TEST BANK for Principles of Marketing 19th Edition Philip Kotler; Gary Armstrong; Sridhar Balasubram by StudyGuide

Test Bank For Principles of Marketing Revised by Michael Casey and Susan Leshnower

Principles of Marketing Nineteenth Edition Global Edition

Philip Kotler Gary Armstrong Sridhar Balasubramanian

TABLE OF CONTENTS Chapter 1 Marketing: Creating Customer Value and Engagement Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Engagement, Value, and Relationships Chapter 3 Analyzing the Marketing Environment Chapter 4 Managing Marketing Information to Gain Customer Insights Chapter 5 Consumer Markets and Buyer Behavior Chapter 6 Business Markets and Business Buyer Behavior Chapter 7 Customer Value-Driven Marketing Strategy: Creating Value for Target Customers Chapter 8 Products, Services, and Brands: Building Customer Value Chapter 9 Developing New Products and Managing the Product Life Cycle Chapter 10 Pricing: Understanding and Capturing Customer Value Chapter 11 Pricing Strategies: Advanced Topics Chapter 12 Marketing Channels: Delivering Customer Value Chapter 13 Retailing and Wholesaling Chapter 14 Engaging Consumers and Communicating Customer Value: Integrated Marketing Communications Strategy Chapter 15 Advertising and Public Relations Chapter 16 Personal Selling and Sales Promotion Chapter 17 Digital Marketing Chapter 18 Creating Competitive Advantage Chapter 19 The Global Marketplace Chapter 20 Sustainable Marketing: Social Responsibility and Ethics

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 1 Marketing: Creating Customer Value and Engagement 1) Which of these statements reflects Amazon founder Jeff Bezos’s opinion on the firm’s success and modern marketing? A) Focus on the bottom line B) Hire the right people C) Obsess over customers D) Sell everything to anybody E) Deliver savings Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate 2) According to management guru Peter Drucker, "The aim of marketing is to ________." A) maximize profits of the company B) emphasize customer wants and not customer needs C) make selling unnecessary D) fulfill unrealistic customer expectations E) sell products Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Easy 3) Marketing is defined as a set of strategies and activities by which companies acquire and engage customers, build strong customer and client relationships, and create superior customer value in order to ________. A) enhance research and development efforts B) maintain or gain the leading market position C) profit from the sale of products D) capture value from customers in return E) increase the firm’s revenue Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate

4) According to the five-step model of the marketing process, which of the following is the last step in creating value for customers? A) designing a customer-driven marketing strategy B) understanding the marketplace and customer needs C) constructing an integrated marketing program that delivers superior value D) building profitable relationships and creating customer delight E) capturing value from customers to create profits and customer equity Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate 5) According to the five-step model of the marketing process, a company should ________ before designing a customer-driven marketing strategy. A) determine how to deliver superior value to customers B) build profitable relationships with customers C) use customer relationship management to create full partnerships with key customers D) understand the marketplace and customer needs and wants E) construct an integrated marketing program Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate 6) Which of these objectives is one of the threefold goals of marketing? A) attract new customers by promising superior value B) extract as much profit as possible from the market segment C) focus on growing the firm’s market share D) create new products through extensive research and development E) partner with supply chain members to deliver low-cost products Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate 7) Marketing is managing profitable customer relationships. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Easy 8) One of the threefold goals of marketing is to eliminate unprofitable customers. Answer: FALSE 2

AACSB: Analytical thinking Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate 9) Marketing is a social and managerial process by which entities obtain what they need or want by creating and exchanging value with others. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Easy 10) List the five steps of the marketing process. Answer: Step 1: Understand the marketplace and customer needs and wants. Step 2:Design a customer value-driven marketing strategy. Step 3: Construct an integrated marketing mix that delivers superior value. Step 4: Engage customers, build profitable relationships, and create customer delight. Step 5: Capture value from customers to create profits and customer equity. AACSB: Application of knowledge Skill: Concept Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Easy

11) ________ are human needs that are shaped by culture and individual personality. A) Necessities B) Wants C) Demands D) Values E) Exchanges Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy

12) When backed by buying power, wants become ________. A) social needs B) demands C) physical needs D) self-esteem needs E) exchanges Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 13) __are states of felt deprivation. A) Value exchanges B) Market offerings C) Demands D) Needs E) Wants Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 14) Venus Williams now has the buying power to purchase an island in the Bahamas that she has wanted for several years. Venus’s want is now a(n) ________. A) need B) necessity C) exchange D) demand E) transaction Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate 15) A ________ is some combination of products, services, information, or experiences provided to consumers to satisfy a need or want. A) market offering B) value proposition C) brand positioning D) market segment 4

E) market mix Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 16) Firm ABC’s marketing team is convinced their primary products are superior to their competitors but their sales are declining. A consulting firm tells Firm ABC that they need to focus more on the benefits and experiences provided to the firm’s customers and focus less on the specific products. What does Firm ABC appear to suffer from? A) market offering dystopia B) demand focus C) value proposition D) marketing myopia E) marketing immersion Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate 17) Smart marketers look beyond the attributes of products and services. Instead, they focus on __. A) enhancing profitability B) creating brand experiences for their customers C) online buying and rapid delivery D) developing a superior supply chain network E) delivering a solid product at a value-conscious price Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 18) ________ is the act of obtaining a desired object from someone by offering something in return. A) Valuation B) Exchange C) Market offering D) Confiscation E) Donation Answer: B 5

AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 19) A(n) ________ is the set of actual and potential buyers of a product or service. A) market B) control group C) subsidiary D) focus group E) audience Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy Refer to the following scenario to answer questions 20 - 22. Rashad is the new customer relationship manager for retail Firm XYZ. Sales have been falling and no one at the firm knows why this is happening. The marketing team has evaluated the product offerings several times and is convinced the firm’s products are superior to their competitors. Rashad needs additional information to diagnose the problem and then establish a plan to reverse the trend. After interviewing the entire marketing team, Rashad learned that no one really knows anything about their customers other than a demographic profile created 10 years ago. 20) After discussing Firm XYZ’s current situation, Rashad learns that no one at the firm has attempted to address the problem from the customer’s perspective. He believes the marketing team is suffering from . A) product differentiation syndrome B) customer value creation C) exchange focus D) marketing myopia E) relationship intermediation Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate 21) Rashad knows that one of the key building blocks for developing and managing customer relationships is to . 6

A) focus on the product mix B) hire a comprehensive sales force C) create a superior marketing plan D) create better products E) satisfy customers Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 22. Why do you think sales have been falling at Firm XYZ? Answer: The team at Firm XYZ appears to be suffering from marketing myopia. They have become so focused on their products that they have lost sight of what customers need and want. AACSB: Analytical thinking Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate Refer to the following scenario to answer questions 23 - 25. Carol Veldt, owner of Seagull Terrace, watched her investment grow from a small, seaside motel to a thriving year-round resort in just a few years. Atop a cliff overlooking the Maine coast, Seagull Terrace had attracted thousands of visitors during summer, but then faced a tremendous downturn in business during winter. "But, given the established industries in the nearby towns, very little year-round competition, and our close proximity to Portland," Carol added, "I couldn't understand why seasonality had to hit Seagull Terrace so hard!" So, Carol spent her first winter devising a new marketing plan. She put together a promotional package designed to attract business travelers year-round. Carol's plan also involved a seasonal promotional gimmick–to be implemented from early winter to late spring–that would attract the same numbers as the large summer crowd. Her idea worked! During her second winter, Carol greeted numerous business travelers–both satisfied repeat guests as well as new guests who had been snagged by her promotional appeals. "We still have a long way to go," Carol admitted. "Our delicatessen offers entrees that are a part of the local cuisine, but we'd like to expand that. We provide health club privileges off-site, but we would like to eventually provide our own. These are goals I hope to achieve in a few years. Our first project, however, included a renovation of our guest rooms and I'm quite proud of the results." Carol then added, "Actually there are so many possibilities. With an indoor pool area, I will eventually offer weekend getaways throughout winter." 23) Seagull Terrace offers its customers good accommodations, local delicacies, and amazing seaside views. The overall experience provided at the motel is a part of its ________. 7

A) market offering B) target market C) market segment D) product positioning E) marketing mix Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Challenging 24) Carol Veldt’s marketing efforts resulted in creating and delivering value for her customers as evidenced by repeat guests. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 25) Explain how Carol Veldt transformed Seagull Terrace into an experience. Answer: Seagull Terrace was a simple seaside motel but Carol’s strategy turned the motel into an experience destination. She added amenities such as health and fitness options, better dining options, and also renovated the lodging. Her main focus was to rebrand the motel as an experience destination instead of merely a place to sleep on your summer vacation. AACSB: Analytical thinking Skill: Application Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate

26) Human needs are shaped by culture and individual personality. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 27) Market offerings are limited to physical products. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and 8

identify the five core marketplace concepts. Difficulty: Easy 28) What is a market offering? Answer: A market offering is any combination of products, services, solutions, and experiences that satisfy a consumer’s needs or wants. Furniture, financial services, and lodging are all examples of market offerings. AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 29) Explain how wants and resources help determine what we buy. Answer: Consumers demand products and services that will satisfy their wants and needs and fit within their budgets. They will purchase the products and services that deliver the most value and satisfaction per dollar spent. AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 30) Explain how the world’s number one hotel, Mahali Mzuri, maintains this status by offering more than lodging accommodations? Answer: Mahali Mzuri understands their guests want an experience and not simply a bed. The hotel delivers unique and unforgettable experiences by providing guests with multiple opportunities to view African wildlife. Guests get exposure to traditional Maasai culture without having to ‘camp out’ to get the experience. The hotel’s staff are attentive, and the accommodations are world class. In short, the hotel creates an immersive experience for its guests. AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 31) What should sellers consider if they wish to avoid marketing myopia? Answer: Sellers should consider the particular benefits and experiences desired by their customers, and not just pay attention to the specific products they offer. AACSB: Application of knowledge Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 9

32) Briefly compare and contrast the concepts of needs, wants, and demands and provide examples to illustrate your answer. How do these three concepts relate to marketing practices? Answer: Human needs are states of felt deprivation. Needs are a basic part of the human makeup; marketers do not create them. Humans have a basic physical need for food, clothing, warmth, and safety; a basic social need for belonging and affection; and a basic individual need for knowledge and self-expression. Wants are needs shaped by culture, society, and individual personality. For example, an American needs food but wants a Big Mac and a soft drink. Wants become demands when they are backed by consumers' buying power. For example, an American with ten dollars needs food, wants a Big Mac and soft drink, and demands lunch at McDonald's. Marketers conduct extensive research to understand customers' wants and demands. They then attempt to fulfill customers' wants and demands through their market offerings. AACSB: Written and oral communication Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate 33) Explain how and why marketers go beyond selling a product or service to create brand experiences. Answer: Sellers are most effective when they focus more on the benefits and experiences produced by their products and services than on the specific products and services themselves. Smart marketers focus on creating a brand experience, incorporating several products and services for their customers. By doing so, marketers hope to increase customer satisfaction. Satisfied customers buy again and tell others about their good experiences. AACSB: Written and oral communication Skill: Concept Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate 34) Some firms attempt to serve all market segments _. A) since the most profitable firms attract the most customers B) since they understand the customer needs and wants C) by focusing on cost cutting over other goals D) and end up not serving any of them very well E) and lose sight of their product mix Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 35) Dividing the market into various groups of customers is known as ________. A) market segmentation B) positioning 10

C) customization D) target marketing E) differentiation Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 36) Identifying which groups of customers to serve is known as ________. A) market segmentation B) positioning C) customization D) target marketing E) differentiation Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy Refer to the following scenario to answer questions 37 - 39. Kamesha’s Clothes is a retail clothing store that is considering expansion into nearby communities. Kamesha started her store four years ago and has done well focusing on providing stylish clothing to middle-income buyers. However, before she expands she would like to understand her customers better and see if she can expand her appeal to other demographic groups. During her last buying trip, she added some more expensive items to her inventory. However, very few of the added items have been sold. Kamesha is trying to decide whether to begin marketing the items more aggressively or whether to focus on other groups. 37) What should Kamesha do first as she attempts to expand her business? A) develop a targeted marketing campaign B) lower her prices on all items C) identify the various market segments D) hire a marketing manager E) consider hiring a consultant to help her make this decision Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Challenging 38) Kamesha’s second step should be to

_. 11

A) lower her prices on all items B) hire a marketing manager C) develop a targeted marketing campaign D) select the market segments she wants to pursue E) abandon her expansion efforts for the current time Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Challenging 39) What value proposition made Kamesha’s business successful and how can she build on that success? Answer: Kamesha’s initial success was based on focusing on providing stylish clothing to middle-income buyers. Instead of trying to serve another target market she should determine if there are unmet needs or wants among her middle-income buyers and expand accordingly. AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 40) An organic farmer has identified three distinct groups that might be interested in his products: vegetarians, health-conscious individuals, and people identified as trendsetters who try out new products in the market before others. These three groups are examples of ________. A) marketing mixes B) market segments C) value propositions D) market offerings E) marketing intermediaries Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Challenging 41) Which of the following customer questions is answered by a company's value proposition? A) "Why should I buy your brand rather than a competitor's?" B) "What is your company's estimated customer equity?" C) "What are the costs involved in the production of your brand?" D) "What is the budget allocated by your company for research and development?" E) "What is the financial stability of your company?" Answer: A AACSB: Analytical thinking 12

Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 42) Which of these marketing orientations focuses primarily on the product’s features, performance, and quality? A) production concept B) product concept C) selling concept D) marketing concept E) societal marketing concept Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 43) Which of the following marketing management concepts is most likely to lead to marketing myopia? A) customer-driven marketing concept B) customer-driving marketing concept C) societal marketing concept D) marketing concept E) product concept Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 44) Which of these statements is true of the selling concept? A) It focuses on a large-scale selling and promotion effort. B) It follows the customer-centered sense-and-respond philosophy. C) It focuses solely on the product’s attributes and features. D) It calls for sustainable marketing. E) It leads to companies focusing too narrowly on their own operations. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 13

45) The concept of marketing focuses on consumer wants, company requirements, and the long-run interests of consumers and society. A) selling B) product C) societal D) consumer E) production Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 46) Which of the following is the aim of the product concept? A) improve the marketing of a firm's best products B) market only those products with high customer appeal C) focus on the target market and make products that meet those customers' demands D) focus on making continuous product improvements E) ensure that product promotion has the highest priority Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 47) The concept of marketing takes an inside-out view that focuses on existing products. A) product B) selling C) production D) societal E) wholistic Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 48) Railroads were once operated based on the thinking that users wanted trains that would offer the most in quality, performance, and innovative features. The railroad managing companies overlooked the fact that there could be other modes of transportation. This reflects the ________ concept. A) product 14

B) production C) selling D) marketing E) societal marketing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Challenging 49) Which of these marketing orientations espouses the concept of shared value? A) the marketing concept B) the production concept C) the societal marketing concept D) the selling concept E) the product concept Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 50) Which of the following marketing orientations also considers consumer long-run welfare? A) the marketing concept B) the production concept C) the product concept D) the selling concept E) the societal marketing concept Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 51) The selling concept is typically practiced ________. A) to balance consumers' wants, company's requirements, and the society's long-run interests B) with products that offer the most in terms of quality, performance, and innovative features C) when the company focuses on building long-term customer relationships D) with goods that buyers normally do not think of buying E) by customer-driven companies Answer: D AACSB: Application of knowledge Skill: Concept 15

Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 52) Which of the following marketing orientations holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do? A) the product concept B) the production concept C) the selling concept D) the marketing concept E) the societal marketing concept Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 53) The societal marketing concept seeks to establish a balance between ________. A) customer lifetime value and customer equity B) an inside-out perspective and an outside-in perspective C) consumer short-run wants and consumer long-run welfare D) marketing mixes and market offerings E) customer-driven marketing and customer-driving marketing Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 54) Some fast-food restaurants offer tasty and convenient food at affordable prices, but in doing so they contribute to a national obesity epidemic and environmental problems. These fast-food restaurants overlook the ________ philosophy. A) marketing concept B) product concept C) production concept D) societal marketing concept E) selling concept Answer: D AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Challenging 16

55) The set of marketing tools a firm uses to implement its marketing strategy is called the ________. A) promotion mix B) product mix C) marketing mix D) market offering E) marketing effort Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 56) Which of the following is the most likely result of a marketing strategy that attempts to serve all potential customers? A) All customers will be delighted. B) Customer-perceived value will increase. C) All customers will directly turn into customer evangelists. D) Not all customers will be satisfied. E) Customers will not show interest in any other company's products. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 57) Which of these is NOT one of the four Ps of marketing? A) price B) place C) product D) profit E) promotion Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 58) At a local farmers' market, Molly Malone sells mussels while shouting to passersby, "Fresh seafood, get your fresh seafood here!" What kind of perspective is Molly taking? A) customer-focused B) inside-out 17

C) customer-driven D) outside-in E) niche marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Challenging 59) Market segmentation is the process of seeking fewer customers and reduced demand for profit maximization only. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 60) The selling concept holds that consumers will favor high quality products with the most features. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 61) The production concept and the product concept are marketing orientations that are more likely to lead to marketing myopia. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 62) Healthy Veggies, LLC, believes that marketing is a tool to use in finding customers and keeping them by providing vegetables that are grown using chemical-free farming techniques and selling through small family-owned stores. Healthy Veggies, LLC, practices societal marketing. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. 18

Difficulty: Challenging 63) What is a firm’s marketing mix? Answer: The marketing mix refers to the set of marketing tools the firm uses to implement its marketing strategy. The marketing mix tools are typically classified as the four Ps of marketing: product, price, place, and promotion. AACSB: Application of knowledge Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Easy 64) Company X, a manufacturer of office supplies, follows the selling concept. Explain how the firm may lose sight of customer relationships with this marketing orientation. Answer: The selling concept of Company X focuses on selling its office supplies rather than making what the market wants; such a strategy creates sales transactions but not long-term customer relationships. The company would most likely have a faulty assumption that customers who are persuaded to buy the product will like it or that they will buy the product again later even if they were not really initially satisfied. Company X will not foster customer loyalty with this approach. AACSB: Analytical thinking Skill: Application Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Challenging 65) Compare the selling and marketing concepts, listing the key components of each philosophy. Answer: The selling concept reflects an inside-out perspective, while the marketing concept takes an outside-in perspective. The selling concept is typically practiced when an organization is marketing products or services that buyers do not normally think of purchasing, such as insurance or blood donation. Aggressive selling focuses on creating sales transactions rather than building long-term relationships with customers, with the aim of selling what the company makes rather than making what the customer wants. The marketing concept, on the other hand, is based upon identifying the needs and wants of target markets and then satisfying those needs and wants better than competitors do. In contrast to the selling concept, marketing focuses on the customer, not the product, as the path to profits. AACSB: Written and oral communication Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 66) Briefly explain the societal marketing concept. Give an example of an organization that has effectively used the societal marketing concept. Answer: According to this concept, firms will succeed if they take underlying consumer needs 19

and society's well-being into account over the long term. A pure marketing concept can damage consumers' long-run welfare by focusing exclusively on satisfying consumers' short-run wants. Over an extended period of time, this too-narrow focus can be damaging to the company. In setting their marketing strategies, marketers today need to balance company profits, consumer wants, and society's interests. The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer's and society's well-being. It calls for sustainable marketing, socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Jeni's Splendid Ice Creams has a mission that stresses company profits, consumer wants, and societal interests. The company proactively seeks opportunities to act responsibly and efficiently. They ethically source all inputs from suppliers that have minimal impact on the environment and help build and shape local communities. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 1.3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Difficulty: Moderate 67) Which of these statements best describes customer lifetime value? A) The value of the entire stream of purchases that the customer would make over a lifetime of patronage. B) The value associated with creating a brand preference. C) The component of customer relationship management that focuses solely on customer delight. D) The overall value of the firm’s customer base. E) The value created when customer satisfaction generates additional sales. Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 68) Customer satisfaction is a goal that companies strive to achieve. Companies can accomplish this goal by ________. A) regularly putting products on sale B) promising only what they can deliver and then delivering more than they promise C) offering promotional deals such as "buy one and get one free" D) creating contests with exciting prizes E) using celebrities to advertise the products Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 20

69) Which of the following marketing strategies should marketing managers focus on to manage detailed information about individual customers and carefully manage customer touchpoints to maximize customer loyalty? A) customer divestment B) customer-managed relationships C) the societal marketing concept D) partner relationship management E) customer relationship management Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 70) ________ is determined by a customer's evaluation of the benefits and costs of a market offering relative to those of competing offers. A) Customer-perceived value B) Customer lifetime value C) Share of customer D) Customer-managed relationship E) Brand value proposition Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 71) Anu is trying to understand the cost-benefit analysis that customers make prior to buying his firm’s products. Specifically, he wants to know why a customer would pick his firm’s product over the products of his competitors. Anu is evaluating . A) customer satisfaction B) customer relationship management C) customer-perceived value D) customer engagement E) product satisfaction Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging

72) When customers purchase products they typically act on ________ as they judge values and costs. A) objective value B) perceived value C) customer lifetime value D) company image E) society's interests Answer: B AACSB: Reflective thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 73) The primary key to delivering customer satisfaction is to match product performance with ________. A) the performance of competitive products B) competitive prices C) aggressive advertising D) limited customer services E) customer expectations Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 74) Gerald bought a new drill from the hardware store and was really pleased with his purchase. He voluntarily left a glowing product review on the manufacturer’s website. Which of these terms describes Gerald’s behavior? A) customer-generated marketing B) partner relationship management C) customer lifetime value D) surrogate customers E) share of customer Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 75) Roberto bought a new cologne that he believes has a more pleasing fragrance than the one he has been using. When he compares the new cologne with his expectations about the brand he is assessing his level of ________. 22

A) customer delight B) customer satisfaction C) customer equity D) customer-perceived value E) customer lifetime value Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 76) Which of the following strategies would a company most likely use to delight customers? A) decrease the variety of offered services B) go the ‘second mile’ to keep customers satisfied C) raise prices to establish a ‘luxury good’ reputation D) ‘fire’ unprofitable customers E) limit customer experiences with the brand Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 77) Anil wants to make his firm’s brand a part of their customers’ everyday conversations and lives. Every decision he makes is with that focus in mind. What is Anil practicing? A) customer-perceived values B) customer satisficing C) customer relationship leveling D) customer-engagement marketing E) customer brand advocacy Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate

78) Greater customer empowerment means that companies can no longer rely on ________. A) promoting brand-consumer interaction B) generic market offerings C) marketing by intrusion D) concepts with an outside-in perspective E) marketing by attraction 23

Answer: C AACSB: Reflective thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 79) Kao Corp., a deodorant manufacturer, invited teenage girls to make an ad that would encourage other girls to buy the product. This program is an example of ________. A) societal marketing B) the production concept C) the selling concept D) partner relationship management E) customer-generated marketing Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 80) Elisandra, a marketing manager at a regional chain restaurant, has decided to organize a contest calling for customers to create commercials for the restaurant. Winning entries will be posted on the organization's home page. Elisandra's plan is an example of ________. A) customer-generated marketing B) partner relationship management C) customer lifetime value D) community development E) customer divestment Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 81) The fourth step in the marketing process is ________. A) capturing value from customers B) building profitable relationships and creating customer delight C) creating customer lifetime value D) understanding the marketplace E) designing a customer-driven marketing strategy to reap profits Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for 24

creating value for customers and capturing value from customers in return. Difficulty: Easy 82) "Losing a customer once means losing the entire stream of possible purchases that the customer would make over an extended period of patronage." This statement specifically indicates loss in terms of ________. A) customer-perceived value B) marketing offerings C) partner relationship management D) customer lifetime value E) value proposition Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 83) One danger of too much customer interaction is . A) too much control related to managing partner relationships B) selling new products on multiple platforms is confusing C) consumers can be overwhelmed with too many contacts D) converting "barnacles" to "strangers" is much harder E) capturing customer lifetime value is more difficult Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 84) The value of a customer's purchases over a lifetime of patronage for a single firm is known as ________. A) customer-perceived value B) share of customer C) customer insight D) customer lifetime value E) induced consumption Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy

85) Apart from retaining good customers, most marketers want to constantly increase their "share of customer." What does this mean in marketing terms? A) Marketers want to increase their market share. B) Marketers want to increase the share they get of the customer's purchasing in their product categories. C) Marketers want to diversify their operations and customize their products to cater to the entire market. D) Marketers want to continuously increase their customers' levels of satisfaction. E) Marketers want to turn satisfied customers into delighted customers. Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 86) ________ occurs when a firm works with others inside and outside of the firm to bring more value to their customers. A) Targeting new customers B) Partner relationship management C) Customer brand advocacy D) Customer-engagement marketing E) Partnership marketing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 87) Leticia is a licensed cosmetician and she helps her clients pick out the appropriate cosmetics based on their skin tones and personal preferences. Recently, she has added jewelry to her line. What is Leticia attempting to do by adding the jewelry? A) increase shared value B) increase her share of customer C) become more socially responsible D) engage in customer-generated marketing E) encourage brand loyalty Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 88) Which of the following refers to the total combined customer lifetime value of all of the 26

company's current and potential customers? A) share of customer B) marketing mix C) customer equity D) target market E) customer-perceived value Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 89) In the context of customer relationship groups, a is both profitable and loyal. A) true friend B) butterfly C) stranger D) barnacle E) market maven Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 90) Customers can be classified into four relationship groups based on their profitability and projected loyalty. Which customer type is associated with low profitability and very little longterm loyalty? A) barnacles B) strangers C) butterflies D) true friends E) cash cows Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 91) A company should not always target all possible customers. Which kind of customer is not the most valuable to a company, but can over time, contribute to the firm's success? A) butterflies B) shooting stars C) barnacles 27

D) true friends E) strangers Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 92) Which of these things received a boost from the COVID-19 pandemic lockdown? A) in-store sales B) promotional advertising C) artificial intelligence usage D) customer-generated content E) partner relationship management Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 93) A marketer wants to increase its "share of customer." How can they accomplish this goal? A) decreasing prices B) cross-sell and up-sell to existing customers C) sending samples directly to customers D) introducing customers to "brand evangelists" E) raising prices to appear more exclusive Answer: B AACSB: Reflective thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate Refer to the scenario below to answer the questions 94 - 97. Carol Veldt, owner of Seagull Terrace, watched her investment grow from a small, seaside motel to a thriving year-round resort in just a few years. Atop a cliff overlooking the Maine coast, Seagull Terrace had attracted thousands of visitors during summer, but then faced a tremendous downturn in business during winter. "But, given the established industries in the nearby towns, very little year-round competition, and our close proximity to Portland," Carol added, "I couldn't understand why seasonality had to hit Seagull Terrace so hard!" So, Carol spent her first winter devising a new marketing plan. She put together a promotional 28

package designed to attract business travelers year-round. Carol's plan also involved a seasonal promotional gimmick–to be implemented from early winter to late spring–that would attract the same numbers as the large summer crowd. Her idea worked! During her second winter, Carol greeted numerous business travelers–both satisfied repeat guests as well as new guests who had been snagged by her promotional appeals. "We still have a long way to go," Carol admitted. "Our delicatessen offers entrees that are a part of the local cuisine, but we'd like to expand that. We provide health club privileges off-site, but we would like to eventually provide our own. These are goals I hope to achieve in a few years. Our first project, however, included a renovation of our guest rooms and I'm quite proud of the results." Carol then added, "Actually there are so many possibilities. With an indoor pool area, I will eventually offer weekend getaways throughout winter." 94) Carol Veldt's plan also involves a seasonal promotional gimmick that she wants to promote aggressively. This is an example of the ________ concept. A) selling B) marketing C) product D) production E) societal marketing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 95) Renovations of the guest rooms at the Seagull Terrace and plans to add an indoor pool area are examples of the ________ concept. A) selling B) marketing C) product D) production E) societal marketing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 96) Carol Veldt has decided to ask selected guests to participate in an extensive survey about their experience at Seagull Terrace and about their requirements in terms of amenities and cuisines. By implementing the suggestions she receives from guests, Carol would be following the ________ concept. A) production 29

B) product C) selling D) marketing E) societal marketing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 97) How can Carol capitalize on the concept of “customer-perceived value?” Answer: Carol has done well but still does not appear to truly know her customers. She needs to spend some time learning about what features attract them the Seagull Terrace and what features she could add to enhance the overall experience. Then she can focus on learning how to attract new customers that fit the same profile. For example, she could offer discounts to repeat customers who bring a friend along or refer a friend. AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 98) Coronada believes in cultivating her customer base and doing whatever is necessary to make her customers happy. She believes it is much easier to retain a customer than it is to attract a new one. What is Coronada attempting to accomplish? A) build customer lifetime value B) grow her share of customer C) harvest short-term profits D) develop a sustainable marketing plan E) devise a marketing strategy Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Challenging 99) When satisfied customers talk favorably about a brand with their friends and colleagues it is known as __. A) customer relationship leveling B) customer brand advocacy C) customer-perceived value D) satisficing E) customer relationship management Answer: B 30

AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 100) Which of these digital media is NOT a social media platform that marketers can use to engage customers? A) TikTok B) Facebook C) Google D) Instagram E) Twitter Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 101) In today’s digital age firms need to rely more on __ instead of marketing by intrusion. A) artificial intelligence B) traditional selling techniques C) pushing consumers to act D) marketing by attraction E) marketing by extrusion Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 102) Barnacles are highly loyal and highly profitable customers. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 103) Customer lifetime value is essentially the combined future value of all the firm’s expected sales. Answer: FALSE AACSB: Application of knowledge 31

Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 104) The total lifetime combined value of a firm’s customers is known as customer equity. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 105) In customer-generated marketing, consumers play a bigger role in shaping brand experiences. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 106) Customer-generated marketing occurs when customers play a role in shaping their own brand experiences and those of other customers. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 107) How can a firm use customer-generated marketing to increase brand awareness? List an example of a firm using this tactic. Answer: Customer-generated marketing often involves uninvited customer-to-customer exchanges and emerges organically. However, some firms have been able to generate this activity by hosting contests for new products or ideas. For example, Oreos asked consumers for new flavor ideas and the top three ideas were created and sold with consumers voting for the winner. The winner received a $500,000 cash prize. AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 108) Explain the concept of “share of customer.” 32

Answer: Share of customer refers to the fraction of a consumer’s spending that a firm is able to capture. For example, a clothing retailer might add ties and cuff links to its product mix in order to capture additional sales from the same customers. AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 109) Explain what marketers can expect from individuals in the customer relationship group classified as "butterflies." Answer: "Butterflies" are potentially profitable but not loyal. Marketers should enjoy this type of customer "for the moment" because they soon flutter off. Marketers should create profitable and satisfying transactions with "butterflies," then cease investing in them until the next time around. Marketers can expect transactions with butterflies when conditions are optimal, but they should not expect butterflies to become loyal customers. AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 110) Describe and compare the four types of customers classified by their potential profitability to an organization. Explain how an organization should manage each type of customer. Answer: The four types of customers are strangers, butterflies, true friends, and barnacles. "Strangers" have low potential profitability and loyalty. A company's offerings do not fit well with a stranger's wants and demands. Companies should not invest in building a relationship with this type of customer. Another type of customer in which a company should not invest is the "barnacle." Barnacles are highly loyal but not very profitable because there is a limited fit between their needs and the company's offerings. The company might be able to improve barnacles' profitability by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be "fired." Like strangers, "butterflies" are not loyal. However, they are potentially profitable because there is a good fit between the company's offerings and their needs. Like real butterflies, this type of customer will come and go without becoming a permanent, loyal consumer of a company's products. Companies should use promotional blitzes to attract these customers, create satisfying and profitable transactions with them, and then cease investing in them until the next time around. The final type of customers is "true friends"; they are both profitable and loyal. There is a strong fit between their needs and the company's offerings, so the company should make continuous relationship investments in an effort to go beyond satisfying and to delight these customers. A company should try to convert true friends into customer evangelists who tell others about their good experiences with the company. AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. 33

Difficulty: Challenging 111) Explain the concept of customer equity. Answer: Customer equity is the total combined customer lifetime values of all the company’s customers. It is a measure of the future value of the firm’s customer base. AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 112) How can a marketer increase its "share of customer"? Answer: The marketer can offer greater variety to customers; in addition, the marketer can train employees to cross-sell and up-sell in order to market more products and services to existing customers. AACSB: Reflective thinking Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 113) Define customer relationship management and explain its associated tools and levels of relationships. Answer: Customer relationship management is the process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. A company with mostly low-margin customers is likely to seek basic relationships, using brandbuilding advertising, public relations, and so on. An organization with few customers and high margins, on the other hand, will work to create full partnerships with key customers. To create stronger bonds with customers, some companies offer frequency marketing programs that reward customers who buy frequently or in substantial amounts. Other companies sponsor club marketing programs that offer members special benefits and create member communities. AACSB: Application of knowledge Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 114) Explain why the aim of customer relationship management is to create not just customer satisfaction, but also customer delight. Answer: Customer satisfaction cannot be taken for granted. Because brand loyalty is dependent upon strong customer satisfaction, companies strive to retain, satisfy, and even delight current customers. Outstanding marketing companies go out of their way to keep important customers satisfied. Most studies show that higher levels of customer satisfaction lead to greater customer loyalty, which in turn results in better company performance. Firms create customer delight by promising only what they can deliver and then delivering more than what they promised. They 34

also create emotional relationships with key customers. Delighted customers make repeated purchases and become willing marketing partners and "customer evangelists" who tell other potential customers about their positive experiences with the product. AACSB: Written and oral communication Skill: Concept Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 115) Marketers use mobile channels for several purposes. Which of the following is LEAST likely to be one of those purposes? A) Enrich the brand experience. B) Send billing statement. C) Stimulate immediate buying. D) Make shopping easier. E) Boost sampling. Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 116) The technology that involves machines that think and learn like humans is known as A) big data B) analytics C) artificial intelligence D) the Internet of things E) digital thinking Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 117) Amazon Echo's Alexa is an example of A) desktop computing B) data analytics C) the worldwide web D) artificial intelligence E) digital learning Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing 35

landscape in this age of relationships. Difficulty: Easy 118) Government agencies design ________ to encourage energy conservation and discourage smoking, excessive drinking, and drug use. A) club marketing programs B) social marketing campaigns C) consumer-generated marketing campaigns D) ambush marketing campaigns E) frequency marketing programs Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 119) As part of the rapid globalization of today's economy, companies are selling more domestically produced goods in international markets and ________. A) taking a local view of their industry B) purchasing more supplies abroad C) reducing competition within their industry D) downplaying concerns for social responsibility E) competing solely in traditional marketplaces Answer: B AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 120) Iceco Inc., an ice cream manufacturing company, encourages all stakeholders, including the top management and all employees, to consider individual and community welfare in their dayto-day decisions. This action undertaken by Iceco reflects ________. A) environmentalism B) social responsibility C) the selling concept D) partner relationship management E) marketing myopia Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Challenging 36

121) Marketing in the non-profit sector is applied in all but which of these ways? A) to enhance their images B) to attract memberships C) to publicize the organization's supporters D) to design social marketing campaigns for specific causes E) to encourage donor support Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 122) A museum targeting different demographic groups to increase attendance is an example of ________. A) affinity marketing B) not-for-profit marketing C) societal marketing D) evangelism marketing E) affiliate marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 123) Your state's department of education has budgeted a significant amount of money for a radio, print, television, and online advertising campaign emphasizing the long-term benefits, both educationally and professionally, of reading every day. This is an example of a(n) ________ campaign. A) perspective marketing B) social marketing C) inbound marketing D) consumer-generated marketing E) affiliate marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 124) Many organizations use multiple social media, such as Facebook, Twitter, Instagram, and YouTube. What is the primary reason a company would use multiple social media? A) entice customers to one of the social media sites 37

B) present a carefully integrated message to fans and customers C) improve its "hit" count D) appeal to new customers E) increase its prices because it is more well-known Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Challenging 125) When a firm, such as Ben & Jerry’s, is civic minded and socially responsible they are practicing __. A) pure capitalism B) cronyism C) caring capitalism D) prosperity marketing E) mission-centered marketing Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 126) Which of these trends is NOT one of the major trends shaping marketing? A) Rapid globalization B) Explosive growth in digital technology C) Growth of not-for-profit marketing D) Renewed focus on selling E) Sustainable marketing Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 127) Which of these is NOT one of the ways firms use big data in their marketing efforts? A) To gain deep customer insights B) To create personalized marketing efforts C) To increase the speed of marketing analysis D) To improve customer engagement E) To provide better customer service Answer: C AACSB: Application of knowledge 38

Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate

128) Many company and brand websites also serve as online brand communities, where customers can congregate and exchange brand-related interests and information. Answer: TRUE AACSB: Integration of real-world business experiences Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 129) The Internet of Things is a new product created by multiple companies working together. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 130) Organizations choose to use only a few of the available online and social media. Using multiple social media results in confused fans. Answer: FALSE AACSB: Application of knowledge Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Challenging 131) Social media sites with small audiences, such as Birdpost.com, can be as effective in creating customer engagement as sites with large audiences, such as Pinterest. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 132) McDonald’s is an American restaurant with limited global exposure. Answer: FALSE AACSB: Application of knowledge Skill: Application 39

Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 133) What is “not-for-profit marketing” and why has it expanded in recent years? Answer: Not-for-profit marketing is used by various non-profit organizations such as universities, foundations, hospitals, museums, and other organizations to raise funds. This sector has grown significantly as the competition for donor dollars and grant money has increased. AACSB: Application of knowledge Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 134) What do marketers mean when they mention the “Internet of Things?” Answer: The Internet of Things refers to the current level of digital access where a significant percentage of the world’s population is now online. Almost 5 billion people are now online and have the ability to research products, search for products, and order them online. Ninety-seven percent of Americans are digitally connected through smartphones and computers. AACSB: Analytical thinking Skill: Application Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Easy 135) Explain how the growth of digital technology has transformed the way in which companies conduct business today. Answer: At the most basic level, marketers set up company and brand Web sites that provide information and promote the company's products. Many of these sites also serve as online brand communities, where customers can congregate and exchange brand-related interests and information. Beyond brand Web sites, most companies are also integrating social and mobile media into their marketing mixes. AACSB: Analytical thinking Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 136) How are local retailers affected by global competition? Answer: A local retailer might have global suppliers and customers. The retailer's goods may come from abroad, or components of those goods may be produced or assembled abroad. In addition, a local retailer may also sell goods over the Internet to international customers. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing 40

landscape in this age of relationships. Difficulty: Moderate 137) Discuss the challenges and advantages of new communication technologies for marketers as they work to build relationships with their customers. Answer: Through the Internet and related technologies, people can now interact in direct and surprisingly personal ways with large groups of others, from neighbors within a local community to people across the world. With communication technologies such as e-mail, blogs, Web sites, online communities, and online social networks, today's marketers incorporate interactive approaches that help build targeted, two-way customer relationships. Marketers can create deeper consumer involvement and a sense of community surrounding a brand, making a brand a meaningful part of consumers' conversations and lives. However, while new communication tools create relationship-building opportunities for marketers, they also create challenges. They give consumers a greater voice, and therefore greater power and control in the marketplace. In fact, the marketing world is beginning to embrace customer-managed relationships. Today's consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers. This benefits companies when views of its products are positive, but can be damaging when customers share stories of negative experiences with a company's products. AACSB: Analytical thinking Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 138) Discuss how artificial intelligence is currently used in marketing. Answer: Artificial intelligence (AI) is being used to analyze data in real time and use the insights gleaned from this analysis to engage customers and assist them in the buying process. AI is used to provide advice and product recommendations. Visible uses of AI include Apple’s Siri and Amazon Echo’s Alexa. AACSB: Analytical thinking Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 139) List some of the digital trends shaping the way marketers interact with customers. Answer: The digital world is exploding with social media applications, mobile marketing tools, and numerous blog sites where marketers can reach consumers. AI can be used to rapidly analyze data and interact with customers and potential customers seeking advice and product recommendations. AACSB: Analytical thinking Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Moderate 41

140) How do today’s consumers impact the firm’s social responsibility efforts? Answer: Today’s consumers are more focused on sustainability and social responsibility than in the past. Experts anticipate this focus will continue to grow. Consumer cast their dollar votes for products and firms that are more socially responsible and have numerous outlets to express displeasure if firms are not considering the societal impact of their actions. This consumer pressure is driving more firms to behave responsibly. AACSB: Analytical thinking Skill: Concept Objective: LO 1.5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships. Difficulty: Challenging

Quantitative Questions 1) Amazon accounts for 41% of all online sales in the United States. How much were total U.S. online revenues in 2021 if Amazon’s revenues for that year were $470 billion? A) $192.7 billion B) $1,146.3 billion C) $662.7 billion D) $1,625.7 billion E) $885.4 Answer: B; You can compute this by dividing Amazon’s revenue by .41, so $470 billion/.41 = $1,146.3. AACSB: Analytical thinking Skill: Application Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate 2) Amazon’s revenue averages $893,873 every minute of every day. Approximately how much revenue does Amazon generate every 24 hour period? A) $650 million B) $1.1 billion C) $1.3 billion D) $470 million E) $893 billion Answer: C; The first step is to determine the total number of minutes in a day. So, 60 minutes x 24 hours = 1,440 minutes per day x $893,873 = $1,287,177,120 per day, or almost $1.3 billion per day. AACSB: Analytical thinking Skill: Application Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Moderate 3) Assume Facebook computes the value of a single user to be $1.35 each per month. How much is the value of Facebook’s monthly 2.9 billion member user base? 42

A) $2.915 billion B) $2.148 billion C) $4.576 billion D) $7.981 billion E) $3.915 billion Answer: E; You compute the value by multiplying $1.35 x 2.9 billion users = $3.915 billion. AACSB: Analytical thinking Skill: Application Objective: LO 1.1: Define marketing and outline the steps in the marketing process. Difficulty: Easy 4) Ninety-four percent of Americans believe it is dangerous to send a text while driving. How many adults recognize the danger of texting and driving if there are 209.1 million adults living in the United States? A) 196.6 million B) 209.1 million C) 222.4 million D) 334.1 million E) 287.3 million Answer: A; You compute the answer by multiplying 0.94 x 209.1 million = 196.6 million AACSB: Analytical thinking Skill: Application Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 5) Mahali Mzuri luxury tent accommodations during the low season cost $945 per night per person. If they are at capacity of 24 people a night how much revenue will they generate per week? A) $6,615 B) $45,360 C) $22,680 D) $158,760 E) $201,540 Answer: D; Compute this by $945 per person x 24 people x 7 days = $158,760 in weekly revenue. AACSB: Analytical thinking Skill: Application Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Moderate 6) Firm XYZ estimates the size of their target market in dollar value is about $435 million. They believe they can bump their market share to 12% by next year. What is the size of Firm XYZ’s market? A) $2.4 million 43

B) $12.7 million C) $52.2 million D) $59.1 million E) $523.5 million Answer: C; Compute this by multiplying $435 million x .12 = $52.2 million AACSB: Analytical thinking Skill: Application Objective: LO 1.2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Difficulty: Easy 7) Jared’s annual income is $1,872,000 and he splurged and purchased a Patek Philippe watch for $322,000. What percentage of his income did he spend on the watch? A) 32.2% B) 17.2% C) 9.1% D) 43.4% E) 55.8% Answer: B; You compute this by dividing the cost of the watch by his annual income. So, $322,000/$1,872,000 = .172, or 17.2% AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 8) Firm XYZ spent $4.2 million on advertisement to reach 21 million people using a high profile time slot on television. How much did the ad cost per viewer? A) 42 cents per viewer B) $2 per viewer C) $20 per viewer D) 20 cents per viewer E) $2.10 per viewer Answer: D; You divide the cost by the number of viewers to get the cost per viewer. So, $4.2 million/21 million = .20, or 20 cents per viewer. AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate 9) Firm XYZ created a competition for the best customer-generated marketing idea for their product. The prize was a $500,000 award with the winner receiving the entire amount. However, after judging, it was determined to be a three way tie. How much did each winner receive? A) $166,667 each B) $250,000 each 44

C) $500,000 each D) $125,000 each E) $100,000 each Answer: A; $500,000/3 winners = $166,667 each AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Easy 10) What is the customer lifetime value of someone who spends an average of $125 week and will be a good customer for 15 years? A) $82,200 B) $19,500 C) $97,500 D) $6,500 E) $12,500 Answer: C; $125 week x 52 weeks x 15 years = $97,500 AACSB: Analytical thinking Skill: Application Objective: LO 1.4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Engagement, Value, and Relationships 1) ________ is a description of the organization’s purpose—what it wants to accomplish in the larger environment. A) Benchmarking B) A SWOT analysis C) Market segmentation D) A mission statement E) A strategic plan Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 2) Which of the following is true with regard to strategic planning? A) At the corporate level, the company starts the strategic planning process by determining what portfolio of businesses and products is best for the company. B) A strategic plan deals with a company's short-term goals. C) The focus of strategic planning is to define a game plan for long-run survival and growth. D) The strategic plan is a statement of an organization's purpose. E) Strategic planning involves identifying segments of consumers with identical preferences. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 3) CVS Health’s overall aim is to be a “pharmacy health care innovation company,” one that is “helping people on their way to better health.” Its marketing strategies and programs must support this aim. This is an example of a A) vision statement B) mission statement C) marketing mix D) value proposition E) strategic planning statement Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 4) Mission statements should ________ and be defined in terms of ________. 1 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) be technology oriented; meeting the self-actualization needs of customers B) be product oriented; satisfying the esteem needs of customers C) embody the company's short-term plans; current opportunities D) be market oriented; satisfying basic customer needs E) address sales and profits; the net return on investments Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 5) More than 70 years ago, IKEA founder Ingvar Kamprad developed the “IKEA concept.” He was a native of Småland, Sweden, where the soil was poor and the people had a reputation for working hard, living frugally, and making the most of limited resources. IKEA reflects those characteristics—“offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” This ____________ forms the foundation for IKEA’s entire operating model, and it provides the guiding light for IKEA’s culture and values. A) mission statement B) profit statement C) sustainability plan D) market segmentation strategy E) employee reward plan Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 6) In its quest to improve people’s lives, IKEA obsesses over ________. A) its technology B) the customer experience C) the training of its employees D) return on investments E) new products Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate

7) A company’s mission should ____be stated as making more sales or profits. A) not B) sometimes C) always D) occasionally E) frequently Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 8) Which of the following companies has a market-oriented business definition? A) An electronics company, whose business definition is: "We produce microchips." B) A hotel, whose business definition is: "We rent rooms." C) An apparel company, whose business definition is: "We make and sell women's clothing." D) A cosmetic company, whose business definition is: "We sell hope and self-esteem." E) A pizzeria, whose business definition is: "We sell the world's most delicious thin-crust pizzas." Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 9) Which of the following is NOT an example of product-oriented mission statements? A) "We are an online library." B) "We run theme parks." C) "We sell athletic shoes." D) "We sell memorable experiences." E) "We rent hotel rooms." Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 10) “We sell lifestyle and self-expression by helping customers to unlock their beauty potential.” This is Sephora’s __________. A) product-oriented definition B) SWOT analysis C) market-oriented definition D) market-segmentation plan E) strategic planning statement Answer: C AACSB: Analytical thinking 3 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 11) Strategic planning is the process of developing and maintaining a profitable strategic fit between an organization’s goals and capabilities and its changing marketing opportunities. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 12) A mission statement is a document embodying an organization's short-term goals. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 13) Mission statements should be product oriented. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 14) "At Trader Joe's, our mission is to provide all our customers the best food and beverage values to be found anywhere, and the information to make informed buying decisions." This is a product-oriented business definition. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 15) How does strategic planning benefit companies? Answer: Strategic planning sets the stage for all other planning in the firm. The strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment. AACSB: Analytical thinking; Reflective thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 16) Should mission statements be product or technology oriented? 4 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: Mission statements should be market oriented and defined in terms of satisfying customer and societal needs. Products and technologies eventually become outdated, but market and societal needs may last much longer, even forever .AACSB: Application of knowledge Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 17) Define strategic planning. Discuss the steps involved. Answer: The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its marketing opportunities is called strategic planning. At the corporate level, the company starts the strategic planning process by defining its overall purpose and mission. This mission is then turned into detailed supporting objectives that guide the entire company. Next, headquarters decides what portfolio of businesses and products is best for the company and how much support to give each one. In turn, each business and product develops detailed marketing and other departmental plans that support the company-wide plan. Thus, marketing planning occurs at the business-unit, product, and market levels. It supports company strategic planning with more detailed plans for specific marketing opportunities. AACSB: Application of knowledge Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 18) The collection of businesses and products that make up a company is called a ______. A) cash cow B) marketing mix C) market segment D) business portfolio E) product line Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 19) You probably know Johnson & Johnson for its many iconic consumer health brands, maybe BAND-AID brand adhesive bandages, Johnson’s baby shampoo, or Tylenol pain reliever. But did you know that the substantial bulk of J&J’s revenue comes from its pharmaceuticals and medical devices businesses? This is an example of (a) _______. A) business portfolio B) market segmentation C) SWOT analysis D) mass marketing E) strategic planning Answer: A AACSB: Analytical thinking 5 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 20) ______refers to the process by which management evaluates and plans for the future of the products and businesses that make up the company. A) Strategic business unit (SBU) B) SWOT analysis C) Strategic planning D) Portfolio analysis E) Growth-share matrix Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 21) During portfolio analysis, a company ________ after identifying the key businesses that make up the company. A) formulates a short-term marketing plan B) assesses the attractiveness of its various SBUs C) assesses its strengths and weaknesses D) performs a SWOT analysis E) assesses the effectiveness of its various channel intermediaries Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 22) A portfolio-planning method that evaluates a company’s strategic business units (SBUs) in terms of market growth rate and relative market share.is called (a) _______ A) portfolio analysis B) strategic plan C) growth-share matrix D) profit statement E) SWOT analysis Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate

Refer to the scenario below to answer questions 23-25. Carolina crafted a new kind of dog food that was very healthy. She used only high-quality organic ingredients. She sourced her ingredients from non-GMO providers and made sure that none of her suppliers used child labor. Carolina carefully selected packaging materials that were environmentally friendly and completely compostable. She made sure that the packages of dog food were easy to open without having to use a scissors or knife. Carolina researched the prices on competing dog food brands and offered an introductory offer at a lower price. Carolina advertised her products in health-food stores and in upscale retailers such as Whole Foods. At first sales were robust. Dog owners were willing to give the product a try. They responded favorably to Carolina’s effort to offer a product that was healthy for dogs and “healthy” for the planet. However, after the initial sales period, Carolina saw that sales of her product declined. She increased her advertising, but sales continued to fall. When Carolina conducted an online survey about her dog food, she learned to her surprise that the dogs didn’t like the taste and wouldn’t eat the dog food. 23) According to the Boston Consulting Group approach, Carolina’s product was a _______. A) dog B) star C) question mark D) cash cow E) domino Answer: A AACSB: Application of Knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 24) Carolina’s mission should focus on customer benefits. In this scenario, who is the target customer? A) the health-food store B) the dogs C) the suppliers of organic ingredients D) the packaging company E) the pet owner Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 25) What action should Carolina take? Answer: Carolina needs to adjust the flavor and texture of her product to appeal the end-user of the product---the dogs. If the dogs won’t eat the dog food, then the product will fail even though it is healthy, priced competitively, well-promoted, and environmentally friendly. Carolina needs 7 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

to test market different flavors to see what appeals to the dogs. AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 26) In the BCG matrix approach, high-growth, high-share businesses or products are called _____. A) market segments. B) question marks C) stars D) dogs E) cash cows Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 27) ________ are low-growth, high-share businesses/products that need less investment to hold their market share. A) Stars B) Cash cows C) Question marks D) Dogs E) Bears Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 28) _____can represent significant opportunity costs by absorbing managerial energy and attention that could be used more profitably elsewhere. A) Cash cows B) Dogs C) Stars D) Question marks E) Advertising Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 8 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

29) Company growth by increasing sales of current products to current market segments without changing the product is called: A) market skimming B) market penetration C) market development D) product line development E) portfolio analysis Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 30) Sunshine, a well-known coffee shop chain in South America, recently opened 500 stores to cater to its rapidly increasing number of patrons. This exemplifies ________. A) product diversification B) market skimming C) market share D) market penetration E) product development Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 31) _______require a lot of cash to hold their share, let alone increase it. Management has to decide if it should try to build phased or out these products. A) Cash cows B) Question marks C) Stars D) SBUs E) Dogs Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 32) IKEA is a “global home furnishing brand that brings affordability all over the world. IKEA’s expansion into China shows that the company is most likely following a ________ strategy. A) local marketing B) market development C) diversification D) product adaptation E) product development 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 33) Starbucks developed Via instant coffee, and it sells its coffees and Tazo teas in K-Cup packs that fit Keurig at-home brewers. This is an example of ________. A) market penetration B) product development C) mass marketing D) market development E) product adaptation Answer: B AACSB: Application of Knowledge Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy Refer to the scenario below to answer questions 34-36. The managers of Alfredo’s Pizza, a popular pizzeria in New York City, have been increasingly encouraging senior citizens to visit the pizzeria’s numerous outlets spread across the city. Anticipating a rise in the population of senior citizens in the area, the management of Alfredo’s Pizza is seeking to tap into this promising segment that consists of retired, affluent consumers. Alfredo’s serves the same types of pizza that family members created decades ago. Customers come to Alfredo’s to eat the well-known, delicious pizza with a special crust. There is no need for Alfredo’s to offer new kinds of pizza because customers come from all over Manhattan for Alfredo’s classic pizza. 34) In this instance, the managers of Alfredo’s Pizza are anticipating company growth through ________. A) market development B) product development C) mass customization D) niche marketing E) product differentiation Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 35) The one outstanding ingredient in Alfredo’s Pizza is its special pepperoni. Alfredo’s is most likely following a ________ strategy. 10 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) market penetration B) product differentiation C) downsizing D) diversification E) marketing development Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 36) If Alfredo’s decides to sell frozen pizzas to its New York City customers, this would be an example of ________. Answer: product development. Explanation: Alfredo’s is experiencing company growth by offering modified or new products to current market segments. This is product development. Alfredo is still appealing to his current customers in Manhattan, and is not diversifying into markets. AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 37) Sunny Brews is a coffeehouse chain based in Boston. It recently introduced Eva, a mild roast, which became immensely popular. This exemplifies ________. A) benchmarking B) diversification C) mass customization D) product development E) downsizing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 38) Starbucks continues to expand it lines of ready-to-drink beverages sold in grocery stores, such as Starbucks Coffee with Essential Vitamins, Starbucks Cold Brew Concentrate, and Starbucks Coffee with 2x the Caffeine. This is an example of ________. A) mass marketing B) strategic planning C) market segmentation D) product development E) partner relationship management 11 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 39) Starbucks Reserve brand, with Starbucks Reserve Roasteries and Starbucks Reserve Bars features high-end immersive experiences. Within its Starbucks Reserve locations, the company is opening Princi Bakery and Café shops, offering artisan Italian food— from fresh-baked bread and pastries to flaky cornetti to focaccia sandwiches—based on the recipes of famed Italian baker Rocco Princi. Starbucks is also experimenting with stand-alone boutique Princi bakery stores, taking the company beyond coffee and snack shops. This is an example of ________. A) portfolio analysis B) market segmentation C) value chain development D) diversification E) product differentiation Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 40) The ________is a set of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products A) growth-share matrix B) product line C) value chain D) supply chain E) product/market expansion grid Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate Refer to the scenario below to answer questions 41-44. Fun-Spot Fun Park began as a small amusement park in 1985. With nothing more than a merrygo-round, a slide, pony rides, and an ice cream stand, Fun-Spot grew into a popular family attraction with 20 rides, a restaurant, and an outdoor performing arts theater. "My wife, Gail, and I didn't know what we were getting into," commented Ron Hart, the owner. "We just knew that weekenders coming to the lakes in our rural area represented an untapped market." 12 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Today, thousands of visitors flock to Fun-Spot: families, children of all ages, and even senior citizens who enjoy strolling through the gardens and the arbors. "There's something here for everyone," Gail Hart said with a smile. "Dozens of companies hold annual company picnics here. We have welcomed class field trips. And we even had one wedding here at the park!" "Here's the funny thing," Ron chimed in. "We really don't know why we've been so successful. There is nothing else like Fun-Spot Fun Park in the area. We were just lucky." "I think it's the ambience of the park that has brought so many visitors," Gail added. "We provide a 'total package' of entertainment. Plus, we try to change our rides and various attractions from time to time for variety." Ron and Gail Hart admitted that making every visitor happy is a priority. "That has always been our philosophy," they said. "Like the park's motto at the entrance reads, 'We're here to make you happy!' And we've always been able to deliver on that because we've never allowed ourselves to grow too big too quickly." 41) Fun-Spot's mission is ________. A) product oriented B) technology oriented C) market oriented D) design oriented E) narrowly focused on profits Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 42) Fun-Spot Fun Park represents a high-growth, high-share business. According to the BCG matrix, it can be classified as a ________. Answer: Star. Explanation: The growth-share matrix places SBUs into four quadrants. Since Fun-Spot Park is a high-growth, high-share business, it would be classified as a star according to the BCG matrix. Stars often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows. AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 43) Ron and Gail plan to lower Fun-Spot's prices in an effort to encourage customers to stay longer, visit more often, and spend more money during each visit. What type of strategy are Ron and Gail planning? A) market penetration B) market development C) product development D) product adaptation 13 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) diversification Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 44) Ron and Gail, owners of Fun-Spot, strive to provide new offerings and entertainment options for their visitors. This type of strategy can be best described as ________. A) market penetration B) market development C) product development D) niche marketing E) diversification Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 45) Companies must carefully prune, harvest, or divest brands or businesses that no longer fit their overall strategy Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 46) Many companies have dropped formal matrix-based methods in favor of customized approaches that better suit their specific situations. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 47) Market development refers to identifying and developing new markets for its current products. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy

48) Starbucks’ stores in China have grown from 800 to 6,000 in the past eight years, with one new store opening every 15 hours. This is an example of product development. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate

49) Company growth through downsizing involves harvesting unprofitable products. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 50) What are the limitations of the SBU approach? Answer: Centralized approaches have limitations. They can be difficult to undertake, timeconsuming, and costly to implement. And they may not apply well or easily to certain types of markets facing structural changes or disruptions. AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 51) What is a dog and what strategy should a company take? Answer: Dogs are low-growth, low-share businesses and products. They may generate enough cash to just maintain themselves but do not promise to be large sources of cash. Even if they break even financially, dogs can represent significant opportunity costs by absorbing managerial energy and attention that could be used more profitably elsewhere. The company should take decisive action concerning its dogs. AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 52) Define diversification. Answer: Diversification refers to company growth through starting up or acquiring businesses outside the company’s current products and markets. AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 53) What is a business portfolio? What are the steps involved in business portfolio planning? Answer: A business portfolio is the collection of businesses and products that make up a company. Business portfolio planning involves two steps. First, the company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment. Second, it must shape the future portfolio by developing strategies for growth and downsizing. AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 54) What is a growth-share matrix? Discuss the BCG growth-share matrix. 16 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: The growth-share matrix is a portfolio-planning method that evaluates a company's SBUs in terms of market growth rate and relative market share. Using the now-classic Boston Consulting Group (BCG) approach, a company classifies all its SBUs according to the growthshare matrix. On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. The growth-share matrix defines four types of SBUs: 1. Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows. 2. Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay its bills and support other SBUs that need investment. 3. Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out. 4. Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash. AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 55) What are some of the problems associated with matrix approaches? Answer: The BCG and other formal methods revolutionized strategic planning. However, such centralized approaches have limitations: They can be difficult, time-consuming, and costly to implement. Management may find it difficult to define SBUs and measure market share and growth. In addition, these approaches focus on classifying current businesses but provide little advice for future planning. AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 56) Marketing plays a key role in the company's strategic planning in all of these ways EXCEPT ________. A) providing input to identify attractive market opportunities B) designing new products from scratch C) creating customer value and building profitable relationships with customer groups D) designing strategies for reaching a unit's objective E) providing a guiding philosophy Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Easy 17 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

57) Subway’s finely tuned__________ consistently delivers fresh, fast, and tasty made-to-order sandwiches at affordable prices. Subway is effective only to the extent that it successfully partners with its franchisees, suppliers, and others to jointly carry out its “Make It What You Want” positioning promise. A) channel of intermediaries B) external value stream C) demand chain D) value delivery network E) supplier chain Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Easy Refer to the scenario below to answer questions 58-60. Phil bought his first new Prius. He could afford a Tesla, but he chose the Prius. He took delivery of his brand-new car and started to drive it home enjoying the new-car smell of the interior. On the interstate he noticed the lights on the dashboard, the nicely designed cup holder, that popped out of the center console, he tried all of these with pleasure. On a whim he turned on the radio. His favorite classical music station came on with splendid sound that filled the entire interior of the car. Phil pushed the second button. It was his favorite news outlet. The third button brought his favorite talk station. The fourth button was set to his daughter’s favorite rock station. In fact, every button was set to his specific tastes. Phil knew the car was smart, but did it have a crystal ball? The mechanic at Prius had noted the radio settings on his trade-in and programmed them into the new Prius. Phil was delighted. This was his car now. No one told the mechanic to do this, but it was simply part of the Prius philosophy. Delight a customer and continue to delight a customer, and you will have a customer for life. What the mechanic did cost the company nothing. Yet it solidified the relationship, and Phil recommended buying a Prius to his neighbor. 58) Phil benefitted from the________________. A) company's value chain B) supply chain C) independent subsidiary of the company D) the company’s product development E) portfolio analysis Answer: A AACSB: Application of Knowledge Skill: Application Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. 18 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Moderate 59) Phil’s enjoyment of his new Prius results from the company’s ________. A) market penetration B) product development C) product orientation D) marketing orientation E) business portfolio Answer: D AACSB: Application of Knowledge Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Moderate 60) What does Phil’s experience demonstrate? Answer: Phil’s experience shows that creating a positive experience for the customer can build a profitable relationship with key customer segments and lead to future sales. AACSB: Application of Knowledge Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Moderate 61) The marketing concept focuses on creating customer value and building profitable relationships with key customer segments Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Easy 62) Customer engagement and value are the key ingredients in the marketer’s formula for success. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Easy 63) Which department is responsible for creating customer value? Answer: Engaging customers today requires a whole-company commitment. Marketers can play a key role in getting all departments to “think consumer” and developing a smoothly 19 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

functioning value chain. Success depends on how well each department performs its work of adding customer value. AACSB: Application of knowledge Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Moderate 64) Why is partner relationship management an important as part of the value chain? Answer: Marketers alone cannot produce superior value for customers. Marketers must practice partner relationship management, working closely with partners in other departments to form an effective value chain that serves the customer. And they must also partner effectively with other companies in the marketing system to form a competitively superior value delivery network. AACSB: Analytical thinking Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Moderate 65) What is a value chain? Answer: A Value chain is the set of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products. AACSB: Analytical thinking Skill: Concept Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Easy 66) A group of consumers who are expected to respond in a similar way to a given set of marketing efforts is a ____________ A) marketing strategy B) growth matrix C) marketing mix D) market segment E) value chain Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy

67) Which of the following is NOT an element of the marketing mix? A) place B) price C) promotion D) product E) penetration Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 68) Which of the following defines the company’s overall mission and objectives? A) portfolio analysis B) market segmentation C) strategic plan D) marketing mix E) value chain Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 69) To find the best marketing strategy and mix, the company engages in all of the following EXCEPT ______. A) marketing analysis B) planning C) implementation D) control E) innovation Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 70) The Texas T-Shirt Company sells t-shirts with the logos of the high schools in Odessa, Texas. This is a way to group consumers based on ___________factors. A) demographic B) geographic 21 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) psychographic D) behavioral E) biographic Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 71) Each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments. This process involves all of the following EXCEPT ______. A) market segmentation B) market targeting C) differentiation D) price discrimination E) positioning Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 72) Consumers who care mainly about price and operating economy make up a ________. A) marketing mix B) market segment C) value chain D) product group E) portfolio Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 73) It would be difficult to make one car model that was the first choice of all consumers. Companies should focus their efforts on meeting the distinct needs of ______. A) suppliers B) new customers C) marketing intermediaries D) individual market segments 22 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) SBUs Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 74) A company should ______segments in which it can profitably generate the greatest customer value and sustain it over time. A) downsize B) diversify C) target D) deliver E) avoid Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 75) In the car market, there are consumers who want the biggest, most comfortable car regardless of price. This shared response based on shared needs of customers constitutes a(n) _____. A) market segment B) value delivery network C) product group D) SBU E) interest group Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 76) Stitches of Love in Atlanta specializes in serving needlepoint enthusiasts, not quilters or knitters, who like to stitch with threads that are of exceptional quality even though they cost more than those offered by local craft stores. Which of the following best describes Stitches of Love? A) market follower B) market challenger C) early adopter D) market nicher E) laggard Answer: D AACSB: Application of knowledge 23 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Application Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 77) When Emily hears the word “Subaru,” she thinks of a safe car for driving her young children to school and soccer practice. This is an example of a firm's ________ as a safe car. A) portfolio B) marketing segment C) positioning D) marketing mix E) mission statement Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 78) Alpha Motors offers "Green automobiles for a greener world." This refers to the ________ of Alpha automobiles. A) brand resonance B) position C) brand equity D) pleasure value E) added value Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 79) In the marketing mix, design, packaging, services, and variety can be categorized under ________. A) product B) price C) promotion D) place E) position Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 24 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

80) The marketer must determine which segments offer the best opportunities. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 81) Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs is known as market penetration. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 82) Every market has segments, but not all ways of segmenting a market are equally useful. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 83) The four Ps concept adopts the seller's view of the market. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 84) Define the marketing mix. Answer: Guided by marketing strategy, the company designs an integrated marketing mix made up of factors under its control—product, price, place, and promotion (the four Ps). The mix itself must be long-term oriented, profitable, and sustainable. AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 85) Describe a marketing strategy. 25 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: Marketing strategy is the marketing logic by which the company hopes to create this customer value and achieve these profitable relationships. AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 86) What is market segmentation? Answer: Market segmentation refers to dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes. AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 87) Define the four As. Answer: Under the more customer-centered framework, acceptability is the extent to which the product exceeds customer expectations; affordability the extent to which customers are willing and able to pay the product’s price; accessibility the extent to which customers can readily acquire the product; and awareness the extent to which customers are informed about the product’s features, persuaded to try it, and reminded to repurchase. The four As relate closely to the traditional four Ps. Product design influences acceptability, price affects affordability, place affects accessibility, and promotion influences awareness. Marketers would do well to think through the four As first and then build the four Ps on that platform. AACSB: Application of knowledge; Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 88) Distinguish between market segmentation and market targeting. Answer: The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs, is called market segmentation. On the other hand, market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter. A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate 26 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

89) Most standard portfolio analysis methods evaluate SBUs on the ________. A) potential for niche or global marketing B) degree of product differentiation C) strength of the SBU’s position in the market or industry D) accessibility to rural markets E) number of successful business acquisitions Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 90) According to the Boston Consulting Group approach, ________ provides a measure of market attractiveness. A) product attribute B) product design C) market penetration D) market growth rate E) market segmentation Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate

91) Which of the following is true with regard to a SWOT analysis? A) It classifies SBUs into four distinct categories. B) It measures customer response to a new product. C) It evaluates the company's overall strengths. D) It evaluates the growth potential of a market segment. E) It ignores the threats faced by a company while assessing its situation in the market. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 92) ________ are current and emerging external factors that may challenge the company’s performance A) Weaknesses B) Question marks C) Opportunities D) Threats E) Strengths Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 93) ______include internal limitations and negative situational factors that may interfere with the company’s performance. A) Strengths B) Weaknesses C) Threats D) Opportunities E) Capabilities Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 94) Harris Brown, the marketing manager at a small retail chain, wants to assess his firm's strengths, opportunities, weaknesses, and threats. Which of the following would be best suited for his purpose? 29 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) SWOT analysis B) cluster analysis C) portfolio analysis D) regression analysis E) Porter's five forces analysis Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 95) Which of the following functions is NOT part of managing the marketing process? A) planning B) control C) budgeting D) implementation E) organization Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 96) ________ provides a complete analysis of the company's situation. A) A SWOT analysis B) A marketing audit C) Regression analysis D) Return on marketing investment E) Marketing budget evaluation Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 97) Marketing ________ addresses the what and why of marketing activities, while marketing ________ addresses the who, where, when, and how. A) analysis; planning B) planning; implementation C) implementation; planning D) organization; implementation 30 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) control; planning Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 98) Omega Inc. makes lightweight sunglasses with 100-percent UV protection for people who love to hunt, hike, and ride bikes. The company's long-term plans include the development of lenses that, in addition to protecting users from UV rays, would help reduce lens spotting through effective water-sheeting methods. This new feature would be valuable to people who fish. Given the rising popularity of recreational fishing in the United States, Omega products clearly have a huge market potential. In terms of a SWOT analysis, Omega has recognized a market ________. A) weakness B) strength C) threat D) opportunity E) challenge Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 99) The _____ presents a brief summary of the main goals and recommendations of the plan for management review, helping top management find the plan’s major points quickly. A) budget B) execution plans C) marketing strategy D) executive summary E) objectives and issues Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy

100) A _______consists of specific strategies related to target markets, positioning, the marketing mix, and marketing expenditure levels. It outlines how the company intends to engage target customers and create value in order to capture value in return. A) marketing budget B) portfolio analysis C) positioning statement D) SWOT analysis E) marketing strategy Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 101) Many managers think that "doing things right," or ________, is as important as, or even more important than, "doing the right things." A) strategy B) planning C) positioning D) implementation E) targeting Answer: D AACSB: Analytical thinking; Ethical understanding and reasoning Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 102) The most common form of marketing organization is the ________ organization. Under this organization, an operational specialist heads different marketing activities. A) geographic B) product management C) functional D) customer management E) market Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 32 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

103) Berman Electronics, a chain of appliance stores in North America, caters to a wide range of customers. It has a marketing organization in which different operational specialists head different marketing activities. Berman Electronics is a(n) ________. A) customer management organization B) niche marketer C) early adopter D) functional organization E) laggard Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Challenging 104) To head up such large marketing organizations, many companies have now created a _____ position. This person represents marketing on the company’s top management team A) chief marketing officer (CMO) B) chief financial officer (CFO) C) chief executive officer (CEO) D) director of human resources E) director of global marketing Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 105) Emerson Studios has designed its marketing organization along the lines of a ________ organization in which operational specialists head different marketing activities. A) geographic B) product C) functional D) customer E) market Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 34 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

106) A company that sells nationally or internationally often uses a _____, assigning sales and marketing people to specific countries, regions, and districts. A) geographic organization B) product organization C) functional organization D) niche marketer E) mass marketer Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 107) Which of the following is true with regard to geographic organization? A) It is the most common form of marketing organization. B) Different marketing activities are headed by a functional specialist. C) It requires salespeople to have international experience. D) It reduces the overall efficiency of salespeople. E) It allows salespeople to work with a minimum of travel time and cost. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 108) Which of the following is a major advantage of the market organization? A) The company is organized around the needs of specific customer segments. B) The company exploits bleeding-edge technologies to keep ahead in the market. C) The company has a flat organizational structure. D) The company allows its salespeople to settle into a specific territory. E) The company caters to a single, small market segment. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy

109) Companies with many different products or brands often create a _________organization A) technology management B) product management C) customer management D) functional management E) geographic management Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 110) ________ refers to evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved. A) Marketing control B) Marketing implementation C) Satisficing D) Prospecting E) Benchmarking Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 111) Marketing control involves four steps including all the following EXCEPT ________. A) setting specific marketing goals B) measuring the marketing plan's performance in the marketplace C) evaluating the causes of any differences between expected and actual performance D) increasing the staffing in the planning department E) taking corrective action to close the gaps between goals and performance Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy

112) All of the following steps pertain to the marketing control process EXCEPT ________. A) setting goals B) measuring performance C) taking corrective action D) defining the company's mission E) evaluating the causes of gaps between expected and actual performance Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 113) The purpose of ________ is to ensure that the company achieves the sales, profits, and other goals set out in its annual marketing plan. A) benchmarking B) operating control C) strategic control D) SWOT analysis E) a marketing audit Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 114) ________ involves looking at whether a company's key action plans are well-matched to its opportunities. A) Operating control B) Benchmarking C) Strategic control D) Regression analysis E) Portfolio analysis Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy

115) ________ measures the profits generated by investments in marketing activities. A) A SWOT analysis B) A marketing audit C) Regression analysis D) Return on marketing investment E) Marketing budget evaluation Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 116) A SWOT analysis allows a marketer to evaluate the company's overall strengths, weaknesses, opportunities, and threats. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 117) Which of the following is true of the BCG matrix approach? A) It is inexpensive to implement. B) It does not have any limitations. C) It considers market growth rate to be a measure of market attractiveness. D) It describes consumer motivations and needs. E) It does not consider relative market share to be a measure of company strength in the market. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy

118) Benchmarking refers to the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 39 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

119) The key businesses of Kimberley and Price consist of a division that produces and sells breakfast cereals and another that manufactures gardening tools. Each of these businesses is called a ________. A) market segment B) strategic business unit C) question mark D) prospect E) product portfolio Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate

