Inc., a company that manufactures office furniture, has recently observed a dip in its profitability. Salespeople visit an average prospect at least six times before closing a deal. What suggestion can you give the company to reduce this expense of direct marketing and increase its profitability? Answer: (Student answers will vary.) The company can replace some of the sales calls with telemarketing. This would help them reduce the costs and increase profitability. Diff: 2 LO: 14.4: Discuss the role of direct marketing, and identify the key direct marketing channels. AACSB: Analytical thinking

Marketing Management, 16e (Kotler) Chapter 15 Designing and Managing Distribution Channels 1) Today's holistic marketers view the entire supply chain as a A) profit center B) cost center C) value network D) healthy competitor E) holdover from the pre-internet era Answer: C Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking

2) Brokers, manufacturers' representatives, and sales agents search for customers and may negotiate on the producer's behalf but do not take title to the goods. This group of intermediaries are called collectively known as . A) wholesalers B) facilitators C) agents D) distributors E) merchants Answer: C Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 3) Transportation companies, independent warehouses, banks, and advertising agencies assist in the distribution process but don't take title to goods or negotiate purchases or sales. This group of intermediaries are called collectively known as . A) wholesalers B) facilitators C) agents D) distributors E) merchants Answer: B Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking

4) Which of these is NOT one of the five common flows across distribution channels? A) Physical flow B) Title flow C) Staffing flow D) Payment flow E) Promotion flow Answer: C Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 5) What two intermediaries are typically found in a dual-level channel? A) Two retailers B) A wholesaler and a retailer C) A manufacturer and a distributor D) A dealer and a manufacturer E) A dealer and a wholesaler Answer: B Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 6) What class of intermediaries operate between manufacturers and industrial customers in B2B markets? A) Industrial distributors B) Wholesalers C) Retailers D) Rack jobbers E) Reverse-flow intermediaries Answer: A Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 7) Which of these is NOT one of the typical functions of a reverse-flow channel? A) Collecting empty reusable containers for reuse B) Refurbishing products C) Recycling D) Disposing of packaging E) Arranging financing Answer: E Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking

8) When Apple accepts used cell phones from customers and extracts components and materials from them for use in other products and manufacturing processes, it is operating a(n) . A) collection depot B) remanufacturing operation C) reverse-flow channel D) environmental channel E) salvage operation Answer: C Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 9) A direct marketing channel has intermediary(ies). A) one B) zero C) one or two D) an indeterminate number of E) two or three Answer: B Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 10) are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. A) Distribution channels B) Interstitials C) Communication channels D) Sales territories E) Marketing terrains Answer: A Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 11) Intermediaries that buy, take title to, and resell the merchandise are known as A) merchants B) brokers C) sales agents D) manufacturers' reps E) facilitators Answer: A Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking

12) Which of the following channel functions constitute only a backward flow? A) Movement of physical goods B) Placing orders with manufacturers C) Persuasive communication D) Storage of physical goods E) Overseeing actual transfer of ownership Answer: B Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 13) Identify which of these channel functions constitutes both backward and forward flow. A) Financing B) Storage of physical goods C) Persuasive communication D) Movement of physical goods E) Overseeing actual transfer of ownership Answer: A Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Analytical thinking 14) Producers often shift some functions to intermediaries. Which of the following is the most significant benefit of doing this? A) It increases customer loyalty. B) It provides the producer with greater control over operations. C) It reduces the amount of direct customer interaction. D) It lowers the producer's costs and prices. E) It ensures greater information security. Answer: D Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Analytical thinking 15) Which of the following is an example of a zero-level channel? A) A company takes online orders from customers and ships the products to them. B) An organization uses a combination of direct salespeople and sales agencies to increase sales. C) A company sells its products through wholesalers and retailers. D) A company sells its products through chains of supermarkets and other large sellers. E) A large company forms alliances with smaller companies to increase sales coverage. Answer: A Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Analytical thinking

16) Which of the following entities is present in a zero-level distribution channel? A) Consumers B) Retailers C) Brokers D) Agents E) Wholesalers Answer: A Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Application of knowledge 17) A direct distribution channel is a channel. A) one-level B) two-level C) zero-level D) three-level E) reverse-flow Answer: C Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 18) Door-to-door sales, home parties, mail order, telemarketing, TV selling, online selling, and manufacturer-owned stores are examples of . A) zero-level channels B) jobbers C) wholesalers D) manufacturer's representatives E) consumers Answer: A Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Application of knowledge 19) Which of the following activities is a reverse-flow channel? A) Raw materials movement B) Product recycling C) Materials ordering D) Finished goods storage E) Customer order placement Answer: B Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Application of knowledge

20) What is the trade-off in return for the benefits associated with an integrated multichannel marketing system? A) Increased market coverage B) Loss of profitable customers C) Lower channel costs D) Two or more channels may end up competing for the same customer E) Customized selling Answer: D Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 21) A distribution channel overcomes the time and place gaps that separate goods and services from those who need or want them. Answer: TRUE Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 22) Distribution channels are the set of pathways a product or service follows after production, culminating in purchase and consumption by the final end user. Answer: TRUE Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 23) Sales agents and brokers are called facilitators in a distribution channel. Answer: FALSE Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 24) All functions in a distribution channel use up scarce resources and can be shifted among channel members. Answer: TRUE Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 25) A zero-level distribution channel typically uses a wholesaler and a retailer. Answer: FALSE Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking

26) The flow of materials to refurbish products for resale constitutes a reverse flow. Answer: TRUE Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 27) What do we mean when we say marketing channels must not just serve markets, they must also make them? Answer: Many channel intermediaries are expected to find customers and develop demand for products. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 28) Why would a producer delegate some of the selling job to intermediaries, thereby relinquishing control over how and to whom its products are sold? Answer: Through their contacts, experience, specialization, and scale of operation, intermediaries make goods widely available and accessible to target markets, offering more effectiveness and efficiency than the producing firm could achieve on its own. Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 29) What three characteristics do all channel functions share? Answer: All channel functions (1) use up scarce resources, (2) can often be performed better through specialization, and (3) can be shifted among channel members. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 30) What two dynamics in the business environment tend to spur changes in channel institutions? Answer: Changes in channel institutions largely reflect the discovery of more efficient ways to combine or separate the economic functions that provide assortments of goods to target customers. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 31) What does title flow mean in distribution channels? Answer: Title flow refers to the passing of legal ownership from one entity to the next. For example, manufacturers may sell products to distributors, who "take title" by becoming the owners of the goods until they resell them. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking

32) Identify the three strategies manufacturers can use to gain acceptance from intermediaries while trying to manage online and offline channels. Answer: One option involves offering different brands or products online and offline. The second option entails offering offline partners higher commissions to cushion the negative impact on sales. The third option involves taking orders on their website but having retailers deliver and collect payment. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 33) What three important benefits do multiple distribution channels give companies? Answer: The first is increased market coverage. Not only are more customers able to shop for the company's products in more places, but those who buy in more than one channel are often more profitable than single-channel customers. The second benefit is lower channel cost. Selling online or by catalog and phone is cheaper than using personal selling to reach small customers. The third is the ability to do more customized selling, such as by adding a technical sales force to sell complex equipment. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 34) Why is using a single channel typically not as efficient as an integrated multichannel approach? Answer: Using a single channel is typically not very efficient, as a direct sales force can demonstrate. A salesperson would have to find leads, qualify them, presell, close the sale, provide service, and manage account growth. With an integrated multichannel approach, however, the company's marketing department could run a preselling campaign informing prospects about the company's products through advertising, direct mail, and e-mails; generate leads through telemarketing, more e-mails, and trade shows; and qualify leads as hot, warm, or cool. The salesperson enters when the prospect is ready to talk business and invests his or her costly time primarily in closing the sale. This multichannel architecture optimizes coverage, customization, and control while minimizing cost and conflict. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 35) How prevalent is multichannel marketing in today's business environment? Answer: Most companies today have adopted multichannel marketing to one degree or another. Diff: 1 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking

36) What are the various functions performed by members of a distribution channel? Answer: Members of the marketing channel perform a number of key functions: • Gather information about potential and current customers, competitors, and other actors and forces in the marketing environment. • Develop and disseminate persuasive communications to stimulate purchasing and foster brand loyalty. • Negotiate and reach agreements on price and other terms so that transfer of ownership or possession can be effected. • Place orders with manufacturers. • Acquire the funds to finance inventories at different levels in the marketing channel. • Assume risks connected with carrying out channel work. • Provide buyers with financing and facilitate payment. • Provide for buyers' payment of their bills through banks and other financial institutions. • Oversee transfer of ownership of goods from one organization or person to another. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 37) Briefly explain the various levels of distribution channels. Answer: A zero-level channel, also called a direct distribution channel, consists of a manufacturer selling directly to the final customer. The major examples are door-to-door sales, home parties, mail order, telemarketing, TV selling, internet selling, and manufacturer-owned stores. A one-level channel contains one selling intermediary, such as a retailer. A two-level channel contains two intermediaries. In consumer markets, these are typically a wholesaler and a retailer. A three-level channel contains three intermediaries. In the meatpacking industry, wholesalers sell to jobbers, essentially small-scale wholesalers, who sell to small retailers. Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Reflective thinking 38) Eureka Forbes, a consumer appliances company, sells its vacuum cleaners through door-to door sales. This allows the company to obtain a high conversion ratio. Comment on the length of the channel in the case of Eureka Forbes' vacuum cleaners. Answer: The company is using a zero-level channel, in which the manufacturer sells directly to the final customer. This is the shortest channel. Diff: 2 LO: 15.1: Define the roles of marketing channels. AACSB: Analytical thinking

39) What are distribution channels? Identify the different types of intermediaries. Answer: Distribution channels are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. They are the set of pathways a product or service follows after production, culminating in purchase and consumption by the final end user. Some intermediaries—such as wholesalers and retailers—buy, take title to, and resell the merchandise; they are called merchants. Others—brokers, manufacturers' representatives, sales agents—search for customers and may negotiate on the producer's behalf but do not take title to the goods; they are called agents. Still others–transportation companies, independent warehouses, banks, advertising agencies–assist in the distribution process but neither take title to goods nor negotiate purchases or sales; they are called facilitators. Diff: 3 LO: 15.1: Define the roles of marketing channels. 40) The Norticon Group provides and manages computers and network systems for businesses and communities. Norticon sells its products through various means. It uses its sales force to sell to large customers and telemarketing to sell to smaller customers. The company also sells its products online. Briefly explain the marketing approach being used by the company. Answer: The company is using multichannel marketing, which involves the use of two or more distribution channels to reach customer segments. In multichannel marketing, each channel targets a different segment of buyers, or different need states for one buyer, and delivers the right products in the right places in the right way at the least cost. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Analytical thinking 41) Garolds Stores operates as a low price retailer. It offers home fashion products, such as wall decor, frames, candles, bath and bedding products, furniture, home accents, and kitchen products. The firm has showrooms and retail stores across United States. Customers can buy products in three different ways: (1) they can place orders online and have the products shipped to their homes; (2) they can buy directly from the showrooms and retail outlets; or (3) they can place orders online and pick them up from the nearest showroom. What are the benefits that Garolds Stores achieves by using various channels to sell to customers? Answer: The company increases its sales by targeting different segments of customers through various channels. Multichannel marketing allows the company to deliver the right products in the right places in the right way at the least cost. Diff: 3 LO: 15.1: Define the roles of marketing channels. AACSB: Analytical thinking

42) Why did Apple conclude that existing retail channels were not meeting its distribution objectives when it decided to open its own retail stores? A) Existing channels didn't give off the right "techie" vibe. B) Existing channels weren't creating a dynamic retail experience for consumers. C) There weren't enough outlets in major markets. D) At the time, there were no stores capable of selling computers. E) It wanted to make consumers dependent on the Genius Bar service experience. Answer: B Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 43) Felder, an Austrian manufacturer of high-end woodworking machinery, has only a handful of showrooms in the United States and does not sell its products through home improvement stores. This is an example of distribution. A) exclusive B) selective C) intensive D) professional E) trade Answer: A Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 44) Automotive dealerships are examples of the format. A) manufacturer-sponsored wholesaler franchise B) manufacturer-sponsored distributor franchise C) manufacturer-sponsored retailer franchise D) service-firm-sponsored retailer franchise E) zero-channel franchise Answer: C Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 45) Société Bic S.A. is the French company behind Bic brand lighters, razors, and pens. Which distribution strategy is right for these low-cost consumer products? A) Exclusive B) Selective C) Intensive D) Professional E) Trade Answer: C Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 11

46) The Hermès brand of luxury fashion is available in approximately 300 company stores worldwide as well as a few carefully chosen high-end retail partners. This is an example of distribution. A) luxury B) selective C) intensive D) exclusive E) trade Answer: D Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 47) Which of these is true about the selective distribution strategy? A) It allows no competition between retailers. B) It counts on all retailers in a market to carry particular products. C) Retailers are assigned non-overlapping market territories. D) It might result in some retailers competing for the same customers. E) It limits distribution to one selected retailer in each market. Answer: D Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 48) Which of the following types of distribution involves severely limiting the number of channel intermediaries? A) Exclusive B) Selective C) Intensive D) Aggressive E) Retail Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

49) Which of the following allows a firm to maintain control over service level and obtain more dedicated and knowledgeable selling? A) Selective distribution B) Intensive distribution C) Push strategy D) Exclusive distribution E) Pull strategy Answer: D Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 50) Which of the following channel alternatives is most suited to handle complex products and transactions? A) Sales forces B) The internet C) Dealers D) Telemarketers E) Direct mails Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 51) Which of the following is a potential disadvantage of using the internet as a distribution channel? A) It is less effective for complex products. B) It lacks convenience and practicality. C) It cannot be used to reach a wide audience. D) It is considered expensive. E) It causes the company to lose direct contact with customers. Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

52) Armon Apparels designs, manufactures, and distributes athletic apparel and accessories for men and women. The company has only nine distributors across the United States. These distributors control a nationwide network of 600 retailers. The company does not sell its products through any other channels. This is an example of distribution. A) selective B) intensive C) exclusive D) internal E) passive Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 53) An intensive distribution strategy serves well for A) premium cars B) commercial trucks C) private label products D) industrial equipment E) soft drinks Answer: E Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge

54) Which of the following products is most likely to be sold using an exclusive distribution strategy? A) Designer luggage B) Soft drinks C) Alcoholic beverages D) Automotive fuel E) Medicine Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking

Use of Power (Scenario) Broomer manufactures fashion apparel for women, men, and children. Its products are in high demand and apparel stores are more than willing to carry and sell Broomer's garments. The company recently introduced a new clothing line named "Inducer," targeted at youth. However, the new line is not well received by the market, and sales fail to take off even three months after its launch. 55) In an effort to boost sales, Broomer offers its retailers a higher margin for promoting and selling products from the "Inducer" line to customers. This is an example of power. A) coercive B) reward C) passive D) expert E) referent Answer: B Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 56) Because of the acceptance that the other Broomer products have in the market, retailers are willing to stock items from the new "Inducer" line of clothing. This is an example of power. A) referent B) passive C) legitimate D) coercive E) reward Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 57) Broomer threatens to withdraw all its other products from the retailers' stores if they are unwilling to push products from the "Inducer" line. This is an example of power. A) reward B) coercive C) legitimate D) expert E) referent Answer: B Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking

58) power can be effective, but its exercise produces resentment and can lead the intermediaries to organize countervailing power. A) Coercive B) Reward C) Legitimate D) Expert E) Referent Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. 59) A manufacturer offers its intermediaries an extra benefit for performing a promotional activity. This is an example of the use of _ power. A) reward B) coercive C) functional D) expert E) referent Answer: A Diff: 1 LO: 15.2 Explain the key channel-management decisions. 60) A manufacturer is using legitimate power when it . A) requests a behavior that is warranted under the selling contract B) threatens to withdraw a resource or terminate a relationship C) offers intermediaries an extra benefit for performing specific acts or functions D) makes the intermediaries sell more of a particular product by offering rewards E) sells more products by making use of its reputation in the market Answer: A Diff: 3 LO: 15.2 Explain the key channel-management decisions. 61) HP Inc. is a highly respected technology brand. Many retailers want to be associated with the brand because of this reputation. What kind of power does HP obtain due to this reputation? A) Referent B) Functional C) Legitimate D) Coercive E) Reward Answer: A Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge

62) Which of the following types of power is objectively observable? A) Coercive power B) Legitimate power C) Group power D) Expert power E) Referent power Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 63) A new firm typically starts as a local operation selling in a fairly circumscribed market by . A) finding and developing new intermediaries B) using a few existing intermediaries C) forming partnerships with the market leader D) creating a special channel E) forming partnerships with other firms Answer: B Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge 64) Who will most likely be willing to pay for high-value-added channels? A) Early buyers of a product B) Internal customers of a company C) Small and matured buyers of an industry D) Consumers of low involvement products E) Repeat customers of a product Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge 65) A producer must modify its channel design and arrangements if A) consumer buying patterns change B) the competition in the market stabilizes C) the product is in the growth stage of its life cycle D) the market size remains unchanged for a particular period E) the firm's profits stabilize Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

66) What is the major difference between a conventional distribution channel and a vertical marketing system? A) Elements in a conventional distribution channel act as separate businesses whereas the elements in a vertical marketing system act as a unified system. B) A vertical marketing system has many intermediaries whereas a conventional distribution channel has a limited number of intermediaries. C) A vertical marketing system is characterized by an independent producer whereas a conventional distribution channel is characterized by multiple producers. D) A conventional distribution channel has elements such as retailers and wholesalers whereas these elements are not present in a vertical marketing system. E) Producers have complete control over the other members in a conventional distribution channel whereas this control is minimal in a vertical marketing system. Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 67) A(n) includes the producer, wholesaler(s), and retailer(s) acting as a unified system. A) parallel distribution channel B) vertical marketing system C) extensive distribution channel D) internal marketing system E) conventional distribution channel Answer: B Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 68) A(n) vertical marketing system combines successive stages of production and distribution under single ownership. A) corporate B) administered C) contractual D) regulatory E) controlled Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

69) The most advanced supply-distributor arrangements for systems rely on distribution programming. A) corporate B) administered C) contractual D) regulatory E) controlled Answer: B Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

vertical marketing

70) Rotter Garder Inc. is a large-scale paint manufacturer and is known for its wide range of decorative paint products and industrial coatings. In addition to making paints, the company also owns and operates the retail stores that sell its products. This is an example of a(n) vertical marketing system. A) administered B) contractual C) referent D) corporate E) regulated Answer: D Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 71) An administered vertical marketing system coordinates successive stages of production and distribution through . A) an automated central control unit B) single ownership C) the combined efforts of all its members D) the establishment of contractual obligations E) the size and power of one of the members Answer: E Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

72) A(n) vertical marketing system consists of independent firms at different levels of production and distribution, integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone. A) administered B) contractual C) corporate D) regulated E) referent Answer: B Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 73) A group of small sellers takes the initiative and organizes a new business entity to carry on wholesaling and possibly some production. This entity is called a(n) . A) retailer cooperative B) franchise organization C) area-based cartel D) sponsored voluntary chain E) alternate selling channel Answer: A Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge 74) A group of small grocery shops forms a new business entity to buy products directly from manufacturers. The group buys products in bulk that are then distributed among members. This helps the shops obtain better profit margins. Which of the following types of vertical marketing systems can be observed here? A) Contractual B) Corporate C) Administered D) Controlled E) Regulatory Answer: A Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking

75) A franchise organization is an example of a(n) A) corporate B) administered C) contractual D) regulatory E) controlled Answer: C Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

vertical marketing system.

76) In a marketing system, two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity. A) reverse flow B) vertical C) horizontal D) lateral E) forward flow Answer: C Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 77) A corporate vertical marketing system combines successive stages of production and distribution under single ownership. Answer: TRUE Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 78) Channel power is the ability to alter channel members' behavior so that they take actions they would not have taken otherwise. Answer: TRUE Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 79) A manufacturer is using reward power when it offers intermediaries an extra benefit for performing specific acts or functions. Answer: TRUE Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge

80) When a manufacturer requests a behavior that is warranted under the contract, the manufacturer is using coercive power. Answer: FALSE Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge 81) When economic conditions are depressed, producers want to move goods to market using longer channels. Answer: FALSE Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 82) STIHL, which manufactures handheld outdoor power equipment sold to six independent U.S. distributors and six STIHL-owned marketing and distribution centers who sell to a nationwide network of more than 8,000 servicing retail detailers, is a good example of intensive distribution. Answer: FALSE Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Application of knowledge 83) Intensive distribution relies on only some of the intermediaries willing to carry a particular product. Answer: FALSE Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 84) An intensive distribution strategy serves well for products such as snack foods and soft drinks. Answer: TRUE Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 85) Selective distribution severely limits the number of intermediaries. Answer: FALSE Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

86) What are the three main characteristics of a franchise organization? Answer: (1) The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments. (2) The franchisee pays for the right to be part of the system. This includes start-up costs and (usually) a regular license fee. (3) The franchisor provides its franchisees with a system for doing business. Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 87) Why did Nike pull all its products from Sears after Sears purchased Kmart? Answer: Nike didn't want its brand associated with or sold through a low-priced retailer such as Kmart, so it sacrificed a portion of intensive distribution to protect its brand. Diff: 1 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 88) How does franchising benefit both parties in the arrangement? Answer: Franchisors gain the motivation and hard work of people who are entrepreneurs rather than "hired hands," as well as the franchisees' familiarity with local communities and conditions, and the enormous purchasing power of being a franchisor. Franchisees benefit from buying into a business with a proven business model and a well-known and accepted brand name. They find it easier to borrow money for their business from financial institutions, and they receive support in areas ranging from marketing and advertising to site selection and staffing. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 89) How do both channel partners benefit from exclusive distribution arrangements? Answer: The producer obtains more loyal and dependable outlets, and the retailer gets a steady supply of special products and stronger seller support. Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 90) What are the conditions that must be met for exclusive distribution agreements to be legal? Answer: Exclusive arrangements are legal as long as they do not substantially lessen competition or tend to create a monopoly and as long as both parties enter into them voluntarily. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking

91) Can a producer legally refuse to let a competent wholesaler or retailer carry its products, and can it prevent intermediaries from selling outside their designed territories? Answer: A producer has no legal obligation to sell through more outlets than it wishes, so yes, it can legally refuse any wholesaler or retailer's request to carry its products. However, the legal situation on preventing intermediaries from selling outside their designed territories is not as clear; this has become a major legal issue. Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 92) Explain the three distribution strategies based on the number of intermediaries. Answer: • Exclusive distribution: This strategy focuses on severely limiting the number of intermediaries. It's appropriate when the producer wants to maintain control over the service level and outputs offered by the resellers, and it often includes exclusive dealing arrangements. By granting exclusive distribution, the producer hopes to obtain more dedicated and knowledgeable selling. It requires a closer partnership between seller and reseller and is used in the distribution of new automobiles, some major appliances, and many luxury brands. • elective distribution: This distribution strategy relies on only some of the intermediaries willing to carry a particular product. Unlike exclusive distribution, in which individual retailers do not directly compete with one another (for example, because they are assigned non-overlapping geographic areas), selective distribution might include retailers that compete for the same customers. • Intensive distribution: This strategy places the goods or services in as many outlets as possible. This strategy serves well for snack foods, soft drinks, newspapers, candies, and gum – products consumers buy frequently or in a variety of locations. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 93) National Beverage Corp. produces and distributes a wide range of beverages. It offers a selection of flavored soft drinks, juices, sparkling waters, energy drinks, nutritionally enhanced waters, and other specialty beverages. What distribution strategy will be most suitable for the company's products? Answer: The company has to use intensive distribution, which places the goods or services in as many outlets as possible. This strategy serves well for products consumers buy frequently or in a variety of locations. Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking

94) What is channel power? Explain the various types of channel power. Answer: Channel power is the ability to alter channel members' behavior so they take actions they would not have taken otherwise. • Coercive power: A manufacturer threatens to withdraw a resource or terminate a relationship if intermediaries fail to cooperate. This power can be effective, but its exercise produces resentment and can lead the intermediaries to organize countervailing power. • Reward power: The manufacturer offers intermediaries an extra benefit for performing specific acts or functions. Reward power typically produces better results than coercive power, but intermediaries may come to expect a reward every time the manufacturer wants a certain behavior to occur. • Legal power: The manufacturer requests a behavior that is warranted under the contract. As long as the intermediaries view the manufacturer as a legitimate leader, legal power works. • Expert power: The manufacturer has special knowledge of the intermediaries' value. Once the intermediaries acquire this expertise, however, expert power weakens. The manufacturer must continue to develop new expertise so intermediaries will want to continue cooperating. • Referent power: The manufacturer is so highly respected that intermediaries are proud to be associated with it. Companies such as IBM, Caterpillar, and Hewlett-Packard have high referent power. Coercive and reward power are objectively observable; legitimate, expert, and referent power are more subjective and depend on the ability and willingness of parties to recognize them. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 95) Apple is a highly respected brand across the globe. What kind of channel power does this respect give Apple? Answer: Apple is so highly respected that intermediaries are proud to be associated with it. This gives Apple referent power. Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 96) Atronix Solutions is a major manufacturer of electronic measuring devices in the United States. The company often threatens to terminate its relationship with its intermediaries if they do not agree with its terms and conditions. What channel power does Atronix use? What are its effects? Answer: Here, the manufacturer is using coercive power. This power can be effective, but its exercise produces resentment and can lead the intermediaries to organize countervailing power. Diff: 2 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking

97) A group of entrepreneurs is planning to start a food processing company. Comment on the likely evolution of the company's distribution channels. Answer: The firm is likely to start as a local operation selling in a fairly circumscribed market, using a few existing intermediaries. At this stage, it is often difficult to convince the available intermediaries to handle the firm's line. If the firm is successful, it might branch into new markets with different channels. In smaller markets, the firm might sell directly to retailers; in larger markets, through distributors. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 98) What is a vertical marketing system? What are the various types of vertical marketing systems? Answer: A vertical marketing system includes the producer, wholesaler(s), and retailer(s) acting as a unified system. One channel member, the channel captain, owns or franchises the others or has so much power that they all cooperate. There are three types of vertical marketing systems: corporate, administered, and contractual. • A corporate vertical marketing system combines successive stages of production and distribution under single ownership. • An administered vertical marketing system coordinates successive stages of production and distribution through the size and power of one of the members. Manufacturers of dominant brands can secure strong trade cooperation and support from resellers. • A contractual vertical marketing system consists of independent firms at different levels of production and distribution, integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Reflective thinking 99) DMM Industries, a manufacturer of composite metal products, sells its products using a conventional distribution channel. The company decides to adopt a vertical marketing system to improve its performance. What advantages could this provide? Answer: Each entity in a conventional channel is a separate business seeking to maximize its own profits, even if this goal reduces profit for the system as a whole. A vertical marketing system, by contrast, acts as a unified system. This would make the company more profitable. vertical marketing systems achieve economies through size, bargaining power, and elimination of duplicated services. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking

100) Altrudex Inc. is involved in the manufacture, distribution, and sale of consumer electronics. The company sources over half the products it sells from companies it partly or wholly owns. It also owns a large retail chain and sells its products through them. What marketing system is Altrudex using? Answer: The company is using a corporate vertical marketing system. A corporate vertical marketing system combines successive stages of production and distribution under single ownership. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 101) True Value is a retailer-owned cooperative with over 4,000 independent retail locations worldwide. Members of True Value own their individual stores and operate independently. True Value helps its members procure materials at a low cost. What kind of marketing system is True Value? Explain briefly. Answer: True Value is a type of contractual vertical marketing system. It is a retail cooperative wherein retailers take the initiative and organize a new business entity to carry on wholesaling and possibly some production. Diff: 3 LO: 15.2 Explain the key channel-management decisions. AACSB: Analytical thinking 102) A wise response to channel conflict is to . A) acknowledge that conflict will always exist and try to manage it better B) try to eliminate all forms of conflict C) ignore it as a natural part of doing business D) use conflict to force through change E) simply accept that various members of a channel have different degree of power Answer: A Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking 103) If channel members experiencing conflict try to come to agreement on a fundamental goal they are all seeking, they are a pursuing the mechanism for conflict management. A) dual compensation B) superordinate goals C) strategic justification D) joint memberships E) co-optation Answer: B Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking

104) channel conflict occurs between channel members at the same level. A) Horizontal B) Vertical C) Multichannel D) Administrative E) Contractual Answer: A Diff: 1 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking 105) Alcart Solutions is a large distributor of Aldor phones in Canada. The company distributes products to various retailers in the New Brunswick province. Recently Aldor received several complaints from retailers that Alcart offers preferential treatment to some of the other retailers in the region. This is an example of conflict. A) multichannel B) horizontal C) vertical D) intermediate E) parallel Answer: B Diff: 3 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Application of knowledge 106) When Goodyear began selling its popular tire brands through Sears, Walmart, and Discount Tire, independent dealers that sold the same tires at higher prices were angry. This is an example of a(n) conflict. A) horizontal B) vertical C) intermediate D) multichannel E) parallel Answer: D Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Application of knowledge

107) A manufacturer wants to achieve rapid market penetration through a low-price policy. However, the manufacturer's dealers prefer to work with high margins and pursue short-run profitability. The major reason for this conflict is . A) goal incompatibility B) unclear roles C) ambiguous rights D) differences in perception E) dependence on the manufacturer Answer: A Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking 108) When Estée Lauder set up a website to sell its Clinique and Bobbi Brown brands, Dayton Hudson reduced space for Estée Lauder products in its department stores in response to the conflict. A) horizontal channel B) multichannel C) vertical channel D) grid channel E) end-customer Answer: C Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Application of knowledge 109) General Motors' executives work for a short time in some dealerships, and some dealership owners work in GM's dealer policy department. This strategy helps the company avoid conflicts with its dealers. This is an example of the strategy. A) employee exchange B) dual compensation C) joint membership D) co-optation E) diplomacy Answer: A Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Application of knowledge

110) RX Corp. is a large manufacturer of electronic goods and sells its products through distributors and retailers. In order to keep pace with the growing use of the internet, the company decides to start selling online. The company faces stiff opposition from its retailers as they believe that this will significantly reduce their profits. The company attempts to eliminate this resistance by offering its retailers commissions for processing and delivering orders received via the Web. This is an example of which of the following conflict resolution strategies? A) Dual compensation B) Joint membership C) Arbitration D) Co-optation E) Strategic pricing Answer: A Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Application of knowledge 111) Co-optation is an effort by one organization to win the support of the leaders of another by . A) including them in advisory councils B) engaging in mediation and arbitration C) encouraging joint memberships in trade associations D) encouraging employee exchanges E) offering strategic justifications Answer: A Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking 112) Winstar is a large-scale manufacturer with more than a hundred partners across the globe. When making decisions concerning distribution and channel optimization, the company invites members from its channel partners to be part of its advisory committee. This helps the company maintain harmony with its partners. Which of the following conflict resolution techniques is Winstar using? A) Diplomatic counselling B) Mediation C) Arbitration D) Co-optation E) Joint membership Answer: D Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Application of knowledge

113) If a producer wants to achieve rapid market penetration through a low-price policy, while a dealer wants to work with high margins to pursue short-run profitability, the source of the channel conflict is . A) unclear roles and rights B) goal incompatibility C) differences in perception D) intermediaries' dependence on the manufacturer E) strategic justification Answer: B Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking 114) Jaycee was using when his organization tried to win the support of the leaders of one of his distributors by including them in advisory councils, boards of directors, and the like. A) dual compensation B) employee exchange C) co-optation D) joint membership E) strategic justification Answer: C Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Application of knowledge 115) Conflicts between various franchisees of a company are an example of vertical channel conflict. Answer: FALSE Diff: 1 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking 116) Multichannel conflicts are common when the members of one channel obtain a lower price based on larger-volume purchases. Answer: TRUE Diff: 1 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking 117) Dual compensation pays existing channels for sales made through new channels. Answer: TRUE Diff: 1 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Reflective thinking

118) Characterize the power imbalance in the U.S. retailing sector and its effect on channel conflict. Answer: There is a stark imbalance of power in the U.S. retailing sector: Thanks to waves of consolidation, the 10 largest U.S. retailers now account for more than 80 percent of the average manufacturer's business. In other words, the fate of these manufacturers is largely in the hands of huge retail chains that often hold the upper hand, which frequently spawns channel conflict. Diff: 3 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Analytical thinking 119) How did Apple create a challenge for its authorized solution-provider and channel partners by effectively "stealing" many of their current customers? Answer: Apple did this by opening its own retail stores, thereby siphoning off a lot of sales that had previously been handled by its various channel partners. Diff: 1 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Analytical thinking 120) Flash Designs is an apparel manufacturing company and has adopted a franchising model to distribute and sells its garments. The company recently received complaints from a particular franchisee that another competing franchisee was infringing on its territory. What type of conflict is this? Answer: This is an example of horizontal channel conflict, between channel members at the same level. Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Analytical thinking 121) Crafted Jewels is a jewelry manufacturer that sells its designs to various jewelry retailers. The retailers often complain that the company's online store acts as a competitor and reduces their profitability. What type of conflict is this? Briefly explain. Answer: This is a case of vertical channel conflict, as Crafted has chosen to bypass the retailer level of its established channel and sell directly to consumers. Diff: 2 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Analytical thinking

122) UltraMotion Pictures produces and distributes music and television entertainment in the United States. The company distributes music in partnership with a large music retailer, Fromen Tunes. Fromen executives often work for a short time with UltraMotion and some of the UltraMotion executives work at the retail outlets to study Fromen's operations. This strategy minimizes the conflicts between partners. What strategy is being used here? Briefly explain. Answer: This strategy of managing channel conflict is called an employee exchange which involves the exchange of persons between two or more channel levels. Thus participants can grow to appreciate each other's point of view. Diff: 3 LO: 15.3: Discuss how firms manage channel cooperation and conflict. AACSB: Analytical thinking 123) includes strategically procuring the right inputs (raw materials, components, and capital equipment), converting them efficiently into finished products, and dispatching them to the final destinations. A) Logistics B) Channel management C) Supply chain management D) Just-in-time inventory E) Purchasing management Answer: C Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 124) Which of these is an important disadvantage of just-in-time inventory management? A) Few distribution managers know about it. B) It has been replaced by zero-inventory logistics. C) Its inventory-carrying costs are too high. D) It lacks flexibility when distribution logistics are interrupted. E) Its inventory-carrying costs are impossible to predict. Answer: D Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 125) The strategy of carrying near-zero inventory and acquiring stock based on orders is known as . A) just-in-time inventory management B) agile inventory management C) zero-cost inventory management D) responsive inventory management E) order-driven inventory management Answer: A Diff: 1 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 33

126) Which of these is NOT an inventory carrying cost? A) Storage charges B) Cost of capital C) Depreciation D) Setup costs E) Obsolescence Answer: D Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 127) Order-processing costs for a manufacturer consist of A) setup costs B) sales costs C) inventory-carrying costs D) marketing costs E) component costs Answer: A Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking

and running costs.