120) Return on marketing investment refers to the net return from a marketing investment divided by the costs of the marketing investment. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 121) What is marketing control? Answer: Marketing control refers to evaluating results and taking corrective action to ensure that the objectives are attained. Marketing control involves four steps. Management first sets specific marketing goals. It then measures its performance in the marketplace and evaluates the causes of any differences between expected and actual performance. Finally, management takes corrective action to close the gaps between goals and performance. This may require changing the action programs or even changing the goals AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 122) What is the main purpose of the executive summary in a marketing plan? Answer: The executive summary presents a brief summary of the main goals and recommendations of the plan for management review, helping top management find the plan's major points quickly. AACSB: Written and oral communication Skill: Concept 40 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 123) What is the purpose of the marketing plan? Answer: To find the best strategy and supporting marketing mix and to put them into action, the company engages in marketing analysis, planning, implementation, and control. The marketing plan serves as a blueprint that helps articulate and implement the marketing strategy. .AACSB: Written and oral communication Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 124) Define marketing return on investment (ROI) Answer: Marketing ROI is the net return from a marketing investment divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities. AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 125) Describe the most common forms of marketing organizations. Answer: Modern marketing departments can be arranged in several ways. 1. The most common form of marketing organization is the functional organization. Under this organization, different marketing activities are headed by a functional specialist–a sales manager, an advertising manager, a marketing research manager, a customer service manager, or a new product manager. 2. A company that sells across the country or internationally often uses a geographic organization. Its sales and marketing people are assigned to specific countries, regions, and districts. Geographic organization allows salespeople to settle into a territory, get to know their customers, and work with a minimum of travel time and cost. 3. Companies with many very different products or brands often create a product management organization. Using this approach, a product manager develops and implements a complete strategy and marketing program for a specific product or brand. 4. For companies that sell one product line to many different types of markets and customers who have different needs and preferences, a market or customer management organization might be best. A market management organization is similar to the product management organization. Large companies that produce many different products flowing into many different geographic and customer markets usually employ some combination of the functional, geographic, product, and market organization forms. 41 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Written and oral communication Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 126) What is the top marketing concern? Answer: Marketing accountability is the top marketing concern. Marketing managers must ensure that their marketing dollars are being well spent. In a tighter economy, today’s marketers face growing pressures to show that they are adding value in line with their costs. In response, marketers are developing better measures of marketing return on investment. Increasingly, they are using customer-centered measures of marketing pact as a key input into their strategic decision making. AACSB: Application of Knowledge Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 127) How do marketers measure return on marketing investment? Why is this figure difficult to assess? Answer: Marketing ROI (return on investment) is the net return from a marketing investment divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities. Marketing ROI can be difficult to measure. In measuring financial ROI, both the "R" and the "I" are uniformly measured in dollars. As of yet, however, there is no consistent definition of marketing ROI. For instance, returns like advertising and brand-building impact aren't easily put into dollar returns. Increasingly, however, beyond standard performance measures, marketers are using customercentered measures of marketing impact, such as customer acquisition, customer retention, customer lifetime value, and customer equity. These measures capture not only current marketing performance but also future performance resulting from stronger customer relationships. AACSB: Application of knowledge; Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate 128) Which of the following is the first step in strategic planning? A) setting short-term goals B) developing the business portfolio C) defining the company mission D) formulating the key marketing strategies 42 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) identifying the organization's weaknesses and the threats it faces Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 129) Which of the following is NOT a step in the strategic planning process? A) defining the company mission B) setting company objectives and goals C) designing the business portfolio D) planning marketing and other functional strategies E) evaluating members of the company's value chain Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 130) Orion Inc. operates in many industries, including pharmaceuticals and food products. The company's goal is to create "abundant and affordable food for all and a healthy environment." This represents Orion's ________. A) marketing plan B) product mix C) business portfolio D) marketing mix E) mission statement Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Moderate 131) Which of the following best describes a strategic business unit? A) the internal value chain of a company B) the supply chain of a company C) the key businesses that make up a company D) the key channel intermediaries of a service company E) the key competitors of a company Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 132) Which of the following is NOT something a company must determine when analyzing its current business portfolio? 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) which businesses should receive more investment B) which businesses should receive less investment C) which businesses should receive no investment D) which businesses should be sold or closed E) which businesses shape the future portfolio Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 133) Within a decentralized company, who is responsible for strategic planning? A) the president and vice presidents B) the accounting and finance departments C) the marketing and sales departments D) cross-functional teams of divisional managers close to their markets E) the manufacturing and production departments Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 134) Most standard portfolio analysis methods evaluate SBUs on the ________. A) potential for niche or global marketing B) degree of product differentiation C) strength of the market or industry position D) accessibility to rural markets E) number of successful business acquisitions Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Easy 135) Teenagers are expected to respond in a similar way to a set of marketing efforts. In other words, this group represents a ________. A) channel intermediary B) line extension C) market segment D) product attribute E) brand personality Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Moderate 136) What is market targeting? Answer: Market targeting involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. A company with limited resources might decide to serve only one or a few special segments. AACSB: Analytical thinking Skill: Concept Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them. Difficulty: Easy 137) In a SWOT analysis, ________ include favorable trends in the external environment. A) strengths B) challenges C) weaknesses D) opportunities E) threats Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Easy 138) What is the difference between operating control and strategic control Answer: Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary. Its purpose is to ensure that the company achieves the sales, profits, and other goals set out in its annual plan. It also involves determining the profitability of different products, territories, markets, and channels. Strategic control involves looking at whether the company’s basic strategies are well matched to its opportunities. Marketing strategies and programs can quickly become outdated, and each company should periodically reassess its overall approach to the marketplace. Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate. 139) How are marketing departments typically organized? Answer: Marketing departments can be organized in one way or a combination of ways: functional marketing organization, geographic organization, product management organization, or market management organization. In this age of customer relationships, many companies are 45 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

now changing their organizational focus from product or territory management to customer relationship management. Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate. 140) The marketing dashboard gives marketers the detailed measures they need to assess and adjust their marketing strategies. Answer: TRUE Skill: Concept Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Moderate. Quantitative Questions 1) In 2019 Starbucks generated $16.65 billion in revenue in the U.S. alone. However, COVID-19 pushed sales revenues down by 11% in 2020. How much revenue did Starbucks generate in 2020? A) $18.48 billion B) $14.82 billion C) $1.83 billion D) $12.32 billion E) $15.55 billion Answer: B; You can compute 2020 revenue by multiplying 2019 revenue by (1 - .11). So, $16.65 x .89 = $14.82 billion. AACSB: Analytical thinking Skill: Application Objective: LO 2.1: Explain company-wide strategic planning and its four steps. Difficulty: Easy 2) Assume Ikea generated $58 billion in total revenue from 458 stores located in 59 countries. How much revenue per store is Ikea generating? A) $.126638 million B) $145.57 million C) $126.64 million D) $7.896 million E) $18.325 million Answer: C; You compute this answer by dividing the $58 billion in revenue by 458. So, $58 billion/458 = .126638 billion per store, or $126.64 million per store. AACSB: Analytical thinking Skill: Application Objective: LO 2.1: Explain company-wide strategic planning and its four steps. 46 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Moderate 3) Company ABC is adopting a growth strategy that management believes will grow the firm’s revenues by 5% a year for the next three years. What will sales by in three years if the most recent annual sales revenue was $45.8 million? A) $43.21 million B) $50.49 million C) $48.09 million D) $53.02 million E) $55.87 million Answer: D; You can compute this answer by FV =PV(1 + growth rate)n, where n = number of years. So, $45.8(1.05)3 = $53.02 million. AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Challenging 4) Company ABC has a cash cow strategic business unit (SBU) that generated 14% of the firm’s $76 million in revenues last year. How much revenue did the cash cow generate? A) $8.17 million B) $11.41 million C) $10.64 million D) $12.21 million E) $5.43 million Answer: C; You compute this answer by multiplying $76 million x .14 = $10.64 million. AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 5) Company ABC has a cash cow strategic business unit (SBU) that generated 14% of the firm’s $76 million in revenues last year. How much in average revenue is generated by each of the other eight SBUs? A) $8.17 million B) $11.41 million C) $10.64 million D) $12.21 million E) $5.43 million Answer: A; You compute this answer by determining the revenue generated by the 8 SBUs and then dividing by 8. So, [$76 million (1 - .14)]/8 = $8.17 million. AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Challenging 6) What is the growth rate in stores for a firm that has 3,400 stores but plans to have 4,000 by the end of next year? 47 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) 8.21% B) 11.10% C) 12.54% D) 15.00% E) 17.65% Answer: E; You compute this answer by the following formula → % growth rate = (Value1 – Value0)/Value0. So, (4,000 – 3,400)/3,400 = .1765, or 17.65%. AACSB: Analytical thinking Skill: Application Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies. Difficulty: Moderate 7) Firm XYZ’s management believes that it can save 4% in operating costs by changing some of its suppliers. How much will it save if last year’s operating costs were $22 million? A) $88,000 B) $650,000 C) $1,231,00 D) $880,000 E) $21,120,000 Answer: D; You compute this by multiplying the costs by the % savings. So, $22 million x .04 = $880,000. AACSB: Analytical thinking Skill: Application Objective: LO 2.3: Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value. Difficulty: Moderate 8) Firm XYY believes it can increase its market share to 13% by the end of the year through focused marketing efforts. What is the expected growth rate if the firm’s current market share is 11.3%? A) 11.1% B) 5.6% C) 15.0% D) 13.4% E) 3.1% Answer: C; You compute this answer by the following formula → % growth rate = (Value1 – Value0)/Value0. So, (13 – 11.3)/11.3 = .1504, or 15.04%. AACSB: Analytical thinking Skill: Application Objective: LO 2.4: Describe the elements of a customer value–driven marketing strategy and mix and the forces that influence them. Difficulty: Moderate Use the following data from Firm XYZ to answer the next two questions. Sales $45,003 Gross profit $18,211 48 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Marketing expenses Net income

$4,113 $6,566

9) What was Firm XYZ’s percentage profit? A) 33.51% B) 14.59% C) 11.22% D) 9.14% E) 5.32% Answer: B; You compute this answer by dividing net income by sales. So, $6,566/$45,003 = .1459, or 14.59%. AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Challenging 10) How much revenue did Firm XYZ generate per dollar of marketing budget? A) $10.94 B) $11.98 C) $17.23 D) $14.59 E) $109.41 Answer: A; You compute this by dividing total sales by the marketing expenses. So, 45,003/4,113 = $10.94. AACSB: Analytical thinking Skill: Application Objective: LO 2.5: Explore the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment. Difficulty: Challenging

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 3 Analyzing the Marketing Environment 1) Dan has been directed to study the forces close to a company that affect its ability to serve its customers, such as the company, suppliers, marketing intermediaries, customer markets, competitors, and publics. In this instance, Dan has been directed to study the ________ of the company. A) macroenvironment B) microenvironment C) technological environment D) demographic environment E) political environment Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 2) Which of these categories do you think the COVID-19 pandemic should fit into? A) macroenvironment B) marketing orientation C) microenvironment D) target markets E) corporate environment Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 3) Which of the following is a component of a firm's microenvironment? A) customer demographics B) economic recessions C) population shifts D) marketing intermediaries E) technological changes Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 4) Naya works with suppliers to ensure her firm has a steady stream of products for sale. Which of these categories is she working with in her role? 1 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) macroenvironment B) microenvironment C) internal environment D) marketing mix E) marketing intermediaries Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 5) Jamal works with the finance department to help them develop sales forecasts so they can project the firm’s financing needs. Which of these environmental actors does this relationship represent? A) cultural B) economic C) company D) political E) technological Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 6) Which of these environmental actors helps the firm promote and sell products? A) accounting B) finance C) purchasing D) marketing intermediaries E) Research & development Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy

7) ________ provide the resources needed by a company to produce its goods and services. A) Retailers B) Marketing services agencies C) Resellers D) Suppliers E) Financial intermediaries Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 8) Stephens Inc. provides the firm with a short-term line of credit since most of the firm’s sales are seasonal. Stephens Inc. is a . A) financial intermediary B) supplier C) retailer D) customer E) local public Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 9) ________ include households, other businesses, resellers, and government entities. A) Customers B) Physical distribution firms C) Competitors D) Marketing services agencies E) Suppliers Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 10) Maria works for Sigma Inc., a firm that helps companies target and promote their products to the right markets. Sigma is most likely a ________. A) financial intermediary B) physical distribution firm C) marketing services agency D) reseller E) wholesaler 3 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 11) LandPort Transportation and Omega Warehousing help companies move and stock goods from their manufacturing plants to their destinations. These two businesses are examples of ________. A) resellers B) marketing services agencies C) financial intermediaries D) physical distribution firms E) wholesalers Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 12) Keysha works for a firm that buys products from manufacturers and sells them on Amazon for a small markup. She works for a . A) reseller B) marketing services agency C) financial intermediary D) physical distribution firm E) business market Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 13) Which of these groups includes consumer organizations and environmental groups? A) financial publics B) local publics C) general publics D) citizen-action publics E) internal publics Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve 4 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

its customers. Difficulty: Easy 14) Which of the following is true with regard to media publics? A) The primary function of this group is to protect the interests of minority groups. B) This group carries news, features, and editorial opinion. C) The primary function of this group is to critique the marketing decisions of companies. D) This group includes neighborhood residents and community organizations. E) This group directly influences the company's ability to obtain funds. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 15) A company's marketing decisions may be affected by the overall public’s attitude toward the company’s products. This group is also known as the _____ ___. A) media publics B) local public C) general public D) citizen-action publics E) internal publics Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 16) A consumer organization in Ohio has challenged the marketing decision of a local firm alleging it to be against the larger social interest. In this instance, the firm is challenged by a(n) ________ public. A) internal B) general C) government D) citizen-action E) media Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 5 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

17) Cape Sky Inc., an international insurance and financial services company, is the primary sponsor of the annual New York City Marathon, which is attended by over one million fans and watched by approximately 300 million viewers worldwide. The Cape Sky logo and name are displayed throughout the racecourse. Cape Sky most likely sponsors this event in order to appeal to which of the following types of publics? A) financial publics B) citizen-action publics C) government publics D) general publics E) internal publics Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Challenging 18) Laquan works with product quality and various regulatory agencies to ensure the firm’s products are toddler safe and comply with federal law. He works with the publics. A) general B) internal C) government D) citizen-action E) media Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate

19) ________ markets buy goods and services for further processing. A) Business B) Reseller C) Wholesale D) Consumer E) Retail Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy

20) JBC Industries often contributes money to help build community centers. JBC is working with publics. A) government B) internal C) financial D) local E) citizen-action Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 21) Rachel works for a furniture company in Ireland. She is responsible for buying and selling goods at a profit to small retailers. Rachel most likely operates in a ________ market. A) business B) reseller C) wholesale D) consumer E) retail Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 22) Sparks Inc. has a growing ________ market in consisting of firms that use their products for furniture components. A) consumer B) government C) business D) international E) financial Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate Refer to the scenario below to answer questions 23-25. Casey Brickly opened The Landing, a convenience store on the north shore of Witmer Lake, in 1962. With a sandwich counter on one side and a bait shop and grocery on the other, The 7 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Landing was an immediate hit with weekend lake visitors and local residents alike. In the summer, boaters parked at the piers and bought all their fishing needs, such as rods and reels, bait, snacks, and soft drinks at The Landing. Even during the winter months, snowmobilers, and ice anglers were lured to The Landing for snacks and hot coffee or hot chocolate. As time passed, the business changed and grew tremendously. What was formerly a weekend tourist area gradually became a full-fledged residential area. Many of the houses, which were built as cottages in the 1950s and 1960s, were remodeled into residential homes. By the end of the 1970s, the days of small motorboats and 10 mile-per-hour speed limits were gone; skiing and fast speedboats became the rage. Through it all, The Landing continued to attract flocks of patrons. In the 1980s, however, Casey started to realize that the grocery area in The Landing could not compete with larger local retailers. He eventually enlarged the sandwich counter, transforming the bait shop and grocery into a restaurant with a full menu typical of any diner. "Getting rid of the bait shop was hard to do," Casey admitted. "I still had a summer crowd that relied on us for their fishing needs, but we couldn't survive a whole year on four months of profit." In the early 2000s, the atmosphere of Witmer Lake and the neighboring lakes became upscale. "I could see that people were spending more on their speed boats than what they had originally paid for their cottages!" Casey exclaimed. Many of the cottages were inherited by children and grandchildren of the original owners. Once again, the scene started to change as many of the lake houses were used only as weekend lake homes. Unlike the previous generation, a vast number of the current owners could afford to live closer to their jobs while maintaining lake homes. "At this point, business wasn't growing," Casey said. As local competition continued to increase, Casey converted the diner of The Landing into a bar with a lounge area. "The change might have been too drastic," Casey said, "but it was the only way we could maintain a strong, year-round business in spite of the population shifts and competitive forces." 23) Which of the following microenvironment actors has had the most influence on The Landing? A) competitors B) suppliers C) marketing intermediaries D) resellers E) citizen-action publics Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 24) How did The Landing’s customer base change in the early 2000s? 8 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) The customers became year round residents. B) The customers had higher incomes. C) The customers demanded more sporting goods. D) The customers wanted a more expansive grocery store. E) The customers were new home buyers moving to the area. Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company’s ability to serve its customers. Difficulty: Moderate 25) What factors in the microenvironment forced The Landing to change over the years? Answer: The Landing changed primarily due to its changing customer base. The customers changed from anglers to year round residents and back to weekenders that used the area lake homes for weekends and vacations. The Landing’s competition also changed over that 45-year time period as new businesses catered to the changing customer base. The Landing was forced to change multiple times or become obsolete. AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate

26) The microenvironment consists of larger societal forces that affect a company, such as demographic, economic, political, and cultural forces. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 27) The macroenvironment consists of larger societal forces that affect a company, such as demographic, economic, political, and cultural forces. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 28) Marketing success requires building relationships with other company departments, suppliers, marketing intermediaries, competitors, various publics, and customers, which combine to make up the company's value delivery network. Answer: TRUE 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 29) Citizen-action publics include consumer organizations, environmental groups, minority groups, and others. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 30) Media publics buy goods and services for further processing or for use in their production processes. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 31) Trudie Jones works for a distribution channel firm that helps several electronics companies find customers or make sales to them. Trudie works for a reseller. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 32) A business's competitors are the most important actors in the company's microenvironment. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Easy 33) Customers are the most important component in the company's microenvironment. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. 10 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Easy 34) Why are citizen-action publics becoming more important to the company? Answer: Citizen-action publics include environmental groups, consumer organizations, and other action groups that can either harm a company with their criticism or help a company with their support. Today’s consumers are more socially conscious and pay attention to the company’s value system. Companies that ignore this new reality and only focus on profit-maximization might lose more profits in the long-run. AACSB: Application of knowledge Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Challenging 35) Who are the major players in a company's microenvironment? Explain the role that each actor plays. Answer: Marketing success requires building relationships with other company departments, suppliers, marketing intermediaries, competitors, various publics, and customers, which combine to make up the company's value delivery network. The company: In designing marketing plans, marketing management takes other company groups into account–groups such as top management, finance, research and development (R&D), purchasing, operations, and accounting. All of these interrelated groups form the internal environment. Top management sets the company's mission, objectives, broad strategies, and policies. Marketing managers make decisions within the broader strategies and plans made by top management. Suppliers: Suppliers form an important link in the company's overall customer value delivery network. They provide the resources needed by the company to produce its goods and services. Marketing intermediaries: Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries. Competitors: The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Thus, marketers must do more than simply adapt to the needs of target consumers. Publics: The company's marketing environment also includes various publics. A public is any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives. Customers: Customers are the most important actors in the company's microenvironment. The aim of the entire value delivery network is to serve target customers and create strong relationships with them. AACSB: Written and oral communication Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 11 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

36) What are marketing intermediaries and what are the various types? Answer: Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries. Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise. Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. AACSB: Written and oral communication Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 37) What is a "public" in terms of the marketing environment? In a short essay, briefly describe the different types of publics that marketers must consider and explain how marketing might communicate with these publics. Answer: A public is any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives. There are seven types of publics. Financial publics: This group influences the company's ability to obtain funds. Media publics: This group carries news, features, and editorial opinions. Government publics: Management must take government developments into account. Marketers must often consult the company's lawyers on issues of product safety, truth in advertising, and other matters. Citizen-action publics: A company's marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups. Local publics: This group includes neighborhood residents and community organizations. Large companies usually create departments and programs that deal with local community issues and provide community support. General public: A company needs to be concerned about the general public's attitude toward its products and activities. The public's image of the company affects its buying. Internal publics: This group includes workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. A company can prepare marketing plans for these major publics as well as for its customer markets. AACSB: Written and oral communication Skill: Concept Objective: LO 3.1: Describe the environmental forces that affect the company's ability to serve its customers. Difficulty: Moderate 12 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

38) The marketing team of 7 Star Inc., a company manufacturing smartphones, is currently studying the size, density, location, age, and occupation of its target market. Which of the following environments is being studied in this scenario? A) demographic environment B) political environment C) economic environment D) technological environment E) cultural environment Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 39) The single most important demographic trend in the United States is the ________. A) changing age structure of the population B) mobility of families C) changing family structure of the population D) increasing number of professional jobs E) increasing birth rate Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 40) Among the generational groups in the U.S population, ________ are still the wealthiest generation in U.S. history. A) baby boomers B) Generation Xers C) millennials D) echo boomers E) Generation Alphas Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 41) A) Generation Z B) Millennials C) Generation X

consists of 71 million people born between 1946 and 1964.

D) Baby boomers E) Generation Y Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 42) Which of these groups is now the largest generation alive in the United States? A) Generation Z B) Millennials C) Generation X D) Baby boomers E) Generation Y Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 43) Which of the following generations is often overlooked and considered an “in between” consumer group? A) Generation Z B) Baby boomers C) Millennials D) Generation X E) Generation Y Answer: D AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 44) Mary Adams is helping her company develop a marketing program for a new product line. The program is designed to appeal most to less materialistic consumer groups who are likely to prize experience, not acquisition. The marketing program is most likely designed to appeal to which of the following demographic groups? A) Generation X B) Millennials C) Echo Boomers D) Generation Y E) Generation Z Answer: A 14 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Challenging 45) Which of the following is true of Generation Z? A) They are the children of baby boomers and were born between 1981 and 1996. B) They control an estimated 70 percent of the disposable income in the United States. C) They make up 26 percent of the population. D) They were the first to grow up in the Internet era. E) They are less immersed in technology than Gen Xers. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 46) Which of the following generational groups is fluent and comfortable with digital technology and is highly mobile, social, and connected? A) Generation Z B) Millennials C) Baby Boomers D) Generation Y E) Lost Generation Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 47) Marketers target Generation Z because they ________. A) listen to their parents and follow their examples B) influence up to $333 billion per year in family spending C) spend an estimated minimum of $434 billion annually of their own money D) prefer shopping in brick-and-mortar stores with actual products E) have long attention spans and are easily targeted Answer: B AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Challenging 15 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

48) Gen Alphas are kids born after 2012 and they A) are too young to be tech savvy. B) largely irrelevant at this time given their age. C) will be the most formally educated generation ever. D) control most of the household spending decisions. E) are a group that exerts no influence over household purchases. Answer: C AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 49) Marketers can group people in a number of ways, including by birth date. However, the following combination of groups has proven to be more effective: A) income, lifestyle, life stage B) profession, common values they seek in products they buy, lifestyle C) lifestyle, life stage, common values they seek in products they buy D) place of residence, life stage, lifestyle E) race or nationality, lifestyle, common values they seek in products they buy Answer: C AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Challenging 50) Which of the following is a trend that depicts the increasingly nontraditional nature of today's American families? A) fewer than half of the U.S. households contain married couples B) more than 70 percent of U.S. households are now traditional households C) about 45 percent of all new marriages are interracial D) the number of working women is declining E) roughly 10 percent of U.S. adults have never been married Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 51) In the context of geographical shifts in population, about move each year. A) 25 B) 15 C) 31

percent of U.S. residents

D) 9 E) 4 Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 52) Over the past two decades, the U.S. population has shifted toward the ________ states. A) Northern B) Northeast C) Sunbelt D) Midwest E) Snowbelt Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 53) The migration to ________, has resulted in a rapid increase in the number of people who “telecommute”. A) major cities B) micropolitan areas C) foreign countries D) the east and west coasts E) extreme rural communities Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 54) Micropolitan areas are ________. A) likely to have a higher crime rate than metropolitan areas B) less likely to attract telecommuters C) likely to offer many of the same advantages as metropolitan areas D) less likely to offer market expansion opportunities E) generally unattractive to niche marketers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. 17 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Challenging 55) In the United States, job growth currently is the weakest for ________. A) white collar workers B) manufacturing workers C) salespeople D) telecommuters E) professional workers Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 56) Most of the fastest growing occupations A) require postsecondary education B) are high-tech manufacturing jobs C) are menial jobs in the services industry D) are in the construction trades E) are unionized Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 57) Which of the following is an accurate statement about the diversity of the American population? A) Black Americans represent the largest non-white segment of the population. B) More than 20 percent of the people living in the United States were born in another country. C) By 2050, the Asian population is estimated to remain at 4.7 percent. D) By 2060, Hispanic Americans are estimated to be 28 percent of the population. E) The United States has become more of a "melting pot" than a "salad bowl." Answer: D AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 58) By 2060, ________ will be an estimated 15 percent of the U.S. population. A) Black Americans B) Asian Americans 18 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) Hispanic Americans D) Native Americans E) LGBTQ+ Americans Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 59) Which of the following is a true statement about baby boomers? A) They are the first generation to have grown up with computers. B) They constitute the largest demographic group in the United States. C) They were born between 1965 and 1976. D) They are the most educated generation of Americans. E) They are the wealthiest generation in U.S. history. Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 60) The approximately 80 million ________ make up the important kids, tweens, and teens markets. A) millennials B) Generation Xers C) Generation Zers D) Latinos E) baby boomers Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 61) Soon-Yi Park's chain of travel agencies has identified the LGBTQ+ community as a growing market that spends an increasing percentage of its income on travel. Which of the following would be the LEAST effective component of a marketing plan for Soon-Yi to take advantage of this opportunity? A) develop a presence on LGBTQ+ oriented social networking sites B) position his agency as focused on specialized experiences C) implement a mass marketing campaign targeting midsized cities D) place specially targeted ads in LGBTQ+ publications E) advertise on television networks aimed at the LGBTQ+ community 19 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: C AACSB: Diverse and multicultural work environments Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Challenging 62) Which of the following is true with regard to the diversity segment of U.S. adults with disabilities? A) Fifteen percent of the world’s population has a disability and they have over $500 billion in annual purchasing power. B) The market represented by U.S. adults with disabilities is smaller than that represented by Black Americans or Hispanics. C) The diversity segment, U.S. adults with disabilities, is a rather unattractive segment for the tourism industry. D) The annual spending power of U.S. adults with disabilities is less than $100 billion. E) Most companies are reluctant to reach out to consumers with disabilities given the product modifications often needed. Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 63) The economic environment consists of economic factors that affect ________. A) cultural patterns of communities B) entrepreneurial orientation of a population C) the quality of technological innovation D) consumer purchasing power E) the natural environment Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 64) Consumers' spending patterns since the Great Recession include ________. A) spending freely, without caution B) buying less and looking for greater value in what they buy C) amassing record levels of debt D) experiencing rapid increases in housing values E) participating in a booming stock market Answer: B AACSB: Analytical thinking 20 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Challenging 65) A retailer with a value proposition is most likely to ________. A) offer consumers superior quality of goods and services at a very high price B) offer consumers only those products that are associated with status and prestige C) offer consumers low quality goods and services at very low prices D) offer consumers a balanced combination of product quality at a fair price E) deny discounts to consumers to increase profits Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 66) Secure is a financial services and insurance company. The company's most profitable division is one that sells the Secure Future Plan. The Secure Future Plan targets customers who are entering retirement and want long-term savings so they can remain financially independent in the later years of their life. The marketing team at Secure has most likely targeted the plan to ________. A) Millennials B) Baby boomers C) Generation Xers D) Generation Zers E) Generation Yers Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate Refer to the scenario below to answer questions 67-70. Casey Brickly opened The Landing, a convenience store on the north shore of Witmer Lake, in 1962. With a sandwich counter on one side and a bait shop and grocery on the other, The Landing was an immediate hit with weekend lake visitors and local residents alike. In the summer, boaters parked at the piers and bought all their fishing needs, such as rods and reels, bait, snacks, and soft drinks at The Landing. Even during the winter months, snowmobilers, and ice anglers were lured to The Landing for snacks and hot coffee or hot chocolate. As time passed, the business changed and grew tremendously. What was formerly a weekend 21 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

tourist area gradually became a full-fledged residential area. Many of the houses, which were built as cottages in the 1950s and 1960s, were remodeled into residential homes. By the end of the 1970s, the days of small motorboats and 10 mile-per-hour speed limits were gone; skiing and fast speedboats became the rage. Through it all, The Landing continued to attract flocks of patrons. In the 1980s, however, Casey started to realize that the grocery area in The Landing could not compete with larger local retailers. He eventually enlarged the sandwich counter, transforming the bait shop and grocery into a restaurant with a full menu typical of any diner. "Getting rid of the bait shop was hard to do," Casey admitted. "I still had a summer crowd that relied on us for their fishing needs, but we couldn't survive a whole year on four months of profit." In the early 2000s, the atmosphere of Witmer Lake and the neighboring lakes became upscale. "I could see that people were spending more on their speed boats than what they had originally paid for their cottages!" Casey exclaimed. Many of the cottages were inherited by children and grandchildren of the original owners. Once again, the scene started to change as many of the lake houses were used only as weekend lake homes. Unlike the previous generation, a vast number of the current owners could afford to live closer to their jobs while maintaining lake homes. "At this point, business wasn't growing," Casey said. As local competition continued to increase, Casey converted the diner of The Landing into a bar with a lounge area. "The change might have been too drastic," Casey said, "but it was the only way we could maintain a strong, year-round business in spite of the population shifts and competitive forces." 67) Which of the following is the macroenvironmental force that has had the greatest effect on The Landing? A) the demographic environment B) the technological environment C) marketing intermediaries D) the political environment E) citizen-action publics Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 68) Which of the following generational groups is most likely to represent the present owners of cottages surrounding Witmer Lake? A) Baby Boomers B) Echo Boomers C) Gen Xers D) Gen Alpha E) Millennials Answer: C 22 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 69) Which of these generational groups was most likely the first group to grow up vacationing at the cottages surrounding Witmer Lake? A) Baby Boomers B) Echo Boomers C) Gen Xers D) Generation Alpha E) Millennials Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 70) What demographic changes happened to The Landing’s customer base? Answer: Several changes occurred including the level of wealth and generational changes. For example, when the original owners passed the properties to their heirs there was a generational shift. Later the properties converted from full-time residences to weekend lake homes for higher income groups. All of these changes dictated changes in The Landing’s focus. AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 71) The Covid-19 pandemic pushed many consumers to increase online shopping. Answer: TRUE AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 72) Generation Alpha comprises the most financially affluent group in America today. Answer: FALSE AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 23 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

73) The Gen Xers will be the most formally educated generation. Answer: FALSE AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 74) Marketers must increasingly consider the needs of traditional households because this segment of the population represents almost 70 percent of U.S. households. Answer: FALSE AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 75) The American workforce today is more white-collar than it was in the late twentieth century. Answer: TRUE AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 76) What are two potential drawbacks of creating separate products and marketing programs for each generation? Answer: Some experts warn that marketers need to be careful about turning off one generation each time they craft a product or message that appeals effectively to another. Others caution that each generation spans decades of time and many socioeconomic levels. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 77) How did the Covid-19 pandemic change consumers? Answer: American consumers shifted to online shopping as they self-isolated at home. Many of these consumers continue to shop more online even post-pandemic. Millennials are the least likely to return to traditional brick-and-mortar retailers. Consumers also tightened their spending in much the same way they did during the Great Recession of 2008-2009. AACSB: Analytical thinking Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. 24 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Moderate 78) What is the main financial focus of baby boomers? Answer: Baby boomers are focusing on retirement. For many this means curtailing spending and for others this means beginning to downsize homes and move to other regions of the country. Of course, health care spending also increases as we age and they are spending more money online. Boomers also spend more on travel and most want to maintain an active lifestyle. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 79) Why do marketers find Generation Alpha attractive? Answer: Generation Alpha will grow to be larger than Millennials by 2025. They will be the most formally educated group and will eventually become the wealthiest generation. Alphas are also attracted to technology and already exert tremendous influence on household spending. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 80) How can marketers reach the Millennials effectively? Answer: Millennials engage with brands in an entirely new way, such as with mobile or social media. More than sales pitches from marketers, Millennials seek opportunities to shape their own brand experiences and share them with others. Many brands are now fielding specific products and marketing campaigns aimed at Millennial needs and lifestyles. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 81) What structure can an American family have now, as the traditional family has changed? Answer: The traditional household consists of a husband, wife, and children (and sometimes grandparents). Yet couples without children, single parents, and nonfamily households are groups growing more quickly than traditional households. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 82) What population shifts are currently underway? 25 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: More people are moving to micropolitan areas and away from the congestion and crime of the major cities. The migration away from the Northeast and the Midwest continues as more people move to the Sunbelt. AACSB: Application of knowledge Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 83) What is demography? Why is the demographic environment of major interest to marketers? Discuss the changing age structure of the U.S. population. Answer: Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. The demographic environment is of major interest to marketers because it involves people, and people make up markets. Marketers can learn much about human populations in terms of changing age and family structures, geographic population shifts, educational characteristics, population diversity, and other statistics. Based on age structure, the U.S. population can be categorized into several generational groups; the three largest among them are the baby boomers, Generation X, and the Millennials. The baby boomer market of 71 million people is one of the most powerful forces shaping the marketing environment. Considerably smaller than the boomer generation that precedes them and the Millennials who follow, the Generation Xers are a sometimes overlooked consumer group. Although they seek success, they are less materialistic than the other groups; they prize experience, not acquisition. For many of the Gen Xers who are parents, family comes first–both children and their aging parents–and career second. From a marketing standpoint, the Gen Xers are a more skeptical bunch. They tend to research products before they consider a purchase, prefer quality to quantity, and tend to be less receptive to overt marketing pitches. They are more likely to be receptive to irreverent ad pitches that make fun of convention and tradition. The Millennials (or Generation Y) are the 73 million children of the baby boomers born between 1981 and 1996. One thing that all Millennials have in common is their comfort with digital technology. They don't just embrace technology; it's a way of life. Rather than having massmarketing messages pushed at them, the Millennials prefer to seek out information and engage in two-way brand conversations. Generation Zers make up important kids, tweens, and teens markets that spend an estimated $140 billion on their own and influence almost $333 billion of household spending. They are utterly fluent with technology and take it for granted. They are highly mobile, connected, and social. They blend the online and offline worlds seamlessly as they socialize and shop. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Moderate 84) The physical environment affecting marketing activities is referred to as the ________ environment. A) economic 26 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) natural C) cultural D) political E) social Answer: B Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Easy 85) The environmental sustainability movement encourages companies to ________. A) actively resist social change B) operate freely in the underground economy C) go beyond government regulations D) institute deregulation E) curb organizational anarchy Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 86) Environmental sustainability means A) focusing on the legal issues surrounding the environment. B) creating a pollution free world. C) meeting present needs while also considering future generations. D) exploiting green opportunities to maximize profits. E) rapid exploitation of natural resources. Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Challenging 87) New technologies most likely lead to ________. A) economic imbalance in society B) reduced exports C) trade deficits D) an increased demand for unskilled labor E) new markets and opportunities Answer: E AACSB: Analytical thinking Skill: Concept 27 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Easy 88) Consumers are demanding that firms A) aggressively lower costs for all products. B) analyze threats and opportunities in the macroenvironment. C) move toward environmental sustainability. D) focus on eliminating global poverty. E) track patterns of online consumer behavior. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 89) are perhaps the most dramatic forces affecting today’s marketing strategies. A) Environmental sustainability issues B) Technological advances C) Economic declines D) Demographic changes E) Pandemic shutdowns Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Easy 90) Trends in the natural environment include all of the following EXCEPT ________. A) increased government intervention B) the development of an environmental sustainability movement C) increased pollution D) decreased costs of product development E) shortages of raw materials Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 91) Fargo Inc. is a carbonated beverage manufacturer that has many manufacturing plants around the world. It is planning to shift from using thermal power to wind power for its manufacturing 28 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

plants in the Netherlands to decrease dependency on nonrenewable sources of energy. This scenario depicts Fargo's concern for its ________ environment. A) economic B) natural C) demographic D) political E) cultural Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Challenging 92) Nakeem accepted a position with an established firm that is a known polluter. Part of the reason he accepted the offer was to effect change from the inside. However, he discovered that the firm’s culture makes change difficult. Now Nakeem is trying to decide what his next step should be and whether it would be easier to simply find another job. Nakeem’s focus is on the firm’s . A) regulatory compliance B) profit motive C) sustainability efforts D) technology improvements E) demographic focus Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Challenging Refer to the scenario below to answer questions 93 and 94. Casey Brickly opened The Landing, a convenience store on the north shore of Witmer Lake, in 1962. With a sandwich counter on one side and a bait shop and grocery on the other, The Landing was an immediate hit with weekend lake visitors and local residents alike. In the summer, boaters parked at the piers and bought all their fishing needs, such as rods and reels, bait, snacks, and soft drinks at The Landing. Even during the winter months, snowmobilers, and ice anglers were lured to The Landing for snacks and hot coffee or hot chocolate. As time passed, the business changed and grew tremendously. What was formerly a weekend tourist area gradually became a full-fledged residential area. Many of the houses, which were built as cottages in the 1950s and 1960s, were remodeled into residential homes. By the end of the 1970s, the days of small motorboats and 10 mile-per-hour speed limits were gone; skiing and fast speedboats became the rage. Through it all, The Landing continued to attract flocks of patrons. 29 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

In the 1980s, however, Casey started to realize that the grocery area in The Landing could not compete with larger local retailers. He eventually enlarged the sandwich counter, transforming the bait shop and grocery into a restaurant with a full menu typical of any diner. "Getting rid of the bait shop was hard to do," Casey admitted. "I still had a summer crowd that relied on us for their fishing needs, but we couldn't survive a whole year on four months of profit." In the early 2000s, the atmosphere of Witmer Lake and the neighboring lakes became upscale. "I could see that people were spending more on their speed boats than what they had originally paid for their cottages!" Casey exclaimed. Many of the cottages were inherited by children and grandchildren of the original owners. Once again, the scene started to change as many of the lake houses were used only as weekend lake homes. Unlike the previous generation, a vast number of the current owners could afford to live closer to their jobs while maintaining lake homes. "At this point, business wasn't growing," Casey said. As local competition continued to increase, Casey converted the diner of The Landing into a bar with a lounge area. "The change might have been too drastic," Casey said, "but it was the only way we could maintain a strong, year-round business in spite of the population shifts and competitive forces." 93) Which of the following is the macroenvironmental force that benefitted The Landing the most? A) the legal environment B) the natural environment C) the economic environment D) the political environment E) the technological environment Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 94) Explain how The Landing’s focus on the natural environment determined their business offerings. Answer: The Landing started as a convenience store serving people engaging in recreational activities at Witmer Lake. Early on this service meant providing groceries, fishing tackle, and bait. However, as the recreational use changed to speed boats and water skiing The Landing’s offerings changed. However, in all cases the retail outlet catered to the needs of people enjoying the natural environment. 95) Environmental sustainability concerns have declined steadily over the past three decades. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological 30 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

environments. Difficulty: Moderate 96) The technological environment is changing so rapidly that it is difficult for some firms to keep up. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 97) The introduction of new technologies is equally beneficial to all industries. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 98) Enlightened companies go beyond what the law dictates with respect to environmental sustainability. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Easy 99) Advances in digital technology have had limited impact on consumer shopping patterns. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Easy

100) How can marketers benefit from developing solutions to environmental problems, such as pollution and raw material shortages? Answer: Marketers who help develop solutions to problems facing the natural environment can gain the advantage of becoming market leaders, as increasingly strict environmental regulations can be expected in the United States and elsewhere. Environmentally responsible actions will help a company's public image; the actions will also help in creating a more sustainable market. AACSB: Application of knowledge; Ethical understanding and reasoning Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological 31 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

environments. Difficulty: Challenging 101) What are the major trends in today's natural environment? How do these trends affect companies? Answer: The natural environment shows three major trends: shortages of certain raw materials, higher pollution levels, and more government intervention in natural resource management. Environmental concerns create marketing opportunities for alert companies. As concern about global warming and other environmental issues continues to grow, more and more consumers are demanding environmentally responsible products. Companies who pay heed to these demands will benefit, as environmentally responsible actions are linked with good business. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 102) Why is the technological environment such a dramatic force in today's market? Answer: The technological environment is perhaps the most dramatic force now shaping our destiny. Technology has released such wonders as antibiotics, robotic surgery, miniaturized electronics, smartphones, and the Internet. It also has released such horrors as nuclear missiles, chemical weapons, and assault rifles. It has released such mixed blessings as the automobile, television, and credit cards. Our attitude toward technology depends on whether we are more impressed with its wonders or its blunders. New technologies create new markets and opportunities. However, every new technology replaces an older technology. Transistors hurt the vacuum-tube industry, digital photography hurt the film business, and digital downloads and streaming have hurt the DVD and book businesses. When old industries fought or ignored new technologies, their businesses declined. Thus, marketers should watch the technological environment closely. Companies that do not keep up will soon find their products outdated. If that happens, they will miss new product and market opportunities. AACSB: Written and oral communication Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological environments. Difficulty: Moderate 103) List a few technological changes that affect marketers. Answer: Digital technologies have transformed the marketplace. Most consumers have smartphones and the ability to shop and conduct research from anywhere. They receive information from various social media platforms and can easily access the opinions of others. This instant access to information creates transparency and forces firms to treat consumers consistently. AACSB: Written and oral communication Skill: Concept Objective: LO 3.3: Identify the major trends in the firm's natural and technological 32 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

environments. Difficulty: Moderate 104) Regulations force companies to be responsible. However, most companies want to be responsible. Impacts of government regulations include all of the following EXCEPT ________. A) informing the public that products are safe B) higher research costs C) increased sales because they have been found to be safe D) penalties to companies that fail to meet the regulations E) longer times between new product ideas and their introduction Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 105) The ________ prohibits monopolies and activities (price-fixing, predatory pricing) that restrain trade or competition in interstate commerce. A) Sherman Antitrust Act B) Lanham Trademark Act C) Fair Packaging and Labeling Act D) CAN-SPAM Act E) Magnuson-Moss Warranty Act Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 106) The ________ limits the number of commercials aired during children's programs. A) Children's Online Privacy Protection Act B) Child Protection Act C) Fair Packaging and Labeling Act D) Children's Television Act E) Consumer Product Safety Act Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 107) Which of these is NOT a broad purpose of government regulation? A) To maintain competitive markets B) To protect and inform consumers C) To ensure businesses make a profit D) To protect national interests 33 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) To protect societal interests Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 108) The ________ environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society. A) socio-legal B) cultural C) political D) technological E) economic Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 109) Laws in the United States and many other countries have many business-oriented laws covering issues such as competition, environmental protection, pricing, packaging, and labeling, product safety, truth in advertising, consumer privacy, and ________. A) land ownership B) taxation C) fair-trade practices D) education E) interdepartmental communication Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 110) Funco Inc., a toy manufacturer, sold plastic racing cars that were manufactured with toxic materials, which threatened the health of several children. Which purpose of government regulation to protect consumers is involved? A) misleading customers in their advertising B) deceiving consumers through their packaging C) making shoddy products D) deceiving consumers through their pricing E) invading consumer privacy Answer: C AACSB: Analytical thinking Skill: Application 34 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 111) Which of these government entities monitors and remedies unfair trade methods? A) The Federal Trade Commission B) The Federal Reserve C) The Sherman Antitrust Commission D) Federal Labeling Laws Division E) Consumer Privacy Bureau Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 112) The boom in online, mobile, and social media has created a new set of social and ethical issues for companies. Their greatest concern involves ________. A) failure to provide value-priced products for online customers B) protecting the privacy of knowing and unknowing customers C) providing too many alternative products online which confuses customers D) rarely following the marketing orientation when devising promotional offers online E) failing to reach their target customers through online marketing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 113) Caran was shopping at her local big box store and noticed that some of the cereal boxes appeared to be underweight. At first she attributed it to inflation and assumed the contents had been reduced and the price left unchanged to hide inflation. However, when she got home she noticed that the content weight was still listed as 16 ounces. Curious, she weighed the contents of the new box and discovered it contained only 14 ounces of cereal. What government legislation appears to have been violated? A) Robinson-Patman Act B) Fair Packaging and Labeling Act C) The Sherman Antitrust Commission D) Federal Labeling Laws Division E) Nutrition Labeling and Education Act Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 114) The boom in internet marketing has created a new set of social and ethical issues. Critics worry most about ________. 35 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) accessibility B) puffery in advertising C) online privacy issues D) sustainability E) issues pertaining to efficiency Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 115) What form of marketing is involved when Walgreens partners with Red Nose Day to raise money for children in poverty? A) cause-related marketing B) corporate fraud protection C) corporate social responsibility D) legislative lobbying E) sustainability marketing Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 116) A regional supermarket chain runs print, radio, and television advertisements announcing that all of its product packaging comes from recycled materials. This is an example of ________. A) cause-related marketing B) generational marketing C) sustainable marketing D) market segmentation E) product differentiation Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Challenging 117) The ________ environment consists of institutions and other forces that affect a society's basic values, perceptions, preferences, and behaviors. A) social B) cultural C) political D) physical E) natural Answer: B AACSB: Analytical thinking 36 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 118) Marketers should understand that people's core beliefs and values tend to be ________. A) fixed B) highly flexible C) similar around the world D) constantly and rapidly changing E) easily influenced by secondary beliefs Answer: A AACSB: Reflective thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 119) Babita Singh, a 51-year-old schoolteacher from Los Angeles, believes that people should be married before cohabitating. This is an example of one of Babita's ________. A) secondary beliefs B) core beliefs C) cultural values D) work ethics E) moral codes Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Challenging 120) Mercury Inc., an American multinational corporation, is currently planning to enter the promising consumer goods market in India. The firm will most likely discover that ________ beliefs and values are more open to change in India. A) inherited B) secondary C) primary D) core E) traditional Answer: B AACSB: Analytical thinking; Diverse and multicultural work environments Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 121) Which of these beliefs is passed through the family and not susceptible to change? A) social codes 37 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) cultural values C) core beliefs D) secondary beliefs E) tertiary beliefs Answer: C AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 122) Some experts are concerned that the digital age will result in . A) diminished human interaction B) the elimination of verbal conversation C) lower IQs D) more sedentary lifestyles E) greater consumer activism Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 123) Which of the following is a potential downside to using patriotic themes in marketing programs? A) Consumers rarely respond to patriotic marketing messages in a favorable manner. B) A consumer's societal orientation has no visible impact on product consumption. C) Patriotism could be viewed as an attempt to cash in on the nation's emotions. D) Patriotic Americans may have less disposable income than reformers. E) Mass marketing has limited appeal among patriotic Millennials. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 124) Barth spent most of his life fishing and keeping his catch. However, lately his appreciation for the wild rivers and streams and the sport of fly fishing has altered his thought process. He now practices catch and release. Barth’s situation reflect his . A) view of nature B) environmental awareness C) ethical reasoning D) moral compass E) core values Answer: A AACSB: Analytical thinking Skill: Concept 38 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 125) Josie's FarmFresh creates sustainable, all-natural food products. These products are most likely to become popular with which group? A) Generation Alpha B) environmentally conscious C) LGBTQ+ D) business professionals E) Millennials Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 126) The popularity of cause-related marketing as a form of corporate giving is rapidly increasing. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 127) Secondary beliefs and values are less open to change than core beliefs and values. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 128) Over the past 20 years Americans have grown to trust corporations more than previously. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 129) Explain the controversy surrounding cause-related marketing. Answer: Critics worry that cause-related marketing is more a strategy for selling than a strategy for giving–that "cause-related" marketing is really "cause-exploitative" marketing. Companies may walk a fine line between increased sales and an improved image yet face charges of exploitation, even though business and charity don't have to be mutually exclusive. AACSB: Ethical understanding and reasoning Skill: Concept 39 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 130) What is the difference between core beliefs and secondary beliefs? Give an example of each. Answer: Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. On the other hand, secondary beliefs and values are more open to change. For example, believing in marriage is a core belief; believing that people should get married early in life is a secondary belief. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 131) How do socially responsible firms positively impact consumers and the environment? Answer: Enlightened companies encourage their managers to look beyond what the regulatory system allows and simply "do the right thing." These socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 132) What is cause-related marketing? Illustrate with examples. Answer: To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes. Some companies are founded entirely on cause-related missions. Under the concept of "values-led business" or "caring capitalism," their mission is to use business to make the world a better place. Cause-related marketing has become a primary form of corporate giving. It lets companies "do well by doing good" by linking purchases of the company's products or services with benefiting worthwhile causes or charitable organizations. The P&G Tide Loads of Hope program provides mobile laundromats and loads of clean laundry to families in disaster-stricken areas–P&G washes, dries, and folds clothes for these families for free. Down the street, needy people will probably find the P&G Duracell Power Relief Trailer, which provides free batteries and flashlights as well as charging stations for phones and laptops. AACSB: Ethical understanding and reasoning; Written and oral communication Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Moderate 133) How do people's views of nature affect marketers? Answer: People vary in their attitudes toward the natural world–some feel ruled by it, others feel in harmony with it, and still others seek to master it. A long-term trend has been people's growing mastery over nature through technology and the belief that nature is bountiful. More recently, however, people have recognized that nature is finite and fragile; it can be destroyed or spoiled by human activities. 40 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

This renewed love of things natural has created a sizable market of consumers who seek out everything from natural, organic, and nutritional products to fuel-efficient cars and alternative medicine. U.S. sales of natural and organic products now exceed $300 billion and will reach an estimated $400 billion by 2030. AACSB: Written and oral communication Skill: Concept Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Easy 134) Companies that take a proactive stance toward the marketing environment are most likely to ________. A) develop strategies to change the environment in their favor B) passively accept the marketing environment C) resist organizational change D) discourage innovation E) consider technological advances more disruptive than beneficial Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 3.5: Discuss how companies can react to the marketing environment. Difficulty: Moderate 135) Katrina Mendoza is a senior manager in a manufacturing firm that hires lobbyists to influence legislation that affects the manufacturing industry. Katrina's firm takes a(n) ________ stance toward the marketing environment. A) reactive B) proactive C) adversarial D) passive E) altruistic Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 3.5: Discuss how companies can react to the marketing environment. Difficulty: Challenging 136) Which of the following is most likely influenced by marketers? A) population shifts B) core cultural values C) income distribution D) ethnic diversity E) media Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 3.5: Discuss how companies can react to the marketing environment. 41 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Moderate 137) When a company hires lobbyists to influence legislation affecting its industry, it is taking a defensive stance toward the marketing environment. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 3.5: Discuss how companies can react to the marketing environment. Difficulty: Easy 138) The renewed love of things natural has created a sizable market for natural products. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 3.5: Discuss how companies can react to the marketing environment. Difficulty: Easy 139) What does it mean for a firm to have a proactive stance towards its marketing environment? Answer: Rather than assuming that strategic options are bounded by the current environment, firms keen on adopting a proactive stance toward the marketing environment develop strategies to change the environment. AACSB: Analytical thinking Skill: Concept Objective: LO 3.5: Discuss how companies can react to the marketing environment. Difficulty: Moderate 140) List some ways that proactive firms attempt to influence their environment. Answer: They become involved in lobbying efforts to influence legislation, they may develop media campaigns to shape public opinion, and they may file lawsuits to effect change. Any efforts to change their environment are proactive instead of reactive. AACSB: Analytical thinking Skill: Concept Objective: LO 3.5: Discuss how companies can react to the marketing environment. Difficulty: Moderate Quantitative Questions 1) Seventy percent of the U.S. population lives within 15 minutes of a Best Buy store. How many people does that represent if the U.S. population is 342 million? A) 198.7 million B) 239.4 million C) 251.4 million D) 273.6 million E) 295.3 million Answer: B; You compute this answer by multiplying the U.S. population by 70 percent. So, 342 million x .70 = 239.4 million. 42 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company’s ability to serve its customers. Difficulty: Easy 2) Best Buy’s revenue was $18 billion during the 2020 pandemic year. This was up by 144% over the previous year. How much was Best Buy’s 2019 revenue? A) $4.36 billion B) $6.98 billion C) $7.38 billion D) $12.50 billion E) $16.41 billion Answer: C; You compute this answer by dividing the current revenue by (1 + growth rate). So, $18 billion/(1 + 1.44) = $7.377 billion. Note that the growth rate is 144% or 1.44 when converted to a decimal. AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company’s ability to serve its customers. Difficulty: Challenging 3) Jericho Industries has 19% of the overall market for concrete pavers. However, a new competitor entered the market with some unique designs. Jericho expects to lose about 10% of its market share unless it comes up with something unique that matches the competitor’s products. How much revenue will Jericho lose if the initial revenue forecast was $38 million. A) $3.8 million B) $4.1 million C) $5.2 million D) $34.2 million E) $41.3 million Answer: A; You compute the answer by assuming a 10% decline so $38 million x .10 = $3.8 million. AACSB: Analytical thinking Skill: Application Objective: LO 3.1: Describe the environmental forces that affect the company’s ability to serve its customers. Difficulty: Moderate 4) In 1970 the median age of the U.S. population was 29 and it is currently 39. How many people are between the ages of 0 and 39 if the U.S. population is 332 million? A) 158 million B) 144 million C) 211 million D) 166 million E) 245 million Answer: D; The median is the midpoint which means 50% is below that number and 50% is 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

above that number. So, 332 million x .5 = 166 million. AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 5) What percentage of the overall population consists of baby boomers if there are 71 million baby boomers and the U.S. population is 332 million? A) 15.71% B) 21.38% C) 71.00% D) 78.62% E) 25.27% Answer: B; You compute this by taking the fraction of 71/332 = .2138, or 21.38%. AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Easy 6) The global market for meal delivery services is expected to grow by 17% each year for the next seven years. How much will it be in 4 years if the current market is worth $18.3 billion? A) $21.4 billion B) $25.1 billion C) $34.3 billion D) $40.1 billion E) $45.6 billion Answer: C; You can compute this answer by FV =PV(1 + growth rate)n, where n = number of years. So, $18.3(1.17)4 = $34.3 billion. AACSB: Analytical thinking Skill: Application Objective: LO 3.2: Explain how changes in the demographic and economic environments affect marketing decisions. Difficulty: Challenging 7) Firm XXY experienced a 25% growth rate in online revenues during the pandemic year. How much online revenue did Firm XXY generate during the pandemic year if the previous year’s online revenues were $72.4 million? A) $87.2 million B) $18.1 million C) $75.4 million D) $82.1 million E) $90.5 million Answer: E; You compute the online sales revenue by taking previous year’s revenues and multiplying by (1 + growth rate). So, $72.4 million (1.25) = $90.5 million. AACSB: Analytical thinking 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Application Objective: LO 3.3: Identify the major trends in the firm’s natural and technological environments. Difficulty: Moderate

Use the following information to compute the answers to questions 8 and 9. Assume the following three firms gave generous donations to charitable causes. The donation amounts, revenues, and net income are all provided in the following table. All dollar amounts are in millions of dollars.

Firm A Firm B Firm C

Revenues $455.3 $551.7 $122.6

Donations $19.4 $18.3 $6.7

Net Income $36.3 $62.1 $8.4

8) Which firm donated the largest amount as a percentage of revenue? A) Firm A B) Firm B C) Firm C D) Firm A and C tied E) Firm B and C tied Answer: C; You need to compute the donation as a percentage of revenue for all three firms and then select the largest percentage. Firm A = $19.4/$455.3 = .0426, or 4.26% Firm B = $18.3/$551.7 = .0332, or 3.32% Firm C = $6.7/$122.6 = .0546, or 5.46%; Firm C donated the largest percent of revenue. AACSB: Analytical thinking Skill: Application Objective: LO 3.3: Identify the major trends in the firm’s natural and technological environments. Difficulty: Challenging 9) Which firm donated the largest amount as a percentage of net income and how much was that percentage? A) Firm A; 53.44% B) Firm A; 78.21% C) Firm B; 29.47% D) Firm C; 89.43% E) Firm C; 79.76% Answer: E; You need to compute the donation as a percentage of net income for all three firms and then select the largest percentage. Firm A = $19.4/$36.3 = .5344, or 53.44% Firm B = $18.3/$62.1 = .2947, or 29.47% Firm C = $6.7/$8.4 = .7976, or 79.76%; Firm C donated the largest percent of net income. 45 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 3.3: Identify the major trends in the firm’s natural and technological environments. Difficulty: Challenging 10) Unilever’s new brand, Right to Shower, donates 30% of profits to provide mobile showers for homeless people. How much did they donate in 2021 assuming the brand’s revenues were $221.5 million and the profit margin was 7%? A) $1.26 million B) $3.87 million C) $13.95 million D) $4.65 million E) $66.39 million Answer: D; You compute this answer by computing total dollar profits and then multiplying that amount by 30%. So, $221.5 x .07 x 30 = $4.65 million. AACSB: Analytical thinking Skill: Application Objective: LO 3.4: Explain the key changes in the political and cultural environments. Difficulty: Challenging

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 4 Managing Marketing Information to Gain Customer Insights 1) Today’s dynamic customers and markets call for marketing information approaches that are all of the following EXCEPT______. A) highly flexible B) customized to marketer needs C) capable of spanning the digital and physical worlds D) capable of colleting the right type of data E) just gather a lot of information Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Easy

2) Brad works with a reputable retailer and leads a team that collects market information from a wide variety of sources ranging from marketing research studies to monitoring online conversations where consumers discuss Brad's firm or its products. Brad's team uses this information to arrive at a better understanding of consumers' behavior and their buying motives. This, in turn, allows Brad's firm to successfully generate more value for consumers. Brad leads the ________ team. A) product development B) strategy implementation C) human resource D) customer relationship management E) customer insights Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Moderate 3) The term big data refers to the ________ generated by today's sophisticated information generation, collection, storage, and analysis technologies. A) large reports B) huge and complex data sets C) information requests D) social media contacts E) e-mail messages Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the 1 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

marketplace and customers. Difficulty: Easy 4) A(n) ________ consists of people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. A) enterprise planning system B) enterprise information system C) marketing information system D) corporate performance management system E) geographic information system Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Easy 5) Collections of consumer and market information obtained from data sources within the company network are called ___________ A) internal databases B) external databases C) big data D) a marketing information ecosystem E) a target market Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy 6) An MIE user should most likely be able to ________. A) implement new technology B) increase order requests C) develop customer insights D) analyze employee turnover E) establish short-term objectives Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Easy 7) The market researchers at HoneyCamp Foods gather daily sales data and sort it by product line and region. With the help of sophisticated tools and techniques, they develop the data needed by marketing managers to evaluate the market share of the company's different products 2 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

and also to gain valuable market insights. This mix of people and procedures at HoneyCamp Foods that generate actionable marketing insights represents a(n) ________. A) enterprise planning system B) product mix C) strategic planning system D) marketing information system E) business portfolio Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Moderate 8) Big data refers to the huge and complex data sets generated by today’s sophisticated data generation, collection, storage, and analysis technologies. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Easy 9) The real value of marketing research lies in the customer insights that it provides. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Easy 10) A marketing information ecosystem assesses information needs, develops needed information, and helps decision makers use the information. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Easy

11) What do marketers gain from gathering and analyzing information about customers and the needs and motivations of those customers? Answer: To create value for customers and build meaningful relationships with them, marketers must first gain fresh, deep insights into what customers need and want. Such customer insights come from good marketing information. Companies use these customer insights to develop a competitive advantage. Customer insights groups collect customer and market information from a wide variety of sources, ranging from traditional marketing research studies to mingling with and observing consumers to monitoring social media conversations about the company and its products. They mine big data from sources far and wide. Then they use this information to develop important customer insights from which the company can create more value for its customers. AACSB: Reflective thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Moderate 12) What is the function of a marketing information ecosystem (MIE)? Answer: A marketing information ecosystem (MIE) consists of people and procedures dedicated to assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. The MIE begins and ends with information users–marketing managers, internal and external partners, and others who need marketing information. First, it interacts with these information users to assess information needs. Next, it interacts with the marketing environment to develop needed information through internal company databases, marketing intelligence activities, and marketing research. Finally, the MIE helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships. AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 13)Are customer insights difficult to obtain? Explain. Answer: Customer and market insights can be difficult to obtain. Customer needs and buying motives are often anything but obvious—often, customers themselves can’t tell you what exactly they need and why they buy. To gain good customer insights, marketers must therefore effectively manage marketing information from a range of sources. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Moderate 14) A good marketing information ecosystem balances the information users ________ to have against what they ________ and what is ________ to offer. 4 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) request; want; affordable B) demand; should request; time-efficient C) want; are unaware of; the newest technology D) would like; need; feasible E) don't need; can afford; available Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 15) Kei, a senior marketing manager of a pizzeria in North Florida, is currently researching electronic collections of consumer information within the company network to arrive at crucial marketing decisions. In this instance, Kei is using ________. A) ethnographic research B) internal databases C) descriptive research D) data warehouses E) causal research Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 16) _____ is the monitoring, collection, and analysis of available information about contenders in the marketplace. A) Big data B) Competitive marketing intelligence C) Social space D) Resource dependency E) Engaging customers Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy 17) Which of the following is an advantage of using an internal database? A) Data always remains current in internal databases. B) Highly sophisticated equipment and techniques are not required for maintaining internal databases. C) Internal databases can be accessed more quickly and cheaply than other information sources. D) Internal databases require less maintenance efforts. E) Information obtained from internal databases is almost always sufficient for making marketing decisions. 5 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy 18) Problems with internal databases include all of the following EXCEPT that ________. A) data ages quickly B) the data is in the wrong form for making marketing decisions C) managing and mining mountains of information requires sophisticated equipment D) keeping a database current requires major effort E) information can be accessed more cheaply Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy 19 ) The marketing department of a reputable firm wants to improve strategic decision making, track the actions of other players in the market, and provide early warning of opportunities and threats. Which of the following would help the firm achieve its objectives? A) ethnographic research B) strategic planning C) data warehousing D) competitive marketing intelligence E) customer relationship management Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate

20) Which of the following statements is true regarding competitive marketing intelligence? A) The advantage of using competitive marketing intelligence is negligible. B) The goal of competitive marketing intelligence is to improve recruiting efforts. C) Competitive marketing intelligence relies upon costly internal databases. D) Competitive marketing intelligence relies upon publicly available information. E) Companies using competitive marketing intelligence routinely ignore consumers' online chatter. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate

21) Marketing intelligence techniques do NOT include _____. A) observing consumers B) analyzing competitors’ financial reports C) conducting online research D) implementing product diversification E) benchmarking competitors' products Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate Refer to the scenario below to answer questions 22-23.

Jason West, owner of A1 Cleaning, started his enterprise in 2001. Jason's primary focus had been on office cleaning for large corporations. But in recent months, Jason has seen a decline in demand for his office cleaning services. Surprisingly, the competitive environment appeared relatively stable with no new competitors. However, Jason knew that office cleaning was a highfrequency service that is usually performed daily; therefore, competitors must have been doing something to attract his customers. Building a competitive advantage seemed to be the only option to offset competition. But as Jason pondered over his dilemma, he realized that prior to building his competitive advantage he needed to better understand how customers assessed service quality and what they look for in a superior cleaning service. Jason developed a research plan. First, he gathered information about his competitors, primarily through pamphlets and Web sites, as well as through a few phone calls in order to find out exactly what the competitors offered in their cleaning packages. In addition, Jason obtained from the Chamber of Commerce an updated list of local corporations. He planned on sending written questionnaires to them. Though the list of corporations contained 141 local company names, Jason chose to survey 75 of them. To better understand customer service expectations between both small and large 7 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

corporations, Jason divided his surveys into two categories. The survey questions were designed to extract specific data from respondents with regard to service quality expectations in correlation to service frequency and price. Jason awaited the results. Though his primary focus had been on large corporations, he was flexible and would aim his efforts differently if needed. 22) In this scenario, which of the following is representative of competitive marketing intelligence? A) formulating a research plan B) collecting data about competitors C) sending mail questionnaires to focus groups D) creating competitive advantage E) consolidating core competencies Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 23) How can good marketing intelligence help Jason? Answer: Good marketing intelligence can help Jason gain insights into how consumers talk about and engage with his cleaning service. Such intelligence can also shed light on competitors’ sources of competitive advantage and their likely moves. AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate

24) External databases are electronic collections of consumer and market information obtained from data sources within a company's network. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy

25) Data ages quickly. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy

26) The growing use of marketing intelligence raises ethical issues because some intelligencegathering techniques involve questionable ethics. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 27) Competitor intelligence can be collected from people inside the company, such as executives, engineers, purchasing agents, and the sales force, as well as customers. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy 28) Marketers can obtain information from internal data and from competitive marketing intelligence. Compare and contrast the two sources of information. Answer: Internal databases refer to electronic collections of consumer and market information obtained from data sources within the company network. For example, the accounting department provides records of sales, costs, and cash flows; operations reports on productionrelated issues; sales and marketing provide data on resellers, competitors, buyer behavior, and the industry; and marketing provides information on customer transactions, demographics, and buying behavior. Internal data are cheaper sources that are easy to access. On the other hand, competitive marketing intelligence refers to the systematic collection and analysis of publicly available information about consumers, competitors, and developments in the marketplace. The goal of competitive marketing intelligence is to improve strategic decision making by understanding the consumer environment, assessing and tracking competitors' actions, and providing early warnings of opportunities and threats. Marketing intelligence techniques range from observing consumers firsthand to quizzing the company's own employees, benchmarking competitors' products, researching the Internet, and monitoring Internet buzz. AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 29) What is the most important characteristic of a good MIE? Answer: A good MIE balances the information users would like to have against what they really need and what is feasible to offer. AACSB: Analytical thinking Skill: Concept Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Easy 30) The objective of is to gather preliminary information that will help further define the research problems and suggest hypotheses. 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) exploratory research B) causal research C) descriptive research D) market research E) focus group research Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 31) Which of the following is true with regard to marketing research? A) The marketing research process depends primarily on sophisticated internal databases. B) The marketing research process requires assessing macroeconomic forces. C) Marketing research gives marketers insights into customer motivations. D) Marketing research eliminates the need for a SWOT analysis. E) Marketing research is a simple two-step process. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 32) Which of the following is the second step in the marketing research process? A) developing a survey B) defining the problem and objectives of the study C) developing the research plan D) preparing the executive summary E) collecting information Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

33 ) The objective of descriptive research is to ________. A) test hypotheses about cause-and-effect relationships B) use online surveys C) portray market potential for a product or consumer characteristics D) assign a cause to a seemingly random event E) define the research problem Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 34) Traditional mainstays of marketing research do NOT include _____. A) in-person research surveys B) focus groups C) telephone surveys D) online surveys E) research panels Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 35) Today’s fast and agile decision making often calls for fast and agile marketing information and research, also called _______. A) in-person B) telephone research C) survey research D) marketing research E) just-in-time research Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

36) Akira Takano, a marketing manager, is about to test the hypothesis that the sale of a particular product will increase exponentially if there is a $5 drop in the selling price of the product. Akira is involved in ________ research. A) exploratory B) descriptive C) causal D) constructive E) ethnographic Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate Refer to the scenario below for questions 37-38. Beth Williams works for a marketing research company in Chicago. Her current research involves finding the market potential for a client's new line of sports apparel. 37) Given her objective, which of the following types of research is the most suitable for Beth? A) causal research B) constructive research C) statistical research D) descriptive research E) exploratory research Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate

38) If Beth wants to test her hypothesis about the success of the new line of sports apparel, what would be her next step? Answer: Beth should probably conduct causal research. The objective of causal research is to test hypotheses about cause-and-effect relationships. For example, would a decrease in price result in a sufficient increase in sales? Managers often start with exploratory research and later follow with descriptive or causal research. AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 39) The marketing research process does NOT include _____ A) market segmentation B) gathering information C) collecting the data D) defining the problem E) research objectives Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 40) Secondary data consist of ________. A) information collected for the specific purpose at hand B) data that does not age C) information that already exists somewhere, having been collected for another purpose D) information collected from conducting personal, in-depth interviews E) data that is unreliable and unsuitable for the purpose of making marketing decisions Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate

41) Primary data consist of ________. A) data that does not age B) data obtained from the public domain C) information collected for the specific purpose at hand D) information that already exists somewhere, having been collected for another purpose E) information that is the least expensive and the easiest to obtain Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 42) The research plan should be presented in a(n)_______. A) in-person proposal B) teleconference over Zoom C) written proposal D) email E) informal memo Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 43) Secondary data can be retrieved from all EXCEPT ________. A) interviews B) commercial online databases C) internet search engines D) off-the-shelf blueprints E) consumer studies Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

44) Which of the following is a NOT a valid source of primary data? A) focus groups B) interviews C) ethnographic research D) commercial databases E) observational research Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 45) Which of the following is true with regard to gathering secondary data? A) Gathering secondary data involves costly fees to government agencies. B) Commercial online databases contain primary rather than secondary data. C) Internet search engines can be useful sources of relevant secondary data. D) It is illegal for firms to purchase secondary data from outside suppliers. E) Secondary data eliminates the need for primary data in most cases. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 46) ______use(s) artificial intelligence and machine learning techniques to automatically and continuously analyze the huge amounts of text data posted by consumers on social media, internet forums, company websites, and other digital platforms. A)Digital analysis . B) Online databases C)Customer insight committees . D) Secondary data E) Focus groups Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 47) Primary data collection does NOT include _____. A) customer insight communities B) commercial databases C) surveys and questionnaires D) digital text analysis E) online tracking and targeting 15 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 48) A company sent a trained observer to watch and interact with consumers in their natural environments in order to gain deeper insights on consumer needs. This is an example of ________. A) viral marketing B) survey research C) ethnographic research D) experimental research E) niche marketing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 49) ________ involve(s) sending observers to watch consumers—usually unobtrusively—in their “natural environments” as they go about their daily lives. A) Ethnographic research B) Focus groups C) Experimental research D) Descriptive research E) Online tracking and targeting Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 50) Intuit has a “follow-me-home” program. Small, well-trained teams of employees visit customers’ homes and offices to watch them experience the company’s products in real life— everything from removing the shrink-wrap to downloading an app to applying the software. The teams don’t interview the customers; they simply observe. After each visit, the teams debrief immediately “so you get a complete picture faster,” says Intuit CEO Intuit conducts some 10,000 hours of follow-me-home visits a year. This is an example of A) Online research B) Ethnographic research C) Digital text analysis research 16 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) Exploratory research E) Focus-group research Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 51) In exploratory research, _________are especially useful. A) open-ended questions B) closed-ended questions C) mail questions D) digital text analysis questions E) sampling questions Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 52) Which of the following is true of ethnographic research? A) It is a type of experimental research that involves evaluating group responses. B) It involves sending observers to watch and interact with consumers in their natural environments. C) It is a traditional quantitative research approach. D) Information used in this mode of research is mainly derived from secondary data sources. E) It is a form of survey research. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 53) The focus group remains a major qualitative marketing research tool for all of the following EXCEPT _____ A) gaining insight into consumer thoughts and feelings B) observing group interactions C) hearing consumer ideas D) accessing commercial databases E) observing facial expressions Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing 17 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

research process. Difficulty: Moderate 54) While looking for ideas on how to craft a user-friendly dishwasher, the designers of a dishwasher-manufacturing company spent 10 days observing people as they used their dishwashers in their homes. In this instance, the designers were conducting ________. A) survey research B) experimental research C) quantitative marketing research D) ethnographic research E) causal research Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 55) Fashion For Us is a producer of several popular foot ware brands. Rather than relying only on slower, traditional marketing research methods, Fashion For Us maintains customer insight committee a(n) __________ panel of engaged consumers who provide input and take part in research projects over time. As a result, Fashion For Us has instant access to customer opinions about its products and marketing efforts. Rather than simply gathering data about consumers, Fashion For Us builds brand relationships. A) telephone B) online C) ethnographic D) traditional focus-group E) just-in-time Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 56) Which of the following is true about experimental research? A) It involves sending observers to watch and interact with consumers in their natural environments. B) It is best suited for gathering causal information. C) It involves mail questionnaires D)It involves the use of commercial databases . E)It is used for gathering secondary data. . Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing 18 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

research process. Difficulty: Moderate 57) Juanita Petino, a nutritionist, decided to test the effects of two breakfast cereals, Kinglo and Loopy, on different consumer groups. For the purpose of her study, she divided 20 volunteers into two groups and asked the members of one group to have Kinglo cereal and the members of the other group to have Loopy cereal for breakfast. She decided to compare the responses of the volunteers after a week to gain deeper insights into consumer attitude. In this instance, Juanita is using ________. A) niche marketing B) experimental research C) product differentiation D) ethnographic research E) viral marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 58) What is the advantage of survey research? Answer: The flexibility of survey research is high; it can be used to obtain many different kinds of information in many different situations. AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 59) Identifying relevant digital text data and gaining insights from all those data are huge challenges. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 60) Nielsen Media Research attaches people meters to television sets in selected homes to record who watches which programs and has developed on-device meter panels to record user interactions with mobile devices. In fact, Nielsen’s Portable People Meter (PPM) is worn like a pager and records hidden tones within a program’s audio stream. This is an example of ______. A) behavior targeting B) social targeting 19 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) focus-group research D) digital, mechanical, and biosensors E) online tracking and targeting Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 61) BestBurgers introduced a new hamburger and, before including it on its main menu, tested it in two different cities at two different prices. The marketers at BestBurgers analyzed the different sales levels at these two restaurants , planning to use the information to help them set a nationwide price for the new offering. This is an example of ________. A) exploratory research B) social targeting C)behavioral targeting D) experimental research E) focus-group research Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 62) Maria Ramirez is conducting research to determine consumers' personal grooming habits. Because of the personal nature of many of the survey questions, Maria wants to select the contact method that is most likely to encourage respondents to answer honestly and that will allow her to easily collect large amounts of data. Which of the following is best suited to meet Maria's requirements? A) mail questionnaires B) telephone interviews C) individual interviews D) focus group interviews E) immersion group discussions Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 63) Marketers use _______, mining individual online social networking activity to target ads and marketing efforts. A) social targeting B) focus-group research 20 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) target marketing D) market segmentation E) just-in-time research Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 64) Loft Industries sells roof trusses to contractors and builders and is currently looking for honest feedback on its services. However, in the past, most of its efforts to procure feedback from customers did not yield any meaningful data. According to the marketing managers of Loft Industries, feedback was more polite than honest. Which of the following contact methods should Loft Industries NOT use if the company wants to get a high response rate? A) online focus groups B) telephone interviews C) mail questionnaires D) individual interviews E) personal interviews Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 65) Which of the following is an advantage of telephone interviews? A) They are more cost-effective than mail questionnaires. B) Interviewer bias is absent. C) The quantity of data collected is greater compared to personal interviewing. D) The speed with which data is collected is high. E) Response rates tend to be higher than those of mail questionnaires. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 66) The Smith Co. is using online and mobile surveys because of all of the following reasons EXCEPT A) They are more interactive. B) They are more engaging. C) They attract higher response rates. D) They are more intrusive than phone surveys. E) They are easier to complete than mail surveys. 21 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 67) If you do a Google search for a Samsung TV you’re thinking about buying, you’ll probably see an ad for that TV set on your next visit to Facebook or your favorite buying site. This is an example of __________ A) exploratory research B) personal interviewing C) behavioral targeting D) tracking E) causal research Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 68) Redrunners Inc., a manufacturer of sports merchandise, is gathering customer opinions about the firm's new sports shoe line. A team of researchers in the company invited eight regular customers to talk about the new line of shoes, asking why they chose to buy the shoe and what they disliked most about its design. A moderator was present to monitor the discussion. Which of the following types of contact methods is Redrunners using? A) individual interviewing B) mail questionnaire C) group interviewing D) mass survey E) mall intercept Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 69) Happy Pets, a company manufacturing pet foods and accessories, created a membership club for its regular customers called "I Love My Pet." This group consists of animal lovers selected by the company to complete product-related polls, chat with product developers, and provide feedback about specific products. Which of the following best describes "I Love My Pet"? A) primary group B) immersion group C) mob D) dyad 22 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) triad Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 70) In a simple random sample, ________. A) every member of the population has a known and equal chance of selection B) the population is divided into mutually exclusive groups (such as blocks), and the researcher draws a sample of the groups to interview C) the researcher selects the easiest population members from which to obtain information D) the population is divided into mutually exclusive groups and random samples are drawn from each group E) the researcher finds and interviews a prescribed number of people in each of several categories Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 71)Designing a sample does NOT include the following question. A) Who is to be studied? B) How many people should be included in the sample? C) Should the sample be large or small? D) How should the people be chosen? E) Who is the moderator? Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 72) Which of the following is an example of a nonprobability sample? ________. A) simple random sample B) stratified random sample C) cluster (area) sample D) convenience sample E) focus group Answer: D AACSB: Analytical thinking Skill: Concept 23 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 73) Jaime Gonzalez owns a small publishing company in Utah and has a very restrictive budget for the market research he currently needs to conduct. He requires a large sample size for his research in order to arrive at insightful conclusions. Additionally, he wants to have excellent control over his sample. Keeping in mind his restrictive budget and other specifications, which of the following methods of contact would you advise Jaime to use? A) telephone interviews B) individual interviews C) online surveys D) mail questionnaires E) focus group interviews Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 74) Melissa Thomas leads the marketing research division at Tronics Inc., a manufacturing company based in Alabama. To improve future sales of the company's products, she has decided to collect customer opinions and feedback on the current products offered by her company. For this purpose, Melissa is looking for a highly flexible contact method that can be used to gather large amounts of data within the least possible time. In this instance, which of the following contact methods is most likely to hold the highest appeal for Melissa? A) online surveys B) in-depth interviews C) telephone interviews D) individual interviews E) mail questionnaires Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Challenging

75) Which of the following is true about Internet-based survey research? A) The effectiveness of Internet-based survey research is invariably affected by the interviewer's bias. B) Internet-based survey research is less flexible compared to mail questionnaires. C) Internet-based survey research is characterized by high speed and low costs. D) Typically, the quantity of data gathered in Internet-based survey research is low. E) The response rate of Internet-based survey research is lower than that of mail questionnaires. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 76)In a ______the researcher finds and interviews a prescribed number of people in each of several categories or segments. ? A) quota sample B) judgment sample C) convenience sample . D)cluster (area) sample . E) simple random sample Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 77) In a(n) _______each population member has a known chance of being included in the sample and researchers can calculate confidence limits for sampling error. A) nonprobability B) immersion group C) probability sample D) sampling plan E) convenience sample Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

78) For her current research project, Margaret Rogers wants to select a sample composed of the easiest population members from which to obtain information. In other words, Margaret is looking for a ________. A) focus group B) convenience sample C) stratified random sample D) probability sample E) sampling plan Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 79) Which of the following refers to a probability sample in which the population is divided into mutually exclusive groups (such as blocks), and the researcher draws a sample of the groups to interview? A) quota sample B) judgment sample C) cluster sample D) stratified random sample E) simple random sample Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 80) Which of the following refers to a sample in which every member of the population has an equal chance of selection A) nonprobability sample B) sampling unit C) sampling plan D) cluster sample E) simple random sample Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