128) Which of these is NOT a step in the order-to-payment cycle? A) Order transmission B) Closing C) Order entry D) Credit check E) Production scheduling Answer: B Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking 129) includes planning the infrastructure to meet demand and then implementing and controlling the physical flows of materials and final goods from points of origin to points of use to meet customer requirements at a profit. A) Market logistics B) Containerization C) Transportation D) Nonstore retailing E) Wholesaling Answer: A Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking 34

130) The elapsed time between an order's receipt, delivery, and payment is called the cycle. A) variable-costs-to-payment B) product-to-payment C) inventory-to-sale D) order-to-inventory E) order-to-payment Answer: E Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking 131) costs for a manufacturer consist of setup costs and running costs. A) Inventory-carrying B) Containerization C) Wholesaling D) Order-processing E) Transportation Answer: D Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 132) As inventory draws down, management must know at what stock level to request additional stock. This stock level is called the . A) order of reorder point B) least fixed point C) point of divergence D) inflection point E) critical point Answer: A Diff: 1 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 133) A stock order or reorder point of 10 means ordering the product A) every 10 days B) when stock falls to 10 units C) every 10 units D) when stock falls to 9 units E) in batches of 10 items Answer: B Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking

134) E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing more products only once it is ordered. Which of the following is true for E&OE? A) Inventory costs are lower than order-processing costs. B) Running costs are higher than inventory-carrying costs. C) Setup costs for the products are low. D) Order-processing costs are high. E) Order-processing costs are lower than setup costs. Answer: C Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking 135) E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing more products only once it is ordered. Which of the following will be true for E&OE? A) Short production runs will be more expensive than longer ones. B) Setup and order-processing costs will be high. C) The order point will be high. D) Order-processing costs will be lower than the inventory-carrying costs. E) E&OE can reduce the average cost per unit by producing a long run. Answer: D Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking 136) consists of putting goods in boxes or trailers that are easy to transfer between two transportation modes. A) Containerization B) Haulage C) Inventory carrying D) Order processing E) Warehousing Answer: A Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking

137) Which of the following is an example of a private carrier? A) MET is a transporter that operates only in the Chicago area and charges fixed prices. B) BCL is a family firm that owns only three trucks, but takes small orders for transport. C) VTV owns a fleet of trucks and transports goods for any client for a fee. D) COM is a shipping firm that transports goods by road and rail across the United States. E) BEL Inc. manufactures parts for automobiles and transports its products to customers itself. Answer: E Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking 138) The trucking firm hired by your transportation manager provides a trucking service between the city of Sacramento and the surrounding towns on a regular schedule and at fixed prices. The trucking firm saves transportation costs by transporting the goods using trains as well as trucks, instead of trucks alone. Your transportation manager has hired a(n) carrier. A) airship B) airtruck C) trainship D) fishyback E) piggyback Answer: E Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking 139) If the shipper owns its own truck or air fleet, it becomes a A) containerized B) private C) contract D) common E) diversified Answer: B Diff: 1 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking

carrier.

140) Most companies today are trying to increase the order-to-payment cycle. Answer: FALSE Diff: 1 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking

141) Inventory cost increases at an accelerating rate as the customer-service level approaches 100 percent. Answer: TRUE Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 142) Discuss the challenge of balancing order-processing costs and inventory-carrying costs. Answer: Trying to save money by reducing one of these costs can raise the other cost, so it's a delicate balancing act and depends on a large number of variables. Order-processing costs for a manufacturer consist of setup costs (costs of setting up the processes required to produce one item) and running costs (operating costs when production is running) for the item. If setup costs are low, the manufacturer can produce the item often, and the average cost per item is stable and equal to the running costs. If setup costs are high, however, the manufacturer can reduce the average cost per unit by producing a long run and carrying more inventory. Order-processing costs must be compared and balanced with inventory-carrying costs, which include storage charges, cost of capital, taxes and insurance, and depreciation and obsolescence. Carrying costs might run as high as 30 percent of inventory value and are higher the larger the average stock carried. This means marketing managers who want to carry larger inventories need to show that incremental gross profits will exceed incremental carrying costs. Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 143) What did the coronavirus pandemic expose about the global supply chain? Answer: The pandemic made painfully clear how interconnected the world's supply chains are and– thanks to just-in-time inventory management–how vulnerable they are to disruptions in procurement, manufacturing, and shipping. Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 144) Explain how transportation choices affect customer satisfaction. Answer: Transportation choices affect product pricing, on-time delivery performance, and the condition of the goods when they arrive, all of which affect customer satisfaction. Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 145) What is containerization, and what are the dual-mode transportation options it enables? Answer: Containerization consists of putting the goods in boxes or trailers that are easy to transfer between two transportation modes. The term piggyback describes the use of rail and trucks; fishyback, water and trucks; trainship, water and rail; and airtruck, air and trucks. Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 38

146) What reassessments should logistics managers make in the aftermath of the coronavirus pandemic? Answer: To balance the effectiveness and the cost-efficiency of their logistics, companies need to re-evaluate their logistics networks periodically to guard against extreme demand shocks. Accordingly, many companies are securing additional warehousing space and modernizing their distribution operations. Merchants are also moving their warehouses closer to large population centers to ensure that they have the required inventory on hand are able to deliver it to their customers faster than the competition. Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 147) What are the three types of carriers that shippers can chose from? Answer: Shippers can choose private, contract, or common carriers. If the shipper owns its own truck or air fleet, it becomes a private carrier. A contract carrier is an independent organization selling transportation services to others on a contract basis. A common carrier provides services between predetermined points on a scheduled basis and is available to all shippers at standard rates. Diff: 2 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 148) Why does the objective "getting the right goods to the right places at the right time for the least cost" provide little practical guidance? Answer: This objective provides little practical guidance because no system can simultaneously maximize customer service and minimize distribution cost. Maximum customer service implies large inventories, premium transportation, and multiple warehouses, all of which raise market-logistics costs. Nor can a company achieve efficient market logistics by asking each market-logistics manager to minimize his or her own logistics costs. Every decision in market-logistics involves trade-offs, so each company needs to carefully evaluate each variable to decide which choice best supports its strategic marketing plans. Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking 149) Describe the four major steps in market logistics planning. Answer: The four major decisions market logistics are (1) How should we handle orders (order processing)? (2) Where should we locate our stock (warehousing)? (3) How much stock should we hold (inventory)? (4) How should we ship goods (transportation)? Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Reflective thinking

150) E&OE wants to minimize inventory costs as far as possible. Explain one way by which it can achieve a near-zero inventory. Answer: (Student answers will vary.) Manufacturers can achieve a near-zero inventory by building for order, not for stock, that is, manufacturing a product only when it receives an order. However, this system will work only when the customers do not need a product immediately. Diff: 3 LO: 15.4: Discuss how firms manage market logistics. AACSB: Analytical thinking

Marketing Management, 16e (Kotler) Chapter 16 Managing Retailing 1) A retailer or retail store is any business enterprise . A) registered with the Internal Revenue Service as a retailer B) whose sales volume comes primarily from retailing C) that uses online e-commerce D) that carries at least one consumer-oriented product line E) that declares itself a retailer Answer: B Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 2) Which of these factors matters in the definition of what constitutes retailing? A) How the goods or services are sold B) Where the goods or services are sold C) How customers refer to the company D) Whether the company sells to final consumers E) The firm's national tax classification Answer: D Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 3) Which temporary retailing format is designed to create buzz? A) Pop-up stores B) Interactive stores C) Experiential retailing D) Non-store retailing E) Invitation-only stores Answer: A Diff: 1 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 4) The phenomenon of small manufacturers being crowded out of market sectors because they can't deliver enough quantity to satisfy retailers' demands is a consequence of . A) mobile commerce B) retailer consolidation C) online commerce D) growing customer affluence E) regulatory changes Answer: B Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 1

5) Retailers that augment their physical locations with coordinated online stores are using . A) consolidated retailing B) mixed retailing C) split channels D) omnichannel retailing E) vertical integration Answer: D Diff: 1 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 6) In , fashion retailers develop completely different supply chain and distribution systems in order to offer consumers constantly changing product choices. A) hyper retailing B) fast retailing C) fashion-forward retailing D) adaptive retailing E) novelty Answer: B Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 7) includes all the activities in selling goods or services directly to final consumers for personal, non-business use. A) Wholesaling B) Retailing C) Procurement D) Promoting E) Warehousing Answer: B Diff: 1 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 8) Which of the following is true for retailing? A) Manufacturers are not considered to be retailers as they are engaged in producing the product. B) Vending machines are considered to be retailing only if they are located within stores. C) Retailing deals only with goods; it does not include services. D) Selling from a consumer's home is direct selling, but not retailing. E) Wholesalers are only considered to be retailers if they are selling to final consumers. Answer: E Diff: 1 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 2

9) Which of the following is an example of retailing? A) Dylan's sends catalogs to retail, industrial, and institutional customers. B) SEZ U Inc. sells a limited line of fast-moving goods to small retailers for cash. C) BEL Inc. sells FMCG goods to merchant wholesalers and distributors. D) Praxis International sells products to consumers directly through the internet. E) Hub Styles procures its raw materials directly from farmers in the region. Answer: D Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Analytical thinking 10) Electronic shelf labeling allows retailers to . A) check inventory levels instantaneously B) order electronically from suppliers C) run continual promotional messages D) advertise sales and special offers E) change price levels instantaneously Answer: E Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 11) Retailing includes all the activities involved in selling goods or services directly to final consumers. Answer: TRUE Diff: 1 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 12) Pop-up stores let retailers promote brands to seasonal shoppers for a limited time. Answer: TRUE Diff: 1 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 13) Growth in the retail market is centered firmly in the middle market, leaving luxury retailers and discounting specialists struggling. Answer: FALSE Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking

14) As discount retailers improve their quality and image, consumers have been willing to trade down. Answer: TRUE Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 15) Electronic shelf labeling allows retailers to check inventory levels instantaneously. Answer: FALSE Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 16) Provide several examples of new retail forms and combinations that have emerged in recent years. Answer: (Student answers will vary. The chapter gives the following examples: bookstores adding coffee shops, gas stations adding food stores, Loblaws supermarkets adding fitness clubs, and grocery stores adding bars.) Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 17) Describe the impact that retailer consolidation is having on manufacturers. Answer: Through their superior information systems, logistical systems, and buying power, giant retailers such as Walmart are able to deliver good service and immense volumes of product to masses of consumers at appealing prices. They are crowding out smaller manufacturers that cannot deliver enough quantity, and they often dictate to the most powerful ones what to make, how to price and promote it, when and how to ship, and even how to improve production and management. Without these accounts, manufacturers could lose a significant portion of their sales, so they are generally obliged to follow the retailers' demands. Diff: 3 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 18) How are large retail chains able to force manufacturers to pay allowance fees for listing, stocking, and promoting new brands? Answer: Thanks to waves of consolidation, large retail chains now have massive power over manufacturers, who rely on retailers to get their goods to the consumer. With this power in their hands, retailers can force manufacturers to pay some of the costs associated with selling their products. Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Analytical thinking

19) Characterize the growth of mobile retailing. Answer: Thanks to mobile devices, consumers are fundamentally changing the way they shop, such as using their cell phones to text a friend or relative about a product while shopping in stores. Over 50 percent of all Google searches are done on mobile phones. In some parts of the world, m-commerce is well established and benefits from an extensive mobile shopping infrastructure. Diff: 2 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 20) Discuss the increasing role of technology in retail. Answer: Technology is profoundly affecting the way retailers conduct nearly every facet of their business. Nearly all now use technology to produce forecasts, control inventory costs, and order from suppliers, reducing the need to discount and run sales to clear out languishing products. Technology is also directly affecting the consumer shopping experience inside the store. Electronic shelf labeling allows retailers to change price levels instantaneously. In-store programming can run continual demonstrations or promotional messages. Retailers are experimenting with virtual shopping screens, audio/video presentations, and QR code integration. They are also developing fully integrated digital communication strategies with well-designed websites, e-mails, search strategies, and social media campaigns. Social media are especially important for retailers during the holiday season, when shoppers are seeking information and sharing successes. Diff: 3 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 21) Why have social media become especially important for retailers during the holiday season? Answer: Social media are especially important for retailers during the holiday season because shoppers are seeking information and sharing successes. Retailers can track hot topics, respond to problems, and provide suggestions using their social media accounts. Diff: 3 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Analytical thinking 22) What do we mean when we say the retail market today is hourglass shaped? Answer: An hourglass is wide at the top and bottom but narrow in the middle. This image fits the retail sector in recent years, with growth at the top and bottom but waning opportunities for retailers stuck in the middle. Examples of this phenomenon include luxury retailers such as Tiffany and Neiman-Marcus at the top, and discount retailers such as Walmart and Dollar General at the bottom. Stuck in the middle are such firms as JCPenney, Kohl's, Sears, CompUSA, RadioShack, and Montgomery Ward–some of which have even gone out of business because of the declining appeal of mid-market retailers. Diff: 3 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking

23) Identify seven major trends that are reshaping retailing. Answer: The recent trends in retail include the following: • New retail forms and combinations • Retailer consolidation • Growth of mobile retailing • Growth of omnichannel retailing • Growth of fast retailing • Increasing role of technology • Decline of middle-market retailers Diff: 3 LO: 16.1: Explain the key changes defining modern retailing. AACSB: Reflective thinking 24) What key step must a retailer make before it can make consistent decisions about product assortment, store decor, advertising messages and media, price, and service levels? A) Choose locations B) Decide on an online strategy C) Define and profile its target market D) Choose wholesalers and other suppliers as needed E) Plan staffing Answer: C Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 25) Why does Whole Foods have so many more employees per store than the typical grocery store? A) To fulfill union contract requirements B) To provide the level of service that differentiates the company from mainstream grocery retailers C) To help coordinate sales through Amazon, which now owns Whole Foods D) To create a welcoming atmosphere E) To handle its much larger product assortment Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

26) What mistake did jeweler Zales make that cost it many of its traditional customers? A) Ran ads that many loyal customers found too racy B) Moved out of malls into standalone stores C) In an effort to go up-market, dropped many products that its loyal customers liked D) Ran too many confusing price discount schemes E) In an effort to save money, made its store interiors too spartan and uninviting Answer: C Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 27) Which product strategy move have retailers such as Gymboree and Hot Topic made in recent years to reach their target markets more successfully? A) Simplified their product lines to reduce confusion B) Sliced their markets into ever-finer segments, with specific product lines aimed at these narrow segments C) Made sure every store carries every product carried on their websites D) Severely reduced in-store inventory to encourage shoppers to buy online E) Merged boys' and girls' clothing into unisex product lines Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 28) may play a particularly important role in retailers' product decisions because they have the greatest impact on where households choose to shop and how they view a particular retailer. A) Destination categories B) Loss leaders C) National brands D) Product quality ratings E) Private brands Answer: A Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 29) Which product strategy decision got Urban Outfitters into trouble with its customer base? A) Mixing hip and stodgy styles B) Embracing new styles too quickly C) Not embracing new styles quickly enough D) Not staying on the leading edge of hip E) Adding home décor items to its clothing assortment Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 7

30) Which of these is a natural advantage that brick-and-mortar retailers can offer their customers over e-commerce alternatives? A) In-depth product information B) Product search capabilities C) Real-time customer service D) Product comparison capabilities E) Vast product selection Answer: C Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 31) What does "turns + earns" mean for retailers? A) Sales volume and gross margins B) Foot traffic and revenue per customer C) Foot traffic and profit per customer D) E-commerce sales and store sales E) Inventory turnover and total revenue Answer: A Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 32) Which of these stores is the clearest representative of the low-markup, high-volume retail group? A) Victoria's Secret B) Target C) Neiman Marcus D) REI E) Hermès Answer: B Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 33) What is price image? A) The overall perception that consumers have about the level of prices at a given retailer B) The pricing component expressed in the retailer's positioning statement C) The physical visibility of pricing in the store environment D) The degree of "hidden" add-ons to prices E) The clarify of a store's pricing structure Answer: A Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 8

34) What does EDLP stand for? A) Electronic data platforms B) Everyday limited pricing C) Extreme discounts and low prices D) Essential data loops E) Everyday low pricing Answer: E Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 35) What is high-low pricing? A) Setting high prices on some items and low prices on others B) Charging higher prices generally but running frequent promotions with low prices C) Making sure a store's top sellers are priced lower than the competition D) Randomly flipping prices on hot-selling products E) Making sure the stores highest prices are lower than competitors' Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 36) Which of these is one of the likely reasons JCPenney failed in its switch to EDLP? A) EDLP is a patented process technology owned by Walmart. B) Its competitors continued to run sales promotions, creating the impression of better value. C) Its computer systems were incapable of handling the switch. D) Poor training left employees confused about the new scheme. E) Its customer based doesn't shop on price, so the new scheme meant little to them. Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 37) How does the redemption rate for mobile coupons compare with paper coupons? A) The mobile redemption rate is 10 times higher than paper. B) The mobile redemption rate is one-tenth that of paper. C) The relative rate is unknown because paper redemption rates aren't measurable. D) The rates are roughly the same. E) The mobile redemption is roughly twice that of paper. Answer: A Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

38) Which of these is NOT a reason why retailers adopt EDLP? A) Constant sales and promotions are costly. B) Constant sales and promotions have undermined consumer trust in pricing. C) Some consumers have less time for monitoring for sales and deals. D) It generates more "buzz" among consumers. E) Some consumers have less patience for monitoring for sales and deals. Answer: D Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 39) Which of these is NOT an advantage retailers can gain from EDLP? A) Greater pricing stability B) Stronger image of fairness C) Stronger image of reliability D) Higher retail profits E) Elimination of bargain hunters Answer: E Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 40) involves targeting customers with a mobile promotion when they are within a defined geographic space. A) Local targeting B) Personalized messaging C) Geofencing D) Mobile marketing E) In-store promotions Answer: C Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 41) If a digital coupon pops up on your mobile phone when you arrive on site at a retail location, what promotional technique is the retailer using? A) Local targeting B) Personalized messaging C) Geofencing D) Mobile marketing E) In-store promotions Answer: C Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking

42) When manufacturers and retailers use stocking, displays, and promotions to affect consumers actively shopping for a product, this is known as . A) coordinated marketing B) shopper marketing C) channel marketing D) store promotions E) physical marketing Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 43) Which of these was identified as one of the circumstances in which EDLP can yield higher profits for retailers than high-low pricing? A) Most shoppers order online and pick up their orders at the store. B) Most shoppers order online and use a delivery service. C) Shoppers "cherry pick" luxury items and bargains. D) Shoppers tend to buy many items on any one trip. E) Shoppers stick to everyday essentials. Answer: D Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 44) Discount stores that try to keep prices as low as possible are more likely to function using operations. A) limited service B) self-selection C) full-service D) self-service E) limited-selection Answer: D Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 45) A large staff, along with a higher proportion of specialty goods and slower-moving items and many services, are usually features of retailing. A) self-service B) self-selection C) limited service D) full-service E) limited-selection Answer: D Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 11

46) In retailing, salespeople are ready to assist in every phase of the "locate-compare-select" process. A) self-service B) self-selection C) full-service D) limited service E) limited-selection Answer: C Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 47) In the type of retailing, customers usually find their own goods, although they can ask salespeople for assistance. A) self-service B) self-selection C) full-service D) limited service E) limited-selection Answer: D Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 48) Which of the following is true for self-service retailing? A) They carry more shopping goods and services such as credit and merchandise-return privileges. B) This service model is favored by discount stores and customers who want to save money. C) It results in high staffing costs compared to other forms of retailing. D) Salespeople are ready to assist in every phase of the "locate-compare-select" process. E) Customers need more information and assistance than in other forms of retailing. Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 49) Which of the following types of retailing generally entails the highest costs? A) full-service B) self-service C) limited-selection D) limited service E) self-selection Answer: A Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 12

50) Which of the following is an example of a limited-service retailer? A) Customers at TAB pick out the products they want and pay at the checkout counter. B) Salespeople at Eli are always on hand to offer shoppers advice and assistance in choosing products. C) Mina's allows customers to check out their own purchases in order to reduce the staff count. D) CLO's offers a number of shopping goods and offers services such as credit and merchandise-return privileges. E) Alison's stocks a number of specialty products and the store's salespeople generally help shoppers with all their needs. Answer: D Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 51) An example of a restaurant with a narrow and deep assortment is a A) small lunch counter B) cafeteria C) large restaurant D) casual dining restaurant chain E) delicatessen Answer: E Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

52) In the corporate headquarters of a supermarket chain, are responsible for developing brand assortments and listening to salespersons' presentations. A) central buyers B) brokers C) specialist buyers D) agents E) specialized wholesalers Answer: C Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

53) In supermarkets and other retail outlets, RFID is used to A) change prices instantaneously B) check for spoilage or damage to goods C) advertise special offers and discounts D) run continual promotional messages E) facilitate inventory control and product replenishment Answer: E Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

54) Which of the following is true for direct product profitability? A) It is highly correlated with the gross margin on a product. B) It is negligible compared to the gross margin on a product. C) It sometimes bears little relation to the gross margin on a product. D) It is significantly lower than the gross margin on a product. E) It is exactly the same as the gross margin on a product. Answer: C Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 55) Mass merchandisers and discount stores typically fall into the to margins and volume. A) mixed markup, high-volume B) low-volume, mixed markup C) low-volume, low-markup D) high-volume, low-markup E) high-markup, low-volume Answer: D Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

group with respect

56) A store selling expensive artwork and luxury goods typically falls into the with respect to margins and volume. A) mixed markup, high-volume B) low-volume, mixed markup C) low-volume, low-markup D) high-volume, low-markup E) high-markup, low-volume Answer: E Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking

group

57) Most retailers will put low prices on some items in order to increase traffic to the store. These low-priced products are known as _. A) loss leaders B) price ceilings C) price skimmers D) price floors E) cold calls Answer: A Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 58) Which of the following is a prepurchase service offered by some retailers? A) Allow customers to try products B) Shipping the product C) Delivery to the customer's doorstep D) General information E) Interior decoration of the retail outlet Answer: A Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 59) Which of the following is a postpurchase service offered by retailers? A) Accepting orders over the telephone B) Advertising and window displays C) Delivery to the customer's doorstep D) General information E) Interior decoration of the retail outlet Answer: C Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 60) Stores are using to measure a product's handling costs from the time it reaches the warehouse until a customer buys it in the retail store. A) electronic data interchange B) direct product profitability C) radio-frequency identification D) global positioning systems E) compounded annual grown rate Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking

Answer: B

Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking

61) In your neighborhood there is a small men's store that has a limited selection of clothing, but the selection that is carried is of very high quality and price. Services include free alterations and tailoring, personalized recordkeeping, and free dry cleaning. Inside the store are deep leather chairs and couches and thick pile carpet. Upon entering the store, a customer feels "special and rich." In terms of differentiation, what is this retailer trying to communicate by its decorations and service level? A) Differentiation based on services mix and atmosphere B) Differentiation based on prepurchase services C) Differentiation based on postpurchase services and atmosphere D) Differentiation based on ancillary services and atmosphere E) Differentiation based on prepurchase and postpurchase services Answer: A Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Application of knowledge 62) Which of the following is a strong differentiator for brick-and-mortar stores who want to emphasize their superiority over online retailers? A) Product quality B) The shopping experience C) Product range D) Pricing E) The retailer's reputation Answer: B Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 63) Full-service retailers generally have the lowest costs of all retail types. Answer: FALSE Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 64) The gross margin on a product always bears a direct relation to the direct product profit. Answer: FALSE Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 65) Some high-volume products may have such high handling costs that they are less profitable and deserve less shelf space than low-volume products. Answer: TRUE Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 17

66) Mass merchandisers are usually high-markup, lower-volume stores. Answer: FALSE Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 67) Low prices on some items serve as traffic builders or loss leaders for retailers. Answer: TRUE Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 68) What is RFID and what role does it play in retailing? Answer: RFID stands for radio frequency identification, and the RFID system consists of small electronic tags that can be applied to merchandise, labels, or shipping containers and readers that can detect and identify these individual tags. When a tag is near a reader, it transmits a unique identifying number to a computer database. Some stores now use RFID to help automate inventory control and product replenishment, and some manufacturers use RFID to track goods as they move through distribution systems from the factory all the way to shopping baskets in the supermarket. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 69) What are the two dimensions of product selection that retailers need to consider? Answer: The two dimensions are breadth (how many different categories of products does the store carry) and depth (how many product varieties are available within each category). A specialty store might have limited breadth but considerable depth in each of the product lines it does carry, and customers know they can find a good selection within those specific categories. In contrast, a more general retailer might carry a broad array of product categories but with only a shallow selection within each categories. Customers will recognize that they can shop from a wide variety of categories but won't expect to find every possible item within each category. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

70) What is direct product profitability and why is it so important in retailing? Answer: Direct product profitability measures a product's handling costs (receiving, moving to storage, tracking paperwork, selecting, checking, loading, and space cost) from the time it reaches the warehouse until a customer buys it in the retail store. This figure gives retailers a truer indication of how much profit it makes on each product because it incorporates all the costs of making the product available to sell. A product that might seem profitable based on gross margin (the price the customer pays minus the price the retailer had to pay to acquire the product) could turn out to generate little or no real profit after all its handling costs are added in. Some high-volume products may have such high handling costs that they are less profitable and deserve less shelf space than low-volume products–unless customers buy enough other, more profitable products to justify the loss involved in pushing the high-volume products. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 71) Trader Joe's carries only a small fraction of the number of products that a typical supermarket carries. How has it been so successful in spite of its limited product selection? Answer: The key to Trader Joe's success is based on uniqueness and variety, not breadth and depth. Customers don't visit the store expecting to satisfy every grocery and household need but rather to find food products not available anywhere else. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 72) Do customers expect the same level of service from every retailer? Explain your answer. Answer: No, customers don't need or expect the same level of service from every type of retailer. Customers looking to maximize savings realize that one of the trade-offs is less service, so the self-service model is the cornerstone of all discount operations. At the other extreme, customers who want or need a high degree of personalized service expect it from the stores they frequent and are willing to pay the additional costs of having highly trained staff on hand to help them. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 73) What is the services mix in retailing? Answer: The services mix is the combination of services that a retailer offers before and after the sale. The mix can range from little more than basic information and problem-resolution to a full suite of personalized attention. Such services might involve prepurchase services such as providing product information and enabling shoppers to try and experience products, as well as postpurchase services such as shipping, delivery, and installation, gift wrapping, alterations and tailoring, installation, and adjustments and returns. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking

74) How does Neiman Marcus use geofencing in its stores? Answer: It uses geofencing to alert salespeople when their more valuable customers are on the premises so staff can review their purchase history to provide more personalized service. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 75) How does a retailer's price image affect consumers' beliefs about the attractiveness of a given price? Answer: Because consumers are often unaware of the actual prices of the items they seek to purchase across different retailers, they often rely on retailers' price image to determine the attractiveness of a given price. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 76) Why can't retailers easily achieve the "turns + earns" goal of high volumes and high gross margins? Answer: Generally, the kinds of products that achieve high volumes are products that consumers or businesses buy frequently and in large quantities—basic groceries, household supplies, and so on. These products usually face fierce price competition and limited opportunities for differentiation, two factors that virtually guarantee they will be sold with very slim margins. Conversely, the kinds of products that can command high gross margins tend to be specialty products or luxury goods—products that by their very nature don't sell in high quantities. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 77) Explain what we mean we say that the store atmosphere should match shoppers' basic motivations? Answer: The atmosphere in the shopping environment should match the mindset that people are in when they come to shop. If customers are likely to be in a task-oriented and functional mind-set, then a simpler, more restrained in-store environment may be better. On the other hand, some retailers of experiential products are creating in-store entertainment to attract customers who want fun and excitement. Similarly, if customers are seeking a luxury experience, every aspect of the store environment should support that goal. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking

78) Why does Bloomingdale's arrange the aromas in its stores by department? Answer: These scents help transport customers to the state of mind they hope to be in by purchasing particular products. For example, the scent of baby powder can trigger the joy of holding and caring for a baby. If shoppers encounter this aroma in the baby goods section of a store, they are presumably more likely to spend more time shopping and be in a more positive frame of mind regarding baby products. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 79) Do self-service stores still need to have "unerringly reliable customer service," as the chapter describes it? Explain your answer. Answer: Yes, because even in an unstaffed, automated environment such as vending machines or Amazon's new stores with automated checkout, there are still aspects of the experience that consumers associate with customer service. These can include making sure the products are stocked on the shelves, checkout scanners work properly, someone can be reached in the event a product fails to meet expectations, and so on. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 80) What are destination categories in retailing? Answer: Destination categories are those categories of products that influence where households choose to shop and how they view a particular retailer. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 81) Why would sporting good stores such as REI and Dick's Sporting Goods devote space to experiential activities (such as REI's climbing walls), given that this space could be used to hold more merchandise to sell? Answer: These areas enable an important prepurchase service—allowing customers to try products before they buy. They may also inspire some shoppers to try activities they haven't encountered before, the entertainment aspect is likely to keep customers in the store longer. In many cases, these spaces are used for product demonstrations and skill classes, which can further build sales and customer loyalty. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 82) On the "turns + earns" question, where does a retailer such as Lumber Liquidators fall? Answer: Lumber Liquidators is squarely in the "low-markup, higher-volume" category, with a business model based on selling hardwood flooring at the lowest possible price. Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 21

83) Why did Nordstrom decide to added Wi-Fi to its stores? Answer: The company realized that many customers were using the Nordstrom mobile app to get more information about the products on display, so they added free Wi-Fi to facilitate this shopper behavior. Diff: 1 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 84) What does Procter & Gamble mean when it says the retail store encounter is the "first moment of truth" for a product? Answer: This statement means that the consumer's experience with a product begins before they buy it or begin to use it. The second moment of truth comes after the purchase, when consumers use or consume the product. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 85) List and explain the three service levels offered by retailers. Answer: Retailers meet widely different consumer preferences for service levels and specific services. The four three of service usually offered by retailers are: 1. Self-service: Self-service is the cornerstone of all discount operations. Many customers are willing to carry out their own "locate-compare-select" process to save money. 2. Limited service: These retailers carry more shopping goods and services such as credit and merchandise-return privileges. Customers need more information and assistance. 3. Full-service: Salespeople are ready to assist in every phase of the "locate-compare-select" process. Customers who like to be waited on prefer this type of store. The high staffing cost, along with the higher proportion of specialty goods and slower-moving items and the many services, result in high-cost retailing. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Reflective thinking 86) Sandy's Stores is a small chain of grocery stores located in a few neighboring towns. The stores have always been largely self-service, but the company is considering making a switch to full-service stores. Offer reasons why Sandy's should stick with its current system. Answer: Student answers will vary. As Sandy's is primarily a grocery chain, it is unlikely that customers will need much help in locating products. The high staffing cost of full-service retailing will only increase operational costs for Sandy's, without conferring any benefit. Diff: 2 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking

87) Over the past three years, skincare products retailer Glissade has realized that it is losing sales to competitors who sell products online. Glissade has always cultivated an exclusive upscale image, and the management feels that shifting to the online route will only harm the brand image and sales in the long run. How can Glissade encourage customers to frequent its stores? Answer: (Student answers will vary.) Glissade can offer more in-store services for its customers. It can offer more information about the products, provide consultation and advice about the kinds of products to choose, and allow customers to test or experience the products themselves. The retailer can also revamp the store atmosphere to be more inviting to customers, using music and fragrances and store design to create a pleasurable experience. Glissade can also increase the number of activities and experiences that customers can participate in. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 88) Imagine that you are in charge of creating a distinctive store atmosphere at a clothing retailer. What can you do to make your store stand out in the customer experience? Answer: (Student answers will vary.) Answers can include the use of fragrances, music, store design and layout, and activities. Diff: 3 LO: 16.2: Discuss the marketing decisions that retailers face. AACSB: Analytical thinking 89) Which one of these retailers carries the broadest range of products? A) Drugstore B) Specialty store C) Category killer D) Convenience store E) Supermarket Answer: E Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 90) What retail category are Walmart and Carrefour in? A) Supermarket B) Category killer C) Mass merchandiser D) Hard-discount E) Warehouse club Answer: C Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking

91) In the business-to-business sector, are third parties that link buyers and sellers. A) infomediaries B) market makers C) consolidators D) freight forwarders E) customer communities Answer: B Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 92) In the business-to-business sector, are third parties that add value by aggregating information about alternatives. A) infomediaries B) market makers C) consolidators D) freight forwarders E) customer communities Answer: A Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 93) Which of these is a true statement about the impact of market maker websites such as Alibaba? A) By making prices more transparent, they will increase price pressure on highly differentiated products. B) By consolidating so much information, they will make it more difficult for industrial buyers to sort out prices. C) By making prices more transparent, they will increase price pressure on undifferentiated products. D) By making prices more transparent, they will decrease price pressure on undifferentiated products. E) By making pricing more transparent, they will make value less transparent. Answer: C Diff: 3 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking

94) Which of these is NOT one of the noted advantages online retailing has over in-store retailing? A) Product assortment B) Convenience C) Social interaction D) Return policies E) Lower prices Answer: C Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 95) What retail category are Sam's Club and Costco in? A) Supermarket B) Category killer C) Mass merchandiser D) Hard-discount E) Warehouse club Answer: E Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 96) What retail category are The Body Shop and Sephora in? A) Supermarket B) Category killer C) Mass merchandiser D) Specialty store E) Warehouse club Answer: D Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking

97) After a successful career in banking, you decide to return to your hometown with the aim to open a store that will serve the community. You have identified the perfect location and are finalizing the details of the merchandise you will carry. Your research indicated that most customers in the area are very price-conscious, so you want to offer goods from well-known brands but at lower prices than the full retail prices of the products. You choose to stock excess production from manufacturers or goods that have remained unsold at other retailers. This is a description of a(n) retailer. A) off-price B) specialty C) discount D) department E) catalog Answer: A Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Analytical thinking 98) Dollar General and Family Dollar are retail chains that specialize in selling goods at very low prices. To achieve this, they stock a very narrow assortment of basic necessities and offer customers a no-frills shopping experience. They are examples of the _ store format. A) off-price B) specialty C) hard-discount D) superstore E) convenience Answer: C Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Analytical thinking 99) A factory outlet is an example of a(n) retailer. A) off-price B) specialty C) discount D) department E) catalog Answer: A Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking

100) Staples is a giant retailer that concentrates on selling office supplies. It is an example of a(n) . A) ambush marketer B) supercenter C) megamarketer D) category killer E) guerilla marketer Answer: D Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Application of knowledge 101) Which of the following is an example of a category killer? A) PetSmart B) Walmart C) Kohl's D) The Limited E) Tesco Answer: A Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 102) Catalog distribution has declined in the face of ever-expanding e-commerce. Answer: FALSE Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 103) A pure-click retailer is one that sells exclusively online, with no physical store locations. Answer: TRUE Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 104) A "brick-and-click" retailer is an omnichannel retailer. Answer: TRUE Diff: 1 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 105) Category killers such as Staples and PetSmart carry wide but shallow product assortments. Answer: FALSE Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 27

106) Distinguish regional and community shopping centers. Answer: The difference is number of stores. Large regional malls contain 40 to 200 stores, typically featuring one or two nationally known anchor stores such as Macy's or Bloomingdale's or a combination of big-box stores such as PETCO, Designer Shoe Warehouse, or Bed Bath & Beyond, and a number of smaller stores. Community shopping centers are smaller malls with one anchor store and 20 to 40 smaller stores. Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 107) What is affiliate marketing in online retail? Answer: To drive traffic to a site, many firms employ affiliate marketing, which is paying online content providers to drive business to their brands' sites. Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 108) Contrast e-commerce activity in the business-to-consumer and business-to-business sectors. Answer: Although business-to-consumer websites have attracted much attention in the media, even more activity is being conducted on business-to-business sites, which are changing the supplier-customer relationship in profound ways. In the past, buyers exerted a lot of effort to gather information about worldwide suppliers. Business-to-business sites make markets more efficient, giving buyers easy access to a great deal of information from a variety of sources. Diff: 3 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 109) What impact did the Covid-19 pandemic have on omnichannel retailing? Answer: The pandemic accelerated the transition to omnichannel retailing when many brick-and-mortar-only retailers found their sales revenues quickly evaporating as their customers became increasingly cautious of in-person shopping. Government regulations on business operations exacerbated the situation by further restricting consumers' access to retail stores. This dramatic change in the dynamics of shopping behavior forced many retailers to reevaluate their business models and embrace e-commerce as an integral aspect of their operations. Diff: 3 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Reflective thinking 110) Give an example of a retailer that uses stand-alone stores as opposed to stores located in malls. Why do you think retailers opt for this format? Answer: (Student answers will vary.) Retailers may opt for standalone stores so that they are not associated with other retailers. It can avoid competition from conflicting attractions in a mall. Customers will be less motivated to check other options available at other retailers. Standalone stores may give a retailer an upscale image and prevent dilution of the brand identity. Diff: 2 LO: 16.3: Describe how a company manages omnichannel retailing. AACSB: Analytical thinking 28

111) What effect do recessions have on private-label sales? A) They increase private-label sales, but never permanently. B) They increase private-label sales, and some consumers never go back to national brands. C) They decrease private-label sales. D) They have no measurable impact. E) They have the same impact on sales of private labels as on national labels. Answer: B Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 112) Which of these is NOT an accurate label for Costco's own Kirkland branded products? A) National brand B) Private brand C) Store brand D) House brand E) Reseller brand Answer: A Diff: 1 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 113) Which of these is NOT a reason why retailers create their own brands? A) Profit potential B) Competitive differentiation C) Consumer preference for lower prices D) Bargaining power over national brands E) Consumer mistrust of national brands Answer: E Diff: 3 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 114) Which of these is one of the steps manufacturers of national brands are taking to fight back against the rise of private labels? A) Refusing to sell to retail chains B) Investing in strong pull advertising C) Lowering quality to lower prices D) Cutting out advertising to rescue profit margins E) Cutting back on research and development Answer: B Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking

115) Which of these moves did Procter & Gamble take to better position itself to compete with retailer brands? A) Selling off smaller lines in its brand portfolio so it could concentrate on its biggest sellers B) Adding smaller lines so it had a more complete portfolio to go up against retailer brands C) Rebranding 10 of its top 20 selling lines D) Agreeing to co-manufacture its best sellers with leading retail chains E) Outsourcing all its manufacturing in order to pour more money into marketing Answer: A Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 116) Which of these moves did Estée Lauder make in its relationship with the retailer Kohl's? A) Sued Kohl's for patent infringement B) Sold off its weaker brands so it fight Kohl's more effectively C) Partnered with Kohl's by producing several brands just for the retailer D) Stopped selling through Kohl's entirely E) Cut its co-op advertising programs with Kohl's to invest more in research and development. Answer: C Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 117) What percentage of product sales in U.S. supermarkets, drug chains, and mass merchandisers do private brands now account for? A) Less than 1 percent B) 1 to 2 percent C) 10 percent D) 20 percent E) 33 percent Answer: D Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 118) Which of these forces has NOT contributed to the weakening of national brands relative to retailer's private brands? A) Consumer price sensitivity, partly as a result of constant price promotions B) Copycat products from other manufacturers C) Blurred brand identities from overzealous brand and line extensions D) Reduced marketing communication budgets E) Strong pull campaigns to build consumer interest Answer: E Diff: 3 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 30

119) A brand developed by a retailer and/or wholesaler that is available only in selected retail outlets is called a brand. A) generic B) franchisee C) marque D) national E) private-label Answer: E Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking 120) Though it is sold only in Walmart stores, Walmart's Ol'Roy dog food has surpassed Nestlé's Purina brand as the top-selling dog food. Ol'Roy is an example of a . A) generic product B) national brand C) franchise D) copy-cat brand E) private label Answer: E Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking 121) are unbranded, plainly packaged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches. A) Common carriers B) Shills C) Generics D) Private labels E) Marques Answer: C Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking

122) In addition to its store brands and nationally well-known brands of detergents, Reynold's also carries much cheaper varieties of detergents that are not advertised and have little-known names. They are often manufactured from lower-quality ingredients and save on packaging and advertising costs. These are known as . A) common carriers B) shills C) generics D) private labels E) marques Answer: C Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking 123) Private label or store brands are also known as generics. Answer: FALSE Diff: 1 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking 124) The lower price of generics is made possible by lower-cost labeling and packaging and minimal advertising, and sometimes lower-quality ingredients. Answer: TRUE Diff: 1 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking 125) Featuring exclusive national brands that are not available at competing retailers is a way of generating consumer interest in a retailer. Answer: TRUE Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 126) Why is it true that for many manufacturers, retailers are both collaborators and competitors? Answer: The issue is private-label brands, which now constitute 20 percent of all items sold in U.S. supermarkets, drug chains, and mass merchandisers. Private-label brands created by retailers compete with the brands created by manufacturers, who also rely on retailers to sell their goods. Diff: 2 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking

127) What steps are manufacturers of national brands taking to compete against the growing influence of retailers' private brands? Answer: To stay a step ahead of store brands, leading brand marketers are investing significantly in research and development to bring out new brands, line extensions, features, and quality improvements. They are also investing in strong pull advertising programs to maintain high brand recognition and consumer preference and to overcome the in-store marketing advantage that private labels can enjoy. Diff: 3 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 128) The growth of private-label brands has skyrocketed in recent years. What benefits do intermediaries receive from sponsoring their own brands? Answer: A private-label brand (also called a reseller, store, or house brand) is a brand that retailers and wholesalers develop. These brands can be more profitable. Intermediaries search for manufacturers with excess capacity that will produce private label goods at low cost. Other costs, such as research and development, advertising, sales promotion, and physical distribution, are also much lower, so private labels can generate a higher profit margin. Retailers also develop exclusive store brands to differentiate themselves from competitors. Many price-sensitive consumers prefer store brands in certain categories. These preferences give retailers increased bargaining power with marketers of national brands. Diff: 3 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 129) Supermarket chain Reynold's is considering making a switch to stocking almost exclusively private-label products in order to offer customers the lowest prices. Offer reasons why Reynold's should think twice before opting to stock exclusively private-label products. Answer: (Student answers will vary.) Reynold's should think twice about opting for private-label products because consumers prefer certain national brands, and many product categories are not feasible or attractive on a private-label basis. Diff: 3 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking; Application of knowledge

130) Supermarket chain Reynold's is considering stocking a number of private-label products in order to offer customers the lowest possible prices. Explain how this strategy could benefit the company. Answer: (Student answers will vary). Private brands can be more profitable for Reynold's if it searches for manufacturers with excess capacity that will produce private label goods at low cost. Other costs, such as research and development, advertising, sales promotion, and physical distribution, are also much lower, so private labels can generate a higher profit margin. Exclusive store brands can also help Reynold's differentiate itself from competitors. Many price-sensitive consumers prefer store brands in certain categories. These preferences could give Reynold's increased bargaining power with marketers of national brands. Diff: 3 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Analytical thinking; Application of knowledge 131) What are a manufacturer's four strategic options to compete against or collaborate with private labels? Answer: • Fight selectively: manufacturers should focus on products where they can win against private labels and add value for consumers, retailers, and shareholders. • Partner effectively: seek win-win relationships with retailers through strategies that complement the retailer's private labels. • Innovate brilliantly: Add new products to beat private labels. • Create winning value propositions. Diff: 3 LO: 16.4: Explain the key principles in building and managing private labels. AACSB: Reflective thinking 132) Which of these is NOT functioning as a wholesaler? A) Broker B) Agent C) Full-service wholesaler D) Vending machine operator E) Cash and carry wholesaler Answer: D Diff: 1 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking

133) Which of these is NOT one of the differences between wholesalers and retailers? A) Wholesalers pay less attention to promotion, atmosphere, and location. B) Wholesalers are less concerned with long-term customer relationships. C) Wholesale transactions are usually larger than retail transactions. D) Wholesalers usually cover a larger trade area than retailers. E) Wholesalers and retailers are subject to different legal regulations and taxes. Answer: B Diff: 1 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 134) Full-service wholesalers are . A) merchant wholesalers B) brokers C) agents D) cash and carry wholesalers E) buyer's agents Answer: A Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 135) Which of these is NOT one of the competitive challenges facing today's wholesalers? A) Competition from digital platforms such as Alibaba B) Demanding customers C) Direct-buying programs by large retail customers D) Lack of transportation options E) Direct-buying programs by large industrial customers Answer: D Diff: 1 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 136) Which of these is NOT one of the risks that wholesalers take over from manufacturers by taking title to goods? A) Theft B) Damage C) Design flaws D) Spoilage E) Obsolescence Answer: C Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking

137) includes all the activities in selling goods or services to those who buy for resale or business use. A) Retailing B) Wholesaling C) Procurement D) Promoting E) Warehousing Answer: B Diff: 1 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 138) Which of the following is considered a wholesaler? A) Retailers B) Brokers C) Producers D) Manufacturers E) Farmers Answer: B Diff: 1 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Application of knowledge 139) typically buy directly from the manufacturer, take title to the merchandise they handle, store the product, and then sell it to the customer. A) Brokers B) Agents C) Merchant wholesalers D) Specialized wholesalers E) Retailers' branches Answer: C Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 140) Which of the following is true of brokers? A) Brokers represent buyers or sellers on a semipermanent basis. B) Most brokers are small businesses with a few skilled salespeople. C) Brokers bring buyers and sellers together and assist in negotiation. D) Selling brokers have contractual authority to sell a manufacturer's entire output. E) Purchasing brokers make purchases for buyers and often receive, inspect, warehouse, and ship merchandise. Answer: C Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Analytical thinking 36

141) refers to buying large carload lots and dividing them into smaller units before shipping them out to consumers. A) Bulk breaking B) Containerization C) Wholesaling D) Warehousing E) Broking Answer: A Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 142) Wholesaling includes all the activities in selling goods or services to those who buy for resale or business use. Answer: TRUE Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 143) Merchant wholesalers are independently owned businesses that take title to the merchandise they handle. Answer: TRUE Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking 144) Distinguish the two main types of merchant wholesalers. Answer: Full-service wholesalers can provide a vast array of supplementary functions, such as maintaining a sales force to promote the products, offering credit, making deliveries, and providing management assistance. In contrast, limited-service wholesalers offer few if any extra services and instead aim to offer lower prices on merchandise. For example, cash and carry wholesalers sell a limited line of fast-moving goods to small retailers in a no-frills environment, only for cash, and with limited return privileges or no-return policies. Diff: 3 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Analytical thinking; Application of knowledge 145) Summarize how wholesalers differ from retailers. Answer: First, wholesalers pay less attention to promotion, atmosphere, and location because they are dealing with business customers rather than final consumers. Second, wholesale transactions are usually larger than retail transactions, and wholesalers usually cover a larger trade area than retailers. Third, wholesalers and retailers are subject to different legal regulations and taxes. Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Analytical thinking; Application of knowledge 37

146) What are manufacturers' major complaints against wholesalers? Answer: Manufacturers' major complaints against wholesalers are that they do not aggressively promote the manufacturer's product lines and act more like order takers; that they do not carry enough inventory and therefore do not fill customers' orders fast enough; that they do not supply the manufacturer with up-to-date market, customer, and competitive information; and that they charge too much for their services. Diff: 3 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Analytical thinking; Application of knowledge 147) Why do retailers prefer to deal with wholesalers rather than directly with manufacturers? Answer: In general, retailers prefer to deal with wholesalers rather than directly with manufacturers (and vice versa) as wholesalers are better at performing the following functions: • Selling and promoting: Wholesalers' sales forces help manufacturers reach many small business customers at a relatively low cost. They have more contacts, and buyers often trust them more than they trust a distant manufacturer. • Buying and assortment building: Wholesalers are able to select items and build the assortments their customers need, saving them considerable work. • Bulk breaking: Wholesalers achieve savings for their customers by buying large carload lots and breaking the bulk into smaller units. • Warehousing: Wholesalers hold inventories, thereby reducing inventory costs and risks to suppliers and customers. • Transportation: Wholesalers can often provide quicker delivery to buyers because they are closer to the buyers. • Financing: Wholesalers finance customers by granting credit, and finance suppliers by ordering early and paying bills on time. • Risk bearing: Wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence. • Market information: Wholesalers supply information to suppliers and customers regarding competitors' activities, new products, price developments, and so on. • Management services and counseling: Wholesalers often help retailers improve their operations by training sales clerks, helping with store layouts and displays, and setting up accounting and inventory-control systems. They may help industrial customers by offering training and technical services. Diff: 3 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking

148) JGB manufactures the K-Nine brand of dog food that is carried in supermarkets across the country. The company has always used wholesalers instead of selling directly to the retailers. However, recently, the sales team at JGB has noticed that wholesalers don't aggressively promote JGB's product line. They often don't carry enough inventory and therefore don't fill customers' orders fast enough. However, the marketing team insists that the wholesaling route is the best. What reasons can the marketing team offer to justify this? Answer: (Student answers will vary.) Wholesalers' sales forces help JGB reach many small business customers at a relatively low cost. They have more contacts, and the buyers often trust them more than they trust JGB. Wholesalers can often provide quicker delivery to buyers because they are closer to the buyers. Wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence. Wholesalers supply information regarding competitors' activities, new products, price developments, and so on. Diff: 3 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Analytical thinking 149) Jayne runs a small grocery store in a small town. As there are only a few customers, the store does not require to stock goods in large quantities. Explain why sourcing products from a wholesaler will be beneficial for Jayne. Answer: (Student answers will vary.) Wholesalers are able to select items and build the assortments Jayne needs, saving considerable work. Wholesalers achieve savings for Jayne by buying large carload lots and breaking the bulk into smaller units. Thus, Jayne can benefit from lower bulk prices while buying only as much as the store can sell. Wholesalers also hold inventories, thereby reducing inventory costs and risks for Jayne. Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Analytical thinking; Application of knowledge 150) Differentiate between brokers and agents. Answer: Brokers bring buyers and sellers together and assist in negotiation; they are paid by the party hiring them. Agents represent buyers or sellers on a more permanent basis and aim to facilitate buying and selling, on commission typically based on the selling price. Diff: 2 LO: 16.5: Describe the key aspects of wholesaling. AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 17 Driving Growth in Competitive Markets 1) Which of these is NOT one of the quadrants in the Product-Market Growth framework? A) Market penetration B) Market retrenchment C) Market development D) Product development E) Diversification Answer: B Diff: 1 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 2) When a company is looking for growth opportunities, which of these steps should it take first? A) Consider whether it could gain more market share with its current products in their current markets using a market-penetration strategy B) Consider considers whether it can find or develop new markets for its current products using a market-development strategy C) Consider whether it can develop new products for its current markets with a product-development strategy D) Consider whether it should develop new products for new markets through a diversification strategy E) Consider whether it should strengthen its brands by consolidating diverse product lines. Answer: A Diff: 3 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 3) What is the common name for the Ansoff planning matrix? A) Strategic Planning framework B) Product Planning framework C) Product-Market Growth framework D) Four-Square grid E) Market Choice grid Answer: C Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking

4) The alternative to growing through mergers and acquisitions is commonly referred to as . A) organic growth B) internal growth C) natural growth D) self-directed growth E) external growth Answer: A Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 5) When a firm looks for ways to grow sales of its current offerings to its existing customers, it is using the strategy. A) new-market segment B) market-penetration C) geographical-expansion D) product development E) diversification Answer: B Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 6) As the marketing manager for a floor tile manufacturer, Evans Smith is given a target to achieve 500 new customers by the end of summer. He decides to search the market for probable customers who might use his firm's products but currently do not. Which of the following growth strategies is Evans pursuing? A) Market-development strategy B) New-market segment strategy C) Geographical-expansion strategy D) Needs-assessment strategy E) Consolidation strategy Answer: A Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking

7) When a firm looks for new users in groups that have never used its current products, it is using the strategy. A) market-development B) market-penetration C) geographical-expansion D) product development E) diversification Answer: A Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 8) When Starbucks introduced its Tazo Tea line to bring in new customers who had never gone to Starbucks because they don't drink coffee, Starbucks was employing a strategy. A) market-penetration B) market-development C) geographical-expansion D) niche identification E) blue-ocean Answer: B Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 9) Trendz Inc. is a leading brand of fashion clothing and accessories based in Houston. After gaining a strong foothold in the US, the company wants to expand internationally. Management knows that people residing in other countries are likely to have different tastes and preferences, so the company may need to create new products for these markets. Which of the following strategies does this represent? A) Market-penetration B) Outsourcing C) Diversification D) Product-development E) Market-development Answer: C Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking

10) Regarding innovation and imitation, Theodore Levitt argues that . A) imitation is wrong and should be punished B) product imitation might be as profitable as product innovation C) innovation is not possible without substantial imitation D) innovation cannot begin unless dissatisfaction with imitation occurs E) imitation should be against the law because of the intellectual property decision involved Answer: B Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 11) The illegal and unethical strategy duplicates the leader's product and packaging and sells it on the black market or through disreputable dealers. A) innovator B) cloner C) imitator D) adapter E) counterfeiter Answer: E Diff: 1 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 12) As a market follower strategy, the emulates the leader's products, name, and packaging, with slight variations. A) counterfeiter B) cloner C) imitator D) adapter E) innovator Answer: B Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 13) Look-alike Tasteeos sell for far less than the market-leading Cheerios brand. Which market follower strategy is being employed by the cereal manufacturer? A) Counterfeiter B) Cloner C) Imitator D) Adapter E) Reverse innovator Answer: B Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 4

14) The copies some things from the leader but differentiates on packaging, advertising, pricing, or location. A) innovator B) adapter C) cloner D) imitator E) counterfeiter Answer: D Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 15) As a(n) , BurgerJacks, a fast food chain selling low-price burgers, has differentiated itself by setting up base in a market not yet exploited by McDonald's. A) cloner B) imitator C) counterfeiter D) adapter E) innovator Answer: B Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 16) The TelePizza chain, which operates in Europe and Latin America, has copied Domino's service model but maintains differentiation in terms of location. TelePizza is an example of a(n) . A) counterfeiter B) adopter C) cloner D) imitator E) adapter Answer: D Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking

17) As a market follower that modifies or improves the leader's product ideas, the choose to sell to different markets, but often it grows into a future challenger. A) imitator B) adapter C) cloner D) counterfeiter E) innovator Answer: B Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking

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18) Redo is a market follower in the wristwatch industry. After noticing a shortcoming in the market leader's product, Redo improves its product to suit consumer needs and becomes a challenger for the market leader. This is an example of a(n) . A) counterfeiter B) cloner C) imitator D) adapter E) innovator Answer: D Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 19) Organic growth is another way of referring to growth through mergers and acquisitions. Answer: FALSE Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 20) When looking for growth opportunities, a company's first step should be to develop new products for its existing markets. Answer: FALSE Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 21) As a market-follower strategy, an imitator duplicates the leader's product and packages and sells it on the black market or through disreputable dealers. Answer: FALSE Diff: 1 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking

22) A market-penetration strategy is one where a company searches for new customers in a group that has never used a product before. Answer: FALSE Diff: 1 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 23) What are the four quadrants in the Product-Market Growth framework? Answer: The four quadrants are as follows: • Current products, current customers: Market penetration • Current products, new customers: Market development • New products, current customers: Product development • New products, new customers: Diversification Diff: 3 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 24) Under what two conditions would a diversification strategy be a good growth path for a company to pursue? Answer: Diversification can be a good option if (1) the new industry is a highly attractive market and (2) the company has the right mix of business strengths to succeed in this new market. Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 25) Describe the options for growing through mergers and acquisitions. Answer: A company looking to grow through mergers and acquisitions might acquire one or more of its suppliers to gain more control or generate more profit through backward integration. It might acquire some wholesalers or retailers, especially if they are highly profitable, in forward integration. Finally, the company might acquire one or more competitors, provided the government does not block this horizontal integration. However, these new sources may not deliver the desired sales volume. In that case, the company must consider diversification. Diff: 3 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking

26) Describe the "conscious parallelism" strategy used by some market followers. Answer: Many companies prefer to follow rather than challenge the market leader. Patterns of "conscious parallelism" are common in capital-intensive, homogeneous-product industries such as steel, fertilizers, and chemicals. The opportunities for product differentiation and image differentiation are low, service quality is comparable, and price sensitivity runs high. The mood in these industries is against short-run grabs for market share because that only provokes retaliation. Instead, most firms present similar offers to buyers, usually by copying the leader. Market shares show high stability. Diff: 3 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 27) What are two reasons that companies occasionally need to trim their business portfolios through pruning, harvesting, or divesting? Answer: Companies occasionally need to trim down their portfolios to reduce costs or to free up resources for more promising and profitable business units. Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 28) Market-penetration and market-development strategies typically follow which growth path—organic growth or mergers and acquisitions? Answer: Market-penetration and market-development strategies typically follow the path of organic growth. Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 29) Describe the three types of diversification strategies that a company can pursue. Answer: First, the company could choose a concentric strategy and seek new products that have technological or marketing synergies with existing product lines, even though they appeal to a different group of customers. Second, it might use a horizontal strategy and produce complementary products, even though they might require a different manufacturing process. Finally, the company might seek new businesses with no relationship to its current technology, products, or markets, adopting a conglomerate strategy. Diff: 3 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking 30) Describe the market-penetration strategy for pursuing growth. Answer: The market-penetration strategy involves finding ways to increase sales of current products to current customers. Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Analytical thinking

31) Describe the three broad strategies often employed by market followers to meet their competitors. Answer: These broad strategies include: 1. cloner — The cloner emulates the leader's products, name, and packaging, with slight variations. 2. imitator — The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. 3. adapter — The adapter takes the leader's products and adapts or improves them. Diff: 3 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 32) If your company, which is a market follower, was labeled as an imitator, what would its primary strategies for meeting competition be? Answer: The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. Diff: 2 LO: 17.1: Summarize how a company assesses its growth opportunities. AACSB: Reflective thinking 33) Which of these is NOT one of the five factors that have been identified as the foundations of long-term market leadership? A) Vision of a mass market B) Tactical agility C) Persistence D) Relentless innovation E) Financial commitment Answer: B Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 34) The first company to sell a new product type is known as the A) inventor B) product pioneer C) market pioneer D) product leader E) product inventor Answer: C Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking

35) Which of these is NOT generally noted as an advantage that pioneers in a market get? A) Greater brand recall B) Opportunity to define the attributes of the product class C) Customer inertia (reluctance to move on to new suppliers) D) Broad protection against market followers E) Economies of scale Answer: D Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 36) If a marketer of carpet cleaners advertised that the beginning of Daylight Saving Time would be a great time to "spring ahead with fresher carpets," it would be using which strategy to grow sales? A) Identifying new occasions for usage B) Identifying new uses for the product C) Encouraging customers to use more than they need D) Creating a new market E) Diversifying into a new market Answer: A Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Analytical thinking 37) The first company to developing a working model of a new product type is known as the . A) inventor B) product pioneer C) market pioneer D) product leader E) product inventor Answer: B Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 38) The market has the largest market share and usually shows the way to other firms in price changes, new-product introductions, distribution coverage, and promotional intensity. A) challenger B) entrant C) follower D) nicher E) leader Answer: E Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 10

39) When the total market expands, the market usually gains the most. A) challenger B) leader C) follower D) nicher E) entrant Answer: B Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 40) A market leader on the lookout for more usage from existing customers should focus on increasing the frequency of consumption and . A) decreasing the product price B) the product line C) the amount of consumption D) decreasing production turnover time E) diversifying into unrelated markets Answer: C Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 41) Which of the following marketing strategies requires either identifying additional opportunities to use the brand in the same basic way or identifying completely new and different ways to use the brand? A) Increasing the amount of consumption B) Decreasing the level of consumption C) Increasing dedication to consumption D) Increasing product innovation E) Increasing frequency of consumption Answer: E Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking

42) When food product companies advertise recipes that use their branded products in entirely different ways, they are increasing the consumption of the brand. A) amount of B) level of C) dedication to D) frequency of E) awareness of Answer: D Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 43) Oliver, a company that produces different types of olive oil, launched a promotional campaign focusing on the alternative uses of olive oil. What strategy is the company implementing to expand its total market demand? A) Using the new-market segment strategy to attract new customers B) Improving the current level of product performance C) Advertising new and different applications of the brand D) Protecting its market share E) Using the market-penetration strategy to attract new customers Answer: C Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Analytical thinking 44) Clorox runs ads stressing the many benefits of its bleach, such as how it eliminates kitchen odors, in order to generate additional opportunities to use the brand in the same basic way. This is an attempt to of consumption. A) increase the amount B) increase the level C) increase the perception D) increase the frequency E) increase the emotional implications Answer: D Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Analytical thinking

45) When Starbucks extended its brand into non-coffee drinks and ice creams to reach customers who frequent its stores for coffee, it was using a(n) strategy. A) geographical-expansion B) new-market segment C) market-penetration D) larger package size E) increased frequency Answer: B Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Application of knowledge 46) An alternative to being a market follower in a large market is to be a leader in a small market. This type of competitor is called a . A) marketing king B) niche marketer C) segment king D) guerilla marketer E) strategic clone Answer: B Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 47) A firm that serves small market segments that are not being served by bigger firms is known as a(n) . A) challenger B) leader C) follower D) niche marketer E) entrant Answer: D Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Analytical thinking 48) The market leader strategy ensures high sales volume, whereas the niche marketer strategy allows firms to achieve _ . A) high margin B) low margin C) high promotability D) medium pricing E) lower demand Answer: A Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Analytical thinking 13

49) Which of the following is true about niche marketers? A) They are market followers in small markets. B) They tend to have high manufacturing costs. C) Specialization is key to success. D) A niche marketer achieves high volume as against a mass marketer that achieves high margin. E) They usually experience long-term losses. Answer: C Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 50) Newman Inc. manufactures saddles specifically for horses that race in derbies in the United States and the United Kingdom. Within this context the firm is exhibiting the role of a specialist. A) vertical-level B) customer-size C) product D) job-shop E) service Answer: C Diff: 3 LO: 17.2: Explain how a company gains market position. AACSB: Analytical thinking 51) A niche marketer is considered to be a(n) specialist if the firm specializes in producing a certain type of product or product feature such as Rent-a-Wreck, which rents only "beat-up" cars. A) end-user B) vertical-level C) customer-size D) channel E) product Answer: E Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Application of knowledge

52) A niche marketer that specializes in one type of customer, like a value-added reseller that customizes computer hardware and software for a specific customer segment and earns a price premium in the process, is a specialist. A) geographic B) quality-price C) product-feature D) customer E) channel Answer: D Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 53) A(n) is the first to develop a working model of the product. A) developer B) creative pioneer C) market pioneer D) product pioneer E) inventor Answer: D Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 54) When the total market expands, the dominant firm usually gains the most. Answer: TRUE Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 55) One way to increase the frequency of consumption of a product by consumers is by introducing it in larger package sizes. Answer: FALSE Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 56) Firms with low shares of the total market can become highly profitable through smart niche marketing. Answer: TRUE Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking

57) An alternative to being a follower in a large market is to be a leader in a small market. Answer: TRUE Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 58) The niche marketer achieves high sales volume, whereas the mass marketer achieves high margin. Answer: FALSE Diff: 1 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 59) What are the three dimensions that define a company's market position? Answer: The three dimensions are share of market (share of revenue or units sold), share of mind (percentage of customers who think of the company first), and share of heart (percentage of customers who prefer to do business with the company). Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 60) What does share of mind mean? Answer: Share of mind is the percentage of customers who think of a company first when they consider a particular industry or product need. Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 61) What does share of heart mean? Answer: Share of heart is the percentage of customers who name a company as the company from which they would prefer to buy a specific product. Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 62) What are the two ways to measure share of market? Answer: Market share can be measured as a share of the overall revenue in a market or as the share of the units sold in a market. Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking

63) Describe the general relationship between share of mind, share of heart, share of market, and profitability. Answer: Market share typically reflects the share of mind and heart. This can be generalized as follows: Companies that make steady gains in mind share and heart share will inevitably make gains in market share and profitability. Diff: 3 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 64) What are the five factors that underpin long-term market leadership? Answer: The five factors are a vision of a mass market, persistence, relentless innovation, financial commitment, and strategic assets. Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 65) What are the common weaknesses that have been identified among companies that were pioneers in their markets but ultimately failed? Answer: These factors include new products that were too crude, were improperly positioned, or appeared before there was strong demand; product-development costs that exhausted the innovator's resources; a lack of resources to compete against larger firms entering the market; and managerial incompetence or unhealthy complacency. Successful imitators thrived by offering lower prices, continuously improving the product, or using brute market power to overtake the pioneer. Diff: 3 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 66) What is a niche marketer? Answer: An alternative to being a follower in a large market is to be a leader in a small market or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. But even large, profitable firms may choose to use niching strategies for some of their business units or companies. Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 67) Characterize the customer specialist role that can be assumed by a niche marketer. Answer: When the firm assumes the end-user specialist role, it specializes in one type of enduse customer. For example, a value-added reseller (VAR) customizes computer hardwareand software for specific customer segments and earns a price premium in the process. Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Analytical thinking

68) What is a product specialist? Answer: A product specialist specializes in producing a certain type of product. Zipcar's car-sharing services target people who live and work in selected major U.S. cities, frequently use public transportation, but still need a car a few times a month. Diff: 2 LO: 17.2: Explain how a company gains market position. AACSB: Reflective thinking 69) When a company determines that it can no longer defend some of its territory, which of these defensive moves is it likely to make? A) Counteroffensive B) Repositioning C) Contraction D) Flank E) Preemptive Answer: C Diff: 2 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 70) Which of the following is the most constructive response a market leader can make when defending its market share? A) Maintain basic cost control B) Innovate continuously C) Provide desired benefits D) Meet challengers with a swift response E) Provide expected benefits Answer: B Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 71) To satisfy customers, a(n) marketer finds a stated need and fills it. A) creative B) responsive C) anticipative D) laid-back E) inexperienced Answer: B Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking

72) A(n) marketer looks ahead to needs customers may have in the near future. A) laid-back B) creative C) inexperienced D) responsive E) anticipative Answer: E Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 73) A(n) marketer discovers solutions customers did not ask for but to which they enthusiastically respond. A) laid-back B) responsive C) inexperienced D) creative E) anticipative Answer: D Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 74) marketers are not just market-driven, they are proactive market-driving firms. A) Creative B) Responsive C) Inexperienced D) Laid-back E) Anticipative Answer: A Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 75) Sony is an unusual market leader. It gives its customers new products that they have never asked for (e.g., Walkmans, VCRs, video cameras, CDs). This makes Sony a(n) firm. A) market-driven B) market-driving C) operations-driven D) vision-driven E) virtually-driven Answer: B Diff: 2 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Application of knowledge

76) Which of the following is true about proactive marketing? A) A company needs creative anticipation to see the writing on the wall. B) Proactive companies create new offers to serve unmet and unknown consumer needs. C) Proactive companies refrain from practicing uncertainty management. D) A company needs responsive anticipation to devise innovative solutions. E) Companies are winners when they are extremely risk-averse. Answer: B Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 77) defense involves occupying the most desirable market space in the minds of the consumers and making the brand almost impregnable. A) Position B) Flank C) Preemptive D) Mobile E) Contraction Answer: A Diff: 2 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 78) A marketing manager has planned a strategy that will require the organization to erect outposts to protect its weak front-running brands. In this defense, the outposts will be central to the organization's new competitive strategy. A) position B) flank C) preemptive D) counteroffensive E) mobile Answer: B Diff: 2 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Analytical thinking 79) defense is an aggressive maneuver where the firm attacks first, perhaps with guerrilla action across the market and keeps everyone off balance. A) Position B) Flank C) Contraction D) Preemptive E) Lateral Answer: D Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 20

80) The defensive marketing strategy wherein a stream of new products are introduced by a firm and are announced in advance are referred to as defense. A) mobile B) counteroffensive C) preemptive D) contraction E) flank Answer: C Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 81) If Microsoft announces plans for a new product development, smaller firms may choose to concentrate their development efforts in other directions to avoid head-to-head competition. In this example, Microsoft is employing a defense strategy. A) preemptive B) counteroffensive C) mobile D) flank E) contraction Answer: A Diff: 2 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Application of knowledge 82) In a defense strategy, the market leader can meet the attacker frontally and hit its flank or launch a pincer movement so that the attacker is forced to pull back to defend itself. A) position B) counteroffensive C) preemptive D) contraction E) flank Answer: B Diff: 2 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking

83) In a defense, the market leader stretches its domain over new territories that can serve as future centers for defense and offense. A) counteroffensive e B) flank C) contraction D) repositioning E) position Answer: D Diff: 2 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Analytical thinking 84) Market broadening and market diversification are likely tactics employed in defense strategies. A) position B) flank C) preemptive D) counteroffensive E) repositioning Answer: E Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Analytical thinking 85) When "petroleum" companies such as BP sought to recast themselves as "energy" companies, increasing their research into the oil, coal, nuclear, hydroelectric, and chemical industries, these companies were employing a defense strategy. A) preemptive B) counteroffensive C) repositioning D) flank E) contraction Answer: C Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Analytical thinking

86) When large companies can no longer defend their full territory, they can launch a defense where they give up weaker markets and reassign resources to stronger ones. A) contraction B) preemptive C) flank D) mobile E) position Answer: A Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 87) Sara Lee spun off products that accounted for a large percentage of the company's revenues, including its strong Hanes hosiery brand, so it could concentrate on its well-known food brands. In this example, Sara Lee employed a defense strategy. A) preemptive B) counteroffensive C) mobile D) flank E) contraction Answer: E Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 88) When Procter & Gamble used Gain and Cheer laundry detergents as outposts to protect a weak front or support a possible counterattack, they were using a defense. A) flank B) position C) preemptive D) counteroffensive E) mobile Answer: A Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Application of knowledge 89) The most constructive response to protecting market share is continuous innovation. Answer: TRUE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking

90) A responsive marketer looks ahead to needs customers may have in the near future. Answer: FALSE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 91) An anticipative marketer finds a stated need and fills it. Answer: FALSE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 92) A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond. Answer: TRUE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 93) Position defense means occupying the most desirable market space in consumers' minds, making the brand almost impregnable. Answer: TRUE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 94) In counteroffensive marketing, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so that it is forced to pull back to defend itself. Answer: TRUE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 95) In contraction defense, the leader stretches its domain over new territories through market broadening and market diversification. Answer: FALSE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 96) Market diversification shifts the company's focus to unrelated industries. Answer: TRUE Diff: 1 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking

97) Which three types of marketers help satisfy customers' needs? Answer: In satisfying customer needs, one can draw a distinction between responsive marketing, anticipative marketing, and creative marketing. A responsive marketer finds a stated need and fills it. An anticipative marketer looks ahead to needs customers may have in the near future. A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond. Creative marketers are proactive market-driving firms, not just market-driven ones. Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 98) What is counteroffensive defense? Explain with an example. Answer: (Student answers will vary.) In a counteroffensive, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so it will have to pull back to defend itself. After FedEx watched UPS successfully invade its airborne delivery business, it invested heavily in ground delivery through a series of acquisitions to challenge UPS on its home turf. Another common form of counteroffensive is the exercise of economic or political clout. The leader may try to crush a competitor by subsidizing lower prices for the vulnerable product with revenue from its more profitable products, or it may prematurely announce a product upgrade to prevent customers from buying the competitor's product. Or the leader may lobby legislators to take political action to inhibit the competition. Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Reflective thinking 99) As a brand manager of a firm that manufactures denim jeans, how could you implement a preemptive defense marketing strategy to meet an anticipated competitive challenge? Answer: (Students answers will vary.) A preemptive defense is a more aggressive maneuver that has as its purpose to attack before the enemy starts its offense. You might to launch a preemptive defense by introducing a stream of new products like denim jackets and skirts in various colors and force your anticipated competitors to play catch-up. Diff: 3 LO: 17.3: Summarize the strategies a company can use to defend its market position. AACSB: Analytical thinking 100) Most products are in the stage of the product life cycle. A) growth B) decline C) maturity D) introduction E) stagnancy Answer: C Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

101) The maturity stage of the product life cycle can be divided into three phases: growth, stability, and . A) decaying maturity B) obsolescence C) disappearance D) replacement E) reemergence Answer: A Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 102) In the introduction stage of the product life cycle, profits are A) impossible to measure B) not a concern C) negative or low D) unpredictable E) at a peak Answer: C Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

103) In the introduction stage of the product life cycle, sales growth tends to be A) nonexistent B) still impossible to measure C) flat D) slow E) rapid Answer: D Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 104) In the growth stage of the product life cycle, sales rise A) in negative correlation with B) at the same rate as C) much slower than D) much faster than E) in positive correlation with Answer: D Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

marketing expenditures.