81) Carol is a teacher at the Eagle Hill elementary school. She wants to know what the teachers think about the new lunch policy. Carol asks those teachers who are good prospects for accurate information. What sampling technique is Carol using? information? A) quota sample B) judgment sample C) convenience sample D) stratified random sample E) simple random sample Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 82) Which of the following refers to a nonprobability sample in which the researcher finds and interviews a prescribed number of people in each of several categories? A) quota sample B) judgment sample C) convenience sample D) stratified random sample E) simple random sample Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 83) Virtual conferencing platforms such as Zoom and Webex allow individuals to connect seamlessly online, with the full array of vocal and facial expressions captured and saved for later review and analysis. This is an example of _______ A) primary research B) secondary research C) telemarketing D) using search engines E) open-source directories Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 27 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

84) All of the following are closed-ended questions EXCEPT ____ A) How is voting going to help the nation? B) Do you like driving on the highway? C) How many children do you have? D) Would you like to try a sample? E) Are your friends in town? Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 85) All of the following questions are open-ended EXCEPT_____ A) Why do you think some people are more comfortable taking risks than others? B) How can I improve my presentation skills? C) Why do you think a single vote makes a difference? D) Would you like to try our new ice cream flavor? E) What is the best way to prevent weeds in a garden? Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 86) When reporting the findings, researchers should do all EXCEPT ________. A) avoid using too many numbers B) avoid using fancy statistical techniques C) present findings in a useful and usable way D) facilitate robust decision making E) present a faulty interpretation of the findings Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

87) To implement the research plan, the researcher should NOT A) maintain discipline and integrity B) analyze collected data C) collect information D) avoid checking data for accuracy and completeness E) process information Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 88) In many cases, findings can be interpreted in different ways, and discussions between researchers and managers will help highlight the best interpretations. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy Refer to the scenario below to answer question(s) 89-91 Jason West, owner of A1 Cleaning, started his enterprise in 2001. Jason's primary focus had been on office cleaning for large corporations. But in recent months, Jason has seen a decline in demand for his office cleaning services. Surprisingly, the competitive environment appeared relatively stable with no new competitors. However, Jason knew that office cleaning was a highfrequency service that is usually performed daily; therefore, competitors must have been doing something to attract his customers. Building a competitive advantage seemed to be the only option to offset competition. But as Jason pondered over his dilemma, he realized that prior to building his competitive advantage he needed to better understand how customers assessed service quality and what they look for in a superior cleaning service. Jason developed a research plan. First, he gathered information about his competitors, primarily through pamphlets and Web sites, as well as through a few phone calls in order to find out exactly what the competitors offered in their cleaning packages. In addition, Jason obtained from the Chamber of Commerce an updated list of local corporations. He planned on sending written questionnaires to them. Though the list of corporations contained 141 local company names, Jason chose to survey 75 of them. To better understand customer service expectations between both small and large corporations, Jason divided his surveys into two categories. The survey questions were designed to extract specific data from respondents with regard to service quality expectations in correlation to service frequency and price. 29 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Jason awaited the results. Though his primary focus had been on large corporations, he was flexible and would aim his efforts differently if needed. 89) In this scenario, which of the following is an example of primary data? A) list of corporations obtained from the Chamber of Commerce B) information obtained from competitors' pamphlets C) data obtained from the surveys conducted in the 75 companies D) information obtained from the Internet about current market trends E) data obtained from competitors' Web sites Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 90) Of the 141 companies on the list, Jason chose to survey only 75 of them. He sent surveys to both small as well as large companies. If Jason selected survey recipients randomly from two mutually exclusive groups comprised of small and large companies respectively, he most likely used a ________. A) simple random sample B) judgment sample C) convenience sample D) stratified random sample E) quota sample Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 91) If Jason used mostly open-ended questions in the survey to encourage people to answer in their own words, what kind of research would Jason be conducting? Answer: Jason would be conducting exploratory research. The objective of exploratory research is to gather preliminary information that will help further define the research problems and suggest hypotheses. AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 92) Ideally, a sample should be representative so that the researcher can make accurate estimates of the preferences and behaviors of the larger population. 30 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 93) The needs of the research project should guide the choice of sampling method. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

94) Group interviewing involves talking with people in their homes or offices, on the street, or in shopping malls. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 95) A sample is a segment of the population selected for marketing research to represent the population as a whole. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 96) Open-ended questions are especially useful in experimental research. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 97) The first question in a questionnaire should be intentionally difficult and complicated in order to weed out uninterested respondents. 31 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 98) Behavioral segmentation involves measuring brain activity to learn how consumers feel and respond. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 99) What are the steps of the marketing research process? How do companies conduct research? Answer: The marketing research process involves four steps: defining the problem and research objectives, developing the plan, implementing the research plan, and interpreting and reporting the findings. Some large companies have their own research departments that work with marketing managers on marketing research projects. In addition, these companies–like their smaller counterparts– frequently hire outside research specialists to consult with management on specific marketing problems and to conduct marketing research studies. Sometimes firms simply purchase data collected by outside firms to aid in their decision making. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 100) Briefly compare the different types of research approaches for gathering primary data. Answer: Research approaches for gathering primary data include observations, surveys, and experiments. Observational research involves gathering primary data by observing relevant people, actions, and situations. Observations can reveal information that people are unwilling or unable to provide in surveys or experiments. Survey research, the most widely used method for primary data collection, is the approach best suited for gathering descriptive information. A company that wants to know about people's knowledge, attitudes, preferences, or buying behavior can often find out by asking them directly. The major advantage of survey research is its flexibility; it can be used to obtain many different kinds of information in many different situations. Surveys addressing almost any marketing question or decision can be conducted by phone or mail, in person, or online. Experimental research is best suited for gathering causal information. It involves selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and checking for differences in group responses. Experimental research tries to explain cause-andeffect relationships. 32 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 101) Identify three ways that companies can collect secondary data. Answer: Companies can buy secondary data from outside suppliers such as Nielsen and U.S. MONITOR service by Kantar Futures. Also, companies can use commercial online databases such as ProQuest for a fee. Companies can use Internet search engines to locate relevant secondary information sources. AACSB: Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 102) Describe the major contact methods used to collect information from respondents in market research. Answer: Information can be collected by mail, telephone, personal interview, or online. Mail questionnaires can be used to collect large amounts of information at a low cost per respondent. Respondents may give more honest answers to more questions by mail than to an unknown interviewer in person or on the phone. Also, no interviewer is involved to bias respondents' answers. Telephone interviewing is one of the best methods for gathering information quickly, and it provides greater flexibility than mail questionnaires. Interviewers can explain difficult questions and, depending on the answers they receive, skip some questions or probe on others. Response rates tend to be higher than with mail questionnaires, and interviewers can ask to speak to respondents with the desired characteristics or even by name. Personal interviewing takes two forms: individual interviewing and group interviewing. Individual interviewing involves talking with people in their homes or offices, on the street, or in shopping malls. Such interviewing is flexible. Group interviewing consists of inviting 6 to 10 people to meet with a trained moderator to talk about a product, service, or organization. Participants normally are paid a small sum for attending. A moderator encourages free and easy discussion, hoping that group interactions will bring out actual feelings and thoughts. Online research can take many forms. A company can use the Internet or mobile technology as a survey medium: It can include a questionnaire on its Web or social media sites or use e-mail or mobile devices to invite people to answer questions. It can create online panels that provide regular feedback or conduct live discussions or online focus groups. Researchers can also conduct online experiments. AACSB: Analytical thinking Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate

103) Describe the three decisions involved in designing a sample. Answer: Designing the sample requires three decisions. First, who is to be studied (what sampling unit)? The answer to this question is not always obvious. Second, how many people should be included (what sample size)? Large samples give more reliable results than small samples. However, larger samples usually cost more, and it is not necessary to sample the entire target market or even a large portion to get reliable results. Finally, how should the people in the sample be chosen (what sampling procedure)? AACSB: Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 104) Compare and contrast closed-ended questions and open-ended questions for gathering data. Answer: Closed-ended questions include all the possible answers, and subjects make choices among them. Examples include multiple-choice questions and scale questions. Open-ended questions allow respondents to answer in their own words. Open-ended questions are especially useful in exploratory research, when the researcher is trying to find out what people think but is not measuring how many people think in a certain way. Closed-ended questions, on the other hand, provide answers that are easier to interpret and tabulate. AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 105) Briefly explain why marketers need marketing research in addition to competitive marketing intelligence. Answer: In addition to marketing intelligence information about general consumer, competitor, and marketplace happenings, marketers often need formal studies that provide customer and market insights for specific marketing situations and decisions. Marketing research gives marketers insights into customer motivations, purchase behavior, and satisfaction. AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy

Refer to the scenario below to answer questions 106-108. Chicken Shack, a fast-food chicken restaurant whose amazing chicken sandwich has become a phenomenon, wants to know how consumers would respond to offering plant-based “chicken” tenders and other plan-based dishes such as meatballs and hamburgers. Research shows that about 5 percent of Americans are vegetarians. A competitor, Chicken World, tested plant-based menu items in selected restaurants throughout the United States and Canada. However, at most fast-food restaurant chains, vegan items are limited to sides, such as fries or salads. Adding plant-based foods represents a major departure from Chicken Shack successful history of offering products made with real chicken. Chicken Shack could spend valuable advertising dollars on offering plant-based foods only to find out that consumers preferred real chicken. Also, Chicken Shack needs to learn about the characteristics and usage patterns of the broader population of fast-food and fast-casual diners: What do they need and expect from such restaurants? Where, when, and how do they use them, and what existing quality, price, and service levels do they value? The new plant-based offering would require strong positioning in the crowded fast-food market. What would be the Impact on the Chicken Shack’s customer experience: Would plant-based “chicken” offerings be consistent in quality with its famous chicken sandwich? On the other hand, adding vegetarian meals could help attract new sales and allow Chicken Shack to become a market leader for vegetarian offerings. Chicken Shack decided to use market research

106) Chicken Shack needs to know all of the following EXCEPT______. A) the demographic characteristics of current competitor’s customers B) the economic characteristics of current customers C) the lifestyle characteristics of current customers D) the employee reaction to serving and promoting plant-based chicken E) the number of fast-food restaurants in the United States and Canada Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 107) The research question is whether vegetarian “chicken” could create enough new sales to make it a lasting and profitable menu item. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 108) What should Chicken Shack do? 35 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: Chicken Shack marketers need many other types of information to decide whether to introduce a plant-based “chicken” item and, if so, the best way to do it. To meet the information needs, the research plan can call for gathering secondary data, primary data, or both. Secondary data consist of information that already exists somewhere, having been collected for another purpose. Primary data consist of information collected for the specific purpose at hand. AACSB: Application of knowledge Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 109) List two benefits of using secondary data. Answer: Secondary data can usually be obtained more quickly and at a lower cost than primary data. Also, secondary sources can sometimes provide data an individual company cannot collect on its own–information that either is not directly available or would be too expensive to collect. AACSB: Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 110) Who should interpret research findings? Answer: Interpretation should not be left only to researchers. Although they are often experts in research design, statistics, and data science, the marketing manager may know more about the problem and the decisions that must be made. The best research means little if the manager unthinkingly accepts faulty interpretations from the researcher. Similarly, managers may be biased. They may only accept research findings that align with their worldview. In many cases, findings can be interpreted in different ways, and discussions between researchers and managers will help highlight the best interpretations. Thus, managers and researchers must work together closely when interpreting research results, and both must share responsibility for the research process and resulting decisions. AACSB: Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Moderate 111) What are some of the limitations of observational research? Answer: Some things simply cannot be observed, such as attitudes, motives, or private behavior. Long-term or infrequent behavior is also difficult to observe. Finally, observations can be very difficult to interpret. Because of these limitations, researchers often use observation along with other data collection methods. AACSB: Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 36 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

112) What is descriptive research? Answer: The objective of descriptive research is to describe market and consumer characteristics, such as the market potential for a product or the demographics and attitudes of consumers who buy the product. AACSB: Written and oral communication Skill: Concept Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 113) Describe the translation problems that arise in international settings. ? Answer: Translating a questionnaire from one language to another is anything but easy. Many idioms, phrases, and statements mean different things in different cultures. For example, a Danish executive once noted, “Check this out by having a different translator put back into English what you’ve translated from English. You’ll get the shock of your life. AACSB: Written and oral communication Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 114) Technology by which machines think and learn in a way that looks and feels human but with a lot more analytical capacity is called _____. A) artificial intelligence (AI) B) behavioral segmentation C) sampling D) market segmentation E) exploratory research Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 115) _______refers to managing detailed information about individual customers and using that information to carefully manage customer touch points to maximize customer loyalty. A) firms monitor and minimize employee turnover B) Customer relationship management (CRM) C) Online research D) Sampling E) Causal research Answer: B 37 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 116) _______consists of the analysis tools, technologies, and processes by which marketers dig out meaningful patterns in big data to gain customer insights, gauge marketing performance, and improve the customer experience. A) Neuromarketing B) Marketing analytics C) Customer relationship management D) Ethnographic research E) Causal research Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 117) Customer relationship management integrates everything that a company's sales, service, and ________ teams know about individual customers. A) management B) marketing C) manufacturing D) engineering E) accounting Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 118) Which of the following is true about customer relationship management (CRM)? A) Data mining has limited applicability in CRM activities. B) Sophisticated analytical tools are sparingly used in CRM activities. C) CRM reduces the number of customer touch points. D) CRM aims to maximize customer loyalty. E) CRM enables firms to compare various product and service categories. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Moderate 119) IBM has a division called Watson Advertising, built around its supercomputer Watson, which first gained public recognition when it bested human contestants and won $1 million on 38 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Jeopardy! Watson can ingest hundreds of millions of pages of data each second. IBM has now turned Watson’s talents toward marketing. This is an example of _______. A) artificial intelligence (AI) B) neuromarketing C) sampling D) target marketing E) tracking and targeting market segment Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 120) In CRM, ________ techniques are used to sort through data and locate useful findings about customers. A) data warehousing B) marketing analytics C) niche marketing D) data conservancy E) mass marketing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 121) Netflix streams more movie and program content by far than any other video service. Worldwide, Netflix’s 209 million paid subscribers watch more than 6 billion hours of movies, TV programs, and original Netflix content each month. But while avid Netflixers are busy watching Netflix, Netflix is also busy watching them—very, very closely. Every day, Netflix tracks and parses member data on tens of millions of searches, ratings, and “plays.” This is an example of _______ A) marketing analytics B) customer relationship management (CRM) C) behavioral marketing D) online marketing survey research E) sample size Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Challenging 122) Ralph Goldsmith works for Zenith Inc., a leading cosmetic company based in Illinois. At Zenith, Ralph's primary responsibility revolves around digging deeply into customer data to gain valuable insights about customer needs, motives, and attitudes. This data is, in turn, used by 39 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Zenith to personalize its customers' shopping experiences. Ralph's position at Zenith requires him to focus primarily on ________. A) customer sales B) human resource management C) risk assessment D) financial analysis E) customer relationship management Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Moderate 123) All of the following statements are true about marketing analytics EXCEPT________________ A) Managers get buried in big data B) Managers let machines make decisions C) Managers miss the big picture D) Marketing analytics can craft strategy without managers E) Managers have to craft their own strategy Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 124) Customer touch points include customer purchases, satisfaction surveys, credit and payment interactions, sales force contacts, and service and support calls. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 125) Customer relationship management helps manage detailed information about individual customers and maximize customer loyalty. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 126) A disadvantage of using customer relationship management is its ineffectiveness in pinpointing high-value customers. Answer: FALSE AACSB: Analytical thinking 40 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Moderate 127) How can a company manage information on specific customers more effectively? Answer: Many companies have used customer relationship management (CRM) to manage detailed information about individual customers and carefully manage customer touch points to maximize customer loyalty. Through the use of sophisticated software and analytical tools, information about customers can be integrated and analyzed in depth, and the results can assist in building stronger customer relationships. CRM integrates everything that a company's sales, service, and marketing teams know about customers to provide a complete view of the customer relationship. Moreover, CRM analysts use analysis tools, technologies, and processes to reveal meaningful patterns in big data to gain customer insights and measure marketing performance. AACSB: Application of knowledge; Skill: Concept Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Moderate 128) How can data be misused and how has this problem been addressed? Answer: Recognizing that marketing research can be abused, several associations—including the American Marketing Association, the Marketing Research Association, and the Council of American Survey Research Organizations (CASRO)—have developed codes of research ethics and standards of conduct. For example, the CASRO Code of Standards and Ethics for Survey Research outlines researcher responsibilities to respondents, including confidentiality, privacy, and avoidance of harassment. It also outlines major responsibilities in reporting results to clients and the public. AACSB: Analytical thinking Skill: Application Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 129) Small businesses and not-for-profit organizations can obtain good market information and customer insight through all of the following cost-effective ways EXCEPT ____ A) observation B) secondary data searches C) informal surveys D) large-scale research studies E) small convenience samples Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 41 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

130) Which of the following is most likely to be a tool used by small businesses? A) large-scale research studies B) hiring a market researcher firm C) data purchased from Nielsen or the U.S. MONITOR service D) informal surveys using small convenience samples E) sophisticated digital analysis Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Easy 131)Which of the following is a problem that international researchers face? A) Secondary data is easy to find. B) Researchers must deal with diverse markets in different countries. C) There are hundreds of research services in developing countries. D) Researchers do not have to collect their own data. E) Language is not a problem because most countries use English for business communication. Answer: B AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 132) For international researchers, ________ is the most obvious obstacle. A) language B) technology C) infrastructure D) motivation E) political risk Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Easy

133) Which statement does NOT explain why some people resent or mistrust marketing research? A)They don’t like being interrupted by researchers. B) They fear that marketers are building databases full of personal information C)They worry that researchers might use sophisticated techniques to probe their deepest feelings. D) They enjoy being surveyed and giving their opinions E) They value their privacy . Answer: D AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 134) Small businesses and not-for-profit organizations can collect a significant amount of information at very little cost by researching online. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Easy

135) How do most major companies safeguard privacy in the international business environment. Answer: Most major companies have now appointed a chief privacy officer (CPO), whose job is to safeguard the privacy of the companies in the international business environment. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Easy 136) Discuss how small businesses and not-for-profit organizations can obtain market insights economically. Answer: While small businesses and not-for-profit organizations cannot afford costly large-scale marketing studies or sophisticated digital analytics, they can obtain good marketing insights through observation or informal surveys using small convenience samples. Also, many associations, local media, and government agencies provide special help to small organizations. Finally, small businesses can collect a considerable amount of information at very little cost online. They can scour competitor and customer Web sites and use Internet search engines to research specific companies and issues. In summary, secondary data collection, observation, surveys, and experiments can all be used effectively by small organizations with small budgets. However, although these informal research methods are less complex and less costly, they still must be conducted with care. Managers must think carefully about the objectives of the research, formulate questions in advance, recognize the biases introduced by smaller samples and less 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

skilled researchers, and conduct the research systematically. AACSB: Written and oral communication Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 137) Explain the common problems that international marketing researchers encounter. Answer: International researchers deal with less homogeneous markets. The markets often vary greatly in their levels of economic development, cultures and customers, and buying patterns. Good secondary data are difficult to find in many foreign markets. Because of the scarcity of good secondary data, international researchers often must collect their own primary data. In addition, choosing representative samples and finding methods of contacting participants can be a formidable task. Cultural and language differences can present obstacles in interpreting the data and drawing realistic conclusions. Consumers' attitudes in other countries may hinder the process of collection. Translating a questionnaire from one language to another is anything but easy. Many idioms, phrases, and statements mean different things in different cultures. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 138) Discuss the special issues some marketing researchers face. Answer: Special marketing research situations arise when conducting research in small business, not-for-profit, or international situations. Marketing research can be conducted effectively by small businesses and nonprofit organizations with limited budgets. International marketing researchers often face challenges related to conducting research across countries with varying cultures, languages, and infrastructures. Companies also need to be sensitive to and proactively address the major public policy and ethical issues surrounding marketing research, including maintaining consumer privacy, securing and protecting consumer data, and preventing the misuse of research findings. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate 139) Explain the importance of information in gaining insights about the marketplace and customers. Answer: The marketing process starts with a complete understanding of the marketplace and consumer needs and wants. Thus, the company needs to turn collected data into useful information and ultimately into meaningful customer insights by which it can produce superior value for its customers. The company also requires information on competitors, resellers, and other actors and forces in the marketplace. Increasingly, marketers are viewing information as an important strategic asset and marketing tool. Good information, well analyzed and used, not only 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

helps the company make better decisions but also opens up new opportunities for growth and competitive advantage. AACSB: Analytical thinking Skill: Concept Objective: LO 4.1: Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Moderate 140) Why do some consumers resent marketing research? Answer: Although some consumers actually enjoy being interviewed and giving their opinions, others strongly resent or even mistrust marketing research. They don't like being interrupted by researchers. They worry that marketers are building huge databases full of personal information about customers. Or they fear that researchers might use sophisticated techniques to probe our deepest feelings, peek over our shoulders as we shop, or track us as we browse and interact on the Internet and then use this knowledge to manipulate our buying. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 4.5: Discuss the special issues some marketing researchers face, including public policy and ethics issues. Difficulty: Moderate

Quantitative Questions 1) The size of the global datasphere is currently 74 zettabytes and growing rapidly. What is the expected annual growth rate if it doubles in three years as expected? A) 12% B) 24% C) 35% D) 55% E) 94% Answer: B; You can use the rule of 72 to determine the growth rate that will cause a value to double. You simply divide 72 by the number of years it will take to double a value and that will give you the approximate annual growth rate. So, 72/3 = 24% per year. AACSB: Analytical thinking Skill: Application Objective: LO 4.1 Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Moderate

Use the following information to answer problems 2 and 3. Ride-sharing firm Uber made $11.13 billion in revenue in 2020 and posted a $6.7 billion loss. 45 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

However, the firm settled a lawsuit with autonomous driving firm Waymo by paying $244 million after it was discovered Uber jumpstarted its self-driving car program using trade secrets belonging to Waymo. 2) What percentage of Uber’s revenues does the lawsuit represent? A) 2.19% B) 3.11% C) 3.64% D) 5.84% E) 6.01% Answer: A; To compute this fraction divide the lawsuit amount by revenues. So, $244,000,000/11,130,000,000 = .0219, or 2.19%. AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 3) What percentage of Uber’s losses does the lawsuit represent? A) 2.19% B) 3.11% C) 3.64% D) 5.84% E) 6.01% Answer: C; To compute this fraction divide the lawsuit amount of Uber’s losses. So, $244,000,000/6,700,000,000 = .0364, or 3.64% AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate

Use the following table of data to answer questions 4, 5, and 6. Conveyance Analytics conducted a survey and asked respondents to rate their attitude toward a product on a 1 to 5 scale with 1 being “strongly dislike” and 5 being “strongly like.” The ratings by respondent are; Respondent

Attitude toward product (1 to 5)

A B C D E F G

H I J

3 4 4

4) Calculate the mean of these data. A) 4.1 B) 3.5 C) 3.2 D) 2.9 E) 2.7 Answer: B; The mean, or average, is computed by adding the values and then dividing by the number of observations. So, the sum of the values is 35 and there are 10 observations. The mean is 35/10 = 3.5. AACSB: Analytical thinking Skill: Application Objective: LO 4.1 Explain the importance of information in gaining insights about the marketplace and customers. Difficulty: Moderate 5) Calculate the median of these data. A) 5 B) 4.4 C) 4 D) 3.5 E) 5 Answer: C; To compute the median for an even number of values you put them in order and take the two values in the center and add them together and then divide by 2. So, the values in order are [1,2,3,3,4,4,4,4,5,5]. The two middle values are both 4 so 4 + 4 = 8/2 = 4. AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 6) Calculate the mode of these data. A) 1 B) 2 C) 3 D) 4 E) 5 Answer: D; The mode is the most frequently occurring number which is 4 with 4 occurrences. AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 47 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

7) Julanna is conducting research on her firm’s competition. She downloaded the annual reports from the four firms in the industry which included her firm. What percentage of the market does Julanna’s firm have if the revenues of the four firms are; Julanna’s firm $45 million; Competitor A $87 million; Competitor B $18 million; Competitor C $56 million. A) 19.2% B) 21.8% C) 33.4% D) 36.1% E) 38.4% Answer: B; To compute the percentage of the market you determine the total market by adding all the sales revenue together. So, $45 + $87 + 18 + $56 = $206 million. Julanna’s firm has $45/$206 = .218, or 21.8% of the market. AACSB: Analytical thinking Skill: Application Objective: LO 4.2: Define the marketing information ecosystem and discuss its parts. Difficulty: Moderate 8) A recent report suggests that 5% of Americans now identify themselves as vegans. How large is this group given a US population of 332.4 million? A) 9.31 million B) 12.47 million C) 14.26 million D) 16.62 million E) 25.41 million Answer: D; To compute the answer multiply .05 x population of 332.4 = 16.62 million. AACSB: Analytical thinking Skill: Application Objective: LO 4.3: Outline the role of marketing research and the steps in the marketing research process. Difficulty: Easy 9) Beyond Meat wants to sample .2% of the vegan market to get feedback on some of the firm’s new products. How many people will the firm survey if there are 12.1 million vegans in the U.S? A) 41,050 B) 14,700 C) 29,500 D) 31,200 E) 24,200 Answer: E; To compute the answer multiply .002 x 12,100.000 = 24,200. AACSB: Analytical thinking Skill: Application Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy 48 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

10) Assume Starbucks spends $45 million a year on disposable cups and lids. How much will Starbucks save if the firm’s red cup program where customers get a free reusable cup with certain drinks eliminates 20% of this cost? A) $5 million B) $9 million C) $11 million D) $15 million E) $22 million Answer: B; To compute the answer multiply .20 x 45 million = $9 million. AACSB: Analytical thinking Skill: Application Objective: LO 4.4: Explain how companies analyze and use marketing information. Difficulty: Easy

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 5 Consumer Markets and Buyer Behavior 1) Individuals and households that buy or acquire goods and services for personal consumption make up the ________. A) consumer market B) market offering C) market mix D) subculture E) social class Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Easy 2) Which of these is NOT an example of marketing stimuli? A) product stimuli B) price stimuli C) place stimuli D) social stimuli E) promotion stimuli Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Easy 3) Which of these stimuli is NOT present in a buyer's environment? A) economic stimuli B) cultural stimuli C) political stimuli D) social stimuli E) technological stimuli Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Moderate

4) Companies can research many aspects of buying decisions. However, the one that is the most difficult to identify is ________. A) what consumers buy B) how and how much they buy C) why they buy D) when they buy E) where they buy Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Moderate 5) Marketers engage in data mining to determine . A) consumers’ technological skills B) the buyer's path to purchase C) the buyer’s ethnological background D) why consumers are fickle E) whether buyers can mentally engage Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Challenging 6) Which of the following is a list of the four Ps of marketing? A) product, packaging, place, promotion B) packaging, price, place, product C) price, promotion, product, place D) promotion, people, product, preferences E) place, price, preferences, promotion Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Moderate

7) Which of these statements is the most accurate with respect to consumer behavior? A) Consumers often don’t know what influences their purchases. B) Consumers understand what motivates them to buy a product. C) Peer pressure is the primary consumption motivator. D) Most consumers respond favorably to negative advertising. E) Learning what makes consumers buy a product is a simple data mining exercise. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Moderate 8) Buyer responses are influenced by marketing stimuli. The responses to the stimuli include all of the following EXCEPT ________. A) brand engagement B) buying attitudes C) purchasing behavior D) buying preferences E) the "why" regarding the responses Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Moderate 9) Which of these elements of consumer buying behavior is the most difficult to measure? A) whats B) wheres C) whens D) whys E) whos Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Moderate

10) The starting point of understanding how consumers respond to various marketing efforts is called the stimulus-response model of buyer behavior. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer 3 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

buyer behavior. Difficulty: Easy 11) Consumers can easily explain what influences their purchases. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Easy 12) Marketers have a difficult time understanding “when” consumers buy. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Easy 13) The marketing stimuli include price, product, place, and promotion. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Easy 14) What role do the four Ps play in consumer behavior? Answer: The four Ps are the marketing stimuli that affect buyer behavior: marketers use product, price, place, and promotion to attract the targeted consumers. AACSB: Analytical thinking Skill: Concept Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Easy 15) Discuss the buyer’s decision process. Answer: First, the buyer’s characteristics influence how he or she perceives and reacts to the stimuli. These characteristics include a variety of cultural, social, personal, and psychological factors. Second, the buyer’s decision process itself affects behavior. This decision process—from need recognition, information search, and alternative evaluation to the purchase decision and postpurchase behavior—begins long before the actual purchase decision and continues long after.. AACSB: Analytical thinking Skill: Concept 4 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 5.1: Define the consumer market and construct a simple model of consumer buyer behavior. Difficulty: Moderate 16) ________ is the most basic determinant of a person's wants and behavior. A) Culture B) Brand personality C) Cognitive dissonance D) Motive E) Attitude Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 17) Subcultures include nationalities, religions, geographic regions, and ________. A) genders B) ages C) professions D) racial groups E) income levels Answer: D AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 18) ________ involves enlisting established influencers or creating new influencers to spread the word about a firm's brands. A) Word-of-mouth influence B) Opinion leading C) Influencer marketing D) Social networking E) Using a reference group Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 19) Consumer purchases are influenced strongly by characteristics that marketers cannot control but must take into account, including cultural, social, psychological, and ________ characteristics. A) economic B) professional 5 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) medical D) personal E) genetic Answer: D AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 20) ________ is the set of basic values, perceptions, and behaviors learned by members of society from their family members and other important institutions. A) Culture. B) Socialization C) Attitude D) Motivation E) Lifestyle Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 21) Which of the following statements is true of subcultures? A) Subcultures are arbitrary classes used to identify marketing segments. B) Most brand marketing today focuses on appealing to a specific subculture. C) Subcultures include nationalities, religions, racial groups, age cohorts, and geographic regions. D) Income is the single most important factor that determines the consumer buying behavior of a subculture. E) Subcultures universally exhibit identical product and brand preferences. Answer: C AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 22) Family is one of the ________ factors that influence consumer behavior. A) regional B) social C) personal D) psychological E) business Answer: B AACSB: Diverse and multicultural work environments Skill: Concept 6 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 23) A shoe manufacturing company uses ads featuring the members of a country music band with the hope that the band's fans will see them wearing the company's shoes and hence purchase the same brand of shoes. The shoe company believes that the band portrays the image of a ________ to the band's fans. A) membership group B) reference group C) status symbol D) subculture E) lifestyle Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 24) Rachel loves fashion and is always seen wearing the trendiest fashion outfits. She actively shares her knowledge with a wide group of friends and colleagues about where to shop for the latest fashion at great deals. Most of her friends and colleagues follow her fashion tips. Rachel portrays the image of a(n) ________. A) surrogate consumer B) lagging adopter C) opinion leader D) brand personality E) social networker Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging Answer questions 25, 26, and 27 using the following information. Jenna dresses very stylishly using inexpensive used clothing. She finds various accessories online and puts together complete outfits that she markets on Poshmark, Facebook marketplace, and Mercari for very reasonable markups. In a short period of time Jenna has amassed over 90,000 followers on Poshmark and has over 100,000 followers on Facebook marketplace. A large percentage of them share her posts and gain her even more exposure. She is now considering expanding her small online business by finding new clothing she can have drop shipped to the customers without ever touching the merchandise. Jenna does not advertise her products other than posting them online. However, she is wondering how she might advertise her products if she does try to expand. 25) Which of these terms best describes Jenna? 7 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) marketing professional B) opinion leader C) buzz marketer D) viral marketer E) thought leader Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 26) Facebook marketplace, Poshmark, and Mercari are all examples of ________. A) consumer brand alliances B) opinion leaders C) online social networks D) influencers E) market mavens Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 27) Explain how Jenna uses word-of-mouth influence in her business. Answer: Jenna’s social network with thousands of followers is essentially a word-of-mouth network of online followers that voluntarily share her posts on their social media pages. This advertising does not cost Jenna anything, but it does influence potential buyers to look at her merchandise. AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 28) What type of influencers are golfing great Tiger Woods and soccer superstar Cristiano Ronaldo? A) celebrity mega-influencer B) word-of-mouth influencer C) micro-influencer D) meta-influencer E) reference group influencer Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 8 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

29) What is the most important consumer buying unit in society? A) family B) social class C) membership group D) subculture E) reference group Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 30) A ________ consists of the activities an individual is expected to perform, according to the people around him/her. A) motive B) role C) lifestyle D) life cycle E) perception Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 31) A buyer's decisions are influenced by ________ such as the buyer's age and life-cycle stage, occupation, economic situation, lifestyle, personality, and self-concept. A) personal characteristics B) stereotypes C) perceptions D) attitudes E) psychographics Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 32) Since a person's economic situation will affect her store and product choices, marketers watch trends in spending, personal income, interest rates, and ________. A) employment B) savings C) home purchases D) rents E) fuel prices Answer: B AACSB: Analytical thinking 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 33) Rafael enjoys spending time with his friends and playing in the park with his dog. These activities are part of Rafael’s_ _______ . A) Personality B) Culture C) Lifestyle D) Motive E) Social class Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 34) In the context of the AIO dimensions for measuring consumers' lifestyles, "A" stands for ________. A) activities B) achievements C) admirations D) attitudes E) associations Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 35) Many firms are currently trying to enhance customer value by redesigning, repositioning, and repricing their offerings. What is the primary driver behind these changes? A) Changes in consumer self-concept B) Current economic situation C) Lifestyle changes driven by the media D) Changes in U.S. demographic profile E) Aging consumers Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 36) Marketers are keenly aware of the fact that our personal possessions contribute to our identities that we project to the outside world. This connection between possessions and identity is related to our . A) attitudes 10 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) beliefs C) self-image D) personality E) self-awareness Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty:

Moderate

37) Which of these terms refers to a specific mix of human traits that may be attributed to a particular brand? A) brand perception B) brand identity C) brand personality D) brand concept E) brand equity Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 38) Shoez Inc., a manufacturer of shoes, has recently launched a brand of sturdy shoes ideal for hiking and other outdoor activities. Which of the following brand personalities could be best associated with the new brand? A) sincerity B) excitement C) sophistication D) competence E) ruggedness Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 39) Which of these brand personalities aligns with high-tech, eco-friendly luxury? A) Tesla B) Patagonia C) MINI automobiles D) Red Bull E) Ford Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 40) Harley-Davidson promotes its motorcycles with images of independence, freedom, and power. Harley-Davidson has created a ________. A) motive B) life-cycle stage C) self-concept D) brand personality E) self-actualization need 12 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 41) A person's buying choices are influenced by four major psychological factors. Which of the following is NOT one of these factors? A) motivation B) perception C) association D) learning E) beliefs and attitudes Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 42) According to Freud, a person's buying decisions are primarily affected by ________. A) family influences B) societal expectations C) brand images D) cultural norms E) subconscious motives Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 43) Which of these statement is the most accurate regarding consumers and their buying behavior? A) Consumers often do not know why they behave in a certain way. B) Most consumers spend the most money on products promoted by celebrity influencers. C) Consumer buying patterns are easy to predict using data analytics with access to big data. D) A good marketer can convince consumers to purchase almost any product. E) Consumers often make impulse purchases on big ticket items. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 44) ________ refers to qualitative research designed to probe consumers' hidden, subconscious 13 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

motivations. A) Perception analysis B) Subliminal analysis C) Motivation research D) Need recognition E) Market segmentation Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 45) A marketing research company asked members of a focus group to describe several brands as animals. The purpose of the request is to measure the prestige of the various brands. This is an example of ________. A) brand strength analysis B) interpretive consumer research C) quantitative research D) buzz marketing E) brand extension Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 46) The theory that human needs can be arranged in a hierarchy and that people will satisfy the most pressing needs first and then move on to other needs was developed by . A) Blakely B) Armstrong C) Maslow D) Freud E) Gucci Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 47) Which of the following is NOT part of Maslow's hierarchy of needs? A) physiological needs B) safety needs C) spiritual needs D) esteem needs E) social needs Answer: C AACSB: Analytical thinking 14 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 48) ________ is the process by which people select, organize, and interpret information to form a meaningful picture of the world. A) Motivation B) Perception C) Dissonance D) Learning E) Self-actualization Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 49) People cannot focus on all of the stimuli that surround them each day. A person's tendency to screen out most of the information is called ________. A) subliminal retention B) selective distortion C) cognitive dissonance D) selective attention E) cognitive inertia Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 50) People tend to interpret new information in a way that will support what they already believe. This is called ________. A) selective retention B) selective distortion C) cognitive dissonance D) selective attention E) cognitive bias Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy Refer to the following scenario to answer questions 51, 52, and 53. 15 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Mark has long supported a particular brand of footwear and has always bought that brand. Recently, the footwear manufacturer was embroiled in a controversy for using child labor at its manufacturing plants. Mark doubts the news reports and continues to purchase the same brand of footwear. Mark tuned out the follow up reports that corroborated the firm’s use of child labor and bought a new pair of shoes. 51) Which of these tendencies is Mark exhibiting when he refuses to believe the negative reports? A) selective distortion B) cognitive dissonance C) selective retention D) selective attention E) consumer ethnocentrism Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 52) When Mark tuned out the additional reports, he was exhibiting . A) selective distortion B) cognitive dissonance C) selective retention D) selective attention E) consumer ethnocentrism Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 53) How does perception influence marketing and impact our consumption choices? Answer: Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Every person can form a different perception from the same five sensual stimuli, but it can motivate us to buy one product over another. Marketers understand that we are all exposed to thousands of marketing stimuli every day and their job is to create a stimulus that will attract consumer attention and motivate us to buy the product. AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 54) Juana looked at the September issue of her favorite fashion magazine and did not find anything particularly interesting despite the fact that the magazine had several advertisements that were targeted at Juana's demographic. The only thing that interested her was an article about an upcoming fashion show. Which consumer behavior is being illustrated in this instance? A) subliminal advertising 16 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) groupthink C) selective attention D) social loafing E) consumer ethnocentrism Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 55) Imani wanted to purchase a high-end sports car. She viewed a commercial for a particular sports car that highlighted the cost, design, and power of the car. After viewing the ad, Imani felt that the car's price was acceptable, considering the superior and unique design. She looked up the consumer reviews on Kelly Blue Book’s website and they were a 3.1 out of 5. However, after driving the car she believed the reviews were unfair. Which of the following concepts does this scenario demonstrate? A) selective distortion B) consumer ethnocentrism C) selective retention D) selective attention E) cognitive dissonance Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 56) A research study conducted over 50 years ago claimed that flashing the phrase “Eat popcorn” on a movie screen increased popcorn sales by over 58 percent even though the phrase was flashed across the screen so rapidly that moviegoers were not even aware of it. This tactic is called ________. A) alternative evaluation B) subliminal advertising C) selective retention D) subconscious dissonance E) selective perception Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 57) ________ are minor stimuli that determine where, when, and how a person responds to an idea. A) Cues B) Drives C) Reinforcers 17 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) Cognitions E) Impulses Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 58) A(n) ________ is a descriptive thought that a person holds about something. A) lifestyle B) motive C) belief D) attitude E) cognition Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 59) A(n) ________ is a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea. A) lifestyle B) motive C) belief D) attitude E) perception Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy Refer to the following scenario to answer questions 60, 61, 62, 63, and 64. The Attic Trunk opened in 1999 as an upscale dress shop in Forest Ridge's fashionable shopping district, catering to a wealthy, mature clientele consisting mostly of older, first-generation Hispanics. Many other specialty shops lined the main avenue over the next few years. But as Forest Ridge began to attract a more price-conscious, younger, and more demographically diverse population, the once-popular shopping district was increasingly perceived as stodgy and snobby by the new segment of customers. By the mid-2000s, many of these specialty shops suffered financially. Most shops attracted only tourists who enjoyed strolling through the district and eating at the sidewalk cafes. Owners of The Attic Trunk noticed the shifts in buying behavior of customers and observed that 18 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

the once-fashionable shopping district in Forest Ridge no longer attracted the wealthy, mature clientele. This clientele had been replaced with price-conscious families with children, a mix of Asian and Black Americans as well as Caucasians. The tourists tended to simply browse in the shops and leave without making a purchase. Specialty items at The Attic Trunk gradually disappeared, replaced by brand-name apparel, fashion accessories, and jewelry. In the late 2000s, more restaurants appeared and a day spa opened on the main avenue in Forest Ridge. 60) Many families with children are now attracted to the shopping district in Forest Ridge. What characteristics about families as consumer groups might the owners of The Attic Trunk want to keep in mind? A) Though more women hold jobs outside the home today than when The Attic Trunk first opened, husband-wife involvement in the buying process has remained relatively unchanged. B) Children have considerable amounts of disposable income and have a strong influence on family buying decisions. C) Women seldom account for any technology-related purchases. D) Women typically account for most habitual purchases. E) Men make all the major purchasing decisions in most families. Answer: B AACSB: Reflective thinking Skill: Critical Thinking Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 61) Which of the following would each consumer segment attracted to The Attic Trunk have in common with the other consumer segments? A) habitual buying behaviors B) self-concepts C) AIO dimensions D) life-cycle stages E) aspirational groups Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 62) What major change occurred in the mid-2000s that caused The Attic Trunk to phase out specialty items and shift to brand-name apparel and fashion items? A) Buying patterns changed as the consumers aged B) The predominant consumers had different lifestyles than the initial older, wealthy Hispanic consumers. C) Urban decay caused the area to decline and many businesses were closed D) The Attic Trunk failed to develop its own brand personality and evolve with the times E) The economy tanked and many consumers became more price conscious 19 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 63) Which of these PRIZM life-stage groups makes up most of The Attic Trunk’s new customer base? A) Sustaining Families B) Affluent Empty Nests C) Young Achievers D) Midlife Success E) Striving Singles Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 64) Explain how customer age and life-stage affected The Attic Trunk’s product offerings. Answer: People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle—the phases through which families pass as they mature over time. The Attic Trunk’s customers gradually shifted from older, wealthy Hispanics to young price conscious families with children. The Attic Trunk had to customize their offerings and marketing for this new life-stage consumer group. AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Challenging 65) Subliminal advertising has been shown to be very effective. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 66) A person’s occupation has limited impact on their consumption choices. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 67)The family is the most important membership group and consumer buying unit in society. 20 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 68) People's tastes in food, clothes, recreation, and even furniture change as they age. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 69) An opinion leader is a person within a reference group that can socially influence others. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 70) Give an example of the Covid-19 pandemic affected consumers. Answer: The onset of the COVID-19 pandemic disrupted supply chains and led to product stockouts, so consumers often had to settle for less-preferred products and brands. AACSB: Application of knowledge Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 71) Why might the Hispanic American market be a viable targeted group for a new marketer of products? Answer: Hispanic Americans are a large, fast-growing U.S. subculture and they tend to favor companies who show special interest in them. A new marketer of products can capitalize on these attributes. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 72) In what way might a marketer rely on opinion leaders? Answer: Opinion leaders can influence other larger groups of consumers to be attracted to a marketer's products. AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 21 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

73) How does marketing through online social networks differ from more traditional marketing? Answer: Marketers hope to use social networks to interact with consumers and become a part of their everyday lives instead of relying on one-way commercial messages that play a significant role in traditional marketing. AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 74) Explain the difference between mega-influencers and micro-influencers. Give an example of a mega-influencer. Answer: Influencers have the ability to spread positive information about a brand. A microinfluencer might write a blog about cats that is read by a few thousand people. In contrast, a mega-influencer such as basketball legend LeBron James, has over 100 million social media followers. His sphere of influence is much greater relative to a micro-influencer. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 75) Explain how marketers are focusing on shifting family roles in some of their campaigns. Answer: Marketers have noted that family roles are changing, and they are designing ads accordingly. For example, recent surveys show that one-third of men do the majority of the house cleaning and 43 percent of men perform food preparation and cleanup activities. This role reversal has resulted in laundry detergent ads targeting dads and ads for consumer electronics that target women. AACSB: Analytical thinking Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 76) Explain how selective distortion is somewhat controllable by a marketer. Answer: Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. People also will forget much of what they learn. They tend to retain information that supports their attitudes and beliefs. Marketers can attempt to understand consumers' mindsets and how these will affect perceptions of advertisements. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 77) Explain how selective retention affects what consumers remember about marketing messages. Answer: Due to selective retention, consumers are more likely to remember positive messages about the brands they already favor and more likely to forget positive messages about the competing brands. 22 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 78) Cultural factors exert a broad and deep influence on consumer behavior. The marketer needs to understand the role played by the buyer's culture, subculture, and social class. Distinguish between culture, subculture, and social class. Answer: Culture is the most basic cause of a person's wants and behavior. Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. Many subcultures make up important markets. Social classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Unlike nationality or ethnic subculture, social class is determined by a combination of many variables, such as occupation, income, education, and wealth. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 79) A consumer's behavior is influenced by social factors, such as the consumer's small groups, family, and social roles and status. Explain the differences among these social factors. Answer: Small groups to which a person belongs have a direct influence on what a person buys. Reference groups serve as direct or indirect points of comparison or reference in forming a person's attitudes or behaviors. An aspirational group is one to which the individual wishes to belong. Reference groups expose a person to new behaviors and lifestyles, influence a person's attitudes and self-concept, and create pressures to conform that may affect the person's product and brand choices. Opinion leaders are people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others. The group closest to consumers is the family, the most important consumer buying organization in society. Marketers are interested in the changing roles and influence of each family member on the purchase of different products and services. Within groups, including families, the position of an individual is defined by role and status. A role consists of the activities people are expected to perform according to the persons around them, while status is the general esteem given to that role. People tend to choose products that fit with their roles and status. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 80) People's distinct individual personalities influence their buying behavior. Personality is usually described in terms of traits. What are these traits, and how do they affect the way people purchase items? Give at least one example. Answer: Personality is described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness. Personality can be useful in analyzing consumer behavior for certain products. Consumers are likely to choose brands with 23 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

personalities that match their own. For example, someone with a sophisticated personality might be attracted to a more sophisticated product, such as a BMW, while someone with a more rugged personality might be attracted to a more rugged product, such as a Jeep. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Moderate 81) Explain Maslow's hierarchy of needs. Answer: Maslow suggested that an individual's unfulfilled needs motivate them and that their needs are arranged in a hierarchy. The hierarchy of needs includes physiological, safety, social, self-esteem, and self-actualization needs. Maslow suggested that individuals meet the bottomlevel, basic needs first before moving up the hierarchy. Until more basic needs such as safety are fulfilled, an individual has little interest in higher-level needs such as esteem and selfactualization. AACSB: Written and oral communication Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 82) Explain how learning about products impacts consumption. Answer: As consumers learn about products they will be more likely to buy other products from the same manufacturer if they were pleased with the product. If they were displeased they will look elsewhere. Knowing how learning impacts consumption can help marketers increase demand by associating the product with a positive learning experience. AACSB: Written and oral communication Skill: Concept Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy

83) When consumers are highly involved with the purchase of an expensive product and they perceive significant differences among brands, they most likely will exhibit ________. A) consumer capitalism B) complex buying behavior C) consumer ethnocentrism D) dissonance-reducing buying behavior E) variety-seeking buying behavior Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 84) George is buying his first house. He has spent a month looking at houses and comparing 24 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

attributes such as price and location. He has contacted several real estate agents to look at different types of houses. George is most likely exhibiting ________. A) variety-seeking buying behavior B) complex buying behavior C) consumer capitalism D) dissonance-reducing buying behavior E) marketing myopia Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 85) When consumers are highly involved with an expensive, infrequent, or risky purchase but see little difference among brands, they most likely will exhibit ________. A) habitual buying behavior B) complex buying behavior C) impulse buying behavior D) dissonance-reducing buying behavior E) consumer capitalism Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 86) Pat thought he had received the best deal on his new car. Shortly after buying the car, Pat started to notice certain disadvantages of his new car as he learned more about other cars available in the market. Pat is experiencing ________. A) dissonance-reducing buying behavior B) need recognition C) postpurchase dissonance D) marketing myopia E) complex buying behavior Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 87) Kathleen bought some pistachio ice cream last week. She enjoyed the ice cream but wants to try a new flavor. Which behavior is Kathleen exhibiting? A) dissonance-reducing buying behavior 25 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) need recognition C) postpurchase dissonance D) variety-seeking behavior E) complex buying behavior Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 88) Eduardo usually purchases the same breakfast cereal, the kind he grew up eating. Eduardo exhibits ________. A) dissonance-reducing buying behavior B) complex buying behavior C) habitual buying behavior D) variety-seeking buying behavior E) conspicuous consumption behavior Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 89) When customers have low involvement in a purchase but perceive significant brand differences, they will most likely engage in ________. A) complex buying behavior B) dissonance-reducing buying behavior C) habitual buying behavior D) variety-seeking buying behavior E) consumer ethnocentrism Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 90) The buyer decision process consists of five stages. Which of the following is NOT one of these stages? A) need recognition B) information search C) conspicuous consumption D) purchase decision E) postpurchase behavior 26 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 91) What is the first stage of the buyer decision process? A) purchase decision B) information search C) need recognition D) buyer's remorse E) alternative evaluation Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 92) An invitation to go skiing over the weekend forced Donna to look at her current wardrobe. She realized that she required a warmer coat. Which of the following stages of the buyer decision process does Donna exemplify? A) product evaluation B) situational analysis C) need recognition D) problem screening E) information search Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 93) Donna wants to buy a new coat. She narrowed her options down to four coats that she really likes and wants to try on. This is Donna’s . A) alternative evaluation B) choice set C) consideration set D) information search set E) consumption basket Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of 27 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

buying decision behavior. Difficulty: Challenging 94) Whether or not a consumer is satisfied after buying a product depends on the difference between the product’s performance and the . A) consumer’s expectations B) buyer's remorse C) need recognition match D) information accuracy E) dissonance level Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 95) James has decided to buy a new vehicle. His brother John has recently purchased a new truck and recommends the same model to James. James finally decides to buy the same truck. Which of the following sources of information has most likely influenced James' purchase decision? A) experiential sources B) public sources C) personal sources D) commercial sources E) market mavens Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 96) Lamar decided to buy a particular smartphone that he saw reviewed online. However, after buying the phone he feared he picked the wrong phone. What is Lamar feeling after his purchase? A) postpurchase behavior B) action regret C) conflict emergence D) purchase discomfort E) cognitive dissonance Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 28 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

97) Marketers view buying as a process and not a single event. What is this process called? A) Adoption process B) Customer journey C) Variety-seeking buyer behavior D) Cognitive buying E) Alternative evaluation Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 98) The information sources that are the most effective at influencing a consumer's purchase decision are ________. These sources legitimize or evaluate products for the buyer. A) commercial B) public C) experimental D) personal E) attitudinal Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 99) The stage of the buyer decision process where the consumer uses information to consider their options is known as ________. A) alternative evaluation B) information search C) impulse buying D) consumer capitalism E) cognitive dissonance Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 100) Robert has taken up cycling as a hobby and as a way to maintain his physical fitness. He wants to buy a hydration system since he will need a lot of water as he cycles. Having gathered a great deal of information, he has finally narrowed down his choices to three systems: Waterbags for Roadies, Supertanker Hydropacks, and Fast Water. These options are Robert’s _______ . 29 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) consideration set B) evaluation set C) choice set D) alternatives to evaluate E) information set Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging

101) Sara is about to purchase a new television. She is using several attributes to evaluate her choices. Sara has created a spreadsheet with 12 different models listed and pros and cons of each model. This group is Sara’s . A) consideration set B) evaluation set C) choice set D) alternatives to evaluate E) information set Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 102) Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. Which of the following is one of these factors? A) economic risks B) attitudes of others C) cognitive dissonance D) alternative evaluation E) buyer's remorse Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 103) A particular automobile company works to keep its customers happy after each sale the company’s goal is to delight each one of them in order to increase their customer lifetime value. Which of the following steps of the buyer decision process does the company exemplify? A) need recognition B) information search C) evaluation of alternatives D) purchase decision E) postpurchase behavior Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 104) Rashad was at a wine tasting and sampled two different brands of wine from vineyards in 31 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Australia. When asked for his opinion about the wines, she said that one brand of wine tasted like alcoholic grape juice, but the other had a crisp taste that he really enjoyed. These statements were most likely made during the ________ stage of the buyer decision process. A) information search B) need recognition C) alternative evaluation D) purchase decision E) postpurchase behavior Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 105) Almost all major purchases result in ________, or discomfort caused by postpurchase conflict. A) need recognition B) cognitive dissonance C) consumer ethnocentrism D) conspicuous consumption E) consumer capitalism Answer: B AACSB: Reflective thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 106) Marquita purchased a new laptop computer for school. However, she’s now wondering if she made the right choice. What is Marquita experiencing? A) selective retention B) selective attention C) selective distortion D) cognitive dissonance E) consumer ethnocentrism Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 107) The customer journey A) can be easily mapped B) is unique to each customer

C) focuses on a single sale D) is an abstract concept with no practical application E) typically takes about eight weeks from information search to purchase Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 108) Sherrod was looking for new carpet to get installed in his bedroom. However, after a couple of days of looking at carpeting he still cannot tell much difference between the brands. He decided to go with one that was mid-price but came in a color he liked. What type of buying behavior did Sherrod engage in when he bought the carpet? A) Habitual buying behavior B) Complex buying behavior C) Dissonance-reducing buying behavior D) Variety-seeking buying behavior E) Price-conscious buying behavior Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 109) Family members rarely impact someone's final purchase decision. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 110) Jim is planning on buying an expensive HDTV and there are significant differences between brands. Jim is displaying complex buying behavior. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 111) LaQuan bought a different brand of protein drink today that he really liked. However, there are several other brands he wants to try. He is exhibiting variety-seeking behavior. Answer: TRUE 33 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 112) The two factors that can come between the purchase intention and the purchase decision are unexpected events and the opinions of others. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 113) Cognitive dissonance is the buyer discomfort we often feel due to postpurchase conflict. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 114) Explain the role of marketers in the information search step of the buyer decision process. Give an example of how the marketer might execute this role. Answer: The role of marketers in the information search step of the buyer decision process is to make the required information about their product easily accessible to the consumer. Students' examples will vary. AACSB: Application of knowledge Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 115) Why should marketers set up systems that encourage customers to complain about products? Answer: Most customers never share their complaints with marketers; without this information, it is difficult for a company to identify how it can improve. AACSB: Application of knowledge Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 116) Compare and contrast the four types of buying decision behavior exhibited by consumers. Answer: Consumers exhibit complex buying behavior when they are highly involved in a 34 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

purchase decision and perceive significant differences among the choices. Consumers will engage in a learning process as they gather and analyze information about their choices before making a purchase. When a consumer is highly involved with a purchase but does not perceive significant differences among her choices, he/she will most likely engage in dissonance-reducing behavior. This behavior involves less time learning about each product's attributes, and a consumer is more likely to make a choice based on a good price or convenience. Habitual buying behavior and variety-seeking behavior are exhibited when a consumer has a low involvement with the product. When the consumer sees little difference between brands, he/she will most likely engage in habitual buying behavior, buying the most familiar brands out of habit. When the consumer perceives some significant brand differences, he/she is more likely to engage in variety-seeking buying behavior, doing a lot of brand switching without a great deal of evaluation before purchase. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 117) What is the customer journey? Answer: Rather than viewing the buying process only as a specific set of stages, many marketers view it as a broader customer journey—as the sum of the ongoing experiences consumers have with a brand. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 118) Listing them in the proper order, what are the stages in the buyer decision process? Describe each. Answer: In the need recognition stage, consumers become aware of a new problem or need. Then, consumers seek information about products to meet that need in the information search stage. In the alternative evaluation stage, consumers use the gathered information to compare and contrast the choices. Consumers do not use the same evaluation process in all buying situations; sometimes they may make careful, logical calculations and other times they may rely on intuition and buy on impulse. Consumers then make the purchase decision, buying the product. The last component of the process is postpurchase behavior, which is determined by any difference between the consumer's expectations for the product and the perceived performance of the product. AACSB: Application of knowledge Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 119) Why is it important to understand the different types of buyer behavior? 35 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: Buying behavior differs greatly for a tube of toothpaste, a smartphone, financial services, and a new car. More complex decisions usually involve more buying participants and more buyer deliberation. Marketers that understand their product and the type of buyer behavior consumers will use can position their product accordingly to attract consumer interest. AACSB: Application of knowledge Skill: Concept Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Easy 120) Consumers learn about new products for the first time and make the decision to buy those products during the ________. A) need recognition stage B) adoption process C) evaluation process D) trial process E) quality assessment stage Answer: B Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 121) Which of the following is the first stage in the new product adoption process? A) awareness B) adoption C) evaluation D) interest E) trial Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 122) Which of the following is the adoption process stage at which the consumer considers whether trying the new product makes sense? A) awareness B) interest C) evaluation D) adoption E) trial Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 36 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

123) Cameron loves to own and be up-to-date on the latest technological gadgets available in the market. Among his friends, he is always the first to own the latest electronic gadgets. He loves trying out new products before others. Cameron most likely belongs to the ________ adopter group. A) innovator B) surrogate consumer C) late mainstream D) early mainstream E) lagging Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Challenging 124) Five characteristics are important in influencing an innovation's rate of adoption. Which of the following is NOT one of those characteristics? A) relative advantage B) compatibility C) consumability D) complexity E) communicability Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 125) In the context of product characteristics that influence the rate of adoption, ________ refers to the degree to which the innovation fits the values and experiences of potential consumers. A) communicability B) relative advantage C) compatibility D) complexity E) divisibility Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 126) Which of the following product characteristics refers to the degree to which the innovation appears superior to existing products? A) compatibility B) divisibility 37 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) communicability D) relative advantage E) complexity Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 127) What percentage of the population can be classified as an innovator? A) 2.5% B) 12.5% C) 25.0% D) 30.0% E) 33.0% Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 128) Which of these groups is NOT one of the adopter categories with respect to the relative time of new product adoption? A) Early adopters B) Innovators C) Followers D) Early mainstream adopters E) Lagging adopters Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 129) Abel is considering whether or not to get an e-reader. He has read online reviews of three different kinds of readers and has talked with two friends who own e-readers. Abel is at the awareness stage of the new product adoption process. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Challenging

130) Ed purchased electronic devices such as a smartphone, and tablet after many people he knew already owned the devices. Ed belongs to the adopter group called lagging adopters. 38 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 131) Viviana wants to be the first to own the new fashion style of shoes. Viviana is an early mainstream adopter. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 132) Two of the characteristics that are especially important in influencing an innovation’s rate of adoption are relative advantage and compatibility. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 133) Early adopters represent about 2.5% of the population. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 134) A product’s characteristics affect its rate of adoption. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 135) What strategy should a marketer use upon learning that consumers are not buying a product because they do not perceive a need for it? Answer: Marketing might launch an advertising campaign that shows customers how the product can solve their existing problems and meet their existing needs. AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 136) What are the differences between innovators, early adopters, and early mainstream adopters? 39 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: Innovators are more willing to take on risk; early adopters are opinion leaders in their communities and adopt new ideas early but carefully. Early mainstream adopters are deliberate; although they rarely are leaders, they adopt new ideas before the average person. AACSB: Analytical thinking Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 137) Identify and describe the stages in the adoption process. Answer: In the awareness stage, consumers become aware of the new product but lack information about it. Then, consumers seek information about the new product in the interest stage. In the evaluation stage, consumers consider whether trying the new product makes sense. Consumers try the product on a limited basis in the trial stage. Finally, consumers decide to make full use of the product in the adoption stage. AACSB: Written and oral communication Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 138) Identify product characteristics that influence the rate of adoption. Explain how each characteristic affects the rate of adoption. Answer: The five most important product characteristics that influence the rate of a product's adoption are relative advantage, compatibility, complexity, divisibility, and communicability. Relative advantage is the degree to which an innovation appears superior to existing products; the greater the perceived relative advantage, the sooner the product will be adopted. Compatibility is the degree to which the innovation fits the values and experiences of potential consumers; high compatibility leads to quick adoption. Complexity is the degree to which the innovation is difficult to understand or use; the greater the complexity, the slower the adoption rate. Divisibility is the degree to which the innovation may be tried on a limited basis; the higher the divisibility, the slower the rate of adoption. Finally, communicability is the degree to which the results of using the innovation can be observed or described to others; high communicability leads to a higher rate of adoption. AACSB: Written and oral communication Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 139) List the six key product characteristics that can influence adoption. Answer: Relative advantage, compatibility, complexity, trialability, observability, and risk. AACSB: Application of knowledge Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate 140) How does risk impact product adoption and what are some ways marketers can overcome consumer concerns? 40 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: The degree to which the customer perceives risk in purchasing the product affects adoption. High perceived risk will slow adoption rates. Marketers that are introducing new productions can lower perceived risk by offering generous product return policies, providing accurate and deep knowledge about product capabilities, and ensuring a good fit with customer needs before making a sale. AACSB: Application of knowledge Skill: Concept Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate Quantitative Questions 1) There are 64 million Hispanic American consumers. What percentage of the population is Hispanic assuming the U.S. population is currently 332 million? A) 11.21% B) 14.36% C) 17.19% D) 19.28% E) 22.48% Answer: D; To compute this answer you divide 64/332 = .1928, or 19.28%. AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy

2) By 2060 the Hispanic American community will represent 29% of the U.S. population. How many Hispanic American consumers will there be if the U.S. population in 2060 is expected to be 404 million? A) 122.35 million B) 117.16 million C) 101.24 million D) 97.45 million E) 78.25 million Answer: B; To compute this number you multiply .29 x 404 million = 117.16 Hispanic American consumers. AACSB: Analytical thinking Skill: Application Objective: LO 5.2: Explore the four major factors that influence consumer buyer behavior. Difficulty: Easy 3) How much money will Firm AAA save if they can reduce returns by 20% by providing enough information in advance to reduce post-purchase cognitive dissonance. Returns cost the firm $5.4 million last year and will cost about 10% more this year unless Firm AAA implements its information program. A) $4.752 million B) $5.940 million 41 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) $1.188 million D) $2.553 million E) $3.114 million Answer: C; You need to compute the returns next year and then take 20% of that amount to determine the savings. So, $5.4 x 1.1 x .20 = $1.188 million. AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging Use the following information to answer questions 4, 5, 6, 7, and 8. Darlene Fields is looking for a financial app that will help her manage her money and learn about saving ideas, investing, and portfolio allocation. She wants an app that is easy to use. She has compiled this table of data to help her decide which app to use. You can compute a score can for each alternative by multiplying the importance rating for each attribute by the alternative’s perceived rating on that attribute. These scores are then summed to determine the total composite score for each alternative. The highest composite score represents the best alternative.

Important attributes

Savings Ideas Investing advice Portfolio allocation Ease of use

Alternatives Considered Darlene’s ratings of each factor (1 to 10 with 10 best rating) App X App Y

Importance (1 to 10 with 10 best rating) 5

App W

App Z

Look at the “Marketing by the numbers” at the end of this chapter to see examples of how to compute these scores. 4) What is the composite score for App W? A) 174 B) 203 C) 187 D) 191 E) 199 Answer: B; You can compute the composite score by multiplying the importance rating for each attribute by the alternative’s perceived rating on that attribute. So, (5 x 7) + (8 x 8) + (3 x 8) + (10 x 8) = 203. 42 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 5 What is the composite score for App X? A) 174 B) 203 C) 187 D) 191 E) 199 Answer: D; You can compute the composite score by multiplying the importance rating for each attribute by the alternative’s perceived rating on that attribute. So, (5 x 8) + (8 x 5) + (3 x 7) + (10 x 9) = 191. AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 6) What is the composite score for App Y? A) 174 B) 203 C) 187 D) 191 E) 199 Answer: C; You can compute the composite score by multiplying the importance rating for each attribute by the alternative’s perceived rating on that attribute. So, (5 x 9) + (8 x 10) + (3 x 4) + (10 x 5) = 187. AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 7) What is the composite score for App Z? A) 174 B) 203 C) 187 D) 191 E) 199 Answer: E; You can compute the composite score by multiplying the importance rating for each attribute by the alternative’s perceived rating on that attribute. So, (5 x 6) + (8 x 9) + (3 x 9) + (10 x 7) = 199. AACSB: Analytical thinking Skill: Application 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Challenging 8) Which App is the easiest to use? A) App W B) App X C) App Y D) App Z E) they have the same ease of use Answer: A; App W has the highest composite score of 203 according to Darlene’s evaluation. AACSB: Analytical thinking Skill: Application Objective: LO 5.3: Understand the stages in the buyer decision process and the major types of buying decision behavior. Difficulty: Moderate 9) Firm ZZZ identified a possible market size of 40 million consumers for their new product. How many of these consumers will be potential early adopters? Use Figure 5.6 to compute the answer.

A) 13.6 million B) 1.0 million C) 5.4 million D) 17.8 million E) 14.5 million Answer: C; To compute this answer you multiply .135 x 40 million = 5.4 million AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Easy 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

10) Firm ZZZ identified a possible market size of 40 million consumers for their new product. How much revenue will the firm generate from innovators if the product sells for $419? Use Figure 5.6 to compute the answer. A) $41.9 million B) $84.2 million C) $321 million D) $419 million E) $211 million Answer: D; To compute this answer you need to determine the number of innovators and then multiply by $419. So, 40 million x .025 x $419 = $419 million AACSB: Analytical thinking Skill: Application Objective: LO 5.4: Describe the adoption and diffusion process for new products. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 6 Business Markets and Business Buyer Behavior 1) The decision process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands is known as ________. A) situational analysis B) business buying process C) business diversification D) business process automation E) lateral expansion Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy 2) Business buyer behavior refers to the ________. A) buying behavior of consumers who buy goods and services for personal consumption B) buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others C) buying behavior of consumers who rely on small retailers for the regular supply of provisions D) decision process by which business buyers determine which products and services their organizations need to purchase E) strong affinity of businesses for value-for-money deals Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy

3) Think about the large number of business transactions involved in the production and sale of a single set of Goodyear tires. Various suppliers sell Goodyear the rubber, steel, equipment, and other goods that it needs to produce tires. Goodyear then sells the finished tires to retailers, which in turn sell them to consumers. Thus, many sets of ______ were made for only one set of ______. A) business purchases; consumer purchases B) consumer purchases; business purchases C) business buyer behavior; customer behavior D) market demand; business demand E) market structure; business buyer process Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate

4) The Pure Drug Company produces insulin, a product with a very stable demand. Even though the price changed several times in the past two years, the demand for Pure Drug's insulin remained relatively unaffected. In this instance, the demand for insulin is representative of ________ demand. A) latent B) negative C) inelastic. D) derived E) composite Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate

5)Which of the following is NOT true about business markets and consumer markets? A) Business and consumer markets involve people who assume buying roles. B) Business and consumer markets involve people who make purchase decisions. C) Both business and consumer markets involve people who try to satisfy needs. D) Business and consumer markets differ in market structure and demand. E) Business and consumer markets have the same market structure and demand. Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate

6) Green Bees, a popular American heavy-metal band, will perform in Berlin during Christmas. There is a high demand for concert tickets among fans worldwide who are looking forward to the much-awaited performance. In this instance, the high demand for tickets for the Green Bees concert is representative of ________ demand. A) primary B) negative C) derived D) elastic E) business Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy

7) Jeremy's, a handbag manufacturer in Lower Manhattan, procures a large stock of leather in anticipation of brisk sales of handbags during December. This is an example of a(n) ________ demand. A) composite B) derived C) primary D) latent E) inelastic Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy 8) Business markets have all EXCEPT ________. A) far fewer buyers than in consumer markets B) inelastic demand C) larger buyers than in consumer markets D) far more buyers than in consumer markets E) fluctuating demand Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Challenging

9) Demand for Gore-Tex fabrics derives from consumer purchases of outdoor apparel brands made from Gore-Tex. If consumer demand for these products increases, so does the demand for the Gore-Tex fabrics they contain. Gore-Tex calls itself an “ingredient brand,” one that “works with the world’s best outdoor, athletic, and lifestyle brands to create high-performance products that upgrade your comfort and protection.” So to boost demand for Gore-Tex, Gore advertises to final consumers to convince them of the benefits of Gore-Tex fabrics in the brands they buy. It also directly markets brands containing Gore-Tex. This is an example of _______. A) capability management B) fluctuating demand C) derived demand D) outsourcing E) supplier development Answer: C AACSB: Application of Knowledge Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate

Refer to the scenario below to answer questions 10-12.

Alpha Stampings Inc. produces 14 metal stampings for the automotive industry. Due to industry design changes and consumer demands, for the next financial year, six of those stampings will require a slight change: two will have an extra hole punched through the side, two will require an extra plating process, and two will require an additional weld operation. In the meantime, purchasing agent Richard Koehl has been asked to reduce the number of Alpha's steel suppliers in an effort to cut costs. After obtaining updated price quotations and steel samples from his current suppliers, Richard faced a dilemma. Until now, he had selected his suppliers based on quality and price, but the major consideration had been the type of steel required and the specialized production processes of his respective suppliers. Not all of Alpha's suppliers could produce the exact grades of steel needed; some suppliers were better at producing certain types of steel than others. Richard contacted several employees at Alpha who had worked with the various types of steel in the past. The quality control manager and line inspector, for example, could help to determine which suppliers had the capabilities of producing specific types of steel. The production control manager could provide input regarding which types of steel worked best in which presses. The warehouse foreman gave inputs regarding how long various types of steel could be held in inventory before rust spots began to form on their surfaces. Each person contributed the necessary information to help Richard in making his decision. 10) The demand for Alpha Stampings' products is ultimately based on the demand for new automobiles in the consumer market. This is an example of ________ demand. A) negative B) latent C) primary D) derived E) composite Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 11) Describe derived demand and how it applies to Alpha Stampings Inc. Answer: Derived demand refers to the business demand that ultimately comes from (derives from) the demand for consumer goods. If consumer demand for automobiles continue to increase, so does the demand for the for Alpha Stampings’ products. AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy 7 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

12) Alpha Stampings products are inelastic because the total demand for them is not much affected by price changes in ingredients such as steel, Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 13) Describe supplier development Answer: Supplier development, systematically developing networks of supplier-partners to ensure a dependable supply of the products and materials that they use in making their own products or reselling to others. For example, Walmart has a “Supplier Development Department.” Walmart manages a huge network of supplier-partners that help provide the hundreds of billions of dollars of goods that it sells to its customers each year AACSB: Application of Knowledge Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 14) The business marketer normally deals with far fewer but far larger buyers than the consumer marketer does. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy 15) The demand for many business goods tends to change more slowly than the demand for consumer goods. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy 16) Derived demand refers to the business demand that ultimately comes from the demand for consumer goods. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

consumer markets. Difficulty: Easy

17) Are the buyer and seller dependent or independent of each other in the business buying process? Answer: In the business buying process, the buyer and seller are often dependent on each other. B-to-B marketers may roll up their sleeves and work closely with customers during all stages of the buying process—from helping customers define problems to finding solutions to supporting after-sale operation. AACSB: Application of knowledge Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 18) Compare business and consumer purchasing. Answer: Compared with consumer purchases, a business purchase usually involves more decision participants and a more professional purchasing effort. Often, business buying is done by trained purchasing agents who spend their working lives learning how to buy better. The more complex the purchase, the more likely it is that several people will participate in the decisionmaking process. Buying committees composed of technical experts and top management are common in the buying of major goods. AACSB: Written and oral communication Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy 19) Why is the business buying process more formalized than the consumer buying process? Answer: Large business purchases usually call for detailed product specifications, written purchase orders, careful supplier searches, and formal approval. Business purchases often involve large sums of money and complex technical and economic considerations. AACSB: Application of knowledge Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 20) Describe the business buying process compared with consumer purchases. Answer: Compared with consumer purchases, a business purchase usually involves more decision participants and a more professional purchasing effort. Often, business buying is done by trained purchasing agents who spend their working lives learning how to buy better. The more complex the purchase, the more likely it is that several people will participate in the decisionmaking process. Buying committees composed of technical experts and top management are common in the buying of major goods. AACSB: Written and oral communication Skill: Concept 11 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 21) Distinguish between business markets and consumer markets. Answer: As compared to consumer markets, business markets usually have fewer but larger buyers. Business demand is derived demand, which tends to be more inelastic and fluctuating than consumer demand. The business buying decision usually involves more, and more professional, buyers. Business buyers usually face more complex buying decisions, and the buying process tends to be more formalized. Finally, business buyers and sellers are often more dependent on each other. AACSB: Analytical thinking; Written and oral communication Skill: Concept Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 22) Medical Center Hospital buys masks and surgical gloves every month. The order is placed online from the supplier’s website. The quantity of gloves and masks ordered is the same each month.. This is an example of ________. A) solutions selling B) suppler development C) a straight rebuy D) systems selling E) a modified rebuy Answer: C AACSB: Application of knowledge; Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 23) A marketer wanting to determine business buyer behavior is most likely to ask which of the following questions? A) Are buyers sensitive toward price changes in consumer markets? B) What are the major influences on buyers? C) Are niche markets more profitable than mass markets? D) How do interpersonal factors affect organizational performance? E) Is the role of gatekeepers relevant in the international business environment? Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 24) In a ________ situation, the "in" suppliers may become nervous and feel pressured to put their best foot forward to protect an account and the "out" suppliers may see the present situation as an opportunity to make a better offer and gain new business. 12 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) straight rebuy B) new task C) reverse auction D) modified rebuy E) solutions selling Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

25) In a straight rebuy, ________. A) the "in" suppliers try to maintain product and service quality to keep the business B) the "in" suppliers feel pressured to protect an account C) the "out" suppliers view the situation as an opportunity to gain new business D) a company buys a product or a service for the first time E) buyers are keen on revising product specifications Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 26) Gina Parker owns an ad agency in Baton Rouge. She regularly purchases cleaning supplies for her custodial staff, using the same vendor and ordering relatively consistent amounts of the same products on each purchase. This is an example of ________. A) a modified rebuy situation B) a new task C) a straight rebuy situation D) reverse auction E) product differentiation Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

27) Ralph works for a manufacturing company in Ohio. Recently, he called in a department manager to assist in the purchase of some heavy machinery. After consulting the department manager, Ralph is considering a change in product specifications and characteristics and expects suppliers to meet his requirements. Which of the following is evident here? A) modified rebuy B) new task C) straight rebuy D) product differentiation E) reverse auction Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 28) Sheffield Cargo serves both consumer and business markets, but most of its revenue comes from its business customers. Of late, the business customers of Sheffield Cargo have demanded a change in the packaging of heavy cargo along with a more sophisticated and user-friendly extranet framework. Sheffield Cargo is under pressure to offer better products and services or risk losing a huge portion of its customers. This is an example of ________. A) a new task B) a modified rebuy situation C) a straight rebuy situation D) trade exchange E) reverse auction Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 29) Peter Adams, an entrepreneur, decided to start a new technology venture. As he needed servers and computers for his company, he decided to order these from a local vendor who was offering attractive discounts. In this instance, Peter ________. A) faces a new task situation B) faces a modified rebuy situation C) is most likely to benefit the most from reverse auction D) faces the need for product differentiation E) plans to attract customers by offering products at below-market prices Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

30) ______refers to buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation. A) Systems selling B) Marketing stimuli C) New task D) A buying center E) Derived demand Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 31) ________ refers to all the individuals and units that play a role in the purchase decisionmaking process. A) Systems selling B) A buying center C) Problem recognition D) Derived demand E)Inelasticity Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

32) Rudolf Technologies Inc. decided to enter the automobile service market. Consequently, the company decided to procure the tools and machines needed from a reputable supplier. Rudolf Technologies is facing ________. A) a new task situation B) a modified rebuy situation C) negative competition D) the need to outsource its primary service offering E) the pressure to diversify its market Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 33) In a _______, the buyer wants to alter product specifications, prices, terms, or suppliers. The “in” suppliers may become nervous and feel pressured to put their best foot forward to protect an account. “Out” suppliers may see the modified rebuy situation as an opportunity to make a better offer and gain new business. A) value chain B) modified rebuy C) customer support system D) straight rebuy E) innovation center Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

34) ________ are people in an organization’s buying center who have formal or informal power to select or approve the final suppliers. A) suppliers B) customers C) deciders D) managers E) systems sellers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

35) ________ are people in an organization’s buying center who control the flow of information to others. A) Gatekeepers B) Influencers C) Managers D) Marketing Managers E) Suppliers Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 36) ________ refer to people in an organization's buying center who affect the buying decision; they often help define specifications and provide information for evaluating alternatives. A) Users B) Influencers C) Buyers D) Gatekeepers E) Deciders Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

37) Eric Mason, an employee of Huntington Steelworks, is responsible for defining product specifications and providing relevant information for evaluating alternatives in his organization's buying center. Eric, whose opinions affect the buying decisions of his organization to a great extent, is most likely a(n) ________. A) user B) influencer C) decider D) gatekeeper E) buyer Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 38). When fleet buyers and owner-operators buy Peterbilt, they’re buying more than a truck. They’re buying iconic tradition, styling, and elegance. This example shows that today, most Bto-B marketers recognize that _____plays an important role in business buying decisions A) price B) promotion C) emotion D) technology E) culture Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

39) The COVID-19 pandemic dramatically changed how business buyers and sellers meet, interact, and make decisions. Work-from-home regimens and other social-distancing measures “forced B-to-B buyers and sellers to go digital in a massive way.” This example shows that _______. A) major environmental disruptions influence business buyers B) major environmental disruptions do not influence buyers C) buying teams make the final purchasing decisions D) suppliers play an important role in purchase decisions E) digital marketing is not effective for business buyers Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 40) Jason Perkins controls the flow of information to others at the Signal Company. As a purchasing agent, Jason often has authority to prevent salespersons from seeing users or deciders. Jason has the role of a _________. A) gatekeeper B) decider C) marketer D) influencer E) partner Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

41) A technician in a hospital told the chief dentist, Dr. Albrecht, that the hospital should purchase equipment that would sterilize the dentists' tools without using any water because water tends to affect the durability of the tools over time. Dr. Albrecht located some articles on chemical sterilizers and gathered more information on how they worked. Dr. Albrecht has had extensive training and earned advanced certifications at well-respected universities. He has also had 15 years of experience and has served on many committees in prominent dental associations. He received a research grant recently and will conduct research trials at the hospital After talking to salespeople, Dr. Albrecht finally placed his order for the machine. In this instance, Dr. Albrecht played the role of a(n) ________. A) monitor B) decider C) researcher D) department chair E) staff member Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Challenging 42) Marissa Hopkins, a hospital nurse, notices that the gurneys used in the hospital are not durable enough. She informed the hospital authorities about Grace Care Inc., a new company selling lightweight and durable gurneys. She checked competing companies to make sure that Grace Care offered a competitive price and had a good service record. She did online research to be sure that the Grace Care had positive reviews from customers. In this instance, Marissa played the role of a(n) ________. A) strategist B) user C) buying center member D) influencer E) purchasing agent Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 43) Phoi Nguyen, a manufacturing mechanic, determines that the molds for manufacturing plastic jar lids are wearing out sooner than expected. Phoi contacts her manager to request that the parts be reordered. In this instance, Phoi played the role of a(n) ________. A) user B) buyer C) gatekeeper D) influencer E) decider Answer: A AACSB: Analytical thinking 22 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 44) The buying center usually includes many participants who influence each other, so ________also influence the business buying process. A) organizational procedures B) interpersonal factors C) organizational objectives D) systems E) strategies Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

45) Business buyers are heavily influenced by factors in the current and expected economic environment, such as ________. A) level of primary demand B) organizational objectives C) group dynamics D) individual motives E) culture and customs Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 46) Individual factors are affected by personal characteristics such as all of the following EXCEPT ________. A) age B) income C) education D) personality E) use of technology Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

47) In the Model of Business Buyer Behavior, which of the following is NOT part of the marketing stimuli in the environment? A) price B) product C) place D) service E) promotion Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 48) In the Model of Business Buyer Behavior, which of the following is NOT a buyer response? A) technology B) order quantities C) payment D) product or service choice E) supplier choice Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 49) In the Model of Business Buyer Behavior, other stimuli in the environment include all of the following EXCEPT ________. A) economic stimuli B) marketing stimuli C) technological stimuli D) political stimuli E) cultural stimuli Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

50) If a buying center is most influenced by authority in the business buying process, it can be safely concluded that ________ factors have a major influence on its buying behavior. A) technological B) systemic C) interpersonal D) strategic E) economic Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate Refer to the scenario below to answer questions 51-53. Premium heavy-duty truck maker Peterson stresses performance—its dealer ads and online sites provide plenty of information about factors such as productivity, reliability, comfort, and fuel efficiency. But Peterson appeals to buyers’ emotions as well. Its marketing content shows the raw beauty of the trucks, and the Peterson slogan suggests that owning a Peterbilt truck is a matter of pride as well as superior performance. Peterson shows a passion for unrivaled performance, forged out of the heritage of the iconic brand, and focused on inspired styling and a premium driver experience. Peterson recently reintroduced its Model 389 Pride & Class model package, with “unique styling and touches of understated elegance that set this truck apart from all others.” Thus, when fleet buyers and owner-operators buy Peterbilt, they’re buying more than a truck. They’re buying iconic tradition, styling, and elegance. 51) This scenario shows that B-to-B marketers recognize that _____ plays an important role in business buying decisions. A) emotion B) price C) promotion D) culture E) custom Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

52) You might expect that ads promoting large trucks to corporate fleet buyers or independent owner-operators would stress all of the following EXCEPT ________. A) technical factors B) performance factors C) economic factors D) national factors E) social factors Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 53) Does culture influence business buyer reactions when purchasing a fleet of trucks? If so, how? Answer: Culture and customs can strongly influence business buyer reactions to the marketer’s behavior and strategies, especially in the international marketing environment. The business buyer must watch these factors, determine how they will affect the buyer, and try to turn these challenges into opportunities. AACSB: Application of Knowledge Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 54) A company buying a product or service for the first time faces a new task situation. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

55) Within the organization, buying activity consists of two major parts: the buying center and the buying decision process. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

56) Business buyers are heavily influenced by factors in the current and expected economic environment, such as the level of primary demand, the economic outlook, and the cost of money. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 57) Gatekeepers have formal or informal power to select or approve the final suppliers. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 58) Rachel Stein works for the LeBray Beverage Company. She helps define product specifications and also provides information for evaluating alternatives. Rachel plays the role of gatekeeper. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 59) Business buyers are subject primarily to economic influences when they make their buying decisions. Emotional or personal factors rarely are involved. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 60) What happens in a modified rebuy? Answer: In a modified rebuy, the buyer wants to modify product specifications, prices, terms, or suppliers. The "in" suppliers may become nervous and feel pressured to put their best foot forward to protect an account. "Out" suppliers may see the modified rebuy situation as an opportunity to make a better offer and gain new business. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

61) Why does the buying center concept present a major marketing challenge? Answer: The buying center concept presents a major marketing challenge. The business marketer must learn who participates in the decision, each participant’s relative influence, and what evaluation criteria each decision participant uses. This can be difficult. AACSB: Application of knowledge Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 62) What is the primary function of gatekeepers in an organization? Answer: Gatekeepers control the flow of information to others. For example, purchasing agents often have authority to prevent salespersons from seeing users or deciders. AACSB: Application of knowledge Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 63) How do individual factors influence the business buying process? Answer: Each participant in the business buying decision process brings in personal motives, perceptions, and preferences. These individual factors are affected by personal characteristics such as age, income, education, professional identification, personality, and attitudes toward risk. Also, buyers have different buying styles. Some may be technical types who make in- depth analyses of competitive proposals before choosing a supplier. Other buyers may be intuitive negotiators who are adept at pitting the sellers against one another for the best deal. AACSB: Application of knowledge Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 64) What is the role of organizational factors in a buying organization? Answer: Organizational factors are also important. Each buying organization has its own objectives, strategies, structure, systems, and procedures, and the business marketer must understand these factors well. Questions such as these arise: How many people are involved in the buying decision? Who are they? What are their evaluative criteria? What are the company’s policies and limits on its buyers? AACSB: Application of knowledge Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy 65) Why is it difficult to assess interpersonal factors that influence the business buying process? Answer: Interpersonal factors such as who is liked, who controls rewards and punishments, and who has special relationships with other important participants are often very subtle and not obvious to the external observer. Therefore, a business marketer is likely to find it difficult to assess interpersonal factors in the business buying process. 29 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Written and oral communication Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

66) Describe the major types of buying situations. Answer: There are three major types of buying situations. In a straight rebuy, the buyer reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. To keep the business, "in" suppliers try to maintain product and service quality. "Out" suppliers try to find new ways to add value or exploit dissatisfaction so that the buyer will consider them. In a modified rebuy, the buyer wants to modify product specifications, prices, terms, or suppliers. The "in" suppliers may become nervous and feel pressured to put their best foot forward to protect an account. "Out" suppliers may see the modified rebuy situation as an opportunity to make a better offer and gain new business. A company buying a product or service for the first time faces a new task situation. In such cases, the greater the cost or risk, the larger the number of decision participants and the greater the company's efforts to collect information. The new task situation is the marketer's greatest opportunity and challenge. The marketer not only tries to reach as many key buying influences as possible but also provides help and information. The buyer makes the fewest decisions in the straight rebuy and the most in the new task decision. AACSB: Written and oral communication Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 67) Explain the advantages of systems selling. Answer: Many business buyers prefer to buy a complete solution to a problem from a single seller rather than buying separate products and services from several suppliers and putting them together. The sale often goes to the firm that provides the most complete system for meeting the customer's needs and solving its problems. Such systems selling (or solutions selling) is often a key business marketing strategy for winning and holding accounts. AACSB: Application of knowledge Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Easy

68) Define a buying center and the major roles played by members of an organization in the purchase decision process. Answer: The decision-making unit of a buying organization is called its buying center. It consists of all the individuals and units that play a role in the business purchase decision-making process. This group includes the actual users of the product or service, those who make the buying decision, those who influence the buying decision, those who do the actual buying, and those who control buying information. The buying center includes all members of the organization who play any of five roles in the purchase decision process: 1. Users are members of the organization who will use the product or service. In many cases, users initiate the buying proposal and help define product specifications. 2. Influencers often help define specifications and also provide information for evaluating alternatives. Technical personnel are particularly important influencers. 3. Buyers have formal authority to select the supplier and arrange terms of purchase. Buyers may help shape product specifications, but their major role is in selecting vendors and negotiating. In more complex purchases, buyers might include high-level officers participating in the negotiations. 4. Deciders have formal or informal power to select or approve the final suppliers. In routine buying, the buyers are often the deciders, or at least the approvers. 5. Gatekeepers control the flow of information to others. For example, purchasing agents often have authority to prevent salespersons from seeing users or deciders. Other gatekeepers include technical personnel and even personal secretaries. AACSB: Written and oral communication Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 69) "The buying center concept presents a major marketing challenge." What does a business marketer need to learn in order to deal with the challenge effectively? Answer: The buying center is not a fixed and formally identified unit within the buying organization. It is a set of buying roles assumed by different people for different purchases. Within the organization, the size and makeup of the buying center will vary for different products and for different buying situations. The buying center concept presents a major marketing challenge. The business marketer must learn who participates in the decision, each participant's relative influence, and what evaluation criteria each decision participant uses. AACSB: Application of knowledge Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate

70) Discuss the major influences on business buyers. Answer: Business buyers are heavily influenced by factors in the current and expected economic environment, such as the level of primary demand, the economic outlook, and the cost of money. Another environmental factor is the supply of key materials. Many companies now are more willing to buy and hold larger inventories of scarce materials to ensure adequate supply. Business buyers also are affected by technological, political, and competitive developments in the environment. Finally, culture and customs can strongly influence business buyer reactions to the marketer's behavior and strategies, especially in the international marketing environment. Organizational factors are also important. Each buying organization has its own objectives, strategies, structure, systems, and procedures, and the business marketer must understand these factors well. The buying center usually includes many participants who influence each other, so interpersonal factors also influence the business buying process. However, it is often difficult to assess such interpersonal factors and group dynamics. AACSB: Written and oral communication Skill: Concept Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 71) In the beginning of the buying process, Timothy Perry, a product development manager, noticed that the raw materials that were being procured from his company's regular supplier were of poor quality. Consequently, he decided to change the existing supplier as a remedial measure. The stage of the buying process in which Timothy identified the quality breach represents the ________ stage. A) problem recognition B) general needs description C) product specification D) supplier search E) performance review Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate

72) ______can result from internal or external stimuli. Internally, the company may decide to launch a new product that requires new production equipment and materials. A) Product specification B) Supplier selection C) Problem recognition D) Supplier search E) Needs description Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 73) Which of the following is an example of an internal stimulus that would most likely lead to problem recognition? A) A buyer gets a new idea from an advertisement. B) A buyer gets a new idea at a trade show. C) A buyer is unhappy with a current supplier's product quality. D) A buyer receives a call from a salesperson offering better service. E) A buyer learns about a new product at an industry convention. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 74) The second step of the business buying process is ________. A) general needs description B) product specification C) order-routine specification D) problem recognition E) performance review Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy

75) Ross Stuart is a purchasing manager in a Texas-based manufacturing company. He sources most of the raw materials needed by his company from Kramer Corp. However, Ross is unhappy with Kramer's prices. Additionally, he thinks that the quality of the raw materials supplied by Kramer is substandard. Which of the following stages in the business buying process is Ross' company currently in? A) general need description B) problem recognition C) product specification D) order-routine specification E) performance review Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 76) Sam Doharty, a purchasing manager in Willard Groups of Companies, is currently working with engineers and consultants to define the items to be purchased. Additionally, Sam and his team are ranking the importance of reliability, durability, and price desired in the items. In other words, they are preparing a(n) ________. A) decision tree B) supplier list C) product proposal D) order-routine specification E) general need description Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 77) _______ is the stage of the business buying process in which the buying organization decides

on and specifies the best technical product characteristics for a needed item. A) Product specification B) General need description C) Supplier search D) Supplier selection E) Order-routine specification Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy

78) ______ refers to the stage of the business buying process in which the buyer tries to find the best vendors. A) Evaluation B) Systems review C) Product development D) Supplier search E) Product specification Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate

79) A manager in a garment manufacturing company decided to replace the plastic shopping bags currently used in his company with bags made of recyclable material. Consequently, he asked the operations officer to gather relevant information and send a list of alternatives to him. In the business buying process, the manager is preparing a(n) ________. A) problem statement B) general need description C) supplier list D) proposal solicitation E) order-routine specification Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate

80) In the _______ stage of the business buying process, the buyer invites qualified suppliers to submit documents. In response, some suppliers will refer the buyer to their website or promotional materials or have a salesperson call on the prospect. However, when the item is complex or expensive, the buyer will usually require a detailed written document or formal presentation from each potential supplier. A) marketing B) suppler search C) proposal solicitation D) cost-benefit analysis E) product value analysis Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 81) By showing buyers a better way to make an object, outside sellers can ________. A) turn straight rebuy situations into modified rebuy situations B) reduce delivery times and save money C) provide incentives for larger orders D) turn straight rebuy situations into new task situations E) discourage straight rebuys Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 82) Johann Herr's company has standardized the size of its paper bags so that each bag can be used in five to seven different store departments. In the business buying process, this approach to cost reduction most likely took place in the ________ stage. A) problem recognition B) general needs description C) product specification D) supplier search E) proposal solicitation Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate

83) Sail Metalworks Inc. is currently looking for the best vendors of metal sheets. In other words, Sail Metalworks is ________. A) preparing a general needs description B) deciding on product specification C) conducting a supplier search D) preparing an order-routing specification E) reviewing suppliers' performance Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 84) Members of the buying center at Kid's World, a store for children's clothing, are drawing up a list of desired supplier attributes and their relative importance. Next, they intend to compare several suppliers' proposals to these attributes. In which step of the business buying process is the buying center at Kid's World involved? A) general needs description B) proposal solicitation C) supplier selection D) order-routine specification E) performance review Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 85) Which of the following most likely occurs in the supplier selection stage of the business buying decision process? A) The buyer calls for detailed written proposals or formal presentations from each potential supplier. B) The buyer compiles a small list of qualified suppliers by reviewing trade directories, doing computer searches, or contacting other companies for recommendations. C) The buying team decides on the best product characteristics and specifies them accordingly. D) The buyer prepares a general need description and identifies the quantity of the needed item. E) The buying center draws up a list of the desired supplier attributes and their relative importance. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate

86) Many large buyers now practice _________, in which they turn over ordering and inventory responsibilities to their suppliers. Under such systems, buyers share sales and inventory information directly with key suppliers. A) vendor databases B) vendor-managed inventory C) proposal solicitation D) supplier selection E) suppler reviews Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 87) Which of the following statements describe business buying?________. A) Each organization buys in its own way, and each buying situation has unique requirements. B) Each organization has a buyer committee. C) Each organization uses online tools in selecting suppliers. D) Each organization uses classified ads. E) Organizations are not affected by environmental concerns. Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 88) During________, the buying center often will draw up a list of the desired attributes and their relative importance. Such attributes include product and service quality, reputation, on-time delivery, ethical corporate behavior, honest communication, and competitive prices. A) supplier selection B) product specification C) performance review D) proposal solicitation E) online ordering Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate

89) Attributes that a buying center may look for in a supplier include all of the following EXCEPT ________. A) product quality B) off-shore manufacturing C) service quality D) on-time delivery E) competitive prices Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 90) Xi has a manufacturing business in Omaha. Xi’s approach to cost reduction is to have manufacturing components studied carefully to determine if they can be redesigned, standardized, or made by less costly methods of production. This is an example of ______. A) product value analysis B) supplier selection C) proposal solicitation D) marketing research E) competitor analysis Answer: A AACSB: Application of Knowledge Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 91) Which of the following is NOT an example of problem recognition? A) A purchasing manager is not happy with a current supplier’s product quality B) A machine has broken down and needs new parts C) A manager has received a complaint about service quality D) The supply of parts arrives on time E) The buyer gets new ideas at a trade show. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy

92) Which of the following is NOT true about suppliers? A) A supplier search is conducted to find the best vendors. B) Suppliers should offer the lowest price to close the sale. C) More and more companies find suppliers online. D) The supplier’s task is to get listed in major directories. E) Suppliers should create a social media presence. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 93) __________is the stage of the business buying process in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties. A) Marketing review B) Performance review C) Supplier search D) Supplier selection E) Order-routine specification Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 94) Luke Price, a manager in an automobile factory, wanted his subordinates to rate their satisfaction about the new pistons that arrived last month. He asked them to rate the product based on strength and ease of handling. Which of the following is evident here? A) order-routine specifications B) supplier selection C) performance review D) general needs description E) proposal solicitation Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy

95) ______is the stage of the business buying process in which the buyer assesses the performance of the supplier and decides to continue, modify, or drop the arrangement. A) Purchasing B) Problem recognition C) Performance review D) Just-in-time inventory E) Procurement Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy Refer to the scenario below to answer questions 96-98. Alpha Stampings Inc. produces 14 metal stampings for the automotive industry. Due to industry design changes and consumer demands, for the next financial year, six of those stampings will require a slight change: two will have an extra hole punched through the side, two will require an extra plating process, and two will require an additional weld operation. In the meantime, purchasing agent Richard Koehl has been asked to reduce the number of Alpha's steel suppliers in an effort to cut costs. After obtaining updated price quotations and steel samples from his current suppliers, Richard faced a dilemma. Until now, he had selected his suppliers based on quality and price, but the major consideration had been the type of steel required and the specialized production processes of his respective suppliers. Not all of Alpha's suppliers could produce the exact grades of steel needed; some suppliers were better at producing certain types of steel than others. Richard contacted several employees at Alpha who had worked with the various types of steel in the past. The quality control manager and line inspector, for example, could help to determine which suppliers had the capabilities of producing specific types of steel. The production control manager could provide input regarding which types of steel worked best in which presses. The warehouse foreman gave inputs regarding how long various types of steel could be held in inventory before rust spots began to form on their surfaces. Each person contributed the necessary information to help Richard in making his decision. 96) In this instance, Richard plays the role of a(n) ________. A) decider B) gatekeeper C) influencer D) proposal solicitor E) product designer Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. 42 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Easy 97) In this scenario, Richard faces the issue of supplier selection. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 98) Discuss supplier selection in the buying process. Answer: During supplier selection, the buying center often will draw up a list of the desired supplier attributes and their relative importance. Such attributes include product and service quality, reputation, on-time delivery, ethical corporate behavior, honest communication, and competitive prices. The members of the buying center will rate suppliers against these attributes and identify the best suppliers. AACSB: Application of knowledge Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 99) In the product specification stage of the business buying process, the buyer invites qualified suppliers to submit proposals. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 100) In the general need description stage, the buying team decides on the best product characteristics and specifies them accordingly Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 101) In the supplier selection stage, the buyer reviews supplier performance. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 102) During proposal solicitation, the buying center often will draw up a list of desired supplier attributes and their relative importance. Answer: FALSE 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 103) The performance review specification includes the final order with the chosen supplier or suppliers and lists items such as technical specifications, quantity needed, expected delivery time, return policies, and warranties. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 104) In the supplier selection stage, the seller or the buyer may modify, continue, or cancel the business arrangement. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 105) In the performance review stage, the buyer may contact users and ask them to rate their satisfaction. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 106) Are all buyer-center participants involved in all stages of the buying process? Explain. Answer: Different buying-center participants may be involved at various stages of the process. Although certain buying-process steps usually do occur, buyers do not always follow them in the same order, and they may add other steps. Often, buyers will repeat certain stages of the process. AACSB: Application of knowledge Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 107) Discuss the skills needed to prepare a proposal. Answer: Business marketers must be skilled in researching, writing, and presenting proposals in response to buyer proposal solicitations. They should be skilled at connecting digitally with buyers to understand their needs and requirements. Proposals should be marketing documents, not just technical documents. Presentations should inspire confidence and should make the marketer’s company stand out from the competition. AACSB: Application of knowledge 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate

108) What does supplier selection involve? Answer: Buyers may attempt to negotiate with preferred suppliers for better prices and terms before making the final selections. In the end, they may select a single supplier or a few suppliers. Many buyers prefer multiple sources of supplies to avoid being totally dependent on one supplier and to allow comparisons of prices and performance of several suppliers over time. Today’s supplier development managers want to develop a full network of supplier-partners that can help the company bring more value to its customers. AACSB: Written and oral communication Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 109) Describe order-routine specification. Answer: Order-routine specification includes the final order with the chosen supplier or suppliers and lists items such as technical specifications, quantity needed, expected delivery time, return policies, and warranties. In the case of maintenance, repair, and operating items, buyers may use blanket contracts rather than periodic purchase orders. A blanket contract creates a long-term relationship in which the supplier promises to resupply the buyer as needed at agreed prices for a set time period. AACSB: Written and oral communication Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy

110) Briefly describe the eight steps in the business buying process. Answer: The eight steps in the business buying process are: problem recognition, general needs description, product specification, supplier search, proposal solicitation, supplier selection, orderroutine specification, and performance review. 1. Problem recognition: The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a specific product or service. Problem recognition can result from internal or external stimuli. 2. General needs description: Having recognized a need, the buyer next prepares a general need description that describes the characteristics and quantity of the needed item. For standard items, this process presents few problems. For complex items, however, the buyer may need to work with others–engineers, users, and consultants–to define the item. 3. Product specifications: The buying organization next develops the item's technical product specifications, often with the help of a value analysis engineering team. Product value analysis is an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized, or made by less costly methods of production. 4. Supplier search: The buyer now conducts a supplier search to find the best vendors. The buyer can compile a small list of qualified suppliers by reviewing trade directories, doing computer searches, or contacting other companies for recommendations. 5. Proposal solicitation: In the proposal solicitation stage of the business buying process, the buyer invites qualified suppliers to submit proposals. In response, some suppliers will refer the buyer to their Web sites or promotional materials or send a salesperson to call on the prospect. However, when the item is complex or expensive, the buyer will usually require detailed written proposals or formal presentations from each potential supplier. 6. Supplier selection: During supplier selection, the buying center often will draw up a list of the desired supplier attributes and their relative importance. Such attributes include product and service quality, reputation, on-time delivery, ethical corporate behavior, honest communication, and competitive prices. 7. Order-routine specification: The buyer now prepares an order-routine specification. It includes the final order with the chosen supplier or suppliers and lists items such as technical specifications, quantity needed, expected delivery time, return policies, and warranties. 8. Performance review: In this stage, the buyer reviews supplier performance. The buyer may contact users and ask them to rate their satisfaction. The performance review may lead the buyer to continue, modify, or drop the arrangement. The seller's job is to monitor the same factors used by the buyer to make sure that the seller is giving the expected satisfaction. AACSB: Written and oral communication Skill: Concept Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Challenging

111) SkyWalk Aeronautics Limited received orders for 25 cargo air carriers from Zephyr Cargo Limited through its Web site in 2016. This is an example of ________. A) order-routine specification B) supplier selection C) e-procurement D) proposal solicitation E) customer relations management Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate 112) Pace Hardware uses Learningnow.com to improve sales force effectiveness and facilitate sharing of expertise. It allows Pace retailers to connect with each other for seeking managerial and marketing advice. It also allows Pace retailers to ask their suppliers about product usage, deliveries, and warranties, and send new-product information directly to the retailers. In this instance, Pace Hardware is facilitating communication through ________. A) extranet links B) podcasts C) search engines D) trading exchanges E) reverse auctions Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate

113) Which of the following is true with regard to e-procurement? A) E-procurement has significantly declined in recent years. B) Typically, business marketers do not favor e-procurement as it offers them little benefit. C) E-procurement has been widely practiced since the 1950s. D) E-procurement adds to existing inefficiencies in the supply chain. E) E-procurement hastens order processing and delivery. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate 114) ______refers to purchasing through electronic connections between buyers and sellers— usually online A) Marketing intelligence B) E-procurement C) User D) Proposal solicitation E) Influencer Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate 115) In ________, companies work together to facilitate the trading process. A) reverse auctions B) trading exchanges C) procurement D) supplier selection E) order-routine specification Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate

116) Which of the following is LEAST likely a characteristic of business-to-business eprocurement? A) greater access to new suppliers B) lower purchasing costs C) quick order processing and delivery D) an increase in the derived demand E) less paperwork Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate 117) Which of the following can help a company create direct procurement accounts with suppliers, through which company buyers can purchase equipment, materials, and supplies directly? A) backsourcing B) extranet links C) company blog D) reverse auction E) trade exchange Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Easy 118) Which of the following is true about business-to-business e-procurement? A) E-procurement increases transaction costs for suppliers. B) Because of an overwhelming demand, e-procurements usually have a huge time gap between order and response. C) Many buyers now use the power of the Internet to pit suppliers against one another and search out better deals, products, and turnaround times on a purchase-by-purchase basis. D) E-procurement doesn't enhance customer-supplier relationships. E) Due to extensive paperwork, the relatively important strategic issues, such as finding better supply sources and working with suppliers to reduce costs and develop new products, are sidelined. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate

119) Digital and social media's role in business-to-business marketing enhances all of the following EXCEPT ________. A) targeting individuals that affect buying decisions within the target businesses B) facilitating anytime and anywhere connections between people at the selling and buying organizations C) giving sellers more control of and access to important information D) meeting in person with customers at trade shows or conferences E) giving buyers more control of and access to important information Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Challenging 120) The benefits of e-procurement include access to new suppliers, lower purchasing costs, and more time-efficient order processing and delivery. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Easy 121) E-procurement has caused the time between order and delivery to decrease significantly. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Easy 122) Companies can allow their suppliers access to online sites on which the company posts its buying needs, requests bids, negotiates terms, and places orders, thus minimizing research steps and costs. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Easy

123) Although the internet makes it possible for suppliers and customers to share business data and even collaborate on product design, it can also erode decades-old customer-supplier relationships Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Easy 124).Describe business online buying. Answer: In response to business customers’ rapid shift toward online buying, today’s B-to-B marketers are now using a wide range of digital and social media marketing approaches—from websites, blogs, mobile apps, email, e-newsletters, and proprietary online networks to mainstream social media such as LinkedIn, Facebook, Twitter, Instagram, YouTube, and TikTok— to engage business customers and manage customer relationships anywhere, anytime AACSB: Analytical thinking Skill: Concept Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate 125) The federal, state, and local ______markets purchase or rent goods and services for carrying out the main functions of government. A) government B) retail C) wholesale D) for-profit E) international Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate

126) Sage Hospitals, a nonprofit organization, provides healthcare to the people in the Midwest. Management at Sage is involved in the ________ market. A) government B) consumer C) wholesale D) institutional E) resell Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Easy 127) All of the following organizations are likely part of the institutional market EXCEPT ________. A) LaGrange Community Hospital B) Worthampshire Prison C) Lancaster Real Estate Company D) Water Street Nursing Home E) Millersville Community College Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Easy

128) All of the following are difficulties associated with selling to government buyers EXCEPT ________. A) excessive paperwork B) bureaucracy C) strict regulations D) high advertising costs E) decision-making delays Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 129) Government buyers are affected by all of the following factors EXCEPT ________ factors. A) environmental B) cultural C) organizational D) interpersonal E) individual Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 130) Which of the following plays the most important role in government buying? A) price B) product differentiation C) advertising D) personal selling E) customer relationship management Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate

131) Total government spending is determined by ________. A) legal treatises B) marketing efforts C) elected officials D) court rulings E) technology needs Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 132) Some companies sell primarily to government buyers as prime contractors or subcontractors. This allows these companies to ________, participate in the product specification phase, gather competitive intelligence, prepare bids carefully, and produce stronger communication to describe and enhance their companies' reputations. A) lobby elected officials to fund projects B) anticipate government needs and projects C) develop relationships with government procurers D) identify cost-cutting measures E) invest in new technologies Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 133) The ________ website provides a single point of entry through which commercial vendors and government buyers can post, search, monitor, and retrieve opportunities solicited by the entire federal contracting community. A) U.S. Small Business Administration B) Center for Regulatory Effectiveness C) Federal Business Opportunities D) Federal Civil Defense Authority E) U.S. Commerce Department Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Easy

134) A great deal of the government’s buying has gone online. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Easy 135) Dell has specific business units tailored to meet the needs of federal as well as state and local government buyers. Dell offers its customers tailor-made Premier web pages that include special pricing, online purchasing, and service and support for each city, state, and federal government entity. This example shows that companies have established customized marketing programs for ________buyers. A) government B) institutional C) international D) national E) local Answer: A AACSB: Application of Knowledge Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 136) The KraftHeinz Foodservice division helps institutional food service customers in any of several industries find creative meal solutions using its broad assortment of food and condiment brands. And P&G’s Professional Division markets professional cleaning and laundry formulations and systems to educational, healthcare, and other institutional and commercial customers. This example shows that _____ A) Many marketers set up separate divisions to meet the needs of institutional buyers. B) Government organizations typically require suppliers to submit proposals C) Government organizations tend to favor domestic suppliers D) Government organizations tend to favor foreign suppliers Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 137) What are the noneconomic criteria that influence government buying? Answer: Government buyers are asked to favor depressed business firms and areas; small business firms; minority-owned firms; and business firms that avoid race, gender, and age discrimination. AACSB: Written and oral communication 56 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Easy

138) Describe the government market. Answer: The government market offers large opportunities for many companies, both big and small. In most countries, government organizations are major buyers of goods and services. In the United States alone, federal, state, and local governments contain tens of thousands of buying units that purchase more than $2.3 trillion in goods and services each year. Government buying and business buying are similar in many ways. But there are also differences that must be understood by companies that wish to sell products and services to governments. To succeed in the government market, sellers must locate key decision makers, identify the factors that affect buyer behavior, and understand the buying decision process. AACSB: Application of knowledge Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 139) What are the major characteristics of institutional markets? Answer: The institutional market consists of schools, hospitals, nursing homes, prisons, and other institutions that provide goods and services to people in their care. Institutions differ from one another in their sponsors and their objectives. For example, Community Health Systems runs 89 for-profit hospitals in 16 states, generating $11.8 billion in annual revenues. By contrast, the Shriners Hospitals for Children is a nonprofit organization with 22 facilities that provide free specialized health care for children, whereas the government-run Veterans Affairs Medical Centers located across the country provide special services to veterans.15 Each institution has different buying needs and resources. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate 140) Describe the use of authorized defense and civilian websites. Answer: Such sites allow authorized defense and civilian agencies to buy everything from office supplies, food, and information technology equipment to construction services through online purchasing. The General Services Administration, the Defense Logistics Agency, and the Department of Veterans Affairs not only sell stocked merchandise through their websites but also create direct links between government buyers and contract suppliers. For example, the branch of the Defense Logistics Agency that sells 160,000 types of medical supplies to military forces transmits orders directly to vendors such as Bristol-Myers Squibb. Such online systems promise to eliminate much of the hassle sometimes found in dealing with government purchasing AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Moderate Quantitative Questions 58 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

1) LinkedIn has 800 million active users and 40% log in every day. How many LinkedIn users log in every day? A) 260 million B) 320 million C) 400 million D) 580 million E) 640 million Answer: B; You compute this answer by multiplying 40% x 800 million = 320 million. AACSB: Analytical thinking Skill: Application Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Easy 2) Firm XXQ sells inputs to Firm ABC. The demand for Firm XXQ’s product is derived from the demand for Firm ABC’s product. Assume Firm XXQ’s sales this year were $45 million and Firm ABC’s sales were $147 million and the sales ratio between the two firms is constant. How much will Firm XXQ sell next year if Firm ABC projects a 15% increase in sales? A) $47.25 million B) $48.85 million C) $51.75 million D) $58.25 million E) $62.35 million Answer: C; The simplest way to compute the answer is to increase Firm XXQ’s sales by 15%. So, $45 million x 1.15 = $51.75 million. AACSB: Analytical thinking Skill: Application Objective: LO 6.1: Define the business market and explain how business markets differ from consumer markets. Difficulty: Moderate 3) About 300,000 UPS drivers deliver 36 million packages a day with an average of 120 deliveries per driver. How many UPS drivers would the firm need if it could increase the average deliveries per driver to 125 per day? A) 229,000 B) 257,000 C) 278,000 D) 288,000 E) 300,000 Answer: D; To compute this answer you divide 36 million by 125 = 288,000 drivers needed. AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Challenging 4) Suresh is a buyer for his firm. During the COVID-19 pandemic and subsequent supply chain 59 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

issues he realized they do not need to be relying on a single supplier to obtain their raw materials. Suresh has been buying 400,000 pounds of copper from a single source. However, now he wants to diversify the suppliers and intends to add 4 more suppliers. They have been paying $3.68 a pound for copper and the average price after diversifying suppliers will be $3.76 a pound. How much extra will it cost Suresh to source the firm’s copper? A) $8,000 B) $22,000 C) $28,000 D) $32,000 E) $40,000 Answer: D; The firm will still buy 400,000 pounds and it will cost 8 cents a pound more, or $3.76 - $3.68 = $.08. So, .08 x 400,000 = $32,000. AACSB: Analytical thinking Skill: Application Objective: LO 6.2: Identify the major factors that influence business buyer behavior. Difficulty: Moderate 5) JaQuanda Industries is looking for new suppliers for its expanding production needs. The firm’s management also wants to reduce its reliance on single vendors, so they intend to use four different suppliers. How many units will each supplier need to deliver assuming JaQuanda needs 1,852 new units to reach its new output goals? A) 263 units per supplier B) 363 units per supplier C) 463 units per supplier D) 563 units per supplier E) 663 units per supplier Answer: C; You compute the answer by dividing the 1,852 units/4 suppliers = 463 units per supplier. AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy Use the following information to answer questions 6, 7, and 8. Generation Lithics (GL) wants to get 500 new accounts this year. Each salesperson averages 40 new accounts each year and the average size of an account is $86,000 in annual revenue. GL currently has seven sales reps on its payroll that make a base salary of $60,000 and get a commission of 4% of new sales revenue. 6) How many salespeople does GL need to accomplish its goal? A) 6 B) 5 C) 7 D) 8 E) 4 Answer: A; GL wants 500 new accounts, and it has 7 sales reps that will generate 40 new 60 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

accounts. So, 500 – (7 x 40) = 220 additional accounts, so 220/40 = 5.5, or 6 new salespersons needed to achieve their goal. AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Moderate 7) How much will GL need to pay the new salespersons if they achieve their goals? A) $180,000 B) $197,600 C) $60,000 D) $146,000 E) $86,000 Answer: B; Each one has a base salary of $60,000 and receives a 4% commission on new accounts. So, $60,000 + [40 x ($86,000 x .04)] = $197,600. AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Challenging 8) How much revenue will GL generate from the new accounts in the first year? A) $18 million B) $22 million C) $86 million D) $500 million E) $43 million Answer: E; $86,000 per account x 500 new accounts = 43,000,000. AACSB: Analytical thinking Skill: Application Objective: LO 6.3: List and define the steps in the business buying decision process. Difficulty: Easy 9) Assume business e-procurement is expected to increase by 11% a year for the next five years. How much will the value of e-procurement be by end of the next 5 years if it is $1.17 trillion now? A) $1.32 trillion B) $1.48 trillion C) $1.97 trillion D) $2.11 trillion E) $2.87 trillion Answer: C; You compute this by the formula; FV = PV (1 + growth rate)n, where n = number of periods. So, FV = $1.17 (1.11)5 = $1.97 trillion. AACSB: Analytical thinking Skill: Application Objective: LO 6.4: Discuss how online, mobile, and social media have changed business-tobusiness marketing. Difficulty: Moderate 61 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

10) The U.S. government spends about $2.3 trillion each year on goods and services. How much will the U.S government spend on goods and services next year if the budget is 12% higher? A) $2.576 trillion B) $2.347 trillion C) $2.129 trillion D) $3.231 trillion E) $1.954 trillion Answer: A; You compute the answer by multiplying $2.3 trillion x 1.12 = $2.576 trillion. AACSB: Analytical thinking Skill: Application Objective: LO 6.5: Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions. Difficulty: Easy

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 7 Customer Value-Driven Marketing Strategy: Creating Value for Target Customers 1) Companies know they cannot appeal to all buyers in the marketplace, or at least not in the same way. Reasons for this include all of the following EXCEPT ________. A) buyers are too numerous B) companies vary widely in their abilities to serve different market segments C) buyers are varied in their needs and buying practices D) companies need more information to offer the right products to the right customers E) buyers are widely scattered Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 2) ________ consists of evaluating each market segment's attractiveness and selecting one or more segments to enter. A) Positioning B) Mass customization C) Market targeting D) Market segmentation E) Differentiation Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 3) ________ involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. A) Mass customization B) Market targeting C) Market segmentation D) Differentiation E) Positioning Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy

4) ________ involves actually distinguishing the firm's market offering to create superior customer value. A) Mass customization B) Differentiation C) Market segmentation D) Diversifying E) Targeting Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 5) When marketers at Fair & Leigh Inc. selected the Gen Z, a demographic group that includes many college students, as an untapped group of potential customers for their new line of products, they were engaging in ________. A) occasion segmenting B) local marketing C) market diversification D) market targeting E) product positioning Answer: D AACSB: Analytical thinking; Diverse and multicultural work environments Skill: Application Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Moderate 6) ________ consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. A) Mass customization B) Targeting C) Segmentation D) Differentiation E) Positioning Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 7) Marketing boils down to two questions: 1) Which customers will we serve? and 2) A) How will we serve them? B) What price will we charge? C) Where will we sell our products? 2 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) Who will be in charge of the marketing efforts? E) What types of promotions will we use? Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 8) Monica sells handmade jewelry made from recycled products. Her jewelry is unique which makes it easier to sell since none of her competitors have anything similar. What marketing strategy is she pursuing? A) Value creation B) Targeting C) Differentiation D) Segmentation E) Positioning Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 9) The customer-driven marketing strategy involves four steps: market segmentation, market targeting, positioning, and differentiation. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 10) With technology advances making it simple to contact many customers at once, companies have moved toward mass marketing over target marketing. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 11) Market targeting involves dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors that might require separate marketing strategies to reach them. 3 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 12) Positioning involves designing the market offering to create superior customer value that differs from the offerings of competitors. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 13) New technologies, such as big data analytics and social and digital media platforms, allow firms to reach consumers on an individualized basis. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 14) What is differentiation? Answer: Differentiation refers to differentiating the market offering to create superior customer value. AACSB: Application of knowledge Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 15) Explain the four major steps in designing a customer-driven marketing strategy. Answer: The first step is market segmentation: dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors, who might require separate products or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. The second step is market targeting: evaluating each market segment’s attractiveness and selecting one or more of the market segments to enter. The third step is differentiation: actually differentiating the firm’s market offering to create a superior customer value. Finally, the last step is market positioning: arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of consumers. AACSB: Application of knowledge; Written and oral communication 4 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Moderate 16) What is the goal of a customer value-driven marketing strategy? Answer: The goal is for the organization to create more value for the customers than their competitors are able to do. This will allow the organization to reap the benefits of higher profits and more sales. AACSB: Application of knowledge Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy 17) What is the “battle for the mind of the consumer?” Answer: Market positioning is often referred to as the battle for the mind of the consumer. The goal is to create market offerings that occupy a clear, distinctive, and desirable place in the minds of the target consumers AACSB: Application of knowledge Skill: Concept Objective: LO 7.1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Easy

18) ________ calls for dividing the market into regions, states, counties, cities, or even neighborhoods. A) Benefit segmentation B) Geographic segmentation C) Demographic segmentation D) Psychographic segmentation E) Occasion segmentation Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 19) Many companies today are conducting location-based targeting to consumers in local communities or neighborhoods using digital or social media. This type of marketing is known as ________. A) geographic segmentation B) product diversification C) hyperlocal social marketing D) psychographic segmentation 5 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) demographic segmentation Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 20) ________ segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. A) Geographic B) Benefit C) Occasion D) Psychographic E) Demographic Answer: E AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 21) ________ segmentation divides buyers into different segments based on lifestyle and personality characteristics. A) Benefit B) Occasion C) Geographic D) Demographic E) Psychographic Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 22) Vanessa’s Clothing runs a back-to-school sale every July with a 20 percent discount on all youth apparel. What type of market segmentation is she using? A) Occupation B) Education C) Ethnicity D) Religion E) Occasion Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 6 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

23) Gilron Holidays runs a premium membership club that caters to customers whose annual salary exceeds $100,000. Members of this club are offered seasonal discounts at select luxury hotels in select cities worldwide. Gilron Holidays most likely follows a(n) ________ segmentation approach. A) gender B) benefit C) occasion D) income E) geographic Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 24) ________ segmentation divides buyers into different segments according to the different utilities that consumers seek from the product. A) Benefit B) Occasion C) Geographic D) Demographic E) Psychographic Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 25) Marketers who use ________ often segment their markets by consumer lifestyles and base their marketing strategies on lifestyle appeals. A) demographic segmentation B) geographic segmentation C) benefit segmentation D) psychographic segmentation E) occasion segmentation Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 26) One online gaming retailer targets consumers who play longer hours by delivering digital tokens after they reach different levels of playing time. What base are they using to segment their market? 7 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) Loyalty status B) Gender C) Age and life cycle D) Usage rate E) User status Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 27) Malcolm Sanders, a graduate student from Boston, makes customized snowboards for local snowboarding enthusiasts. The demand for snowboards peaks during the winter months, a busy time for Malcolm. He advertises more aggressively and sells most of his snowboards around this time. Which market segmentation approach does Malcolm most likely use? A) gender segmentation B) psychographic segmentation C) occasion segmentation D) geographic segmentation E) age and life-cycle segmentation Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 28) Company XYZ promotes its pumpkin spice drink beginning in early October and it runs through the end of December. What type of segmentation is Company XYZ using? A) occasion segmentation B) benefit segmentation C) age and life-cycle segmentation D) income segmentation E) generation segmentation Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate

29) Rocky Mountain Tiny Homes builds and markets compact homes that appeal to consumers who want to “live simply.” What segmentation strategy is this firm pursuing? A) Gender segmentation B) Psychographic segmentation C) Benefit segmentation D) Geographic segmentation E) Demographic segmentation Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 30) A recent study conducted by Estelle Cosmetics Company showed that heavy users of Estelle's products comprise a small percentage of the market. The study indicated that less than 7 percent of all shoppers buy nearly 71 percent of Estelle's products in the United States. This is an example of ________. A) benefit segmentation B) segmentation by loyalty status C) segmentation by usage rate D) psychographic segmentation E) occasion segmentation Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 31) Consumers who show their allegiance to brands, stores, or companies help marketers to segment consumers by their ________. A) user status B) loyalty status C) income D) geographic location E) benefit-seeking attitudes Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 32) Athleisure company Lululemon uses a network of brand ambassadors to champion their products. What type of segmentation is Lululemon using? A) user status B) loyalty status C) celebrity status 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) geographic location E) benefit-seeking attitudes Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Challenging Use the following information to answer questions 33, 34, 35, 36, and 37. Cornell was a high-level college athlete until he tore his ACL and ended his playing career. At one point his name was discussed as a possible draft pick. He was a serious student and worked hard to earn his degree in business with his athletic scholarship paying the way. After graduation he worked in marketing for a large sporting goods company, and he has been saving his money to start his own business. Now, after 10 years he is ready to launch his business. Cornell purchased some land and erected a building large enough for indoor courts for basketball, racquetball, and exercise equipment. However, he hasn’t decided which market to pursue. His first thought was to tailor the offerings to kids that needed some physical activities. Cornell also realized that there was a potential adult market he could also serve with night classes in aerobics, spin, and weight training. He also knows that fitness goals come in all levels. Some consumers want to sculpt their bodies and have chiseled physiques. Others, primarily the older consumers, just want to maintain their health and live active lifestyles. And some people just want to socialize and have fun. He also recently he realized that he should devote some space for product sales with athletic wear, energy drinks, and high protein snacks available. Cornell also knows he can promote his business using social media given his tech skills. However, his first step is to decide on his target market. 33) Cornell decided to target the older consumers that want to maintain their health and mobility. This group were financially capable of paying for the service and many were retired so preferred coming to the facility during the day. What type of segmentation is Cornell using? A) usage rate B) geographic C) age and life-cycle D) personality E) loyalty status Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 34) Cornell is considering expanding his business into neighboring cities. He was a good enough college player that he has name recognition inside the state. What type of segmentation would he be using if he decides to expand into neighboring cities? 10 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) usage rate B) geographic C) lifestyle D) personality E) loyalty status Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 35) Cornell intends to use hyperlocal social marketing to promote his business. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 36) Cornell’s market segmentation options are based on occupation and education. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 37) Discuss what type of market segmentation is best for Cornell. Answer: Answers will vary. However, Cornell’s segmentation options include lifestyle, age, geographic region, and benefits. Other options, such as user status and loyalty, may emerge as the business progresses. AACSB: Application of knowledge Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 38) Business marketers use geographic, demographic, benefit, user status, usage rate, and loyalty status to segment their markets. They also use ________, customer operating characteristics, purchasing approaches, and situational factors. A) weather patterns B) psychographics C) ethical traits D) budgets and financial status E) personal characteristics Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 11 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

39) Double Drill Inc. segments its foreign markets by per capita income. They segment the international markets based on ________. A) political factors B) legal factors C) geographic location D) economic factors E) cultural factors Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 40) Pacific Fisheries divides its customers into different regional units, such as Asia, Australia, and the Americas. This is an example of ________ segmentation. A) demographic B) psychographic C) geographic D) occasion E) benefit Answer: C AACSB: Analytical thinking; Diverse and multicultural work environments Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 41) Li is considering expanding her business into Tibet. In previous expansions she was able to navigate the endless bureaucracy and social unrest. Li believes this ability is her strength and the regions she enters have very little competition due to these factors. What type of segmentation is Li practicing? A) economic segmentation B) political and legal segmentation C) demographic segmentation D) income segmentation E) cultural segmentation Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Challenging 42) Which of the following refers to cultural factors in the context of segmenting international markets? A) receptivity of foreign firms B) economic development of the country 12 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) population income levels D) stability of the government E) values and attitudes Answer: E AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 43) Using ________ segmentation, marketers form segments of consumers who have similar needs and buying behaviors even though they are located in different countries. A) psychographic B) demographic C) occasion D) benefit E) intermarket Answer: E AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 44) Andrew Levitt runs a retail store in Norristown. Andrew's store stocks cold weather products beginning in August since Norristown since that is the beginning of the region’s winter season. Which type of market segmentation is Andrew using? A) geographic B) age-group C) occasion D) benefit E) cross-market Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 45) Teen Mania Inc., a company marketing adventure sports merchandise for teenagers, targets the world's teenagers, who have similar needs and buying behavior even though they are located in different countries. Which market segmentation strategy does Teen Mania appear to be using? A) income segmentation B) psychographic segmentation C) gender segmentation D) intermarket segmentation E) occasion segmentation Answer: D AACSB: Analytical thinking Skill: Application 13 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 46) Firm XXY targets consumers in Spanish speaking countries and evaluates each country it enters for political stability. What type of segmentation does Firm XXY appear to be using? A) occasion B) geographic C) income D) benefit E) cultural Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 47) An Alaskan firm targets cruise ship passengers that visit primarily between June and August. The firm is using ________ segmentation. A) psychographic B) income C) geographic D) occasion E) benefit Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 48) Venus Inc., a company designing and marketing branded diamond jewelry, targets wealthy consumers with similar needs and buying behaviors, even though the consumers are located in different countries. This is an example of ________ segmentation. A) intermarket B) loyalty C) life-cycle D) income E) psychographic Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 49) Luxury good maker Chanel targets consumers that can afford their high-end products. Chanel practices ________ segmentation. 14 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) benefit B) income C) psychographic D) geographic E) gender Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 50) Business information services such as Acxiom’s Personicx Lifestage help marketers to ________. A) save significant amounts of money on shipping products B) spend more time identifying potential customers C) learn more specific details from consumers about their products D) segment people and locations into marketable groups of like-minded consumers E) expand their product offerings to interested clients and provide high-quality service to them Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 51) When the size, purchasing power, and profile of a market segment can be calculated, the market is ________. A) measurable B) profitable C) substantial D) actionable E) competitive Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 52) A market segment that is large enough or profitable enough to serve is ________. A) measurable B) accessible C) substantial D) profitable E) differentiable Answer: C AACSB: Analytical thinking Skill: Concept 15 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 53) When an effective program can be designed for attracting and serving a particular segment, the segment is best described as ________. A) accessible B) measurable C) competitive D) actionable E) differentiable Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 54) ________ segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. A) Complex B) Measurable C) Competitive D) Differentiable E) Homogeneous Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 55) Market segments that can be effectively reached and served are ________. A) measurable B) accessible C) substantial D) actionable E) profitable Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy Refer to the following scenario to answer questions 56-60. Ruben Delgado was making wooden pens and pencils, which had unique engravings, as a hobby until Simon Yoder recognized Ruben's talent. Simon immediately ordered 250 pens and pencils 16 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

of various styles to be displayed in his shop's showcase. Within three months, the wooden pencils were a hit with all students! Ruben Delgado had never thought of marketing his talent, but Simon's enthusiasm and the recent sales were enough to change his mind. With limited resources, Ruben contacted three additional specialty shops within 100 miles that were situated near schools. He explained his manufacturing processes and engraving options to each. All three shop owners placed a trial order. Within two months, just prior to the holiday season, each shop owner placed an additional order. Ruben was ecstatic! "I figured business would slow down after that," Ruben stated, "but in February I was contacted by Elmore Distributors. At that point, I had to make a huge decision about how far I wanted to go with this business." Elmore Distributors provides products for school fundraisers in a seven-state area. Ruben was offered a two-year contract and immediate inclusion in Elmore's promotional flyer. Ruben Delgado accepted the offer and, along with it, the responsibility to produce thousands of wooden pens and pencils. "I had to get a grip on the magnitude of this project," Ruben added. He decided to place his major focus on the large contract with Elmore. However, to avoid placing his total emphasis with one customer, Ruben continued nurturing his four previously established accounts without targeting any additional customers. "At this point, I had set up an assembly line in a rented building," Ruben explained. "I had to hire three full-time employees to work the line while I managed the customer orders and purchased materials." Ruben paused. "But I can't take the Elmore project for granted. It might not always be there. I'll have to have a good alternate plan if that day comes." 56) In the scenario, Ruben has segmented his market based on ________. A) geography B) benefits sought C) occasion D) loyalty status E) demographics Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 57) Ruben’s focus on the Elmore contract is an example of A) geography B) usage rate C) occasion D) loyalty status E) demographics Answer: B AACSB: Analytical thinking Skill: Application 17 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

segmentation.

Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 58) What type of market segmentation will Ruben practice if he decides to expand his business into a few more nearby towns? A) geography B) benefits sought C) occasion D) degree of loyalty E) demographics Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 59) Ruben’s business strategy could be classified as using multiple segmentation bases. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 60) What type of market segmentation should Ruben focus on if he decides to expand his business? Answer: Answers will vary. However, Ruben could easily continue his geographic segmentation by locating more specialty shops near schools. He was successful in expanding into three locations within 100 miles so he could continue his geographic segmentation by expanding beyond that radius. AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Challenging 61) Psychographic segmentation divides buyers into different segments based on lifestyle or personality characteristics. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 62) Usage occasions, online activities, and loyalty status are all demographic segmentation bases. Answer: FALSE AACSB: Analytical thinking 18 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy

63) Briefly describe occasion segmentation. Answer: Occasion segmentation refers to dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. AACSB: Written and oral communication Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 64) How does loyalty status enhance a company's understanding of its consumers? Answer: A company can learn a lot by analyzing loyalty patterns in its market. It should start by studying its own loyal customers. In contrast, by studying its less-loyal buyers, a company can detect 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 take actions to correct them. AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 65) Explain the different segmentation variables used in segmenting consumer markets. Answer: 1. Geographic segmentation calls for dividing the market into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. A company may decide to operate in one or a few geographical areas or operate in all areas but pay attention to geographical differences in needs and wants. 2. Demographic segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. Demographic factors are the most popular bases for segmenting customer groups. 3. Psychographic segmentation divides buyers into different segments based on lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic characteristics. 4. Behavioral segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses concerning a product. Many marketers believe that behavior variables are the best starting point for building market segments. AACSB: Application of knowledge Skill: Concept 19 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 66) Describe how marketers use multiple segmentation bases to their advantage. Answer: Marketers rarely limit their segmenting analysis to only one or a few variables. Instead, they use multiple segmentation bases in an effort to identify smaller, better-defined target groups of consumers who share likes, dislikes, lifestyles, and purchase behaviors. Companies often begin by segmenting their markets using a single base, and then expand using other bases. AACSB: Application of knowledge Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 67) Why do companies opt for market segmentation? Answer: Buyers in any market differ in their wants, resources, locations, buying attitudes, and buying practices. Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs. AACSB: Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 68) Why do international markets need to be segmented? Answer: Different countries, even those that are close together, can vary greatly in their economic, cultural, and political makeup. Thus, just as they do within their domestic markets, international firms need to group their world markets into segments with distinct buying needs and behaviors. AACSB: Application of knowledge; Analytical thinking Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 69) What are the primary requirements for effective market segmentation? Answer: To be useful, market segments must be: 1. Measurable: The size, purchasing power, and profiles of the segments can be measured. 2. Accessible: The market segments can be effectively reached and served. 3. Substantial: The market segments are large or profitable enough to serve. A segment should be the largest possible homogeneous group worth pursuing with a tailored marketing program. 4. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. If men and women respond similarly to marketing efforts for soft drinks, they do not constitute separate segments. 5. Actionable: Effective programs can be designed for attracting and serving the segments. AACSB: Written and oral communication 20 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 70) How can marketers segment by usage rate? Answer: Analyzing big data collected from numerous sources can help marketers identify the heavy users of their product or service. After these heavy users have been identified marketers can send them special promotion or coupons to encourage even more product consumption or use. AACSB: Written and oral communication Skill: Concept Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 71) Market targeting is ________. A) arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers B) dividing a market into distinct groups of buyers who have different needs and characteristics C) evaluating segment attractiveness and deciding how many and which segment(s) to serve D) marketing to buyers with separate marketing strategies or mixes E) differentiating the firm's market offering to create customer value Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 72) Which of the following is the reason a company may choose not to focus on the largest, fastest-growing segments? A) The smaller segments may be more profitable to the firm. B) The company may lack the skills to serve larger segments. C) The right size and growth characteristics don't match the company’s goals. D) The segments may be too competitive. E) All of the above Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 73) A segment is less attractive if it ________. A) is difficult for new entrants to enter B) is substantial C) is actionable 21 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) already contains many strong and aggressive competitors E) contains weak suppliers Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 74) Which of these factors will make a market segment less attractive to enter? A) easy entry by new competitors B) the segment is highly profitable C) there are only a few competitors D) the products do not have substitutes E) power of buyers is weak Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 75) A ________ consists of a set of buyers who share common needs or characteristics that the company decides to serve. A) marketing channel B) citizen-action group C) distribution channel D) customer franchise E) target market Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 76) ________ refers to a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. A) Individual marketing B) Local marketing C) Niche marketing D) Undifferentiated marketing E) Segmented marketing Answer: D AACSB: Analytical thinking Skill: Concept 22 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 77) Sanguine Services is a small company that uses a marketing strategy in which its limited resources are employed to target a large share of two small market segments. Sanguine most likely uses which of the following marketing strategies? A) individual marketing B) one-to-one marketing C) mass marketing D) concentrated marketing E) undifferentiated marketing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 78) A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each is known as ________. A) mass marketing B) differentiated marketing C) concentrated marketing D) individual marketing E) cross-marketing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 79) With a(n) ________ marketing strategy, a firm goes after a large share of one or a few smaller niches. A) individual B) mass C) concentrated D) differentiated E) local Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 23 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

80) Which of the following is true about the concentrated marketing strategy? A) Companies that rely on a few segments for all of their business will suffer if a segment turns sour. B) Concentrated marketing is not profitable for most firms. C) Niche marketing involves few risks for most firms. D) Concentrated marketing involves going after a small share of a large market. E) The Internet has limited the use and benefits of niche marketing. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 81) ________ is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. A) Mass marketing B) Trigger-based marketing C) Differentiated marketing D) Concentrated marketing E) Micromarketing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 82) Which of the following is a drawback of local marketing? A) Local marketing increases manufacturing costs by reducing the economies of scale. B) Local marketing requires specialization that is difficult to identify. C) Local marketing is not profitable for most small firms. D) Local marketing cannot accommodate the needs of modern buyers who are technology savvy. E) Local marketing almost always results in brand dilution. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 83) Andrew Levitt runs a retail store in Norristown. Andrew's store stocks cold weather products as Norristown mostly has sub-zero temperatures. Which of the following is evident here? A) local marketing 24 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) concentrated marketing C) segmented marketing D) mass marketing E) direct marketing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 84) A public relations firm tailors its advertising and promotional services according to the needs and preferences of specific customers. This exemplifies ________. A) trigger-based marketing B) mass marketing C) segmented marketing D) individual marketing E) concentrated marketing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 85) ________ is the process by which firms interact one-to-one with masses of customers to design products and services tailor-made to individual needs. A) Product diversification B) Micromarketing C) Mass customization D) Differentiated marketing E) Local marketing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 86) When order requests come in, the designers of Titus Furniture often go to a client's location to note their requirements, budget, and expected date of delivery. In this way, Titus Furniture is successful in tailor-making products for its customers. This is an example of ________. A) market diversification B) undifferentiated marketing C) mass customization D) differentiated marketing 25 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) trigger-based marketing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 87) Which of the following marketing strategies is most suitable for smaller firms with limited resources? A) mass marketing B) undifferentiated marketing C) niche marketing D) differentiated marketing E) one-to-one marketing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 88) Lamar Plastics makes plastic plates, cups, and eating utensils. Which market strategy should they use to market their products? A) one-to-one marketing B) undifferentiated marketing C) individual marketing D) local marketing E) trigger-based marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 89) GamaPix makes point-and-shoot cameras and handycams for amateur photographers and hobbyists. It also has a separate line of cameras dedicated to professional photographers. Additionally, it designs separate offers for each segment. Which of the following marketing strategies does GamaPix most likely use in this instance? A) mass marketing B) differentiated marketing C) individual marketing D) local marketing E) direct marketing Answer: B 26 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 90) Jean Malone, a market researcher, recently found that most people in Bradburg County purchase automobiles with predominantly functional designs and prefer darker colors. Which of the following marketing strategies should Jean most likely recommend to an automobile dealer interested in opening a dealership in Bradburg County? A) one-to-one marketing B) undifferentiated marketing C) segmented marketing D) individual marketing E) direct marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 91) Which of these is a recent successful example of a firm breaking into a market by focusing on a market niche? A) InterContinental Hotels Group (IHG) now operates more than 6,000 hotels worldwide under 16 brands. B) Tesla broke into an auto industry dominated by well-established, deep-pocketed competitors by first concentrating on the narrow, high-tech, all-electric car market niche. C) Spotify’s “music for every mood” focus. D) Cadillac Escalade’s focus on off-road performance E) Southeastern fast-food chain Bojangles’ Famous Chicken ‘n Biscuits targets everything it does toward the tastes and tendencies of its core of regulars. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Challenging 92) A catalog retailer in the United States has identified Black American professionals between the ages of 35 and 45 as a group of potential customers for its products. The retailer plans to direct its marketing efforts toward this group of consumers. Which of the following market segmentation variables did the catalog retailer most likely use? A) demographic B) psychographic 27 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) user status D) loyalty status E) usage rate Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate Refer to the following scenario to answer questions 93, 94, 95, 96, and 97. Ruben Delgado was making wooden pens and pencils, which had unique engravings, as a hobby until Simon Yoder recognized Ruben's talent. Simon immediately ordered 250 pens and pencils of various styles to be displayed in his shop's showcase. Within three months, the wooden pencils were a hit with all students! Ruben Delgado had never thought of marketing his talent, but Simon's enthusiasm and the recent sales were enough to change his mind. With limited resources, Ruben contacted three additional specialty shops within 100 miles that were situated near schools. He explained his manufacturing processes and engraving options to each. One of the engraving options included the local school mascots and logos. All three shop owners placed trial orders. Within two months, just prior to the holiday season, each shop owner placed an additional order. Ruben was ecstatic! "I figured business would slow down after that," Ruben stated, "but in February I was contacted by Elmore Distributors. At that point, I had to make a huge decision about how far I wanted to go with this business." Elmore Distributors provides products for school fundraisers in a seven-state area. Ruben was offered a two-year contract and immediate inclusion in Elmore's promotional flyer. Ruben Delgado accepted the offer and, along with it, the responsibility to produce thousands of wooden pens and pencils. "I had to get a grip on the magnitude of this project," Ruben added. He decided to place his major focus on the large contract with Elmore. However, to avoid placing his total emphasis with one customer, Ruben continued nurturing his four previously established accounts without targeting any additional customers. "At this point, I had set up an assembly line in a rented building," Ruben explained. "I had to hire three full-time employees to work the line while I managed the customer orders and purchased materials." Ruben paused. "But I can't take the Elmore project for granted. It might not always be there. I'll have to have a good alternate plan if that day comes." 93) In marketing his wooden pens and pencils to specialty-shop customers, Ruben was most likely using ________ marketing. A) mass B) trigger-based C) concentrated D) segmented E) individual Answer: C 28 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 94) If Ruben interacted one-to-one with his customers to design his products and services according to individual needs, he would be practicing ________. A) concentrated marketing B) trigger-based marketing C) undifferentiated marketing D) mass customization E) segmented marketing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 95) Engraving school logos and mascots on the pens and pencils is an example of local marketing. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 96) Ruben began practicing undifferentiated marketing after he accepted the contract with Elmore Distributors. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 97) Discuss how Ruben’s marketing strategy could be called micromarketing. Answer: Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and local customer segments. Rather than seeing a customer in every individual, micromarketers see the individual in every customer. Ruben’s business is manufacturing wooden pens and pencils with unique engravings. His primary focus is schools, and he gives them an opportunity to have their school mascot or logo engraved on the products. This strategy is a good example of micromarketing. AACSB: Analytical thinking 29 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate

98) Some firms may decide to pursue smaller markets if they do not have the resources to compete in the larger target market. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy

99) A market segment with powerful suppliers that can exert some control over prices is an attractive market to enter. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 100) A market segment is less attractive to enter if there are no substitute products that consumers might select. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 101) What are the major structural factors affecting long-run segment attractiveness? Answer: The number and strength of competitors, substitute products, the relative power of buyers, and the presence of powerful suppliers impact segment attractiveness. AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 30 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

102) What does a company focus on when using an undifferentiated marketing strategy? Answer: A company using an undifferentiated marketing strategy focuses on what is common in the needs of consumers rather than on what is different. It designs a product and a marketing program that will appeal to the largest number of buyers. AACSB: Written and oral communication Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 103) What does a company focus on when using a concentrated marketing strategy? Answer: When using a concentrated marketing (or niche marketing) strategy, instead of going after a small share of a large market, a company goes after a large share of one or a few smaller segments or niches. AACSB: Written and oral communication Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 104) Briefly explain mass customization. Answer: Mass customization is the process by which firms interact one-to-one with masses of customers to design products and services tailor-made to individual needs. AACSB: Written and oral communication Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 105) List some important factors that companies need to consider when choosing a markettargeting strategy. Answer: The availability of resources, the degree of product variability, market variability, and competitors' marketing strategies are some important factors that companies need to consider when choosing a market-targeting strategy. AACSB: Written and oral communication Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Easy 106) What are the major structural factors that impact a market’s attractiveness? Answer: Several major structural factors can affect long-run segment attractiveness. For example, a segment is less attractive if it already contains many strong and aggressive competitors or if it is easy for new entrants to come into the segment. The existence of many actual or potential substitute products may limit prices and the profits that can be earned in a segment. The relative power of buyers also affects segment attractiveness. Buyers with strong 31 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

bargaining power relative to sellers will try to force prices down, demand more services, and set competitors against one another—all at the expense of seller profitability. Finally, a segment may be less attractive if it contains powerful suppliers that can control prices or reduce the quality or quantity of ordered goods and services.. AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 107) Distinguish between undifferentiated and differentiated marketing strategies. Answer: Undifferentiated (mass) marketing refers to a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. On the other hand, differentiated (segmented) marketing refers to a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. AACSB: Analytical thinking Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 108) Briefly explain local and individual marketing. Answer: Local marketing involves tailoring brands and promotions to the needs and wants of local customer groups–cities, neighborhoods, and even specific stores. Advances in communications technology have given rise to new high-tech versions of location-based marketing. Increasingly, location-based marketing is going mobile, reaching on-the-go consumers as they come and go in key local market areas. In the extreme, micromarketing becomes individual marketing–tailoring products and marketing programs to the needs and preferences of individual customers. Individual marketing has also been labeled one-to-one marketing, mass customization, and markets-of-one marketing. More detailed databases, robotic production and flexible manufacturing, and interactive media such as mobile phones and the Internet have combined to foster mass customization. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 109) Explain how the growth of social media, the ubiquity of smartphones, and targeted direct media has raised concerns about potential targeting abuses. Answer: The internet and mobile marketing allow more precise targeting, letting the makers of questionable products or deceptive advertisers zero in on the most vulnerable audiences. Unscrupulous marketers can now send tailor-made, deceptive messages by email directly to millions of unsuspecting consumers. For example, the Federal Bureau of Investigation’s Internet Crime Complaint Center website alone received almost 800,000 complaints last year. AACSB: Application of knowledge; Written and oral communication 32 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 110) How can video games targeted to teen users be considered socially irresponsible targeting? Answer: Some critics worry that teens may become addicted to video games, playing them for days on end until they become exhausted. The World Health Organization has added “gaming disorder”—defined as “excessive and irrepressible preoccupation with video games, resulting in significant personal, social, academic, or occupational impairment for at least 12 months”—to the International Classification of Diseases. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 111) ________ refers to how a company will create differentiated value for targeted segments and what positions it wants to occupy in those segments. A) Targeted marketing B) Market segmentation C) Product positioning D) Value proposition E) Niche marketing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 112) Which of these is NOT one of the five winning value propositions? A) more for the same B) more for less C) same for less D) less for much more E) more for more Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 113) ________ show(s) consumer perceptions of a company's brands versus competing products on important buying dimensions. 33 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) Differentiation B) Positioning C) Market targeting D) Perceptual positioning maps E) Market segmentation Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 114) Which of these questions should be answered by a brand’s value proposition? A) Who are your customers? B) Where can I buy your brand? C) Why should I buy your brand? D) What is your competitive advantage? E) What type of marketing campaign do you have? Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 115) Through ________ differentiation, brands can be differentiated on features, performance, or style and design. A) services B) channel C) people D) product E) price Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 116) Even when competing offers look the same, buyers may perceive a difference based on ________ differentiation. A) image B) people C) price D) channel E) services 34 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 117) Harvey's Bookstore is a popular online bookstore that has differentiated itself through smooth-functioning delivery networks. This is an example of ________ differentiation. A) product B) image C) price D) channel E) people Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 118) Which of these value propositions is most closely aligned with the retail giant Target? A) more for the same B) more for less C) same for less D) less for much less E) more for more Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 119) Which of these criteria is NOT one that must be satisfied before a product difference is worth promoting? A) Important B) Preemptive C) Primary D) Affordable E) Profitable Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 35 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

120) Stores such as Walmart, PetSmart, and DSW Shoes use ________ positioning. A) more for the same B) more for less C) same for less D) less for much less E) more for more Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 121) ________ positioning involves meeting consumers' lower performance or quality requirements at a much lower price. A) More for less B) Less for much less C) Same for less D) More for more E) More for the same Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 122) Pierre's Mart, a grocery store in New Orleans, Louisiana, offers less merchandise selection and fairly low levels of service. Despite the lackluster service and limited selection of merchandise, customers still flock to Pierre's because it charges rock-bottom prices. Pierre's Mart most likely uses the ________ positioning. A) more for the same B) more for less C) same for less D) less for much less E) more for more Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 123) Watches and jewelry sales fell during the Covid-19 pandemic. What does this suggest about 36 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

brands pursuing more for more positioning? A) luxury good sales can be at risk during economic downturns B) consumer tastes and preferences can change overnight C) consumers no longer want luxury goods D) brand positioning is not worth the time and effort E) a less for less positioning strategy is better overall Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 124) A ___ _____shows the consumer perceptions of a firm’s brand versus those of competing products on important buying dimensions. A) positioning statement B) perceptual positioning map C) order-routine specification D) vision statement E) product specification Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 125) Positioning statements should be developed for . A) every product B) only the firm C) each brand D) generic products E) only luxury products Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 126) The Jay Group hires better employees than its competition by conducting effective searches and multi-tiered interviews. The company also provides high quality training to its employees, an aspect often neglected by competitors. The Jay Group is most likely to gain a strong competitive advantage through which type of differentiation? A) image differentiation 37 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) people differentiation C) services differentiation D) product differentiation E) channel differentiation Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 127) Symbols such as the McDonald's golden arches, the colorful Google logo, the Nike swoosh, or Apple's "bite mark" logo provide strong company or brand recognition and are indicative of ________ differentiation. A) people B) image C) channel D) services E) product Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 128) Ferrari sports cars claim superior quality, performance, and style. Ferrari provides "perfection" at a premium price to keep its brand image intact. Which type of value proposition does Ferrari most likely position its products with? A) more for the same B) more for more C) less for much less D) the same for less E) more for less Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 129) Which of the following is true with regard to the same for less value proposition? A) Discount stores and "category killers" rarely use the same-for-less value proposition. B) The same-for-less value proposition is mostly offered by marketers who sell higher quality upscale products or services. C) The same-for-less value proposition cannot generate profits. 38 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) Offering the same for less can be a powerful value proposition because everyone likes a good deal. E) The same-for-less positioning involves meeting consumers' lower performance or quality requirements at a much lower price. Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 130) While Jenkins Stationeries was selling branded stationery at premium prices, Pembroke Stationeries, a store across the street, was selling the same branded stationery at discount prices. Which of the following value propositions best describes Pembroke's product positioning? A) more for less B) more for the same C) same for less D) less for much less E) more for more Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 131) A product position is the way a product is defined by consumers on important attributes. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 132) To the extent that a company can differentiate and position itself as providing superior customer value, it gains competitive advantage. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 133) Positioning a brand typically takes a short time. Answer: FALSE 39 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 134) Firms should avoid abrupt changes in their brand position since it can confuse consumers. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 135) Companies find it as easy to come up with a good positioning strategy as to execute it. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 136) Briefly list some dimensions that a company can use to differentiate itself or its market offering. Answer: Companies can differentiate on the basis of product, services, channel, people, image and other dimensions. AACSB: Written and oral communication Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 137) What does it mean for a firm to have a competitive advantage? Answer: A competitive advantage over competitors gained by offering greater customer value either by having lower prices or providing more benefits that justify higher prices. Companies that position products according to their value proposition and then live up to their claims can gain a competitive advantage in their target market. AACSB: Written and oral communication Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 138) How do firms practicing channel differentiation gain competitive advantage? Answer: Firms that practice channel differentiation gain competitive advantage through the way they design their channel's coverage, expertise, and performance. 40 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Written and oral communication Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy 139) What is product position? What functions do perceptual positioning maps serve? Answer: A product position is the way a product is defined by consumers on important attributes–the place the product occupies in consumers' minds relative to competing products. Products are made in factories, but brands happen in the minds of consumers. Consumers position products with or without the help of marketers. But marketers do not want to leave their products' positions to chance. They must plan positions that will give their products the greatest advantage in selected target markets, and they must design marketing mixes to create these planned positions. In planning their differentiation and positioning strategies, marketers often prepare perceptual positioning maps that show consumer perceptions of their brands versus competing products on important buying dimensions. AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate 140) How can people differentiation give a firm a competitive advantage? Answer: Companies can also gain a strong competitive advantage through people differentiation—hiring and training better people than their competitors do. People differentiation requires that a company select its customer-contact people carefully and train them well. For example, East Coast supermarket chain Wegmans has long been recognized as a customer service champ with a cult-like loyalty among its shoppers. The secret to its extraordinary customer service lies in its carefully selected, superbly trained, happy employees, who personify Wegmans’s commitment to customers: “Every Day You Get Our Best.” AACSB: Analytical thinking Skill: Concept Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Moderate Quantitative Questions 1) One estimate shows that by 2026 over 25% of the population will spend at least one hour a day in the metaverse. What is the expected number of people that will be doing this in 2026 if it is currently 2023 and the current global population is 8.05 billion with an expected growth rate of 6% per year? A) 8.88 billion B) 9.59 billion C) 2.4 billion 41 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) 10.02 billion E) 10.21 billion Answer: C; You compute this by taking 25% of the future population which is Future population = current population (1 + growth rate)n, where n = number of years of growth. So, .25 x (8.05 x (1.06)3 = 2.4 billion. AACSB: Analytical thinking Skill: Application Objective: LO 7.1: Define the major steps in designing a customer value–driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Difficulty: Challenging 2) Assume Retail Firm X has 45 stores that have an average of 65,000 square feet of retail space. If the firm employs 88 people per store, how many employees will Retail Firm X have if they add 9 new stores next year? A) 4,752 employees B) 4,960 employees C) 3,960 employees D) 4,952 employees E) 5,523 employees Answer: A; You compute the answer by multiplying the total number of stores (45 + 9) x 88 employees per store = 4,752 employees. AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 3) Burger King’s geofence campaign against McDonalds generated a 27-to-1 return on investment. How much did Burger King make if the campaign cost them $23.7 million? A) $395.2 million B) $411.5 million C) $639.9 million D) $589.4 million E) $23.9 million Answer: C; You can compute this answer by multiplying $23.7 x 27 = $639.9 million. AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Easy 4) Women are the primary breadwinner in 49% of U.S. households. How many women does this represent if the total number of U.S. households is 122,354,000? A) approximately 30 million B) approximately 40 million C) approximately 50 million D) approximately 60 million E) approximately 70 million Answer: D; You compute this answer by multiplying 122,354,000 x .49 = 59,953,460, or 42 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

approximately 60 million. AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate 5) A Shakalo home costs $62,000 and targets the tiny home consumer market. How much is the per square foot cost of a Shakalo home that is 20 feet long and 8.5 feet wide? A) $184.12 B) $211.87 C) $291.74 D) $338.65 E) $364.71 Answer: E; You compute this by dividing the cost of $62,000 by the square feet which is 20 x 8.5 = 170 square feet. So, $62,000/170 = $364.71 per square foot. AACSB: Analytical thinking Skill: Application Objective: LO 7.2: Discuss the major bases for segmenting consumer and business markets. Difficulty: Moderate Use the following information to answer questions 6, 7, and 8. Jazmah Industries received a patent on their new ozone generator. The product will sell for $485, and it will clean the air inside a home and eliminate 95% the pollution particles inside the home. Jazmah’s market research shows that there are 121 million homes in North America. The firm believes an aggressive marketing campaign focusing on heavily polluted regions of the country will allow them to get about 30% of this market. Their research shows that about 45% of the houses are in heavily polluted areas. 6) How many houses are in Jazmah’s target market? A) 54.45 million B) 121 million C) 36.3 million D) 16.34 million E) 8.76 million Answer: A; You compute the answer by multiplying 121 million x .45 = 54.45 million homes. AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 7) How many units does Jazmah Industries expect to sell? A) 54.45 million B) 121 million C) 36.3 million D) 16.34 million E) 8.76 million 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: D; You compute the answer by multiplying 121 million x .45 x .30 = 16.34 million homes. AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Moderate 8) How much revenue does Jazmah Industries expect to earn? A) $792,247,000 B) $7,922,475,000 C) $4,115,750,000 D) $3,165,784,000 E) $2,235,512,000 Answer: B; You compute the answer by multiplying 121 million x .45 x .30 x $485 = $7,922,475,000. AACSB: Analytical thinking Skill: Application Objective: LO 7.3: Explain how companies identify attractive market segments and choose a market-targeting strategy. Difficulty: Challenging 9) Firm XYX has 23% of the market for their product. The total market is estimated to be worth $225 million, and it is growing by 5% a year. Firm XYX believes they can design a campaign that will allow them to service about 28% of the market in three years. How much does Firm XYX expect to earn in three years? A) $59.41 million B) $63.00 million C) $72.94 million D) $76.19 million E) $80.00 million Answer: C; You need to compute the market size in three years and then multiply that by .28. So, $225 (1.05)3 = $260.5 x .28 = $72.94 million AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Challenging 10) Annual jewelry sales fell by 25% during the COVID-19 pandemic. How much revenue did jewelry sellers lose due to the pandemic if 2019 total industry revenue was $330 billion? A) $42.1 billion B) $111.4 billion C) $64.3 billion D) $247.5 billion E) $82.5 billion Answer: E; You compute this by multiplying 2019 revenue of $330 billion x .25 = $82.5 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

billion. AACSB: Analytical thinking Skill: Application Objective: LO 7.4: Discuss how companies differentiate and position their products for maximum competitive advantage. Difficulty: Easy