105) involves gradually reducing the costs of a product or business while trying to maintain sales. A) Divesting B) Harvesting C) Obsoleting D) Liquidating E) Riding out Answer: B Diff: 1 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 106) Which of these statements about the product life cycle model is NOT true? A) All products pass through all stages. B) Products have a limited life. C) Profits rise and fall at different stages of the product life cycle. D) The concept can be used to analyze entire product categories. E) The concept can be used to analyze a single brand. Answer: A Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 107) Assume a pharmaceutical company aggressively promotes its latest drug, building an initial wave of demand. After that wave of demand subsides, it boosts demand again with a fresh promotional campaign, which then eventually diminishes as well. Which product life cycle pattern does this represent? A) Growth-slump-maturity B) Cycle-recycle C) Scalloped D) Scalloped cycle E) Repetitious Answer: B Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 108) is the period of slow sales growth and nonexistent profits. A) Growth B) Decline C) Maturity D) Introduction E) Stagnancy Answer: D Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 27

109) Naturemade is a newly established company that specializes in preparing healthy but tasty food for children under the age of 5. It is incurring huge production costs, nonexistent profits, and slow sales growth. Its products are in the phase of their life cycle. A) stagnancy B) introduction C) maturity D) decline E) growth Answer: B Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 110) is the product-life cycle stage of rapid market acceptance and substantial profit improvement. A) Stagnancy B) Introduction C) Maturity D) Decline E) Growth Answer: E Diff: 1 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 111) is a slowdown in sales growth because the product has achieved acceptance by most potential buyers. A) Obsolescence B) Introduction C) Growth D) Decline E) Maturity Answer: E Diff: 1 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

112) During the _ stage of a product's life cycle, sales show a downward drift and profits erode. A) introduction B) growth C) decline D) obsolescence E) maturity Answer: C Diff: 1 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 113) One of the ways to change the course of a brand is to modify the product. Under product modification, improvement adds size, weight, materials, supplements, and accessories that expand the product's performance, versatility, safety, or convenience. A) feature B) quality C) style D) size E) technological Answer: A Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 114) One way to increase sales volume during a product's mature phase is to increase the usage rate among users. This can be done by . A) converting nonusers B) having consumers use less of the product on each occasion C) having consumers use the product on more occasions D) attracting competitors' customers E) entering new market segments Answer: C Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

115) For a market challenger, attacking is a high-risk but potentially high-payoff strategy and makes good sense if the leader is not serving the market well. A) a firm of its own size B) the market leader C) a regional firm D) an underfinanced firm E) a poorly performing firm Answer: B Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 116) In a pure attack, the attacker matches its opponent's product, advertising, price, and distribution. A) guerilla B) bypass C) encirclement D) frontal E) flank Answer: D Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 117) Epic Inc., a firm that produces chairs for offices, uses comparative advertising to inform consumers that its products offer the same features and quality as the competitor's. This is an example of a(n) _ attack. A) guerilla B) frontal C) encirclement D) bypass E) flank Answer: B Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking

118) Pepsodent launched a new product that could whiten teeth, fight decay, and maintain fresh breath. Observing that Pepsodent did not focus on the dental sensitivity aspect, Colgate introduced a toothpaste which did all of the above and also protected sensitive teeth. This is an example of a(n) _ attack. A) frontal B) flank C) guerrilla D) encirclement E) bypass Answer: B Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 119) A(n) strategy is another name for identifying shifts in market segments that are causing gaps to develop, then rushing in to fill the gaps and developing them into strong segments. A) frontal attack B) flanking C) encircling D) counteroffensive E) bypass Answer: B Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 120) The attack attempts to capture a significant share of the consumer market by launching a grand offensive on several fronts. A) frontal B) bypass C) flank D) encirclement E) guerrilla Answer: D Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

121) An up-and-coming department store has distinguished itself with bold strategies such as launching attacks on its primary competitor from several fronts, including advertising, new store openings, and new distributor alliances. Which of the following market challenger attack strategies is the company using? A) Frontal attack B) Bypass attack C) Guerrilla attack D) Flank attack E) Encirclement attack Answer: E Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 122) The attack offers the firm an opportunity to diversify into unrelated products, into new geographical markets, and leapfrogging into new technologies. A) bypass B) flank C) frontal D) guerrilla E) encirclement Answer: A Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 123) Appy Juices, a company that manufactures bottled water, diversified into soft drinks before any of its opponents could launch a diversified product. This would be an example of a(n) attack. A) flank B) bypass C) guerrilla D) encirclement E) frontal Answer: B Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking

124) A marketing manager has decided to leapfrog the competition by moving into cutting-edge technologies. This indirect approach to attacking competition can be characterized as a(n) attack. A) flank B) encirclement C) bypass D) guerrilla E) frontal Answer: C Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Application of knowledge 125) Selective price cuts, intense promotional blitzes, and occasional legal action are commonplace in the strategic design of a(n) attack. A) frontal B) flank C) bypass D) encirclement E) guerilla Answer: E Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 126) Sales of nylon have shown a scalloped PLC pattern because of the many new uses— parachutes, hosiery, shirts, carpeting, boat sails, automobile tires—discovered over time. Answer: TRUE Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 127) Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. Answer: TRUE Diff: 1 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 128) Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action. Answer: TRUE Diff: 1 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

129) Explain the difference between a fad and a trend. Answer: A fad is a product category that is "unpredictable, short-lived, and without social, economic, and political significance." In contrast, a trend is a direction or sequence of events with momentum and durability. Trends are more predictable and durable than fads; they reveal the shape of the future and can provide strategic direction. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 130) What are the drawbacks of keeping weak performers in a company's product portfolio? Answer: Besides being less profitable or even unprofitable, weak products consume a disproportionate amount of management's time, require frequent price and inventory adjustments, incur expensive setup for what are usually short production runs, draw advertising and sales force attention that would be better used to make healthy products more profitable, and cast a negative shadow on company image. Maintaining them also delays the aggressive search for replacement products, creating a lopsided product mix long on yesterday's breadwinners and short on tomorrow's. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 131) What are the four stages that markets evolve through? Answer: Markets evolve through four stages: emergence, growth, maturity, and decline Diff: 1 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 132) Identify the reasons that sales drop during the decline phase of the product life cycle. Answer: Sales decline for a number of reasons, including technological advances, shifts in consumer tastes, and increased domestic and foreign competition. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 133) What are the four assumptions on which the product life cycle model is based? Answer: The concept of product life cycle is based on four key assumptions: • Products have a limited life. • Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller. • Profits rise and fall at different stages of the product life cycle. • Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

134) Why have sales of nylon exhibited the scalloped pattern of product life cycle behavior? Answer: With the scalloped pattern, sales pass through a succession of life cycles reflecting the discovery of new product characteristics, uses, or users. Nylon has exhibited this pattern because of the many new uses–parachutes, hosiery, shirts, carpeting, boat sails, and automobile tires– discovered over time. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 135) Can marketers always tell if a fad is really just a fad? Explain your answer. Answer: No, they can't always tell if a fad is really just a short-term phenomenon that will quickly disappear or the start of a sustainable trend. Some innovations have been termed fads by some observers, only to become essential to people's lives and become permanent product categories. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 136) Explain with an example how a fad might appear within a larger sustainable trend. Answer: (Student answers will vary.) A good example of this are fad diets that appear within the longer-term trend of healthy eating. The desire to eat better is solidly established as a market demand, but fad diets and miracle quick fixes come and go as people try them and quickly grow disillusioned with them. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 137) What options does a company have if management determines that it no longer makes financial or strategic sense to keep a product or product line in the business portfolio? Answer: If the product still has strong distribution and residual goodwill, the company might be able to find a buyer for it and so divest it from the portfolio. If a buyer can't be found, the only choice remaining is to liquidate by selling off all remaining inventory (if possible) and deciding how much support to give existing customers and for how long. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 138) What does it mean to "harvest" a product? Answer: Harvesting calls for gradually reducing the costs of a product or business unit while trying to maintain sales for as long as possible. The first step is to cut research and development costs and plant and equipment investment. The company might also reduce product quality, sales force size, marginal services, and advertising expenditures. Essentially, the idea of harvesting is to squeeze out as much profit as possible for as long as possible. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 35

139) What options does a company have when it realizes a product category in which it competes has entered the decline stage? Answer: The options include withdrawing entirely, reducing the number of products offered, exiting smaller segments and weaker trade channels, cutting marketing budgets, and reducing prices further. The company can try to harvest whatever remaining profits the category will generate for as long as customers keep buying, or it might decide to sell to any interested buyers or simply liquidate its remaining inventory. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 140) What is an "orphan" or "ghost" brand? Answer: An "orphan" or "ghost" brand is one that a company wants to sell off, either as a strategic decision to focus its resources elsewhere or perhaps because it has entered bankruptcy and needs to sell off as many assets as it can. Certain companies specialize in buying up these unwanted brands and capitalizing on the remaining goodwill in the market by marketing them with a fresh boost of energy. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 141) What can a firm do to sustain rapid market share increases during the growth phase of the product life cycle? Answer: To sustain rapid growth in market share during this phase, a firm can adopt a variety of strategies: It can improve product quality and add new features or improved styling; it can add new models and flanker products (e.g., different sizes and flavors) to protect the main product; it can enter new market segments; it can increase its distribution coverage and enter new distribution channels; it can shift from awareness and trial communication to preference and loyalty communication; and it can lower prices to attract the next layer of price-sensitive buyers. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 142) What are two key ways to reverse a product's decline in the maturity phase of the product life cycle? Answer: Two primary ways to change the course for a brand are market growth (expand the number of users and/or increase usage rates among current users) and product modification (make improvements to quality, function, or style to attract more buyers). Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

143) What are fads in the context of the product life cycle? Answer: A fad is a product category with "unpredictable, short-lived, and without social, economic, and political significance." A company can cash in on a fad, but getting it right requires luck and good timing. Fads come quickly into public view, are adopted with great zeal, peak early, and decline very fast. Their acceptance cycle is short, and they tend to attract only a limited following searching for excitement or wanting to distinguish themselves from others. It is important to note that sometimes it is hard to tell whether a product is a fad or not. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 144) What is the criticism of the product life cycle concept? Answer: The product life cycle theory has its share of critics, who claim life cycle patterns are too variable in shape and duration to be generalized, and that marketers can seldom tell what stage their product is in. A product may appear mature when it has actually reached a plateau prior to another upsurge. Critics also charge that, rather than an inevitable course, the product life cycle pattern is the self-fulfilling result of marketing strategies, and that skillful marketing can in fact lead to continued growth. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 145) Who are the ideal opponents of a market challenger? Answer: The opponents of a market challenger are the industry leader, firms its own size that are not doing the job and are underfinanced, or small local and regional firms. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 146) Describe frontal attack as a general market-challenger attack strategy. Answer: In a pure frontal attack, the attacker matches its opponent's product, advertising, price, and distribution. The principle of force says the side with the greater resources will win. A modified frontal attack, such as cutting price, can work if the market leader doesn't retaliate, and if the competitor convinces the market its product is equal to the leader's. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 147) Assume that you are the marketing manager of a firm that manufactures athletic shoes. How might you launch an encirclement attack on your main competitor? Answer: (Student answers will vary.) Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. It makes sense when the challenger commands superior resources. In an attack on your archrival, you might launch your newest products in all the major cites of the globe together and surprise your rival. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 37

148) A firm that manufactures cotton cloth has chosen the bypass attack as a means of responding to an industry leader. How might the company go about launching this type of attack? Answer: (Student answers will vary.) The bypass attack is an indirect assault. The marketing manager can diversify into unrelated products like ready-made garments. The manager can also diversify into new geographical markets or adopt new technologies to manufacture its product. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Analytical thinking 149) What is a guerilla attack? Answer: Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action, to harass the opponent and eventually secure permanent footholds. A guerrilla campaign can be expensive, although less so than a frontal, encirclement, or flank attack, but it typically must be backed by a stronger attack to beat the opponent. Diff: 2 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking 150) How can a challenger firm select the specific tactics to use once it decides to attack the market leader? Answer: Any aspect of the marketing program can serve as the basis for attack, such as lower-priced or discounted products, new or improved products and services, a wider variety of offerings, and innovative distribution strategies. A challenger's success depends on combining several, more specific, strategies to improve its position over time. Diff: 3 LO: 17.4: Discuss the key product-cycle marketing strategies AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 18 Developing New Market Offerings 1) involves entering new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems. A) Supplemental innovation B) Incremental innovation C) Disruptive innovation D) New-market innovation E) Breakthrough innovation Answer: B Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 2) Which of these is identified in the chapter as one reason companies continue to pursue incremental innovation over new-to-the-world innovations? A) Tax laws favor incremental innovation. B) Employees dislike the disruption of breakthrough innovation. C) Customers are rarely interested in breakthrough innovation. D) It is increasingly difficult to identify blockbuster products that will transform a market. E) Breakthrough innovations invite vigorous competitive responses. Answer: D Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 3) What is the estimated failure rate of new products? A) Less than 10 percent B) Between 10 and 20 percent C) Around 25 percent D) Around 50 percent E) As high as 95 percent Answer: E Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

4) Intrapreneurs working on new product designs and plans are mostly to be found working in . A) product management departments B) venture teams C) new-product departments D) communities of practice E) skunk squads Answer: B Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 5) Which of these is NOT one of the stages found in the stage-gate framework? A) Idea generation B) Concept development C) Business-model design D) Offering development E) Sales prospecting Answer: E Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 6) Which stage in the stage-gate framework must come before concept development? A) Business-model design B) Idea generation C) Commercial deployment D) Offering development E) Sales prospecting Answer: B Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 7) When a firm has a valid business model in hand for a new offering, what is its next step in the stage-gate framework? A) Concept development B) Idea generation C) Commercial deployment D) Offering development E) Sales prospecting Answer: D Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

8) In addition to creating offerings that are desirable to customers and technologically feasible, the stage-gate framework aims to create offerings that are . A) viable (creating value for the company and its collaborators) B) unique (unmatched by any other company) C) cutting-edge (using only the latest technologies and concepts) D) low cost (marketable using minimal resources) E) buzz-worthy (capable of generating broad media attention) Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 9) Designing and validating a prototype version of a potential offering occurs during the stage of the stage-gate framework. A) concept development B) idea generation C) commercial deployment D) offering development E) business-model design Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 10) The offering's target market, the value created by the offering in this market, and the key attributes of the offering are all defined in the stage of the stage-gate framework. A) concept development B) idea generation C) commercial deployment D) offering development E) business-model design Answer: E Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 11) Making the case for how the company and its collaborators will benefit from launching the offering occurs in the stage of the stage-gate framework. A) concept development B) idea generation C) business-model design D) commercial deployment E) offering development Answer: C Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 3

12) Conducting a market test occurs in the stage of the stage-gate framework. A) offering implementation B) idea generation C) business-model design D) commercial deployment E) offering development Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 13) When General Mills is finalizing the key attributes of a new cereal offering, including the brand name, price, incentives, communication, and distribution plan, it is in the stage of the stage-gate framework. A) offering implementation B) idea generation C) business-model design D) commercial deployment E) offering development Answer: C Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Analytical thinking 14) When Apple released the third generation of the iPad Pro tablet, this was an example of which kind of innovation? A) Supplemental innovation B) Incremental innovation C) Disruptive innovation D) New-market innovation E) Breakthrough innovation Answer: B Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Analytical thinking 15) Oreo Carrot Cake flavored cookies are an example of which kind of innovation? A) Supplemental innovation B) Disruptive innovation C) Incremental innovation D) New-market innovation E) Breakthrough innovation Answer: C Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Analytical thinking 4

16) Which of these is NOT one of the characteristics of highly innovative companies? A) A positive attitude toward innovation B) A positive attitude toward risk-taking C) Strict boundaries on risk-taking with appropriate negative consequence D) A methodical approach to generating, developing, and commercializing new offerings. E) An embrace of experimentation and acceptance of failure Answer: C Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 17) The Keurig single-serving coffee pod represents what kind of innovation? A) Supplemental innovation B) New-to-the-world innovation C) Incremental innovation D) New-market innovation E) Predicted innovation Answer: B Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Analytical thinking 18) What does the term "intrapreneur" suggest in terms of innovation development? A) These employees are focused on internal innovation only. B) These non-employees are temporary brought inside as consultants. C) These employees take an entrepreneurial approach within their companies. D) These innovators work only with like-minded people in the company. E) These employees get a profit cut of any products they help invent. Answer: C Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 19) Which of these statements about the stage-gate framework is NOT true? A) Typically, most ideas raised at the beginning of the process do not survive to the commercialization stage. B) The number of potential offerings decreases as the company works through the process. C) The number of potential offerings increases as the company works through the process. D) The cost of moving a potential offering through each stage increases as the process moves forward. E) The process doesn't always move in a strictly linear flow from left to right; sometimes ideas are "kicked back" to an earlier stage and reworked. Answer: C Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Analytical thinking 5

20) Which of these statements about the business-model design stage of the stage-gate model is true? A) The validated business model is still only a plan, not a market-ready offering. B) The business model is validated based primarily on how innovative the idea is. C) Customer needs are not considered during the business-model design stage. D) This is strictly a "business case" stage; the product concept hasn't been development yet. E) The business-model design stage produces a fairly complete plan for bringing the new offering to market. Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 21) After developed product concepts are validated by assessing their technological feasibility and potential to fulfill an uncovered customer need, what is a company's next step toward commercialization? A) Offering implementation B) Idea generation C) Business-model design D) Commercial deployment E) Offering development Answer: C Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 22) In addition to ensuring that new offerings are technologically feasible and financially viable for the company and its collaborators, the stage-gate framework aims to create offerings that are . A) desirable (providing value for target customers) B) unique (unmatched by any other company) C) cutting-edge (using only the latest technologies and concepts) D) low cost (marketable using minimal resources) E) buzz-worthy (capable of generating broad media attention) Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

23) Which stages of the stage-gate framework typically require the greatest investment of company resources? A) Idea generation and concept development B) Concept development and business-model design C) Business-model design and offering implementation D) Offering implementation and commercialization E) Commercialization and test marketing Answer: D Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 24) If Caterpillar is developing a new compact front-end loader for use on residential construction sites but determines that the product won't create enough value for the company or its distribution collaborators, which gate in the stage-gate framework stopped the project? A) Idea validation B) Concept validation C) Business-model validation D) Offering validation E) Test market Answer: C Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Analytical thinking 25) In the context of the stage-gate framework of product development, the product concept can be thought of as the the company will offer to its target customers. A) value proposition B) product design C) value proposal D) product idea E) business model Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

26) A limited geographic introduction of a new offering, perhaps in just one city, designed to validate the offering and see how well the various elements will perform, is known as a . A) regional market B) sales simulation C) focus group D) market test E) business-model validation Answer: D Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 27) New-to-the-world products are . A) low-cost products designed to obtain an edge in highly competitive markets B) new product enhancements that supplement established products C) new versions of an existing product that has been less successful D) new products that create an entirely new market E) existing products that are targeted to new geographical markets Answer: D Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 28) Most new-product activities are devoted to . A) changing the target markets B) developing new-to-the-world products C) introducing backward integration D) improving existing products E) changing the existing market dynamics Answer: D Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 29) Most established companies focus on innovation when they aim to enter new markets by tweaking existing products, or they want to stay one step ahead in the market by using variations on a core product. A) incremental B) continuous C) spontaneous D) radical E) competitive Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 8

30) Identify a shortcoming of giving the responsibility to develop new products to the product managers of a company. A) They would not be familiar with the industry standards. B) Product managers would not have an operational focus. C) Product managers are often focused on managing existing lines. D) They will find it difficult to gain support from employees. E) Product managers are less likely to use participative management. Answer: C Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 31) teams are cross-functional groups charged with developing a specific product or business. A) Virtual B) Venture C) Fundamental D) Elemental E) Transitory Answer: B Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 32) Intercom Inc., together with its subsidiaries, primarily engages in the generation, transmission, and distribution of electric power in the United States. The company observes that its growth has stagnated over a period of two years. In an attempt to promote growth, it considers adding new features to the existing products and introducing a few new products. The company forms a committee consisting of three top executives, one of the production mangers, a few operational managers, and a representative of the HR department to develop new products. This team is called a(n) team. A) virtual B) venture C) fundamental D) elemental E) transitory Answer: B Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

33) A team formed at Intercom Inc. to develop new products conducts most of its meetings at informal locations away from office. These workplaces are called _. A) skunkworks B) idea funnels C) research centers D) stage-gate systems E) contextual bases Answer: A Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 34) A divides the innovation process into stages with a checkpoint at the end of each stage. A) reverse assumption analysis technique B) skunkworks system C) stage-gate system D) spiral development process E) new-product department technique Answer: C Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 35) are informal workplaces, sometimes garages, where intrapreneurial teams attempt to develop new products. A) Stage-gate systems B) Skunkworks C) Funnels D) Opportunity spaces E) Research centers Answer: B Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 36) During which of the following stages in new product development does the company develop a prototype that has the core functionality of the proposed offering? A) Idea generation B) Idea screening C) Business analysis D) Concept development E) Product development Answer: D Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 10

37) Fewer than 10 percent of all new products are truly innovative and new to the world. Answer: TRUE Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 38) Companies that fail to develop new products leave their existing offerings vulnerable to increased domestic and foreign competition. Answer: TRUE Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 39) Most established companies focus on incremental innovation rather than radical innovation. Answer: TRUE Diff: 1 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 40) Skunkworks are formal workplaces where intrapreneurial teams attempt to develop new products. Answer: FALSE Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 41) Venture teams are cross-functional groups charged with developing a specific product or business. Answer: TRUE Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 42) Characterize the nature of product innovation in today's business environment. Answer: Innovation ranges from minor improvements or revisions of existing products to newto-the-world items that create an entirely new market. Fewer than 10 percent of all new products can be considered truly innovative and new to the world. Most new-product activity is concentrated on improving existing products. This form of continuous innovation can broaden a brand's meaning and force competitors to play catch-up. Most established companies focus on this incremental innovation, entering new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 11

43) In addition to creating new or improved products and services, how else can innovation help companies be more competitive and more successful? Answer: In addition to creating new or improved products and services, innovation can involve a new technology, a new approach to brand building, a new pricing mechanism, a new way of managing incentives, new channels of communication, or a novel distribution method. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 44) What are the risks a company exposes itself to by failing to develop new products? Answer: Companies that fail to develop new products leave themselves vulnerable to changing customer needs and tastes, shortened product life cycles, increased domestic and foreign competition, and lack of awareness of the potential market opportunities opened up by new technologies. Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 45) Characterize the overall approach to innovation that highly innovative firms exhibit. Answer: Highly innovative firms are able to repeatedly identify and quickly seize new market opportunities. They create a positive attitude toward innovation and risk taking, "routinize" the innovation process, practice teamwork, and allow their people to experiment and even fail. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 46) Given the considerable cost and risk of trying to create blockbuster, new-to-the-world innovations when incremental innovation serves so many companies well, why do some firms continue to pursue breakthrough innovations? Answer: When these high-cost, high-risk innovations do succeed, they can improve the corporate image, create a greater sustainable competitive advantage for the company, and produce significant financial rewards. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 47) In one sentence, summarize the various reasons for the failure of new products. Answer: The new offering fails to create superior value for its target customers in a way that sufficiently benefits the company and its collaborators. Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

48) What is the advantage of having the department in charge of current offering overview the development of new products? Answer: A common approach to foster and manage innovation is to assign responsibility for developing new products and services to managers in charge of a given product category, brand, or market. The advantage of this approach is that these managers have a solid understanding of customer needs, the competitive environment, and the processes involved in designing, communicating, and delivering the company's products to its current customers. Diff: 2 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 49) What are the three principle aims of the stage-gate framework? Answer: The stage-gate approach encompasses three aims. Its goal is to develop: (1) a desirable offering that target customers will find attractive, (2) a technologically feasible offering that the company will find doable, and (3) a viable offering that will create value for the company and its collaborators. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 50) Does the stage-gate process always flow in a linear, uninterrupted fashion from idea generation to commercialization? Explain your answer. Answer: No. On many occasions, the development of a new offering might not follow a predefined series of orderly, well-delineated steps but might instead entail actions that do not follow the linear format of the stage-gate framework. It is not uncommon for a new-offering development project to pass the idea-generation stage only to fail to overcome some of the subsequent hurdles. In such cases, the company must go back to the drawing board and perhaps even reevaluate the idea and/or the concept underlying the entire project. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 51) What does it mean to "routinize" the innovation process? Answer: Making innovation a routine part of doing business means that the company has a methodical process in place to continually generate ideas, develop product concepts, and carry promising product concepts through to commercialization. With such an orderly process in place, the company doesn't rely on random "bolt from the blue" ideas for new products or reacting to competitive moves to figure out which products to develop next. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

52) With an example, explain how innovation can make companies and indeed entire industries superfluous. Answer: (Student answers will vary.) Truly disruptive innovations can so thoroughly replace old ways of creating market value that they render those companies irrelevant in the minds of many customers. Recorded music, for instance, has gone through multiple generations of replacement as new formats appeal so strongly to customers that existing formats either disappear or become relegated to niche status. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 53) What is incremental innovation? Provide an example. Answer: (Student answers will vary.) Incremental innovation refers to entering new markets by tweaking products for new customers, using variations on a core product to stay one step ahead of the market, and creating interim solutions for industry-wide problems. Examples are numerous, from brand and line extensions in grocery categories to virtually every new release of mobile phones. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 54) Identify the major reasons why new products fail. Answer: The most common reasons include ignored or misinterpreted market research, overestimates of market size, high development costs, poor product performance, inadequate pricing, ineffective communication, insufficient distribution support, proactive competitive response, lack of organizational support for the new offering, and inadequate return on the company's investment. The different reasons for failure can be summed up in one sentence: The new offering fails to create superior value for its target customers in a way that sufficiently benefits the company and its collaborators. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 55) What practices guide innovation at W. L. Gore? Answer: First, it works with potential customers. Second, Gore has a distinctly egalitarian culture; it lets employees choose projects and appoints few product leaders and teams. The company likes to nurture "passionate champions" who convince others a project is worth their time and commitment, and leaders have positions of authority because they have followers. Third, all research associates spend 10 percent of their work hours on "dabble time," developing their own ideas. Promising ideas are judged according to a "Real, Win, Worth" exercise: Is the opportunity real? Can we win? Can we make money? Fourth, Gore knows when to let go. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking

56) Identify six ways that companies can organize new product development. Answer: Here are six common ways to organize the new-product effort: • Assign it to departments already in charge of current offerings • Set up dedicated new-product departments • Establish innovation centers • Establish venture teams • Set up cross-functional teams Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Interpersonal relations and teamwork 57) Explain how stage-gate systems are used by companies to manage innovation and new product launches. Answer: New-product development is commonly represented as a sequence of actions (stages) separated by checkpoints (gates) that the new offering must pass through. The stage-gate approach divides the innovation process into stages, with a gate/checkpoint at the end of each stage. The ultimate goal of using a stage-gate approach to new-product development is to ensure market success in a way that minimizes risk and optimizes allocation of the company's resources. There is no single stage-gate format; companies vary in the ways they define different stages of product development and the hurdles that the new offering must overcome. At the same time, there are several similarities between these approaches that can be distilled into an overarching stage-gate framework for managing the process of developing new offerings. This framework presents a streamlined version of the stage-gate approach, which comprises five key stages–idea generation, concept development, business-model design, offering development, and commercial deployment–separated by hurdles that aim to validate the actions taken in the previous step. Diff: 3 LO: 18.1: Explain how companies develop new offerings. AACSB: Reflective thinking 58) Which of these is a critical "reality check" that must be applied to bottom-up product ideas in particular? A) They must have a unique brand name. B) They must fit smoothly in the company's current product portfolio. C) They must address a viable market opportunity. D) They must be compatible with the company's current distribution networks. E) They must not place a demand on company resources. Answer: C Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking

59) Which of these is one of the errors that companies are prone to make during the idea validation phase? A) Not considering brand naming issues early enough B) Failing to reject ideas with little or no merit C) Putting too much emphasis on distribution challenges too early D) Failing to engage top management E) Failing to get employee input Answer: B Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 60) Why is top-down idea generation the preferred way of coming up with new product ideas? A) It is based on viable market opportunities. B) It is cheaper. C) It is faster. D) It uses fewer company resources. E) It lets companies bypass stages in the stage-gate framework. Answer: A Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 61) Firms can help establish the optimal brand positioning for a new product and the right points of parity and points of differences by during the idea generation stage. A) interviewing employees B) observing customers C) analyzing the competition D) crowdsourcing E) interviewing customers Answer: C Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking

62) A research team in your company's laboratories stumbled on a way to erase hard drives using radio waves. The scientists think it could turn into a great product that gives computer users an easy way to erase their drives before sending their devices to recycling or reselling them. What model of idea generation is this? A) Exploratory B) Top-down C) Research-driven D) Bottom-up E) Incremental Answer: D Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Analytical thinking 63) The search for is the starting point of new-product development. A) viable ideas B) unused brand names C) distribution channels D) profitable business models E) customer value Answer: A Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 64) When Varidesk responded to health concerns about the long-term effects of sitting by creating variable desks that allow people to change from sitting to standing throughout the day, it used which model of idea generation? A) Exploratory B) Top-down C) Research-driven D) Bottom-up E) Incremental Answer: B Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Analytical thinking

65) The Slinky toy was created after a naval engineer who was designing a power meter noticed how tension springs bounced when they fell to the floor. What model of idea generation is this? A) Exploratory B) Bottom-up C) Research-driven D) Top-down E) Incremental Answer: B Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 66) Innovation marries a customer need with a A) brand B) value proposition C) creative idea D) business model E) distribution network Answer: C Diff: 3 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking

that addresses this need.