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 8 Products, Services, and Brands: Building Customer Value 1) A(n) _________includes more than just a tangible object, such as cars, clothing, or smartphones. A) product B) event C) idea. D) intangible activity E) service Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 2) ________ are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. A) Liabilities B) Services C) Brands D) Consumer products E) Specialty products Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 3) A service includes all of the following EXCEPT____ A) airline travel B) banking C) a hotel D) wireless communication E) a bathing suit Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy

4) A market offering includes everything from pure tangible goods to pure services, as well as combinations of goods and services. Which of the following is NOT a product or service? A) breakfast cereal B) rental car C) free concert D) shoes E) haircut Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

5) are market offerings with a strong sensory or emotional component that plays out over time. A) Customer experiences B) After-sale services C) Core benefits D) Warranties E) Features Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 6) Which of the following is a goods-and-services combination? A) a bicycle B) a milk shake at an ice cream store C) chocolate chips D) a train ride E) a music lesson Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

7) A person buying lipstick buys more than lip color. Charles Revson of Revlon saw this early: “In the factory, we make cosmetics; in the store, we sell hope.” This example answers the following question. A) What is the buyer really buying? B) What is the exchange value? C) What is co-branding? D) Who is the customer? E) What should the product support include? Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 8) If a consumer purchases a new "smart" television which can connect to services like Netflix and Pandora, what is the core customer value involved? A) connection to entertainment and information B) state-of-the-art technology C) slick and attractive packaging D) brand name E) tech support and warranty Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

9) When consumers buy an Airstream, the company and its dealers give buyers a warranty and quick repair services when needed. On the Airstream Owners Hub, customers can shop for accessories ranging from an OXO Airstream Drawer Storage Bundle and an Airstream Roof Locker Dish Rack by YouCopia to an Airstream-branded license plate frame and plastic pink flamingos to complete the retro look. In addition, owners can access financial services and learn about the on-the-road lifestyle at the Airstream Academy. This is an example of _______. A) features B) core benefits C) service features D) an augmented product E) styling Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 10) When developing products, marketers first must identify the ________that consumers seek from the product. A) core customer value B) accessories C) style D) augmented product features E) customer service benefits Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

11) Industrial products refer to all of the following EXCEPT________. A) products purchased by consumers for further processing or for use in conducting a business B) products and services bought by final consumers for personal consumption C) primarily intangible offerings from marketers D) raw materials as well as manufactured materials and parts E) products that aid in the consumer's production or operations, including installations and accessory equipment Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy

12). Life insurance and Red Cross blood donations are examples of _____ A) Shopping products B) Convenience products C) Unsought products D) Capital items E) Supplies and repair services Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 13) The consumer has little product awareness or knowledge (or if aware, little or even negative interest) of __________products A) unsought B) specialty C) convenience D) luxury E) shopping Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy

14) Erica wants to replace her old washing machine with a new one. In order to get the maximum value for her money, she plans to spend substantial time and effort in gathering information and making product comparisons before making the actual purchase. In this instance, Erica is planning to buy a(n) ________ product. A) convenience B) unsought C) specialty D) shopping E) exclusive Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

15) A hand-tooled, unique leather purse by a leathercrafter from Texas is an example of a ________. A) convenience product B) capital item C) service D) specialty product E) product attribute Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

16) ________ are consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a notable purchase effort. A) Specialty products B) Convenience products C) Unsought products D) Shopping products E) International products Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 17) ________ are the major marketing factors in the sale of most manufactured materials and parts. A) Branding and advertising B) Price and service C) Sales promotion and advertising D) Branding and packaging E) Public relations and brand management Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy

18) A(n)_______is a product bought by organizations for further processing or for use in conducting a business. A) maintenance product B) convenience product C) capital item D) specialty items E) industrial product Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 19) Installations, machines on the factory floor, and accessory equipment are examples of ________. A) supplies B) capital items C) raw materials D) manufactured parts E) supplies and services Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

20) Tennis superstar and entrepreneur Serena Williams earned $45 million last year from endorsements for brands ranging from Nike and Gatorade to Beats by Dre, Pepsi, and Chase Bank. Williams herself has become a marketable brand. She recently launched a fashion line—S by Serena—inspired by her own personal model of femininity, strength, and authenticity. “I want to be the brand,” she says, “instead of just being the face.” This is an example of A) place marketing B) person marketing C) idea marketing D) social marketing E) organization marketing Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

21) Outdoor apparel and gear marketer Patagonia does little or no advertising for specific products. Instead, its marketing promotes the company’s environmental purpose and values, whether it’s print ads promoting responsible consumption or an activist social media campaign to save the world’s public lands. When someone buys something from Patagonia, “we want to make sure... they understand why we exist as a company, Patagonia’s marketing is about more than just selling products. It’s about “building a movement” based on the values it shares with its communities. Patagonia is an example of ______marketing A) person B) organization C) social D) place E) idea Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy

22) Tourism Ireland tells travelers to “Fill your heart with Ireland—discover heart-warming moments and spectacular sights.” It tells businesses, “Ireland, right place right time—our people and your business, a winning combination.” This is an example of ______marketing A) place B) celebrity C) idea D) social E) brand Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 23) Elmo Inc., a Michigan-based manufacturer of athletic shoes, uses professional athletes in its ad campaigns to help sell its products. This is an example of ________ marketing. A) person B) place C) social D) organization E) internal Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy

24) Many companies support ideas they believe in. Microsoft’s “Make What’s Next” campaign encourages girls to enter tech and science fields. The company promotes the program with inspirational ads, social media videos and events, and a dedicated website. This exemplifies ________. A) organization marketing B) price marketing C) place marketing D) social marketing E) person marketing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

Refer to the scenario below to answer questions 25-27. Ruben Delgado built his enterprise on the faithful patronage of four specialty shops and a large contract from Elmore Distributors. But after two years, the maker of novelty pens and pencils had to rethink his strategy when his contract with Elmore ended. Ruben built a company reputation on the manufacturing and distribution of a variety of wooden writing utensils with customized engravings. Specialty shops loved to display the products in their fancy, lighted showcases, but such specialty shops alone were not profitable. Ruben Delgado established a brand name, known merely as Delgado, and decided to expand on it. Ruben extended his writing utensil lines to include quills, felt-tip pens, and multiple-cartridge pens that write in different colors. He even added a line of various grades of personalized stationery and business cards. Perhaps Ruben's biggest added touch, however, was the addition of two salespeople who would work to explain the diverse array of products offered by Delgado, as well as nurture existing accounts. "We make an excellent product," Ruben Delgado stated, "and we honor a good guarantee on everything we sell. But let's face it–we face hundreds of competitors! We need Delgado representatives out there to help prospects understand what they should demand in something as simple as a writing tool." The Delgado brand was fast-becoming synonymous with top-notch customer service. Part of the purchase package brought personal visits from the Delgado representative, before the purchase and long after. 25) An easier, more comfortable, more stylish transfer of thought onto paper refers to the ________ of Ruben's offerings. A) tangible element B) core customer value C) actual product D) augmented product E) service variability Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Challenging

26) Which type of product does Delgado manufacture? A) industrial B) convenience C) specialty D) shopping E) unsought Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Challenging 27) How does Ruben Delgado’s company bring value to its customers through its products and services? Answer: Products are a key element in the overall market offering. Marketing mix planning begins with building an offering that brings value to target customers. This offering becomes the basis on which the company builds profitable customer relationships. A company’s market offering may include both tangible goods and services. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services Difficulty: Moderate 28) What is place marketing? Provide an example. Answer: Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places. Cities, states, regions, and even entire nations compete to attract tourists, new residents, conventions, and company offices and factories. For example, Detroit’s city website celebrates Detroit as “America’s Great Comeback City” and promotes the best places to eat, things to do, and events to attend. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

29) Can ideas be marketed? Answer: Ideas can be marketed. In one sense, all marketing is the marketing of an idea, whether it is the general idea of brushing your teeth or the specific idea that Crest toothpastes “improve the health of your smile.” Here, however, we narrow our focus to the marketing of social ideas. This area has been called social marketing and consists of using traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well-being. AACSB: Analytical thinking Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 30) Define services. Provide an example. Answer: Services are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in a customer’s the ownership of anything. Examples include banking, hotel, airline travel, retail, wireless communication, and home-repair services. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 31) Describe social marketing programs. Provide an example. Answer: Social marketing programs cover a wide range of issues. The Ad Council of America (www.adcouncil.org), for example, has developed dozens of social advertising campaigns involving issues ranging from health care, education, environmental sustainability, and diversity and inclusion to preventing teen bullying and confronting sexual harassment. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 32) How do consumers perceive products? Answer: Consumers see products as complex bundles of benefits that satisfy their needs. When developing products, marketers first must identify the core customer value that consumers seek from the product. They must then design the actual product and find ways to augment it to create customer value and a full and satisfying brand experience. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 17 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

33) What are convenience products? Answer: Convenience products are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort. Examples include laundry detergent, soft drinks, and fast food. Convenience products are usually low priced, and marketers place them in many locations to make them readily available when customers need or want them. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 34) What are shopping products? Answer: Shopping products are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. When buying shopping products and services, consumers spend much time and effort in gathering information and making comparisons. Examples include furniture, clothing, major appliances, and hotel services. Shopping product marketers usually distribute their products through fewer brick-and-mortar and online outlets but provide deeper sales support to help customers in their comparison efforts. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 35) Describe specialty products? Answer: Specialty products are consumer products and services with unique characteristics or brand identifications for which a significant group of buyers is willing to make a special purchase effort. Examples include specific brands of cars, high-priced photography equipment, designer clothes, gourmet foods, and the services of medical or legal specialists. A Lamborghini luxury automobile, for example, is a specialty product because buyers are usually willing to travel great distances to buy one. Buyers normally do not compare specialty products. They invest only the time needed to reach and interact with brick-and-mortar and online dealers carrying the wanted brands. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 36) Explain the difference between a consumer product and an industrial product. Include an example. Answer: The distinction between a consumer product and an industrial product is based on the purpose for which the product is purchased. If a consumer buys a lawn mower for use around home, the lawn mower is a consumer product. If the same consumer buys the same lawn mower 18 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

for use in a landscaping business, the lawn mower is an industrial product. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate

37) Products and services fall into two broad classes based on the types of consumers that use them. Name these two broad classes and describe how they are different from each other. Answer: The two broad classes are consumer products and industrial products. Consumer products and services–those bought by final consumers–are usually classified according to consumer shopping habits. Consumer products include convenience products, shopping products, specialty products, and unsought products. Industrial products, on the other hand, are those that are purchased for further processing or for use in conducting a business. These products include the three broad categories of materials and parts, capital items, and supplies and services. AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 38) Product quality has two dimensions: _________ A) level and consistency B) design and style C) price and features D) customer value and core benefits E) service and warranties Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging 39) ________ is an approach in which all the company's people are involved in constantly improving the quality of products, services, and business processes. A) Business intelligence B) Quality function deployment C) Total quality management D) Brand equity management E) Product positioning Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 40) Features are a competitive tool for differentiating a company's product from competitors' products. Which question are companies LEAST likely to ask in a survey of buyers regarding product features? 20 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) Which features could we add to improve the product? B) Which specific features of the product do you like most? C) How much would (a certain new feature) be worth to you? D) Which features of the product do you like the least? E) How do you like the product? Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy

41) ________refers to freedom from defects and consistency in delivering a targeted level of performance. A) Conformance quality B) Good design C) Performance quality D) Quality level E) Return-on-quality Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 42) Which of the following questions is most important for product designers to consider while developing a product? A) Which specific features of the product do customers like most? B) How does the product appear to buyers? C) What are the product's technical specifications? D) How would customers use and benefit from the product? E) How can the product be packaged to stimulate instant purchase? Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate

43) Increased competition and clutter on retail store shelves means that ______must now perform many sales tasks—from attracting buyers to communicating brand positioning to closing the sale. A) benefits B) design C) line stretching D) packaging E) customer experience Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 44) PopSockets, those back-of-the-phone buttons you see everywhere, didn’t start in a bigcompany design lab. They began when a philosophy professor’s iPhone earbuds kept getting tangled up in his pocket and he needed something to wrap his cord around. He observed that many others experienced this same problem, along with a boatload of other frustrations in handling and using their smartphones. So he invested his life savings, taught himself how to use 3-D design software, and set out to create a solution. After 100 tries, he came up with PopSockets. This is an example of all EXCEPT A) understanding customer needs B) shaping a customer’s product-use experience C) considering only the technical product and making a prototype D) designing a good product E) seeing how a product benefits a customer Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate

45) A _____is a name, term, sign, symbol, or a combination of these that identifies the maker or seller of a product or service A) product B) service C) package D) brand E) label Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy

46) All of the following are true about branding EXCEPT________. A) Brand names help consumers identify products. B) Brands say something about product quality and consistence C) Branding provides legal protection to sellers for unique features. D) Branding is the basis for stories about special product qualities E) Branding does not help the seller segment markets Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 47) A ________ is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outlets, or fall within given price ranges. A) product line B) line extension C) private brand D) multibrand E) new brand Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 48) _____ involves adding more items within the present range of a line. A) Product line stretching B) Product line depth C) Product line conformance D) Product line filling E) Packaging Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate

49) ________ occurs when a company lengthens its product line beyond its current range. B) Brand extension C) Product line stretching D) Product line filling E) Branding Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 50) King Inc., an automobile manufacturer based in Idaho, recently added two new models to its existing line of trucks in order to increase profits and satisfy dealers. This is an example of ________. A) line filling B) social marketing C) market diversification D) negative brand equity E) person marketing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 51) Google Nest began with a single smart thermostat that monitored and efficiently controlled home heating and cooling and then quickly added the Nest Protect smoke and carbon monoxide alarm. Next came a full line of Nest home security devices, including Nest Hello doorbell cameras, Nest Cam indoor and outdoor security cameras, and Nest key-free smart door locks, along with its Nest Aware subscription service that ties all the security devices together. More recently, the Google Nest line has expanded into smarthome connecting devices. This is an example of ________. A) product development B) product line stretching and filling C) branding D) organization marketing E) market diversification Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. 26 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Challenging

52) Mercedes wanted to capture entry-level buyers with its A-Class and C-Class sedans and GLA and GLB SUVs. With the A-Class sedan, “The virtue is in the value.” This is an example of ________. A) social marketing B) product line filling C) product line stretching D) internal marketing E) cannibalization Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging 53). Burger King’s new logo presents a simpler, friendlier, more modern retro vibe in a fresh identity—it’s warmer and more appetizing. Uber replaced a blocky logo unveiled only two years earlier—dubbed the “smushed eyeball” by some observers—with a simpler one consisting of its name in white on a black background. Most logo changes focus on creating all of the following EXCEPT ________: A) simpler designs B) brighter and more modern designs C) designs that present well on digital screens D) static symbols on a printed page, package, or TV ad E) designs that appeal to diverse audiences Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging 54) Product mix ________ refers to the number of different product lines the company carries. A) length B) height C) width D) consistency E) depth Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 28 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

55) The first step in designing support services is to ____ A) survey customers to assess the value of current services B) offer new products C) survey the competition D) extend the product line E) offer low prices Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 56) Product mix ________ refers to the number of versions offered for each product in the line. A) length B) depth C) height D) width E) consistency Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 57) Ford Motors intends to drop sedans altogether to focus on a future where it sells only SUVs and trucks. And GM recently dropped several long-established sedan models as car-buyer preferences have shifted toward SUVs, crossovers, hatchbacks, and trucks. This example shows that companies have to ____ A) streamline their product mix B) introduce new products C) maintain marginally performing product lines D) add product width E) add product length Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy

58) A well-known cosmetic company in New York City added new product lines in order to increase its business. In other words, it ________. A) lengthened its existing product line B) decreased its product line consistency C) widened its product mix D) engaged in market diversification E) engaged in social marketing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate

Refer to the scenario below to answer questions 59-61. Ruben Delgado built his enterprise on the faithful patronage of four specialty shops and a large contract from Elmore Distributors. But after two years, the maker of novelty pens and pencils had to rethink his strategy when his contract with Elmore ended. Ruben built a company reputation on the manufacturing and distribution of a variety of wooden writing utensils with customized engravings. Specialty shops loved to display the products in their fancy, lighted showcases, but such specialty shops alone were not profitable. Ruben Delgado established a brand name, known merely as Delgado, and decided to expand on it. Ruben extended his writing utensil lines to include quills, felt-tip pens, and multiple-cartridge pens that write in different colors. He even added a line of various grades of personalized stationery and business cards. Perhaps Ruben's biggest added touch, however, was the addition of two salespeople who would work to explain the diverse array of products offered by Delgado, as well as nurture existing accounts. "We make an excellent product," Ruben Delgado stated, "and we honor a good guarantee on everything we sell. But let's face it–we face hundreds of competitors! We need Delgado representatives out there to help prospects understand what they should demand in something as simple as a writing tool." The Delgado brand was fast-becoming synonymous with top-notch customer service. Part of the purchase package brought personal visits from the Delgado representative, before the purchase and long after. 59) The new felt-tip pens, multiple-cartridge pens, and quills offered by Ruben Delgado are examples of ________. A) product line filling B) multibranding C) megabranding D) product line inconsistencies E) co-branding Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging

60) The product mix consists of all the product lines and items that Ruben Delgado’s company offers for sale. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 61) What are Ruben’s product-mix options for defining his company’s product strategy? Answer: Product mix dimensions provide the handles for defining the company’s product strategy. Ruben can increase his business in four ways. He can add new product lines, widening its product mix. In this way, its new lines build on the company’s reputation in its other lines. A company can lengthen its existing product lines to become a more full-line company. He can add more versions of each product and thus deepen its product mix. Finally, he can pursue more product line consistency—or less—depending on whether he wants to have a strong reputation in a single field or in several fields. AACSB: Application of knowledge Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 62) Product line filling is overdone if it results in cannibalization and customer confusion. Answer: TRUE Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy

63) Ride provider Lyft added Lyft Lux (“add a little luxury to your ride and arrive in style”). This is an example of stretching a product line upward Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 64) Product line length refers to the total number of items a company carries within its product lines. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 65) A company's product mix has four important dimensions: width, length, depth, and consistency. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 66) How does branding help buyers? Answer: Branding helps buyers in many ways. Brand names help consumers identify products that might benefit them. Brands also say something about product quality and consistency– buyers who always buy the same brand know that they will get the same features, benefits, and quality each time they buy. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate

67) Describe product line stretching. Provide an example. Answer: Product line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways. Companies located at the upper end of the market can stretch their lines downward. A company may stretch downward to plug a market hole or to respond to a competitor’s attack on the upper end. Or it may add lower-end products to attract new entry-level buyer segments. AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 68) Describe product quality. Answer: Product quality is one of the marketer’s major positioning tools. Quality affects product or service performance; thus, it is closely linked to customer value and satisfaction. In the narrowest sense, quality can be defined as “no defects.” But most marketers go beyond this narrow definition. Instead, they define quality in terms of creating customer value and satisfaction. The American Society for Quality defines quality as the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. Similarly, Siemens defines quality this way: “Quality is when our customers come back and our products don’t.” AACSB: Analytical thinking Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 69) Name and describe the principal decisions companies make regarding their individual products and services. Answer: Individual product decisions involve: 1) product attributes, 2) branding, 3) packaging, 4) labeling, and 5) product support services. Product attribute decisions involve product quality, features, and style and design. Branding decisions include selecting a brand name and developing a brand strategy. Package decisions often include designing labels, which identify, describe, and possibly promote the product. Labeling identifies the product and may describe and promote the product and brand. Companies also develop product support services that enhance customer service and satisfaction and safeguard against competitors. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 70) Describe the principal functions of packaging. Answer: Packaging involves designing and producing the container or wrapper for a product. 34 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Traditionally, the primary function of the package was to hold and protect the product. In recent times, however, packaging has become an important marketing tool as well. Increased competition and clutter on retail store shelves means that packages must now perform many sales tasks–from attracting buyers, to communicating brand positioning, to closing the sale. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate

71) Briefly describe the history of legal concerns about packaging and labels. Answer: The Federal Trade Commission Act of 1914 held that false, misleading, or deceptive labels or packages constitute unfair competition. Labels can mislead consumers, fail to describe important ingredients, or fail to include needed safety warnings. As a result, several federal and state laws regulate labeling. The most prominent is the Fair Packaging and Labeling Act of 1966, which set mandatory labeling requirements, encouraged voluntary industry packaging standards, and allowed federal agencies to set packaging regulations in specific industries. The Nutritional Labeling and Educational Act of 1990 requires sellers to provide detailed nutritional information on food products, and recent sweeping actions by the Food and Drug Administration (FDA) regulate the use of health-related terms such as low fat, light, high fiber, and organic. AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 72) What are the different dimensions of a company's product mix? Briefly describe each dimension. Answer: A company's product mix has four important dimensions: width, length, depth, and consistency. Product mix width refers to the number of different product lines the company carries. Product mix length refers to the total number of items a company carries within its product lines. Product mix depth refers to the number of versions offered for each product in the line. Finally, 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. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Moderate 73) Service ________ means that services cannot be seen, tasted, felt, heard, or smelled before they are bought. A) inseparability B) variability C) intangibility D) perishability E) heterogeneity Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Easy 36 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

74) Some marketers call for adding three more Ps to the marketing mix to create the 7Ps of services marketing mix. Which of the following is NOT included in the 7Ps of services marketing? A) people B) process C) physical evidence D) promotion E) platform Answer: E AACSB: Analytical thinking Skill: Critical Thinking Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 75) Tristan and Juliet, a newly married couple who intend to go to Egypt for their honeymoon, bought a Europe travel package on Jizo Inc., an online travel site. As they have never seen Europe or used the services of Jizo before, they were largely dependent on other customers' feedback and signals for service quality. Which of the following characteristics of service is highlighted in this instance? A) service intangibility B) service inseparability C) service variability D) service perishability E) service distinction Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Challenging 76) A flight takes off with 20 empty seats. This is an example of service ________because services cannot be stored for later use. A) intangibility B) inseparability C) variability D) perishability E) heterogeneity Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 37 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

77) People undergoing cosmetic surgery cannot see the result before the purchase. This is an example of service ______ A) intangibility B) inseparability C) variability D) perishability E) heterogeneity Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Easy 78) The customers of Parry's Hair Salon have noticed that the quality of a haircut depends on who provides it as well as when, where, and how the service is provided. Which of the following characteristics of service is evident in this instance? A) service intangibility B) service inseparability C) service perishability D) service variability E) service distinction Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Challenging 79) To reduce uncertainty, buyers look for signals of ______. They draw conclusions from the place, people, price, equipment, and communications that they can see. The service provider’s task is to make the service tangible. A) service quality B) perishability C) variability D) intangibility E) inseparability Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Easy

80) Frederico rents storage space to college students who go home for the summer but do not want to haul all of their property home and back. The business is profitable during the summer months, but when the storage space is unoccupied in the off-season, Frederico loses money. Which of the following characteristics of service is most likely the source of Frederico's problem? A) intangibility B) perishability C) inconsistency D) variability E) inseparability Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Challenging 81) According to the service profit chain, superior internal service quality results in ________. A) lesser service value B) increased word-of-mouth sales C) reduced after-sale services D) more satisfied, loyal, and hardworking employees E) negative brand equity of newly launched products Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 82) The service profit chain includes internal service quality, satisfied and productive service employees, greater service value, healthy service profits and growth, and ________. A) higher market share B) better paid employees C) satisfied and loyal customers D) increased manufacturing efficiency E) higher morale Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate

83) Internal service quality does NOT include A) superior employee selection B) superior employee training C) yield management D) a high-quality work environment E) strong support for those dealing with customers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 84) ________ refers to the design of pricing, advertising, and other strategies for better matching service capacity and demand. A) Yield management B) Service differentiation C) Service portfolios D) Service perishability E) Traditional external marketing Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 85) Emirates added first-class suites to its Boeing 777 airplanes featuring door-to-ceiling sliding doors, closets for hanging clothes, wireless tablets with 2,500 channels, 32-inch TV screens, personal minibars, and “inspiration kits” containing moisturizing pajamas and skin care kits. This example shows that service marketers can differentiate their offering by ________. A) having a lower price than their competitors B) designing a superior delivery process C) offering a stellar physical environment in which the product is delivered D) developing innovative features that set the company’s offering apart E) adopting a recognizable image Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate

86) Service companies can differentiate their service delivery by ________. A) using symbols and logos B) instituting a hierarchical organizational structure C) offering innovative product features D) de-emphasizing branding E) having more able and reliable customer-contact people Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 87) Apollo Couriers, a company providing international express mail services, has a proactive customer communications team. The primary job of this team is to identify situations that led to customer dissatisfaction, and then provide quick remedies to fix the problems. To a great extent, this has helped Apollo in winning customer loyalty. In this instance, Apollo has benefitted from ________. A) product differentiation B) good service recovery C) multibranding D) place marketing E) co-branding Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Challenging 88) Service productivity can be increased by hiring new employees who will work harder, by giving up some quality, or by ________. A) using technology more effectively B) outsourcing portions of the process to other firms C) creating more self-serve opportunities for customers D) reducing the number of products offered E) increasing the price on some of the product line Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate

89) Unlike product manufacturers who can adjust their machinery and inputs until everything is perfect, service quality will always vary, depending on the interactions between employees and customers. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 90) Today’s customers are increasingly able and willing to handle their own needs when empowered with technology. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 91) In a service business, the customer and the front-line service employee interact to co-create the service. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Easy 92) Airline passengers have nothing but a ticket and a promise that they and their luggage will arrive safely at the intended destination, hopefully at the same time. This is an example of service intangibility. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 93) Service companies can differentiate their service delivery by having more able and reliable customer-contact people. Answer: TRUE AACSB: Analytical thinking Skill: Concept 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Easy

94) Pushing too hard to increase productivity or cut costs can reduce a company’s longer-run ability to innovate, maintain service quality, and respond to consumer needs and desires Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Easy 95) Private not-for-profit organizations offer services through museums, charities, churches, colleges, foundations, and hospitals Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Easy 96) As competition and costs increase, and as productivity and quality decrease, what are the three major marketing tasks facing service companies in contemporary times? Answer: Today, as competition and costs increase, and as productivity and quality decrease, more service marketing sophistication is needed. Service companies face three major marketing tasks: They want to increase their service differentiation, service quality, and service productivity. AACSB: Application of knowledge Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 97) Define interactive marketing. Why is it considered an important skill for service marketers? Answer: Interactive marketing means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. In product marketing, product quality often depends little on how the product is obtained. But in services marketing, service quality depends on both the service deliverer and the quality of delivery. Service marketers, therefore, have to master interactive marketing skills. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate

98) What are the key service characteristics a company must consider when designing marketing programs? Briefly describe each characteristic. Answer: A company must consider four special service characteristics when designing marketing programs: intangibility, inseparability, variability, and perishability. Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled before they are bought. Service inseparability means that services cannot be separated from their providers, whether the providers are people or machines. Service variability means that the quality of services depends on who provides them as well as when, where, and how they are provided. Service perishability means that services cannot be stored for later sale or use. AACSB: Analytical thinking; Written and oral communication Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 99) Distinguish between the service profit chain and internal marketing. Answer: The service profit chain links service firm profits with employee and customer satisfaction. This chain consists of five links: internal service quality, satisfied and productive service employees, greater service value, satisfied and loyal customers, and healthy service profits and growth. On the other hand, internal marketing means that the service firm must orient and motivate its customer-contact employees and supporting service people to work as a team to provide customer satisfaction. Marketers must get everyone in the organization to be customer centered. In fact, internal marketing must precede external marketing. AACSB: Application of knowledge Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Challenging 100) How can service providers use a differentiated offer, delivery, and image to avoid competing solely on price? Answer: A service offer can include innovative features that set a company's offers apart from competitors' offers. Service companies can differentiate their service delivery by having more able and reliable customer-contact people, developing a superior physical environment in which the service product is delivered, or designing a superior delivery process. Services can also be differentiated through symbols and branding, by creating an image that sets a company's services apart from that of its competitors. AACSB: Analytical thinking Skill: Concept Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 46 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

101) For many companies, the value of the _____exceeds the value of all the tangible assets listed on their balance sheets A) product line B) label C) brand D) design E) product attributes Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 102) A brand has positive ______when consumers react more favorably to it than to a generic or unbranded version of the same product. A) differentiation B) brand equity C) value D) variability E) service delivery Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 103) BlueFin canned tuna has higher sales than its unbranded rival, even though the unbranded tuna costs $0.45 less per can than BlueFin tuna. BlueFin most likely has ________. A) an aggressive brand personality B) high brand equity C) no brand commitment D) negative brand equity E) low brand relevance Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate

104) Which of the following consumer perception dimensions measures brand strength? A) brand conformance B) brand consistency C) brand convenience D) brand extension E) brand relevance Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 105) To the world’s more than 2 billion monthly active Instagram users worldwide, the Instagram brand stands for something more than just a photo and video sharing service. Instagram stands for sharing important moments with friends through pictures as they happen. This is an example of (a) A) brand relationship B) brand knowledge C) dilution D) esteem E) brand strategy Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 106) Brand ________ refers to how much consumers know about the brand. A) esteem B) conformance C) differentiation D) relevance E) knowledge Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy

107) After a brief stay at a luxury hotel in Paris, Pamela noted that the hotel had kept every promise it made when she booked the room, meeting all her needs. She added that it was a "thoroughly comfortable and opulent experience." Ad agency group WWP’s Brand Asset Valuator measures brand strength along four consumer perception dimensions. Which dimension does this example illustrate? A) price B) esteem C) promotion D) differentiation E) knowledge Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Challenging 108) The fundamental asset underlying brand equity is_____, the value of the relationships that the brand creates. A) customer equity B) differentiation C) brand value D) relevance E) esteem Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 109) ____is the total financial value of a brand. A) Brand value B) Brand equity C) The product experience D) Service variability E) The service experience Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy

110) FedEx can position itself on features such as speed, reliability, quality, and convenience of package delivery. This is an example of the lowest level of positioning which is based on____. A) beliefs and values B) product benefits C) product attributes D) after-sale services E) brand equity Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 111) FedEx can talk about benefits such as the peace of mind in knowing that packages will be delivered where and when they must be. This is an example of positioning according to _____ A) desirable benefits B) good packaging C) service perishability D) strong beliefs and values E) product attributes Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 112) Gainville Inc. manufactures Android phones. Each new Gainville phone launch advances the cause of democratizing technology. Gainville, an expert in fostering customer community, engages customers at a deep, emotional level, and has been ranked one of the Breakaway Brands by the brand consultancy, Kendell Associates. Gainville is most likely positioned on ________. A) basic product attributes B) short-term benefits C) service variability D) self-image enhancement E) strong beliefs and values Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate

113) Brands like Disney, Apple, Nike, Coca-Cola, Starbucks, Google, and LEGO have achieved a high status level with many customers. Customers don’t just like these brands; they have strong emotional connections. This example shows all of the following EXCEPT A) Brands connect with consumers on an emotional level. B) Brands can inspire loyalty C) Branding can lead to a competitive advantage D) Brands are not positioned on beliefs and values E) Brands convey a promise to deliver certain benefits Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 114) Brand names should NOT be _____. A) distinctive B) easy to pronounce C) extendable D) capable of registration E) protected legally Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 115) Costco’s Signature products are an example of a ________. A) national brand B) support brand C) store brand D) generic brand E) manufacturer's brand Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate

116) Which of the following is true with regard to store brands? A) Store brands have been declining in popularity and strength for more than two decades. B) Store brands are also known as national brands. C) Store brands are created and owned by resellers of a product or service. D) Increasing consumer distrust toward store brands has led to a store-brand slump. E) Store brands are growing far slower than manufacturer's brands. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate 117) Some companies obtain the rights to use the names or symbols previously created by other manufacturers for a fee. This process is known as ________. A) multibranding B) positioning C) segmenting D) co-branding E) licensing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 118) ________ occurs when two established brand names of different companies are used on the same product. A) Market diversification B) Niche marketing C) Co-branding D) Licensing E) Cannibalization Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy

119) Which of the following is an advantage offered by co-branding? A) Manufacturers do not have to invest in creating their own brand names with co-branding. B) Co-branding allows retailers to sell exclusive products that cannot be purchased from competitors. C) Co-branding allows a company to expand its existing brand into a category it might otherwise have difficulty entering alone. D) Co-branding dilutes brand equity and increases the appeal of store brands. E) Co-branding does not involve complex legal contracts and licenses. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate 120) ________ occurs when a company introduces additional items in a given product category under the same brand name, such as new flavors, forms, colors, ingredients, or package sizes. A) Line extension B) Megabranding C) Interactive marketing D) Internal marketing E) Co-branding Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 121) ________ involves the use of a successful brand name for new or modified products in a new category. A) A line extension B) A product line C) A brand extension D) Co-branding E) Cannibalization Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy

122) Symmonds Inc., a company manufacturing breakfast cereals, has extended its special Crispo cereal brand into a full line of breakfast cereals plus protein shakes, fruit and sandwich spreads, butter, and doughnuts. This is an example of ________. A) line extension B) brand extension C) licensing D) co-branding E) cannibalization Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Challenging 123) Which of the following is a potential drawback of multibranding? A) Multibranding tends to decrease brand loyalty. B) Company resources are likely to be concentrated on a single brand. C) Multibranding curbs the growth opportunities of established brands. D) Each brand might obtain only a small market share, and none may be very profitable. E) Multibranding causes companies to refrain from product diversification. Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate 124) Which of the following strategies involves weeding out weaker brands and focusing marketing dollars only on brands that can achieve the number one or number two market share positions with good growth prospects in their categories? A) megabrand strategies B) niche marketing strategies C) social marketing strategies D) co-branding E) licensing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy

125) A brand extension extends a current brand name to new or modified products in a new category. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 126) Attributes are the most desirable level for brand positioning because competitors can easily copy attributes. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 127) A brand’s positioning will not take hold fully unless everyone in the company lives the brand. Answer: TRUE AACSB: Reflective thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 128) A company should strive to build a brand name that becomes identified with the product category, as Scotch Tape did. Answer: FALSE AACSB: Reflective thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 129) Co-branding occurs when retailers and wholesalers create their own store brands. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 56 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

130) Brand equity is the measure of the brand’s ability to capture consumer preference and loyalty. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 131) Multibranding offers a way to establish different features that appeal to different customer segments, lock up more reseller shelf space, and capture a larger market share. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 132) Briefly explain the concept of brand equity. Answer: Brand equity is the differential effect that knowing the brand name has on customer response to the product and its marketing. It's a measure of the brand's ability to capture consumer preference and loyalty. A brand has positive brand equity when consumers react more favorably to it than to a generic or unbranded version of the same product. It has negative brand equity if consumers react less favorably than to an unbranded version. AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate

133) What are the desirable qualities for a brand name? Answer: Desirable qualities for a brand name include the following: 1. It should suggest something about the product's benefits and qualities. 2. It should be easy to pronounce, recognize, and remember. 3. It should be distinctive. 4. It should be extendable. 5. The name should translate easily into foreign languages. 6. It should be capable of registration and legal protection. AACSB: Application of knowledge Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate 134) Describe store brands. Answer: National brands (or manufacturers’ brands) have long dominated the retail scene. In recent times, however, increasing numbers of retailers and wholesalers have created their own store brands (or private labels). Store brands have been gaining strength for decades, but recent years have seen a store-brand boom. AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Easy 135) What are the different brand sponsorship options available to manufacturers? Answer: A manufacturer has four sponsorship options. The product may be launched as a national brand (or manufacturer's brand), as when Samsung and Kellogg sell their output under their own brand names (the Samsung Galaxy tablet or Kellogg's Frosted Flakes). Or the manufacturer may sell to resellers who give the product a private brand (also called a store brand or distributor brand). Although most manufacturers create their own brand names, others market licensed brands. Finally, two companies can join forces and co-brand a product. AACSB: Written and oral communication Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate 136) Explain consistency of the product mix. Answer: 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. Colgate’s product lines are consistent insofar as they are consumer products that go through the same distribution channels. The lines are less consistent insofar as they perform different functions for buyers. 58 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate 137) A company has four choices when it comes to developing brands. Describe them. Answer: The company can introduce line extensions, brand extensions, multibrands, or entirely new brands. A line extension involves extending a current brand name to new forms, colors, sizes, flavors, etc. in one of the company's existing product categories. In contrast, a brand extension extends a current brand name to a new or modified product in a new product category. Multibranding involves introducing several brands within the same category. Finally a company may decide that a new brand name is needed, particularly if the power of an existing brand name is declining or the company is entering a new product category. AACSB: Analytical thinking Skill: Concept Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and managing their brands. Difficulty: Moderate Refer to the scenario below to answer questions 138-140. You don’t just rent a room through Airbnb, you buy into a “live-like-a-local” moment. “Airbnb has always been about unique travel,” says an Airbnb marketer. “Every hotel room in every hotel chain is the same. Airbnb is a home, and our stays are as different as the individual host.” The travel company takes its travel mantra to extremes with its “Airbnb Night At” program by which it transforms iconic locations into unforgettable one-night stays. The brand has curated one-nighters in fun and extraordinary places ranging from Dracula’s castle in Transylvania for Halloween, inside the Oscar Mayer “Wienermobile,” and a stay in a cable car suspended high above the Swiss Alps to an underwater night’s sleep with the sharks at a Paris aquarium and a sleepover in a VIP suite overlooking the home court in Chicago’s United Center, home of the Chicago Bulls (complete with layup lessons from Bulls icon Scottie Pippen). It even partnered with Mattel to create a Malibu Barbie Dreamhouse stay for Barbie’s 60th birthday. Although these “Night At” adventures are extremes, they emphasize Airbnb’s positioning as a creator of out-of-the- ordinary travel. “By casting these moments in time as synonymous with ‘travel,’” notes an industry analyst, “Airbnb is extending its brand identity.” 138) What does Airbnb use as the basis of its marketing strategy? Answer: Airbnb uses customer experiences as the basis of its marketing strategy. Customer experiences are market offerings with a strong sensory or emotional component that play out over time. Great experiences involve a careful management of a customer’s journey with the company, from beginning to end. The company’s core product or service may be just one part of the experience. AACSB: Application of knowledge Skill: Concept 59 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 139) Experiences have always been an important part of marketing for some companies. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 140) Airbnb doesn’t just arrange room rentals, it creates travel experiences for people looking to escape the humdrum daily surroundings. This example shows that______ A) many goods-and-services combinations are possible B) companies provide either goods or services, not both C) Airbnb only provides a pure tangible good—a room D) Airbnb provides only an intangible good-- “live-like-a-local E) Airbnb has the same market offerings as a hotel. Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate Quantitative Questions 1) Data show that 76.9% of the U.S. economy is service-based. How many dollars of U.S. GDP are generated by the service sector if 2021 GDP was $23 trillion? A) $14.54 trillion B) $17.69 trillion C) $18.24 trillion D) $19.57 trillion E) $21.68 trillion Answer: B; You compute this answer by multiplying the 2021 GDP of $23 trillion x .769 = $17.69 trillion. AACSB: Analytical thinking Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Easy 2) Airstream trailers are known for quality and reliability. In fact, over 75% of all Airstreams ever built are still on the road. How many Airstreams are still in use if the firm has sold an 60 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

average of 2,500 per year between January 1, 1936, and December 31, 2023? A) 125,000 B) 132,000 C) 155,000 D) 165,000 E) 220,000 Answer: D; The span of time covers 88 years x 2,500 per year x .75 = 165,000 Airstreams still on the road. AACSB: Analytical thinking Skill: Application Objective: LO 8.1: Define product and describe the major classifications of products and services. Difficulty: Moderate 3) Recent studies suggest that 55% of shoppers decide what brand to buy while shopping. How many consumers will make this brand decision assuming there a 225 million consumers in the U.S? A) 123.75 million B) 225 million C) 155.25 million D) 175.16 million E) 228.32 million Answer: A; You compute the answer by multiplying 225 million x .55 = 123.75 million. AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Easy 4) Company X is filling in its product line with some products that they hope attracts new customers, but they also know it will cannibalize existing sales. The new products will generate another $45 million in revenue, but Company X expects to lose about 1.5% of existing sales which were $762 million last year. What is the increase in revenue Company X expects to earn by filling its product line? A) $8.21 million B) $11.43 million C) $33.57 million D) $45.00 million E) $762.00 million Answer: C; You compute this answer by taking $45 million in extra revenue and subtracting out the revenue lost by people switching from existing products to new products. So, $45 million – (.015 x $762 million) = $33.57 million. AACSB: Analytical thinking Skill: Application 61 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging Use the following information to answer questions 5, 6, 7, and 8. Snack Company XYZ wants to expand production by adding some additional chip snacks to their product line. The expansion will require adding plant capacity which will increase fixed costs by $4 million per year. When the new items are introduced the company expects to see sales fall on existing products by about 1% since some consumers that already purchase their products will switch to the new flavors of chips. The lost sales of existing products is known as product cannibalism or erosion. Snack Company XYZ sells about 100 million bags of chips every year. Snack Company XYZ will sell the new snacks for $1.50 a bag and variable costs per bag are $0.70 a bag. Assume “new chips” ignores the units lost to cannibalism or existing customer switching to the new flavors. 5) How many bags of new chips will Snack Company XYZ need to sell in order to break even? A) 4,000,000 B) 5,000,000 C) 3,400,000 D) 4,200,000 E) 8,000,000 Answer: B; Fixed costs are incurred whether a firm produces or not. Snack Company XYZ will need to generate enough sales to cover the fixed costs. Every bag of chips sold will contribute ($1.50 - $0.70 = $0.80) $0.80 toward covering fixed costs. So, $4,000,000/$0.80 = 5,000,000 bags of chips is the break-even point. The formula is BE units = Fixed costs/(price – variable costs). AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging 6) How many dollars of new sales will Snack Company XYZ need to generate to break even? A) $6,500,000 B) $7,000,000 C) $7,500,000 D) $8,000,000 E) $8,500,000 Answer: C; Break Even units = Fixed costs/(price – variable costs). So, $4,000,000/$0.80 = 5,000,000 bags of chips x $1.50 per bag = $7,500,000. AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. 62 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Challenging 7) ) How many dollars of new sales will Snack Company XYZ need to generate to break even if they raise the price to $1.70 per bag? A) $6,500,000 B) $7,000,000 C) $7,500,000 D) $8,000,000 E) $8,500,000 Answer: E; Break Even units = Fixed costs/(price – variable costs). So, $4,000,000/$0.80 = 5,000,000 bags of chips x $1.70 per bag = $8,500,000. AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging 8) How many bags of new chips will Snack Company XYZ need to sell in order to break even when you consider the product cannibalism? A) 4,000,000 B) 5,000,000 C) 6,000,000 D) 7,000,000 E) 8,000,000 Answer: C; Fixed costs are incurred whether a firm produces or not. Snack Company XYZ will need to generate enough sales to cover the fixed costs. Every bag of chips sold will contribute ($1.50 - $0.70 = $0.80) $0.80 toward covering fixed costs. So, $4,000,000/$0.80 = 5,000,000 bags of new chips is the break-even point. The formula is BE units = Fixed costs/(price – variable costs). However, the firm also needs to recover lost sales of 1 million bags (100 million x 1%). So, total production = 5,000,000 + 1,000,000 = 6,000,000. AACSB: Analytical thinking Skill: Application Objective: LO 8.2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Difficulty: Challenging

9) Firm X hired a new employee to respond to social media queries or comments. The cost of the new hire was $65,000 including benefits. The response time to social media contacts went from an average of 12 minutes to 4 minutes. How much did it cost per comment to reduce the social media response time? Assume 50 comments per day and a 365 day year. A) $1.54 B) $2.11 C) $2.98 D) $3.56 63 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) $4.59 Answer: D; You divide the employee cost by the total number of comments. So, $65,000/(50 x 365) = $3.56 per comment. AACSB: Analytical thinking Skill: Application Objective: LO 8.3: Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Difficulty: Moderate 10) A retail grocery chain is considering developing its own store brand of canned vegetables. The chain’s current profit margin on canned vegetables is 1% on annual sales of $20 million. The store brand will sell for a lower price, but management believes consumers will buy more units, so they expect sales to be $23 million. In addition, the profit margin will increase to 1.3%. How much additional profit will the chain make if they make the switch, and their forecasts are accurate? A) $99,000 B) $150,000 C) $200,000 D) $299,000 E) $325,000 Answer: A; To compute this you need to compute future profits and subtract current profits. So, ($23,000,000 x .013) – ($20,000,000 x .01) = $99,000. AACSB: Analytical thinking Skill: Application Objective: LO 8.4: Discuss branding strategy—the decisions companies make in building and managing their brands. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 9 Developing New Products and Managing the Product Life Cycle 1) Which of these is a significant challenge presented by the product life cycle? A) increased expenses B) increased competition C) new product development D) evaluation of results E) recognizing the stages as a product goes through them Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 2) Acquisition refers to ________. A) the buying of a whole company, a patent, or a license to produce someone else's product B) an agreement between two or more commercial companies to produce a common product C) a partnership between two companies to produce a product in different countries by sharing risks D) investments made in a country's businesses by foreign citizens, often in the form of stocks E) the development of original products, product improvements, product modifications, and new brands through the firm's own product development strategies Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 3) Electron Corp. purchased Proton Corp. by buying all of its assets and ownership equity. This is an example of a(n) ________. A) new product development B) acquisition C) joint venture D) licensing contract E) divestment Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Moderate

4) Product improvements, product modifications, and original products can all be classified as ________. A) blueprints B) new products C) prototypes D) product extensions E) test products Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 5) Which of these is a common reason for new product failure? A) incorrect estimation of the market size B) low product development costs C) ineffective social marketing campaigns D) low selling prices of products E) patent ownership exclusively held by the company Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Moderate 6) A particular firm added three new products earlier this year to increase variety for customers. Two of the products failed to reach the minimal sales quota. Which of the following is LEAST likely to have been the cause of their failure? A) The products were priced too high. B) The products were advertised incorrectly. C) Competitors fought back harder than expected. D) Product research was too extensive. E) The product development costs were high. Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy

7) Which of these is needed for developing successful new products? A) focus on cutting costs B) understand your market C) offshore the manufacturing D) hiring a new sales force E) undercutting your competition Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Challenging 8) More than 30,000 new products are introduced every year. What percentage of them fail? A) 15% B) 45% C) 65% D) 75% E) 95% Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 9) Gerard Butler is a top level executive in the firm GGI Systems. His pet project that he knows will be successful did not generate positive results in its test market. What should he do now? A) conduct several more market tests B) go with his gut feeling and push for launch C) abandon the project due to limited consumer interest D) ask the marketing department to review their methodology E) find another firm willing to take on the challenge Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Challenging 10) A firm can obtain new products through acquisition or new product development efforts. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 11) Acquisition involves the purchase of a whole company, a patent, or a license to produce someone else's product. Answer: TRUE 3 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy

12) Roughly half of all new products introduced each year fail. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 13) Apple can attribute much of its success to new product development. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 14) New products sometimes fail because they are launched at the wrong time. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Easy 15) Explore common reasons for the failure of new products. What must be the goals for a company to create successful new products? Answer: Although an idea may be good, the market size may have been overestimated. Other possible reasons for failure include the following: the actual product was not designed as well as it should have been; the product may have been incorrectly positioned in the market, priced too high, or advertised poorly; a high-level executive might have pushed a favorite idea despite poor marketing research findings; the costs of product development were higher than expected; or competitors fought back harder than expected. To create successful new products, a company must understand its customers, markets, and competitors and deliver superior value to customers. AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Moderate 16) What are the two major challenges presented by the product life cycle? Answer: First, because all products eventually decline, a firm must be good at recognizing when a product is nearing the end of its life cycle and developing new products to replace fading ones (the challenge of new product development). Second, a firm must be good at adapting its 4 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

marketing strategies in the face of changing tastes, technologies, and competition as products pass through stages (the challenge of product life-cycle strategies). AACSB: Written and oral communication Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Moderate 17) Why do some firms prefer to obtain new products through acquisition? Answer: New product development is expensive and has a high failure rate even after the products have been developed. About 95% of the new products introduced every year fail. For these reasons acquiring a new product by buying the firm, a patent, or a license to produce and sell someone else's product is often much more cost effective and less risky. AACSB: Analytical thinking Skill: Concept Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Challenging 18) New product development starts with ________. A) concept development B) idea screening C) idea generation D) concept testing E) test marketing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 19) John's fascination for his grandmother's sherbet recipes inspired him to come up with a recipe for SherBetter, a gourmet sherbet for the American market. Which of the following stages of the new product development process does this exemplify? A) idea screening B) idea generation C) concept testing D) product development E) product manufacturing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 20) Which of these is NOT an internal source for new product ideas? 5 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) Research & development centers B) Intrapreneurial programs C) Focused hackathons D) Customer surveys E) Repurposing existing products Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 21) Which of these is NOT a question to ask if you use the R-W-W new product screening framework? A) Is it real? B) Can we win? C) Is it worth doing? D) Does the product fit the firm’s overall growth strategy? E) Is the product easy to make? Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 22) Why are customers often considered the most important sources of new product ideas? A) Customers are close to the market and can pass along information about problems and new product possibilities. B) The company can analyze customer questions and complaints to find new products that better solve consumer problems. C) Customers buy competing new products, take them apart to see how they work, analyze sales, and then decide to purchase. D) Customers review the sales, costs, and profit projections for a new product to find out whether the product satisfies the company's objectives. E) Customers estimate the minimum and maximum sales to assess the range of risk. Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 23) Which of the following is an external source for ideas? A) project managers B) engineers C) salespeople 6 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) manufacturing staff E) suppliers Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 24) Craftsman initially sold a rechargable stand-up light as part of a product grouping. The light came with rechargable drill, batteries, and other products. However, at some point the firm realized the light might sell as a stand alone product and began offering it that way. What type of idea generation tactic did Craftsman use? A) unbundling existing offerings B) repurposing existing products C) using technology to generate ideas D) intrapreneurship E) existing R&D department Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 25) Which of the following is the practice of inviting broad communities of customers, employees, independent researchers, and members of the public into the new product innovation process? A) brainstorming B) idea screening C) crowdsourcing D) outsourcing E) concept testing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy

26) In the new product development process, the first idea-reducing stage is ________. A) business analysis B) idea generation C) concept development D) crowdsourcing E) idea screening Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 27) Executives at an automobile manufacturing company conducted a brainstorming session for selected employees. This session resulted in a large number of ideas for developing new cars after extensive R&D. The executives then planned to filter out the best ideas during the ________ stage. A) business analysis B) idea generation C) concept testing D) idea screening E) concept development Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 28) Global Firm XXY announced a “design a new flavor” contest for its popular snack food line. What type of idea generation is Firm XXY using? A) brainstorming B) ideation C) crowdsourcing D) intrapreneurship E) concept testing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 29) Which of these is NOT a purely external source of new product ideas? A) competitors B) crowdsourcing 8 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) innovation leaders D) suppliers E) customers Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 30) Which of the following statements best explains why idea screening may be the most important step of new product development? A) It increases the number of ideas generated. B) It provides an opportunity for the marketer to test the prototype in a simulated market. C) It helps forecast the products' sales and profits accurately for a specific period. D) It gives research and development team members an opportunity to gather consumer feedback. E) It saves the company money in product development costs by going ahead with only the product ideas that are likely to be profitable. Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 31) A detailed version of a new idea stated in meaningful customer terms is called a product ________. A) solution B) concept C) image D) proposal E) lining Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 32) A ________ is the way consumers perceive an actual or potential product. A) product idea B) product concept C) product image D) brand personality 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) concept test Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 33) JoAnn Fabrics Inc. has created a new combination of colors and fabric types. The firm wants to know how consumers will perceive the new product. The firm is concerned with the product ________. A) idea B) displacement C) image D) activation E) placement Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 34) For concept test, companies will frequently present customers with ________ of the concept for a reliable concept test. A) a verbal description B) a PowerPoint slide C) a picture D) a physical presentation E) a printed paragraph Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 35) Which of the following stages in the new product development would a firm engage in immediately after the completion of concept testing? A) idea screening B) marketing strategy development C) business analysis D) product development E) business plan development Answer: B AACSB: Analytical thinking 10 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 36) Which of these items is NOT a component of marketing strategy statement? A) proposed management team B) value proposition C) profit goals D) market share goals E) target market description Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 37) Which stage of new product development requires management to estimate minimum and maximum sales to assess the range of risk in launching a new product? A) concept testing B) marketing strategy development C) business analysis D) product development E) test marketing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 38) Once managers of The Grecian Urn have decided on their product concept and marketing strategy, they can evaluate the business attractiveness of the proposal in the ________ stage of the new product development process. A) business transformation B) test marketing C) business analysis D) business process reengineering E) concept testing Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 11 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

39) ________ involves attempting to sell the product in a realistic market setting. A) business transformation B) test marketing C) business analysis D) business process reengineering E) concept testing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 40) Juan created a detailed service blueprint for a group of excursions he intends to offer to cruise ship clients when they port in Cozumel. What stage of the new product development process is Juan’s service plan? A) idea screening B) concept development and testing C) business analysis D) product development E) test marketing Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 41) Why do some firms skip the test marketing phase of new product development? A) It can take too long and result in missed opportunities. B) It provides limited information. C) Consumers differ too much from region to region. D) It is cheaper to introduce a lot of new products and wait for the winners to emerge. E) Consumers are too fickle in today’s digital world. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 42) Which of these tactics is an alternative to expensive test marketing? A) consumer polling B) product development C) product activation 12 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) simulated test markets E) product design Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 43) When a company decides to commercialize a new product, it typically; A) incurs high costs. B) hires a new salesforce. C) does so with limited information. D) starts with minimal advertising and promotion. E) launches the product in a single location first. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 44) In the ________ stage of the new product development process, products undergo rigorous tests to make sure that they perform safely and effectively, or that consumers will find value in them. A) product design B) idea generation C) concept development and testing D) product development E) product activation Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 45) A group of business entrepreneurs who worried about their teenage children drinking and driving decided there must be some way to approach this problem proactively. They came up with an idea for a pair of blurry goggles. They believed looking through the goggles would simulate what the world looks like when someone is seriously intoxicated. They developed a crude pair of blurry goggles to show prospective customers. This crude pair of goggles is known as a ________. A) prototype B) concept test C) product concept 13 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) product image E) product idea Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 46) Once the prototype of Wainwright Industries' new riding lawnmower, made especially for women, passes product tests, the next step is ________. A) test marketing B) focus group surveys C) commercialization D) concept testing E) business analysis Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate Use the following scenario to answer questions 47, 48, 49, and 50. Arjun Gupta, CEO of Firm XYZ, launched a new product contest earlier this year and the response was overwhelming. The contest was open to everyone, including employees. A total of 87 product ideas were submitted for evaluation. His team members managed to cut 87 ideas down to a short list of three new product possibilities. However, he fears they need to get the new product(s) out soon before his competitors beat him to launch. Arjun knows the firm’s competitors have knowledge of some of the ideas even though winner has not been announced. The contest was too high profile for some leaks not to have occurred. After reviewing projected sales, costs, and profit possibilities Firm XYZ’s c-suite finally made a tough decision and is developing one of the new products that is time sensitive. In order to speed up product development the firm’s management pulled members from production, finance, marketing, logistics, and R&D into one room and challenged them with having the product in stores within three months. 47)What type of process is Firm XYZ using to get the new product to market? A) controlled product development B) commercialization adaptation C) team-based new product development D) customer-centered new product development E) systematic new product development Answer: C 14 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 48) What step in the product development process occurred when the firm evaluated the 87 contest submissions and narrowed it down to three choices? A) concept development B) idea generation C) commercialization D) idea screening E) limitation Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 49) What type of idea generation method did Firm XYZ utilize? A) internal R&D B) intrapreneurship C) crowdsourcing D) acquisition E) using technology to generate ideas Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate

50) Briefly discuss some of the dangers Firm XYZ faces in launching this new product with limited information. Answer: Rushing the product to market can be costly in terms of the firm’s reputation and it could tarnish the public’s image of the firm’s other products. The new product could be flawed and frustrate consumers, result in recalls, or simply not provide the customer with real benefits. However, a test market would have consumed valuable time and Arjun did not think they had the luxury of waiting. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 15 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

51) In a(n) ________, new products and marketing tactics are tested among specifically identified groups of customers and stores. A) controlled test market B) simulated test market C) standard test market D) systematic sample E) accidental sample Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 52) Which of the following is the most likely circumstance for a company to decide to do little or no test marketing? A) when the new product requires a major investment B) when management lacks confidence in the new product C) when management lacks confidence in the marketing strategy D) when the product has no substitutes and is new in its category E) when the costs of developing and introducing the product are low Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 53) Which of these is the most important focus of new product development? A) cost containment B) the marketing plan C) customer value creation D) profit generation E) stalling competition Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 54) Which of these product development processes follows an orderly process that begins with idea generation and ends with commercialization? A) sequential product development 16 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) team-based new product development C) innovative new product development D) management driven product development E) life cycle product development Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 55) P&G introduced its Duncan Hines ready-to-spread frosting in a small geographic area. When General Mills became aware of the product, it rushed to market its own Betty Crocker ready-tospread frosting, which eclipsed the Duncan Hines product introduction. General Foods was able to enter the ________ stage of the new product development process before P&G could. A) commercialization B) co-marketing C) idea generation D) idea screening E) simulation Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 56) Which of the following costs most likely occur during the commercialization stage of new product development? A) building or renting a manufacturing facility B) paying target customers for product feedback C) determining the product's planned distribution D) developing a prototype of the product E) identifying target markets Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 57) The new product development process should be A) quick B) cost driven C) spontaneous D) systematic

E) compartmentalized Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 58) According to the commercialization stage of the new product development process, following the decision to introduce the new product at a particular time, a company must next decide ________. A) where to launch the new product B) how to launch the new product C) why to launch the new product D) what pricing strategies to implement E) what marketing mix elements to use Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 59) Skyrim Corp. lacks the capital and capacity to launch its new helicopter for full national and international distribution. If the test market results look promising, what should be management's next step? A) retest the product in additional markets B) develop a planned market rollout over time C) liquidate its assets to gain capital and capacity D) seek the help of a nationally known consultant E) develop a prototype Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 60) At Fantastic Flavors, a large regional chain of candy stores, employees from marketing, design, production, and finance work in cross-functional groups to save time and money in the new product development process. Fantastic Flavors uses a ________ approach. A) customer-centered new product development B) sequential product development C) team-based new product development D) heuristic E) functional Answer: C 18 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 61) Which of the following is the goal of the team-based new product development approach when it uses cross-functional teams that overlap the steps in the process? A) gain a big competitive edge by getting the right new products to market B) save time and increase effectiveness C) increase production efficiency and customer satisfaction D) speed product distribution to market and reduce costs E) reduce organizational tension and confusion Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 62) According to the text, the search for new product ideas should most likely be ________. A) intermittent B) holistic C) segmented D) compartmentalized E) flexible Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 63) A company can install a(n) ________ management system to collect, review, evaluate, and manage new product ideas. A) quality B) innovation C) content D) supply chain E) customer relationship Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. 19 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Easy 64) The innovation management system approach yields two favorable outcomes: it helps create an innovation-oriented company culture, and it ________. A) clearly assigns responsibility for the process to a single department B) yields a larger number of new product ideas C) guarantees successful products D) frees up senior management time E) requires less budget support Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate Refer to the following scenario to answer questions 65, 66, and 67. Most people laughed when Evelyn Ringler explained her product idea: a solar-powered vacuum cleaner. But the concept was practical and the technology used in the vacuum was the same as that used in many electronic toys. After setting up a demonstration booth in a mall in a Chicago suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers seemed receptive and offered helpful pieces of advice, such as how much they would pay for the vacuum, what colors they would prefer, and why they would not buy the vacuum. The vacuum itself was shaped like a small saucer, with a filter bag on top and sensory nodes along the edges. After being charged in the sunlight, the vacuum could run for 7 hours, covering a floor area of 600 square feet. As the apparatus lightly bumped into table legs, chairs, and so on, the sensory nodes allowed the vacuum to move around the objects in various directions. This is the same type of technology used in the manufacture of children's racecars and walking dolls. Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who lead busy lives. The price would be above average but would likely be reduced after Evelyn recouped some of her costs. After a 500-unit production run and a substantial financial investment, Evelyn set up a multiplecity test market, in a Chicago mall and in an appliance store in New Jersey and several other retail stores in Florida. "It's such a novel idea," Evelyn added. "People will notice it, even if they don't buy it right away." 65) Evelyn's ________ is the practical use of solar power in a vacuum cleaner that is designed to effortlessly vacuum clean the floors of on-the-go and elderly consumers. A) product placement B) product concept C) product image D) product idea 20 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) virtual product Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging 66) Which of the following stages of new product development was Evelyn involved in when she set up a demonstration booth to learn about consumers' feelings toward her vacuum cleaner? A) concept testing B) marketing strategy development C) idea screening D) commercializing E) crowdsourcing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging

67) What are some of the challenges Evelyn may face with the commercialization of the solar vacuum? Answer: One of her target markets is older consumers and people with busy lives. Will they be required to carry the vacuum outside in the sunlight to be recharged? Will consumers remember the vacuum is outside in the weather? Also, inner-city people may not have an outdoor space. Introducing this product may also require a significant investment since she will need to get the product manufactured and distributed. AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Challenging

68) Most firms have some type of intrapreneurship program. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy

69) The final stage in the product development process is commercialization. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 70) Google’s Area 120 is an example of a successful intrapreneurship program. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate

71) Pet Products Inc. began marketing their extra absorbent kitty litter to auto mechanics to absorb oil and fluid spills. This is an example of new product development that resulted from repurposing an existing product. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 72) 3M’s Post-it Notes are an example of recognizing “hidden” ideas. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 73) What elements may help to create a product image? Answer: A product image is the way consumers perceive an actual or potential product. Any number of product attributes, as well as packaging and intended use, create product image; the promotional campaign also affects product image. AACSB: Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 22 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

74) How might a firm benefit from implementing an "intrapreneurial" program? Answer: Many companies have developed successful internal social networks and intrapreneurial programs that encourage employees to develop new product ideas. For example, Twitter hosts periodic "hackathons," which actively promotes internal innovation through experimentation around the company. AACSB: Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 75) Why are competitors considered a good external idea source? Answer: Marketers can pay particular attention to competitors' ads to get clues about their new products. They buy competing new products, take them apart to see how they work, analyze their sales, and decide whether they should bring out a new product of their own. AACSB: Analytical thinking Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 76) Explain how crowdsourcing works to generate new product ideas. Answer: Many companies are now developing crowdsourcing or open-innovation new product idea programs that can span internal and external sources. Through crowdsourcing, a company invites broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the innovation process. Tapping into such a breadth of internal and external sources can produce unexpected and powerful new ideas. Contests are often used as a way of soliciting new ideas. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 77) What factors are assessed in test marketing? Answer: Test marketing lets a company assess customer response to its product and the effectiveness of its positioning strategy, advertising, distribution, pricing, branding, and packaging. AACSB: Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 78) Differentiate between controlled test markets and simulated test markets. 23 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: In controlled test markets, new products and tactics are tested among controlled panels of shoppers and stores. Using simulated test markets, researchers measure consumer responses to new products and marketing tactics in laboratory stores or virtual online shopping environments. Both controlled test markets and simulated test markets reduce the costs of test marketing and speed up the process. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 79) Briefly describe the steps in the new product development process. Answer: New product development starts with idea generation from internal and/or external sources. Next, the ideas must be reduced through idea screening. Once the new ideas are decided upon, the product concept must be developed and tested. A marketing strategy must be developed to introduce the product to the market. Once the product concept and marketing strategy are chosen, a business analysis is conducted to review the sales, costs, and profit projections to see if they will satisfy the company's objectives. Next, a prototype will be created in the product development stage. Test marketing will follow, introducing the new product and its marketing program into more realistic market settings. The last step is to launch or not launch the new product. If the company decides to launch the product, it will go ahead with the commercialization stage and later test its sales and profit results. AACSB: Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 80) Identify the major sources of external new product ideas and explain why these sources offer advantages over internal sources. Answer: The major external sources of new product ideas include customers, suppliers and distributors, competitors, and research firms. These sources are close to the market and tend to reflect current tastes and preferences. Firms can better match their product offerings to customer needs and wants. AACSB: Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 81) Differentiate between a product idea, a product concept, and a product image. Answer: A product idea is an idea for a product that a company can imagine itself offering to the market. A product concept takes the idea several steps further, with a detailed version of the idea stated in meaningful consumer terms. Finally, a product image is the way consumers perceive an actual or potential product. AACSB: Written and oral communication 24 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 82) Explain concept testing. Answer: Concept testing calls for testing new product concepts with groups of target consumers. The concepts may be presented to consumers physically or symbolically. A more concrete and physical presentation, however, will increase the reliability of the concept test. After being exposed to the concept, consumers are asked questions about it; their answers reveal to the marketer whether the concept needs to be altered in any way. AACSB: Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 83) Define commercialization. Explain two important decisions the company must make during this stage. Answer: Introducing a new product into the market is called commercialization. The company launching a new product must first decide on introduction timing. Next, the company must decide where to launch the new product–in a single location, a region, the national market, or the international market. Confidence, capital, and capacity are required to launch new products on a large-scale basis. Hence, many firms plan a market rollout over time. AACSB: Written and oral communication Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 84) What are the two advantages of an innovation management system for developing new products? Provide four strategies for a company to use to establish a successful system. Answer: The first advantage of an innovation management system is that it helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. The second advantage is that it will yield a larger number of new product ideas, among which will be found some especially good ones. As the system matures, ideas will flow more freely. To establish a successful system a company can do the following: 1. Appoint a respected senior person to be the company's innovation manager. 2. Create a cross-functional innovation management committee with people from each department. 3. Set up a Web site for anyone who wants to become involved in finding and developing new products. 4. Encourage all company stakeholders to send their ideas to the idea manager. 5. Set up formal recognition programs to reward those who contribute the best new ideas. AACSB: Analytical thinking 25 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 85) Which of the following refers to the course that a product's sales and profits take over its lifetime? A) total product process B) service life C) product mix D) product life cycle E) marketing mix Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 86) Which stage of the product life cycle do firms typically begin to make a profit? A) introduction B) maturity C) product development D) growth E) decline Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 87) Which of these is NOT one of the stages of the product life cycle? A) harvest B) growth C) introduction D) product development E) decline Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate

88) Which stage in the product life cycle is characterized by rapid market acceptance and increasing profits? A) introduction B) maturity C) growth D) decline E) product development Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 89) ________ is the product life cycle period when sales fall off and profits drop. A) Introduction B) Growth C) Maturity D) Decline E) Product development Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 90) ________ is the product life cycle period when sales growth slows because the product has achieved acceptance. Profits level off because marketing costs increase in the face of competition. A) Decline B) Maturity C) Product development D) Introduction E) Growth Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 91) Some products that have entered the decline stage have been cycled back to the growth stage through ________. A) repositioning B) harvesting 27 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) maintaining D) pruning E) expanding Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 92) A style is best defined as a ________. A) currently popular trend in retail goods B) popular consumer taste at a given time C) temporary period of unusually high sales D) short-term component of the marketing mix E) basic and distinctive mode of expression Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 93) Which product life-cycle stage is characterized by the highest cost per customer? A) maturity B) introduction C) growth D) decline E) adoption Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 94) Which of these strategies is most likely to be used in the maturity stage of the product life cycle? A) build a selective distribution network B) cut prices C) diversify the brand and models D) offer a basic product E) build interest in the mass market Answer: C AACSB: Analytical thinking Skill: Concept 28 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 95) Which of the following stages of the PLC is characterized with high promotional expenditures that result from an effort to create consumer awareness? A) growth B) product development C) maturity D) introduction E) decline Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 96) A(n) ________ chooses a strategy consistent with the intended product positioning. To gain market leadership requires correct decisions from the beginning. A) brand evangelist B) market pioneer C) early adopter D) laggard E) harvester Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 97) Which stage of the PLC is the firm likely to attempt to increase sales by modifying the marketing mix? A) growth B) decline C) maturity D) product development E) adoption Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 29 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

98) Kellogg's begins to sell its cereals in new markets after conducting extensive marketing research. After the cereal begins to appear in these new markets, the company increases its promotion expenditure to counteract competitive responses. Kellogg's is in the ________ stage of the product life cycle. A) introduction B) growth C) maturity D) decline E) adoption Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Challenging 99) Big Moose Toys is a market pioneer introducing a modern version of Bubble the Moose, a character from an animated television series originally broadcast in the '50s and '60s. The company's version of Sandy the Flying Squirrel, a character from the show targeted to baby boomers, was a strong success. Since the firm is a market pioneer, it needs to make the new launch strategy for Bubble the Moose consistent with the intended ________. A) pricing B) product positioning C) brand extension D) prototype E) fad Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Challenging 100) Which stage in the PLC normally lasts longest and poses strong challenges to marketing managers? A) growth B) decline C) maturity D) introduction E) adoption Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 30 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

101) At which stage in the PLC do profits increase as promotion costs are spread over a large volume, and as the firm enters new market segments? A) maturity B) introduction C) decline D) growth E) harvest Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 102) Which of the following would lead to greater competition in the maturity stage of the PLC? A) overcapacity B) market pioneers C) poor management D) inadequate promotion E) diminishing budgets Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 103) Which of these products is most likely to NOT have a product life cycle? A) Silly Bandz B) L’Oréal Men’s Expert product C) Coca-Cola D) Facebook E) Hula Hoop Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 104) Continuing to carry a weak product can be costly to a firm. Which of these things is NOT an example of one of these costs? A) takes up too much of management’s time B) falling profits C) requires frequent inventory adjustments 31 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

D) higher interest rate charges E) the product’s failing reputation can spillover to the firm Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Challenging 105) When a product is in the maturity stage, the company should most likely consider ________. A) harvesting the product or market B) modifying the product, market, or marketing mix C) divesting the product line D) liquidating the firm's assets E) dropping the product from its market offerings Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 106) Which of these products is considered a fad? A) fidget spinners B) Tide laundry soap C) McDonald’s fries D) Crayola crayons E) VHS tapes Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 107) Due to dropping sales, a company that manufactures soaps begins to sell them to restaurants and hotels to extend their product's life. The soap manufacturer is in the ________ stage of PLC. A) introduction B) growth C) maturity D) decline E) development Answer: D AACSB: Application of knowledge 32 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 108) Firm BCD noted sales were falling so management decided to reduce spending on R&D and advertising. This is an example of . A) extending the product B) product modification C) dropping the product D) harvesting the product E) investing in the product Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate Refer to the following scenario to answer questions 109, 110, and 111. Most people laughed when Evelyn Ringler explained her product idea: a solar-powered vacuum cleaner. But the concept was practical and the technology used in the vacuum was the same as that used in many electronic toys. After setting up a demonstration booth in a mall in a Chicago suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers seemed receptive and offered helpful pieces of advice, such as how much they would pay for the vacuum, what colors they would prefer, and why they would not buy the vacuum. The vacuum itself was shaped like a small saucer, with a filter bag on top and sensory nodes along the edges. After being charged in the sunlight, the vacuum could run for 7 hours, covering a floor area of 600 square feet. As the apparatus lightly bumped into table legs, chairs, and so on, the sensory nodes allowed the vacuum to move around the objects in various directions. This is the same type of technology used in the manufacture of children's racecars and walking dolls. Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who lead busy lives. The price would be above average but would likely be reduced after Evelyn recouped some of her costs. After a 500-unit production run and a substantial financial investment, Evelyn set up a multiplecity test market, in a Chicago mall and in an appliance store in New Jersey and several other retail stores in Florida. "It's such a novel idea," Evelyn added. "People will notice it, even if they don't buy it right away." 109) Evelyn's vacuum is at the ________ stage of the product life cycle. A) product development 33 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

B) introduction C) growth D) decline E) maturity Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Challenging 110) Which of these strategies should Evelyn use when she begins marketing her vacuum? A) build a more intensive distribution system B) offer product extensions, service, and warranty C) build product awareness among early adopters and users D) build interest in the mass market E) stress brand differences and benefits Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Challenging 111) List some of the characteristics of the product life cycle stage occupied by Evelyn’s solar vacuum. Answer: Evelyn’s vacuum is in the introduction stage of the PLC which is characterized by low sales, high cost per customer, negative profits, few competitors, and a small pool of potential customers known as innovators. AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Challenging

112) Firms have no ability to extend a phase of the product life cycle. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 113) Most product life cycles average eight years in length. Answer: FALSE 34 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate

114) Companies should increase the advertising budget when a product enters the decline stage of the PLC. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 115) A norm is a basic and distinctive mode of expression. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 116) A fad is characterized by a temporary period of intense sales. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 117) Explain how the PLC applies differently to a product class than to a product form. Answer: Product classes have longer life cycles, while product forms tend to have the standard PLC shape. AACSB: Written and oral communication Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 118) Why are ad expenditures high for products in the introduction stage of the PLC? Answer: Consumers have very little awareness about such products; promotional spending can enhance customer awareness. AACSB: Written and oral communication Skill: Concept 35 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 119) Why do ad expenditures remain high in the growth stage of the PLC? Answer: Though sales are increasing for such products, competition becomes fierce as competitors attempt to enter the market; therefore, ad expenses remain high in an effort to offset competitive threats. AACSB: Written and oral communication Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Easy 120) Marketers can prolong the lives of many products in the maturity or decline stages of the PLC, sometimes even moving these products back into the growth stage. How is this undertaken? Answer: Marketers can change any element of the marketing mix, find new users and new market segments for its brands, change characteristics such as quality, features, style, packaging, or technology platforms, and so on. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 121) Each product will have a life cycle, although its exact shape and length is not known in advance. Briefly explain each phase of the product life cycle. Answer: -Product development begins when the company finds and develops a new product idea. Sales are zero and the company's investment costs mount. -Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. -Growth is a period of rapid market acceptance and increasing profits. -Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. -Decline is the period when sales fall off and profits drop. A company may seek to reinvigorate a product in decline or maintain it hoping competition will diminish or harvest it or drop it. AACSB: Written and oral communication Skill: Concept Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 122) Explain why the PLC can be applied to more than just brands. Answer: The PLC can be applied to new products and services. It can also be applied to product 36 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

class, a product form, or a brand. The PLC concept lends itself to styles, fashions, and fads. The concept can be used as a useful framework for describing how products and markets work, as well as developing marketing strategy for each stage of the product life cycle. Managers may have difficulties using the PLC concept to forecast product performance or develop general marketing strategies. AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 123) Explain the difference between a fashion and a fad. Answer: A fashion is a currently accepted or popular style in a given field. In contrast, a fad is a temporary period of unusually high sales or interest driven by consumer enthusiasm and immediate product or brand popularity. Fads can be very short lived. AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 124) Give some examples of fads. Answer: Answers will vary but the text lists fidget spinners, selfie sticks, Silly Bandz, and Pokémon Go as examples. AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle. Difficulty: Moderate 125) Manufacturers must comply with specific laws regarding ________. A) profit margins B) product quality and safety C) product harvesting D) distribution channel length E) product life cycles Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Easy 126) Because of ________, a company cannot make its product illegally similar to a competitor's already established product. A) anti-monopoly laws B) patent laws 37 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) the Consumer Product Safety Act D) product warranties E) product liability Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Easy 127) CellTones, a new company selling several types of cellular phones, has closely modeled its products after successful products that are already in the marketplace. As it prepares to enter the market with its new products and services, which of the following should concern CellTones the most? A) legal obligations to suppliers and dealers B) patent laws C) distribution requirements D) product liability suits E) limited warranties Answer: B AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Challenging 128) Which of the following best describes the role of a product steward? A) to protect employees and laborers from harm B) to evaluate new product ideas against a set of general criteria C) to develop a new product concept into a physical product D) to protect consumers from harm and the company from liability E) to decide whether to maintain, harvest, or drop the product in the decline stage of the PLC Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 129) Which of the following is a consequence of standardizing an international product? A) image consistency B) regional design flexibility C) decreased product demand D) increased manufacturing costs E) higher marketing costs Answer: A 38 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 130) Which of these is NOT a challenge of marketing products internationally? A) deciding which products to introduce B) deciding which countries to enter C) standardizing all product offerings D) adapting products to varying tastes E) dealing with cultural differences Answer: C AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Challenging 131) Which of these issues is the second-largest litigation concern among manufacturing companies? A) sexual harassment B) employee safety C) environmental issues D) product liability E) social justice Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 132) If consumers have been injured by a product with a defective design, they can sue manufacturers as well as dealers. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 133) The international growth of many professional and business services such as accounting, consulting, and advertising led to the globalization of the client companies they served. Answer: FALSE AACSB: Diverse and multicultural work environments 39 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 134) The government may prevent companies from adding products through acquisitions if the effect threatens to lessen competition. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 135) There are only a few product classes, such as pharmaceuticals, that have product safety regulations. Answer: FALSE AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 136) Class-action lawsuits over product safety issues can cost firms billions of dollars. Answer: TRUE AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Easy

137) Why has the cost of product liability insurance risen so dramatically? Answer: Consumers who have been injured by a product with a defective design can sue manufacturers or dealers of the product; though manufacturers are only found to be at fault in a small percentage of cases, awards can run into the tens or even hundreds of millions of dollars. This litigation phenomenon has resulted in huge increases in product liability insurance premiums, causing big problems in some industries. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 138) Describe three public policy issues or regulations that marketers should carefully consider as they make decisions about adding or dropping products. Answer: The government may prevent companies from adding products through acquisitions if 40 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

the effect threatens to lessen competition. On the other hand, companies dropping products must be aware that they have legal obligations to their suppliers, dealers, and customers who have a stake in the dropped product. Companies must also obey U.S. patent laws when developing new products, meaning that a company cannot make its product illegally similar to another company's established product. Manufacturers must also comply with specific laws regarding product quality and safety. The Federal Food, Drug, and Cosmetic Act and the Consumer Product Safety Act are just two of many laws that protect consumers from potentially harmful products. If consumers have been injured by a product that has a defective design, they can sue manufacturers or dealers. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 139) List some challenges firms face when expanding into international markets. Answer: International product and services marketers face special challenges. First, they must figure out what products and services to introduce and in which countries. Then they must decide how much to standardize or adapt their products and services for world markets. On the one hand, companies would like to standardize their offerings. Standardization helps a company develop a consistent worldwide image. It also lowers the product design, manufacturing, and marketing costs of offering a large variety of products. On the other hand, markets and consumers around the world differ widely. Companies must usually respond to these differences by adapting their product offerings. AACSB: Analytical thinking Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate 140) What issues do firms face when dropping products? Answer: Companies dropping products must be aware that they have legal obligations, written or implied, to their suppliers, dealers, and customers who have a stake in the dropped product. AACSB: Analytical thinking Skill: Concept Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Moderate Quantitative Questions 1) There are 30,000 new products developed every year. Unfortunately, about 95% of those fail. How many new products are successful over a 5-year time period? A) 1,500 B) 7,500 C) 12,500 D) 15,000 41 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

E) 17,500 Answer: B; You compute this answer by taking the total number of new product introductions and multiplying by 5%. So, 30,000 x 5 years x .05 = 7,500. AACSB: Analytical thinking Skill: Application Objective: LO 9.1: Explore how companies find and develop new product ideas. Difficulty: Moderate 2) Firm X employs 64 scientists and engineers in its R&D department. The average annual salary paid, including bonuses and benefits, is $188,211. Firm X also spends $7,950,000 per year on facilities and equipment for the R&D department. What is the total annual cost of R&D for Firm X? A) $13,908,126 B) $15,219,005 C) $19,995,504 D) $23,921,111 E) $25,511,420 Answer: C; The total cost is (64 x $188,211) + $7,950,000 = $19,995,504. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 3) Firm X employs 64 scientists and engineers in its R&D department. The average annual salary paid, including bonuses and benefits, is $188,211. Firm X also spends $7,950,000 per year on facilities and equipment for the R&D department. The R&D department averages 12 new successful product ideas per year. What is the total cost per successful product for Firm X? A) $1,108,162 B) $1,219,005 C) $1,321,411 D) $1,666,292 E) $1,911,420 Answer: D; After computing the total cost you divide by 12 to get the per product cost. The total cost is (64 x $188,211) + $7,950,000 = $19,995,504. So, $19,995,504/12 = $1,666,292. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 4) Company HHH solicits ideas for new products from all of its stakeholders. The ideas are screened by a committee to identify ones with potential. Last year Company HHH received 4,111 new product ideas and adopted 23 of them. This year Company HHH received 5,289 new product ideas and adopted 19 of them. What percentage of the new product ideas are accepted? A) 0.447% B) 1.231% 42 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

C) 0.897% D) 2.016% E) 4.468% Answer: A; To compute the answer you need to calculate the ratio of adopted ideas to submitted ideas. So, (23 + 19)/(4,111 + 5,289) = .004468, or .447%. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 5) The HondaJet Family V is expected to attract wealthy buyers with quick and luxurious transportation. The firm expects to sell 50 aircraft in the second year of production and make $35 million in profit. How much profit per aircraft do they expect to earn? A) $600,000 B) $2,100,547 C) $500,000 D) $1,428,571 E) $700,000 Answer: E; To compute profit per aircraft you divide total profit by the number of aircraft sold. So, $35 million/50 = $700,000 profit per aircraft. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 6) The HondaJet Family V is expected to attract wealthy buyers with quick and luxurious transportation. The firm expects to sell 50 aircraft in the second year of production and make $35 million in profit. The planes will be priced at $6 million each. How much will it cost to manufacture and sell the aircraft? A) $5,000,000 B) $5,300,000 C) $6,000,000 D) $6,500,000 E) $6,900,000 Answer: B; To compute the cost you can determine the amount of profit per plane and subtract that amount from the selling price. To compute profit per aircraft you divide total profit by the number of aircraft sold. So, $35 million/50 = $700,000 profit per aircraft. So, the cost manufacture and sell the aircraft is $6,000,000 - $700,000 = $5,300,000. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Moderate 7) Firm XXY conducted a test market of 30 cities at a cost of $45,000 per city. What is the total 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

cost of this test market? A) $1,025,000 B) $1,050,000 C) $1,350,000 D) $1,550,000 E) $1,850,000 Answer: C; To compute the answer you multiply the number of cities x the cost per city. So, 30 x $45,000 = $1,350,000. AACSB: Analytical thinking Skill: Application Objective: LO 9.2: Define the steps in the new product development process and the major considerations in managing this process. Difficulty: Easy 8) Firm AAA launched a new product but initially priced it below cost. The firm believes once sales reach a certain level it will be able to lower production costs due to achieving economies of scale. The products are priced at $9.99, and they currently cost $12.48 to manufacture and sell. What is loss to Firm AAA if it sells 123,000 units this year? A) $553,407 B) $56,872 C) $1,228,770 D) $306,270 E) $1,535,040 Answer: D; Firm AAA is losing ($12.48 - $9.99 = $2.49 per unit) x 123,000 units = $306,270. AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. Difficulty: Moderate 9) Last year revenue from Apple’s services brands grew by 28% to $80 billion. What was Apple’s revenue from this source the previous year? A) $62.5 billion B) $80 million C) $77 billion D) $61 billion E) $52 billion Answer: A; You compute this by dividing $80 billion/1.28 = $62.5 billion. AACSB: Analytical thinking Skill: Application Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. Difficulty: Moderate 10) Environmental Firm Green spent $455 million when they installed new solar power equipment to run their plant. Management estimates that over the next 10 year the firm will save 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

about $40 million per year on utilities and will also increase sales by $38 million per year due to the environmentally friendly image they now possess. What is the project’s net present value assuming the firm’s cost of capital is 7%? A) $780.16 million B) $400.00 million C) $380.00 million D) $92.84 million E) $547.84 million Answer: D; You need to compute the present value of the firm’s cash flows and subtract out the initial outlay to determine net present value. Use the following calculator inputs to determine the PV of the project’s cash flows. N = 10; PMT = -$78, or ($40 + $38); I/Y = 7%; FV = 0; CPT PV = $547.84 million - $455 cost = $92.84 million. AACSB: Analytical thinking Skill: Application Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Difficulty: Challenging

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 10 Pricing: Understanding and Capturing Customer Value 1) Product costs set the floor for a product’s ______ A) advertising B) competition C) price D) innovation E) features Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of pricing in today's fast-changing environment. Difficulty: Easy 2) Although Peloton’s bike prices might seem steep, when customers buy a Peloton, they’re getting much more for their money than just a premium home fitness bike. They’re buying into an absorbing lifestyle and a closely connected community of like-minded exercise enthusiasts, who ride together through classes on-demand or live-streamed from Peloton’s studios to an internet-connected tablet on the bike. This example shows that ________ is NOT the only element in the marketing mix that produces revenue. A) price B) product C) place D) fixed costs E) variable costs Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of pricing in today's fast-changing environment. Difficulty: Easy 3) Which of the following is true regarding pricing? A) Pricing is one of the most flexible marketing mix elements. B) Price is the least flexible element in the marketing mix. C) Unlike product features and channel commitments, prices cannot be changed quickly. D) Pricing does not play a role in building customer relationships. E) Prices do not have a direct impact on a firm's bottom line. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of 1 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

pricing in today's fast-changing environment. Difficulty: Moderate 4) _____is the only marketing mix element that translates the value created for customers back into revenues and profits for the company. A) Monopolistic competition B) Pricing C) Pure competition D) Product E) Demand Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.1: Answer the question “What is a price?” and discuss the importance of pricing in today’s fast-changing environment. Difficulty: Challenging 5) Prices do not have an impact on a firm’s bottom line. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 10.1: Answer the question “What is a price?” and discuss the importance of pricing in today’s fast-changing environment. Difficulty: Easy 6) List some important characteristics of price. Answer: Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Price is also one of the most flexible marketing mix elements. Unlike product features and channel commitments, prices can be changed quickly. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 10.1: Answer the question “What is a price?” and discuss the importance of pricing in today’s fast-changing environment. Difficulty: Moderate 7) Why is price considered one of the most flexible elements of the marketing mix? Answer: Unlike product features and channel commitments, prices can be changed quickly. AACSB: Application of knowledge Skill: Concept Objective: LO 10.1: Answer the question “What is a price?” and discuss the importance of pricing in today’s fast-changing environment. Difficulty: Easy 8) Define price. Discuss its importance. Answer: In the narrowest sense, price is the amount of money charged for a product or a service. More broadly, price is the sum of all the values that customers give up to gain the 2 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

benefits of having or using a product or service. Historically, price has been the major factor affecting buyer choice. In recent decades, however, nonprice factors have gained increasing importance. Even so, price remains one of the most important elements that determines a firm’s market share and profitability. Price is the only element in the marketing mix that produces revenue; all other elements represent costs. Price is also one of the most flexible marketing mix elements. Unlike product features and channel commitments, prices can be changed quickly. At the same time, pricing is the number one problem facing many marketing executives, and many companies do not handle pricing well. Some managers view pricing as a big headache, preferring instead to focus on other marketing mix elements. However, smart managers treat pricing as a key strategic tool for creating and capturing customer value. Prices have a direct impact on a firm’s bottom line. A small percentage improvement in price can generate a large percentage increase in profitability. More important, as part of a company’s overall value proposition, price plays a key role in creating customer value and building customer relationships. AACSB: Analytical thinking; Written and oral communication Skill: Concept Objective: LO 10.1: Answer the question “What is a price?” and discuss the importance of pricing in today’s fast-changing environment. Difficulty: Moderate 9) What sets the ceiling for product prices? A) product manufacturing costs B) sellers’ perceptions of the product’s value C) customer perceptions of the product’s value D) variable costs E) break-even volume Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 10) Major pricing strategies include all of the following EXCEPT: A) customer value-based pricing B) cost-based pricing C) competitive pricing D) advertising-based pricing E) good-value pricing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 3 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

11) _____refers to setting price based on buyers’ perceptions of value rather than on the seller’s cost. A) Competition-oriented pricing B) Cost-based pricing C) Time-based pricing D) Customer value-based pricing E) Market-oriented pricing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy

12) Factors a company considers in setting its price include all of the following EXCEPT A) competitors' strategies and prices B) product costs C) overall marketing strategy and mix D) value of the product on the pre-owned market E) nature of the market and demand Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 13) Although costs are an important consideration in setting prices, _______pricing is often product driven. A) cost-based B) marketing-mix C) service-based D) value-added E) competitive Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 4 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

14) All of the following are true about value-based pricing EXCEPT A) Value-based pricing first assesses customer needs. B) Value-based pricing assesses customer perceptions. C) Value-based pricing is product driven. D) Value-based pricing is the most profitable way to price products and services. E) The price is set to match perceived value. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 15) The Aldicon pharmaceutical company in Kansas released a new and expensive anti-cancer drug. The company justifies the high price of the drug by claiming that it is highly effective for treating bladder cancer. The company also claims that the drug will reduce the need for surgeries, an additional benefit for patients. Which of the following pricing strategies is the pharmaceutical company using? A) fixed-cost pricing B) everyday low pricing C) cost-plus pricing D) value-based pricing E) good-value pricing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 16).In ______, the strategy is to offer the right combination of quality and good service at a fair price. A) cost-based pricing B) good-value pricing C) perceived pricing D) market-based pricing E) value-based pricing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 5 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

17) Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A

no-frills airline, it charges for all other additional services, such as baggage handling and inflight refreshments. Which of the following best describes Azure Air's pricing method? A) target profit pricing B) good-value pricing C) cost-based pricing D) break-even pricing E) penetration pricing Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 18) Bon Vivant offers an assortment of exclusive French wines at incredibly low prices. These prices are neither limited-time offers nor special discounts, but represent the daily prices of products sold by Bon Vivant. This reflects Bon Vivant's ________ pricing strategy. A) everyday low B) markup C) penetration D) break-even E) cost-based Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 19) ________ pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items. A) High-low B) Everyday low C) Cost-plus D) Break-even E) Penetration Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 6 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

20) Department stores such as Kohl's and JCPenney's practice high-low pricing by ________. A) charging a constant, everyday low price B) providing few or no temporary price discounts C) increasing prices temporarily on select products D) having frequent sale days for store credit-card holders E) underpricing most consumer items Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 21) Luxury outerwear apparel brand Canada Goose doesn’t try to beat out the competition by offering discounts or more affordable versions of its cold-weather jackets, parkas, vests, and other gear. Instead, Canada Goose has poured resources into making high-quality, carefully crafted products that merit the premium prices it charges. Its iconic Snow Mantra parka was initially developed to meet the needs of workers in the Canadian Arctic. This is an example of A) value-added pricing B) everyday low pricing C) competition-based pricing D) cost-based pricing E) time-based pricing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate

22) In an effort to differentiate its offerings from its competitors, Pegasus Computers decided to add an extra USB port in all its laptops besides providing a free pair of Delphi power bass headphones with every Pegasus laptop. Although the additional features increased the price of the laptops by $500, Pegasus was confident that the strategy would help boost demand for its laptops substantially. This is an example of ________. A) good-value pricing B) markup pricing C) break-even pricing D) value-added pricing E) cost-based pricing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 23) A company must pay each month’s bills for rent, heat, interest on loans, and executive salaries regardless of the company’s level of output. Many of these ______costs are classified as overhead costs. A) variable B) fixed C) total D) breakeven E) seasonal Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 24) Companies with lower costs ________. A) specialize in selling products with value-added features B) usually market products with inferior quality, thereby justifying the low selling price C) can set lower prices that result in smaller margins but greater sales and profits D) tend to overprice products owing to their monopolistic advantage E) usually set higher prices that result in higher margins Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 8 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

25) Samsung involves costs related to computer chips, wires, plastic, packaging, and other inputs. Although these costs tend to be the same for each unit produced, they are called _____costs because the total changes with the number of units produced. A) fixed B) variable C) sunken D) total E) mechanical Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 26) Lenovo built a plant to produce 1,000 tablet computers per day. The cost per tablet is high if Lenovo’s factory produces only a few per day. But as production moves up to 1,000 tablets per day, the average cost per unit decreases. This is because fixed costs are spread over more units, with each one bearing a smaller share of the fixed cost. Lenovo can try to produce more than 1,000 tablets per day, but average costs will increase. This example shows that A) management needs to reduce fixed costs B) management needs to reduce variable costs C) management needs to know how its costs vary with different levels of production. D) Lenovo needs to reduce total costs E) management needs to increase overhead costs Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 27) Which of the following is most likely a fixed cost? A) sales representative commissions B) product distribution costs C) manufacturing input costs D) temporary worker salaries E) facility rental payments Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the 9 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 28) Costs that change with the level of production are referred to as ________. A) fixed costs B) variable costs C) target costs D) total costs E) overhead costs Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 29) As production moves up, the average cost per unit decreases because ________. A) variable costs decrease B) of increasing diseconomies of scale C) fixed costs are spread over more units D) overhead costs decrease E) revenue increases Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 30) A cell phone manufacturing firm produced 1,000 cell phones a day but believed that it could reasonably step up production to 2,000 cell phones a day. Consequently, it built a larger plant and installed efficient machinery and work arrangements to realize the projected output. Which of the following can most likely be inferred from this information? A) The unit cost of producing 2,000 cell phones per day would be twice that of the unit cost of producing 1,000 units per day. B) A production plant with the capacity of producing 5,000 cell phones a day would be most efficient. C) The unit cost of producing 2,000 cell phones per day would be lower than the unit cost of producing 1,000 units per day. D) A 2,000-capacity production plant would be less efficient because of increasing diseconomies of scale. E) The fixed costs of the firm are more likely to increase with the increase in output. Answer: C AACSB: Reflective thinking 10 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Skill: Critical Thinking Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 31) The average cost of producing the first 100,000 tablets is $10 per tablet. When the company has produced the first 200,000 tablets, the average cost has fallen to $8.50. After its accumulated production experience doubles again to 400,000, the average cost is $7. This drop in the average cost is called the ______ A) cost-per-unit B) demand curve C) experience curve D) LRAC curve E) SRAC curve Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 32) A manufacturing plant is designed to produce 2,000 flat-screen TVs per day. But demand is higher than that. If the company tries to increase its production to 2,500 TVs per day, the average costs will ________ because ________. A) decrease; the plant becomes more efficient B) stay the same; the plant becomes more efficient C) decrease; the plant becomes inefficient D) increase; the plant becomes more efficient E) increase; the plant becomes inefficient Answer: E AACSB: Reflective thinking Skill: Critical Thinking Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 33) The experience curve is representative of the ________. A) per unit cost of output in the long run B) drop in the average per-unit production cost that comes with accumulated production experience C) number of units the market will buy in a given time period, at different prices that might be charged D) total market demand resulting from different prices E) per unit cost of output in the short run 11 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy

34) With accumulated production experience and a higher volume of production, companies not only become more efficient but also ________. A) gain economies of scale B) incur higher overhead costs C) create derived demand in the market D) spend more per unit of produced output E) tend to routinely spend less on inputs Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 35) Construction companies may submit job bids by estimating the total project cost and adding a standard markup for profit. Lawyers, accountants, and other professionals sometimes price by adding a standard markup to their costs. These are examples of ______. A) value-added pricing B) cost-plus pricing C) total-cost pricing D) everyday-low pricing E) high-low pricing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 36) A downward-sloping experience curve is indicative of ________. A) the negative customer perception about a company's products B) the falling demand for a company's products C) the falling unit production cost of a company D) the low quality of a company's products E) slow and inadequate organizational learning 12 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate

37) To take advantage of a downward-sloping experience curve, a company must do all of the following EXCEPT ________. A) increase the product's price B) be able to sell the higher volume of product C) price its product lower D) increase its production output E) decrease its costs through experience gained Answer: A AACSB: Reflective thinking Skill: Critical Thinking Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 38) Which of the following is most likely a risk associated with experience-curve pricing? A) High-volume production facilities are unable to meet demand. B) New technology often leads to productivity problems. C) Demand for the product fluctuates unpredictably. D) Consumers tend to prefer new brands over established ones. E) Aggressive pricing often gives a product a cheap image. Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 39) Which of the following is true about experience-curve pricing? A) Competitors might find a lower-cost technology that allows for a lower price. B) Competitors are strong and invincible. C) Aggressive pricing positively affects product image. D) Value-added pricing is part of experience-curve pricing. E) Once prices are lowered, it is easy to increase them later. Answer: A AACSB: Analytical thinking Skill: Concept 13 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 40) Which of the following statements is NOT true about markup pricing? A) price-competition is minimized B) sellers earn a fair return on their investment C) sellers take advantage of buyers when demand increases D) prices are similar among competitors E) demand is ignored Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 41) _______is an approach that sets the price to break-even on the costs of making and marketing a product. A) Cost-plus pricing B) Value-added pricing C) Competition-based pricing D) Total-cost pricing E) Target return pricing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 42) Some sellers tell their customers they will charge cost plus a specified markup; for example, aerospace companies often price this way to the government. This exemplifies ________. A) target pricing B) cost-plus pricing C) value-based pricing D) break-even pricing E) penetration pricing Answer: B AACSB: Application of knowledge Skill: Concept 14 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 43) _______involves setting prices based on competitors’ strategies, costs, prices, and market offerings. In judging the value delivered by a company’s product-price combination, consumers will often be influenced by the prices that competitors charge for similar products. A) Competition-based pricing B) Value-based pricing C) Target-return pricing D) Cost-plus pricing E) Cost-based pricing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 44) If it costs the company more than its competitors to produce and sell a similar product, then all of the following statements are true EXCEPT A) the company will need to charge a higher price B) the company will make less profit C) the company will be at a competitive advantage D) the company will need to watch its costs carefully E) the company will be at a competitive disadvantage Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 45) Why is markup pricing most likely impractical? A) Calculating costs is complicated due to fluctuations. B) By tying the price to cost, sellers oversimplify pricing. C) When all firms in the industry use this pricing method, prices tend to be similar. D) The method ignores demand and competitor prices. E) With a standard markup, consumers know when they are being overcharged. Answer: D AACSB: Analytical thinking Skill: Concept 15 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 46) Some companies, such as Walmart or ALDI, work to become the low-cost producers in their industries. Companies with lower costs can set lower prices that result in smaller margins but_____ A) greater sales and profits B) greater consumer loyalty C) fewer sales and profits D) greater mark-ups E) higher quality Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 47) Which of the following is a cost-based approach to pricing? A) value-based pricing B) high-low pricing C) target return pricing D) good value pricing E) EDLP Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 48) ______ are the sum of the fixed and variable costs for any given level of production. A) Total costs B) Overhead costs C) Markup costs D) Value-added costs E) Break-even costs Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor 16 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

strategies when setting prices. Difficulty: Easy 49) Target return pricing uses the concept of a(n) ________, which shows the total cost and total revenue expected at different sales volume levels. A) BCG matrix B) break-even chart C) SWOT analysis D) demand curve E) experience curve Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 50) John assured his venture capitalists an earning of 25-percent return on equity when he began his IT startup. In order to achieve this result, he will most likely use which of the following pricing approaches? A) value-based pricing B) markup pricing C) EDLP D) customer-based pricing E) target return pricing Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 51) The break-even volume is the point at which ________. A) the total revenue and total cost curves intersect B) demand equals supply C) the production of one more unit will not lead to increase in demand D) the company can pay off all its long-term debt E) a firm exceeds the sales forecast Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 17 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

52) Which of the following statements about break-even analysis is true? A) It is used to determine how much production experience a company must have in order to achieve desired efficiencies. B) It is a technique used to calculate fixed costs. C) It determines the amount of retained earnings a company will have during a given accounting period. D) It is a technique marketers use to determine the relationship between supply and demand. E) It is calculated by using variable costs, the unit price, and fixed costs. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 53) A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even? A) 20,000 B) 25,000 C) 30,000 D) 35,000 E) 40,000 Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 54) As a manufacturer increases the price, ________. A) efficiency drops B) the break-even volume drops C) competition is minimized D) the total costs increase E) the profit margin shrinks Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy

55) Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume? A) 25,000 B) 55,000 C) 100,000 D) 115,000 E) 125,000 Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 56) A manufacturer has fixed costs of $100,000, a variable cost of $10 per unit of output, and break-even volume of 50,000 units. What should the manufacturer's unit cost be in order to break even? A) $10 B) $12 C) $14 D) $16 E) $20 Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 57) If a company charges a higher price, it will not need to sell as many units to achieve its target return. However, much depends on________ A) probable supply B) cost-plus pricing C) price elasticity and competitors' pricing D) expected unit sales E) manufacturer’s costs Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 19 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

58) What questions should be asked when assessing competitors’ pricing strategies? A) How strong are current competitors, and what are their current pricing strategies? B) Do consumers get better service from competitors? C) Is the market dominated by new entrants? D) Do competitors have international markets? E) What service policies do competitors have? Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 59) Companies can legitimately charge a higher price if ________. A) consumers perceive that the company's product offers greater value B) the demand for products manufactured by a firm is highly elastic C) the cost of advertising is minimal D) derived demand remains constant E) consumers de-emphasize quality Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate

Refer to the scenario below to answer questions 60-62. Alden Manufacturing produces small kitchen appliances–blenders, hand mixers, and electric skillets–under the brand name First Generation. Alden attempts to target newlyweds and firsttime home buyers with this brand. Considering that most young households have limited financial resources, Alden attempts to engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics, "we have better control over keeping price right in line with customers." Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The hand mixers are manufactured in two variants–a small handheld mixer with two rotating beaters and another that comes with an optional stand and an attached mixing bowl. Alden's temperature-controlled skillets are manufactured in a single style with three color options. "Our product offerings are narrower," Milt Alden added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low. 60) Milt Alden says that his line workers "know each product like the back of their hands," and that this knowledge helps the company keep its prices low. This indicates that Alden Manufacturing most likely benefits from the ________. A) cost-plus pricing B) value-added pricing C) experience curve D) inelastic demand in the market E) derived demand in the market Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging

61) Which of these is NOT a way in which Mitt Alden’s pricing can accomplish company objectives? A) set prices to attract new customers and retain existing customers B) raise prices to create excitement for a brand C) set prices low to hinder competition from entering the market D) price one product to help sales of other products in the company's line E) set price to keep the loyalty of resellers Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 62) Would it be an advantage to Milt Alden to use cost-plus pricing? Answer: The practice of cost-plus pricing is usually difficult to support from a business viewpoint. First, any pricing method that ignores demand and competitor prices is not likely to lead to the best price. Second, when a company uses cost-plus pricing, it is implicitly acknowledging it is seeking only a “sufficient” level of profits. Instead, the company should be aiming to maximize profits by delivering great value to customers and using prices to extract some of that value in terms of profitability. Thus, cost-plus pricing is not commonly used. AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 63) In customer value-based pricing, price is considered along with all other marketing mix variables before the marketing program is set. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate

64) Target return pricing is when the firm sets a price at which it will break even or make the target return on the costs of making and marketing a product. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 65) Using value-based pricing, a marketer would not design a product and marketing program before setting the price. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 66) Good-value pricing usually is used by premium brands, and rarely by less-expensive brands. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 67) Is cost-based pricing product driven? Answer: Whereas customer value perceptions set the price ceiling, costs set the floor for the price that the company can charge. Cost-based pricing involves setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for the company’s effort and risk. AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 68) Department stores that practice everyday low pricing typically provide frequent sale days, early-bird savings, and bonus earnings for store credit-card holders. Answer: FALSE AACSB: Application of knowledge Skill: Concept 23 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 69) Fixed costs are costs that vary with production or sales level. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 70) Variable costs do not change directly with the level of production. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 71) Cost-based pricing involves setting prices based on consumer perception of value. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 72) Companies with lower costs can set lower prices that result in smaller margins but greater sales and profits. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 73) Average cost tends to increase with accumulated production experience. Answer: FALSE AACSB: Analytical thinking Skill: Concept 24 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 74) A downward-sloping experience curve is indicative of a company's rapidly increasing production costs. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 75) Why has markup pricing remained popular in some situations? Answer: Markup pricing remains popular in some situations. First, sellers are more certain about costs than about demand. By tying the price to cost, sellers simplify pricing; they do not need to make frequent adjustments as demand changes. Second, when all firms in the industry use this pricing method, prices tend to be similar, so price competition is minimized. Third, many people feel that cost-plus pricing is fairer to both buyers and sellers. Sellers earn a fair return on their investment but do not take advantage of buyers when buyers’ demand becomes great. AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 76) The practice of cost-plus pricing is usually difficult to support from a business viewpoint Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 77) Markup pricing is used when a firm tries to determine the price at which it will break even or make the target return it is seeking. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor 25 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

strategies when setting prices. Difficulty: Easy 78) What is a break-even chart? Answer: Target return pricing uses the concept of a break-even chart, which shows the total cost and total revenue expected at different sales volume levels. AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 79) How can a manufacturer increase a customer’s willingness to pay a higher price? Answer: The manufacturer can aim to increase consumers’ willingness to pay by differentiating the product and making it more appealing. Or it can work to enhance consumer perceptions of delivered value, which would again enhance consumers’ willingness to pay. AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 90) Explain the concept of the price floor. Answer: Price floor represents the price below which there is no profit. AACSB: Written and oral communication Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 81) Explain the concept of the price ceiling. Answer: Price ceiling represents the price above which there is no demand. AACSB: Written and oral communication Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy

82) Briefly describe the process of value-based pricing. Answer: The company first assesses customer needs and value perceptions. It then sets its target price based on customer perceptions of value. The targeted value and price drive decisions about what costs can be incurred and the resulting product design. As a result, pricing begins with analyzing consumer needs and value perceptions, and the price is set to match perceived value. AACSB: Application of knowledge Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 83) What is good-value pricing? Answer: Good-value pricing refers to offering just the right combination of quality and good service at a fair price. AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 84) What is high-low pricing? Answer: High-low pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items. AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 85) How should firms decide what prices to charge relative to competitors? Answer: The answer is simple in concept but often difficult in practice: No matter what price you charge—high, low, or in between—be certain to give customers superior value for that price. AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy

86) Explain the significance of a downward-sloping experience curve. Answer: If a downward-sloping experience curve exists, this is highly significant for the company. Not only will the company's unit production cost fall, but it will fall faster if the company makes and sells more during a given time period. AACSB: Written and oral communication Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 87) A marketer's fixed costs are $400,000. The variable cost is $16 per unit, and the price of the product is $24 per unit. If the company wants to make a profit, how many units must it sell and at what price? Answer: If the company wants to make a profit, it must sell more than 50,000 units at $24 each. AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 88) In industrial markets, ________ typically has the final say in setting the pricing objectives and policies of a company. A) the sales manager B) top management C) the production manager D) the HR department E) the sales staff Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 89) What is competition-based pricing? Answer: Competition-based pricing refers to setting prices based on competitors' strategies, prices, costs, and market offerings. AACSB: Analytical thinking Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy

90) Distinguish between value-based pricing and cost-based pricing. Answer: Customer value-based pricing uses buyers' perceptions of value as the key to pricing. Value-based pricing means that the marketer cannot design a product and marketing program and then set the price. Price is considered along with all other marketing mix variables before the marketing program is set. Although costs are an important consideration in setting prices, cost-based pricing is often product driven. The company designs what it considers to be a good product, adds up the costs of making the product, and sets a price that covers costs plus a target profit. Marketing must then convince buyers that the product's value at that price justifies its purchase. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 91) Explain break-even pricing. Answer: Break-even pricing (target return pricing) refers to setting price to break even on the costs of making and marketing a product, or setting price to make a target return. Target return pricing uses the concept of a break-even chart, which shows the total cost and total revenue expected at different sales volume levels. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 92) Which of the following is an external factor that affects pricing decisions in a company? A) the company's overall marketing strategy B) the nature of the market C) the organizational objectives of the company D) elements of the company's marketing mix E) the annual advertising budget of rival firms Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

93) Which of the following is an internal factor that affects pricing decisions in a company? A) the nature of the market B) the degree of inflation in the economy C) the overall marketing strategy of the company D) the forces of demand and supply in the market E) consumers' perception of value Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 94) Companies using target costing ________. A) first design a new product and then determine its cost B) tailor their products to be in line with the marketing mix C) routinely neglect customer value considerations D) avoid determining an ideal selling price until analyzing test market results E) start with an ideal selling price and then target costs that will ensure that the price is met Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 95) Developing an effective integrated marketing mix program involves coordinating price decisions with product design, promotion, and ________ decisions. A) distribution B) production C) assembly D) warranty E) competition Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

96) Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $13 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________. A) competition-based pricing B) cost-plus pricing C) target costing D) everyday low pricing E) high-low pricing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Challenging 97) PoolPak produces climate-control systems for large swimming pools. The company's customers are more concerned about service support for maintaining their systems than the initial price of the product. PoolPak specializes in and differentiates itself through both cutting-edge technologies used to build its high-value climate control systems as well as seamless quality service. PoolPak's prices are very high, but demand for its climate-control systems seems to be forever on the rise. This exemplifies ________. A) target costing B) a pure monopoly C) cost-plus pricing D) a nonprice position E) break-even pricing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Challenging

98) DivetheBlue, a company marketing deep-sea diving equipment, charges very high prices for its products. Despite the availability of many low-priced products in the market, customers seem to prefer DivetheBlue, which has earned a reputation for selling high-quality products. This exemplifies ________. A) a pure monopoly B) an oligopoly C) a nonprice position D) break-even pricing E) target costing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 99) A decision to position the product on high-performance quality will mean that the ________. A) seller must charge a higher price to cover higher costs B) seller must charge a lower price to attract more customers C) producer must step down production D) marketer must boost derived demand in the market E) break-even volume will be fairly low Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate Refer to the scenario below to answer questions 100-102. During the pandemic, which hit the travel and hospitality industries especially hard, many Four Seasons Resorts hotels offered travelers a third or fourth night free. Customers got more for their money, but the upscale hotel’s daily room rate remained unchanged. Similarly, Ritz-Carlton held its room rates at prior levels but offered guests a daily $100 “resort credit” that could be applied to meals and other resort services. 100) In both cases, the luxury chains avoided_____ A) having to “raise” prices during the post-pandemic recovery B) having to deal with supply chain issues C) using cost-plus pricing D) increasing variable costs E) increasing fixed costs Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors 32 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

affecting a firm's pricing decisions. Difficulty: Moderate 101) Rather than cutting prices on their main-market brands, in recent years many companies such as Ritz-Carlton have______. A) held their price positions but redefined the “value” in their value propositions B) lowered their costs C) lowered their level of service D) added non-executive employees E) offered deep discounts Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 102) Do these luxury hotels use “price tiers”? Answer: These luxury hotels do not use price tiers. Companies have developed “price tiers,” adding both more affordable lines or premium lines that span the varied means and preferences of different customer segments. Even in tough economic times, consumers do not buy based on prices alone. They balance the price they pay against the value they receive. AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 103) In industries in which profits critically hinge on smart pricing (airlines, aerospace, steel, railroads, oil companies), companies often have ______to set the best prices or help others set them. A) sales departments B) salespeople C) production managers D) line managers E) pricing departments Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy

104) In small companies, prices are often set by _____rather than by the marketing or sales departments A) engineering managers B) human resources managers C) top management D) customers E) resellers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 105) In a market characterized by_______, marketing research, product development, pricing, advertising, and sales promotion play little or no role. A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) the dominant firm model Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 106) Under______, the market consists of many buyers and sellers trading over a range of prices rather than a single market price. A) pure competition B) monopolistic competition C) oligopolistic competition D) international competition E) value-based competition Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

107) Bose sets its premium speakers, headphones, and audio products apart from the profusion of competing products not by price but by the power of its brand and the host of differentiating features. Bose boasts that it creates “better sound through research—an innovative, high-quality listening experience.” “We’re passionate engineers, developers, researchers, retailers, marketers . . . and dreamers,” says Bose. “One goal unites us—to create products and experiences our customers simply can’t get anywhere else.” Bose competes by _______. A) differentiating its brand and products. B) using pure competition C) discounting its products D) offering price tiers E) offering everyday low prices (EDLP) Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 108) In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shops. This exemplifies ________. A) pure competition B) monopolistic competition C) oligopolistic competition D) pure monopoly E) the dominant firm model Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Challenging 109) Despite the growth of streaming services, only a handful of providers— Comcast, Spectrum, AT&T, and Dish Network—control a lion’s share of the cable/satellite television market. This is an example of ______ A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) the dominant firm model Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors 35 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

affecting a firm's pricing decisions. Difficulty: Moderate 110) Which of the following is true with regard to pure competition? A) Under pure competition, no single buyer or seller has much effect on the going market price. B) In a purely competitive market, marketing research is of utmost importance. C) In a purely competitive market, product development is the focus of most firms. D) Under pure competition, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price. E) Under pure competition, the market consists of only a few large sellers. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 111) Which of the following is true with regard to monopolistic competition? A) Under monopolistic competition, the market consists of many buyers and sellers who trade at a single market price. B) Under monopolistic competition, the market consists of only a few large sellers. C) In a monopolistic market, little time is spent on marketing strategy. D) Sellers can differentiate their products to buyers. E) In a monopolistic market, price becomes a major competitive tool. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 112) The U.S. Postal Service in the context of daily mail is an example of a(n) A) pure competition B) monopolistic competition C) oligopolistic competition D) pure monopoly E) price tier Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

113) In which situation is the market dominated by a few large sellers? A) pure monopoly B) monopolistic competition C) oligopolistic competition D) pure competition E) free market Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 114) For some brands and industries, ______is less sensitive to changes in price. For example, because of Apple’s brand strength and differentiated products, its core of strongly loyal customers will continue to buy Apple iPhones and other devices despite recurring price increases. A) supply B) demand C) cost D) price elasticity E) product development Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 115) Which of the following shows the number of units the market will buy in a given time period, at different prices that might be charged? A) demand curve B) supply curve C) learning curve D) break-even pricing E) target costing Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy

116) For Campbell Soup, noticeable price increases may cause customers to switch to comparable but less expensive store brands or other national brands. This example shows that ______ A) a demand curve shows production experience. B) a demand curve offers a long-term economic picture C) when supply increases prices decrease D) a brand’s price-demand curve is crucial to good pricing decisions E) customer’s will continue to buy products despite price increases Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 117) ABC Servers has decreased its prices on its popular higher-range servers. The company can reasonably expect ________ to increase. A) value-added costs B) variable costs C) demand D) total costs E) overhead costs Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 118) The relationship between the price charged and the resulting demand level is shown in the A) price elasticity B) demand curve C) price-value equation D) marginal utility E) income elasticity of demand Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

119) Under ______demand, a lower price will trigger sharply increased demand and lead to higher revenues and profits. A) variable B) elastic C) inelastic D) derived E) negative Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 120) If demand is _____, sellers will consider lowering their prices. A) variable B) inelastic C) derived D) elastic E) negative Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 121) Dips in the economy and the instant price comparisons made possible by the Internet have contributed to ________. A) decreased consumer price sensitivity B) increased consumer price sensitivity C) a less direct relationship between supply and demand D) low brand equity for luxury goods E) decreased brand loyalty Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

122) After The Great Recession of 2008 to 2009 and the impact of the COVID-19 pandemic, all of the following statements describe consumers EXCEPT A) They have rethought the price value equation. B) They have become less value conscious. C) They have become more value conscious. D) They have become more thrifty. E) They face inflation and are concerned about prices. Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 123) All of the following economic factors affect pricing decisions EXCEPT A) a boom B) a recession C) inflation D) interest rates E) price tiers Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 124) All of the following are reasons not to lower prices EXCEPT A) Price cuts can have long-term negative consequences. B) Price cuts may cheapen a brand in consumer’s eyes. C) Lower prices increase short-term sales. D) It’s difficult to raise prices when the economy improves. E) Lower prices mean lower margins. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

Refer to the scenario below to answer questions 125-127. Alden Manufacturing produces small kitchen appliances–blenders, hand mixers, and electric skillets–under the brand name First Generation. Alden attempts to target newlyweds and firsttime home buyers with this brand. Considering that most young households have limited financial resources, Alden attempts to engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics, "we have better control over keeping price right in line with customers." Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The hand mixers are manufactured in two variants–a small handheld mixer with two rotating beaters and another that comes with an optional stand and an attached mixing bowl. Alden's temperature-controlled skillets are manufactured in a single style with three color options. "Our product offerings are narrower," Milt Alden added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low. 125) Milt Alden uses which of the following strategies for pricing his products? A) basing company price on competitors' prices B) using everyday low pricing C) initiating an aggressive promotional campaign D) starting with customer-value considerations E) focusing on overall fixed costs of manufacturing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Challenging 126) If Milt Alden focuses on overall costs of manufacturing plus profit in setting product prices, which strategy would he employ? Answer: The simplest pricing method is cost-plus pricing (or markup pricing)—adding a standard markup to the cost of the product. AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate

127) Internal factors affecting pricing include Milt Alden's overall marketing strategy, objectives, and marketing mix. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 128) In small companies, prices are often set by top management rather than by the marketing or sales departments. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 129) Often, the best strategy is not to charge the lowest price but rather to differentiate the market offering to make it worth a higher price Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 130) Under oligopolistic competition, the market consists of only a few large sellers. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 131) Some companies deemphasize price and use other marketing mix tools to create nonprice positions. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 42 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

132) Are brands’ strategies built around premium or affordable pricing? Answer: Brands’ strategies might be built around premium pricing or affordable pricing. For example, whereas consumer electronics brands like Samsung and Sony offer ultrahigh technology at premium prices, brands such as TLC, Hisense, and Visio are positioned on good but not ultrahigh technology at lower prices. For example, Visio’s aim is “to make high-quality technology and content affordable to everyone.” AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 133) What is target costing? Answer: Companies sometimes strongly position their products on price and then tailor other marketing mix decisions to the prices they want to charge. Here, price is a crucial productpositioning factor that defines the product’s market, competition, and design. Firms support such price-positioning strategies with a technique called target costing, whereby they start with an ideal selling price based on customer value considerations and then target costs that will ensure that the price is profitable. AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Easy 134) Is price the main element of a company’s marketing strategy? Answer: Price is only one element of the company’s broader marketing strategy. So, before setting price, the company must decide on its overall marketing strategy for the product or service. If a company has selected its target market and positioning carefully, then its marketing mix strategy, including price, should be straightforward. For example, Tesla targets high-end, technology-driven buyers with sophisticated all-electric cars that “accelerate the advent of sustainable transportation.” Such elevated targeting and positioning dictate charging premium prices. AACSB: Written and oral communication Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 135) Compare and contrast pure competition and oligopolistic competition. Answer: Under pure competition, the market consists of many buyers and sellers trading in a uniform commodity, such as wheat, copper, or financial securities. No single buyer or seller has much effect on the going market price. In a purely competitive market, marketing research, product development, pricing, advertising, and sales promotion play little or no role. Thus, sellers in these markets do not spend much time on marketing strategy. On the other hand, under oligopolistic competition, the market consists of only a few large sellers. Because there are few sellers, each seller is alert and responsive to competitors' pricing 43 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

strategies and marketing moves. AACSB: Application of knowledge; Written and oral communication Skill: Synthesis Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Challenging 136) Briefly discuss monopolistic competition. Answer: Under monopolistic competition, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price. A range of prices occurs because sellers can differentiate their offers to buyers. Because there are many competitors, each firm is less affected by competitors' pricing strategies than in oligopolistic markets. Sellers try to develop differentiated offers for different customer segments and, in addition to price, freely use branding, advertising, and personal selling to set their offers apart. AACSB: Analytical thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 137) How should a company maintain a brand’s value? Answer: Companies must be careful not to squander a brand’s value by slashing prices or handing out deep discounts. Unavoidable temporary price adjustments should be consistent with the brand’s basic value proposition. AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 138) What determines the elasticity of demand? Answer: Marketers also need to know price elasticity—how responsive demand will be to a change in price. If demand hardly changes with a small change in price, we say demand is inelastic. If demand changes greatly, we say the demand is elastic. If demand is elastic rather than inelastic, sellers will consider lowering their prices. Under elastic demand, a lower price will trigger sharply increased demand and lead to higher revenues and profits. This practice makes sense as long as the extra costs of producing and selling more do not exceed the extra revenue. At the same time, most firms want to avoid steadily eroding prices that turn their products into commodities. In recent years, forces such as deregulation and the instant price comparisons facilitated by the internet and mobile and other technologies have turned products ranging from phones and computers to new automobiles into undifferentiated commodities in some consumers’ eyes, leading to increased consumer price sensitivity. AACSB: Reflective thinking Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors 44 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

affecting a firm's pricing decisions. Difficulty: Moderate 139) Briefly describe how economic conditions impact a firm's pricing strategies. Answer: In the aftermath of the Great Recession of 2008–2009, many consumers rethought the price-value equation. They tightened their belts and become more value conscious. Consumers continued their thriftier ways well beyond the economic recovery. As a result, many marketers increased their emphasis on value-for-the-money pricing strategies. More recently, driven by constrained national and global supply chain issues and by money poured into the economy to combat the impact of the COVID-19 pandemic, inflation rose rapidly. Inflation hit a 40-year high in early 2022 as consumer prices skyrocketed across the board, causing consumers to be even more concerned about prices. The most obvious response to such economic realities is to find ways to cut prices and offer discounts. But a respectable price premium is one of the most valuable assets a marketer can possess. Lower prices might make products more affordable and help spur short-term sales. However, such price cuts can have undesirable long-term consequences. Lower prices mean lower margins. Deep discounts may cheapen a brand in consumers’ eyes. And once a company cuts prices, it’s difficult to raise them again when the economy recovers. AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate 140) "Beyond the market and the economy, the company must consider several other factors in its external environment when setting prices." Explain this statement. Answer: Beyond the market and the economy, the company must consider several other factors in its external environment when setting prices. It must know what impact its prices will have on other parties in its environment. How will resellers react to various prices? The company should set prices that give resellers a fair profit, encourage their support, and help them to sell the product effectively. The government is another important external influence on pricing decisions. Finally, social concerns may need to be taken into account. In setting prices, a company’s short-term sales, market share, and profit goals may need to be tempered by broader societal considerations. AACSB: Application of knowledge Skill: Concept Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm's pricing decisions. Difficulty: Moderate Quantitative Questions 1) Peloton offered a bike with monthly subscriptions to the firm’s services for $99 a month for 39 months. What is the total cost of the bike for consumers that took this deal? Ignore the time value of money. 45 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

A) $3,111 B) $3,861 C) $4,112 D) $5,219 E) $5,388 Answer: B; Not considering the time value of money the total cost is simply $99 x 39 months = $3,861. AACSB: Analytical thinking Skill: Application Objective: LO 10.1: Answer the question “What is price?” and discuss the importance of pricing in today’s fast-changing environment. Difficulty: Moderate Use the following information to answer questions 2, 3, 4, 5, 6, 7, and 8. Carenza Industries makes hand mixers in a variety of colors. Management has introduced some upgrades to the mixers and the new products will be available for sale in one month. The variable cost to produce the mixers is $37 per mixer. The firm also incurs $400,000 in fixed costs to produce the mixers. Management expects to sell 95,000 mixers in the next year. 2) What are the total variable costs for Carenza Industries if they make and sell 95,000 mixers? A) $400,000 B) $3,515,000 C) $3,915,000 D) $95,000 E) $950,000 Answer: B; Total variable costs $37 x 95,000 = $3,515,000. AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price , identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 3) What are the total production costs for Carenza Industries if they make and sell 95,000 mixers? A) $400,000 B) $3,515,000 C) $3,915,000 D) $95,000 E) $950,000 Answer: C; Total costs = fixed costs + total variable costs. So, $400,000 + ($37 x 95,000) = $3,915,000. AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price , identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. 46 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

Difficulty: Moderate 4) How much profit will Carenza Industries make if they sell the mixers for $65 each? A) $400,000 B) $3,515,000 C) $3,915,000 D) $2,260,000 E) $950,000 Answer: D; Total profit = revenue – costs = ($65 x 95,000) – [$400,000 + (95,000 x $37)] = $2,260,000. AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price , identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 5) How many units does Carenza Industries need to sell to break-even if the price the mixers at $65 each? A) 10,861 units B) 11,312 units C) 12,616 units D) 13,458 units E) 14,286 units Answer: E; Break-even units = Fixed costs/(price – variable costs) = $400,000/($65 - $37) = 14,285.7, or 14,286 units. AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price , identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 6) What is the break-even level of revenue for Carenza Industries if the mixers are priced at $65 each? A) $817,904 B) $928,590 C) $991,002 D) $1,028,114 E) $1,028,563 Answer: B; Break-even units = Fixed costs/(price – variable costs) = $400,000/($65 - $37) = 14,285.7, or 14,286 units. Now multiply the break-even units x price. So, 14,286 x $65 = $928,590. AACSB: Analytical thinking Skill: Application

Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Challenging 7) What is the unit cost per mixer if Carenza makes and sells 110,000 mixers in the second year of production and variable costs increase to $41 per unit? A) $3.64 B) $28.41 C) $44.64 D) $41.00 E) $48.15 Answer: C; Unit costs per mixer = [$400,000/110,000 + $41 = $44.64 AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Moderate 8) How much should Carenza Industries charge for the mixers if it wants a 35% return on sales and the total costs are $45 per mixer? A) $83.64 B) $74.41 C) $59.64 D) $69.23 E) $60.75 Answer: D; Markup price = unit cost/(1 – desired return on sales). So, $45/(1 - .35) = $69.23 per mixer. AACSB: Analytical thinking Skill: Application Objective: LO 10.2: Define price, identify the major pricing strategies, and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. Difficulty: Easy 9) Jimson Corporation conducted a market study using two different prices for their product and determined that at $35 a unit they would sell 50,000 units a year. However, if they priced the units at $32 they would sell 56,000 units a year. Fixed costs are $300,000 and variable costs are $21 a unit. How much profit will Jimson Corporation make if they select the best option? A) $316,000 B) $400,000 C) $411,000 D) $520,000 E) $625,000 Answer: B; Compute the profits from each option; Profit at $35 = ($35 x 50,000) – [$300,000 + ($21 x 50,000)] = $400,000. Profit at $32 = ($32 x 56,000) - [$300,000 + ($21 x 56,000)] = 48 Copyright © 2024 Pearson Education Ltd. All Rights Reserved.

$316,000. AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm’s pricing decisions. Difficulty: Challenging 10) Store XYU sold $22.4 million worth of merchandise out of store with 15,560 square feet of floor space. How much did sales revenue did they generate per square foot? A) $1,439.59 B) $991.14 C) $1,652.11 D) $1,512.92 E) $1,639.59 Answer: A; You compute this answer by taking total revenue and dividing by the square feet. So, $22,400,000/15,560 = $1,439.59 revenue per square foot. AACSB: Analytical thinking Skill: Application Objective: LO 10.3: Identify and discuss the other important external and internal factors affecting a firm’s pricing decisions. Difficulty: Moderate

Principles of Marketing, 19e (Kotler) Chapter 11 Pricing Strategies: Advanced Topics 1) Companies set not a single price, but a pricing ________ that covers different items in its line and changes over time as products move through their life cycles. A) by-product B) structure C) loop D) cycle E) bundle Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy 2) Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________ pricing. A) comparative B) competitive C) market-skimming D) market-segmentation E) cost-plus Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy 3) A market-skimming pricing strategy can backfire when A) the product's quality supports its higher price B) enough buyers want the products at the initial price C) competitors are able to enter the market D) competitors cannot easily undercut prices E) producing a smaller number of goods is feasible Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy

4) When a company sets a high price for a new product with the intention of reducing the price in the future, it is using the ________ pricing strategy. A) market-skimming B) cost-plus C) market-segmentation D) market-penetration 1 Copyright © 2024 Pearson Education Ltd.

E) competitive Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy Refer to the following scenario to answer questions 5, 6, and 7. Jericho Watches Inc. is capitalizing on a trend among the youth to wear different watches every day. The firm just developed a new watch that can be visibly reconfigured to look different by switching the watch face and band. The switch is easy and initial test markets show positive results at several different price points. However, Jericho believes that competitors will be able to offer something similar in a few months. Jericho has a very positive upscale image among consumers. 5) Which pricing strategy should Jericho use to maximize earnings? A) market-penetration pricing B) price skimming pricing C) competitive pricing D) cost-plus pricing E) product-line pricing Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 6) Jericho’s pricing strategy will work best if some consumers are willing to wait for the price to fall prior to buying the watch instead of buying a competitor’s product. Answer: TRUE AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 7) How would Jericho implement a price-skimming strategy? Answer: Jericho should set high initial prices to skim revenues layer by layer from the market. The firm begins by charging high prices for customers who are willing to pay the most to be first to own the product or to get it quickly. Then, over time, they lower prices to attract customers who are willing to pay less. AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 2 Copyright © 2024 Pearson Education Ltd.

8) Which of the following is true of price skimming? A) It is effective in situations in which competitors are able to undercut prices easily. B) It can be profitably used when the product's quality and image support its price. C) It involves underpricing products so that companies make larger sales. D) It is ineffective in situations in which competitors are unable to enter the market easily. E) It leads to a situation in which the company completes more, though less profitable, sales. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 9) Companies that set a low price for a new product in order to attract a large number of buyers and a large market share are using the ________ strategy. A) market-skimming pricing B) market-penetration pricing C) cost-plus pricing D) inclusive pricing E) exclusive pricing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy 10) Market-penetration pricing strategies work best for a new product when ________. A) the market is highly price insensitive B) production and distribution costs do not vary with sales volume C) the product's quality and image support a high price D) a low price helps keep out the competition E) there are no competitors in the market Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 11) Which of the following is true of market-penetration pricing? A) It should be used when the product's quality and image support a high price. B) It involves setting a high price for a new product to appeal to the elite in society. C) It results in drawing in large numbers of buyers quickly, winning a large market share. D) It is best used in conjunction with a market-skimming pricing strategy. E) It results in the company making fewer and less profitable sales. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. 3 Copyright © 2024 Pearson Education Ltd.

Difficulty: Moderate 12) In a bid to attract more customers in a market that has several competitors, Barrymore's Bakery slashed the prices of all its products by 50 percent. Managers at the firm reasoned that lower prices would draw in even more customers, making up for the reduction in price several times over. Which of the following pricing strategies are they using? A) market-skimming pricing B) market-penetration pricing C) captive-product pricing D) cash discount pricing E) by-product pricing Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Challenging 13) Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed countries with the goal of gaining mass-market share quickly. Which of the following pricing strategies would help the firm meet its goal? A) market-skimming pricing B) market-penetration pricing C) market-segmentation pricing D) cost-plus pricing E) captive-product pricing Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Challenging

Refer to the scenario below to answer questions 14, 15, 16, and 17. Champion, Inc. is a manufacturer of lunch boxes, school bags, and school stationery. Champion’s CEO, Charles Payton, intends to enter several new markets this year since the firm’s manufacturing costs fall substantially as volume increases. Payton would like to capitalize on these economies of scale by moving more product. However, the firm’s highly visible products have their own unique images that are copyrighted which provides Champion some protection from competitors. Champion’s designs are also a hot item right now among preteens. Payton also realizes consumer tastes change rapidly so he might need to grab as much market share as possible while his product is hot. He will need to make some decisions about pricing strategy very soon. 14) Which of the following best supports a market-penetration strategy for Champion? A) Production costs increase as sales volume increases. B) It is very difficult for competitors to enter the market. 4 Copyright © 2024 Pearson Education Ltd.

C) The cost of producing a smaller volume is negligible. D) The quality of the products supports high initial prices. E) The market for the products is highly price sensitive. Answer: E AACSB: Reflective thinking Skill: Critical Thinking Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Challenging 15) Which of the following best supports a price-skimming strategy for Champion? A) Production costs decrease as sales volume increases. B) It is very easy for competitors to enter the market. C) The fact that consumer tastes change rapidly. D) The popularity of the products supports high initial prices. E) The market for the products is highly price sensitive. Answer: D AACSB: Reflective thinking Skill: Critical Thinking Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Challenging 16) The existence of economies of scale for Champion’s products lends support to a marketpenetration pricing strategy. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy 17) What factors support Champion deciding to use a market-penetration pricing strategy? Answer: The economies of scale that can be achieved with volume support market-penetration pricing. Also, the fact that Champion’s products are popular would give the firm an edge in increasing its market share. The old adage says “strike while the iron is hot” indicates the time to gain market share is when the product’s are popular. AACSB: Analytical thinking Skill: Concept Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate

18) Firms often use penetration pricing to attract customers to their overall offerings. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 5 Copyright © 2024 Pearson Education Ltd.

19) Price skimming makes sense if the product’s quality and image support a higher price. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy 20) Market penetration pricing makes sense if the product’s quality and image support a higher price. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy 21) Kavian Industries introduced a high-end electronic device that allows users to communicate with the home entertainment systems and program playlists to come on at certain times to make the house appear occupied. The firm started with a high price and after a few months lowered the price to attract the next market segment. Kavian is using a market penetration pricing strategy. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 22) Differentiate between market-skimming and market-penetration pricing strategies. Explain the conditions within which they are effective. Answer: Market-skimming is used to skim revenues layer by layer from the market by entering the market with high initial prices. The product's quality and image must support its higher price, and enough buyers must want the product at that price. The costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Competitors should not be able to enter the market easily and undercut the high price. Market penetration is used to penetrate the market quickly and deeply to attract a large number of buyers quickly and win a large market share by setting a low price initially when it enters the market. The market must be highly price sensitive so that a low price produces more market growth. Production and distribution costs must fall as sales volume increases. Also, the low price must help keep out competition and be maintained over time. AACSB: Application of knowledge; Written and oral communication Skill: Synthesis Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Challenging 23) For what types of products might marketers use market-skimming pricing? Answer: Market-skimming pricing works when the product's quality and image support the higher price. For example, companies selling high-tech electronics may use market-skimming pricing successfully. 6 Copyright © 2024 Pearson Education Ltd.

AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 24) Why might marketers use market-penetration pricing? Answer: Marketers use such pricing when attempting to attract a large number of buyers quickly and win a large market share; such pricing may be common when competition for products is high. AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 25) How does product differentiation impact the firm’s choice of pricing strategy? Answer: Firms can use price-skimming strategy if the product is well differentiated so that competitors cannot undercut its high price and easily grab customers. Otherwise, a marketpenetration pricing might be more appropriate. AACSB: Application of knowledge Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 26) Which of the following product mix pricing strategies involves setting prices across an entire product range based on cost differences between the products, customer evaluations of different features, and competitors' prices? A) by-product pricing B) product bundle pricing C) optional product pricing D) captive product pricing E) product line pricing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Easy 27) Microsoft offers several different options of computers ranging from the Surfaces Go tablet that starts a $399 to the Surface Studio all-in-one PC that starts at $3,500. There are multiple models in between these two options and all of them can be customized which results in a wide range of price points. What pricing strategy is Microsoft using for its range of computing options? A) product line pricing B) product bundle pricing C) captive product pricing D) by-product pricing 7 Copyright © 2024 Pearson Education Ltd.

E) optional product pricing Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 28) Which of the following is true of product line pricing? A) The price steps take cost differences between products in the line into account. B) The pricing strategy cannot be used by companies in developed countries. C) The price steps do not account for the prices of similar products from competitors. D) The pricing strategy involves overpricing products so that they appeal to the elite. E) The customer's perception of the value of different features is considered irrelevant. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 29) Which of the following product mix pricing strategies involves pricing additional or accessory products sold along with the main product? A) inclusive product pricing B) exclusive product pricing C) by-product pricing D) product bundle pricing E) optional-product pricing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Easy 30) Which of the following product mix pricing strategies involves pricing products that can only be used with the main product? A) by-product pricing B) product bundle pricing C) captive product pricing D) product line pricing E) optional product pricing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the 8 Copyright © 2024 Pearson Education Ltd.

profits from the total product mix. Difficulty: Easy 31) Which of the following product mix pricing strategies does Amazon use when it set the prices on Kindle readers and tablets? A) product-segmented pricing B) by-product pricing C) customer-segmented pricing D) captive product pricing E) product bundling pricing Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 32) In the case of services, captive product pricing is called ________ pricing. A) by-product B) optional product C) two-part D) bundle E) segmented Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Easy 33) When amusement parks charge customers for admission and later for food and beverages, they are following a ________ pricing strategy. A) by-product B) product line C) penetration D) skimming E) two-part Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 34) Beach Heaven uses two-part pricing for its holiday resort charges. Because this is a service, the price is broken into a fixed fee for the room plus a(n) ________ usage rate for activities, including kite-sailing and childcare. 9 Copyright © 2024 Pearson Education Ltd.

A) fixed B) variable C) standard D) market E) optional Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 35) Poultry processors learned that rendering chicken feet into lard was costing them money since Chinese consumers consider them a delicacy and will pay more for the chicken feet than the actual chicken meat. What type of pricing system are these processors using? A) product bundle B) optional product C) captive product D) by-product E) product line Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Easy 36) Phone Company XXY charges different price for data packages based on the number of minutes a customer expects to use data each month. What type of pricing are they using? A) bundled product B) captive product C) variable usage rate D) optional product E) primary product Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 37) Which of the following is true of product bundle pricing? A) It promotes the sale of products that consumers might not otherwise buy. B) It is used to set prices across an entire product range based on customer evaluations. C) It forces customers to buy product parts that are only compatible with the main product. D) It results in companies making fewer–though more profitable–sales. E) It involves pricing the main product low and setting high markups on the supplies. 10 Copyright © 2024 Pearson Education Ltd.

Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate Refer to the scenario below to answer questions 38, 39, and 40. Vickie Ng started selling her products online about ten years ago. Her biggest selling items are pearl necklaces. She also sells rings, earrings, and broaches as individual items and the pearls come in multiple color shades. Vickie sources her pearls from pearl farms Vietnam so she gets them at very reasonable prices and is able to pay her relatives to make the jewelry. It gives them an income source and provides her with a good income as well. The pearls she buys are also heavily discounted since they are baroque pearls and oddly shaped. The perfect round pearls go for very high prices and the pearl farmers need a market for the ones that are not graded high enough to be made into high-end jewelry. When you seed an oyster you never really know what shape the pearl will be at harvest. Vickie’s business was doing very well for several year but lately sales have fallen off. One of the strategies she is considering is whether to offer complete jewelry sets for a single price. She could price the sets where they would save the customer about 20% off what they would pay if they purchased the individual items. She would still make a handsome profit, but she is uncertain about how much that would affect total revenue. Would she lose more money on her individual item sales than she earned on the jewelry sets? 38) Which of these product price mix strategies is Vickie Ng’s supplier using when they sell her the baroque pearls? A) optional product pricing B) product bundle pricing C) by-product pricing D) dynamic pricing E) captive product pricing Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 39) Which of these product price mix strategies is Vickie Ng considering using for her jewelry sets? A) optional product pricing B) product bundle pricing C) by-product pricing D) dynamic pricing 11 Copyright © 2024 Pearson Education Ltd.

E) captive product pricing Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging

40) What factors does Vickie need to consider if she decides to use product bundle pricing? Answer: Vickie needs to set the price low enough to attract buyers. A bundle price might encourage some people to buy the jewelry bundle that would not otherwise purchase the items. She also needs to decide whether to allow mixed bundling and let customers choose some items and not others. For example, someone might just want a single strand of baroque pearls but want them in several different colors. AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 41) James is an Illinois farmer that grows corn used for ethanol production. However, lately he found a market for the corn stalks that are used for animal feed. In the past he just plowed them under. However, now he sells them and makes a little extra cash. James probably used byproduct pricing when he sells the corn stalks. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 42) A popular video game maker sells the game console at cost and makes its profit on the video games it sells. This is an example of optional-product pricing. Answer: FALSE AACSB: Application of knowledge; Analytical thinking Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate

43) Superior Boats sells a few basic models that can all have various upgrades such as entertainment systems and even grills. Each boat is customized according to the buyer’s specifications. Superior Boats uses optional-product pricing to determine the final cost of the boat. Answer: TRUE 12 Copyright © 2024 Pearson Education Ltd.

AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 44) Jamal sells specialized air fresheners that release scent every hour. He sells the air fresheners at cost and then makes his profit on the sales of scent cartridges that are the only type that fit in his machines. Jamal practices by-product pricing. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 45) Sensenig Propeller manufactures replica antique wooden airplane propellers. In the process of production, the company generates a great deal of scrap hardwood. How can using by-product pricing benefit the company? Answer: Using by-product pricing, Sensenig can seek a market for the hardwood and should accept any price that covers more than the cost of storing and delivering the by-products. This practice allows Sensenig to reduce the main product's price to make it more competitive. Sensenig might even find that the by-products themselves are profitable. AACSB: Application of knowledge; Written and oral communication Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 46) Explain product line pricing. Answer: With product line pricing, management must decide on the price steps to set between the various products in a line. The price steps should account for cost differences between the products in a line, customer evaluations of different product features, and competitors' prices. The seller's task is to establish perceived quality differences that support the price differences between various price points. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 47) Explain the optional-product pricing model. Answer: Some companies use optional-product pricing models when consumers have the ability to add accessories or additional features. Cars almost always come with various options that add to the sales price of the vehicle. The tires and rims may be upgraded, or an undercoat applied to prevent rust. All of the options that are added to the base model will cost more and firms set the prices accordingly. 13 Copyright © 2024 Pearson Education Ltd.

AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 48) What are the advantages and disadvantages of using captive-product pricing? Answer: Captive products can account for a substantial portion of a brand’s sales and profits. However, finding the right balance between the main-product and captive-product prices can be tricky. Even more, consumers trapped into buying expensive captive products may come to resent the brand that ensnared them. For example, Gillette has lost market share in recent years as price-fatigued customers have shifted to lower-priced direct-to-consumer upstarts such as Dollar Shave Club and Harry’s. AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 49) What is the purpose of by-product pricing? Answer: Producing products and services often generates by-products. If the by-products have no value and if getting rid of them is costly, this will affect the pricing of the main product. Using by-product pricing, the company seeks a market for these by-products to help offset the costs of disposing of them and help make the price of the main product more competitive. In some cases, the by-products turn into profit centers. AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 50) Acme Construction does a lot of remodels and always attempts to recycle the old materials by selling them to various used goods stores. However, they never know prior to the demolition what materials they might be able to salvage. What type of pricing model should Acme use? Justify your response. Answer: Acme should use by-product pricing to recover additional profits that will help offset the costs of disposing of some of the construction materials they are unable to salvage. AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 51) What is product bundle pricing and when would a firm use this pricing model? Answer: Using product bundle pricing, sellers often combine several products and offer the bundle at a reduced price. Price bundling can promote the sales of products consumers might not otherwise buy, but the combined price must be low enough to get them to buy the bundle. 14 Copyright © 2024 Pearson Education Ltd.

AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 52) What two factors do marketers need to keep in mind when using product bundle pricing? Answer: When pricing product bundles, marketers should keep two factors in mind. First, to allow a low combined price, there should be few or no additional costs associated with bundling. Second, allowing customers the flexibility to purchase the component products either separately or in the bundle (called mixed bundling) almost always leads to higher profits than offering products only separately or only in a bundle. AACSB: Application of knowledge Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 53) Which of the following price adjustment strategies involves reducing prices to reward customer responses such as volume purchases, paying early, or participating in sales-support programs? A) product bundle pricing B) captive product pricing C) product line pricing D) dynamic pricing E) discount and allowance pricing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 54) Firm XYV sells products all over the world and adjusts prices based on the country differences. This is an example of pricing. A) allowance B) dynamic C) discount D) international E) quota Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 15 Copyright © 2024 Pearson Education Ltd.

55) Which of the following price adjustment strategies offers a price reduction to buyers who pay their bills promptly? A) cash discount B) season discount C) quantity discount D) trade discount E) functional discount Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 56) A seller offers a ________ to trade-channel members who perform certain functions, such as selling, storing, and record keeping. A) functional discount B) storage allowance C) cash discount D) promotional allowance E) quantity discount Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 57) The discount offered by Glamor Gifts to customers who bought Valentine-themed merchandise the week following Valentine's Day is an example of a ________. A) functional discount B) seasonal discount C) trade discount D) cash discount E) time-based discount Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 58) Larry purchased a new fishing boat after seeing an advertisement offering $1,000 towards the purchase of a new boat if you exchanged your old one, regardless of condition. What type of allowance did Larry receive? 16 Copyright © 2024 Pearson Education Ltd.

A) Promotional B) Trade-in C) Depreciation D) Segmented E) Functional Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 59) Shoe Trends, a company that manufactures formal shoes for men and women, offers to give its customers $10 off a new pair of shoes during the holiday season. What is this type of price adjustment called? A) functional discount B) captive product pricing C) seasonal discount D) trade-in allowance E) trade discount Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 60) In return for participating in Honda advertising and sales support programs, Honda dealerships are rewarded with payments or price reductions, which are known as ________. A) seasonal discounts B) functional allowances C) cash discounts D) promotional allowances E) trade-in allowances Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 61) Rialto Theater offers senior discounts for movie tickets. Which type of price adjustment is Rialto using? A) segmented B) variable C) flexible 17 Copyright © 2024 Pearson Education Ltd.

D) cost-plus E) reference Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 62) Alfonso’s Mexican Restaurants all offer military members a reduced price. What type of pricing is Alfonso using? A) psychological B) product form C) customer-segment D) captive product E) by-product Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 63) Lamont purchased round-trip business-class airfare to Sweden which cost him almost $7,000. He priced the next level of seating and discovered it was only $800. The difference was significant but the reclining seats in business-class made it worth the extra money. What type of pricing is the airline using? A) product-form B) optional product C) captive product D) by-product E) seasonal Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 64) Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that do not, even though the cottages and services offered are identical in every other aspect. This form of pricing is called ________ pricing. A) location-based B) time-based C) by-product D) seasonal E) captive product 18 Copyright © 2024 Pearson Education Ltd.

Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 65) Which type of pricing is only effective if the market can be divided into different groups with different degrees of product demand? A) segmented B) seasonal C) promotional D) product line E) captive product Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 66) When a firm varies its price by the season, it is using ________ pricing. A) product form B) customer-segment C) location-based D) time-based E) value-added Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 67) Firm XYZ makes a luxury brand purse that it sells for $9,000 even though it does not cost any more to manufacture than the firm’s other line of handbags that sell for around $200. What type of pricing is Firm XYZ using? A) captive product pricing B) psychological pricing C) by-product pricing D) promotional pricing E) international pricing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. 19 Copyright © 2024 Pearson Education Ltd.

Difficulty: Moderate 68) Which term refers to prices that buyers carry in their minds and check with when they look at a given product? A) product line prices B) reference prices C) location-based prices D) product form prices E) time-based prices Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 69) As Salisa shopped for groceries she noticed a store brand of soup was selling for $1.09 a can. The comparable brand name soup was $2.25 a can. Salisa decided to try the store band given the price difference. What type of price did Salisa use to help her decide which soup to buy? A) Comparable price B) Seasonal price C) Reference price D) Product price E) Promotional price Answer: C AACSB: Reflective thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 70) La Belle released a cut glass bottle of perfume at $299 per item, even though its major competitor prices its signature scent at $99 per item. La Belle reasons that customers in search of luxury goods will prefer its product because they are likelier to believe that high price indicates superior quality. What price adjustment strategy is evident in its reasoning? A) seasonal pricing B) time-based pricing C) captive product pricing D) psychological pricing E) location-based pricing Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 20 Copyright © 2024 Pearson Education Ltd.

71) What type of pricing is being used when a company temporarily prices its product below the list price or even below cost to create buying excitement and urgency? A) segmented pricing B) international pricing C) reference pricing D) promotional pricing E) basing-point pricing Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 72) Low-interest financing and longer warranties are both examples of ________ pricing. A) segmented B) promotional C) product bundling D) captive product E) product form Answer: B AACSB: Reflective thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 73) Which of the following involves adjusting prices to account for the physical location of customers? A) location-based pricing B) geographical pricing C) domestic pricing D) interior pricing E) captive pricing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 74) Comma Industries charges the same delivered price for its product regardless of where the customer lives. Comma’s management knows the shipping costs vary but they want customers to feel like they all receive equal treatment. What type of pricing strategy is Comma using? A) basing-point pricing 21 Copyright © 2024 Pearson Education Ltd.

B) zone pricing C) dynamic pricing D) FOB-origin pricing E) Uniform-delivered pricing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 75) Crafty Products Industries sells craft items and each customer pays the same price but pays the specific freight charges for the product to be shipped from the factory to its destination. What type of pricing is Crafty using? A) zone pricing B) basing-point pricing C) FOB-origin pricing D) dynamic pricing E) uniform-delivered pricing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 76) If Detroit DLX charges the same price for the delivery of its product to customers located in the states near the Great Lakes, but a different price to customers elsewhere, the company is using ________. A) psychological pricing B) promotional pricing C) zone pricing D) reference pricing E) uniform-delivered pricing Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 77) Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing. A) FOB-origin B) basing-point C) zone 22 Copyright © 2024 Pearson Education Ltd.

D) uniform-delivered E) freight-absorption Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 78) ________ is a pricing strategy in which the company sets up two or more clearly identified geographic regions within which all customers pay the same total price. A) Freight-absorption pricing B) Zone pricing C) Uniform-delivered pricing D) FOB-origin pricing E) Basing-point pricing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 79) In which of the following geographic pricing strategies would customers located close to the company pay the same amount as customers in distant locations? A) uniform-delivered pricing B) zone pricing C) FOB-origin pricing D) location-based pricing E) reference pricing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 80) With which pricing strategy is often used for market penetration in order to gain business? A) FOB origin pricing B) freight-absorption pricing C) basing-point pricing D) location-based pricing E) uniform-delivered pricing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of 23 Copyright © 2024 Pearson Education Ltd.

customers and situations. Difficulty: Easy 81) The Internet offers ________, where the price can easily be adjusted to meet changes in demand. A) captive pricing B) dynamic pricing C) basing-point pricing D) price bundling E) cost-plus pricing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 82) Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold varies according to what Mike’s competitors are currently charging. He pays for a data service that he used to update his prices in real time. This strategy is an example of ________. A) time-based pricing B) seasonal pricing C) dynamic pricing D) promotional pricing E) penetration pricing Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 83) A functional discount might be given to a channel member who stores inventory for the manufacturer. Answer: TRUE AACSB: Reflective thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 84) International prices should be set based on the production costs in each country. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of 24 Copyright © 2024 Pearson Education Ltd.

customers and situations. Difficulty: Easy 85) Chenyi bought a new car which came with free oil changes and service until the loan was paid off. This is an example of promotional pricing. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 86) Company XYZ divided the market into five geographic regions and charges the same shipping rate to customers that live in the same region. This is an example of uniform-delivered pricing. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 87) Dynamic pricing is now easier given the availability of big data and sophisticated data mining techniques. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 88) Why do businesses use cash discounts when they are in essence losing some money on the sale? Answer: Such discounts are customary in many industries in order to reward a customer who pays bills promptly. The practice encourages customers to pay early, giving the firm quicker and more reliable access to cash. A cash discount can also help to build customer loyalty to the firm. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 89) Explain problems that might occur if dynamic and personalized pricing is done improperly. Answer: Dynamic and personalized pricing ensure that prices are aligned with market forces and consumer needs. However, done poorly, they can trigger margin-eroding price wars and damage customer relationships and trust. Customers may resent what they see as unfair pricing practices or price gouging. 25 Copyright © 2024 Pearson Education Ltd.