67) Top-down idea generation starts with a that aims to identify an important unmet need that the company can fulfill in a way that is superior to its competitors. A) business plan B) market analysis C) value proposition D) market offering E) prototype Answer: B Diff: 3 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 68) means inviting the internet community to help create content or software, often with prize money or a moment of glory involved. A) Stage-gating B) Cocreation C) Microstocking D) Buzzing E) Crowdsourcing Answer: E Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 18

69) Some companies believe that interviewing customers does not always help to create better, or new, products. This belief rests on which of the following ideas? A) Such new product developments decrease the chances of success. B) Customers do not consider the cost of design when making suggestions. C) Customers often focus on their current needs, which can prevent breakthrough, forward-thinking innovation. D) It increases the cost of testing a product or service. E) Having too much customer focus leads to a negative brand image. Answer: C Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 70) Interviewing customers is a foolproof way to generate innovative product ideas. Answer: FALSE Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 71) Exploratory research is a mainstay of idea generation and validation. Answer: TRUE Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 72) Crowdsourcing lets companies engage outsiders in the new-product development process in rich and meaningful ways and receive either unique expertise or a different perspective on the problem that might otherwise be overlooked. Answer: TRUE Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 73) Employees can be a source of ideas for improving production, products, and services. Answer: TRUE Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 74) Contrast top-down and bottom-up idea generation. Answer: Top-down idea generation begins with identifying a market opportunity followed by developing an offering specifically designed to address this opportunity. Bottom-up idea generation is the opposite of top-down generation: It starts with an invention and then seeks to identify an unmet market need. Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 19

75) Given that top-down innovation is the preferred method of idea generation, should companies ever encourage bottom-up idea generation? Why or why not? Answer: Yes, companies definitely should encourage bottom-up if they have the technology capacity to invent new products that could potentially become hits with customers. Sometimes a product possibility can't even be imagined until somebody comes up with a new technology that makes it possible. And as the chapter notes, some products come about via "happy accidents," when a technology or product that failed as one type of market offering can be reimagined as another type of offering. Of course, bottom-up ideas need to be subjected to rigorous review in the stage-gate framework to make sure they really address a market need and aren't a "solution in search of a problem." Diff: 3 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 76) What are the two types of errors companies are prone to make when they evaluate proposed ideas for new offerings? Answer: The two errors are failing to reject ideas with little or not merit and, at the other extreme, rejecting good ideas as a result of faulty reasoning or the unwillingness to embrace risk. Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 77) Summarize the miscalculation that held back TiVo's growth. Answer: TiVo's miscalculation was failing to understand that many consumers at the time were fairly satisfied with the way they watched TV and did not see the value of TiVo's digital video recorder offering or feel a strong urge to acquire it. For most consumers, it was a nice-to-have product, but they did not feel the need to have it. Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 78) List six common market research tools for idea generation and validation. Answer: Six common tools are observing customers, interviewing customers, interviewing employees, interviewing experts, analyzing the competition, and crowdsourcing Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 79) What is the key potential weakness of interviewing customers as a way to generate or validate product ideas? Answer: Customers are an important source for generating new ideas, but they are not always able to articulate their needs clearly or to suggest viable new products. Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 20

80) Describe Toyota's use of employee ideas in generating new products and services. Answer: The company has a very active system where employees submit ideas–more than 2 million a year, or about 35 suggestions per employee. Over 85 percent of these employee ideas are implemented. Diff: 2 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 81) What is crowdsourcing? Answer: Crowdsourcing lets companies engage outsiders in the new-product development process in rich and meaningful ways and receive either unique expertise or a different perspective on the problem that might otherwise be overlooked. Diff: 1 LO: 18.2: Explain how companies generate new ideas. AACSB: Reflective thinking 82) A(n) is a working model of the offering that aims to flesh out the original idea and weed out potential problems before the actual offering is created. A) business model B) tactical plan C) alpha test D) prototype E) beta test Answer: D Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Analytical thinking 83) involves customers interacting with prototypes to see how they perform in different applications and to ensure that the final product will be well received in the market. A) Beta testing B) Alpha testing C) Market testing D) Omega testing E) Lab testing Answer: A Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Analytical thinking

84) involves members of the firm interacting with prototypes to see how they perform in different applications and to ensure that the final product will be well received in the market. A) Beta testing B) Alpha testing C) Market testing D) Omega testing E) Lab testing Answer: B Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Analytical thinking 85) Brown & Smith Inc. engages in the design, development, making, and retail selling of designer jewelry in North America. Before approving a new design, the company draws it on a computer and then produces models to show potential consumers and get their reactions. This allows the company to analyze the possible customer reaction. Identify the concept development method used here. A) Conjoint analysis B) Perceptual mapping C) Virtual reality testing D) Prototyping E) Digital fabrication Answer: D Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Analytical thinking 86) After creating a product prototype, a company tests it within the firm to see how it performs in different applications. The company refines the prototype to correct the mistakes found in in-house testing. What should be the next step? A) Commercializing the product B) Performing concept testing C) Conducting beta testing with customers D) Creating a marketing strategy for the product E) Performing business analysis Answer: C Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Application of knowledge

87) Consumer preferences for alternative product concepts can be measured through method for deriving the utility values that consumers attach to varying levels of a product's attributes. A) concept testing B) perceptual mapping C) gap level analysis D) conjoint analysis E) morphological analysis Answer: D Diff: 3 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking

88) With , respondents see different hypothetical offers formed by combining varying levels of the attributes, then rank the various offers. A) gap level analysis B) conjoint analysis C) perceptual mapping D) concept testing E) morphological analysis Answer: B Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking 89) Universal Services Inc. provides communication services to residential and business customers in rural and small urban communities primarily in northern England. The company offers services such as local and long distance voice, data, and internet and broadband product offerings. The company, in an attempt to increase the attractiveness of its offerings, decides to provide special voice and data packages to its customers. The company designs eight different packs that offer varying voice and data benefits to customers. The company then asks some of its customers to rank the packs in order to choose two best packs. Which of the following testing methods is being used in this scenario? A) Virtual reality testing B) Conjoint analysis C) Perceptual mapping D) Product fabrication E) Rapid prototyping Answer: B Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Analytical thinking

90) testing of a prototype takes place within the firm to see how it performs in different applications. A) Beta B) Research C) Sales-wave D) Alpha E) Simulated Answer: D Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking 91) Which of the following products normally undergo alpha and beta testing? A) Food products B) Expensive industrial goods C) Consumer products D) Commodities E) FMCG products Answer: B Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Application of knowledge 92) During testing, the company's technical people let customers use prototypes to see how they perform in different applications and to ensure that the final product will be well received in the market. A) beta B) research C) sales-wave D) alpha E) simulated Answer: A Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Application of knowledge 93) Business-model validation assesses the soundness of the core concept underlying the proposed offering by addressing the technological feasibility of the offering and the way target customers view its desirability. Answer: FALSE Diff: 1 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking

94) Beta testing tests the product within the firm to see how it performs in different applications. Answer: FALSE Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking 95) Expensive industrial goods and new technologies will normally undergo alpha and beta testing. Answer: TRUE Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking 96) What are the two key questions that need to be addressed during concept validation? Answer: (1) Can a functional prototype and, later, a fully functional version of the offering be built? (2) Does it fulfill the identified customer need better than the alternative options? Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking 97) What is the purpose of the concept validation step? Answer: Concept validation typically assesses the soundness of the core concept underlying the proposed offering by addressing the technological feasibility of the offering and the way target customers view its desirability. Diff: 1 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking 98) What would be the risk of skipping the concept validation stage? Answer: The risk would be that the company will move ahead with developing the new offering without verifying that the product is technically feasible or that it addresses a real market need. Either oversight could result in wasting a considerable amount of time and money developing a product design that either can't be built economically (or at all) or won't generate much interest in the market if it can be built. Diff: 3 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking 99) Give an example of how a company might use A/B testing during the concept validation phase. Answer: (Student answers will vary.) A fast food chain might present target customers with two versions of a new hamburger, for instance, and compare their reactions. Diff: 2 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Reflective thinking

100) Caribou Coffee Company Inc. operates coffeehouses primarily in the United States. The company wants to launch a new brand of specialty coffee and it has created a few hypothetical combinations. The company wants to select two of the combinations after obtaining a ranking by customers based on their preference. What concept testing method is suited here? Answer: The company can use conjoint analysis, a method for measuring the values that consumers attach to specific attributes of an offering. Diff: 3 LO: 18.3: Describe how companies create and validate a prototype. AACSB: Analytical thinking 101) With a product concept that has been deemed technologically feasible and desirable from the target customer's point of view, the stage judges whether the concept has commercial viability. A) concept validation B) business-model design C) idea generation D) commercialization E) offering development Answer: B Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 102) In addition to identifying the target market and describing the market offering, the business-model design stage details the offering's . A) distribution plan B) branding C) value proposition D) financial payback E) investment requirements Answer: C Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 103) By losing money on most sales, the pioneering e-commerce site Pets.com ultimately failed because it didn't pass the test of the business-model design stage. A) visibility B) desirability C) demand D) viability E) popularity Answer: D Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Analytical thinking 26

104) Despite a massive promotional campaign, the clear, caffeine-free Crystal Pepsi offering did not succeed in the marketplace because it failed the test of the business-model design stage. A) visibility B) desirability C) demand D) viability E) popularity Answer: B Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Analytical thinking 105) In addition to creating value for the company and for its collaborators, a key part of the business-model design stage is making the sure an offering will create value for . A) distributors B) advertisers C) sales representatives D) suppliers E) customers Answer: E Diff: 1 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 106) Before a new-offering team transitions to the business-model design stage, it should successfully pass the stages. A) idea generation and concept development B) concept development and offering development C) concept development and commercial development D) offering development and commercial development E) commercialization and commercial development Answer: A Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking

107) When a new-offering team has successfully made it past the business-model validation gate, it is ready to begin the stage. A) idea generation B) concept development C) offering development D) commercial development E) product launch Answer: C Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 108) Describing how the company will create, communicate, and deliver value to its target customers, collaborators, and the company stakeholders is embodied in which component of business-model design? A) Target market B) Value proposition C) Market offering D) Marketing plan E) Business plan Answer: C Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 109) Which of these is NOT one of the entities that needs to be identified as part of the target market definition task in the business-model design stage? A) Target customers B) Distribution collaborators C) Customer service collaborators D) Competitors E) Advertising partners Answer: E Diff: 1 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking

110) Building a forecast on the basis of means putting the product into a test market to measure buyer response. A) what customers intended to do B) what customers say they will do C) what customers do D) what customers have done E) what researchers predict customers will do Answer: C Diff: 3 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 111) The business-model design stage represents a significant jump in investment costs compared to the previous stages in the stage-gate framework. Answer: TRUE Diff: 1 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 112) Viability indicates the extent to which the company can create an offering that delivers the functionality desired by customers. Answer: FALSE Diff: 3 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 113) If the business model passes the business-model validation gate, the company can confidently move to the offering implementation stage. Answer: TRUE Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 114) Characterize the change in investment level required when a company moves from concept development to business-model design. Answer: This step requires a significant jump in the investment level, to the point that it will dwarfs the costs incurred in the previous stages. Diff: 1 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 115) What are the three questions that guide the design of the business model for a new offering? Answer: (1) Does the offering create value for target customers? (2) Does the offering create value for the company collaborators? (3) Does the offering create value for the company? Diff: 3 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 29

116) What are the three components on which demand forecasts can be built? Answer: Demand forecasts are built on one of three information bases: what people say, what people do, or what people have done. Diff: 3 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 117) Explain why an offering's desirability, feasibility, and viability are interrelated. Answer: An offering that customers do not find desirable would probably not be viable because it would not create sufficient customer demand to create value for the company. Similarly, an offering that is not technologically feasible would likely prove to be undesirable because it would not be able to meet customer needs. Diff: 2 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 118) If business-model analysis suggests that a new offering is unlikely to create market value for the company and its customers, what does the firm need to do next? Answer: The firm needs to back up and revise or reevaluate the offering concept (and sometimes the underlying idea). Diff: 1 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 119) If the business model successfully passes the business-model validation gate, what is the company's next step? Answer: The next step is to move on to the offering implementation stage. Diff: 1 LO: 18.4: Summarize the key aspects of designing a business model for a new offering. AACSB: Reflective thinking 120) Which of these is NOT one the resources identified as a requirement to launch a new product? A) Business facilities B) Supply channels C) Distribution channels D) Corporate heritage E) Skilled employees Answer: D Diff: 1 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking

121) Which of these products would potentially benefit the most from market testing? A) An all-new model of Chevrolet pickup truck B) A larger version of a Samsung smartphone C) An update to the Duolingo language-learning app D) A new flavor of Cheerios breakfast cereal E) A spinoff of a successful mutual fund that targets a different investment sector Answer: A Diff: 3 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Analytical thinking 122) Why does Gucci test market many of it luxury products in China? A) To benefit from proximity to Chinese manufacturing facilities. B) The Chinese government demands first access to new products. C) Consumer preferences in China indicate where the global market is moving. D) To avoid "signaling" the new product to the rest of the world. E) To test a representative demographic cross-section. Answer: C Diff: 2 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking 123) Developing the market offering involves turning the into a market-ready commodity. A) brand B) business model C) prototype D) product idea E) marketing plan Answer: C Diff: 2 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking 124) Why does General Mills prefer to launch new products in 25 percent of the country? A) This keeps its plants operating at optimal capacity. B) It's an area too large for rivals to disrupt. C) This makes the best use of retailer capacity. D) Retailers won't cooperate with larger launches. E) Retailers won't cooperate with smaller launches. Answer: B Diff: 2 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking

125) Which of these is a reason many consumer-goods companies like to test-market new products in South Korea? A) They can hide the prelaunch test from the rest of the world. B) Its well-developed marketing infrastructure prevents other companies from spying. C) Its consumers are known to be demanding but fair-minded. D) Its consumers reflect the tastes of the majority of the world's cultures. E) The South Korean government offers subsidies to defray the costs of test marketing. Answer: C Diff: 3 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking 126) Implementing the offering involves two key aspects: developing the business model into action and developing the market offering. A) branding strategy B) necessary resources C) employee motivation D) top-management approval E) advertising plan Answer: B Diff: 2 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking

to put the

127) Many companies skip test marketing despite its benefits and rely on faster and more economical testing methods. Answer: TRUE Diff: 1 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking 128) At the time companies develop an offering's concept and design its business model, many still don't have all of the resources necessary in place to create and launch the market offering. Answer: TRUE Diff: 2 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking

129) What steps can a company take to gain the resources needed to successfully launch a new offering? Answer: To gain the resources needed to successfully launch a new offering, a company might adopt one of two different strategies. The company might create its own resources either by internally developing its assets and capabilities or by acquiring the necessary resources from a third party. Alternatively, rather than building its own resources, a company might choose to collaborate with other entities that have the resources required to help develop, manufacture, distribute, and promote the offering, and leverage these resources without assuming ownership of them. Diff: 3 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking 130) Identify all the tasks that need to be accomplished to develop the market offering. Answer: Developing the market offering involves turning the prototype into a market-ready commodity. This involves not only creating the final product and service but also building the brand, setting both retail and wholesale prices, determining the type of sales promotions to be used, and developing a plan to effectively communicate the benefits of the offering and make it available to target customers. Diff: 3 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking 131) What are the two key aspects of implementing the offering? Answer: Implementing the offering turns the concept into a reality. It involves two key aspects: developing the necessary resources to put the business model into action and developing the market offering. Diff: 3 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking 132) What two types of channels does a company need to have in place as it moves toward a product launch? Answer: A company needs supply channels to obtain the materials needed to create the offering and distribution channels through which the offering will be delivered to target customers. Diff: 1 LO: 18.5: Explain how companies implement new offering strategies. AACSB: Reflective thinking

133) informs target customers about the company's offering and makes the offering available to these customers. A) Advertising B) Commercialization C) Integrated marketing communication D) A distribution plan E) A business plan Answer: B Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 134) In addition to ramping up the facilities involved in the offering's production and promoting the offering to all target customers, market expansion involves . A) ensuring that the offering is available to the entire target market B) ensuring that the offering is available to the next chosen subsegment of the target market C) explaining the brand essence to target customers D) announcing the product launch to the news media E) preparing the workforce for the product launch Answer: A Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 135) The term refers to the way knowledge of a product, service, or idea spreads to the marketplace and the speed with which it is purchased or used. A) product learning B) customer education C) leaders and laggards D) diffusion of innovation E) customer adoption Answer: D Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 136) The key aspects of commercialization are followed by market expansion. A) launch planning B) selective market deployment C) test marketing D) market preparation E) offering development Answer: B Diff: 3 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 34

137) Your roommate refuses to get a smartphone, no matter how many cool apps you show him or how many times you explain all the ways its helps you manage your life and your studies. What type of consumer does he represent in the Rogers or Moore models of adoption? A) Innovator B) Early adopter C) Pragmatist D) Laggard/Skeptic E) Late majority Answer: D Diff: 3 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Analytical thinking 138) In the Rogers model of adoption, customers who are technology enthusiasts, venturesome, and who enjoy tinkering with new products and mastering their intricacies are called . A) innovators B) early adopters C) early majority D) investigators E) experimenters Answer: A Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 139) Troma Inc. is a famous manufacturer of cookware that follows a traditional distributor-retailer system to distribute its products. The company abstains from the use of automated supply chain management (SCM) systems mainly due to the fear of unknown. However, rapidly escalating operational costs and inefficiencies have made it necessary for the company to implement an SCM system. The company goes for a big-bang installation of SCM system to become more competitive and cost effective. Identify the adopter group to which Troma belongs. A) Innovator B) Early adopter C) Early majority D) Laggard E) Late majority Answer: D Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Analytical thinking

140) Jason is a technology enthusiast who is happy to conduct alpha and beta testing and report on early weaknesses of consumer electronics products. He is most likely to fall in the adopter category. A) late majority B) early C) early majority D) innovator E) laggard Answer: D Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Application of knowledge 141) Which of the following characteristics is closely associated with late majority adopter groups? A) Superior technological knowledge B) Low price sensitiveness C) Opinion leadership D) Deliberate pragmatism E) High risk aversion Answer: E Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 142) Commercial deployment is the second-to-last stage in developing a new marketing offering. Answer: FALSE Diff: 1 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 143) The subset of target customers to which the offering will initially be made available is referred to as the primary target. Answer: TRUE Diff: 1 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 144) Market expansion involves those customers who were easier and cheaper to reach than the customers targeted with the initial product launch. Answer: FALSE Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking

145) What three activities are typically involved in a market expansion effort? Answer: Market expansion typically involves (1) ramping up the facilities involved in the offering's production, (2) promoting the offering to all target customers, and (3) ensuring that the offering is available to the entire target market. Diff: 3 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 146) What are the two key phases or aspects of commercialization? Answer: The key aspects of commercialization are the initial selective market deployment and the subsequent market expansion. Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 147) Why do companies often choose selective market deployment before expanding to the entire target market? Answer: Large-scale rollouts are characterized by greater uncertainty and higher costs, so companies often choose to launch the offering in a few select markets to give them the chance to fine-tune the offering if needed before expanding to the full market. Selective market deployment also has the potential to bring in revenues to help defray the cost of the subsequent market expansion. Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 148) Characterize a company's primary market when it opts for a selective market deployment. Answer: The primary target typically involves customers who are most likely to buy the company's offering and who will help the company to refine the offering and generate an initial stream of revenue. Diff: 3 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking 149) That one person in the family whom everyone relies on for advice about the latest technology products is probably what type of customer in the Rogers model of adoption? Answer: As an opinion influencer, this customer is most likely an early adopter. Diff: 3 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking

150) A customer survey at a mall revealed that Zoe is considered to be an early adopter. What does this mean? Answer: Early adopters are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage. They are less price sensitive and willing to adopt the product if given personalized solutions and good service support. Diff: 2 LO: 18.6: Discuss the key steps in commercially deploying a new offering. AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 19 Building Customer Loyalty 1) The depicts the phases in the customer acquisition process, from merely being aware of an offering to becoming loyal advocates. A) customer retention funnel B) customer acquisition funnel C) marketing funnel D) lead-generation funnel E) communication funnel Answer: B Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 2) Which of these is NOT a phase in the customer acquisition funnel? A) Awareness B) Appeal C) Ask D) Act E) Anticipate Answer: E Diff: 1 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 3) The phase reflects the fact that although customers might become aware of multiple offerings, they do not actively consider all of them. A) awareness B) appeal C) ask D) act E) anticipate Answer: B Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking

4) The phase is the gateway to customers' interaction with the company's offering. It is in this phase that target customers encounter the company's offering. A) awareness B) appeal C) ask D) act E) anticipate Answer: A Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 5) Which of these is a true statement about the customer acquisition funnel? A) People can't reach the advocate stage without become buyers. B) Customers do not necessarily go through all five stages. C) The steps only occur in a linear fashion. D) The appeal stage is the first stage of the funnel. E) The act stages is the last stage of the funnel. Answer: B Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 6) What are "spinners" in the context of customer acquisition and retention? A) Buyers who change their mind multiple times B) Buyers who argue with salespeople C) Consumers who switch suppliers frequently looking for the best deal D) Consumers who "spin" marketing messages to their own taste E) Opinion leaders in social media Answer: C Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 7) In the customer acquisition funnel model, buyers who recommend a product to others have reached the stage. A) awareness B) appeal C) ask D) act E) advocate Answer: E Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking

8) If you text a friend for advice on choosing from three restaurants you have in mind for dinner tonight, have reached the stage of the customer acquisition funnel. A) awareness B) appeal C) ask D) act E) advocate Answer: C Diff: 1 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 9) Consumers who have "shortlisted" the most favorable-looking offerings currently under consideration have reached the stage of the customer acquisition funnel. A) awareness B) appeal C) ask D) act E) advocate Answer: B Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 10) If you dump your mobile service provider after three billing errors in a row, you ended your loyalty because of a . A) core service failure B) pricing issue C) competition D) convenience E) service encounter failure Answer: A Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 11) What does research suggest about the relative cost of retaining current customers versus acquiring new customers? A) Retaining current customers can cost several times as much as acquiring new ones. B) Acquiring new customers can cost several times as much as retaining current ones. C) Acquiring new customers costs slightly more than retaining current ones. D) Acquiring new customers costs slightly less than retaining current ones. E) Acquiring new customers costs roughly the same as retaining current ones. Answer: B Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 3

12) Which of these could explain a situation where the percentage of recent users of a particular product is significantly lower than the percentage of shoppers who have tried the product? A) Delivery delays prevent recent buyers from actually using the product. B) Something might be wrong with the product that discourages repeat buying. C) Advertising has failed to remind people of the wisdom of buying the product. D) There isn't enough social media buzz about the product. E) Social media buzz is hyping the product heavily. Answer: B Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 13) Satisfied customers constitute the company's . A) customer relationship capital B) customer churn C) target audience D) high-value customers E) customer touch points Answer: A Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 14) Some customers inevitably become inactive or drop out. The challenge for marketers is to 1 them through strategies. A) win-back B) retention C) defection D) sell-out E) recuperation Answer: A Diff: 1 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 15) For a magazine, subscription renewal rate is a good measure of retention. Answer: TRUE Diff: 1 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking

16) A company should try to retain a customer only as long as the cost to discourage defection is lower than the lost profit. Answer: TRUE Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 17) Profit rate tends to decrease over the life of the retained customer due to increased purchases, referrals, price premiums, and increased operating costs to service. Answer: FALSE Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 18) It's often easier to re-attract ex-customers than to find new ones because the company knows their names and histories. Answer: TRUE Diff: 1 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 19) Describe the advocate phase of the customer acquisition funnel, and explain why getting customers to this stage is so beneficial. Answer: The advocate phase reflects customers' reactions following their consumption experience. Ideally, customers' reactions will involve a certain level of loyalty to the company and its offering. These reactions can range from simply repurchasing the offering to ultimately advocating the offering to others. Active advocates recommend products, services, and brands they love without even being asked. They share positive experiences with others and often become evangelists. Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 20) Is the act phase of the customer acquisition funnel limited to the purchase event itself? Explain your answer. Answer: No, customer actions are not limited to purchase but rather reflect the total ownership and usage experience, which also includes actual consumption of the product or service as well as the post-consumption experience. Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking

21) Give examples of when customers don't pass through all five stages of the customer acquisition funnel. Answer: (Student answers may vary.) For example, a customer might make an impulsive purchase without forming a consideration set and gathering additional information about the alternative options. Likewise, loyal advocates might not be actual purchasers of the company's offering. Apple products, such as the iPhone, iPad, and Apple Watch, for example, are sometimes advocated by non-owners. Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 22) Identify some of the key factors that influence customer loyalty. Answer: Among the key factors are pricing issues (high price, price increases, unfair pricing, deceptive pricing); convenience issues (location/hours, wait time for appointment and service); core service failure (service mistakes, billing errors, service catastrophes); service encounter failures (uncaring, impolite, unresponsive, unknowledgeable); response to service failure (negative response, no response, reluctant response); competition (found better service); ethical problems (cheat, hard sell, unsafe, conflict of interest); involuntary switching (customer moved, provider closed). Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Reflective thinking 23) Why is it not surprising that customers acquired through deep discounts typically don't stay with a company for as long as customers acquired without any discount? Answer: Customers who respond to deep discounts are more likely to be price-sensitive switchers who are constantly looking for the best deals. If they responded to Company A's discount offer, chances are they'll be tempted to jump to Company B if it presents an attractive deal in the future. Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Analytical thinking 24) Why is it important for companies to know the conversion rate at each stage of the customer acquisition funnel? Answer: Conversation rates tell the marketer where the bottlenecks or barriers are in the funnel, giving them an important clue about where they need to improve the offering in order to draw more customers through to a purchase. Diff: 2 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Analytical thinking

25) Today, companies are increasingly concerned about customer defection. There are three main steps a company can take to reduce the defection rate. Describe those three steps. Answer: The three steps that a company can take to reduce defection are: 1. The company must define and measure its retention rate. 2. The company must distinguish the causes of customer attrition and identify those that can be managed better. 3. The company must compare the lost profit equal to the customer lifetime value from a lost customer to the costs to reduce the defection rate. Diff: 3 LO: 19.1 Explain how a company should balance its acquisition and retention efforts. AACSB: Analytical thinking 26) Which of these is NOT one of the major sources that customers use to form expectations of the level of satisfaction they will receive by doing business with a company? A) Past buying experience B) Advice of friends and associates C) Government guidelines D) Public information and discourse E) Information and promises from marketers and competitors Answer: C Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 27) programs are a type of promotional incentive designed by companies to encourage customers to continue to patronize their business and, in some case, to increase the frequency and quantity of the products and services they purchase from a company. A) Coupon B) Loyalty C) Communication D) Discount E) Advertising Answer: B Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking

28) A(n) is specialized group of consumers and employees whose identification and activities center revolve around the brand. A) brand community B) customer club C) insiders' club D) frequency flyer club E) company alumni Answer: A Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 29) Which of these would NOT be considered a brand community? A) SAP Community Network B) My Starbucks Idea C) CVS customers in the northeast D) Sephora Beauty Talk E) Microsoft Xbox Ambassadors Answer: C Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 30) Which of these is NOT a recommendation for making online brand communities more effective? A) Enhance the timeliness of information exchanged. B) Have a company insider moderate all comments before they are posted to ensure civil discourse. C) Enhance the relevance of information posted. D) Extend the conversation, including making it easier for users to express themselves. E) Increase the frequency of information exchanged. Answer: B Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 31) According to the chapter, which of these techniques does Deere & Company use to maintain its superb record of customer loyalty? A) Using a PR agency to boost its image among homeowners and commercial users B) Using database marketing to personalize offers C) Using retired employees to interview defectors and customers D) Monitoring social media to see who might complaining about its products E) Inviting customers to join John's Club to get special insider information Answer: C Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 8

32) Which of these is NOT noted in the chapter as a benefit of high customer satisfaction? A) Lower advertising costs B) Stronger ROI C) Increased sales D) Long-term firm value E) Other financial metrics Answer: A Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 33) What does the University of Michigan's ACSI survey measure? A) Corporate profitability B) Customer satisfaction C) Customer churn rate D) Distributor satisfaction E) Supplier satisfaction Answer: B Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 34) The percentage of a customer's spending that a company's brand enjoys is known as its . A) unit market share B) share of voice C) share of wallet D) revenue market share E) market position Answer: C Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 35) Which of these is NOT one of the typical behaviors of a highly satisfied customer? A) Staying with a company longer B) Buying new and upgraded products from the company C) Being less sensitive to price D) Offering product and service ideas to the company E) Requiring more in terms of discounts or special sales attention Answer: E Diff: 3 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking

36) Which of these was NOT a step Home Depot took to turn around its slumping customer satisfaction? A) Requiring all employees to do nothing but serve customers during peak hours B) Changing performance reviews to emphasize customer service C) Emphasized cleaner retail spaces D) Emphasized fully stocked store shelves E) Replacing thousands of full-time workers with part-time employees Answer: E Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 37) Which of these is a true statement about customer satisfaction for customer-centric companies? A) Customer satisfaction is both a goal and a marketing tool. B) Customer satisfaction happens naturally, with little management oversight. C) Customer satisfaction has only a minor impact on long-term customer loyalty. D) Marketing employees don't have much of a role in customer satisfaction. E) Companies can safely ease off customer satisfaction efforts once they have achieved long-term customer loyalty. Answer: A Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 38) How was Kia able to successfully enter the highly competitive U.S. automobile market? A) With an advertising blitz touting the unusual style of the cars B) With low-cost, high-quality cars reliable enough to carry 10-year, 100,000-mile warranties C) With high-quality cars brimming with luxury features D) By emphasizing its national heritage E) By launching the Kia Owners Club to recruit new drivers Answer: B Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking

39) has been defined as "a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior." A) Customer commitment B) Fanaticism C) Loyalty D) Brand community E) Brand trust Answer: C Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 40) Which of these is NOT one of the identified ways that marketing employees contribute to product and service quality? A) They correctly identify customer needs and requirements. B) They design products that fill clearly researched customer needs. C) They make sure customer orders are filled correctly and on time D) They check that customers have received proper instructions, training, and technical assistance in the use of the product. E) They stay in touch with customers after the sale to ensure that they are, and remain, satisfied. Answer: B Diff: 3 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 41) can be defined as a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. A) Value proposition B) Loyalty C) Satisfaction D) Respect E) Customer value Answer: B Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking

42) Total customer satisfaction is measured based on the relationship of . A) expected value and total customer benefit B) perceived performance and expectation C) advertised outcomes and real outcomes D) past experience and present experience E) customer attitude and salesperson's attitude Answer: B Diff: 3 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 43) can track customer satisfaction directly, measure repurchase intention and also gauge a consumer's willingness to recommend the company and brand to others. A) Periodic surveys B) Mystery shoppers C) Customer loss rates D) Customer focus statements E) Sales summary reports Answer: A Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 44) Field Grocery wants to learn the strengths and weaknesses in customer service at all the Field Grocery stores. Which of the following methods can it use for this? A) Group buyers B) Buyer brokers C) Mystery shoppers D) Personal shoppers E) Buying agents Answer: C Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Application of knowledge 45) is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. A) Performance B) Value C) Quality D) Customer retention E) Customer loyalty Answer: C Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 12

46) Cable TV operators and cellular carriers are among the companies that suffer from high levels of . A) customer retention B) customer defections C) detraction D) share-of-wallet E) customer reevaluation Answer: B Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 47) Which of the following is NOT a way to make online brand communities more effective? A) Set appointed times for topic discussion B) Keep the focus on the topic C) Make it easy for users to express themselves D) Launch contests E) Set limits on length of responses Answer: E Diff: 3 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 48) Which of the following can a company do to reduce defection? A) Attract new customers to try out the company's products. B) Increase customer lifetime value by increasing the non-monetary costs of products. C) Enhance the growth potential of existing customers through cross-selling and up-selling. D) Distinguish the causes of customer attrition and identify those that can be managed better. E) Make low-profit customers more profitable or terminate the relationship. Answer: D Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 49) Companies provide rewards to customers who buy often and in substantial amounts. These reward schemes are referred to as programs. A) benefit B) loyalty C) satisfaction D) profitability E) quality Answer: B Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking

50) Which of the following gains the most benefit from introducing a frequency program? A) The first company to introduce a frequency program in an industry B) The fast follower, the second to introduce a program in an industry C) The industry sales leader D) The niche player in the industry E) The low-cost leader in the industry Answer: A Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 51) Club membership programs that are open to everyone who purchases a product or service . A) are more powerful long-term loyalty builders than limited-membership clubs B) will not help a company attract customers from competitors C) prevent those with only a fleeting interest in a company's products from joining D) are useful for building a database of customers but are not very good as long-term loyalty builders E) are useless unless there are fees and membership conditions Answer: D Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 52) Southwest Airlines offers a Rapid Rewards program that allows customers to count flights they have taken toward free future flights. This is an example of a(n) . A) cross-selling program B) value delivery system C) loyalty program D) activity-based costing program E) up-selling program Answer: C Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 53) Improving customer satisfaction is the only way by which a firm can increase its profitability. Answer: FALSE Diff: 3 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking

54) Consumers' expectations result exclusively from past buying experiences. Answer: FALSE Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 55) Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Answer: TRUE Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 56) Clubs that are open to everyone who purchases a product or service are good for building a customer database. Answer: TRUE Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 57) Describe the continuum of loyalty that customers can exhibit. Answer: Customer loyalty can be thought of as a continuum, with different levels of loyalty varying in strength. Loyalty can range from satisfaction with the company's offering to advocacy and evangelism from customers who think of the offering as a part of their own identify and feel responsible for its success. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 58) Explain why customer satisfaction is the key to building customer loyalty. Answer: Without fulfilling customer needs, a company would find it challenging to create a loyal customer base. Even customers who are reluctant to find new suppliers will be tempted to eventually give up and move if their needs aren't being met. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 59) Describe the asymmetric effect of product performance and expectations on satisfaction. Answer: Research has shown an asymmetric effect of product performance and expectations on satisfaction: The negative effect on customer satisfaction produced by failure to meet expectations is disproportionately stronger than the positive effect of exceeding expectations. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking

60) Why is high customer satisfaction not always a company's ultimate goal? Answer: Although the customer-centered firm seeks to create high customer satisfaction, that is often not its ultimate goal. For example, increasing customer satisfaction by lowering price or increasing services may result in unsustainably low profits. In addition, the company may find it is better served in the long run by balancing customer satisfaction with other stakeholder needs, such as investing more in employee rewards. Diff: 3 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 61) What are the four basic factors that customers use to form expectations of satisfaction? Answer: Expectations result from past buying experience, the advice of friends and associates, public information and discourse, and information and promises from marketers and competitors. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 62) Distinguish performance and consistency in the context of product or service quality. Answer: Performance reflects the overall functionality of a company's products and services. Consistency, on the other hand, reflects the degree to which a company's performance remains at the same level over time. Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 63) How do marketing staff contribute to a company's efforts to deliver a high level of quality? Answer: Marketers contribute to quality in multiple ways. They correctly identify customer needs and requirements. They communicate customer expectations properly to product designers. They make sure customer orders are filled correctly and on time. They check that customers have received proper instructions, training, and technical assistance in the use of the product. They stay in touch with customers after the sale to ensure that they are, and remain, satisfied. They gather customer ideas for product and service improvements and convey them to the appropriate departments. Diff: 3 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 64) Identify the benefits that a highly satisfied customer brings to a company. Answer: A highly satisfied customer generally stays loyal longer, buys more as the company introduces new and upgraded products, talks favorably to others about the company and its products, pays less attention to competing brands, is less sensitive to price, offers product or service ideas to the company, and costs less to serve than new customers because transactions can become routine. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 16

65) Discuss the complex challenge of defining just what good performance means in a marketing context. Answer: Various customers may define good performance differently. Good delivery could mean early delivery, on-time delivery, or order completeness, and two customers can report being "highly satisfied" for different reasons. One may be easily satisfied most of the time, and the other might be hard to please but was pleased on one particular occasion. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 66) Why is focusing too much attention and too many resources on customer acquisition harmful to a company's long-term prospects? Answer: Focusing too much effort and investment on acquiring customers can leave a company vulnerable to defections from its current customers if they start to feel that their needs aren't being met. Prioritizing customer retention by building customer loyalty is a far more effective approach to long-term profitability than trying to acquire customers who are likely to leave the company as soon as they catch sight of a better deal. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 67) What are the measurement techniques for monitoring satisfaction? Answer: Many companies are systematically measuring how well they treat customers, identifying the factors shaping satisfaction, and changing operations and marketing as a result. • Periodic surveys: These can track customer satisfaction directly and ask additional questions to measure repurchase intention and the respondent's likelihood or willingness to recommend the company and brand to others. • Customer loss rate: Companies need to monitor their competitors' performance too. They can monitor their customer loss rate and contact those who have stopped buying or who have switched to another supplier to find out why. • Mystery shoppers: Companies can hire mystery shoppers to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products. Managers themselves can enter company and competitor sales situations where they are unknown and experience firsthand the treatment they receive, or they can phone their own company with questions and complaints to see how employees handle the calls. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking

68) Shoe retail chain Berry's has noticed an increase in complaints about customer service at its stores and is beginning to lose customers to competitors. The company needs to identify the problems and rectify them. Give two methods Berry's can use to discover the problem. Answer: Periodic surveys can track customer satisfaction directly and ask additional questions about the quality of customer service. Berry's can hire mystery shoppers to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 69) To increase customer loyalty, bicycle retailer 2Wheels wants to start a club for its dedicated customers, but wants to make sure that only members who want to participate in activities join the club. What can it do to ensure this? Answer: (Student answers will vary.) 2Wheels can institute membership fees and membership conditions to ensure that only members with a lasting interest join the club. Diff: 2 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Analytical thinking 70) Bicycle store 2Wheels wants to maximize sales from each customer. The marketing team suggests that 2Wheels uses cross-selling techniques. How can the company implement this technique? Answer: 2Wheels can use cross-selling techniques by stocking products related to bicycles, such as cycling gear, bottles, lamps, and other accessories. Diff: 1 LO: 19.2 Discuss how a company can manage customer satisfaction and loyalty. AACSB: Reflective thinking 71) Which of these was NOT identified in the chapter as a popular strategy for enhancing customer relationship management? A) Customization B) Customer empowerment C) Shunting troublesome customers to competitors D) Managing customer word of mouth E) Dealing with customer complaints Answer: C Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking

72) is the practice of marketing to consumers only after they have indicated their willingness to receive communications from a company. A) Permission marketing B) Social marketing C) Social commerce D) Interactive marketing E) Acceptance marketing Answer: A Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 73) Today's consumers can choose whether and how they want to engage with company marketing, a phenomenon known as . A) permission marketing B) social marketing C) customer empowerment D) social commerce E) two-way marketing Answer: C Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 74) Which of these is a way that negative reviews of their products can help a company? A) Consumers may learn a product is not right for them before ordering it, which lowers the cost of returns. B) Negative reviews show that the product is real. C) Negative reviews help "humanize" a company; after all, everybody makes mistakes from time to time. D) Negative reviews give product evangelists the opportunity to challenge naysayers. E) Consumers know to ignore complainers, so negative reviews actually make them feel more positive toward a company. Answer: A Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking

75) Why is it a good idea for companies to use social media and other platforms during quiet times to actively shape their public images? A) Paid media are cheaper during these quiet times. B) Doing so builds goodwill that can help firms in the event of a public relations crisis. C) Social media users pay more attention to brands during quiet times. D) These quiet times give social media teams the chance to practice their skills. E) With few companies communicating during quiet times, it's easy to increase a firm's share of voice. Answer: B Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 76) Which of these is NOT one of the recommended ways to recover customer goodwill? A) Make it easy for customers to reach the company at any time. B) Contact the complaining customer as quickly as possible. C) Be sure to resolve every situation to the customer's satisfaction, regardless of the cost. D) Identify the true source of customer dissatisfaction before seeking a solution. E) Accept responsibility for the customer's disappointment. Answer: C Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 77) Which of these is a safe assumption to make about dissatisfied customers? A) Few will have legitimate reasons for complaining. B) Many will have been "put up to it" by competitors. C) The vast majority will take the time to complain. D) Many won't complain and will simply take their business elsewhere. E) Once they complain, the firm has lost the opportunity to keep them as customers. Answer: D Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 78) If a customer has a complaint but the company solves it quickly, what are the odds that the customer might do business with the firm again? A) Less than 10 percent B) 10 to 20 percent C) 25 percent D) 50 percent E) 95 percent Answer: E Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 20

79) How did Angie's List avoid attracting anonymous or biased reviews? A) By requiring all reviews to be notarized. B) By allowing only paid and registered subscribers to access the website. C) By requiring reviews to disclose their full purchase histories. D) By rewarding top reviewers with cash prizes. E) By requiring members to write five reviews before they were allowed to post. Answer: B Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 80) Of customers who register a complaint, . A) all will do business with the company again because they are unwilling to dedicate the effort required to find another vendor B) none will do business with the company again C) customers whose complaints are satisfactorily resolved are more likely to provide publicity than those who are dissatisfied D) the speed of resolution has no impact on the likelihood of repeat business E) 50 to 70 percent might do business with the company again if their complaint is resolved Answer: E Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 81) Which of the following is one of the best methods of recovering customer goodwill? A) Sending service people to conduct door-to-door surveys B) Contacting the complaining customer as quickly as possible C) Identifying prospective customers from the customer database D) Customizing products according to individual customer need E) Defining and measuring the customer retention rate Answer: B Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 82) The aim of customer relationship management is to maximize customer A) integrity B) loyalty C) innovation D) liability E) equity Answer: B Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking

83) is the process of carefully managing detailed information about individual customers and all customer touch points to maximize loyalty. A) Customer relationship management B) Customer lifetime value C) Customer profitability analysis D) Customer satisfaction analysis E) Customer-value delivery Answer: A Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 84) Customer relationship management enables companies to provide excellent real-time customer service through the effective use of . A) reports from mystery shoppers B) survey data from customers who have defected C) market research D) individual account information E) demographic trend data Answer: D Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 85) marketing is based on the premise that marketers can no longer use "interruption marketing" via mass media campaigns. A) Relationship B) Permission C) Database D) Internet E) Horizontal Answer: B Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 86) marketing is the practice of sending messages only when consumers express a willingness to become more involved with the brand. A) Relationship B) Permission C) Cause D) Defensive E) Horizontal Answer: B Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 22

87) A is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships. A) customer database B) customer mailing list C) customer-performance scorecard D) customer profitability analysis E) customer-value hierarchy Answer: A Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking 88) describes the company's optimization of the value of its customer base. A) Customer relationship management B) Behavioral targeting C) Customer value management D) Terminal marketing E) Personalized marketing Answer: C Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 89) focuses on the analysis of individual data on prospects and customers to develop marketing strategies to acquire and retain customers and drive customer behavior. A) Permission marketing B) Customer value management C) Behavioral targeting D) Customer relationship management E) Terminal marketing Answer: B Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking

90) BMW is the customer experience when it offers 500 side-mirror combinations, 1,300 front bumper combinations, and 9,000 center-console combinations and provides new buyers a video link to watch their car being "born" while waiting for delivery. A) identifying B) synthesizing C) integrating D) acknowledging E) personalizing Answer: E Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Application of knowledge 91) To exploit the power of social media, marketers need to create tangible value for consumers, which can come from all of the following EXCEPT . A) discounts B) coupons C) information D) solicitations E) special offers Answer: D Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 92) helps companies manage and monitor online reviews using a process called device fingerprinting. A) Gawker B) Bazaarvoice C) Metacritic D) Angie's List E) Technorati Answer: B Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking

93) A Forrester study of 10,000 consumers of Amazon's electronics and home and garden products discovered that found negative reviews helpful. A) few B) less than 10 percent C) around 25 percent D) 50 percent E) 90 percent Answer: D Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 94) involves making the company's offering as personally relevant as possible to as many customers as possible—a challenge, given that no two customers are identical. A) Customization B) Permission C) Identification D) Database E) Integrated Answer: A Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 95) The phenomenon of customer empowerment means that companies must strengthen their relationship with customers and engage with them in new ways. Answer: TRUE Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 96) The aim of customer relationship management is to keep the costs of meeting and tracking consumers as low as possible. Answer: FALSE Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 97) The best thing a company can do in the face of company mistakes is to discourage the customer from complaining. Answer: FALSE Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking

98) Permission marketing presumes that consumers know what they want. Answer: TRUE Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 99) What model or concept of marketing does permission marketing replace? Answer: Permission marketing replaces "interruption marketing," in which consumers have no control over receiving marketing messages. Diff: 1 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 100) How is customization, even when implemented with the latest technology, really athrowback to marketing practices from a century ago? Answer: It is considered a throwback to marketing practices from the pre-mass marketing era when merchants literally knew their customers by name and designed unique products for each of them. Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking 101) How does BMW's extreme customization program help it as well as the firm's customers? Answer: The customization program is based on a detailed manufacturing and procurement system takes the slack out of the production process, reduces inventory carrying costs, and avoids rebates on slow-moving sellers. Loyal customers also tend to load up with options– generating more profitability for BMW and its dealers. Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking 102) What role do employees have in the effort to offer customized offerings as part of customer relationship management? Answer: Companies are recognizing the role of the personal component in customer relationship management and its influence once customers make actual contact with the company. Employees can create strong bonds with customers by individualizing and personalizing relationships. Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking

103) What role does the customer database play in customer relationship management? Answer: The foundation of a customer relationship management program is the customer database, an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships. In this context, customer relationship management can be viewed as a process of building, maintaining, and using customer-related data to contact customers, transact with them, and build long-term customer relationships. Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 104) Would a company's social media efforts (as in, posts made by company staff, not paid ads on social media sites) fall under interruption marketing or permission marketing? Why? Answer: Social media content like this can be viewed as a form of permission marketing because consumers don't receive these communications unless they have chosen to follow or friend a company, which is essentially a way of granting permission. Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking 105) How can companies deliver tangible value in return for customers' time, attention, endorsement, and data? Answer: (Student answers may vary.) Possibilities for delivering tangible value include discounts, coupons, and information to facilitate purchase. Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 106) Can a company realistically aim for zero customer complaints? Why or why not? Answer: A company can rarely achieve a zero level of complaints, because there are always likely to be customers whose expectations surpass the benefits of a company's offerings–even if it's simply customers who think a product they like costs more than it should. Instead, a more realistic and helpful goal is to balance customer satisfaction with the company's strategic and monetary goals, so that the company can create value for both its customers and its stakeholders. Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking

107) Identify ways in which companies facing customer complaints can recover customer goodwill. Answer: Given the potential downside of having an unhappy customer, it is critical that marketers deal with negative experiences properly. Beyond that, the following procedures can help to recover customer goodwill: • Set up a 24/7 toll-free hotline to receive and act on customer complaints. • Contact the complaining customer as quickly as possible. • Identify the true source of customer dissatisfaction before seeking a solution. • Accept responsibility for the customer's disappointment • Resolve the complaint swiftly and to the customer's satisfaction. Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking 108) Explain permission marketing. Answer: Permission marketing is the practice of marketing to consumers only after gaining their expressed permission and is based on the premise that marketers can no longer use "interruption marketing" via mass media campaigns. Marketers can develop stronger consumer relationships by respecting consumers' wishes and sending messages only when they express a willingness to become more involved with the brand. However, permission marketing, like other personalization approaches, presumes consumers know what they want. Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Reflective thinking 109) Berry's is a chain of shoe stores. The marketing team suggested that the company use permission marketing instead of interruption marketing. How can this benefit the company? Answer: Using permission marketing, the practice of marketing to consumers only after gaining their expressed permission, Berry's can develop stronger consumer relationships by respecting consumers' wishes and sending messages only when they express a willingness to become more involved with the brand. Diff: 2 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking 110) Are complaints a good indicator of customer satisfaction? Why or why not? Answer: No. Studies show that while customers are dissatisfied with their purchases about 25 percent of the time, only about 5 percent complain. The other 95 percent either feel complaining is not worth the effort or don't know how or to whom to complain. They just stop buying. Diff: 3 LO: 19.3 Describe how companies manage customer relationships. AACSB: Analytical thinking

111) Another term for customer lifetime value is . A) brand equity B) customer value C) customer equity D) unit market share E) revenue market share Answer: C Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 112) Which of these is NOT a component of customer lifetime value? A) Revenue B) Customer acquisition costs C) Customer retention costs D) Research and development costs E) Customer support costs Answer: D Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 113) Which of these firms would most likely take a customer equity perspective over a brand equity perspective? A) A fashion designer B) A health and fitness club C) An automobile manufacturer D) A cereal manufacturer E) A soft drinks manufacturer Answer: B Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 114) Which of these is a key to effectively employing activity-based costing? A) Defining and judging "activities" properly B) Knowing each customer's brand preferences C) Having a detailed breakdown of advertising media costs D) Not putting a price on customer satisfaction E) Merging sales and support activities, since they both contribute to satisfaction Answer: A Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking

115) Which of these firms would most likely take a brand equity perspective over a customer equity perspective? A) A health club B) A management consulting firm C) An advertising agency D) A fast food chain E) A home builder Answer: D Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 116) A profitable customer yields a . A) cost stream that exceeds by an acceptable amount his revenue stream B) revenue stream that exceeds the company's cost stream C) cost stream that exceeds the company's revenue stream D) revenue stream that exceeds by an acceptable amount his cost stream E) revenue stream that equals the company's cost stream Answer: B Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 117) A is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing that customer. A) prospector B) profitable customer C) market challenger D) niche marketer E) pioneer customer Answer: B Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 118) Customer profitability analysis is best conducted with the tools of an accounting technique called . A) input-output analysis B) factor analysis C) revenue-based costing D) activity-based costing E) future date costing Answer: D Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 30

119) Which of the following is true for activity-based costing? A) It considers the real costs associated with each product. B) With activity-based costing, the company can estimate all costs coming from the customer, less revenue. C) The tools of activity-based costing can be used to conduct customer profitability analysis. D) It identifies the costs of products and services based on the revenue they generate. E) ABC allocates indirect costs in proportion to direct costs. Answer: C Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 120) describes the net present value of the stream of future profits expected over the customer's lifetime purchases. A) Activity-based costing B) Customer lifetime value C) Customer value analysis D) Customer-perceived value E) Customer profitability analysis Answer: B Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 121) LifeTime Insurance screens its customers and tries to get unprofitable customers to buy services from competitors. This is an example of . A) trying to increase the retention rate for low-profit customers B) terminating the relationship with low-profit customers C) enhancing the growth potential of each customer through up-selling D) increasing the longevity of the customer relationship E) reducing the rate of customer defection Answer: B Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking

122) Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps banks to . A) reduce the rate of customer defection B) make low-profit customers more profitable C) enhance the growth potential for each customer through cross-selling D) increase the longevity of the customer relationship E) focus disproportionate effort on high-value customers Answer: B Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 123) Sapphire Toys actually sells more than toys. It also sells branded clothing, music CDs, and books for children. This expansion of dealership sales offerings is an attempt to increase the value of the customer base by . A) reducing the rate of customer defection B) increasing the longevity of the customer relationship C) enhancing the growth potential of each customer through cross-selling D) making low-profit customers more profitable E) terminating low-profit customers Answer: C Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 124) Which of the following is an example of enhancing the growth potential of each customer through cross-selling? A) In addition to bicycles, 2Wheels stocks biking gear such as helmets, bottles, jackets, and other accessories. B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them. C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city. D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model. E) 2Wheels encourages customers to send in their suggestions for product improvement. Answer: A Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking

125) Which of the following is a policy a store can adopt to make low-profit customers more profitable? A) 2Wheels sends birthday greetings to its best customers and gives them discounts on merchandise. B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them. C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city. D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model. E) 2Wheels encourages customers to send in their suggestions for product improvement. Answer: C Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 126) A customer is any occasion on which a customer encounters the brand and product—from actual experience to personal or mass communications to casual observation. A) touch point B) point of order C) point of difference D) pivot point E) point of parity Answer: A Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 127) A customer touch point for Abacus Airlines would be an item such as A) ease of access to the airport B) a mechanic's ability to service the airplanes C) the reservations desk D) the value of air travel versus surface transportation E) competency of a travel agent Answer: C Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking

128) Rachel and Josh are on vacation in Hawaii. When they arrived at the hotel, they were offered chilled juice. Their check-in formalities were handled by the staff. When they entered their room, they saw that chocolates had been placed on the pillows and a flower arrangement on the table. These are examples of customer . A) lifetime value B) perceived value C) value analysis D) profitability analysis E) touch points Answer: E Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 129) In the context of customer lifetime value, the 80-20 rule reflects the idea that . A) 20 percent of the company's profits are generated by the top 80 percent of customers B) the top 20 percent of customers are highly satisfied and 80 percent of customers will recommend the company to a friend C) 20 percent of customers are unprofitable, and 80 percent make up a company's profits D) the top 20 percent of customers often generate 80 percent of the company's profits E) any new product will be accepted by 20 percent of the customers immediately, but 80 percent of the customers will be up for grabs throughout the product's life cycle Answer: D Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 130) The Net Promoter Score is calculated by subtracting from A) promoters; detractors B) detractors; promoters C) detractors; passively satisfied customers D) passively satisfied customers; detractors E) passively satisfied customers; promoters Answer: B Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking

131) A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing the customer. Answer: TRUE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking

132) A customer touch point is when the customer makes a purchase. Answer: FALSE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 133) A customer's profitability is judged on the basis of the lifetime stream of revenue and cost, not the profit from a particular transaction. Answer: TRUE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 134) Unprofitable customers who defect to a competitor should be encouraged to do so. Answer: TRUE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 135) Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing. Answer: TRUE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 136) Activity-based costing tries to identify the real costs associated with serving each customer. Answer: TRUE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 137) Activity-based costing does not consider indirect, variable, and overhead costs. Answer: FALSE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 138) Customer lifetime value describes the net present value of the stream of future profits expected over the customer's lifetime purchases. Answer: TRUE Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking

139) Why does customer lifetime value emphasize lifetime value over individual transaction value? Answer: A customer who represents a profitable lifetime tenure with the company might have individual transactions that are less profitable or even unprofitable but contribute to a long and eventually profitable relationship. In addition, focusing on the profitability of individual transactions could lead a company to adopt a short-term focus that hampers its ability to attract loyal and ultimately profitable customers. Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking 140) Explain why customer equity and brand equity emphasize difference things. Answer: The customer lifetime value (customer equity) perspective and the brand equity perspective certainly share many common themes. Both emphasize the importance of customer loyalty and the notion that we create value by having as many customers as possible pay as high a price as possible. In practice, however, the two perspectives prioritize different things. The customer equity perspective focuses on bottom-line financial value, but it doesn't fully account for some of the important advantages of creating a strong brand. The brand equity perspective, on the other hand, tends to emphasize strategic issues in managing brands and creating and leveraging brand awareness and image with customers. It provides a great deal of practical guidance for specific marketing activities but doesn't always yield insight into how brand activities produce profitable customers. Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 141) What is the main limitation of the customer equity perspective relative to the brand equity perspective? Answer: The main limitation of the customer equity perspective is that it doesn't fully account for some of the important advantages of creating a strong brand, such as the ability to attract higher-quality employees, elicit stronger support from channel and supply chain partners, and create growth opportunities through line and category extensions and licensing. All of these things can contribute to revenue and profitability even though they aren't directly traceable to individual customer revenue streams. Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking

142) List five effective strategies for improving lifetime customer value. Answer: The chapter lists these five strategies: • Improve customer service • Engage customers • Enhance the growth potential of each customer through cross-selling and other opportunities • Manage unprofitable customers by finding ways to make them more profitable or, if necessary, discourage them from continuing as customers • Reward the most profitable customers Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 143) What are the three building blocks of trust? Answer: The three building blocks are competence trust (belief that the company has the skills to do what it promises to do), honesty trust (belief that the company tells the truth and keeps its promises), and benevolence trust (belief that the company demonstrates genuine concern for its stakeholders). Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 144) When measuring customer lifetime value, why is it important to consider not only the monetary value each customer is likely to directly generate for the company but also the strategic value each customer brings to the company? Answer: Some customers create indirect financial value by endorsing the company and its offering to others. Indeed, a customer's value to a company depends in part on the ability and likelihood that he or she will make referrals and engage in positive word of mouth. Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 145) Why is trust more salient early in the development of a customer relationship? Answer: Trust is more salient early in the development of a relationship because customers are still evaluating the company's performance. It becomes less salient once a relationship has been established and is operating successfully. Once trust is established, companies and brands can benefit from the trust that employees and customers have. As long as a company or brand does not behave in a way that makes established customers question their trust, trust considerations move into the background of their consideration. Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking

146) Charging different customers different prices for the same product or service could tarnish a company's reputation on which of the three dimensions of trust? Answer: The practice of charging different prices could lead some customers to question their belief in the company's benevolence trust if they believe this sort of pricing to be unfair. Diff: 1 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 147) Bicycle store 2Wheels notices that it has a high proportion of low-profit customers, but doesn't want to terminate the customer relationship. What can 2Wheels do to make these customers more profitable? Answer: 2Wheels can encourage unprofitable customers to buy more or in larger quantities, forgo certain features or services, or pay higher amounts or fees. It can also use cross-selling or up-selling techniques. Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 148) What technique is used for customer profitability analysis? Answer: Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing. This technique tries to identify the real costs associated with serving each customer—the costs of products and services based on the resources they consume. The company estimates all revenue coming from the customer, less all costs. With activity-based costing, the costs should include the cost not only of making and distributing the products and services, but also of taking phone calls from the customer, traveling to visit the customer, paying for entertainment and gifts—all the company's resources that go into serving that customer. Activity-based costing also allocates indirect costs like clerical costs, office expenses, supplies, and so on, to the activities that use them, rather than in some proportion to direct costs. Both variable and overhead costs are tagged back to each customer. Diff: 3 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Reflective thinking 149) Berry's is a chain of shoe stores. The company recently reviewed its customer relations strategy and suggested that the brand communication be consistent across all customer touch points. What are some of the various touch points for Berry's? Answer: (Student answers will vary.) Berry's touch points can include the stores' sales staff, point-of-purchase advertising, the company website, the packaging of the products, the company's advertising, and promotional messages. Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking

150) Give an example of how a hotel can generate customer loyalty at a customer touch point. Answer: (Student answers will vary.) An example of a customer touch point would be when a hotel offers its guests something to drink upon arrival before they check in, or when the staff places chocolates on pillows and face towels twisted into the shape of animals on beds. Diff: 2 LO: 19.4 Discuss how a company should manage customer lifetime value. AACSB: Analytical thinking

Marketing Management, 16e (Kotler) Chapter 20 Tapping into Global Markets 1) In addition to struggling in its attempt to enter the U.S. market, what trouble did UK retailer Tesco experience in its domestic market? A) Employee resentment at the new expansion B) Lack of management attention to its stores in the UK C) Confusion among UK consumers about the international expansion D) Confusing messaging in the UK market E) Excess inventory in UK stores Answer: B Diff: 2 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 2) Which of these was NOT identified as a problem with Tesco's failed expansion into the U.S. market? A) U.S. consumers weren't interested in fresh and healthy foods. B) Stores weren't properly staffed. C) Fresh food was not properly maintained. D) New private-label products were not introduced. E) U.S. customers were not accustomed to British-style ready meals. Answer: A Diff: 2 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Analytical thinking 3) Once a firm expanding internationally has decided which markets to enter, what is the next step in the decision-making process? A) Deciding on the marketing organization B) Deciding on the marketing program C) Deciding how to enter those markets D) Deciding how to adapt the product to the new market E) Deciding how to reorganize domestic operations Answer: C Diff: 1 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking

4) Which of these is identified in the chapter as a general risk associated with entering any new market, foreign or domestic? A) Motivating employees B) Compensating managers for the increased revenue C) Undoing years of progress in current markets D) Building effective supply and distribution networks E) Worrying about upsetting domestic customers Answer: D Diff: 2 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 5) Which of these is a potential benefit of expanding globally? A) Counteracting boredom among domestic staff by adding the excitement of international business B) Getting rid of excess inventory in the domestic supply chain C) Pressuring domestic employees to improve performance D) Pressuring domestic suppliers to improve performance E) Transferring ideas and products from international operations back to the domestic market Answer: E Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 6) Which of these benefits did Cinnabon realize from its marketing efforts in Central and South America? A) Bringing products developed there back to Hispanic consumers in the U.S. B) Employee pride at serving international markets C) Being named a cultural ambassador by the U.S. Trade Commission D) Reducing company workload through economies of scale E) Simplifying recruiting of U.S. employees Answer: A Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 7) When companies are hesitant to expand internationally, even when potentially profitable opportunities await, what is that reluctance based on? A) A lack of managerial energy and focus B) Employee resistance C) Sufficient opportunities in their domestic markets D) The real challenges of moving into international markets E) A lack of interest in global affairs Answer: D Diff: 2 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 2

8) Which of the following is NOT a risk that firms must consider prior to expanding into another country? A) Not understanding the nuances of the other country's business culture B) Not understanding the nuances of the other country's business regulations C) Lacking skilled managers with international experience D) Having business disrupted by commercial and political changes E) Choosing countries too similar to their home market Answer: E Diff: 2 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 9) Once a firm decides to enter the international market, what is the next step in the decision-making process? A) Deciding on the marketing organization B) Deciding on the marketing program C) Deciding how to enter the market D) Deciding how to adapt the product to the new market E) Deciding which markets to enter Answer: E Diff: 1 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 10) Most companies would prefer to remain domestic if their domestic market were large enough. Answer: TRUE Diff: 1 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 11) What are the general risks associated with entering a new market? Answer: These risks involve a company's inability to understand customer needs and develop an offering to address these needs, to correctly identify competitive threats, to build effective supply and distribution networks, or to promote the offering in an effective and cost-efficient manner. Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking

12) What are the specific risks associated with doing business in a different country? Answer: These risks involve not understanding the nuances of the foreign country's business culture and the intricacies of foreign regulations; lacking skilled managers with international experience; and having business disrupted by commercial and political changes such as tariffs, currency fluctuations, and even a government change leading to expropriation of foreign property. Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 13) What problems did UK retailer Tesco encounter in its failed attempt to expand into the U.S.? Answer: A host of problems plagued Tesco's U.S. expansion effort. Its U.S. customers were not accustomed to British-style ready meals, self-service cash registers, and unorthodox store layouts. Other complaints were that the product range was too narrow, there was no bakery, the flower department was underwhelming, and the stores were physically too cold. Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 14) While it was aggressively expanding internationally, what problems did UK retailer Tesco have in its home market? Answer: While it focused on geographic expansion, Tesco's core supermarket business in the United Kingdom was neglected. Stores weren't properly staffed, fresh food was not properly maintained, and new private-label products were not introduced. The attempt to add non-grocery items such as clothing and electronics proved futile in a recession, and entry into new areas like banking and telephony was a distraction. Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 15) Is the reluctance to expand internationally based on a realistic assessment of the challenges? Explain your answer. Answer: Yes, when companies are reluctant to expand into other countries, it is usually because of a realistic assessment of the difficulties. Experienced managers know how challenging it can be to run a profitable businesses in their home market, and expanding globally makes all those problems more challenging and adds new unique issues as well. Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking

16) Most companies would prefer to remain domestic if their domestic market were large enough. Yet several factors are drawing more and more companies into the international arena. List some of these factors. Answer: The factors include the following: • Some foreign markets present higher profit opportunities • The company needs a larger customer base to achieve economies of scale • The company wants to reduce its dependence on any one market • The company decides to counterattack global competitors in their home markets • Customers are going abroad and require international servicing Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Reflective thinking 17) Outline the major decisions that a firm must undergo in making a decision to market internationally. Answer: The decisions are (1) deciding whether to go abroad, (2) deciding which markets to enter, (3) deciding how to enter each market, (4) deciding on the marketing program, and (5) deciding on the marketing organization. Diff: 3 LO: 20.1: Explain how companies decide whether to go abroad. AACSB: Analytical thinking 18) Which decision by Unilever and Procter & Gamble has been vital to their success in reaching underserved markets in developing countries? A) Touting the eco-friendliness of their offerings B) Emphasizing their outsider status C) Emphasizing their products' stature in global markets D) Offering products in smaller, less-expensive packages E) Running harsh competitive ads in local media Answer: D Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 19) How was Deere & Company able to make its 8R line of tractors successful in 130 countries, in both developing and developed economies? A) By making it highly customizable B) By emphasizing its U.S. origins C) By teaching farmers around the world U.S. farming techniques D) Be centralizing all manufacturing in the U.S. E) By undercutting local prices in nearly every market Answer: A Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 5

20) Which of these is a challenge to selling in developing areas around the world? A) Customers don't care about brand names. B) Customers don't care about quality. C) A marketing infrastructure may barely exist. D) Consumers refuse to buy foreign goods. E) It's impossible to figure out consumer needs. Answer: C Diff: 3 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 21) Which of these is a key factor about the consumer market in India that food manufacturers need to consider? A) Consumers don't care about brand names. B) A handful of huge retail conglomerates control the final stage of distribution. C) Food is largely purchased from supercenters that exceed the size of typical U.S. supermarkets. D) Food is largely purchased from 12 million small neighborhood stores. E) Consumer shop less frequently than in the U.S. and buy in much larger quantities. Answer: D Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 22) Which of these was NOT mentioned as a reason for Unilever's successful introduction of TRESemmé in Brazil? A) Collaborating with 40 big retailers B) Courting fashion bloggers C) Using social media outreach through Facebook D) Distributing free samples E) Keeping the brand name a secret until launch day Answer: E Diff: 1 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking

23) How did Grameenphone successfully market cell phones to 35,000 villages in Bangladesh? A) Hiring local women as agents who leased phone time to other villagers B) Using social media to build demand for mobile devices C) Giving the phones away for free D) Selling the phones but offering airtime away for no cost E) Building demand through a text messaging campaign Answer: A Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 24) WayToGrow Inc. is one of the most popular brands of toys in its home market. The company decides to expand its business abroad and its board of directors feel that instead of trying to establish its presence all at once in multiple markets, it is better to expand one country at a time. This would limit their risk and allow them to analyze customer response, after which they could expand to other similar countries. WayToGrow is following a approach. A) shotgun B) continuous C) born global D) sprinkler E) waterfall Answer: E Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 25) The main risks in a approach are the substantial resources needed and the difficulty of planning entry strategies for many diverse markets. A) shotgun B) continuous C) born global D) sprinkler E) waterfall Answer: D Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking

26) When innovation at Siemens enables the company to offer solutions that can make the generation of hydroelectricity more environment-friendly, the company wants to reap the benefits of being the first to introduce such a product across multiple countries. In this case, which of the following approaches is likely to be the best approach to entering foreign markets? A) The rifle approach B) The continuous approach C) The born-global approach D) The sprinkler approach E) The waterfall approach Answer: C Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 27) A2Z Inc. is a producer of a wide variety of consumer goods in Brazil. It has successfully captured a huge share of the domestic market and has been able to create a very strong brand. It is now considering a foray into foreign markets. Its board of directors decides to first try out some of its products in the neighboring country of Argentina. A2Z plans to eventually expand its presence in other countries, after they analyze the impact of their entry into the Argentine market. A2Z Inc. is following a approach. A) born global B) waterfall C) sprinkler D) franchisee E) shotgun Answer: B Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 28) In a waterfall approach to international expansion, . A) firms enter countries gradually in a sequence B) firms enter those countries first where the demand for the product is greatest C) countries are entered based upon the availability of government subsidies D) firms enter those countries first where the supply of raw material is greatest E) countries are entered based upon ease of entry Answer: A Diff: 1 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking

29) In a sprinkler approach to international expansion, . A) countries are entered when competition is limited B) countries are gradually entered sequentially C) countries in which the supply of raw material is greatest are entered first D) countries in which the demand for the product is greatest are entered first E) many countries are entered simultaneously Answer: E Diff: 1 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 30) When first-mover advantage is crucial and a high degree of competitive intensity prevails, the approach is better. A) waterfall B) born global C) rifle D) sprinkler E) franchisee Answer: D Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 31) Which of the following requires different marketing approaches in developed countries versus developing countries? A) The cost of production varies substantially between the developed and the developing world. B) The disparity between the rich and the poor in the developing world is reducing. C) There are substantial economic and cultural differences between the developed and the developing world. D) Marketing in developing countries is far more expensive than in the developed world. E) The developing countries have more trade barriers in place than the developed countries. Answer: C Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking

32) Many U.S. firms prefer to sell in Canada, England, and Australia rather than in larger markets such as Germany and France because they feel more comfortable with the languages, laws, and culture. This reflects the between these countries and the United States. A) self-serving bias B) coincident development C) cultural proximity D) cognitive dissonance E) backward invention Answer: C Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 33) While choosing countries to invest in, companies often choose cultural proximity to their own country. Cultural proximity can best be defined as countries . A) in which the company feels comfortable with the language, laws, and culture B) that are located close C) that the home country's management team have visited D) that have no trade barriers E) with good infrastructure and stable political environment Answer: A Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 34) A waterfall approach to entering foreign markets is described as entering countries simultaneously. Answer: FALSE Diff: 1 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 35) The sprinkler approach is an entry strategy where a company gradually enters countries in sequence. Answer: FALSE Diff: 1 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking

36) It often makes sense to operate in fewer countries, with a deeper commitment and penetration in each. Answer: TRUE Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 37) Smaller packaging and lower prices are often critical in markets where incomes are limited. Answer: TRUE Diff: 1 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 38) What two steps have been key to KFC's global success? Answer: KFC has entered scores of countries as a pioneer by franchising its retail concept and by making its marketing culturally relevant. Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 39) What are two key risks of relying on cultural proximity to choose markets for international expansion? Answer: In addition to overlooking potentially better markets, companies that are guided by cultural proximity in their market choices may only superficially analyze real differences and thus be at a disadvantage. Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 40) What effect has information technology had on the phenomenon of "born-global" businesses? Answer: Thanks to the internet and various elements of e-commerce such as digital payments and digital downloads, as well as readily available and moderately priced international shipping for physical goods, companies that do business online can be global enterprises from their first day in operation. Diff: 3 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking

41) A company that is planning to go global must decide on how many countries to enter and how fast to expand. A company's entry strategy typically follows one of three possible approaches. What are those approaches? Answer: The approaches are waterfall and sprinkler. The waterfall approach is when firms gradually enter countries in sequence. It allows firms to carefully plan expansion and is less likely to strain human and financial resources. The sprinkler approach entails entering many countries simultaneously. When first-mover advantage is crucial and a high degree of competitive intensity prevails, the sprinkler approach is better. Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 42) When deciding where to operate internationally, it often makes sense to operate in fewer countries, with a deeper commitment and penetration in each. What criteria should a country possess in order to be a viable and attractive investment destination? Answer: Companies prefer to enter countries that rank high on market attractiveness, are low in market risk, and in which the company possesses a competitive advantage. Diff: 2 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Analytical thinking 43) Define cultural proximity and explain why it is important for companies engaged in exporting products. Answer: It is sometimes seen that companies determine which markets to enter on the basis of cultural proximity. Many U.S. firms prefer to sell in Canada, England, and Australia because they feel more comfortable with the language, laws, and culture. Companies should be careful in choosing markets according to cultural distance. Besides overlooking potentially better markets, they may only superficially analyze real differences that put them at a disadvantage. Diff: 3 LO: 20.2: Discuss the factors that companies consider in deciding which global markets to enter. AACSB: Reflective thinking 44) If a company that has been licensing its business format to firms in other countries wants to take a more hands-on approach in some countries but doesn't yet have the financial resources for direct investment, which of these options would be best? A) Indirect exporting B) Direct exporting C) Subsidiaries D) Joint ventures E) Sub-licensing Answer: D Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking 12

45) Which of these is NOT an option for direct exporting? A) Domestic-based export department operating as a service function B) Domestic-based export department operating as its own profit center C) Overseas sales branch D) Home-country-based traveling export sales representatives E) Domestic-based export agent Answer: E Diff: 1 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 46) Which state government agencies can help U.S. companies move into exporting? A) Export-promotion offices B) Export merchant offices C) Export agencies D) Public communication offices E) Small Business Administration loan offices Answer: A Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 47) Which of these is a potential risk of using licensing for global marketing? A) Licensors that can evolve into competitors B) Licensees that can evolve into competitors C) Complexity relative to direct investing D) Lack of licensors in most markets E) Inability to reach contractual terms Answer: B Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 48) Which of these is the simplest way for a company to get started in international marketing? A) Direct exporting B) Indirect exporting C) Joint ventures D) Licensing E) Direct investment Answer: B Diff: 1 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking

49) Which of the following modes of entry into a foreign market involves the maximum commitment and risk? A) Franchising B) Direct investment C) Joint ventures D) Licensing E) Direct exporting Answer: B Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 50) Domestic-based export merchants . A) buy manufacturers' products and then sell them abroad B) manage a company's export activities for a fee C) buy foreign products and sell them in the domestic country D) seek and negotiate foreign purchases E) carry on exporting activities on behalf of several producers Answer: A Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 51) Domestic-based export agents perform a valuable service for companies seeking to enter foreign markets. The primary function of these agents is to . A) carry on exporting activities on behalf of several producers B) buy the manufacturer's products and then sell them abroad C) buy foreign products and sell them in the domestic country D) seek and negotiate foreign purchases for a commission E) produce and export products to foreign countries Answer: D Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 52) Companies typically start their international foray with , which involves working through independent intermediaries who sell their products abroad. A) indirect exporting B) licensing C) franchising D) direct exporting E) joint ventures Answer: A Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 14

53) Indirect exports have two advantages for a firm: less investment and less A) paperwork B) intrusion by the government C) risk D) competition E) customer suits Answer: C Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking

54) James Franks buys local products from manufacturers in Miami and other parts of Florida and sells them abroad, mainly to Caribbean nations. Franks is a(n) _. A) domestic-based export merchant B) domestic-based export agent C) cooperative agent D) export-management agent E) direct exporting agent Answer: A Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking 55) agree to manage a company's export activities for a fee. A) Cooperative organizations B) Domestic-based export agents C) Export-management companies D) Domestic-based export merchants E) Contract manufacturing organizations Answer: C Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 56) After successfully exporting its products through export merchants, Boyes Inc. decides to take control of its exports. It sets up its own unit in the home country that takes care of all export-related activities. Boyes Inc. is most likely using . A) foreign-based distributors or agents B) a domestic-based export department C) export merchants in foreign countries D) export-management companies E) traveling export sales representatives Answer: B Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking 15

57) A well-known producer of breakfast cereals has decided to hire producers in different countries so that the cereals marketed under their brand are locally produced in the respective countries. This would not only appeal more to consumers who prefer domestically produced goods, but would also create jobs in the host-country enhancing the brand's image further. This is an example of . A) management contracting B) franchising C) greenfield venturing D) contract manufacturing E) straight extension Answer: D Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking 58) Which of the following statements is true about licensing? A) It is one of the most complex ways to engage in international marketing. B) The licensor gains entry into the new market at low risk. C) The licensee has no access to proprietary information. D) The licensee receives a fee or royalty. E) The only benefit for a licensee is the production expertise it gains. Answer: B Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 59) Hotel chains such as Hyatt and Marriott sell a variation of the licensing agreement called to the owners of foreign hotels to manage these businesses for a fee. A) greenfield venturing B) management contracts C) strategic alliance D) indirect exporting E) direct exporting Answer: B Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking

60) In which of the following modes of licensing does the firm hire local producers to produce the product, giving the company less control over the manufacturing process? A) Contract manufacturing B) Management contracts C) Direct investment D) Joint venture production E) Greenfield venturing Answer: A Diff: 1 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking 61) Toshiba, Hitachi, and other Japanese television manufacturers use Eastern European market. A) contract manufacturing B) management contracts C) direct investment D) joint venture production E) greenfield venturing Answer: A Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Application of knowledge

to service the

62) A company can enter a foreign market through a , which is a complete form of licensing in which the company offers a complete brand concept and operating system. A) contract manufacturing agreement B) cooperative agreement C) management contract D) joint venture E) franchising arrangement Answer: E Diff: 1 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 63) Which of the following is true about direct investment as a mode of international expansion? A) It allows a firm to retain full control over its investment. B) It yields lower returns than joint ventures. C) It involves the least amount of risk. D) It involves the least cost. E) It does not allow the firm to diversify. Answer: A Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 17

64) Whirlpool took a 53 percent stake in the Dutch electronics group Philips' home appliances business to leapfrog into the European market. This is an example of a . A) straight extension B) direct investment C) contract manufacturing agreement D) licensing agreement E) franchising agreement Answer: B Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking 65) Which of the following is NOT one of the ways direct exporting happens? A) Overseas sales branch or subsidiary B) Domestic-based export agents C) Domestic-based export division D) Traveling export sales representatives E) Foreign-based distributors or agents Answer: B Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 66) Domestic-based export merchants seek and negotiate foreign purchases for a commission. Answer: FALSE Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 67) Cooperative organizations carry on exporting activities on behalf of several producers and are partly under their administrative control. Answer: TRUE Diff: 1 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Analytical thinking 68) Indirect exports are characterized by high investment, and therefore high risk. Answer: FALSE Diff: 1 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking

69) In licensing, the licensor issues a license to a foreign company to use an item of value for a fee or royalty. Answer: TRUE Diff: 1 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 70) When the licensor provides the licensee with a complete brand concept and operating system, the arrangement is called contract manufacturing. Answer: FALSE Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 71) Contract manufacturing is one mode of licensing that allows a company to start faster, with the opportunity to form a partnership or buy out the local manufacturer later. Answer: TRUE Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 72) The main disadvantage of direct investment is that the firm loses access to the market if the government of that country decides to insist that locally purchased goods have domestic content. Answer: FALSE Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 73) What do management contracts offer foreign owners? Answer: Such contracts offer foreign owners the opportunity to manage businesses such as branded hotels for a fee. Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 74) What is considered the ultimate form of foreign investment? Answer: Direct ownership of foreign-based assembly or manufacturing facilities is the ultimate form of foreign investment. Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking

75) Outline a typical evolution a company might go through from its first foray into exporting through the evolution to becoming a fully fledged multinational. Answer: (Student answers may vary.) When going global, firms often start by working with an independent agent and entering a nearby or similar country. Later, the firm establishes an export department to manage its agent relationships. Still later, it replaces agents with its own sales subsidiaries in its larger export markets. This increases investment and risk but also enlarges earning potential. Next, to manage subsidiaries, the company replaces the export department with an international department or division. If markets are large and stable, or if the host country requires local production, the company will locate production facilities there. By this time, the firm is operating as a multinational and optimizing its sourcing, financing, manufacturing, and marketing as a global organization. Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 76) List the intermediaries that can assist firms with indirect exporting. Answer: Organizations that can act as intermediaries between a company and an international market include domestic-based export merchants, domestic-based export agents, cooperative organizations, and export-management companies. Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 77) What two advantages of indirect exporting make it an attractive choice for companies just starting out with international marketing? Answer: Indirect exporting has two key advantages for every firm but particularly for those with less experience in global marketing. First, there is less investment: A firm doesn't need to develop an export department, an overseas sales force, or a set of international contacts. Second, there's less risk: Because international marketing intermediaries bring know-how and services to the relationship, the seller will make fewer mistakes. Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking

78) Once a company decides to target a particular country, it must determine the best mode of entry. Each of its market entry strategies involves more commitment, risk, control, and profit potential. List these market entry strategies in order from low risk to high risk. Answer: The five modes of entry into foreign markets are as follows: 1. indirect exporting 2. direct exporting 3. licensing 4. joint ventures 5. direct investment The level of risk involved in each rises steadily, with indirect exports entailing minimum risk, and direct investment involving the maximum risk. Diff: 2 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 79) Briefly describe the advantages of direct investment. Answer: Direct investment has the following potential advantages: • Secures cost economies in the form of cheaper labor or raw materials • Strengthens its image in the host country because it creates jobs • Develops a deeper relationship with government and consumers in the host country • Retains full control over its investment • Assures itself access to the market Diff: 3 LO: 20.3: Summarize the strategies companies use to enter global markets. AACSB: Reflective thinking 80) If a U.S. bicycle manufacturer sells products to a retail chain in Indonesia which then resells some of that stock to an unauthorized retailer in Malaysia for less than the manufacturer itself sells to its authorized retail chains in Malaysia, this is an example of . A) the black market B) multi-shipping C) the gray market D) forward buying E) reverse buying Answer: C Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking

81) Which is the most effective deterrent against gray market reselling by authorized distribution channels? A) Severe and/or timely penalties B) Closing operations in the country C) Contract renegotiation D) Diplomatic discussions E) Threats Answer: A Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 82) Which of these is a frequent target of gray market activities? A) Breakfast cereals B) Magazines C) Prescription drugs D) Over the counter drugs E) Cosmetics Answer: C Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 83) The ways that a society handles inequalities among its people is reflected in which of these cultural dimensions? A) Power distance index B) Individualism vs. collectivism C) Masculinity vs. femininity D) Uncertainty avoidance index E) Normative vs. pragmatic orientation Answer: A Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 84) Societies that prefer to maintain time-honored traditions and are skeptical about societal change are said to have a . A) collectivist orientation B) high power distance C) normative orientation D) high degree of uncertainty avoidance E) pragmatic orientation Answer: C Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 22

85) A country in which people accept a hierarchical social stratification is said to have a . A) collectivist orientation B) high power distance C) normative orientation D) high degree of uncertainty avoidance E) pragmatic orientation Answer: B Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 86) If a society tends to maintain rigid codes of belief and behavior and is intolerant of unorthodox behavior and ideas, this reflects a . A) collectivist orientation B) high power distance C) normative orientation D) high degree of uncertainty avoidance E) pragmatic orientation Answer: D Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 87) A U.S. executive who is transferred to the company's subsidiary in Tokyo causes friction with his new colleagues, who think he worries too much about his own career advancement. This is an example of which cultural dimension? A) Power distance index B) Individualism vs. collectivism C) Masculinity vs. femininity D) Uncertainty avoidance index E) Normative vs. pragmatic orientation Answer: B Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking

88) A data scientist who grew up in a fairly strict culture relocates to a new country, where she is taken aback by the freer lifestyle that most of the residents pursue. This is an example of which cultural dimension? A) Indulgence vs. restraint B) Individualism vs. collectivism C) Masculinity vs. femininity D) Uncertainty avoidance index E) Normative vs. pragmatic orientation Answer: A Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 89) General Mills positions its Häagen-Dazs brand globally in terms of "indulgence," "affordable luxury," and "intense sensuality." Which of these best describes its communication strategy in this regard? A) Maintaining the same basic positioning but modifying the specific language country by country B) Modifying the positioning but keeping the same general language C) Modifying the brand name but keeping the positioning D) Changing the brand name, the positioning, and the specific implementation language. E) Leaving the communication up to local distributors Answer: A Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 90) How did Ikea respond to the prevalence of low-cost copies of its products when it expanded into China? A) Drastically slashed prices on its products B) Switched to selling local brands C) Slashed prices on its own products and began selling some local brands D) Changed its name to avoid any association with the knockoff products E) Kept its usual prices and repositioned itself as a luxury brand Answer: C Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

91) The price a company charges its own subsidiaries in other countries is known as the . A) escalator B) transfer price C) subsidiary price D) international price E) internal price Answer: B Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 92) Which of these countries has a reputation for high-tech innovations, soft drinks, toys, cigarettes, and jeans? A) Japan B) China C) The United States D) Germany E) France Answer: C Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 93) What is the estimated global scale of the problem of counterfeit goods? A) Between $100 and $200 million a year B) About $500 million a year C) About $500 billion a year D) More than a trillion dollars a year E) The real cost is unknown Answer: D Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 94) How does McDonald's manage to maintain consistent global branding when tastes and eating habits vary so widely from country to country? A) By enforcing menu consistency from country to country B) By allowing franchise owners in each country to run their restaurants as they see fit C) By enforcing global branding and service standards but allowing regions and countries to customize store layout and menu staples D) By insisting that every McDonald's outlet in the world emphasize the company's U.S. roots E) By frequently passing product ideas from one country to another Answer: C Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 25

95) If consumers believe that French products are naturally stylish, what phenomenon is occurring? A) Francophone marketing B) Francophile marketing C) Country-of-origin effects D) Regional perceptions E) Nationalism Answer: C Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 96) What impact is the growing middle class in many emerging markets having on the product strategies of many international marketers? A) They are raising prices across the board. B) They are dropping their economy price lines. C) They are trying to nudge these consumers toward luxury brands. D) They are adding price-quality tiers to their product portfolios to appeal to the growing middle class. E) They are trying to "price shame" consumers into abandoning lower-cost products. Answer: D Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 97) In a localized marketing program, the company . A) ensures that uniform practices are adopted across countries B) focuses more on brand image than consumer preferences C) ignores differences in the legal environment D) ensures the lowest cost marketing program is adopted E) tailors the marketing programs to each target market Answer: E Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

98) When Kraft blends different coffees for the British (who tend to drink coffee with milk), the French (who often prefer it black), and Latin Americans (who often want a chicory taste), it is engaged in . A) straight extensions B) product adaptation C) retailer versions D) backward invention E) forward invention Answer: B Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Application of knowledge 99) A standardized marketing program involves . A) adopting the strategy that best fits a given target market B) using the same products and communication programs in every country C) adjusting the product to suit market preferences D) changing the features of the product to accommodate the host country E) changing only the communication message to suit the different target markets Answer: B Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 100) Which of the following is one of the six cultural dimensions that differentiate countries? A) Customer relationship management versus power distance B) Strategic management versus marketing management C) High versus low uncertainty avoidance D) Total quality management versus JIT deliveries E) Marketing management versus customer relationships Answer: C Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking

101) The United States imposed a duty of on wind towers produced in China and Vietnam and imported to the United States after they found evidence both countries were selling them at below fair market value, or , the practice of charging less than its costs or less than it charges at home to win a market. A) arm's-length pricing B) gray marketing C) counterfeiting D) transfer pricing E) dumping Answer: E Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Application of knowledge 102) In collectivist societies, . A) all property is owned by the government B) the self-worth of the individual is rooted more in the social system than in individual achievement C) the culture is dominated by the need to maintain low power distance and reduce income inequality D) the culture is dominated by a nurturing attitude as opposed to an assertive attitude E) people are highly risk-averse Answer: B Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Diverse and multicultural work environments 103) Cultures with low power distance . A) emphasize collectivism B) are pragmatic C) strive to equalize the distribution of power D) are averse to risk E) are tolerant of risk Answer: C Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Diverse and multicultural work environments

104) Straight extension of the product means introducing . A) the product to the foreign market without any changes B) the product to the foreign market with minor changes C) the product to the foreign market with major changes D) a customized product to the foreign market with a new marketing strategy E) a customized product to the foreign market with existing marketing strategy Answer: A Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Diverse and multicultural work environments 105) Cultures with high uncertainty avoidance . A) are open to change and ambiguity B) are tolerant of unorthodox behavior and ideas C) believe practice counts more than principle D) maintain a relaxed attitude E) maintain rigid codes of belief and behavior Answer: E Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Diverse and multicultural work environments 106) Which of the following is most likely to be successful when introduced in foreign markets as a straight extension? A) Laundry detergent B) Casual pants C) Dessert mixes D) Digital camera E) Condensed soup Answer: D Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 107) Finnish cellular phone giant Nokia customized its 6100 series mobile phone for every major market in which it is present. In Asia, for example, the series came with higher ring volume so that it could be heard on the crowded Asian streets. This is an example of . A) straight extension B) forward invention C) product adaptation D) city version E) country version Answer: C Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Application of knowledge 29

108) Product adaptation involves . A) altering the product to meet local preferences B) altering the product to meet minimum acceptable standards C) altering the communication strategy to meet local preferences but not the product D) altering neither the product nor the communication strategy while entering a new market E) developing a new product and adapting the communication strategy to enter a new market Answer: A Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 109) A Gucci bag that might sell for $200 in its home country of Italy but $300 in the United States and $400 in China due to the differences in the costs of distributing the product in the two countries. This phenomenon is called a(n) problem. A) opportunity cost B) market pricing C) tactical pricing D) price escalation E) transfer pricing Answer: D Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Application of knowledge 110) The problem with setting a uniform global price for a product is that . A) it allows intermediaries in low-price countries to reship their products to high-price countries B) the company would earn the same profits everywhere, regardless of the cost structure C) this strategy can price the product out of the market in countries where costs are high D) this strategy makes the price too high in poor countries and not high enough in rich countries E) it is ineffective for products that are homogeneous Answer: D Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking

111) When companies are setting prices in different countries, the problem with setting a market-based price in each country is that . A) it might motivate intermediaries in low-price countries to reship their products to high-price countries B) the company would earn the same profits everywhere, regardless of the cost structure C) this strategy might price the product out of the market in countries where costs are high D) this strategy would make the price too high in poor countries and not high enough in rich countries E) it prevents the company from differentiating its products Answer: A Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 112) When one unit charges another unit in the same company for goods it ships to its foreign subsidiaries, the charge is called a(n) price. A) original B) transfer C) margin D) break-even E) customer value Answer: B Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 113) Existence of gray markets leads to which of the following outcomes? A) They make the distribution channel stronger. B) They create a free-rider problem making legitimate distributors' investments in supporting a manufacturer's product less productive. C) Goods sold in grey markets are always counterfeit. D) Goods sold in grey markets come with standard product warranties. E) Taxes imposed on grey market products are very high. Answer: B Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking

114) Dumping occurs when a company . A) selling in a foreign market charges either less than its costs or less than it charges at home B) selling in a foreign market charges more than the price in its home market C) selling in a foreign market charges prices that are lower than those charged by its competitors in this market D) sets its price equal to its average cost of production E) exports its products to a foreign country to increase its revenue in spite of excess demand in the home country Answer: A Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 115) In India, where people often buy items like cigarettes one at a time because incomes are low and people shop daily because homes lack storage and refrigeration, remains an important function of intermediaries and helps perpetuate long channels of distribution. A) breaking bulk B) jobbing C) type of transportation D) information sharing E) reinforcing policies Answer: A Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 116) As people in developing countries often prefer to buy in smaller quantities, is one of the most important functions of intermediaries in developing countries and helps perpetuate the long channels of distribution, which are a major obstacle to the expansion of retailing. A) product adaptation B) breaking bulk C) diversification D) transfer pricing E) dual adaptation Answer: B Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

117) If PepsiCo charges what each country could afford, ignoring cost differences from country to country, it would be using a(n) price. A) uniform B) market-based C) cost-based D) escalation E) skimming Answer: B Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 118) As a result of ad campaigns depicting Brazil as a multicultural land of carnivals and beaches, any mention of the country can make people think of sun and sand. This is an example of . A) collectivism B) target market impact C) ethnocentric thinking D) country-of-origin effect E) cognitive dissonance Answer: D Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 119) The New Zealand Way program was an initiative by the government of New Zealand to raise awareness and attract tourists by showing the dramatic landscapes featured in "The Lord of the Rings" film trilogy. This is an example of a government trying to strengthen its . A) country-of-origin perceptions B) international subsidiaries C) internationalization D) contract manufacturing E) distributor relationships Answer: A Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 120) Country-of-origin effects work the same from both domestic and foreign perspectives. Answer: FALSE Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

121) Luxury brands are usually not globally standardized because they target a niche market. Answer: FALSE Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 122) If a society is collectivist, this implies that the self-worth of the people is rooted in individual achievements. Answer: FALSE Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Diverse and multicultural work environments 123) Straight extension means using an established product's brand name for a new item in the same product category. Answer: FALSE Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 124) If a company charges its subsidiary in a foreign country too low a transfer price, it can be accused of dumping. Answer: TRUE Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 125) Gray market activities harm distributor relations, tarnish the manufacturer's brand equity, and undermine the integrity of the distribution channel. Answer: TRUE Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 126) The more favorable a country's image, the less prominently the "Made in…" label should be displayed. Answer: FALSE Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 127) Country-of-origin effects refer to the attitude anything produced by the home country is better than imported goods. Answer: FALSE Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 34

128) Describe the balancing act that companies must maintain with transfer pricing. Answer: If the company charges a subsidiary too high a price, it may end up paying higher tariff duties, although it may pay lower income taxes in the foreign country. If the company charges its subsidiary too low a price, it can be accused of dumping—charging either less than its costs or less than it charges at home in order to enter or win a market. Various governments are watching for abuses and often force companies to set a price similar to prices charged by other competitors for the same product or a similar one. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 129) How did Haier's initial growth path from its home market in China differ from most other Asian companies? Answer: Unlike most other Asian companies, which chose to enter Asian markets before considering Western markets, Haier decided to target the United States and Western Europe first. The company felt success there would make greater success possible elsewhere in the world. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 130) What branding goal was China's Haier pursuing when it invested in a manufacturing plant in South Carolina and became a marketing partner with the National Basketball Association? Answer: It wanted be seen as a "localized U.S. brand," not an "imported Chinese brand." Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 131) How does the country-of-origin effect differ when viewed from domestic and foreign perspectives? Answer: In the domestic market, these perceptions may stir consumers' patriotic notions or remind them of their past. As international trade grows, these consumers may view certain brands as symbolically important to their own cultural identity or as playing an important role in keeping jobs in their country. In foreign markets, buyers have their own country-of-origin perceptions about these imported products, which may differ from the perceptions that consumers in the domestic market have about the same products. Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

132) What perception effects can a brand gain simply by virtue of its success on the global stage? Answer: The mere fact that a brand is perceived as successful on a global stage–whether it sends a quality signal, taps into cultural myths, or reinforces a sense of social responsibility–may lend credibility and respect. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 133) Why do marketers need to be aware of numbers and colors in their global branding, packaging, and communication efforts? Answer: Numbers and colors can take on special meaning in certain countries, and triggering these associations can negatively affect a company's marketing efforts if it isn't aware of the meanings. Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 134) How are companies using artificial intelligence in the fight against counterfeit goods? Answer: Manufacturers are fighting back with online software that detects fraud and automatically warns apparent violators, without the need for any human intervention. The use of artificial intelligence software helps identify counterfeit storefronts and sales online by detecting advertisements similar to those of legitimate brands and unauthorized internet sites that plaster brand trademarks and logos on their homepages. It also checks for keywords such as cheap, discount, authentic, and factory variants, as well as colors that products were never made in and prices that are far too low. Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 135) How does the problem of counterfeit goods relate to global supply chains? Answer: As companies develop global supply chain networks and move production farther from home, the possible occasions for corruption, fraud, and quality control problems increase. Sophisticated overseas factories seem able to reproduce almost anything. Name a popular brand, and chances are a counterfeit version of it exists somewhere in the world. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 136) Identify the various product versions a company can make as it pursues product adaption? Answer: A company can produce regional versions or even city versions for pinpoint adaptation. It can also produce different retailer versions for specific distribution partners. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

137) What mistakes did Disney make when it opened the Euro Disney theme park outside Paris? Answer: As one Disney executive put it, "When we first launched, there was the belief that it was enough to be Disney. Now we realize our guests need to be welcomed on the basis of their own culture and travel habits." The changes the company made to cater to French customs and values included serving wine with meals and incorporating a variety of local touches. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 138) How does Honda's positioning differ in its home market of Japan and the U.S. market? Answer: Honda automobiles are positioned on speed, youth, and energy in Japan but on quality and reliability in the United States. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 139) Why do food and beverage marketers find it more challenging to market standardized products globally than makers of luxury goods or some high-technology products? Answer: Food and beverage tastes and consumption patterns can vary considerably from culture to culture and country to country, so it's difficult to come up with food or drink products that will satisfy a global audience. In contrast, luxury tends to be a fairly global phenomenon, with brands having the same aspirational value to consumers the world over. Similarly, usage of high-tech products such as digital cameras or tablets is fairly consistent from country to country, making it easier to market the same products globally. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 140) Why is the straight extension strategy so tempting for international marketers? Answer: This strategy is tempting because it requires no additional research and development expense, manufacturing retooling, or promotional modification. Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 141) Why does Nokia make phones for Asian markets that don't have the number 4 on them? Answer: The number four is considered unlucky throughout much of Asia because the Japanese and Chinese word for the number sounds like the word for "death." Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking

142) Why does the software that some manufacturers use to detect online sales of counterfeit goods check specifically for prices that are unreasonably low? Answer: An unreasonably low price is a strong sign that the item is counterfeit and hasn't been distributed through the company's authorized distribution network. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 143) Name the two basic choices that companies have for setting prices in different countries. Answer: Companies have two basic choices for setting prices in different countries: (1) set a uniform price everywhere or (2) set a market-based price in each country. Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 144) International companies must decide how much to adapt their marketing strategy to local conditions. Identify the two strategies companies can use. Answer: A company foraying into the international market can choose between a standardized marketing program and a localized marketing program. In the standardized marketing mix, no changes are made to the marketing mix when entering foreign countries. At the other end is the localized marketing mix, where the producer adjusts the marketing program to each target market. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 145) What are the disadvantages of standardizing the marketing mix worldwide? Answer: A standardized marketing program has several drawbacks. It ignores differences in areas such as the customer needs, wants, and usage patterns for products; customer response to marketing programs and activities; the different competitive environment; and the specifics of the legal, cultural, and political context. Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 146) What are the advantages of standardizing the marketing mix worldwide? Answer: These advantages include economies of scale in production and distribution, lower marketing costs, consistency in brand image, ability to leverage good ideas across different markets, and uniformity of marketing practices. Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

147) Name the six cultural dimensions that differentiate countries. Answer: The six dimensions: are power distance index, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance index, normative vs. pragmatic orientation, and indulgence vs. restraint. Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking 148) Describe the challenge of price escalation. Answer: A firm must add the costs of transportation, tariffs, importer margin, wholesaler margin, and retailer margin, as well as the currency-fluctuation risk while selling the product in another country. Price escalation from these added costs and currency fluctuation risk might make the price two to five times as much in another country to earn the same profit for the manufacturer. Diff: 2 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 149) Define the gray market. Answer: The gray market consists of branded products diverted from normal or authorized distribution channels in the country of product origin or across international borders. Diff: 1 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Analytical thinking 150) Explain the country-of-origin effect. Answer: Country-of-origin perceptions are the mental associations and beliefs triggered by a country. In an increasingly connected, highly competitive global marketplace, government officials and marketers are concerned with how attitudes and beliefs about their country affect consumer and business decision makers. They want to strengthen their country's image to help domestic marketers who export and to attract foreign firms and investors. Marketers want to use positive country-of-origin perceptions to sell their products and services. Diff: 3 LO: 20.4: Explain how companies can adapt their marketing strategies for global markets. AACSB: Reflective thinking

Marketing Management, 16e (Kotler) Chapter 21 Socially Responsible Marketing 1) Taking a more active, strategic role in corporate social responsibility is thought to benefit every one of these groups EXCEPT . A) customers B) competitors C) employees D) shareholders E) the community Answer: B Diff: 1 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 2) Procter & Gamble has made a key component of the company's marketing strategies. A) recycling B) brand highlighting C) brand purpose D) employee right E) consumer rights Answer: C Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 3) Which of these is NOT identified as a reason companies engage in prosocial activities and invest in corporate social responsibility? A) Appealing to consumers who favor companies that exhibit civic virtues B) Creating societal benefits is a key element of the corporate culture and the company's value system C) Responding to the insistence of their collaborators D) Maximizing social capital return for angel investors, the first group of investors to help launch the company E) Increasing employee loyalty Answer: D Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning

4) Which of these moves did Stonyfield Farm make to mitigate the environmental impact of its manufacturing operations? A) Offsetting its energy usage with an equivalent investment in environmental projects B) Requiring employees to take public transportation C) Using only natural sunlight to illuminate its office buildings D) Donating electricity from its own generating plants to local communities E) Teaching competitors how to minimize plastics usage Answer: A Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 5) Which three elements make up the triple bottom line? A) People, brand presence, profit B) Planet, social profit, financial profit C) People, planet, profit D) People, investment, profit E) People, community, profit Answer: C Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 6) In addition to the environment and the marketplace, the three-pronged approach of socially responsible marketing focuses on . A) political action B) results-focused investments C) social investing D) the community E) employee well-being Answer: D Diff: 3 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 7) are all entities directly or indirectly influenced by the actions of the company, rather than just with shareholders, who actually own the firm. A) Owners B) Social owners C) The social community D) Influencers E) Stakeholders Answer: E Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 2

8) United Way focuses its efforts on programs that deliver that benefit(s) specific communities. A) financial assistance B) encouragement and support C) business counseling D) measurable outcomes E) a common vision Answer: D Diff: 3 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 9) Corporate social responsibility has become a priority for many organizations and is ingrained in their business models. Answer: TRUE Diff: 1 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 10) The most admired—and most successful—companies in the world abide by high standards of business and marketing conduct that dictate serving consumer interests as well as their own. Answer: TRUE Diff: 1 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 11) Raising the level of socially responsible marketing calls for a three-pronged approach that focuses on the community, the environment, and the marketplace. Answer: TRUE Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 12) Identify the reasons companies engage in prosocial activities and invest in corporate social responsibility. Answer: Some do it because creating societal benefits is a key element of the corporate culture and the company's value system. Others do it to differentiate themselves by appealing to consumers who favor companies that exhibit civic virtues. Some do it at the insistence of their collaborators, who prefer to deal with companies that care about creating value for society. Yet others do it to build a bank of public goodwill to offset potential criticisms and deal with eventual marketing crises. And some companies engage in corporate social responsibility to increase employee loyalty and create investor goodwill. Diff: 3 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning

13) What does it mean for a firm to "build a bank of public goodwill"? Answer: Building a bank of public goodwill means to encourage a positive view of the company among its various stakeholder groups during normal times, with the idea that this positive feeling toward the company will help the company if it is later subject to criticism or must deal with marketing crises. Diff: 3 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Analytical thinking 14) What are the three components of the triple bottom line? Answer: The three components are people (social component), planet (sustainability component), and profit (monetary component). Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 15) What groups constitute a company's stakeholders? Answer: Stakeholders are all entities directly or indirectly influenced by the actions of the company, rather than just with shareholders, who actually own the firm. These groups include employees, customers, and society at large. Diff: 2 LO: 21.1 Discuss the role that corporate social responsibility plays in marketing management. AACSB: Ethical understanding and reasoning 16) Healthy long-term growth requires marketers to satisfy a broad set of _ and objectives. A) goals B) constituents C) tactical plans D) strategic plans E) social demands Answer: B Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 17) In addition to creating value for the company, its customers, and its collaborators, corporate social responsibility involves creating value for . A) the angel investors who funded the company's launch B) the community in which a company operates C) current shareholders D) employees E) competitors Answer: B Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 4

18) Which of these is NOT a domain in which community-based corporate social responsibility typically occurs? A) Improving the workplace B) Supporting low-income communities C) Promoting industry growth D) Fostering cause marketing E) Engaging in social marketing Answer: C Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 19) Which of these is NOT a focus of corporate social responsibility in the workplace? A) Fair compensation B) Work-life balance C) Diversity D) Community education E) A safe and healthful working environment Answer: D Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 20) Commitment to socially responsible causes is also likely to increase a company's ability to , motivate, and retain key employees. A) inspire B) reward C) recruit D) develop E) compensate Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 21) Firms of Endearment, the term coined by Raj Sisodia, David Wolfe, and Jag Sheth, refers to companies that succeed in doing well . A) by doing good B) by fostering positive emotions C) by emphasizing upbeat themes in their advertisement D) by creating products for consumers' happiest experiences E) by working to bring people together Answer: A Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 5

22) Which of these behaviors is NOT characteristic of senior management in well-loved companies? A) Having an open-door policy B) Using themselves as examples of the rewards of success C) Being passionate about customers D) Earning modest compensation E) Relating more closely to a smaller group of excellent suppliers Answer: B Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 23) Which of these is NOT one of the core principles of the Fair Trade foundation? A) Income sustainability for producers B) Producer empowerment C) Sustainable investor returns D) Individual and community well-being E) Environmental stewardship Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 24) Which of these terms has been used to express worries about the negative consequences of cause marketing? A) Greenwashing B) Consumption philanthropy C) Faux-lanthropy D) Whitewashing E) Social profiteering Answer: B Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

25) Corporate philanthropy influence consumers' opinions of a company in a variety of ways. Which of these is NOT one of the positive changes to a company's reputation that philanthropy can engender? A) Being perceived as warmer B) Being perceived as more compassionate C) Being perceived as more innovative D) Being perceived as more ethical E) Being perceived as less blameworthy in the midst of corporate crises Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 26) A company's reputation for social responsibility can affect customers' ongoing relationship with the firm in all these ways EXCEPT . A) increased consumer loyalty B) increased price sensitivity C) increased customer satisfaction D) decreased price sensitivity E) increased brand commitment Answer: B Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 27) Bottom of the pyramid (BOP) refers to A) a company's least expensive products B) a company's entry-level products C) the segment of consumers least willing to try a company's products D) the largest but poorest group of the world's population E) the thriftiest consumers in the world Answer: D Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