AACSB: Application of knowledge; Written and oral communication Skill: Synthesis Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 90) Explain the factors involved in setting international pricing. Answer: In some cases, a company can set a uniform worldwide price. However, most companies adjust their prices to reflect local market conditions and cost considerations. A firm must consider economic conditions, competitive situations, laws and regulations, and development of the wholesale and retail system. Consumer perceptions and preferences also may vary from country to country, calling for different prices. The company may have different marketing objectives in various world markets. Costs play an important role in setting international prices. Management must prepare for price escalation that may result from the differences in selling strategies or market conditions. The additional costs of operations, product modifications, shipping and insurance, import tariffs and taxes, exchange-rate fluctuations, and physical distribution must all be factored into the "price." AACSB: Diverse and multicultural work environments; Application of knowledge; Written and oral communication Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 91) List four types of price discounts. Answer: Four types of discounts are cash discount, quantity discount, functional or trade discount, and seasonal discount. AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 92) List four types of segmented pricing. Answer: Four types of segmented pricing are customer-segment pricing, product form pricing, location-based pricing, and time-based pricing. AACSB: Application of knowledge Skill: Concept Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 93) Explain the psychology behind a price of $9.99 instead of $10.00. Answer: Consumers typically see a product that is priced at $9.99 as in the $9 range instead of as $10. The price appears to be cheaper at a subconscious level. AACSB: Application of knowledge; Analytical thinking Skill: Concept 26 Copyright © 2024 Pearson Education Ltd.

Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 94) Casual Comfort sells its catalog items using FOB-origin pricing. Who pays the freight charges? Answer: The customer pays for the freight. AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 95) Explain surge pricing and give some examples. Answer: Ride-sharing services such as Uber and Lyft adjust their fares dynamically during slow or peak times or even based on fluctuating fuel prices, a practice called “surge pricing.” Similarly, supply and demand dictates minute-to-minute price adjustments these days for everything from theater tickets to parking spots and golf course greens fees. The price of a can of soda from a vending machine may now vary as a function of the local temperatures. AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 96) What is basing-point pricing? Answer: Using basing-point pricing, the seller selects a given city as a “basing point” and charges all customers the freight cost from that city to the customer location, regardless of the city from which the goods are actually shipped. AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 97) What is the compromise effect? Answer: When companies use psychological pricing they may have products priced at two extremes such as a “bare bones” model and a high-end model with all the options and upgrades. These companies will also offer a middle of the road model that invokes what is known as the compromise effect on the part of customers, which is psychological comfort derived from avoiding the extremes. AACSB: Application of knowledge Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Challenging 27 Copyright © 2024 Pearson Education Ltd.

98) Which of the following factors would most likely lead to a company initiating a price cut? A) over-demand B) weakened economy C) poor competition D) cost inflation E) weak price competition Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Easy 99) Firm ABC noticed that inventory levels were increasing for some products that could result in losses due to obsolescence. Which of these pricing strategies should the firm consider using? A) price increase B) match competitors' pricing C) price cuts D) geographic pricing E) custom prices Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Easy 100) Which of the following would most likely lead to a company initiating a price increase? A) weakened economy B) possession of outdated merchandise C) excess capacity D) over-demand E) possession of defective merchandise Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Easy 101) Reasons for a price increase include all of the following EXCEPT ________. A) a desire to improve profits B) cost inflation C) when the alternative is rationing of the product D) decreasing gross margins E) increasing supply of product Answer: E AACSB: Application of knowledge Skill: Concept 28 Copyright © 2024 Pearson Education Ltd.

Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 102) Which of the following is true of price changes? A) Over-demand leads to companies initiating price cuts. B) Changes in price do not affect a brand's image. C) Customer reaction to price changes is not as important as competitor reaction. D) A drop in price can adversely affect how consumers view the brand. E) Excess capacity is a factor that causes increases in price. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 103) Competitors are most likely to react to a price change when ________. A) a large number of competitors are involved B) the product is uniform C) the buyers are not well informed about product features D) buyers are not well informed about price differences E) the products are not uniform Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 104) Questions a company should consider if a competitor initiates a price change include all of the following EXCEPT ________. A) "Are other competitors going to respond?" B) "What will happen to the company's market share if it does not respond?" C) "Is the price change temporary or permanent?" D) "Why did the competitor change the price?" E) "How can we improve our product?" Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Easy 105) When a competitor cuts its price, a company should ________ if it believes it will not lose much market share or would lose too much profit by cutting its own prices. A) reduce its production costs B) reduce its marketing costs C) maintain its current prices and profit margin D) increase its marketing budget to raise the perceived value of the product E) increase its production costs to improve the quality of the product 29 Copyright © 2024 Pearson Education Ltd.

Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 106) Customers perceive a firm is taking advantage of them by raising prices due to a natural disaster. What do the customer believe the firm is doing? A) price gouging B) disintermediation C) dynamic pricing D) psychological pricing E) segment pricing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 107) In response to price cuts from competitors, a cereal company with several more expensive and higher quality cereals introduced a lower-priced option to its product line. This is an example of which of the following responses to a competitor's price cut? A) raising the perceived value of a product B) improving product quality C) accepting a reduced market share D) launching a "fighter brand" E) using high-low pricing Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Challenging 108) One possible response to a competitor’s price cut is to improve product quality and increase price of your product. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 109) One possible response to a competitor’s price cut is to lower the quality of your product to reduce costs so you can lower the price. Answer: FALSE AACSB: Analytical thinking Skill: Concept 30 Copyright © 2024 Pearson Education Ltd.

Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 110) Raising the price of a product will always reduce sales. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate 111) Discuss the conditions under which a company might consider using price cuts or price increases. Answer: Price cuts may be necessary when there is excess capacity. Another time to cut prices is when market share is falling in the face of strong price competition. A company may also cut prices in a drive to dominate the market through lower costs. A major factor in price increases is cost inflation. Rising costs squeeze profit margins and lead companies to pass cost increases along to customers. Another factor leading to price increases is over-demand. When a company cannot supply all its customers' needs, it can raise its prices, ration products to customers, or both. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Challenging 112) When are competitors most likely to react to price changes? How can a firm anticipate the likely reactions of its competitors? Answer: Competitors are most likely to react when the number of firms involved is small, when the product is uniform, and when the buyers are well informed. If the firm faces one large competitor, and if the competitor tends to react in a set way to price changes, that reaction can be easily anticipated. But if the competitor treats each price change as a fresh challenge and reacts according to its self-interest, the company will have to figure out just what makes up the competitor's self-interest at the time. AACSB: Application of knowledge; Written and oral communication Skill: Application Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Challenging 113) How might a consumer view a price cut? Answer: Price cuts have both advantages and disadvantages. A consumer might believe that he or she is getting a good deal on a quality product, or a consumer might believe that the quality of the product has been reduced. AACSB: Application of knowledge Skill: Application Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Challenging 114) What should a company do when it is forced to raise prices? 31 Copyright © 2024 Pearson Education Ltd.

Answer: When price increases are necessary, companies should maintain a sense of fairness to consumers surrounding the increases. Price increases should be supported by company communications telling customers why prices are being raised. AACSB: Application of knowledge Skill: Application Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Challenging 115) What is “shrinkflation” and how do firms use this concept? Answer: Firms may opt to respond to higher costs by substituting less-expensive ingredients instead of raising the price, a process sometimes called “shrinkflation.” Kimberly-Clark raised Kleenex prices by “desheeting”—reducing the number of sheets of toilet paper or facial tissues in each same-priced package. Shrinkflation is successful because many consumers are more sensitive to a price change than to a size or weight change. AACSB: Application of knowledge Skill: Application Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty:

Challenging

116) Which of the following is true of public policies and pricing? A) The government imposes no limits on intrastate pricing issues. B) The Robinson-Patman Act governs interstate commerce. C) Companies have free rein when it comes to setting prices. D) The Sherman Act governs intrastate commerce. E) The Clayton Act encourages the formation of monopolies. Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 117) Which of the following is NOT true of public policies and pricing? A) Companies are free to charge whatever prices they wish. B) Federal, state, and local laws govern the rules of fair play in pricing. C) Deceptive pricing is not permitted. D) Companies must consider broader societal pricing concerns. E) Regulations exist to control predatory pricing. Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 118) The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of ________. 32 Copyright © 2024 Pearson Education Ltd.

A) monopolies B) global partnerships C) competitive markets D) internal markets E) intrastate partnerships Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 119) When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________. A) interstate commerce B) comparative pricing C) price fixing D) skimming pricing E) price bundling Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 120) When sellers price products below cost in order to punish or harm competitors they are engaging in . A) prestige pricing B) competitive pricing C) predatory pricing D) dynamic pricing E) price fixing Answer: C AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Challenging 121) Federal legislation on price fixing requires that sellers set their prices ________. A) based on their fixed and variable costs B) without communication from competitors C) to achieve a specific profit margin D) without the intention of cutting into competitors' profits E) consistently throughout a region Answer: B 33 Copyright © 2024 Pearson Education Ltd.

AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 122) Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most likely guilty of ________. A) market skimming B) price fixing C) deceptive pricing D) price collusion E) predatory pricing Answer: E AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Challenging 123) The ________ seeks to prevent unfair price discrimination by ensuring that sellers offer the same price terms to customers at a given price level. A) FTC's "Guides against Deceptive Pricing" B) Robinson-Patman Act C) Sherman Act D) Clayton Act E) Automobile Information Disclosure Act Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 124) Price discrimination is legal when a ________. A) manufacturer and reseller have agreed upon a specified retail price for a product B) manufacturer sells to retailers in different markets C) seller can prove its costs are different when selling to different retailers D) seller advertises prices that are not actually available to consumers E) seller has not communicated with competitors before announcing prices Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that 34 Copyright © 2024 Pearson Education Ltd.

affect pricing decisions. Difficulty: Moderate 125) Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________. A) defensive B) offensive C) publicized D) private E) uniform across channels Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 126) Mark's Markers, a manufacturer of white board markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of ________. A) captive pricing B) retail price maintenance C) price discrimination D) competitive pricing E) unfair price skimming Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 127) ________ occurs when a seller states price savings that are not actually available to consumers. A) Comparative pricing B) Scanner fraud C) Deceptive pricing D) Market skimming E) Price collusion Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 128) While comparison pricing claims are legal if they are truthful, the FTC warns sellers not to advertise a) factory or wholesale prices unless such prices are what they claim to be, b) 35 Copyright © 2024 Pearson Education Ltd.

comparable value prices on imperfect goods, or c) ________. A) a sale unless the products are available in sufficient quantity to meet expected demand B) in a way which confuses potential buyers of the product C) a description of a product unless all versions of the product are offered with the same pricing terms D) a price reduction unless it is a savings from the usual retail price E) if only a limited quantity are available at the reduced price Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 129) Failure to enter the current price into a retailer's system may result in charges of ________. A) predatory pricing B) scanner fraud C) retail maintenance pricing D) discriminatory pricing E) price fixing Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 130) The Robinson-Patman Act prevents unfair price discrimination. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 131) Manufacturers cannot require a dealer to charge a specific retail price for its products. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 132) Deceptive pricing may be immoral but it is not illegal. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept 36 Copyright © 2024 Pearson Education Ltd.

Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 133) Manufacturers can price discriminate if they prove the costs are different when selling to different retailers. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Easy 134) In what way does the government regulate pricing? Answer: The most important pieces of federal legislation affecting prices are the Sherman, Clayton, and Robinson-Patman acts, initially adopted to curb the formation of monopolies and to regulate business practices that might unfairly restrain trade. Because these statutes can be applied only to interstate commerce, many states have adopted similar provisions for companies that operate locally. Examples include pricing within channel levels and pricing across channel levels. AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Challenging 135) Compare the practices of price fixing and predatory pricing. Explain why each is prohibited by law. Answer: Many federal, state, and local laws govern the rules of fair play in pricing. Two major areas of concern are price fixing and predatory pricing. Companies that engage in price fixing collude to set a common price for their comparable products; price fixing undermines the core element of price competition in our free-market economy. On the other hand, predatory pricing takes price competition too far. Predatory pricing occurs when a company sells a product below cost with the intention of punishing a competitor or by putting a competitor out of business. AACSB: Ethical understanding and reasoning Skill: Synthesis Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Challenging 136) Why is predatory pricing considered illegal? Answer: Predatory pricing works against the principles of a free-enterprise system; predatory pricing allows marketers to sell below cost with the intention of punishing competitors. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. 37 Copyright © 2024 Pearson Education Ltd.

Difficulty: Moderate 137) Why is identifying predatory pricing difficult? Answer: Selling below cost to unload excess inventory is not considered predatory; selling below cost to drive out competitors is illegal. Thus, a given action may or may not be predatory depending on intent, and intent can be very difficult to determine or prove. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Challenging 138) What is deceptive pricing? Answer: Deceptive pricing occurs when a seller states prices or price savings that mislead consumers or are actually not available to consumers. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 139) What guidelines are sellers encouraged to follow when they use comparison pricing? Answer: The Federal Trade Commission’s “Guides against Deceptive Pricing” warn sellers not to advertise (1) a price reduction unless it is a savings from the usual retail price, (2) “factory” or “wholesale” prices unless such prices are what they are claimed to be, and (3) comparable value prices on imperfect goods. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Moderate 140) Jim’s Retail Clothing announced a “25% Off Sale” for the coming holiday weekend. Prior to the sale Jim instructed his staff to put new tags on the clothing that showed a retail price that was 50% above the price on the current tags. After the 25% markdown Jim’s prices were still above the previous price. Is Jim doing anything illegal? Explain your answer. Answer: Yes. Jim is engaging in deceptive pricing. This can occur when a seller states prices or price savings that mislead consumers or are not actually available to consumers. This might involve bogus reference or comparison prices, as when a retailer sets artificially high “regular” prices and then announces “sale” prices close to its previous everyday prices. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 11.5: Discuss the major public policy concerns and key laws and regulations that affect pricing decisions. Difficulty: Challenging Quantitative Questions 38 Copyright © 2024 Pearson Education Ltd.

Use the following information to answer questions 1, 2, and 3. Korelian Products is adopting a market skimming strategy for its new smart watch. During the first six months of sales Korelian will charge $2,300 for the watch and expects to sell 4,000 watches. During the next six months of sales Korelian will lower the price to $2,100 and it expects to sell another 5,500 watches. During the third six-month period, Korelian will lower the price to $1,995 and it expects to sell 8,500 watches. The cost to produce and sell the watches averages $1,330 per watch. 1) How much revenue will Korelian earn in the first six months? A) $7,980,000 B) $9,200,000 C) $11,550,000 D) $16,957,500 E) $19,950,000 Answer: B; Total revenue = $2,300 x 4,000 = $9,200,000 AACSB: Analytical thinking Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Easy 2) How much profit will Korelian make in the first six months? A) $3,880,000 B) $7,980,000 C) $5,130,000 D) $9,200,000 E) $6,305,000 Answer: A; Profit = total revenue – costs. So, ($2,300 - $1,330) x 4,000 = $3,880,000 AACSB: Analytical thinking Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Moderate 3) How much more profit did Korelian make using a price skimming strategy over what they would have made selling all the watches for $1,995 each? A) $577,500 B) $1,220,000 C) $1,797,500 D) $2,221,000 E) $2,875,000 Answer: C; You compute the answer by computing the addition profit for the first two sixmonth periods. So, (4,000 x ($2,300 - $1,995) + (5,500 x (2,100 - $1,995) = $1,220,000 + $577,500 = $1,797,500 AACSB: Analytical thinking Skill: Application Objective: LO 11.1: Describe the major strategies for pricing new products. Difficulty: Challenging 39 Copyright © 2024 Pearson Education Ltd.

Answer questions 4, 5, and 6 using the following information. Computer Masters Inc. uses a product mix pricing strategy so they can fulfil any customer’s need and price range with an off the shelf model. The models they sell, the prices of each model, the profit margins, and last year’s unit sales are included in the table below. Computer Masters Inc. Model Price A $499 B $799 C $1,199 D $1,899

Profit margin 5% 10% 14% 18%

Unit sales year20xx 5,125 11,421 4,852 2,883

4) What is Computer Masters’ total revenue from their entire product mix? A) $2,840,330 B) $9,125,371 C) $12,411,923 D) $22,975,119 E) $27,235,541 Answer: D; You compute this by multiplying unit sales of each model x price and then summing the values. So, (5,125 x $499) + (11,421 x $799) + (4,852 x $1,199) + (2,883 x $1,899) = $22,975,119. AACSB: Analytical thinking Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate

5) How much total profit does Computer Masters make on the product mix? A) $2,840,330 B) $9,125,371 C) $12,411,923 D) $22,975,119 E) $27,235,541 Answer: A; You compute this by multiplying unit sales of each model x price x profit margin for that unit and then summing the values. So, (5,125 x $499 x .05) + (11,421 x $799 x .10) + (4,852 x $1,199 x .14) + (2,883 x $1,899 x .18) = $2,840,330. AACSB: Analytical thinking Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging 6) What is the percentage profit margin for Computer Masters on their product mix? A) 10.62% 40 Copyright © 2024 Pearson Education Ltd.

B) 11.12% C) 11.95% D) 12.36% E) 14.55% Answer: D; You compute this profit margin/ total sales. Total sale is computed by multiplying unit sales of each model x price and then summing the values. So, (5,125 x $499) + (11,421 x $799) + (4,852 x $1,199) + (2,883 x $1,899) = $22,975,119. You compute total profits by multiplying unit sales of each model x price x profit margin for that unit and then summing the values. So, (5,125 x $499 x .05) + (11,421 x $799 x .10) + (4,852 x $1,199 x .14) + (2,883 x $1,899 x .18) = $2,840,330. Profit margin = $2,840,330/$22,975,119 = .1236, or 12.36%. AACSB: Analytical thinking Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Challenging Video Game Firm X uses captive pricing for their products. The game console sells for $199 and has a profit margin of 3%. The games sell for an average of $49.95 each and have a profit margin of 62%. What if the company’s total profit on the sale of 1,900 game consoles and 6,554 games? 7) $11,343 A) $45,764 B) $99,211 C) $155,699 D) $202,971 E) $214,314 Answer: E; You compute this answer by calculating the profit from games and consoles separately and then sum the results. So, ($199 x 1,900 x .03) + ($49.95 x 6,554 x .62) = $11,343 + $202,971 = $214,314. AACSB: Analytical thinking Skill: Application Objective: LO 11.2: Explain how companies choose a portfolio of prices to maximize the profits from the total product mix. Difficulty: Moderate 8) Firm X offers clients purchasing on credit the opportunity to pay early and get a discount. How much will a firm pay that purchased $400,552 of products if the credit terms are 3/15, net 30 and the firm pays on day 15? A) $381,001 B) $355,114 C) $388,535 D) $378,332 E) $398,355 Answer: C; The firm will get a 3% discount for paying in the 15 day window. So, $400,552 x (1 - .03) = $388,535. AACSB: Analytical thinking Skill: Application 41 Copyright © 2024 Pearson Education Ltd.

Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Moderate 9) Gambi’s Restaurant offers a 25% discount on meals to seniors over the age of 60. How much does this discount save a senior that is buying a meal with a menu price of $22? A) $4.00 B) $4.50 C) $5.00 D) $5.50 E) $6.00 Answer: D; You compute this by $22 x .25 = $5.50. AACSB: Analytical thinking Skill: Application Objective: LO 11.3: Discuss how companies adjust their prices to account for different types of customers and situations. Difficulty: Easy 10) Company XXY wants to liquidate some inventory that has built up. How much will they receive from the sale of inventory currently priced at a total of $3,455,000 if they offer a 7% discount to cash buyers? A) $2,933,250 B) $3,213,150 C) $3,311,027 D) $3,343,111 E) $3,363,550 Answer: B; They will get $3,455,000 x (1 - .07) = $3,213,150 AACSB: Analytical thinking Skill: Application Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 12 Marketing Channels: Delivering Customer Value 1) Producing a product or service and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company's ________. A) upstream partnerships B) marketing channels C) inventory providers D) supply chain E) downstream partnerships Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy 2) Which of the following terms refers to the wholesalers and retailers that form a vital link between the firm and its customers? A) factory-supply networks B) downstream partners C) resource banks D) upstream partners E) supply channels Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy

3) The term demand chain is considered limited because it ________. A) advocates a make-and-sell view of the market that relies on a responsive supply network B) suggests that planning starts with raw materials, productive inputs, and factory capacity C) takes a step-by-step, linear view of purchase-production-consumption activities D) ignores the evolution of the global marketplace E) overlooks the needs of target customers Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate 1

4)The _________is composed of the company, suppliers, distributors, and, ultimately, even customers—all of whom partner together to improve the performance of the entire system in delivering customer value and driving profits. A) supply chain B) demand chain C) marketing channel D) value delivery network E) distribution channel Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy 5) Which of the following questions is NOT of major concern regarding marketing channels? A) What role do physical distribution and supply chain management plan in attracting and satisfying customers? B) What impact do marketing channels have on the profitability of the firm and its partners? C) How do channel firms interact and organize to do the work of the channel? D) What problems do companies face in designing and managing their channels? E) What is the nature of marketing channels, and why are they important? Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate

6) Ford makes great trucks. But to make and market just one of its many lines—say, its bestselling F-150 truck model—Ford manages a huge network of people within the company, from marketing and sales people to folks in finance and operations. It also coordinates the efforts of thousands of suppliers, dealers, and advertising agencies and other marketing service firms. The entire network must function together to create and deliver customer value and establish the brand’s “Built Ford Tough” positioning. This is an example of (a)______ A) value delivery network B) make and sell view C) franchising D) team approach E) demand chain Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Challenging

7) From the economic system's point of view, the role of ________ is to transform the assortments of products made by producers into the assortments wanted by consumers. A) upstream partners B) marketing intermediaries C) third-party logistics D) price consultants E) factory supervisors Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy 8) A ______ is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. A) marketing channel B) supply chain C) value delivery network D) demand chain E) customer franchise Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy

9) Members of the marketing channel perform many key functions that include all of the following transactions EXCEPT: A) information B) promotion C) exclusive territorial agreements D) contact E) matching Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy 10) The number of intermediary levels indicates the ________of a channel. A) length B) vertical conflict C) conventional distribution D) corporate VMS E) disintermediation Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy

11) Plasticine Palace supplies its products exclusively to Arts & Crafts, a chain of stationery stores across the country. The chain then makes the plasticine available to end consumers. This is an example of ________. A) a direct marketing channel B) intensive distribution C) an indirect marketing channel D) disintermediation E) extensive distribution Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate 12) Which of the following is NOT a type of flow that connects all institutions in a marketing channel? A) employment flow B) flow of ownership C) physical flow of products D) promotion flow E) information flow Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy 13) The greater the number of channel levels in a marketing channel, the ________. A) less distance between producer and end-consumer B) greater the channel complexity C) less time it takes for products to reach end-consumers D) greater the control producers have over the distribution of their products E) greater the control producers have over the demand of their products Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy

14) Pampered Chef, Mary Kay Cosmetics, and Amway sell their products through home and office sales parties and online websites and social media; companies ranging from GEICO insurance to Quicken Loans to Casper Mattress sell to customers via internet, mobile, and telephone channels. These are examples of _____. A) direct marketing channels B) indirect marketing channels C) channels with one or more intermediaries D) ownership and control of several types of flows E) producer to business distributor to business customer Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate Refer to the scenario below to answer questions 15-17. Giant Beanstalks is a company based in Maryland that processes and cans vegetables. It has contracts with several large farms in Riverdale, 80 miles away from the factory, that agree to sell their produce to Giant Beanstalks. The company's products are available to the public only through Greenleaf, a grocery chain with 38 stores in the country. 15) Which of the following is Giant Beanstalks' downstream partner? A) the management of Greenleaf B) the farmers of Riverdale C) the trucks that carry Giant Beanstalks' products to Greenleaf D) the end-consumers who buy the canned vegetables from Greenleaf E) the logistics division of Giant Beanstalk Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate

16) Giant Beanstalks channel decisions directly affect the prices of its products. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy 17) Describe the supply chain for Giant Beanstalks. Answer: Producing a product or service and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company’s supply chain. The supply chain for Giant Beanstalks consists of upstream (farmers) and downstream partners (the Giant Beanstalk grocery chain). Upstream from the company is the set of firms that supply the raw materials (the vegetables), information, finances, and expertise needed to create a product or service. Marketers have traditionally focused on the downstream side of the supply chain—the marketing channels (or distribution channels)—the grocery stores that look toward the customer. Downstream marketing channel partners, such retailers, form a vital link between the firm and its customers. AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate 18) Each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer is a channel level. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy

19) The number of products supplied indicates the length of a channel. Answer: FALSE AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Easy

20) Provide an example of a company that disrupted a distribution system to gain a competitive advantage. Answer: Airbnb isn’t your traditional hotel experience. It all started when Airbnb founders Brian Chesky and Joe Gebbia decided to make some extra income to help pay the rent on their modest San Francisco loft apartment by renting out three air mattresses on the apartment’s floor at $40 a night each (hence the “air” in Airbnb). Chesky and Gebbia quickly realized that people who booked their air mattresses got a lot more than just a cheap place to stay. They got an authentic “live-like-the-locals” experience. The idea blossomed into Airbnb, an online lodgings marketplace that matches people who need a place to stay with people who have room to spare. AACSB: Application of knowledge Skill: Application Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Challenging

21) Why is the term value delivery network a more relevant expression to use than the terms supply chain or demand chain? Answer: The term supply chain may be too limited, because it takes a make-and-sell view of the business. It suggests that raw materials, productive inputs, and factory capacity should serve as the starting point for market planning. The term demand chain is better because it suggests a sense-and-respond view of the market. Under this view, planning starts by identifying the needs of target customers, to which the company responds by organizing a chain of resources and activities with the goal of creating customer value. However, even a demand chain view of a business may be too limited because it takes a step-by-step, linear view of purchase-productionconsumption activities. Most large companies today are engaged in building and managing a complex, continuously evolving value delivery network. A value delivery network is made up of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate 22) Intermediaries add value to a marketing system by doing all of the following EXCEPT: A) They transform product assortment into the assortment wanted by customers B) They buy large quantities from many producers C) They help match supply and demand D) They consist of separate businesses which maximize personal profits at the expense of the system E) They bridge the major time, place, and possession gaps Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate 23) All of the following are key functions that members of the marketing channel perform EXCEPT___ A) gathering and distributing information B) developing and spreading promotions C) establishing service-firm sponsored retailer franchises D) contacting prospective buyers E) matching and shaping the offer to the buyer's needs Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate 10

24) ________ are complex behavioral systems in which people and companies interact to accomplish individual, company, and channel goals. A) Customer relationship management systems B) Distribution channels C) Partner relationship systems D) Consumer bases E) Buying centers Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 25) Which of the following does NOT apply to channel systems? A) Some channel systems consist of only informal interactions among loosely organized firms. B) Channel systems do not stand still; they evolve. C) Some channel systems are formal interactions guided by strong organizational structures. D) Intermediaries play interchangeable roles in the system. E) Different types of intermediaries develop and emerge. Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Challenging

26) ______refers to conflict between different levels of the same channel— A) Administrative VMS conflict B) Horizontal channel conflict C) Vertical channel conflict D) Conventional distribution channel conflict E) Franchise channel conflict Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 27) Managers at the Imperial Hotel-Chicago complained that the chain's overall image was hurt because Imperial Hotel-Dallas was overcharging guests and providing poor service. The Imperial Hotel was experiencing ________ conflict. A) equilateral B) vertical C) multitiered D) communal E) horizontal Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate

28) The management of two Panizza restaurants has an ongoing disagreement over the discount rate given to students from the local high school. This is an example of ________ conflict. A) intensive B) selective C) exclusive D) horizontal E) vertical Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 29) Which of the following is NOT true about a vertical marketing system (VMS)? A) It consists of producers, wholesalers, and retailers. B) One channel member wields power over the other members. C) One channel member owns the others. D) No member has control over the other members E) There is strong leadership Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 30) Which of the following is true of conventional distribution channels? A) Channel members have complete control over each other. B) Channel members seek to maximize their own profits. C) Channel conflict is governed by formal mechanisms. D) Channel members are assigned roles according to a clearly defined framework. E) Channel members work exclusively for the good of the organization. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate

31) A__________ combines successive stages of production and distribution under single ownership—channel leadership is established through common ownership. A) corporate VMS B) VMS C) conventional distribution channel D).consumer marketing channel E) direct marketing channel Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 32) A(n) ________ consists of independent firms at different levels of production and distribution that join together through well-defined contracts to obtain more economies or sales impact than each could achieve alone. A) horizontal marketing system B) contractual VMS C) corporate VMS D) administered VMS E) franchise organization Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 33) In a(n) ________VMS, leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members. A) corporate B) franchise organization C) contractual D) administered E) conventional Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy

34) Target partners with CVS Health, which operates CVS pharmacies and Minute Clinics in Target stores through a store-within-a-store format. The partnership gives CVS Health more than nearly 1,700 pharmacies and 1,100 clinics at prime locations inside Target stores. This is an example of a(n) A) franchise organization B) horizontal marketing system C) contractual VMS D) administered VMS E) corporate VMS Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 35) Ford and its network of independent franchised dealers is an example of a ________. A) manufacturer-sponsored retailer franchise system B) manufacturer-sponsored wholesaler franchise system C) service-firm-sponsored retailer franchise system D) service-firm-sponsored equity strategic alliance E) manufacturer-and-service-sponsored joint venture Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 36) Fire Up makes fireproof clothing material and it licenses select stores around the world to use its material to make finished products with the Fire Up logo. Which of the following types of franchising is evident here? A) manufacturer-sponsored retailer franchise system B) manufacturer-sponsored wholesaler franchise system C) service-firm-sponsored retailer franchise system D) service-firm-sponsored equity strategic alliance E) manufacturer-and-service-sponsored joint venture Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Challenging 37) Sonic Drive-In has more than 3,500 franchisee-operated restaurants in the United States. It is a ________. 15

A) horizontal marketing system B) manufacturer-sponsored retailer franchise system C) service-firm-sponsored retailer franchise system D) contractual VMS E) manufacturer-sponsored wholesaler franchise system Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 38) A _______is a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments, coordinating channel strategies to maximize total profits across all the channels. A) administered vertical marketing system B) horizontal marketing system C) corporate vertical marketing system D) multichannel distribution system E) conventional marketing system Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 39) Which of the following is most likely a manufacturer-sponsored retailer franchise system? A) international fast food chains like McDonald's and Pizza Hut B) Starbucks outlets operating within Target stores C) Toyota and its network of independent franchised dealers D) licensed bottlers that bottle and sell soft drinks to retailers E) hotel chains like the Ritz Carlton and Shangri-La Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 40) Which of the following is an advantage of a multichannel distribution system? A) harder to control B) generates conflict C) expanded sales and marketing coverage D) differing channel goals E) more competing for customers 16

Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 41) _______occur(s) when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones. A) Disintermediation and channel disruption B) Multichannel distribution C) Direct-to-consumer (DTC) brands D) Administered vertical marketing E) Channel design decisions Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 42) Atlas Imports and Exports sells products directly to consumers via the Atlas Web site, and through local retailers as well. Which of the following is evident here? A) corporate vertical marketing system B) horizontal marketing system C) multichannel distribution system D) administered vertical marketing system E) conventional distribution channel Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 43) Movie Giants offers DVD rentals through its Web site. It also offers DVD rentals via Star City stores. This is an example of a(n)________ distribution system. A) conventional B) inclusive C) intensive D) extensive E) multichannel Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform 17

the work of the channel. Difficulty: Moderate 44) John Deere sells its familiar green-and-yellow lawn and garden tractors, mowers, and outdoor power products to consumers and commercial users through several channels, including John Deere retailers, Lowe’s home improvement stores, and online. It sells and services its tractors, combines, planters, and other agricultural equipment through its premium John Deere dealer network. And it sells large construction and forestry equipment through selected large, full-service John Deere dealers and their sales forces. This is an example of A) market complexity B) reduced control over the system C) multichannel distribution D) a corporate VMS E) mass customization Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 45) Which of the following is a disadvantage of adding new channels in a multichannel distribution system? A) decreasing complexity of markets B) decreasing control over the system C) reducing opportunities for franchising D) lowering sales and market coverage E) minimizing publicity needs Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 46) Traditional intermediaries are dropping by the wayside, as is the case with online marketers taking business from traditional brick-and-mortar retailers. For example, online music download services such as iTunes and Amazon pretty much put traditional music-store retailers out of business. In turn, however, streaming music services such as Spotify, Amazon Prime Music, and Apple Music are now disintermediating digital download services. This is an example of_______. A) Extensive distribution B) Multichannelization C) Disintermediation D) Inclusive distribution E) Cross merchandising 18

Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy

47) The Bookworm began delivering books directly to customers through mail instead of selling through brick-and-mortar companies. This is an example of ________. A) indirect marketing B) disintermediation C) franchising D) exclusive distribution E) intensive distribution Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 48) Which of the following is true of changes in the organization of distribution channels? A) Developing new channels seldom causes conflict with a company's established channels. B) To remain competitive, product and service producers must use fewer marketing channels. C) The growth of the Internet threatens many brick-and-mortar companies with disintermediation. D) Companies have fewer channel options today than they did in the past due to economic problems. E) Advances in technology have decreased the number of channels available to entrepreneurial firms. Answer: C AACSB: Information technology Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 49) A marketing channel works most effectively when each channel member performs the tasks it does best. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 19

50) Vertical conflicts are conflicts between different levels of the same channel. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy

51) In an administered VMS, leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 52) A non-corporate VMS integrates successive stages of production and distribution under single ownership. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy

53) What is horizontal conflict? Illustrate your answer with an example. Answer: Horizontal conflict is conflict that occurs among firms at the same level of the channel. For example, Chevrolet would experience horizontal conflict if two of its dealers in the same area complain that each is being undercut by the other. Student answers will vary. AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 54) What is vertical conflict? Illustrate your answer with an example. Answer: Vertical conflict occurs between different levels of the same channel; an example would be conflict created between a manufacturer and its dealers when it decides to open an online e-commerce Web site for the same product. Student answers will vary. AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform 20

the work of the channel. Difficulty: Moderate 55) What is a conventional distribution channel? Answer: A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a whole. AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 56) Explain power in a vertical marketing system. Answer: A vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system. One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate. AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 57) How can a firm benefit from involvement in a contractual VMS? Answer: A contractual VMS consists of independent firms at different levels of production and distribution that join together through contracts to obtain more economies or sales impact than each could achieve alone. AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Easy 58) Most of the world’s major airlines have joined to together in one of three major global alliances: Star Alliance, Skyteam, or Oneworld. Star Alliance consists of 26 airlines “working in harmony,” including United, Air Canada, Lufthansa, Air China, and Turkish Airlines, among others. This is an example of_______. A) a horizontal marketing system B) a vertical marketing system C) inbound logistics D) a direct marketing system E) a just-in-time system Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform 21

the work of the channel. Difficulty: Moderate 59) Lyft is displacing traditional sellers and taxis. Lyft’s smartphone app lets passengers hail the nearest car A) disintermediation B) multichannel marketing C) intensive distribution D) marketing channel management E) a horizontal marketing system AACSB: Application of knowledge Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 60) Compare a conventional distribution channel with a vertical marketing system (VMS). Answer: A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits, even at the expense of the system as a whole. No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict. On the other hand, a vertical marketing system is a unified system made up of producers, wholesalers, and retailers. While members of a conventional distribution channel seek to maximize their own profits, members of a vertical marketing system all cooperate because either one member owns the others, one has contracts with the others, or one wields more power than the others. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 61) What are the advantages of multichannel distribution systems? Answer: Multichannel distribution systems exist when a single firm sets up two or more marketing channels to reach one or more customer segments. Such a system offers advantages to firms facing large and complex markets. It allows the firms to expand sales and market coverage. It allows firms to tailor their products and services to the specific needs of diverse customer segments. Larger bottom-line profits may result. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 62) How have changes in technology and the growth of online marketing affected the design of marketing channels? Answer: Changes in technology and the growth of online marketing have increased 22

disintermediation, which is the cutting out of marketing channel intermediaries by product or service producers, or the displacement of traditional intermediaries with radically new types. In many industries, traditional intermediaries are dropping by the wayside. For example, many airlines now sell directly to final buyers, cutting retailers and sales agents from their marketing channels. Online marketers take business from traditional brick-and-mortar retailers. AACSB: Application of knowledge Skill: Concept Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 63) Marketing channel design calls for all of the following EXCEPT_______. A) analyzing consumer needs B) setting channel objectives C) identifying major channel alternatives D) using intensive distribution E) evaluating the alternatives Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 64) Marketing channels are part of the overall_______. A) channel disruption B) manufacturer-sponsored retailer franchise system C) customer value delivery network D) horizontal marketing system E) disintermediation Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 65) In designing the marketing channel, a company must balance customer needs and wants with ________. A) the need to make a profit B) the requirement to find channel members to fill all the steps C) the firm's position in the customers' minds D) the desire to be "the best" in all service areas E) the firm's resources and skills to provide all the desired services Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. 23

Difficulty: Challenging 66) Which of the following questions is NOT asked when finding out what target consumers want from the channel? A) Do consumers want to buy nearby, or are they willing to travel to centralized locations? B) Would customers rather buy in person or online? C) Do consumers value breadth of assortment, or do they prefer specialization? D) Does the company have the resources to offer high levels of service plus low prices? E) Do consumers want many add-on services? Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 67) Which of the following is an environmental factor that affects channel objectives and design? A) economic conditions B) factory staffing C) organizational objectives D) interpersonal influences E) individual motives Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Challenging 68) ________ distribution is a strategy in which producers of convenience products and common raw materials stock their products in as many outlets as possible. A) Direct B) Intensive C) Inclusive D) Exclusive E) Selective Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy

69) The Pampered Chef sells high-quality kitchen tools directly to consumers through its corps of more than 55,000 consultants worldwide rather than going head-to-head with other kitchen tool makers for scarce space in retail stores. The Pampered Chef avoids the channels used by competitors. This is an example of _______. A) a marketing channel objective B) a horizontal marketing system C) channel conflict D) intensive distribution E) wholesaling Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 70) With which of the following strategies would a company give only a limited number of dealers the right to distribute its products in their territories? A) exclusive distribution B) extensive distribution C) moderate distribution D) primary distribution E) intensive distribution Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 71) For which product would a company use an exclusive distribution strategy? A) luxury cars B) newspapers C) chewing gum D) dairy products E) soft drinks Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate

72) Toothpaste, candy, and other similar items are sold in millions of outlets to provide maximum brand exposure and consumer convenience. This is an example of ________ distribution. A) exclusive B) selective C) intensive D) indirect E) corporate Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 73) Outdoor power equipment maker STIHL doesn’t sell its chain saws, blowers, hedge trimmers, and other products through national retailers such as Lowe’s and The Home Depot. Instead, it sells through a select corps of independent hardware and lawn and garden dealers. This is an example of _____ distribution. A) exclusive B) selective C) intensive D) indirect E) corporate Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 74) Breitling watches—positioned as “Instruments for Professionals” and selling at prices from $5,000 to more than $100,000 —are sold by only a few authorized dealers The brand sells through only one jeweler in Chicago. _________distribution enhances Breitling’s distinctive brand positioning and earns greater dealer support and customer service. A) Intensive B) Direct C) Corporate D) Selective E) Exclusive Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate

75) Which of the following is true of the exclusive distribution strategy? A) It makes products available to everybody, everywhere. B) It is used primarily for convenience items. C) It helps promote a brand's luxury image. D) It gives producers no control over their products. E) It enlists all of the intermediaries willing to carry a company's products. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 76) The producer and intermediaries need to agree on the terms and responsibilities of each channel member. They should agree on all EXCEPT A) price policies B) conditions of sale C) training criteria D) territory rights E) specific services to be performed by each party Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy Refer to the scenario below to answer questions 77-79. Giant Beanstalks is a company based in Maryland that processes and cans vegetables. It has contracts with several large farms in Riverdale, 80 miles away from the factory, that agree to sell their produce to Giant Beanstalks. The company's products are available to the public only through Greenleaf, a grocery chain with 38 stores in the country. 77) What distribution strategy does Giant Beanstalks use? A) inclusive distribution B) exclusive distribution C) selective distribution D) intensive distribution E) extensive distribution Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate

78) Selective distribution gives a limited number of dealers the exclusive right to distribute the company’s products in their territories. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 79) Which distribution strategy should Giant Beanstalks use? Answer: Companies must also determine the number of channel members to use at each level. Three strategies are available: intensive distribution, exclusive distribution, and selective distribution. Producers of convenience products and common raw materials typically seek intensive distribution—a strategy in which they stock their products in as many outlets as possible. he extreme form of this practice is exclusive distribution, in which the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories. Between intensive and exclusive distribution lies selective distribution—the use of more than one but fewer than all of the intermediaries who are willing to carry a company’s products. AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 80) Which of the following is NOT a criterion a company will use to evaluate the major channel alternatives? A) adaptability B) control C) commitment D) sales and costs E) likability Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 81) Using economic criteria, a company compares the likely sales, costs, and profitability of different channel alternatives. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy

82) Producers of convenience products and common raw materials typically seek exclusive distribution, a strategy in which they stock their products in as many outlets as possible. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 83) In Nigeria, Domino’s Pizza has had to dig wells and install water-treatment plants behind many of its restaurants to obtain clean water. Similarly, after having difficulty sourcing quality beef in South Africa, rather than buying scarce, poorer- quality beef from local ranchers, Burger King finally invested $5 million in its own local cattle ranch. What challenges to these examples illustrate about international channels of distribution? Answer: When selling in emerging markets, companies must often overcome distribution infrastructure and supply challenges. Even in world markets containing similar types of sellers, retailing practices can vary widely. AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 84) The producer and intermediaries need to agree on the terms and responsibilities of each channel member. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 85) Describe the types of products that are intensively distributed and provide examples. Answer: Convenience products and common raw materials must be available where and when consumers want them; examples include chewing gum, soft drinks, and toothpaste. Student examples will vary. AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 86) Describe the types of products that are exclusively distributed and provide examples. Answer: Exclusive distribution is often used for luxury brands, such as expensive automobiles and prestige clothing. Student answers will vary. AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 29

87) Describe the types of products that are selectively distributed and provide examples. Answer: In selective distribution, more than one, but fewer than all, of the intermediaries who are willing to carry a company's products are used. Products include appliances and some branded clothing. Student answers will vary. AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Easy 88) Compare the three distribution strategies that producers use, providing examples of products for each type of distribution. Answer: Student answers will vary. Producers of convenience products and common raw materials typically seek intensive distribution as a strategy to stock their products in as many outlets as possible. The goods are available where and when consumers want them. Toothpaste, detergents, and soft drinks are examples of this kind of distribution. Selective distribution is used when selling to more than one but fewer than all of the intermediaries who are willing to carry a company's products in a given market. Examples are name-brand blue jeans and computers. Exclusive distribution is used when the producer wants to stock its products with only one or a few dealers in an area. Examples are expensive cars. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 89) Whereas large-scale retail chains dominate the U.S. scene, much of the retailing in other countries is done by small, independent retailers. In India or Indonesia, millions of retailers operate tiny shops or sell in open markets. What does this example illustrate about international distribution channels? Answer: International marketers face many additional complexities in designing their channels. Each country has its own unique distribution system that has evolved over time and changes very slowly. These channel systems can vary widely across countries. Thus, global marketers must usually adapt their channel strategies to the existing structures within each country. There are large differences in the numbers and types of intermediaries serving each country market, and in the transportation infrastructure, serving these intermediaries. AACSB: Application of knowledge Skill: Concept Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate

90) To help recruit, train, organize, manage, motivate, and evaluate relationships with channel partners, companies are now installing integrated high-tech ________ systems. A) advertiser funded programming B) customer segmentation network C) brand content management D) partnership relationship management E) closed loop marketing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy 91) Amazon has rapidly expanded its own delivery and logistics capabilities. This has put it in direct competition with FedEx, UPS, and other important delivery giants in its distribution channel. As a result, FedEx recently declined to renew its Amazon contract for expedited delivery services. In turn, Amazon stopped using FedEx Ground for deliveries and temporarily barred third-party sellers from using FedEx to deliver Prime-eligible packages. What does this example illustrate? Answer: Even established brands may have difficulty gaining and keeping their desired distribution, especially when dealing with powerful channel members. The channel feud between FedEx from Amazon risks damaging both companies’ opportunities while at the same time potentially inconveniencing their mutual customers. AACSB: Analytical thinking Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Moderate 92) When a seller requires its dealers to abstain from handling competitors' products, it is called ________. A) subjective distribution B) exclusive dealing C) selective distribution D) exclusive pricing E) disintermediation Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy

93) A strategy of exclusive dealing is most likely considered legal if ________. A) the industry is newly developed B) both parties have large territories C) competition is not substantially lessened D) the dealer agrees to promote the competitor's products E) the dealer receives a steady source of supply and support Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Moderate 94) Marketing channel management calls for all of the following EXCEPT ______ A) selecting individual channel members B) motivating channel members C) managing channel members D) using a VMS E) evaluating channel members Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy 95) Companies practice strong ________to forge long-term links with channel members. A) partner relationship management B) a value delivery system that only meets the needs of marketing partners. C) a value delivery system that only meets the needs of the company D) exclusive distribution E) intensive distribution Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy 96) In managing its channels, a company must convince suppliers and distributors that they can succeed better by working together as a part of a cohesive value delivery system. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy

97) When a seller requires that dealers not handle competitors’ products, its strategy is called exclusive dealing. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy 98) All of the following are criteria for a company to evaluate channel member performance EXCEPT A) sales quotas B) average inventory levels C) number of franchises D) delivery time E) treatment of damaged and lost goods Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Moderate 99) What factors should a firm consider when selecting intermediaries? Answer: A company may want to evaluate each intermediary's years in business, other lines carried, growth and profit records, cooperativeness, and reputation. AACSB: Application of knowledge Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy 100) What is full-line forcing? Answer: Producers of a strong brand sometimes sell it to dealers only if the dealers will take some or all of the rest of its line. This is called full-line forcing. Such tying agreements are not necessarily illegal, but they violate the Clayton Act if they tend to lessen competition substantially. The practice may prevent consumers from freely choosing among competing suppliers of these other brands. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Easy 101) Explain how companies select, motivate, and evaluate intermediaries or channel members. Answer: When selecting intermediaries, the company should evaluate each channel member's qualifications and select those who best fit its channel objectives. The company should use economic criteria, control issues, and adaptive criteria to analyze each possible channel member. Once selected, channel members must be continuously motivated to do their best. The company 33

must sell not only through the intermediaries but also to and with them. It should work to forge long-term partnerships with channel partners to create a marketing system that meets the needs of both the manufacturer and the partners. The company must also regularly check channel member performance against established performance standards, rewarding intermediaries who are performing well and assisting or replacing weaker ones. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Moderate 102). What are territorial agreements? Answer: In exclusive territorial agreements, the producer may agree not to sell to other dealers in a given area, or the buyer may agree to sell only in its own territory. The first practice is normal under franchise systems as a way to increase dealer enthusiasm and commitment. It is also perfectly legal—a seller has no legal obligation to sell through more outlets than it wishes. The second practice, whereby the producer tries to keep a dealer from selling outside its territory, has become a major legal issue. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Moderate 103) Smart Shoppers, an online store that delivers its products to homes in and around California, recently switched its entire fleet to biodiesel trucks that run on used cooking oil rather than gas. Smart Shoppers has most likely developed a(n) ________. A) vertical marketing channel B) green supply chain C) multitiered marketing channel D) intermodal transportation system E) hybrid distribution system Answer: B AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 104) Producers of a strong brand sometimes sell it to dealers only if the dealers will take some or all of the rest of its line. This is called______. A) full-line forcing B) product positioning C) Mass customization D) Marketing logistics E) Branding Answer: A 34

AACSB: Analytical thinking Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members Difficulty: Easy 105) Tying agreements are not necessarily illegal, but they violate the Clayton Act if they tend to lessen competition substantially if ______ A) they prevent consumers from freely choosing among suppliers B) they affect outbound logistics C) they restrict logistics D) they use a horizontal marketing system E) they enter into agreements voluntarily Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members Difficulty: Moderate 106) ________ refers to overseeing upstream, downstream, and reverse value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers. A) Supply chain management B) Logistics C) Physical distribution D) Reverse logistics E) Inbound logistics Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 107) ________ logistics involves moving products from the factory to resellers and ultimately to customers. A) Customer-centered B) Reverse C) Upstream D) Outbound E) Inbound Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 35

108) ________ logistics refers to moving products and materials from the suppliers to the factory. A) Outbound B) Diverse C) Inbound D) Reverse E) Customer-centered Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 109) Reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products returned by consumers or resellers is known as ________. A) cross merchandising B) reverse logistics C) disintermediation D) diverse logistics E) inbound logistics Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 110) The emphasis on logistics is the result of all of the following EXCEPT A) competitive advantage B) cost savings C) distribution efficiency due to software D) product cycle E) product variety Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate

111) Which of the following is NOT a major logistics function? A) inventory management B) product designing C) warehousing D) transportation E) packaging Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 112) All of the following logistics functions contribute to a firm’s carbon footprint EXCEPT A) transportation B) warehousing C) stocking D) sustainable supply chains E) packaging Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy Refer to the scenario below to answer questions 113-115. Water is essential to every step in Levi Strauss’s jeans-making process. Making just one pair of Levi’s jeans consumes 3,781 liters of water—about three days’ worth of water for one U.S. household. To conserve water, Levi’s launched a series of innovative techniques called Water<Less, which saves up to 96 percent of the water in the denim finishing process alone. So far, Water<Less innovations have saved more than 2 billion liters of water. 113) Which of the following is true about Levi Strauss? A) Water<Less has been profitable for Levi Strauss B) Water<Less has not been able to preserve water C) Water≤Less has not been profitable for Levi Strauss D) Water<Less is consuming greater resources E) Levi Strauss does not have a sustainable supply chain Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 37

114) Designing sustainable supply chains is the right thing to do because it’s one more way that companies can contribute to saving our world for future generations. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 115) Water is essential to every step in Levi Strauss’s jeans-making process. Making one pair of jeans consumes about three days’ worth of water for one U.S. household. How can Levi’s claim to have a green supply chain and make a profit? Answer: More than being good for the planet, Water<Less has also been good for Levi Strauss’s bottom line, saving the company more than $1.6 million. Says Levi’s vice president of Sustainability, “Sustainability should actually cost less, because, by definition, if you’re more sustainable, you’re consuming fewer resources, which means you have fewer input costs.” AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 116) _______are designed to move goods along rather than just store them. They are large and highly automated warehouses designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible. A) Distribution centers B) Inventory management centers C) Vertical management systems D) On-Time, In-Full (OTIF) deliveries E) Horizontal marketing systems Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate

117) Which of the following is true of transporting goods via railroads? A) Railroads are ideal for the transportation of digital technology. B) Railroads are a specialized means of shipping petroleum, natural gas, and chemicals from sources to markets. C) Railroads are a cost-effective way to ship large amounts of bulk products over long distances. D) Railroads are the most flexible mode of transportation in their routing and time schedules. E) Railroads are the slowest mode of transportation and are the most affected by the weather. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 118) What is the goal of a logistics system? Answer: The goal of marketing logistics should be to provide a targeted level of customer service at the least cost. A company must first research the importance of various distribution services to customers and then set desired service levels for each segment. The objective is to maximize profits, not sales. Therefore, the company must weigh the benefits of providing higher levels of service against the costs. Some companies offer less service than their competitors and charge a lower price. Other companies offer more service and charge higher prices to cover higher costs. AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 119) 65 percent of total tons transported in the United States are transported by A) trucks B) railroads C) water D) pipelines E) air Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy

120) Which of the following is true about using air carriers as a transportation mode when shipping products? A) Air carriers are the most cost-effective way to ship non-perishable goods over short distances. B) Air carriers are the slowest and least reliable modes of transport. C) Air carriers provide in-transit services such as the processing of goods en route. D) Air carriers are ideal when time is short and speed is needed. E) Air carriers are a specialized means of shipping chemicals from sources to markets. Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 121) To make inventory management more efficient, companies use ______, by which small transmitter chips are embedded in or placed on products, packaging, and shipping pallets for everything from flowers, fashions, and razors to tires. A) robots B) RFID or “smart tag” technology C) fulfillment centers D) materials-handling methods E) logistics Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 122) In multimodal transportation, piggyback describes the use of flatcars for carrying truck trailers by rail. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy

123) Which statement is NOT true of the internet? A) It carries digital products from producer to consumer via satellite, cable, and wireless signal B) Software firms, the media, and video companies deliver content using the internet C) The internet can lower product distribution costs D) Digital technology moves intangible bits of information E) The internet lacks flexibility Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 124) Heart of Midnight sells blue orchids to major florists around the world. Their key requirement is speed. Which of the following modes of transport will help them? A) rail transport B) air carriers C) trucks D) piggybacks E) water transport Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 125) Using ________, retailers can share real-time data on sales and current inventory levels with suppliers. A) automated storage and retrieval systems (ASRS) B) vendor-managed inventory (VMI) systems C) transportation management systems (TMS) D) warehouse management systems (WMS) E) distribution center management systems (DCMS) Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy

126) Nestlé’s Purina pet food unit has a team of dozens of people working in Bentonville, Arkansas, the home base of Walmart. The Purina Walmart team members work jointly with their counterparts at Walmart to find ways to squeeze costs out of their distribution system. Working together benefits not only Purina and Walmart but also their shared, final consumers. This is an example of A) a cross-functional team B) integrated logistics C) inventory management D) horizontal marketing systems E) third-party logistics Answer: A AACSB: Interpersonal relations and teamwork Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate Refer to the scenario below to answer questions 127-128. Giant Beanstalks is a company based in Maryland that processes and cans vegetables. It has contracts with several large farms in Riverdale, 80 miles away from the factory, that agree to sell their produce to Giant Beanstalks. The company's products are available to the public only through Greenleaf, a grocery chain with 38 stores in the country. 127) Roland is the logistics manager of Giant Beanstalks. Which of the following is NOT an area of responsibility for him? A) the transportation of the canned vegetables to Greenleaf B) the storage of the unprocessed vegetables C) the advertising of the final product D) product inventory management E) the packaging of the final product Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy

128) Which of the following modes of transport should Roland choose to transport the unprocessed vegetables from Riverdale's farms to the Giant Beanstalks' factory quickly and with minimum cost? A) air carrier B) pipeline C) truck D) oil tanks E) air tunnels Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy Refer to the scenario below to answer questions 129-132. Kimberly's Crown sells and designs jewelry. Despite the jewelry's popularity, products are available only through a few shopping stores across the country. 129) What distribution strategy does Kimberly's Crown use? Answer: She should use selective distribution—the use of more than one but fewer than all of the intermediaries who are willing to carry a company’s products. Most consumer electronics, furniture, and home appliance brands are distributed in this manner. AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 130) When one of the stores complains that the jewelry they're being given is inferior to the jewelry Kimberly sells to other stores, Kimberly experiences ________ conflict. A) horizontal B) multitiered C) vertical D) intensive E) subjective Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 131) Kimberly's Crown, Inc. decides to alter its distribution strategy so that its jewelry is accessible to the public only through one distributor. Which employee is most likely to make this 43

decision? Answer: Supply-chain manager. The goal of integrated supply chain management is to harmonize all of the company’s logistics decisions. Close working relationships among departments can be achieved in several ways. Some companies have created permanent logistics committees composed of managers responsible for different physical distribution activities. Companies can also create supply chain manager positions that link the logistics activities of functional areas. AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 132) What mode of transport should Kimberly use to ship its goods over long distances as quickly as possible? A) flatcars B) water transport C) air transport D) trucks E) railroads Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 133) Marketing logistics involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 134) Reverse logistics refers to the moving of products and materials from suppliers to the factory. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 44

135) A third-party logistics (3PL) provider is an independent logistics provider that performs any or all of the functions Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 136) In contrast to distribution centers, storage warehouses are designed to move goods rather than just house them. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 137) UPS stepped in to help manage Kingsdown’s logistics as a third-party logistics provider. Kingsdown excels at producing innovative products. But in an increasingly competitive marketplace, Kingsdown’s delivery fleet was plagued by all of the following issues EXCEPT A) costly inefficiencies B) delivery errors C) relationship problems with retailers D) on-time delivery E) customer dissatisfaction Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 138) Describe integrated logistics management. Answer: Today, more and more companies are adopting the concept of integrated logistics management. This concept recognizes that providing better customer service and trimming distribution costs require teamwork, both inside the company and among all the marketing channel organizations. Inside, the company’s various departments must work closely together to maximize its own logistics performance. Outside, the company must integrate its logistics system with those of its suppliers and customers to maximize the performance of the entire distribution network. AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. 45

Difficulty: Easy 139) Describe multimodal transportation Answer: Shippers use multimodal transportation—combining two or more modes of transportation—accounting for 3 percent of the nation’s goods transported. Piggyback describes the use of rail and trucks; fishyback, trucks and water; trainship, water and rail; and airtruck, air and trucks. Combining modes provides advantages that no single mode can deliver. Each combination offers advantages to the shipper. AACSB: Analytical thinking Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Easy 140) Describe integrated supply chain management Answer: The integrated supply chain management concept recognizes that improved logistics requires teamwork in the form of close working relationships across functional areas inside the company and across various organizations in the supply chain. Companies can achieve logistics harmony among functions by creating cross-functional logistics teams, integrative supply manager positions, and senior-level logistics executive positions with cross–functional authority. Channel partnerships can take the form of cross–company teams, shared projects, and information-sharing systems. Today, some companies are outsourcing their logistics functions to third-party logistics (3PL) providers to save costs, increase efficiency, and gain faster and more effective access to global markets. AACSB: Application of knowledge Skill: Concept Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate Quantitative Questions 1) Airbnb has 7 million listings in over 220 countries. What is the average number of listings per country? A) 29,818 B) 31,818 C) 33,542 D) 34,695 E) 35,741 Answer: B; You divide 7 million by 220. So, 7,000,000/220 = 31,818. AACSB: Analytical thinking Skill: Application Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions these channels perform. Difficulty: Moderate 46

2) Subway’s $5 footlong promotion resulted in a dispute between franchise owners and Subway corporate since the sandwich cost the franchisee $4.85 to make. What was the profit margin on these sandwiches to the franchise owners? A) 1% B) 2% C) 3% D) 4% E) 5% Answer: C; The profit margin is the profit/sales. So, ($5 - $4.85)/$5 = .03, or 3% AACSB: Analytical thinking Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 3) In the United States alone, some 753,700 franchise outlets account for $670 billion of economic output and employ 7.5 million people. How much is the output per franchise? A) $811,911 B) $888,948 C) $912,489 D) $915,321 E) $1,001,822 Answer: B; You compute this by dividing the total economic output of $670 billion by the number of franchise outlets. So, 670,000 million/753,700 = $0.888948 million per franchise, or $888,948 per franchise. AACSB: Analytical thinking Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 4) What is the total revenue generated by Sonic restaurants if a Sonic franchise averages $1,345,000 in annual sales and there are 3,500 franchises? A) $3,775,500,000 B) $3,906,500,000 C) $4,172,200,000 D) $4,204,300,000 E) $4,707,500,000 AACSB: Analytical thinking Answer: E; You compute this by multiplying the franchise average sales by the number of franchises. So, $1,345,000 x 3,500 = $4,707,500,000. AACSB: Analytical thinking Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. 47

Difficulty: Moderate 5) Worldwide, more than 500 million people pay for digital music services. What percentage of the world’s population pays for digital music if the global population is 8 billion? A) 5.00% B) 5.75% C) 6.25% D) 6.75% E) 7.25% Answer: C; You compute this by dividing the number of people that pay for digital music by the global population. So, 500 million/8,000 million = .0625, or 6.25% AACSB: Analytical thinking Skill: Application Objective: LO 12.2: Discuss how channel members interact and how they organize to perform the work of the channel. Difficulty: Moderate 6) To serve northeast Brazil’s Amazon River basin, which lacks a solid network of good roads, Nestlé even launched a floating supermarket to take goods directly to customers. The boat served 800,000 consumers in 18 riverside towns with 300 different Nestlé products, spending one day at each stop. How much does it cost each year per customer to reach this market assuming the boat’s initial cost was $500,000 and it costs about $250,000 annually to staff the boat and pay other expenses such as fuel and maintenance? Assume the boat’s initial cost can be spread equally over the boat’s 10-year life. A) $9.25 B) $12.55 C) $37.50 D) $0.375 E) $0.555 Answer: D; You compute this by computing the boat’s total annual cost and divide by 800,000. So, ($500,000/10 = $50,000 per year) + $250,000 annual costs = $300,000/800,000 = .375, or 37.5 cents per year per customer. AACSB: Analytical thinking Skill: Application Objective: LO 12.3: Identify the major channel alternatives open to a company. Difficulty: Moderate 7) Firm XXY rewards its top distributors by giving the top three distributors a bonus of 10% of their individual sales. How much did the bonus cost Firm XXY this year if the top three distributors sold $2.12 million, $1,98 million, and $1.74 million respectively? A) $584,000 B) $212,000 C) $198,000 D) $174,000 E) $5,840,000 Answer: A; You compute this by summing the total sales and multiplying by 10%. So, $2.12 48

million + $1.98 million + $1.74 million = $5.84 million x .10 = $0.584 million, or $584,000. AACSB: Analytical thinking Skill: Application Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members. Difficulty: Moderate 8) Jarod’s Wholesale found a new supplier that charges 2% less for product delivery. He buys $45 million a year and pays $6.3 million to have it delivered. How much will his business save if he switches to the new supplier? A) $98,000 B) $111,000 C) $126,000 D) $454,000 E) $900,000 Answer: C; He currently pays $6.3 million for delivery and will save 2% of that amount. So, $6.3 million x .02 = $126,000. AACSB: Analytical thinking Skill: Application Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate

9) Manufacturing Firm ABC discovered a new way to package their products that saves $1.11 per unit on packaging costs, and it is lighter in weight, so it saves another $2.55 per unit on shipping costs. The firm sells the units for $73 each. What is the total savings if annual sales are 311,500 units? A) $458,925 B) $555,782 C) $794,325 D) $1,140,090 E) $1,401,005 Answer: D; You compute this summing the total savings per unit and multiplying by the unit sales. So, ($1.11 + $2.55) x 311,500 = $1,140,090. AACSB: Analytical thinking Skill: Application Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate 10) Manufacturing Firm ABC discovered a new way to package their products that saves $1.11 per unit on packaging costs, and it is lighter in weight, so it saves another $2.55 per unit on shipping costs. The firm sells the units for $73 each. What is the total percentage savings per unit? A) 3.61% B) 3.85% 49

C) 4.36% D) 4.85% E) 5.01% Answer: E; The firm saves ($1.11 + $2.55)/$73 = .0501, or 5.01% per unit. AACSB: Analytical thinking Skill: Application Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated supply chain management. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 13 Retailing and Wholesaling 1) ________ includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use. A) Franchising B) Retailing C) Brokering D) Wholesaling E) Disintermediation Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 2) Many institutions, including retailers, wholesalers, and ________ do retailing. A) schools B) government agencies C) factory farmers D) manufacturers E) defense contractors Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 3) Today’s consumers make little distinction between online shopping and in-store buying. They are known as . A) generation Y B) indifferent shoppers C) omni-channel shoppers D) convenience shoppers E) segmented buyers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 4) ________ involves using in-store promotions and advertising to extend brand equity to "the last mile" and encourage favorable point-of-purchase decisions. 1

A) Differentiation B) Shopper marketing C) Social media marketing D) Retailer marketing E) Segmentation Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 5) ________ creates a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping. A) Shopper marketing B) Point-of-purchase marketing C) Social media marketing D) Virtual marketing E) Omni-channel marketing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 6) Retailers are classified on characteristics including the amount of service they offer, the breadth and depth of their product lines, how they are organized, and ________. A) the relative prices they charge B) the number of locations they have C) the strength of their Internet presence D) their sustainability and environmental policies E) the stability of their financial situation Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 7) TJ Maxx sells merchandise that is below regular wholesale price. TJ Maxx is a ________. A) full-service retailer B) limited-service retailer C) self-service retailer D) specialty store E) off-price retailer 2

Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 8) Target serves customers that are willing to perform their own "locate-compare-select" process in order to save money. This is an example of a retailer. A) Limited-service B) Self-service C) Full-service D) Specialty-service E) Wholesaling Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 9) JC Penney provides more sales assistance because they carry more shopping goods about which customers might need information. JC Penney is an example of a retailer. A) self-service B) full-service C) off-price D) limited-service E) specialty-service Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 10) Which type of retailer usually carries more specialty goods at high prices and is more likely to provide customers with assistance in every phase of the shopping process? A) self-service retailer B) limited-service retailer C) full-service retailer D) independent retailer E) off-price retailer Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the 3

major types of retailers. Difficulty: Easy 11) Specialty stores carry ________ with ________ within them. A) only convenience products; shallow assortments B) narrow product lines; deep assortments C) narrow product lines; shallow assortments D) wide product lines; shallow assortments E) wide product lines; deep assortments Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 12) ________ are facing slow sales growth because of slower population growth, increased competition, and the rapid growth of out-of-home eating. A) Warehouse clubs B) Off-price retailers C) Discount stores D) Supermarkets E) Factory outlets Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 13) Which of these is a small store located near a residential area that tends to be open long hours? A) convenience store B) department store C) supermarket D) superstore E) off-price retailer Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy

14) Which type of store is much larger than regular supermarkets and offers a large assortment of routinely purchased food products, nonfood items, and services? A) off-price retailer B) specialty store C) factory outlet D) superstore E) convenience store Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 15) Which of these stores would be considered a category killer since it carries a deep assortment of a particular product line, has knowledgeable staff, and can be viewed as a giant specialty store? A) Walmart B) Home Depot C) Target D) 7-Eleven E) Trader Joe’s Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 16) Airbnb and Uber create two-sided markets that match consumers with part-time retailers. These firms are considered retailers. A) product B) online C) service D) self-employed E) convenience Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 17) ________ sell standard merchandise at lower prices by accepting lower margins and selling higher volume. A) Merchant wholesalers 5

B) Discount stores C) Full-service retailers D) Limited-service retailers E) Factory outlets Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 18) Which of these retailer is an example of a discount store? A) Kohl’s B) Home Depot C) 7-Eleven D) Whole Foods E) Amazon Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 19) As discount stores traded up, ________ have filled the ultra low-price, high-volume gap by buying at less-than-regular wholesale prices and charging consumers less than retail. A) off-price retailers B) specialty stores C) convenience stores D) chain stores E) supercenters Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 20) Which of these is the biggest challenge facing discount stores at this time? A) inflation B) factory outlets C) changing consumer tastes D) international competitors E) supply chain issues Answer: A 6

AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy

21) ________ are two or more outlets that are commonly owned and controlled. A) Corporate chains B) Convenience stores C) Off-price retailers D) Independent off-price retailers E) Power centers Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 22) As a result of the great success of corporate chains, many independent stores choose to band together in either a voluntary chain or a ________. A) factory outlet B) retailer cooperative C) wholesale club D) warehouse club E) convenience cooperative Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 23) A ________ is a wholesaler-sponsored group of independent retailers that engages in group buying and common merchandising. A) voluntary chain B) retailer cooperative C) franchise D) wholesale club E) warehouse club Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 7

Difficulty: Easy 24)

are usually based on some unique product or service.