28) adopts successful solutions developed to meet the needs and constraints of a developing market to create an inexpensive product that can be introduced as a cheaper alternative in developed markets. A) Cross-cultural innovation B) Reverse engineering C) Reverse innovation D) Forward innovation E) Bottom-up innovation Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 29) When Nestlé repositioned its low-fat Maggi brand dried noodles—a popular, low-priced meal in rural Pakistan and India—as a budget-friendly health food in Australia and New Zealand, it was practicing . A) Cross-cultural innovation B) Reverse innovation C) Reverse engineering D) Forward innovation E) Bottom-up innovation Answer: B Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 30) aims to further a cause and is not directly related to a particular business activity. A) Social marketing B) Socially responsible marketing C) Cause-and-issue marketing D) Issue marketing E) Nonbusiness marketing Answer: A Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

31) entails a company taking a stand on an important–typically controversial–social, economic, environmental, or political issue. A) Issue activism B) Public marketing C) Issue advertising D) Public advertising E) Brand activism Answer: E Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 32) How has Nokia been able to maintain its market share lead in many developing economies while losing its lead in parts of the developed world? A) Intensive advertising B) Bottom-up word-of-mouth campaigns C) Low-cost products with the right functionality D) "Sweetheart" contracts with national governments E) Dazzling products with advanced functionality Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 33) What market research technique did Nokia use to determine which features to include in mobile phones aimed at the bottom of the pyramid market? A) Ethnography B) Door to door surveys C) Text-message surveys D) Online surveys E) Competitor analysis Answer: A Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 34) blends corporate social responsibility initiatives with marketing activities. A) Brand activism B) Cause marketing C) CSR marketing D) Social marketing E) Community-based marketing Answer: B Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 9

35) Which of these is one of the reasons Tata's Nano car model did not succeed as hoped, even though it provided good value for low-income consumers looking to make the switch from scooters and motorcycles? A) The stigma attached to buying a "cheap" car B) The lack of perceived value C) Negative associations of the "Nano" name D) Unappealing showrooms E) The limited range of options and colors Answer: A Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 36) Nike's decision to prominently feature former San Francisco 49ers quarterback Colin Kaepernick in support of his stance against police killings of Black Americans was an example of . A) issue activism B) public marketing C) issue advertising D) public advertising E) brand activism Answer: E Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 37) Coca-Cola's collectible Polar Bear aluminum bottle in support of the World Wildlife Fund is an example of . A) eco-marketing B) green marketing C) social marketing D) cause marketing E) influencer marketing Answer: C Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

38) Which of these is NOT an example of a social marketing initiative? A) Improving public health B) Reducing regulatory burdens on manufacturing C) Preventing injuries D) Protecting the environment E) Enhancing consumer financial well-being Answer: B Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 39) When the Centers for Disease Control and Prevention promoted mask-wearing, social distancing, and other steps to mitigate the spread of Covid-19, it was engaged in . A) health marketing B) public marketing C) social marketing D) cause marketing E) influencer marketing Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 40) Eyewear marker Luxottica's OneSight family of charitable vision-care programs, which provide free vision screenings, eye exams, and glasses to millions of needy people in NorthAmerica and developing countries around the world, is an example of . A) health marketing B) public marketing C) social marketing D) cause marketing E) influencer marketing Answer: D Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 41) How does the shoe firm TOMS use cause marketing? A) Advocating for poverty relief B) Donating a pair of shoes to needy children for every pair sold C) Designing low-cost shoes for low-income consumers D) Contributing to education programs in developing countries E) Partnering with the World Wildlife Fund Answer: B Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 11

42) After Barnum's Animal Crackers launched a campaign to raise awareness of endangered species and to help protect the Asian tiger by issuing special-edition packaging and collaborating with the World Wildlife Fund, the Nabisco brand saw a "healthy lift in sales." This was an example of . A) cause marketing B) public marketing C) social marketing D) eco-marketing E) influencer marketing Answer: A Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 43) How does the PRODUCT(RED) campaign help in the global fight against AIDS, tuberculosis, and malaria? A) By educating consumers about global health problems B) By helping individual and families find vital healthcare resources C) By donating profits from PRODUCT(RED)-branded products D) By licensing the PRODUCT(RED) name and logo to sports teams around the world E) By training doctors and nurses in developing economies Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 44) Given the complexity of developing and implementing a successful social marketing campaign, organizations should . A) focus on just one or two tasks B) approach these campaigns in a systematic and disciplined fashion C) improvise, rather then trying to follow a preset plan D) focus on high-level issues and not get bogged down in details E) restrict their efforts to the realm of communication Answer: B Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

45) Companies that speak out against legislative efforts that they believe will suppress votes are engaging in . A) cause marketing B) public marketing C) social marketing D) brand activism E) influencer marketing Answer: D Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 46) For-profit companies define value in monetary terms, whereas nonprofits define it in terms of . A) benefiting society B) return on social capital C) human capital D) awareness E) action toward goals Answer: A Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 47) Social marketing is similar to cause marketing in that both aim to . A) raise the company's profile B) insulate the company from criticism C) bias public opinion in the company's favor D) benefit the community in which the company operates E) improve brand recall, directly or indirectly Answer: D Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 48) Which of these is a potential disadvantage of a firm contributing to a cause with widespread corporate support, such as Susan G. Komen for the Cure? A) A brand may find its contribution overlooked in a crowded field of supporters. B) Each new supporter dilutes the organization's message. C) Supporting firms will inevitably began to disagree over strategy and tactics. D) The nonprofit organization will play favorites with the largest supporters. E) The brand will inevitably be accused of jumping on a bandwagon. Answer: A Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 13

49) Associating a company's brands with a relevant cause can benefit the company in all these ways EXCEPT . A) building brand awareness B) insulating executives from criticism C) enhancing brand image D) strengthening brand credibility E) eliciting brand engagement Answer: B Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 50) A successful cause marketing program can accomplish all these laudable goals EXCEPT . A) improving social welfare B) creating differentiated brand positioning C) building strong consumer bonds D) increasing the firm's market value E) reducing a firm's fixed costs Answer: E Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 51) Dawn dishwashing liquid has an unusual side benefit that makes it a natural for particular cause marketing campaigns. What is this product attribute? A) As the cheapest brand on the market, it is ideal for helping low-income consumers. B) It is the only product recommended by the U.S. Fish and Wildlife Service for cleaning birds caught in oil spills. C) The brand name itself provokes images of hope and a fresh start. D) It can be shipped to natural disaster locations as a powder and reconstituted to liquid form. E) As its developed costs were recouped years ago, it can be sold at a loss to the company. Answer: B Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 52) Marketers refer to the largest but poorest group of the world's population as . A) the great untapped market B) the low-profit, high-volume space C) the aspirational tier D) the bottom of the pyramid E) the developing segment Answer: D Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 14

53) Which of these is NOT one of the benefits firms can realize from investing in corporate social responsibility in their workplaces? A) Higher employee motivations B) Greater sense of employee identify with the company C) Closer relationships among employees D) Reduced employee benefit costs E) Greater embrace of social responsibility by employees Answer: D Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 54) Which of these is NOT one of the domains in which community-based corporate social responsibility typically occurs? A) Improving the workplace B) Engaging in corporate philanthropy C) Supporting organized labor D) Supporting low-income communities E) Fostering cause marketing Answer: C Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 55) Business efforts to improve work-life balance fall under which domain of corporate social responsibility? A) Improving the workplace B) Engaging in corporate philanthropy C) Supporting organized labor D) Supporting low-income communities E) Fostering cause marketing Answer: A Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

56) The assertion that corporate social responsibility is not only the "right thing" but the "smart thing to do" means that . A) it is an effective way to avoid potentially unfair scrutiny by the media B) it is a good way to avoid employee dissent C) it benefits companies that embrace it D) it is an effective way to avoid potentially unfair scrutiny by NGOs E) it is a good way to avoid the distractions of outside criticism Answer: C Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 57) The Ronald McDonald Houses that McDonald's operates to help families while their children are hospitalized is an example of . A) corporate philanthropy B) social marketing C) cause marketing D) brand advocacy E) social commerce Answer: A Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 58) Which of the following is true regarding cause marketing? A) The positive impact of cause marketing can be increased through sporadic involvement with numerous causes. B) Many companies focus on multiple causes to simplify execution and maximize impact. C) Limiting support to a single cause increases the pool of stakeholders who can transfer positive feelings from the cause to the firm. D) Most firms choose causes that fit their corporate or brand image and matter to their employees and shareholders. E) In order to avoid public backlash, firms are advised to adopt a hard-sell approach to their cause efforts. Answer: D Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

59) marketing by nonprofit or government organizations aims to further a cause. A) Corporate societal B) Brand C) Causal D) Social E) Place Answer: D Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 60) If employees think that the company takes the principles of corporate social responsibility to heart, they are more likely to do so themselves. Answer: TRUE Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 61) Implementing workplace corporate social responsibility programs can be accomplished by a company's management alone. Answer: FALSE Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 62) Beloved companies often spend less on marketing than their peers because admiring customers do most of the marketing for them. Answer: TRUE Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 63) Corporate philanthropy as a whole is on the rise. Answer: TRUE Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 64) Cause-related marketing can backfire if consumers question the link between the product and the cause. Answer: TRUE Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

65) Social marketing programs take little time to develop and are generally easy to implement. Answer: FALSE Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Reflective thinking 66) Endearment gives products the appearance of being environmentally friendly without living up to that promise. Answer: FALSE Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 67) Identify the three domains in which researchers have argued that corporate giving can have a positive impact. Answer: Researchers have argued that corporate giving can have a positive impact in at least three domains: enhancing company image, enhancing customer loyalty, and enhancing perceived product performance. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 68) Why do some critics of cause marketing worry about "consumption philanthropy"? Answer: Their concern is that cause marketing may replace virtuous actions with less thoughtful consumer buying, reduce emphasis on real solutions, or deflect attention from the fact that markets themselves may create many social problems. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 69) How is it likely that a company's socially responsible behavior can increase product sales? Answer: It also has been argued that a company's socially responsible behavior is likely to increase product sales by motivating consumers to reward a company for its prosocial behavior and giving consumers the opportunity to attain moral satisfaction from the "warm glow of giving." Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 70) How can corporate philanthropy influence consumers' opinions of a company? Answer: It has been shown that consumers view companies engaged in corporate philanthropy as being warmer, more compassionate, more ethical, more likable and trustworthy, and less blameworthy in the midst of corporate crises. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 18

71) How does a company's reputation for social responsibility affect customers' ongoing relationship with the firm? Answer: A company's reputation for social responsibility tends to enhance consumer loyalty, increase customer satisfaction, decrease consumer price sensitivity, and increase their brand commitment. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 72) What does bottom of the pyramid (BOP) refer to? Answer: The bottom of the pyramid (BOP) is a socioeconomic concept used in reference to the largest but poorest group of the world's population, who live on less than $2.50 a day. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 73) What is reverse innovation? Answer: Reverse innovation adopts successful solutions devised to meet the needs and constraints of a developing market and introduces as cheaper alternatives in developed markets. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 74) What are some of the potential public policy benefits of reverse innovation? Answer: Reverse innovation can involve public policy benefits by transforming industries through the successful development of ultra-low-cost transportation, renewable energy, clean water, micro-finance, affordable health care, and low-cost housing. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 75) What are the potential benefits of a successful cause marketing program? Answer: A successful cause marketing program can improve social welfare, create differentiated brand positioning, build strong consumer bonds, enhance the company's public image, create a reservoir of goodwill, boost internal morale, galvanize employees, drive sales, and increase the firm's market value. Consumers may develop a strong, unique bond with the firm that transcends normal marketplace transactions. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

76) Under what conditions might a cause marketing effort backfire? Answer: Cause marketing can backfire if consumers question the link between the product and the cause, see the firm as self-serving and exploitive, or do not think a company is consistent or sufficiently responsible in all its behavior. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 77) How did KFC's "Buckets for the Cure" cause marketing program in support of the Susan G. Komen breast cancer foundation generate criticism from some observers? Answer: At virtually the same time as the company started what was to be the single biggest corporate donation ever to fund breast cancer research, KFC also launched its Double Down sandwich with two pieces of fried chicken, bacon, and cheese. Critics immediately pointed out that KFC was selling a food item with excessively high calories, fat, and sodium that contributed to obesity. On the Susan G. Komen site, being overweight was flagged as increasing the risk of breast cancer by 30 percent to 60 percent in postmenopausal women, which also left the foundation open to criticism over the partnership. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 78) How did Nokia learn customer needs well enough to succeed in bottom of the pyramid markets in Africa and Asia? Answer: The company sent marketing, sales, and engineering staff from its entry-level phone group to spend a week in people's homes in rural China, Thailand, and Kenya to observe how they used phones. With those insights, it was able to develop rock-bottom-priced phones with just the right functionality. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 79) What are two key reasons Tata's Nano car model did not succeed as hoped, even though it provided good value for low-income consumers looking to make the switch from scooters and motorcycles? Answer: First, in spite of their economic constraints, low-income consumers can have the same aspirational motivations as everyone else, and there was a stigma attached to buying a "cheap" car. Many low-income consumers opted to stretch their budgets to buy the Maruti-Suzuki Alto with its bigger 800cc engine. Second, Tata's glittering showrooms intimidated many target customers who had never owned a car. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

80) What is the key distinction between cause marketing and social marketing? Answer: The key distinction is whether the issue at hand aligns with the company's business interests. Cause marketing aligns its business activities to support a cause, whereas social marketing aims to further a cause, such as "say no to drugs" or "exercise more and eat better." Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 81) How does the effort to reduce smoking illustrate the complexity of most social marketing programs? Answer: Reducing the prevalence of smoking involved multiple activities, including some that are outside the realm of what would be considering marketing: release of cancer reports, labeling of cigarettes as harmful, bans on cigarette advertising, education about the effects of secondhand smoke, bans on smoking in restaurants and planes, increased taxes on cigarettes to pay for antismoking campaigns, and states' lawsuits against tobacco companies. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 82) How did Nike demonstrate support for Colin Kaepernick in its ad campaign celebrating the 30th anniversary of its motto "Just Do It"? Answer: Nike's decision to prominently feature Colin Kaepernick and include the tagline "Believe in something. Even if it means sacrificing everything," took a clear stance in support of the values espoused by Kaepernick's actions. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 83) How does brand activism stand out from other forms of social marketing? Answer: What makes brand activism stand out from other forms of social marketing is that it involves a company taking a prominent and early position on a divisive issue that has important societal implications. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 84) Given the complexity of developing and implementing a successful social marketing campaign, how should organizations approach these campaigns? Answer: Organizations should approach these campaigns in a systematic and disciplined fashion. They should have a clearly defined goal, a well-articulated strategy, meaningful tactics that translate this strategy into a reality, a viable implementation plan, and a process for evaluating program success. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

85) Can social marketing programs implemented by nonprofit organizations use the same marketing techniques used by for-profit companies? Explain your answer. Answer: Yes, even though social marketing programs are often implemented by nonprofit organizations, they can benefit from the same strategic marketing approach that for-profit companies use. Both for-profit and nonprofit companies ultimately aim to create market value, but for-profit companies define value in monetary terms, whereas nonprofits define it in terms of benefiting society. Diff: 1 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 86) How can associating a company's brands with a relevant cause benefit the company? Answer: Associating a company's brands with a relevant cause can benefit the company in several ways. It can help build brand awareness, enhance brand image, strengthen brand credibility, evoke an emotional response to the brand, create a sense of brand community, and elicit brand engagement. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 87) Identify some of the brand benefits that can accrue to a company that engages in cause marketing. Answer: A successful cause-marketing program can improve social welfare, create differentiated brand positioning, build strong consumer bonds, enhance the company's public image, create a reservoir of goodwill, boost internal morale and galvanize employees, drive sales, and increase the firm's market value. Consumers may develop a strong, unique bond with the firm running the cause-marketing that transcends normal marketplace transactions. Diff: 3 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 88) Corporate philanthropy can pose problems even when done with the best intentions. Explain. Answer: Philanthropic efforts by companies can be overlooked—even resented—if the company is seen as exploitive or fails to live up to a "good guys" image. Some critics worry that cause marketing or "consumption philanthropy" may replace virtuous actions with less thoughtful consumer buying, reduce emphasis on real solutions, or deflect attention from the fact that markets themselves may create many social problems. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning

89) Define cause marketing. What is the difference between cause-related marketing and social marketing? Answer: Cause marketing links the firm's contributions to a designated cause to customers' engaging directly or indirectly in revenue-producing transactions with the firm. Cause marketing aligns business activities to support a cause, whereas social marketing by nonprofit or government organizations furthers a cause. Diff: 2 LO: 21.2 Explain how companies manage corporate social responsibility in the workplace. AACSB: Ethical understanding and reasoning 90) Levi Strauss's Waste<Less jeans incorporate in the garment fabric. A) recycled plastic bottles B) hemp C) organic wool D) recycled copper E) organic cotton Answer: A Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 91) Single-use coffee pods in the Keurig system have generated a lot of concern about their lack of recyclability, even though the disposal of used pods makes up of their total environmental impact. A) a negligible amount B) 1 percent C) about 5 percent D) 20 percent E) 50 percent Answer: C Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 92) How have Whole Foods, Wegmans, Target, and Walmart helped preserve worldwide fish populations? A) By no longer selling fresh fish B) By no longer selling frozen fish C) By no longer selling fresh or frozen fish D) By longer selling fish caught in areas subject to overfishing or in a manner likely to harm other marine life or habitats E) By placing a 10-percent eco-charge on all fish products to help fund conservation programs Answer: D Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 23

93) How did an acquisition put Green Mountain Coffee Roasters in a sustainability quandary? A) It acquired a coffee grower that refused to adopt sustainable farming practices. B) It acquired a chain of coffee shops that still uses nonrecyclable plastic cups. C) It acquired a coffee grower whose unique species of coffee beans require an unusual amount of chemical fertilizers. D) It acquired Keurig and the dilemma of its nonrecyclable coffee pods. E) It acquired another large roaster and so doubled its carbon footprint. Answer: D Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 94) Providing misleading information or giving a false impression that products or practices are environmentally friendly without living up to that promise is known as . A) eco-deception B) greenwashing C) eco-washing D) brand deception E) empty philanthropy Answer: B Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 95) Which of these factors helped Clorox succeed with its Green Works household cleaning products? A) New government regulations banning certain cleaning chemicals B) An eco-friendly product priced the same as standard products C) An eco-friendly product with a very modest price premium D) A bipartisan embrace of green products E) The disappearance of several competitors Answer: C Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 96) Why did Patagonia once run an ad encouraging consumers not to buy one of its jackets? A) To highlight the environmental impact of garment manufacturing B) To protest the behavior of certain retailers C) To apologize for a slip in product quality D) To protest environmental regulations E) To promote Goodwill clothing donations Answer: A Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 24

97) Which of these is NOT one of the five behaviors encouraged by the Common Threads Initiative? A) Reduce B) Repair C) Reuse D) Refuse E) Recycle Answer: D Diff: 1 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 98) Which of these was NOT listed in the chapter as one of the environmental trends that marketers need to be aware of? A) Shortage of raw materials B) Proliferation of virtual digital trash C) Increased cost of energy D) Increased pollution levels E) Changing role of governments Answer: B Diff: 1 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 99) Amazon's $2 billion internal venture-capital fund focused on technology investments in transportation, energy generation, battery storage, manufacturing, and food and agriculture is an example of which domain of corporate social responsibility? A) Improving the workplace B) Supporting low-income communities C) Promoting sustainability D) Fostering cause marketing E) Engaging in social marketing Answer: C Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 100) Which of these is part of the damage that greenwashing can cause? A) Raising company's advertising costs B) Increasing consumer skepticism about green initiatives C) Increasing the chance of government clampdown on green initiatives D) Increasing employee workloads E) Putting additional demands on retailers Answer: B Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 25

101) Which of these is identified in the chapter as one of the factors holding back progress toward more environmentally friendly products? A) People are tired of hearing about "green." B) Scientists are running out of ways to make products more sustainable. C) Many consumers are unwilling to sacrifice product performance and quality for genuinely green products. D) Many people are embarrassed to be seen as "going green." E) Many companies can't figure out how to promote environmental benefits. Answer: C Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 102) A company that touts the recyclability of its batteries without mentioning that one of the battery's chemicals is mined in an unsustainable manner could reasonably be accused of . A) puffery B) greenwashing C) deceptive claims D) privacy violations E) bait-and-switch Answer: B Diff: 1 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 103) Which of these is NOT one of the ways that Levi Strauss promotes water conservation with its Water<Less line of jeans? A) Helping cotton farmers use less water B) Creating the popular worn-in look with less water C) Advocating for a ban on bottled-water sales D) Educating consumers on how to clean the garments with less water E) Educating consumers on how to dispose of the garments in ways that consume less water Answer: C Diff: 1 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning

104) Why would a clothing chain such as France's FAGUO decide to engage in such a seemingly unrelated effort such as planting trees? A) To add a natural appeal to its brand meaning B) To offset its carbon footprint C) To convince consumers it cares about nature D) To take advantage of conservation tax breaks E) To avoid accusations of greenwashing Answer: B Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 105) Which of these is an effect noted in the chapter that digital devices have had on the sustainability movement? A) Consumers have increasingly turned to digital devices to learn about the environment and share their green experiences. B) Consumers seem to enjoy the many "eco-shaming" apps now available that critique their shopping and consumption habits. C) Companies take advantage of widespread mobile usage to send eco-themed digital coupons to customers. D) Consumers can use "eco-shaming" apps to report companies engaged in unsustainable practices. E) Companies can share environmental messages and tips via their own apps. Answer: A Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 106) According to one study, how many labels on allegedly green products focus on an eco-friendly benefit while omitting information about significant environmental drawbacks? A) Very few B) Around 20 percent C) Half D) Close to 90 percent E) Nearly all Answer: C Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning

107) refers to the ability to meet humanity's needs without harming future generations. A) Greenwashing B) Sustainability C) Ecological footprinting D) Scalability E) Legal practice Answer: B Diff: 1 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 108) Younger consumers consistently show more concern for the environment than older consumers. Answer: FALSE Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 109) Once a firm touts an environmental initiative, it can become a target for criticism. Answer: TRUE Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 110) Amazon has concluded that it can't achieve "net zero" carbon emissions. Answer: FALSE Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 111) One of the environmental issues that marketers need to stay on top of is the changing role of governments. Answer: TRUE Diff: 1 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 112) Often the more committed a company is to sustainability and environmental protection, the more dilemmas that can arise. Answer: TRUE Diff: 1 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning

113) Why has the French fashion brand FAGUO helped plant 110 new forests across the country? Answer: To reduce the company's carbon footprint, each FAGUO product sold, a tree is planted in France, a move that has turned unused and abandoned lands into wooded areas that can be enjoyed by all. FAGUO's partner in this sustainability project is Naudet, a nursery that specializes in maintaining and reforesting wooded areas in France. Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 114) Define greenwashing. Answer: Greenwashing is providing misleading information or giving a false impression that products or practices are environmentally friendly without living up to that promise. Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 115) What is the motivation behind Stonyfield Farm's cofounder Gary Hirshberg's "Just Label It!" campaign? Answer: The campaign wants food manufacturers to provide more useful information on their labels about the use of GMO (genetically modified organism) ingredients. Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 116) Characterize the reasons for consumer skepticism and resistance to sustainable products. Answer: In response to insincere firms that have jumped on the green bandwagon, consumers bring a healthy skepticism to environmental claims. Also, many consumers are unwilling to sacrifice product performance and quality and are not necessarily willing to pay a price premium for genuinely green products. Unfortunately, green products can be more expensive because ingredients are costly and transportation costs are higher for lower shipping volumes. Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 117) When a company says it is aiming for a goal of "net zero" carbon emissions, does that mean it will not generate any carbon pollution? Explain your answer. Answer: No, "net zero" carbon emissions means the company will offset whatever level of carbon emissions it does generate with compensatory moves in other areas, such as reforestation. Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning

118) What is the purpose of the "nutrition label" Timberland puts on its shoeboxes? Answer: These labels help educate consumers by measuring the brand's environmental footprint–from renewable energy used in its facilities to recycled, organic, and renewable materials in its products to trees planted around the globe. Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 119) What is sustainability? How is it related to the concept of greenwashing? Answer: Sustainability is the ability to meet humanity's needs without harming future generations. It now tops many corporate agendas. Major corporations outline in great detail how they are trying to improve the long-term impact of their actions on communities and the environment. Heightened interest in sustainability has also unfortunately resulted in greenwashing, which gives products the appearance of being environmentally friendly without living up to that promise. Because of insincere firms jumping on the green bandwagon, consumers bring a healthy skepticism to environmental claims, but they are also unwilling to sacrifice product performance and quality. Many firms are rising to the challenge and are using the need for sustainability to fuel innovation. Diff: 3 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 120) Explain the concept of greenwashing along with an example. Answer: (Student answers will vary.) Greenwashing gives products the appearance of being environmentally friendly without living up to that promise. An automobile manufacturer who promotes its cars as being environmentally friendly when the company is in fact a major polluter, would be an example of greenwashing. Diff: 2 LO: 21.3 Identify the strategies that companies use to promote sustainability. AACSB: Ethical understanding and reasoning 121) involves simple exaggerations that are not meant to be believed and that are permitted by law. A) "Truthy" advertising B) Puffery C) Sales claim advertising D) Promotional communication E) Commercial communication Answer: B Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

122) Marketing communication that attracts buyers under false pretenses is known as A) puffery B) bait-and-switch advertising C) false promotion D) pretense advertising E) disparagement advertising Answer: B Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 123) If a retailer advertises $29 blue jeans that it doesn't actually have in stock and when consumers arrive they are told the $29 jeans were returned to the factory, then store clerks steer them to $69 jeans, the company is guilty of . A) puffery B) retail deception C) false promotion D) pretense advertising E) bait-and-switch advertising Answer: E Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 124) If a car dealership advertises a $32,000 price for a certain model but then tells customers who come in to buy it that they are required to buy a $6,000 upgrade package, the dealership's communication qualifies as . A) puffery B) retail deception C) bait-and-switch advertising D) pretense advertising E) false promotion Answer: C Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 125) Which of these tactics are advertisers legally allowed to use in the United States? A) Deceptive health claims B) Theft of trade secrets C) Bribery D) Bait-and-switch advertising E) Puffery Answer: E Diff: 3 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 31

126) What is the name of the European Union regulation that gives consumers control over their personal data? A) Consumer Privacy Act B) General Data Protection Regulation C) Privacy Control Regulation D) Data Sharing Restrictions Act E) Consumers in Control Act Answer: B Diff: 3 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 127) How many U.S. households does the data-tracking firm Acxiom have in its database that tracks the behavior of people offline, online, and on their mobile devices? A) Around 100,000 B) 126 million C) Nearly 1,000,000 D) 600 million E) The number is unknown Answer: B Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 128) What privacy objection did some Nordstrom customers raise that prompted the clothing retailer to drop a mobile app technology it was developing? A) Being personally identified to company researchers B) Being tracked via geolocation C) Not being able to opt out of marketing messages D) Being contacted on their mobile devices E) Having their store purchases recorded and analyzed Answer: B Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

129) Why do some parents object to free branded materials such as Care Bear worksheets being available in daycare centers? A) Concern that young children are too susceptible to such branding and advertising efforts B) Allegiance to competing brand names C) Concerns about fairness if some centers get the free materials and others don't D) Concerns that some teachers might be working undercover as brand ambassadors E) The pressure of being expected to buy products from those companies Answer: A Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 130) Which of these is a major concern about the 8- to 12-year-old tween market regarding privacy? A) Their lack of brand loyalty B) Their limited use of mobile devices C) Their willingness to disclose their locations via mobile devices D) Their defensiveness against invasive advertising E) The fact that only 60 percent of the parents of this group have enabled content-control features on their children's mobile devices Answer: C Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 131) Why did the Federal Trade Commission issue a cease-and-desist order against the makers of POM Wonderful pomegranate juice? A) For targeting minors in its advertising B) For violating mobile data privacy laws C) For disparaging competitors in its ads D) For making unsubstantiated health claims for the juice E) For not disclosing who owns the company Answer: D Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

132) Which of these marketing practices does NOT cross the line into unethical or illegal behavior? A) Bribery B) Theft of trade secrets C) False warranties D) Factual comparisons of competitive products E) Intentionally inaccurate labeling Answer: D Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 133) What is advertising "puffery"? A) Illegal claims B) Simple exaggerations that are not meant to be believed C) Exaggerations that are meant to be believed D) Bait-and-switch tactics E) Deceptive product packaging Answer: B Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 134) "The tastiest pizza in the universe" is an example of . A) bait-and-switch advertising B) deceptive advertising C) puffery D) unsubstantiated health claim E) competitive advertising Answer: C Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 135) technology enables marketers to track consumers' daily routines, frequently visited establishments, and even their movements within a retail store. A) Online B) Triangulation C) Time-space D) Geolocation E) Big data Answer: D Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

136) Routine business practices rarely pose ethical dilemmas. Answer: FALSE Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 137) Bait-and-switch advertising attracts buyers under false pretenses. Answer: TRUE Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 138) Teachers and parents are divided about the ethics of the increasingly heavy marketing push involving children. Answer: TRUE Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 139) Although salespeople are legally prohibited from saying things about their products that are not true, they may legally suggest things about competitors' products that are not true. Answer: FALSE Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 140) Deceptive advertising, exclusive dealing, and predatory competition sharply divide critics regarding whether they are clearly unethical or illegal. Answer: FALSE Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 141) Provide examples of the types of regulations that govern marketing in business markets. Answer: Examples include: It illegal for salespeople to misinform consumers or mislead them about the advantages of buying a product. They may not offer bribes to purchasing agents or others influencing a B2B sale. Their statements must match advertising claims, and they may not obtain or use competitors' technical or trade secrets through bribery or industrial espionage. They must not disparage competitors or their products by suggesting things that are not true. Diff: 3 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

142) Why are some teachers and parents divided over the matter of companies providing free branded learning materials to schools and daycare centers? Answer: Teachers and parents are divided about the ethics of the increasingly heavy marketing push involving children. Some side with groups such as Campaign for a Commercial-Free Childhood, whose members believe that children are incredibly susceptible to advertising and that schools' endorsements of products make children believe the product is good for them–no matter what it is. Yet many schools and day care centers operating on tight budgets welcome the free resources and promotional materials that marketers offer, such as Care Bear worksheets, Pizza Hut reading programs, and Nickelodeon magazines. Diff: 3 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 143) What did Target do to attract criticism in the way it marketed pregnancy-related products to expectant mothers? Answer: Target studied the buying histories of women who signed up for new-baby registries at the store and found that many bought large amounts of vitamin supplements during their first trimester and unscented lotion around the start of their second trimester. Target then used these purchase markers to identify women of child-bearing age who were likely to be pregnant and sent them offers and coupons for baby products timed to the stages of pregnancy and later baby needs. When the practice became known, however, some criticized the company's tactics, which had occasionally been the means by which family members learned that someone in the household was expecting. Diff: 3 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 144) Describe the role that U.S. colleges have taken in improving sustainability in the water industry. Answer: Colleges all over the country—from Western Washington University to Brown University, the University of Vermont, and the University of California at Berkeley—have banned the sale of plain bottled water, typically as part of a student-led movement toward greater sustainability on campus. Many colleges are installing hydration stations to make it easy for students to refill their personal refillable water bottles. Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

145) Characterize the general concern that consumers and privacy advocates have about the amount of data currently being collected about U.S. consumers? Answer: Almost every time consumers order products by mail or telephone, apply for a credit card, or take out a magazine subscription, their names, addresses, locations, and purchasing behaviors are captured and subsequently used by companies to market their offerings to these consumers. This naturally raises the concern that marketers may know too much about consumers' lives, and that they may use this knowledge to unfair advantage. The exploding amount of digital data created by individuals online can nearly all be collected, bought, and sold by advertisers, marketers, ad networks, data brokers, website publishers, social networks, and online tracking and targeting companies. Companies know or can find consumers' age, race, gender, height, weight, marital status, education level, political affiliation, buying habits, hobbies, health, financial concerns, vacation dreams, and much more. Diff: 3 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 146) Discuss the privacy concerns relating to the mobile device usage of tweens. Answer: With the explosion of cell phones, tablets, software apps, and social networking sites, an important concern is protecting unknowing or unsuspecting children in an increasingly complex technological world. The 8-to-12 tween market today is highly mobile and happy to share locations via an app and communicate with others by phone. Only one in five parents, however, uses basic content-control features on their children's smart phones, tablets, and game consoles. Thus, establishing ethical and legal boundaries in marketing to children via mobile devices continues to be a hot topic. Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 147) What is puffery? Is it legal in the United States? Answer: Puffery is the use of simple exaggerations that are not meant to be believed. Yes, is permitted under U.S. law. Diff: 1 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 148) How does Colgate-Palmolive's Colgate Junior toothpaste avoid the ethical issues of targeting children? Answer: This toothpaste has special features designed to get children to brush longer and more often. Thus, the issue is not who is targeted, but how and for what purpose. Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

149) How did Target raise privacy concerns with its marketing to expectant mothers? Answer: New parents are highly lucrative customers, but with birth records public, a slew of companies all discover them at the same time. To beat others to the punch, Target studied the buying histories of women who signed up for new-baby registries at the store and found that many bought large amounts of vitamin supplements during their first trimester and unscented lotion around the start of their second trimester. Target then used these purchase markers to identify women of child-bearing age who were likely to be pregnant and sent them offers and coupons for baby products timed to the stages of pregnancy and later baby needs. When the practice became known, however, some criticized the company's tactics, which had occasionally been the means by which family members learned that someone in the household was expecting. Target responded by including the offers with other offers unrelated to pregnancy, and sales in the promoted pregnancy-related categories soared. Diff: 3 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning 150) What does research tell us about consumer attitudes toward digital privacy? Answer: Research shows that more people, especially older consumers, are refusing to reveal private information online. At the same time, consumers are accepting more privacy intrusions every day, perhaps because they don't realize what information they are giving out, don't feel they have a choice, or don't think it will really matter. Diff: 2 LO: 21.4 Describe how companies balance social responsibility and corporate profitability. AACSB: Ethical understanding and reasoning

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