A) Corporate chains B) Franchises C) Voluntary chains D) Retailer cooperatives E) Warehouse clubs Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Challenging 25) ________ involves sending a letter, catalog, advertisement, or brochure to a specific physical address. A) Telemarketing B) DRTV marketing C) Catalog marketing D) Infomercial marketing E) Direct-mail marketing Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 26) ________ offer narrow product lines with a deep product assortment within that line. A) Department stores B) Convenience stores C) Category killers D) Specialty stores E) Off-price retailers Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 27) Direct marketing through print, video, or digital media made available to select customers is known as ________. A) telemarketing 8

B) DRTV marketing C) catalog marketing D) infomercial marketing E) digital marketing Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate Refer to the scenario below to answer questions 28, 29, 30, and 31. In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe store, a small restaurant, and a grocery store. Over the next two decades, the small town transformed into an international tourist attraction, attracting thousands of tourists who were intrigued by the lifestyle of Shipshewana's largest population–the Amish. Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their town's popularity and their woodworking skills. Their shop, Indiana Wood, began with a small display of handmade hickory rocking chairs, Ben Miller's specialty. But within a few months, the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty items. No other shop offers the same variety. Mary Miller decorated the shop's display room with authentic Amish décor and eventually hired three Amish friends to sew and embroider napkins and other textiles as customers had requested such items. In addition, two women from the Amish community sought permission from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, when Shipshewana attracts swarms of visitors to its flea market on the south edge of town. The Millers also hired four more people to help customers throughout the purchasing process and to provide the required product-related information to the customers. "Shipshewana is full of specialty shops," Mary Miller stated. "People don't come here to buy things made in China or Taiwan. They want real, Amish-made goods." 28) Indiana Wood can be best classified as a(n) ________. A) full-service retailer B) industrial distributor C) self-service retailer D) warehouse club E) limited-service retailer Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 9

Difficulty: Moderate 29) Retailers can also be classified by the length and breadth of their product assortments. In terms of product line, what kind of retailer is Indiana Wood? A) supermarket B) specialty store C) category killer D) department store E) convenience store Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 30) Indiana Wood carries a deep product line with a narrow variety of products. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 31) What are some of the characteristics of Indiana Wood that classify it as a full-service retailer? Answer: Full-service retailers assist customers in every phase of the shopping process. This enhanced customer service increases operating costs, which are passed along to customers as higher prices. However, the unique nature and quality of the Amish products allows Indiana Wood to use this strategy. AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate

32) Department stores carry several product lines with each line operated as a distinct unit that is managed by special buyers and merchandisers. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 10

33) Stores that carry narrow product lines with a deep assortment are known as category killers. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate

34) Convenience stores are small stores that carry a limited line of high-turnover goods. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 35) Franchises are two or more outlets that are commonly owned and controlled. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 36) Compare and contrast specialty stores and convenience stores. Answer: Specialty stores carry narrow product lines with deep assortments within those lines. Convenience stores are small stores that carry a limited line of high-turnover convenience goods. The majority of their revenues come from sales of gasoline, cigarettes, and beverages. AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 37) Describe the differences between discount stores and off-price retailers. Answer: A discount store buys at regular wholesale prices but sells standard merchandise at lower prices by accepting lower margins and selling higher volume. Off-price retailers buy at less-than-regular wholesale prices and charge consumers less than retail. AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. 11

Difficulty: Easy 38) What is a category killer? Provide an example and a description of a category killer. Answer: Student answers will vary. A category killer is a giant specialty store that carries a very deep assortment of a particular line. They feature stores the size of airplane hangars that carry a very deep assortment of a particular line. Category killers are found in a wide range of categories, including electronics, home-improvement products, books, baby gear, toys, linens and towels, party goods, sporting goods, and even pet supplies. Home Depot and PetSmart are both examples of category killers. AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 39) Describe the potential benefits of telemarketing. Answer: Properly designed and targeted telemarketing provides many benefits, including purchasing convenience and increased product and service information. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Easy 40) How do discount stores earn money by selling goods at low prices and low margins? Answer: Discount stores focus on high product turnover. If they make a penny on every dollar sale and turn it over 100 times a year they can earn a high annual return. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 41) Describe the differences between chain stores and franchises. Answer: Chain stores consist of two or more outlets that are commonly owned and controlled. Chain stores have the advantage of buying in larger quantities at lower prices and sharing resources to hire specialists to help with decisions in pricing, promotion, merchandising, inventory, and sales forecasting. Franchises are not commonly owned and controlled; instead, a franchise is a contractual association between a manufacturer, wholesaler, or service organization and an independent businessperson. The system is normally based on some unique product or service; a method of doing business; or a trade name, goodwill, or patent that the franchisor has developed. AACSB: Application of knowledge Skill: Concept 12

Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 42) What is omni-channel marketing? Answer: Omni-channel marketing involves creating a seamless cross-channel buying experience that integrates in-store, digital, and mobile shopping. This strategy meets the needs of connected customers who work across multiple channels as they shop. Traditional store retailers are rapidly integrating online and mobile shopping into their operations to serve this market of the future. AACSB: Application of knowledge Skill: Concept Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 43) Store retailers must master ________, integrating store and online channels into a single shopper experience. A) showrooming B) single-channel retailing C) omni-channel marketing D) webrooming E) dual-channel retailing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Moderate 44) Online retail giant Amazon is building physical stores in some locations. This is an example of ________. A) digital retailing B) omni-channel marketing C) web-based retailing D) in-store ordering with a mobile device E) social media Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 45) Which of the following plays the most important role in omni-channel marketing? A) Social media 13

B) Advertising C) Discounts D) Daily alerts E) In-store promotions Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 46) Omni-channel retailers are those who ________. A) expand their businesses internationally B) conduct all business activities online C) sell products through third-party retailers D) use mobile apps to sell their products E) successfully merge the virtual and physical worlds Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 47) Walmart, Target, Macy's, and other major retailers offer handy ________ that pull customers to both their websites and stores. A) mobile apps B) in-store shopping experiences C) channels D) platforms E) product information Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 48) Omni-channel marketing is a response to A) mobile apps B) omni-channel buying C) Covid-19 D) big data E) marketing analytics Answer: B AACSB: Analytical thinking

Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 49) Beyond direct online sales, retailer online sites, mobile apps, and social media influence a large amount of in-store buying. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 50) It's estimated that 75% of U.S. retail sales are digitally influenced. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 51) Social media plays an important role in omni-channel marketing. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 52) The boundaries between in-store and online retailing are rapidly blurring. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 53) What have retailers learned about how customers make purchase decisions? Answer: Retailers have learned that shoppers with smartphones are doing far more than just checking online prices. More often, they are filling in the information gap. "The consumer has never been more informed, and that information comes from their phone," says a senior marketer at outdoor-gear retailer REI. "We love when someone enters the store holding their phone saying, 'I want this tent. I want this bike. Help me find this.' " This type of activity shows how digital and store retailing can come together to make a sale. AACSB: Analytical thinking 15

Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Easy 54) Explain how marketers use social media in omni-channel marketing. Answer: Most large store retailers now use social media extensively to engage customers, build community, and link buyers to their websites and stores. But beyond simply redirecting users to an online store, many major social media now offer opportunities for users to purchase products directly within the social media platform. For example, Instagram Shop allows sellers to set up shopping sites, use ads with product tags that viewers can directly click on, and feature new brands on an Instagram’s Shop tab. AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Moderate 55) What is one of the keys to successful omni-channel marketing? Answer: Successful omni-channel marketing involves creating a digital-friendly store, highpowered website, shoppable content, and extensive social media presence. However, that alone does not constitute good omni-channel marketing. The key is to integrate these elements to create that critical seamless, anywhere, anytime, omni-channel shopping experience that today’s customers seek. AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Challenging 56) How is Walmart using omni-channel marketing? Answer: Walmart is linking a greatly expanded set of online and mobile services to its massive network of stores. It also launched Walmart+, its own version of Amazon Prime by which subscribers get free two-day or next-day shipping, free delivery of groceries from their local store, Mobile Scan & Go for quick checkouts, and other unified online–offline, omni-channel linkages. Walmart offers a fully featured mobile app that pulls customers to both their website and stores, lets them prepare shopping lists, helps them locate merchandise inside stores, and sends daily alerts and exclusive discounts to their phones. AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Moderate 57) The ________can set one retailer apart from another by using experts to demonstrate a product. 16

A) services mix B) price mix C) product depth D) product assortment E) atmosphere Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 58) Daizy's is a shop that carries only plus-size clothing. According to this information, Daizy's differentiates itself from its competitors based on ________. A) service mix B) pricing C) product assortment D) store atmosphere E) distribution strategy Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 59) Adidas’s flagship store on Fifth Avenue in New York City has several features that mimic sporting events. This is an example of _______ _ . A) a services mix B) experiential retailing C) enhancing the product assortment D) central business districts E) educating the consumer Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 60) A large retailer of home improvement and construction products offers "how-to" classes for do-it-yourselfers, featuring instructions on how to complete home improvement projects using products sold at its stores. This is an example of how the retailer has differentiated itself through its ________. A) product assortment B) services mix C) segmentation D) atmosphere E) pricing 17

Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 61) Until retailers ________ their markets, they cannot make consistent decisions about product assortment, services, pricing, or advertising. A) create B) communicate with C) divide up D) define and profile E) design products for Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 62) A ________ contains from 50 to more than 100 stores, is like a covered mini-downtown, and attracts customers from a wide area. A) community shopping center B) neighborhood shopping center C) central business district D) regional shopping center E) strip mall Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 63) Retailers that couple higher prices with frequent sales and other promotions designed to increase store traffic in order to sell other goods are practicing . A) discounting B) high-low pricing C) promotional pricing D) service pricing E) EDLP pricing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate

64) A ________ contains between 15 and 50 retail stores, including a department or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank. A) community shopping center B) neighborhood shopping center C) strip mall D) regional shopping center E) power center Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 65) A ________ generally contains between 5 and 15 stores. It is close and convenient for consumers, usually contains a supermarket, perhaps a discount store, and several service stores such as a dry cleaner, a drugstore, and a hardware store. A) regional shopping center B) community shopping center C) neighborhood shopping center D) warehouse club E) factory outlet Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 66) An ideal price policy scenario for retailers would be to achieve ________ while earning ________. A) low volume; high markups B) low volume; low markups C) high volume; high markups D) high volume; low markups E) high volume; zero markups Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 67) In-store demonstrations, displays, sales, and loyalty programs are examples of ________. A) direct marketing B) sales promotion C) public relations D) personal selling E) affinity marketing 19

Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 68) Huge unenclosed shopping centers consisting of long strips of retail stores coupled with large stand along anchor stores are also known as ________. A) power centers B) lifestyle centers C) warehouse clubs D) strip malls E) regional shopping centers Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 69) Press conferences, speeches, store openings, special events, newsletters, and store magazines are examples of ________ activities used by retailers to promote themselves. A) public relations B) sales promotions C) personal selling D) affinity marketing E) social marketing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 70) Digital promotions have grown in usage and include e-mail, social media, Web sites, and ________. A) demonstrations B) displays C) store flyers D) newsletters E) online ads and video Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy

71) A is a smaller, open-air mall with upscale stores, convenient locations, and nonretail activities, such as a playground, skating rink, hotel, dining establishments, and a movie theater complex. A) community shopping center B) neighborhood shopping center C) lifestyle center D) regional shopping center E) power center Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Challenging 72) A ________ is a group of retail businesses built on a site that is planned, developed, owned, and managed as a unit. A) warehouse club B) franchise C) shopping center D) supermarket E) hypermarket Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 73) Springfield, a convenience store, has recently begun to redesign and restock its stores to offer a more upscale environment with products such as house wines and fresh foods. This information indicates that Springfield has most likely changed its ________. A) positioning B) price strategy C) service level D) corporate identity E) organizational structure Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 74) Cabela's stores are as much natural history museums for outdoor enthusiasts as they are retail outlets. This information indicates that Cabela's is practicing ________. A) wholesaling B) noncore retailing 21

C) shopper marketing D) experiential retailing E) showrooming Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 75) Big and Tall Men's Shop carries men's clothing in larger sizes. This allows the store to ________ other stores. A) align itself with B) differentiate itself from C) cluster with D) affect the store atmosphere of E) converge with Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 76) The lighting in Jake's Steak Restaurant is dim. The chairs are covered in leather and each table is covered with a white linen cloth. The colors are limited to earth tones with an occasional splash of red. Patrons cannot hear any kitchen noises, only a pleasant melody that seems familiar but unrecognizable. The smells are extraordinarily varied. This is a description of the restaurant's ________. A) promotions B) target C) atmosphere D) services mix E) product assortment Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Challenging 77) Which of the following best describes a similarity between Costco and Walmart? A) Both are warehouse clubs. B) Both target the same affluent market. C) Both are specialty stores. D) Both use everyday low pricing. E) Both are examples of merchant wholesalers. Answer: D AACSB: Application of knowledge 22

Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 78) Macy's department stores carry a wide range of product lines, including clothing, jewelry, kitchenware, and home furnishings. Macy's typically charges a relatively high markup, but also holds frequent sales and price promotions, in particular offering discounts to customers who use a Macy's credit card. Macy's uses ________. A) self-service retailing B) experiential retailing C) high-low pricing D) everyday low pricing E) retail convergence Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 79) Which of the following is most likely true about shoppers who prefer to shop at "lifestyle centers"? A) They use coupons. B) They prefer upscale stores. C) They prefer indoor shopping locations. D) They rarely dine out in expensive restaurants. E) They are motivated by deals on last year's merchandise. Answer: B AACSB: Reflective thinking Skill: Critical Thinking Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate Refer to the scenario below to answer questions 80, 81, 82, and 83. In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe store, a small restaurant, and a grocery store. Over the next two decades, the small town transformed into an international tourist attraction, attracting thousands of tourists who were intrigued by the lifestyle of Shipshewana's largest population–the Amish. Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their town's popularity and their woodworking skills. Their shop, Indiana Wood, began with a small display of handmade hickory rocking chairs, Ben Miller's specialty. But within a few months, the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty items. No other shop offers the same variety. 23

Mary Miller decorated the shop's display room with authentic Amish décor and eventually hired three Amish friends to sew and embroider napkins and other textiles as customers had requested such items. In addition, two women from the Amish community sought permission from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, when Shipshewana attracts swarms of visitors to its flea market on the south edge of town. The pastries add a nice aroma to the store that makes shoppers linger and spend more time perusing the other products. The Millers also hired four more people to help customers throughout the purchasing process and to provide the required product-related information to the customers. "Shipshewana is full of specialty shops," Mary Miller stated. "People don't come here to buy things made in China or Taiwan. They want real, Amish-made goods." 80) The authentic Amish décor of Indiana Wood contributes to the store's ________. A) product assortment B) services mix C) atmosphere D) segmentation E) retail convergence Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 81) Which of these terms describes Indiana Wood’s overall marketing approach? A) experiential retailing B) lifestyle center marketing C) atmospheric retailing D) gimmick marketing E) EDLP marketing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Challenging 82) Indiana Wood’s use of aromas helps create the Amish experience which is part of the store’s experiential retailing. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 83) What else could the Millers do to enhance the shopping experience at Indiana Wood? Answer: They could provide space for some of the local artisans to work so the customers could 24

watch the detail and effort that goes into making the products. They might give tours of a local farm that ended at the store so customers could spend some time browsing after learning more about the Amish lifestyle. Students may come up many other ideas. AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Challenging

84) Promotion tools include advertising, personal selling, sales promotion, and public relations. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 85) Digital promotions are primarily used by marketers to send generic offers to a mass audience. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 86) Explain how Whole Foods is able to compete against Walmart. Answer: Walmart owns the low-price position, so other grocery chains such as Whole Foods must position themselves differently. Rather than try to compete directly with Walmart, Whole Foods is positioned away from Walmart. It targets a smaller group of upscale customers and offers them organic, gourmet foods in a cheerful, aesthetically pleasing environment. AACSB: Application of knowledge Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Challenging 87) Does a store’s location matter if the right products are available? Answer: Retailers need to select store locations that are accessible to the target market in areas that are consistent with the retailer’s positioning. This is one of the most important decision in marketing. AACSB: Application of knowledge Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Challenging

88) How do the practices of high-low pricing and everyday low pricing differ? Answer: With high-low pricing, a retailer charges higher prices on an everyday basis but also 25

has frequent sales and other price promotions; with everyday low pricing, a retailer for the most part avoids sales and instead delivers constant, everyday low prices. AACSB: Application of knowledge Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 89) What are the four promotion tools marketers use? Answer: Advertising, personal selling, sales promotion, and public relations. AACSB: Application of knowledge Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 90) List some of the lifestyle elements that many malls and shopping centers are adding to reinvent themselves to meet changing consumer demands. Answer: Fitness centers, restaurants, children’s play areas, common areas, and multiplex theaters—have all been used to make malls more social and welcoming. In all, today’s centers are more like places to hang out, with a strong focus on the customer experience, rather than just places to shop. AACSB: Application of knowledge Skill: Concept Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Easy 91) Many retailers are now experimenting with limited-time shops that allow them to promote their brands to seasonal shoppers and create buzz in busy areas. Which of the following terms best represents such shops? A) power centers B) strip malls C) pop-up stores D) category killers E) lifestyle centers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 92) What percentage of restaurants permanently closed in 2020 due to the Covid-19 pandemic? A) 11% B) 32% C) 15% D) 17% E) 53% Answer: D 26

AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy

93) What major change was driven by the Great Recession and the COVID-19 pandemic? A) consumers became value seekers B) credit cards charges increased C) discount stores lost business D) most brick-and-mortar retailers went bankrupt E) consumers shifted to luxury goods Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 94) Target recently opened temporary shops to celebrate limited-run collections by Jason Wu in Toronto and Missoni in New York. These temporary shops are examples of ________. A) lifestyle centers B) pop-up stores C) warehouse clubs D) strip malls E) category killers Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 95) The online and mobile equivalent of a pop-up store is ________. A) door buster deals B) Black Friday specials C) high-low pricing D) flash sales sites E) everyday low pricing Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 96) When different types of retailers sell the same products at the same prices to the same customers, thanks in part to the price transparency of the Internet, the retail forms appear to be ________. 27

A) converging B) differentiating C) repositioning D) adapting E) declining Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 97) With their size and buying power, ________ can offer better merchandise selections, good service, and strong price savings to consumers. A) convenience stores B) franchises C) megaretailers D) power centers E) lifestyle centers Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 98) The art and science of preparing for multiple imagined futures is known as A) pop-up shopping B) scenario analysis C) value seeking D) showrooming E) discounting Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 99) Retail online sites, mobile apps, and social media influence ________. A) overall retail sales B) in-store buying C) the number of likes and subscribers companies earn D) customers and their followers E) the number of products a company manufactures Answer: B AACSB: Analytical thinking Skill: Concept 28

Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 100) Touchscreen kiosks, handheld shopping assistants, interactive dressing-room mirrors and virtual sales associates are all examples of how retailers use technology to ________. A) maintain inventory costs B) send information between stores C) meet consumers' expectations D) produce more accurate forecasts E) interact with suppliers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 101) Today's retailers increasingly adopt environmentally sustainable practices. Which of the following is NOT one of these practices? A) working with channel partners to reduce their environmental impact B) cutting back on recycling programs C) greening up their stores and operations D) launching programs to help customers be more responsible E) promoting more environmentally responsible products Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate Refer to the scenario below to answer questions 102, 103, and 104. In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe store, a small restaurant, and a grocery store. Over the next two decades, the small town transformed into an international tourist attraction, attracting thousands of tourists who were intrigued by the lifestyle of Shipshewana's largest population–the Amish. Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their town's popularity and their woodworking skills. Their shop, Indiana Wood, began with a small display of handmade hickory rocking chairs, Ben Miller's specialty. But within a few months, the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty items. No other shop offers the same variety. Mary Miller decorated the shop's display room with authentic Amish décor and eventually hired three Amish friends to sew and embroider napkins and other textiles as customers had requested such items. In addition, two women from the Amish community sought permission from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, when 29

Shipshewana attracts swarms of visitors to its flea market on the south edge of town. The Millers also hired four more people to help customers throughout the purchasing process and to provide the required product-related information to the customers. "Shipshewana is full of specialty shops," Mary Miller stated. "People don't come here to buy things made in China or Taiwan. They want real, Amish-made goods." 102) Which of the following would be the most logical way for Indiana Wood to expand? A) establishing an online presence B) pursuing retail convergence C) implementing RFID inventory tracking D) establishing a community-gathering environment in the store E) joining a producers' cooperative Answer: A AACSB: Analytical thinking Skill: Critical Thinking Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 103) Indiana Wood could offer deep price discounts without damaging their long-run reputation. Answer: FALSE AACSB: Analytical thinking Skill: Critical Thinking Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 104) Discuss some possible ways the Covid-19 pandemic could have affected Indiana Wood. Answer: The lockdown would have eliminated most business for several months when consumers did not travel. Revenues would have fallen to near zero and might have pushed the business into bankruptcy depending on their financial condition prior to the pandemic. AACSB: Analytical thinking Skill: Critical Thinking Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Challenging

105) The Covid-19 pandemic had little impact on online retailing. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy

106) Megaretailers do not have the ability to influence niche markets. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Challenging 107) Retailers can take short-run actions that damage their long-run reputations. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 108) The art and science of preparing for multiple imagined futures is called sensitivity analysis. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate

109) AR can help consumers design, try out, and visualize products before buying them. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate

110) List one pandemic driven shift in retailing that has endured post-pandemic. Answer: The popularity of digital shopping with curbside pickup or home delivery—for everything from groceries to takeout food to consumer electronics—soared during the pandemic. As a result, many consumers learned and liked new shopping patterns that have become the “new normal.” Retailers must strengthen their omni-channel marketing capabilities and reshape their businesses to take advantage of this shift. AACSB: Analytical thinking 31

Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 111) What is the danger of continuous cost-cutting and discounting to some retailers? Answer: It can damage the brand. One analyst calls this “death by discount” and suggests that “virtually every retailer—at both the high and the low end—has fallen so deeply into the trap that discounting has become an expectation of customers rather than a bonus.” AACSB: Analytical thinking Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 112) How can retailers use augmented reality to enhance and extend the shopping experience? Answer: Augmented reality merges digitally augmented objects with real-world images. AR can help consumers design, try out, and visualize products before buying them. AACSB: Analytical thinking Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 113) How can retailers use virtual reality to enhance and extend the shopping experience? Answer: Virtual reality (VR) immerses the consumer in a whole new virtual environment. For example, automaker Audi has installed VR in 1,000 dealer showrooms worldwide. Customers use tablets to select any Audi model and customize each element. They then put on a headset and earphones to experience the sights and sounds of their customized car in virtual reality. They can move around the outside of the car, open the trunk and doors, check under the hood, and even sit in the driver’s seat. AACSB: Analytical thinking Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 114) Discuss how retailers are addressing sustainability issues. Answer: At the most basic level, most large retailers are making their stores more environmentally friendly through sustainable building design, construction, and operations. Retailers are also making their product assortments more sustainable. And many retailers have also launched programs that help consumers make more environmentally responsible decisions. AACSB: Analytical thinking Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Moderate 115) ________ includes all activities involved in selling goods and services to those buying for resale or business use. 32

A) Wholesaling B) Retailing C) Franchising D) Discounting E) Showrooming Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 116) ________ buy mostly from producers and sell to retailers and industrial consumers. A) Warehouse clubs B) Factory outlets C) Wholesalers D) Discount stores E) Megaretailers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 117) Which of the following wholesaler's channel functions is demonstrated when a wholesaler's sales force helps a manufacturer to reach many small customers at a low cost? A) bulk-breaking B) selling and promoting C) buying and assortment building D) risk bearing E) rack jobbing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 118) Which of the following is NOT one of a wholesaler's channel functions? A) financing B) risk bearing C) transportation D) off-price retailing E) bulk breaking Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. 33

Difficulty: Moderate 119) Which of the following wholesaler's channel functions is demonstrated when a wholesaler holds inventories and thereby reduces inventory holding costs and risks of suppliers and customers? A) financing B) transporting C) buying and assortment building D) warehousing E) bulk breaking Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate

120) Which of the following wholesaler's channel functions is demonstrated when a buyer receives quicker delivery because wholesalers are located closer than producers? A) financing B) transportation C) buying and assortment building D) warehousing E) risk bearing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 121) Which of the following wholesaler's channel functions is exemplified by buying in carload lots and then dividing these lots into small quantities? A) warehousing B) transportation C) risk bearing D) bulk breaking E) selling and promoting Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 122) What is the most common type of agent wholesaler? A) wholesale merchant B) industrial distributor C) limited-service wholesaler D) manufacturers' representative E) truck jobber Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 123) A(n) ________ brings buyers and sellers together and assists in negotiations. A) agent B) broker C) retailer D) wholesaler E) industrial distributor Answer: B AACSB: Application of knowledge 35

Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 124) A(n) ________ does not take title to goods and represents buyers or sellers on a more permanent basis than a broker. A) full-service wholesaler B) industrial distributor C) agent D) retailer E) cash-and-carry wholesaler Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 125) Which type of wholesaler sells to manufacturers rather than to retailers? A) industrial distributor B) full-service wholesaler C) cash-and-carry wholesaler D) wholesale merchant E) limited-service wholesaler Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 126) ________ are a type of limited-service wholesaler who does not carry inventory or handle a product. They typically operate in bulk industries, such as coal, lumber, and heavy equipment. A) Wholesale merchants B) Industrial distributors C) Cash-and-carry wholesalers D) Rack jobbers E) Drop shippers Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 127) ________ are independently owned businesses that take title to all merchandise handled. A) Industrial distributors B) Selling agents 36

C) Purchasing officers D) Rack jobbers E) Merchant wholesalers Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 128) ________ are wholesalers who serve grocery and drug retailers, mostly in nonfood items. They price the goods, keep them fresh, set up point-of-purchase displays, and keep inventory records. A) Purchasing agents B) Rack jobbers C) Drop shippers D) Cash-and-carry wholesalers E) Manufacturers' agents Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 129) Today's large, progressive wholesalers have successfully reacted to rising costs by ________. A) relocating to low-rent, low-tax areas B) investing in information technology systems C) investing less money in expensive machinery D) reducing their markup rates E) reducing promotional activities Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 130) Carey David's wholesale company helps retailers train salesclerks, improve store layouts and displays, and set up inventory control systems. According to this information, which of the following wholesaler's channel functions does Carey David provide? A) buying and assortment building B) selling and promotion services C) risk bearing services D) marketing information E) management services and advice Answer: E AACSB: Analytical thinking 37

Skill: Application Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate

131) Price is a critical wholesaler decision because it directly influences retail pricing decisions, which ultimately drive demand and profitability. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 132) Most wholesalers make extensive use of promotions. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 133) Wholesalers realize that they increase value to their customers by watching for better ways to meet the needs of their suppliers and target customers. This involves reducing the services they provide to retailers. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy

134) Digital and social media are playing an increasingly important role in wholesaler promotion. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 135) Why would a producer use wholesalers rather than sell directly to retailers or consumers? Answer: Wholesalers add value by performing one or more of the following channel functions: selling and promotion, buying and assortment building, bulk breaking, warehousing, transportation, financing, risk bearing, providing market information, and giving management 38

services and advice. Wholesalers can perform many channel functions more efficiently and effectively than a producer can, allowing the producer to focus its energies on creating its product. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 136) How do merchant wholesalers and agents/brokers differ? Answer: Merchant wholesalers "take title to" (or own) what they sell; agents/brokers merely serve as liaisons, bringing buyers and sellers together. AACSB: Application of knowledge Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Easy 137) How can wholesalers improve their use of promotions? Answer: Many wholesalers do not view promotion as a team effort to sell, build, and service major accounts; to address this issue, wholesalers should adopt some of the promotion techniques used by retailers, such as developing an overall promotion strategy and making greater use of supplier promotion materials and programs. AACSB: Written and oral communication Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 138) List some ways that wholesalers segment their markets. Answer: They can choose a target group by size of customer (for example, large retailers only), type of customer (convenience stores only), the need for service (customers who need credit), or other factors. Within the target group, they can identify the more profitable customers, design stronger offers, and build better relationships with them. AACSB: Written and oral communication Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate 139) How did Covid-19 impact wholesalers and how can wholesalers deal with these issues? Answer: COVID-19 wreaked havoc on global supply chains and resulted in stockouts and shipping delays. Progressive wholesalers constantly watch for better ways to meet the changing needs of their suppliers and target customers. They recognize that their only reason for existence comes from adding value, which occurs by increasing the efficiency and effectiveness of the entire marketing channel. AACSB: Written and oral communication Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Challenging 39

140) Explain how wholesalers have been able to use technology to cut costs. Answer: Many wholesalers have invested in automated warehouses and information technology systems. Delivery time can be cut as orders are fed from the retailer's information system directly into the wholesaler's. Automated warehouses increase efficiencies and drive down costs, as mechanical devices can automatically pick up items and take them to a shipping platform to be assembled. Wholesalers can also use technology for accounting, billing, inventory control, and forecasting. These computerized, automated, and Web-based systems help wholesalers contain the costs of ordering, shipping, and inventory holding. AACSB: Analytical thinking Skill: Concept Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate Quantitative Questions 1) Walmart’s 2021 sales revenue was $559.15 billion. How much sales revenue will Walmart generate in three years if the sales grow at 5% per year? A) $559.21 billion B) $647.29 billion C) $611.56 billion D) $621.28 billion E) $701.35 billion Answer: B; To compute this use the formula; Future value = present value (1 + growth rate) number of years. So, FV = $559.15 (1 + .05)3 = $647.29 billion. AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 2) Amazon’s sales last year were $470 billion. How much will this year’s sales be if the firm’s sales are expected to grow by 35%? A) $634.5 billion B) $651.3 billion C) $674.4 billion D) $722.5 billion E) $731.5 billion Answer: A; You compute this by $470 billion x (1.35) = $634.5 billion. AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 41

3) By 2025 digital commerce is expected to be $7.4 trillion. What is the expected value in 2030 if digital commerce grows at an annual rate of 14% over that five-year period? A) $12.356 trillion B) $12.157 trillion C) $14.248 trillion D) $14.872 trillion E) $15.327 trillion Answer: C; You compute this by using the formula FV = PV(1 + g)n = $7.4(1.14)5 = $14.248 trillion. AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 4) Firm HHH created a 30-minute infomercial that generates about $421,000 in sales every time they run it on Monday night. It costs about $45,000 to run the infomercial and the firm’s profit margin before running the informercial is 25%. How much profit per minute does the firm earn when it runs the ad? A) $1,500.00 per minute B) $2,008.33 per minute C) $2,100.00 per minute D) $2,508.33 per minute E) $3,508.33 per minute Answer: B; You compute the profit on the total amount and then subtract the cost of running the infomercial and then divide by 30 minutes. So, $421,000 x .25 = $105,250. Then ($105,250 $45,000)/30 = $2,008.33 per minute. AACSB: Analytical thinking Skill: Application Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the major types of retailers. Difficulty: Moderate 5) Online retailing is thriving. It currently accounts for about 17 percent of total U.S. retail sales

and will reach an estimated 24 percent of all retail sales by 2025. If online retail sales were $1.122 trillion in 2021, how much were total retail sales in 2021? A) $5.5 trillion B) $5.8 trillion C) $6.1 trillion D) $6.6 trillion E) $7.2 trillion Answer: D; You compute the answer by dividing total online retail sales by 17%. So, $1.122 trillion/.17 = $6.6 trillion. AACSB: Analytical thinking Skill: Application 42

Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Moderate 6) Online retailing is thriving. It currently accounts for about 17 percent of total U.S. retail sales and will reach an estimated 24 percent of all retail sales by 2025. If online retail sales were $1.122 trillion in 2021, how much will they be in 2025 if total retail sales grow by 7% a year over the next four years? A) $2.006 trillion B) $2.076 trillion C) $2.261 trillion D) $2.312 trillion E) $2.411 trillion Answer: B; You need to compute total retail sales in 2025 and then multiply by 24%. First you need to compute total retail sales in 2021 by taking online sales and dividing by 17%. So, $1.122 trillion/.17 = $6.6 trillion. The compute sales in 2025 by; $6.6(1.07)4 = 8.651 trillion and then multiply by 24%. So, $8.651 trillion x .24 = $2.076 trillion. AACSB: Analytical thinking Skill: Application Objective: LO 13.2: Discuss how retailers are using omni-channel marketing to meet the crosschannel shopping behavior of today’s digitally connected consumers. Difficulty: Moderate 7) Wegmans grocery chain stocks about 60,000 items in its massive 140,000 square foot stores. Competitors with about half the square footage typically stock about 40,000 items. How many items per square foot does Wegmans stock? A) 1.43 B) 1.65 C) 1.75 D) 1.89 E) 2.33 Answer: E; Wegmans's stores have 140,000 square feet/60,000 items. So, 140,000/60,000 = 2.33 items per square foot. AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 8) Wegmans grocery chain stocks about 60,000 items in its massive 140,000 square foot stores. Competitors with about half the square footage typically stock about 40,000 items. How many items per square foot are carried by Wegmans’s competitors? A) 1.43 B) 1.65 C) 1.75 D) 1.89 E) 2.33 43

Answer: C; Wegmans's competitors have 140,000/2, or 70,000 square feet in a typical store and they stock about 40,000 items. So, 70,000/40,000 = 1.75 items per square foot. AACSB: Analytical thinking Skill: Application Objective: LO 13.3: Describe the major marketing decisions that retailers make. Difficulty: Moderate 9) How much revenue did Walmart generate from food and beverage sales if Walmart sells 26% of all groceries sold in the U.S. and 2022 sales were $377 billion? A) $98.02 billion B) $112.56 billion C) $187.45 billion D) $278.98 billion E) $377.00 billion Answer: A; You compute this by multiplying total sales by Walmart’s market share. So, $377 billion x .26 = $98.02 billion. AACSB: Analytical thinking Skill: Application Objective: LO 13.4: Discuss the major trends and developments in retailing. Difficulty: Easy 10) JBC Wholesale generated $43 million in revenue last year. About 32% of the firm’s revenue came from online sales and the remainder came from the firm’s 26 outlets scattered throughout a four state region. What is the average revenue per store generated by JBC Wholesale? A) $0.9852 million B) $1.1246 million C) $1.2157 million D) $1.3429 million E) $1.3879 million Answer: B; You compute the answer by calculating the total store revenue and dividing by 26. So, ($43 million x (1 - .32))/26 = $1.1246 million per store. AACSB: Analytical thinking Skill: Application Objective: LO 13.5: Explain the major types of wholesalers and their marketing decisions. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 14 Engaging Consumers and Communicating Customer Value: Integrated Marketing Communications Strategy 1) Each category of ___________ involves specific tools. For example, advertising includes digital, broadcast, print, outdoor, and other forms. Sales promotion includes discounts, coupons, displays, demonstrations, and events. Personal selling includes sales presentations, trade shows, and incentive programs. Public relations includes news updates, stories, sponsorships, events,= and webpages. A) the product mix B) digital mix C) the promotion mix D) the price mix E) the marketing mix Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Easy 2) Which of the following is not one of the promotion mix tools? A) advertising B) positioning C) sales promotion D) personal selling E) public relations Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Easy 3) _____refers to customer interactions by the firm’s sales force to engage customers, make sales, and build customer relationships A) Sales promotion B) Advertising C) Direct and digital marketing D) Personal selling E) public relations Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Easy

4) Activities designed to engage the company’s various publics and build good relations with them are called ________. A) direct and digital marketing B) sales promotion C) personal selling D) public relations E) publicity Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Easy 5) Which of the following includes news updates, stories, sponsorships, events, and webpages? A) sales promotion B) direct and digital marketing C) horizontal diversification D) public relations E) advertising Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Easy

6) Extel Inc., a home appliance manufacturer, uses sales representatives to sell its products to wholesalers and individual customers. This is an example of ________. A) sales promotion B) personal selling C) public relations D) direct and digital marketing E) advertising Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Moderate

7) Marketing communication goes beyond specific promotion tools. The product design, price, package, and the stores that sell it—all communicate something to buyers. Thus, although the promotion mix is the company’s primary engagement and communications activity, the entire marketing mix—promotion and product, price, and place—must be _________for greatest impact. A) coordinated B) encoded C) decoded D) correctly placed E) digitalized Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Moderate 8) Advertising involves any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Easy

9) The product design, price, package, and the stores that sell it—all communicate something to buyers. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Easy 10) A company's marketing communications mix–also called its promotion mix–blends five different components. List and define these components. Answer: Advertising is any paid-for or nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Sales promotion includes short-term incentives to encourage the purchase or sale of a product or service. Public relations includes building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, or events. Personal selling includes a personal presentation by the firm's sales force for the purpose of making sales and building customer relationships. Direct marketing includes direct connections with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Moderate 11) Today's consumers do not need to rely on marketer-supplied information about products and services because they can use ________ to seek out a wealth of information. A) push strategies B) direct and digital marketing C) the internet D) personal selling E) public relations Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Easy 12) Which of the following is a trend in marketing communications? A) Large advertisers are increasingly moving toward a “digital-first” approach B) TV advertising has significantly increased C) Large advertisers rely more and more on print advertising D) Ad spending on radio has increased E) Mass marketing has led to new mass-media communication models Answer: A 5

AACSB: Technology Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 13) Content marketing managers create, inspire, and share brand messages and conversations with customers across a fluid mix of all of the following communication channels EXCEPT____. A) paid B) owned C) earned D) management E) shared Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Easy

14) _____refers to creating, inspiring, and sharing brand messages and conversations with and among consumers across a fluid mix of paid, owned, earned, and shared communications channels and media. A) Public relations B) Magazines C) Content marketing D) The internet E) Personal selling Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 15) Advances in ______have remarkably transformed caused remarkable changes in the ways how companies and customers communicate with each other. A) digital technology B) mass-media C) content marketing D).personal selling E) channel marketing Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate

16) All of the following describe today’s consumers EXCEPT_____ A) digitally connected B) better informed C) use mobile apps D) more communications-empowered E) rely more on marketer-supplied information Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Easy 17) The key is to ________ traditional mass media with online, mobile, and social media to best engage customers, communicate the brand message, and enhance the customer's brand experiences. A) prioritize B) integrate C) utilize D) design E) spend on Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Easy

18) A recent study showed that more than two-thirds of marketers now plan video ad campaigns that stretch across viewing platforms such as traditional TV and digital, mobile, and social media. Such ________campaigns combine TV’s vast reach with digital’s superior targeting, interaction, and engagement. A) cross-platform B) pull strategy C) vertical diversification D) content marketing E) buzz marketing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate

19) L’Oréal, Hershey, and Unilever increased their digital advertising more than 100 percent over the previous year. In fact, consumer package goods brands are expected to increase their digital advertising spending by more than 50 percent over the next five years. These examples show all of the following EXCEPT that______ A) have equal portions of the advertising budget B) advertisers are moving towards a digital approach C) television advertising has flattened D) new communication models have emerged E) ad spending in newspapers has increased Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Challenging 20) Delia's is a clothing retailer that targets teenage girls. The company runs coordinated promotions for its catalogs, Web site, and retail outlets. It uses the same models in its catalog, print ads, and website. Delia's works to make sure its public relations activities as well as its sales promotions harmonize with its advertising in all aspects. From this information, we can infer that Delia's is using ________. A) buzz marketing B) experiential marketing C) integrated marketing communication D) word-of-mouth marketing E) database marketing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Challenging 21) Excel Enterprises uses a Web site, online social networks, and print advertisements to promote its products. Since Excel Enterprises practices integrated marketing communications, all these different brand contacts maintain ________ in design and tone. A) variety B) simplicity C) creativity D) consistency E) flexibility Answer: D AACSB: Written and oral communication Skill: Application Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. 10

Difficulty: Moderate 22) Direct and digital marketing includes catalogs, direct mail, social media, and mobile marketing. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 23) Cross-platform campaigns combine TV’s core strength—vast reach—with digital’s superior targeting, interaction, and engagement Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 24) The integrated marketing communication ties together all of the company's messages and images. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Easy 25) Integrated marketing communications calls for recognizing all communications channels where the customer may encounter the company and its brands. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 26) The shift toward digital communication allows companies to keep control of message exposure. Answer: FALSE AACSB: Written and oral communication Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. 11

Difficulty: Easy 27) A marketing communications director has overall responsibility for the company's communications efforts. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Easy 28) Explain how today’s marketing strategies are changing and why? Answer: Today’s marketing communications environment is rapidly evolving. First, marketing strategies are changing. As mass markets have fragmented, marketers are shifting away from mass marketing and toward more focused marketing aimed at narrower micromarkets. Second, in this digitally connected, mobile age, consumers are better informed and more communicationsempowered. Instead of relying only on marketer-supplied information, they use the internet, social media, and other technologies to find information on their own. They connect easily with other consumers to exchange brand-related information or even create and communicate their own brand messages and experiences. AACSB: Application of knowledge Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 29) Unilever has shifted ad resources from television advertising to digital streaming and gaming platforms. It now partners with the hugely popular Fortnite and Animal Crossing gaming platforms to engage younger consumers. How have digital platforms changed the use of promotional tools? Answer: Digital tools have become more dominant. In recent years, although TV remains a potent advertising medium, TV ad spending growth has flattened or declined. Ad spending in magazines, newspapers, and radio has also lost significant ground. Meanwhile, spending in digital media has surged Total digital ad spending now captures more than 62 percent of all U.S. ad spending and will grow to an estimated 75 percent of total ad spending by 2024. Advertising on mobile devices now accounts for more than three-quarters of all digital ad spending and by itself exceeds the amount spent on TV advertising. AACSB: Technology Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 30) Describe the rise of content marketing. Answer: The roles and skill sets of marketing communicators are also evolving. Rather than just creating and placing “TV ads” or “print ads” or “Instagram stories,” many marketers now 12

view themselves more broadly as content marketing managers. As such, they create, inspire, and share brand messages and conversations with and among customers across a fluid mix of paid, owned, earned, and shared communication channels and media. These channels include media that are both traditional and new as well as controlled and not controlled. As one ad agency executive notes: “It’s about [communications] context and channels now, rather than just the message itself. It’s about mapping the customer journey to start a conversation with consumers, one that leads to engagement, purchase, loyalty, and advocacy at different touchpoints against this integrated journey” AACSB: Analytical thinking Skill: Application Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Challenging 31) Describe integrated marketing communications (IMC). Answer: In these digital times, the old practice of placing “advertisements” in well-defined “media” within the tidy framework of a carefully managed “advertising campaign” just doesn’t work anymore. Instead, the lines are rapidly blurring between traditional advertising and new digital content. To be relevant, today’s brand messages must be digital, social, mobile, interactively engaging, and multi-platformed. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 32) The communications process should start with a(n)_______ of all the potential touch points between target customers and the company A) audit B) shared images C) print ads D) tv ads E) Instagram stories Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 33) Communications programs need to be developed for specific niches, individuals, and ________. A) genders B) countries C) departments D) products 13

E) segments Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 34) ________ refers to the process of putting thought into symbolic form. A) Sending B) Encoding C) Decoding D) Receiving E) Feedback Answer: B AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 35) HP's advertising agency assembles words and illustrations into an advertisement that conveys the company's intended brand message. In the context of the communication process, HP is ________. A) messaging B) decoding C) sending D) encoding E) responding Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 36) The decision to use an NBA star player to communicate the desirability of Nike basketball shoes represents the ________ process of the communication model. A) sourcing B) messaging C) acknowledging D) decoding E) encoding Answer: E AACSB: Application of knowledge; Written and oral communication 14

Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 37) In the communication process, an actual HP printer/fax machine advertisement would be considered ________. A) encoding B) decoding C) the product D) the message E) the medium Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 38) Noise, the result of unplanned distortion during the communication process, could have all of the following effects EXCEPT_____. A) the customer getting distracted B) the receiver getting a weaker message than the one sent C) the receiver getting a different message than the one sent D) the receiver hearing all key points E) the receiver missing the key points Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 39) To develop an effective integrated communications and promotion program, marketers must do all of the following EXCEPT A) identify the target audience B) determine the communication objectives C) designate a communications manager D) design a message E) select the message source Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. 15

Difficulty: Moderate 40) A high-profile news event could overshadow an ad or video, or a breaking story about the negative health effects of carbonated drinks could blunt Coca-Cola’s message. In the context of the communication process, this unplanned static or distortion is called ________. A) noise B) encoding C) feedback D) response E) decoding Answer: A AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 41) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured actress Gigi Hadid and offered readers a $2-off coupon when they tried the new makeup. In terms of the communication model, the sender of this message is ________. A) Gigi Hadid B) Ladies' Home Journal C) readers who redeem the $2-off coupon D) Maybelline E) the target market to which Gigi Hadid appeals Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 42) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured actress Gigi Hadid and offered readers a $2-off coupon when they tried the new makeup. In terms of the communication model, the medium of this ad is ________. A) Gigi Hadid B) Ladies' Home Journal C) readers who redeem the $2-off coupon D) Maybelline E) the target market to which Gigi Hadid appeals Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 16

43) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured actress Gigi Hadid and offered readers a $2-off coupon when they tried the new makeup. In the context of the communication model, measuring which of the following would be the best way for the source to measure feedback? A) the number of subscribers to Ladies' Home Journal B) the number of people who make up the target market C) the number of people who redeem the coupon D) the number of people who have purchased Maybelline products in the past E) the number of people to whom Gigi Hadid is an appealing spokesperson Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 44) Coca-Cola’s research shows that consumers notice and remember the ad, post messages to Coca-Cola on its social media sites praising or criticizing the ad or refer to the content on their own social media pages. This is an example of a(n) _________, the part of the receiver’s response communicated back to the sender. A) emotional appeal B) messaging C) feedback D) encoding E) response Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 45) The best messages consist of words and symbols that are ________to the receiver. A) familiar B) unfamiliar C) advertised D) translated E) sent Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 17

46) Marketing communicators must know what ________ and what ________. A) products they wish to sell; audiences they want to target B) distribution channel(s) they wish to use; timing they need C) advertising media they will use; message they will send D) audiences they wish to reach; responses they want E) message they will send; feedback they expect Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 47) Which of the following is NOT one of the five As of the customer journey? A) appeal B) awareness C) act D) ask E) answer Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 48) While developing an effective integrated communication, once the target audience has been defined, marketers must do all these steps EXCEPT ________. A) determine the desired response B) collect feedback C) choose the media through which to send a message D) identify potential distractions E) design a message Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 49) Advocates of ______claim they are better than rational messages at drawing attention and create strong beliefs. A) emotional appeals B) consumer appeals C) intellectual arguments D) personal-communication channels 18

E) cross-platform campaigns Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 50) ______involve(s) cultivating opinion leaders and getting them to spread information about a product or a service to others in their communities. A) Personal communication channels B) Buzz marketing C) Nonpersonal communication channels D) Message format E) Moral appeals Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 51) Personal communication channels are effective because of all of the following reasons EXCEPT______. A) they allow for personal addressing and feedback B) they are not controlled C) they include major media, atmospheres, and events D) they include independent experts E) they include friends and family Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate

52) Greenlight Financial Technology took extraordinary measures. It spent nearly $7 million on a Super Bowl LVI ad titled “I’ll Take It.” The goal of the ad was to “shine a light on the world of money for families and empower parents to raise financially-smart kids.” In the context for the five A’s, this is an example of_________ A) act B) awareness C) appeal D) ask E) advocacy Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 53) Lawyers’ offices and banks are designed to communicate confidence and other qualities valued by clients. Events are staged occurrences that communicate messages to target audiences. Brands arrange shows and exhibits, public tours, and other events. These are all examples of ______. A) personal communication channels B) nonpersonal communication channels C) buzz marketing D) word-of-mouth influence E) feedback Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 54) Which of the following statements is true about personal communication channels? A) A magazine advertisement exemplifies the use of a personal communication channel. B) All personal communication channels are directly controlled by a company. C) Personal communication channels do not allow sending and receiving of feedback. D) Word-of-mouth influence uses a personal communication channel. E) A billboard message exemplifies the use of a personal communication channel. Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate

55) An Aleve ad claims: “More pills doesn’t mean more pain relief. Aleve has the strength to keep back, body, and arthritis pain away all day with fewer pills than Tylenol.” This ad makes a(n) _________appeal. A) structural B) rational C) emotional D) moral E) standard Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 56) The ASPCA does a great job of raising money and support by designing ________television, print, and digital advertising that highlights the plight of suffering animals. Its ads tug at people’s heartstrings while encouraging them to contribute to animal welfare support or to adopt a shelter animal. A) rational B) structural C) emotional D) moral E) standard Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 57) ________ involves cultivating opinion leaders and getting them to spread information about a product or a service to others in their communities. A) Sales promotion B) Indirect marketing C) Buzz marketing D) Stealth marketing E) Public relations Answer: C AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy

58) Which of the following appeals is based on the idea that consumers often feel before they think? A) emotional appeal B) rational appeal C) structural appeal D) standardized appeal E) integrated appeal Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 59) A Colgate ad campaign urges people to “Close the tap while brushing” their teeth. One ad shows a young boy in a developing economy with a water bucket atop his head, noting, “What you waste in two minutes is all his family needs for a day.” This is an example of a(n)_______appeal. A) rational B) moral C) social D) economic E) financial Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 60) Reese’s Peanut Butter Cup ads feature the brand’s familiar orange, yellow, and brown colors with text overlaying images of the classic candy. They feature clever headlines that unite the candy’s two distinctive ingredients, such as “Chocolate and peanut butter walked into a bar. The rest is history.” This example shows all of the following EXCEPT A) Communicators plan every detail carefully B) Color alone can significantly enhance message recognition for a brand C) The marketing communicator needs a strong format for the message D) Advertisers cannot entice viewers into mentally interacting with the ad E) To attract attention, advertisers can use novelty and contrast Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 22

61) A marketing communicator starts with a clear target audience in mind. The target audience will affect all of the following EXCEPT A) what will be said B) how it will be said C) when it will be said D) whether it will be translated E) who will say it. Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 62) One of the message structure issues that a marketer must handle is whether to ________. A) present the strongest arguments first or last B) make a moral appeal or not C) use the pull strategy or push strategy D) diversify vertically or horizontally E) use mass marketing or niche marketing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 63) A(n) ________ argument is most likely to be effective when the audience is highly educated or likely to hear opposing claims. A) one-sided B) two-sided C) moral D) emotional E) structured Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate

64) Which of the following advertising slogans most likely represents a two-sided argument? A) Breakfast of champions B) Good to the last drop C) A diamond is forever D) The ultimate driving machine E) The next big thing is already here Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 65) In the message _____ , advertisers can use novelty and contrast; eye-catching pictures and headlines; distinctive formats; message size and position; and color, shape, and movement to attract attention A) structure B) content C) medium D) channel E) format Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 66) _____are media that carry messages with minimal personal contact or feedback. They include major media, atmospheres, and events A) Shared communication channels B) Earned communication channels C) Nonpersonal communication channels D) Nonverbal communication channels E) Owned communication channels Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 67) Two or more people communicate directly with each other and might communicate face-toface, on the phone, via mail or email, on social media, or even through texting or chat. This is called a(n) ________communication channel. 24

A) wireless B) nonverbal C) personal. D) nonpersonal E) digital Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 68) Personal communications about a product between target buyers and neighbors, friends, family members, associates, and other consumers, are known as ________. A) personal selling B) direct marketing C) public relations D) buzz marketing E) word-of-mouth influence Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 69) A manufacturer of a variety of technological devices asked its marketing department to develop inexpensive methods of building and maintaining brand awareness and excitement. The marketing department then recruited consumers who were early adopters of technological devices to spread the word about the company's new products. This is an example of ________. A) a reverse marketing activity B) nonpersonal marketing C) sales promotion D) buzz marketing E) direct marketing Answer: D AACSB: Application of knowledge; Written and oral communication Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging

70) Nonpersonal communication channels include major media, ________, and events. A) sales calls B) atmospheres C) buzz marketing D) word-of-mouth influence E) phone calls Answer: B AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 71) Many firms hire celebrities to appear in their advertisements. Which step of the communication process is represented? A) collecting feedback B) designing a message C) selecting the message source D) determining the communication objectives E) choosing the media Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 72) To ________, a marketer would most likely ask target audience members whether they remember the message, how many times they saw it, and what points they remember. A) select a message source B) collect feedback C) select a message channel D) plan a media purchase E) design a marketing appeal Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate

Refer to the scenario below to answer questions 73-75. John Mayes opened Sparkle Janitorial in 2005. John began his business by acquiring two contracts for office cleaning services from two local manufacturing facilities. For two years, John and his wife, Barb, performed the cleaning services alone. After acquiring three additional cleaning contracts in 2007, John hired two employees. "Up to that point, we had room to grow but we really had no advertising plan," John stated. "We were relying mostly on word-ofmouth." By 2010, Barb hired another two full-time employees to begin Sparkle's new endeavor: carpet cleaning in homes and offices. "Competition was getting tough for both of our services at that point," Barb added. "We ran a local radio spot three times each week. Then we had an advertiser print coupons on placemats. That gave us a little more exposure." John and Barb Mayes admit that they did not realize the value of a sound promotional plan earlier. "We wish we would have put together something catchy with a jingle long before now," they said. 73) In a recent radio spot, John and Barb gave a quick explanation of Sparkle's cleaning process and a description of the value consumers receive for their money. This is an example of a(n) ________ appeal. A) emotional B) standard C) rational D) moral E) social Answer: C AACSB: Application of knowledge; Written and oral communication Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 74) John and Barb could have drawn attention to their services in several ways by using effective integrated marketing communications. Which of the following is NOT a part of an IMC strategy? A) public relations B) personal selling C) direct marketing D) strategic planning E) sales promotion Answer: D AACSB: Application of knowledge; Written and oral communication Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. 27

Difficulty: Moderate 75) How could John and Barb use buzz marketing for their businesses? Answer: Companies must put personal communication channels to work for them. John and can hire or create opinion leaders for their cleaning process—people whose opinions are sought by others—by supplying influencers with the cleaning service and educating them so that they can inform others. Buzz marketing involves cultivating opinion leaders and getting them to spread information about a product or a service to others in their communities. AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 76) How can nonpersonal and personal communications be coordinated? Answer: Nonpersonal and personal communications work best when coordinated well. Nonpersonal communications might first flow from television, magazines, and other mass media to opinion leaders and consumers, who may then interact at a more personal level. Influencers and opinion leaders can also carry mass-media messages to people who are less exposed to such media. Interestingly, marketers often use nonpersonal channels to mimic personal communications by embedding endorsements or word- of-mouth testimonials from consumers and experts in their television ads and other promotions. AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 77) What are the pros and cons of using celebrity spokespersons? Answer: In personal and nonpersonal communication, messages delivered by highly credible or popular sources are more persuasive. Thus, many companies promote to doctors, dentists, and other health-care providers to motivate these professionals to then recommend specific products to their patients. And marketers hire celebrity endorsers—well-known athletes, actors, and musicians—to deliver their messages. But companies must select celebrity brand endorsers carefully. Picking the wrong spokesperson can tarnish the brand. For example, a dozen or more big brands—including Nike, Anheuser-Busch, Oakley, Trek bikes, and Giro helmets—were hurt when pro cyclist Lance Armstrong was stripped of his Tour de France titles and banned from competitive cycling for using performance-enhancing drugs. AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 78) Feedback on marketing communications may suggest changes in the marketing mix. Answer: TRUE 28

AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 79) Describe the need for a strong message format. Answer: The marketing communicator needs a strong format for the message. In a print ad, the communicator has to decide on the headline, copy, illustration, and colors. To attract attention, advertisers can use novelty and contrast; eye-catching pictures and headlines; distinctive formats; message size and position; and color, shape, and movement. They can also entice viewers into mentally interacting with the ad. AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 80) Rational appeals are often used to urge people to support social causes, such as a cleaner environment or helping the disadvantaged. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 81) The "Stop. Think. Tylenol." ad slogan is an example of a moral appeal. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate

82) What is message structure? Answer: Marketers must make three decisions related to message structure. The first is whether to draw a conclusion or leave it to the audience. Research suggests that the advertiser is often better off asking questions and letting buyers come to their own conclusions. The second is whether to present the strongest arguments first or last. Presenting them first gets strong attention but may lead to an anticlimactic ending. Ending on a high note is usually better, especially if the aim is to get the customer to take some action. The third is whether to present a one-sided argument (mentioning only the product’s strengths) or a two-sided argument (mentioning both strengths and shortcomings). AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 83) When should emotional appeals be used? Answer: Emotional appeals—ranging from love, joy, and humor to fear and guilt—invoke positive or negative emotions that can motivate purchase or other actions. Advocates of emotional messages claim they are better than rational messages at drawing attention and create strong beliefs. They reason that consumers often feel before they think and that persuasion is emotional in nature. AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 84) Why is the consumer's field of experience important to a marketer? Answer: The marketing communicator must understand the consumer's field of experience in order to create promotional messages that will be decoded as the sender intends them to be understood. AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 85) In the communication process, what is noise and what is its significance? Answer: Noise is the unplanned static or distortion during the communication process, which results in the receiver getting a different message than the one the sender sent. Due to the noise, the consumer can get distracted and might miss the key point. AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 30

86) Describe the three types of appeals that marketers use. Answer: Rational appeals relate to the consumer's self-interest; emotional appeals attempt to stir up either positive or negative emotions; moral appeals are directed to the consumer's sense of what is "right" and "proper." AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 87) What is a moral appeal? Answer: Moral appeals are directed to an audience’s sense of what is “right” and “proper. For example. A World Wildlife Fund ad shows two human lung-shaped forests side by side with one lung partially destroyed, calling for society to reduce environmental degradation and forest habitat destruction AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 88) Why do marketers value opinion leaders? Answer: Opinion leaders are people whose opinions are sought by others. Marketers rely on opinion leaders to positively influence the spread of product or service acceptance through a market. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 89) Explain how the message source affects consumers' perceptions of the message. Answer: The message source will affect how the consumer perceives the message. For example, highly credible sources–such as certain newspapers or professionals such as doctors and dentists–will be more persuasive. In some cases, the use of celebrity testimonials works well to persuade consumers to make the purchase. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate

90) The background for the QuickRelief allergy medication ad appearing in the magazine Better Homes and Gardens shows green grass and lovely flowers. The headline states "QuickRelief is 54% more effective than the leading prescription." At the bottom of the ad, in small print, is an explanation of how the effectiveness of QuickRelief was determined. The ad also shows a package of QuickRelief so consumers can easily recognize it at the store. Identify the different components of the communication model for this advertisement. Answer: The marketers of QuickRelief are the sender. These marketers encoded their ideas into the actual message, which includes the images and text of the advertisement. The medium for this communication is the page in Better Homes and Gardens. The receiver is anyone reading the magazine who sees this page of advertising; the receiver may or may not decode the message in the way the marketers intended. Noise could pop up at any stage of the communication process. AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Challenging 91) Outline the steps in developing effective marketing communications. Answer: In preparing marketing communications, the marketer's first task is to identify the target audience and its characteristics. Next, the marketer has to determine the communication objectives and define the response sought, whether it is awareness, knowledge, liking, preference, conviction, or purchase. Then a message should be constructed with an effective content and structure. Media must be selected, both for personal and nonpersonal communication. The marketer should find highly credible sources to deliver messages. Finally, the communicator must collect feedback by watching how much of the market becomes aware, tries the product, and is satisfied in the process. AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 92) Describe the five As of the customer journey. Answer: The five As of the customer journey are awareness (I know about the product), appeal (I like the product), ask (I want to know more about the product and be more engaged with the brand), act (I'm buying and relating to the product), and advocacy (I'm telling others about the product). AACSB: Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy

93) While using the ________ method for setting an advertising budget, a company starts with total revenues, deducts operating expenses and capital outlays, and then devotes some portion of the remaining funds to advertising. A) integrated B) moving-average C) competitive-parity D) percentage-of-sales E) affordable Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 94) Which of the following statements is true regarding the affordable method for setting a promotion budget? A) It is mostly used by large businesses. B) It completely ignores the effects of promotion on sales. C) It tends to place promotion first among spending priorities. D) It leads to a certain annual promotion budget. E) It almost always results in overspending. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 95) Though the ________ method of setting an advertising budget is simple to use and helps management think about the relationships among promotion spending, selling price, and profit per unit, it wrongly views sales as the cause of promotion rather than the result. A) percentage-of-sales B) integrated C) competitive-parity D) objective-and-task E) regression Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

96) Which of the following methods is used by companies to set their advertising budgets based on the industry average? A) percentage-of-sales method B) affordable method C) competitive-parity method D) objective-and-task method E) regression method Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 97) Sam, the owner of a small company, learned that a competitor was planning to spend $150,000 on promotion in the next financial year. As soon as he learned this, Sam called his finance manager and said, "I want to spend $150,000 on promotion next year." In this case, which method of promotional budgeting does Sam use? A) the objective-and-task method B) the competitive-parity method C) the percentage-of-sales method D) the affordable method E) the pull-push method Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging 98) Which of the following statements is most likely true regarding the competitive-parity method? A) This method involves starting with total revenues, deducting operating expenses and capital outlays, and then devoting some portion of the remaining funds to advertising. B) It is based on the availability of funds rather than on opportunities. C) It wrongly views sales as the cause of promotion rather than as the result. D) In this method, promotion budgets are set to match competitors' outlays. E) This method involves setting the promotion budget at a certain percentage of current or forecasted sales. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 34

99) The ________wrongly views sales as the cause of promotion rather than as the result. A) percentage-of-sales method B) affordable method C) competitive-parity method D) objective-and-task method E) push method Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging 100) Which budgeting method entails defining specific promotion goals, determining the necessary tasks, and estimating the costs to determine a promotion budget? A) percentage-of-sales method B) objective-and-task method C) affordable method D) exponential task method E) competitive-parity method Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 101) This budgeting method entails (1) defining specific promotion objectives, (2) determining the tasks needed to achieve these objectives, and (3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget. This method is called the____ A) competitive-parity method B) objective-and-task method C) percentage-of-sales method D) affordable method E) promotional method Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

102.The Federal Trade Commission (FTC) has adopted a three-day cooling-off rule. Under this rule, customers who agree in their own homes, workplace, dormitory, or facilities rented by the seller on a temporary basis—such as hotel rooms, convention centers, and restaurants—to buy something costing more than $25 have all of the below EXCEPT_______. . A) 72 hours to cancel a contract B) 72 hours to return merchandise C) 10 days to pay for the merchandise, hotel, or restaurant fee D) 72 hours to get their money back E) no questions asked about the return or cancellation Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging 103) Which of the following is NOT a drawback of advertising? A) Advertising can be very costly B) It can reach large masses of geographically dispersed buyers. C). Mass media advertising lacks the direct persuasiveness of salespeople D) Mass media advertising is impersonal. E) It can only take messages to an audience with no interactive exchange Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 104) Which of the following is a weakness of advertising? A) Advertising is a very expensive promotional tool. B) Advertising sends positive massages about the seller’s size C) Advertising sends positive messages about the seller’s popularity D).Consumers view advertised products as being more legitimate E) Advertising sends positive messages about the seller’s success Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

105) Which of the following is an advantage to sales promotion? Sales promotion effects_____ A) can be short lived B) are weaker than advertising effects in creating long-run brand preferences C) are weaker than advertising effects in creating long-term customer relationships D) can boost sagging sales E) attract existing customers who simply stock up at a lower price Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 106) Which of the following statements is true of personal selling? A) Firms with business customers rely much more on personal selling than on advertising B) A sales force requires a shorter-term commitment than does advertising C) Personal selling includes a wide assortment of tools—coupons, contests, discounts, and premiums. D) Personal selling does not allow customer relationships to spring up. E) Personal selling can reach large masses. Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 107) ________ allows all kinds of customer relationships to spring up, ranging from matter-offact selling relationships to personal friendships. A) Public relations B) Personal selling C) Advertising D) Sales promotion E) Direct marketing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy

108) Suppose Amazon.com has offered you free shipping on your next purchase of more than $35. This offer is an example of ________. A) sales promotion B) personal selling C) a public relations strategy D) horizontal diversification E) a pull strategy Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 109) ________ that is framed as “news and events” can reach prospects who avoid sales-directed approaches such as the personal selling and advertisements. A) Differentiated marketing B) Public relations C) Direct marketing D) Sales promotion E) Personal selling Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 110) A newspaper article announced that Connect Wireless was changing its name to M-Mobile and that to begin the makeover process it had replaced spokesperson Robert Garmon with Catherine Naylor. Which of the following elements of a promotion mix is represented in this example? A) sales promotion B) advertising C) public relations D) personal selling E) direct marketing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging

111) Which promotional tool is the most immediate, customized, and interactive? A) segmented advertising B) sales promotion C) direct marketing D) horizontal diversification E) public relations Answer: C AACSB: Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 112) Business-to-consumer companies usually put more of their funds into advertising, followed by sales promotion, personal selling, and then public relations. For example, P&G spends in the range of $8.6 billion each year on U.S. consumer advertising to create brand preferences and use a _______to get customers into stores that carry its products. A) pull strategy B) blitz strategy C) push strategy D) discount strategy E) marketing strategy Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 113) The manufacturer of Crest toothpaste provides free samples of its toothpaste to dentists and encourages them to distribute these samples to their patients and to inform the patients about advantages of using Crest. The manufacturer of Crest toothpaste is using ________. A) sales promotion B) direct marketing C) a push strategy D) a pull strategy E) a vertical diversification strategy Answer: C AACSB: Application of knowledge Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging

114) Glasis is a type of paint made specifically for use on cars. An ad in Motor Trend magazine advising consumers to request their auto body shops to use Glasis paint is an example of how a company uses ________. A) word-of-mouth influence B) public relations C) buzz marketing D) a push strategy E) a pull strategy Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging 115) Business-to-consumer companies are more likely to emphasize a ________ promotion strategy, while business-to-business companies are more likely to emphasize a ________ promotion strategy. A) pull; push B) push; pull C) pulse; pull D) blitz; pull E) push; blitz Answer: A Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 116) John Deere does very little promoting of its lawn mowers and garden tractors to final consumers. Instead, John Deere's sales force works with Lowe's, Home Depot, independent dealers, and other channel members, who in turn sell John Deere products to final consumers. According to this information, which of the following promotion mix strategies is being used by John Deere? A) public relations strategy B) direct marketing strategy C) push strategy D) blitz strategy E) pull strategy Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 40

117) Salespeople must follow the rules of “fair competition.” Most states have enacted deceptive sales acts that spell out what is not allowed. For example, salespeople may not lie to consumers or mislead them about a product. To avoid _______, salespeople’s statements must match advertising claims. A) bait-and-switch practices B) comparing an offer to its competitors’ offer C) high-pressure selling D) the three-day cooling off rule E) favoring certain customers over others through trade promotions Answer: A AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging Refer to the scenario below to answer questions 118-120. John Mayes opened Sparkle Janitorial in 2005. John began his business by acquiring two contracts for office cleaning services from two local manufacturing facilities. For two years, John and his wife, Barb, performed the cleaning services alone. After acquiring three additional cleaning contracts in 2007, John hired two employees. "Up to that point, we had room to grow but we really had no advertising plan," John stated. "We were relying mostly on word-ofmouth." By 2010, Barb hired another two full-time employees to begin Sparkle's new endeavor: carpet cleaning in homes and offices. "Competition was getting tough for both of our services at that point," Barb added. "We ran a local radio spot three times each week. Then we had an advertiser print coupons on placemats. That gave us a little more exposure." John and Barb Mayes admit that they did not realize the value of a sound promotional plan earlier. "We wish we would have put together something catchy with a jingle long before now," they said. 118) When starting their business, John and Barb would most likely have benefitted from understanding ________. A) social media B) buzz marketing C) public relations campaigns D) network television advertising E) integrated marketing communications Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 41

119) Barb and John should take all of the following steps for Sparkle EXCEPT A) identify the target audience B) determine the communication objectives C) conduct survey research D) design a message E) select a strong message format Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 120) Barb and John are interested in reaching young professionals for Sparkle. What should they do to reach this market segment? Answer: Customers differ. Therefore, communications programs must be developed for specific segments and even individuals. Further, today’s communications technologies are increasingly two-way and interactive. Therefore, companies must ask not only “How can we engage our customers?” but also “How can we let our customers engage with us and with each other?” AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 121) The affordable method of setting advertising budgets takes into consideration the effects of promotion on sales. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

122) Usually, though not always, the affordable method results in under-spending on promotion. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 123) In the objective-and- task method, the company sets its promotion budget based on what it wants to accomplish. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 124) The percentage-of-sales budget is based on the availability of funds rather than on opportunities. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 125) Under a pull strategy, consumer demand “pulls” the product through the channels. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 126) Large-scale advertising conveys a positive message about the seller's size, popularity, and success. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy

127) A pull strategy is a promotion strategy that calls for using the sales force and trade promotion to push the product through channels. The producer promotes the product to channel members who in turn promote it to final consumers. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Challenging 128) Companies using the competitive-parity method set their promotion budgets to match competitors’ outlays. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 129) The affordable method sets the promotion budget at a certain percentage of current or forecasted sales. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 130) One of the hardest marketing decisions facing a company is how much to spend on promotion. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

131) Discuss sales promotion. Answer: Sales promotion includes a wide assortment of tools–coupons, contests, discounts, premiums, and others–all of which have many unique qualities. They attract consumer attention, offer strong incentives to purchase, and can be used to dramatize product offers and boost sagging sales. Sales promotions invite and reward quick response. Whereas advertising says, "Buy our product," sales promotion says, "Buy it now." Sales promotion effects are often shortlived, however, and often are not as effective as advertising or personal selling in building longrun brand preference and customer relationships. AACSB: Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 132) Describe the significance of public relations as a promotion tool. Answer: Public relations is very believable–news stories, features, sponsorships, and events seem more real and believable to readers than ads do. PR can also reach many prospects who avoid salespeople and advertisements–the message gets to buyers as "news" rather than as a sales-directed communication. And, as with advertising, public relations can dramatize a company or product. Marketers tend to underuse public relations or use it as an afterthought. Yet a well-thought-out public relations campaign used with other promotion mix elements can be very effective and economical. AACSB: Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 133) Discuss direct marketing. Answer: Although there are many forms of direct marketing–direct mail and catalogs, online marketing, mobile marketing, social media, and others–they all share four distinctive characteristics. Direct marketing is less public: The message is normally directed to a specific person. Direct marketing is immediate and customized: Messages can be prepared very quickly and can be tailored to appeal to specific consumers. Finally, direct marketing is interactive: It allows a dialogue between the marketing team and the consumer, and messages can be altered depending on the consumer's response. Thus, direct marketing is well suited to highly targeted marketing efforts and building one-to-one customer relationships. AACSB: Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

134) When is it advisable to predominantly use sales promotions in a promotion mix? Answer: Sales promotions are used to invite and reward quick response. Sales promotions are short-lived; therefore, sales promotions are used when the marketer intends to make a quick, dramatic impact on an intended audience with the use of coupons, samples, contest, etc. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 135) Describe the difference in the use of promotion tools between consumer and business markets. Answer: Business-to-consumer companies usually pull more, putting more of their funds into advertising, followed by sales promotion, personal selling, and then public relations. In contrast, business-to-business marketers tend to push more, putting more of their funds into personal selling, followed by sales promotion, advertising, and public relations. However, most companies use both. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 136) Describe socially responsible advertising. Answer: By law, companies must avoid false or deceptive advertising. Advertisers must not make false claims, such as suggesting that a product cures something when it does not. They must avoid ads that have the capacity to deceive, even though no one actually may be deceived. An automobile cannot be advertised as getting 32 miles per gallon unless it does so under typical conditions, and diet bread cannot be advertised as having fewer calories simply because its slices are thinner. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

137) What decisions must be made when designing a message? Answer: There are many different decisions to make when designing a message. If you designed a print ad or the script for a TV ad encouraging prospective students to apply to your school, you would discuss message content, structure, and format. Having defined the desired audience response, the marketing communicator must then craft the message—deciding what to say (message content) and how to say it (message structure and format). Message Content. The marketer must figure out an appeal or theme that will produce the desired responses. There are three types of appeals: rational, emotional, and moral. Rational appeals relate to the audience’s self-interest. They highlight a product’s quality, economy, value, or performance to show that it will deliver the desired benefits. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Moderate 138) Discuss the affordable method of setting the total budget for advertising. Answer: Some companies use the affordable method: They set the promotion budget at the level they think the company can afford. Small businesses often use this method, reasoning that the company cannot spend more on advertising than it has. They start with total revenues, deduct operating expenses and capital outlays, and then devote some portion of the remaining funds to advertising. Unfortunately, this method of setting budgets completely ignores the effects of promotion on sales. It tends to place promotion last among spending priorities, even in situations in which advertising is critical to the firm's success. It leads to an uncertain annual promotion budget, which makes long-range market planning difficult. Although the affordable method can result in overspending on advertising, it more often results in underspending. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

139) What is personal selling? What are the advantages and disadvantages of a firm using personal selling to promote a product or service? Answer: Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers' preferences, convictions, and actions. It involves personal interaction between two or more people, so each person can observe the other's needs and characteristics and make quick adjustments. Personal selling also allows all kinds of customer relationships to spring up, ranging from matter-of-fact selling relationships to personal friendships. An effective salesperson keeps the customer's interests at heart to build a long-term relationship by solving a customer's problems. Finally, with personal selling, the buyer usually feels a greater need to listen and respond, even if the response is a polite "No thank-you." These unique qualities come at a cost, however. A sales force requires a longer-term commitment than does advertising–although advertising can be turned up or down, the size of a sales force is harder to change. Personal selling is also the company's most expensive promotion tool, costing companies on average $600 or more per sales call, depending on the industry. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate 140) Discuss the advantages and disadvantages of advertising. Answer: Advertising can reach masses of geographically dispersed buyers at a low cost per exposure, and it enables the seller to repeat a message many times. Beyond its reach, large-scale advertising says something positive about the seller's size, popularity, and success. Because of advertising's public nature, consumers tend to view advertised products as more legitimate. Advertising is also very expressive; it allows the company to dramatize its products through the artful use of visuals, print, sound, and color. Advertising also has some shortcomings. Although it reaches many people quickly, advertising is impersonal and lacks the direct persuasiveness of company salespeople. For the most part, advertising can carry on only a one-way communication with an audience, and the audience does not feel that it has to pay attention or respond. In addition, advertising can be very costly. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate Quantitative Questions

Use the following information to answer questions 1, 2, 3, and 4. Jermaine Enterprises decided to increase spending on its marketing budget and see if it could gain market share. The plan worked since the firm spent an additional $11 million on advertising, promotion, personal selling, and public relations last year and increased the firm’s market share from 9% to 11%. When the firm had 9% of the market its revenues were $985 million, and profits were $110 million. Promotion dollars appear to have generated the best results. Jermaine spent $2.1 million on promotions and generated $56.7 million in new sales 48

directly attributed to the promotions. 1) How much did Jermaine Enterprises earn in sales revenue after increasing its market share to 11%? Assume the ratio of market share to sales remained constant. A) $1,001.91 million B) $1,203.89 million C) $1,251.11 million D) $1,274.05 million E) $1,299.25 million Answer: B; First compute the revenue per percent of market share when the firm had 9% of the market and then multiply that by 11 to determine the new sales revenue. So, $985/9 = $109.44 million in revenue per percent market share x 11 = $1,203.89. AACSB: Analytical thinking Skill: Application Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Challenging 2) How much profit did Jermaine Enterprises make after increasing market share assuming the firm’s profit margin remained constant? A) $115.67 million B) $128.21 million C) $134.47 million D) $136.41 million E) $139.98 million Answer: C; Compute the profit margin at 9% sales and then multiply that by the new revenue amount. Profit margin at 9% = $110/$985 = .1117, or 11.17%. To determine the sales revenue, you determine the revenue per percent of market share when the firm had 9% of the market and then multiply that by 11 to determine the new sales revenue. So, $985/9 = $109.44 million in revenue per percent market share x 11 = $1,203.89. New profit = $1,203.89 x .1117 = $134.47 million. AACSB: Analytical thinking Skill: Application Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Challenging 3) How much additional revenue per dollar spent did Jermaine Enterprises generate by increasing the marketing budget? A) $19.90 B) $20.54 C) $21.02 D) $21.69 E) $22.16 Answer: A; First compute the revenue per percent of market share when the firm had 9% of the market and then multiply that by 11 to determine the new sales revenue. So, $985/9 = $109.44 million in revenue per percent market share x 11 = $1,203.89. Old revenue was $985 so 49

additional revenue was; $1,203.89 - $985 = $218.89. Divide $218.89 by 11 = $19.90 in new revenue for every $1 increase in the marketing budget. AACSB: Analytical thinking Skill: Application Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Challenging 4) How much additional revenue per dollar spent did Jermaine Enterprises generate by increasing promotion spending? A) $25.55 B) $26.01 C) $26.35 D) $27.00 E) $28.50 Answer: D; Jermaine spent $2.1 million on promotions and generated $56.7 million in new sales. So, $56.7/2.1 = $27. AACSB: Analytical thinking Skill: Application Objective: LO 14.1: Define the four promotion mix tools for communicating customer value. Difficulty: Moderate 5) Total spending on digital advertising is about 62% of all spending on advertising. How much did organizations spend on digital ads in 2022 if all advertising spending was $345 billion? A) $188.54 billion B) $199.65 billion C) $201.31 billion D) $212.8 billion E) $213.9 billion Answer: E; You compute this by multiplying $345 billion in total ad spending x .62 = $213.9 billion. AACSB: Analytical thinking Skill: Application Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Easy 6) Some statistics show that the cost of removing one metric ton of greenhouse gas emissions averages about $600. If Tide detergent’s #TurnToCold social media campaign works to lower the number of loads of laundry washed in hot water by its stated goal and eliminates 4.25 million metric tons of greenhouse gas emissions it will have an enormous impact on the environment and efficiency. What is the global economic impact of reducing greenhouse gas emissions by 4.25 million metric tons? A) $2.45 billion B) $2.55 billion C) $2.65 billion D) $2.75 billion 50

E) $2.85 billion Answer: B; If it costs $600 per ton x 4.25 million tons = $2.55 billion. AACSB: Analytical thinking Skill: Application Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 7) One brand estimates they generate $50 in new sales for every new follower on social media. How much new revenue did they generate if the number of social media followers at the beginning of the year were 231,000 and now they have 267,000 followers? A) $1,500,000 B) $1,675,000 C) $1,710,000 D) $1,760,000 E) $1,800,000 Answer: E; Compute this answer by multiplying new followers (267,000 – 231,000 = 36,000) x $50 = $1,800,000. AACSB: Analytical thinking Skill: Application Objective: LO 14.2: Discuss the changing communications landscape and the need for integrated marketing communications. Difficulty: Moderate 8) Firm XXY just spent $8 million on a 30-second Super Bowl ad. This is the largest advertising expenditure the firm has ever made. How much does it cost Firm XXY to reach on potential consumer if 94 million people watch the Super Bowl? A) 8.51 cents B) 8.87 cents C) 8.96 cents D) 9.21 cents E) 10.11 cents Answer: A; $8 million/94 million viewers = .0851, or 8.51 cents per potential customer. AACSB: Analytical thinking Skill: Application Objective: LO 14.3: Outline the communication process and the steps in developing effective marketing communications. Difficulty: Easy 9) Jermaine Enterprises expects sales revenue next year will be $1.3 billion. The firm’s management decided to use a percentage-of-sales to set the marketing budget. After reviewing competitors’ budgets, they decided to spend 12.5% on marketing. How much will they spend on next year’s marketing budget? A) $157.5 million B) $160.0 million 51

C) $162.5 million D) $166.9 million E) $171.2 million Answer: C; You compute this by multiplying $1.3 billion x .125 = .1625 billion, or $162.5 million. AACSB: Analytical thinking Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Easy 10) Firm YYY is using a sales promotion to move more products and create brand awareness. Over the weekend the firm’s products will be 10% off retail price. The pre-weekend awareness campaign cost the firm $3.5 million in social media ads. Weekend sales were $41 million over the promotion weekend compared to a normal weekend of $13 million. How much in additional revenue did the firm make over the promotion weekend after factoring in the additional ad spending? A) $28.0 million B) $27.2 million C) $26.1 million D) $25.6 million E) $24.5 million Answer: E; Additional revenue = $41 - $13 = $28 - $3.5 ad spending = $24.5 million. AACSB: Analytical thinking Skill: Application Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 15 Advertising and Public Relations 1) Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor is called ________. A) sales promotion B) direct marketing C) advertising D) personal selling E) public relations Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy 2) Advertising is used mostly by ________. A) governments B) business firms C) social agencies D) independent professionals E) not-for-profit organizations Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy 3) Marketing management must make important decisions when developing an advertising program. Which of the following is NOT one of those decisions? A) evaluating advertising effectiveness B) developing advertising strategy C) setting advertising objectives D) designing products and distribution E) setting the advertising budget Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy 4) Competitive parity and task methods are considered when making decisions about ________. A) sales objectives B) budget C) message structure D) media selection 1

E) message effectiveness Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy 5) How much does the U.S. Army spend each year on advertising to attract new recruits? A) $50 million B) $200 million C) $400 million D) $800 million E) $1 billion Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy 6) Which of these is NOT one of reasons organizations use advertising? A) educate B) engage C) inform D) persuade E) innovate Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy 7) How long has advertising been used? A) since the 1800s B) since the beginning of recorded history C) since the U.S. was formed in 1776 D) since the Roman Empire E) since the Middle Ages Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy

8) The two primary marketing communications tools are television advertising and social media. Answer: FALSE 2

AACSB: Written and oral communication Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Moderate 9) The Romans used advertising to announce gladiator fights. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy 10) U.S. advertisers spend about $285 million each year on measured advertising media. Answer: FALSE AACSB: Written and oral communication Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Moderate 11) Marketing management must make four important decisions when developing an advertising program. Briefly describe these four decisions. Answer: Marketing management should first set advertising objectives, which can be classified by primary purpose: to inform, persuade, or remind. Next, the advertising budget needs to be determined, which will often depend on the product's stage in the product life cycle. The third step is to develop an advertising strategy, which involves message decisions and media decisions. The last step is to evaluate the effectiveness of the advertising campaign. AACSB: Analytical thinking; Written and oral communication Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Moderate 12) What is the purpose of advertising? Answer: Advertising’s purpose is to communicate the firm’s value proposition to target customers. For-profit firms typically want this to conclude with a sale. AACSB: Analytical thinking; Written and oral communication Skill: Concept Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Challenging 13) Early electric vehicle (EVs) ads focused on educating the public about the benefits of EVs. What type of advertising objective were these firms using? A) reciprocating advertising B) informative advertising C) persuasive advertising D) attack ads E) comparative advertising 3

Answer: B AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 14) Microsoft and Apple frequently take aim at each other in their advertisements with each firm highlighting why their product is superior to the other firm’s product. This example best illustrates ________. A) informative advertising B) reminder advertising C) comparative advertising D) covert advertising E) institutional advertising Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 15) Encouraging customers to compare their product with a major competitor is what type of advertising? A) informative B) reminder C) explanatory D) comparative E) institutional Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 16) Which type of advertising often creates controversy? A) reminder B) comparative C) informative D) covert E) competitive Answer: B AACSB: Analytical thinking 4

Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 17) Which of the following brands most likely requires heavy advertising in order to be set apart from similar products? A) undifferentiated brands B) specialty brands C) international brands D) mature brands E) high-share brands Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 18) Brands in a market with many competitors and high advertising clutter must ________. A) have very high prices compared to competitors B) be advertised only through print and social media C) be advertised more heavily to be noticed in the marketplace D) never be advertised using informative advertising E) be advertised only during the mature stage of the product life cycle Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 19) Which of the following would be the most likely result of slashing ad spending for a product? A) increased popularity B) reduced long-term market share C) improved brand image D) increased short-term sales E) increased long-term market share Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 5

20) When the product differs greatly from those of competitors, ________. A) advertising can make customers aware of the product B) firms should advertise similarly to competitors, to remind consumers of the product C) advertising can point out the differences to consumers D) firms should advertise little as the uniqueness will not require education of consumers E) advertising can reaffirm a consumer's decision to purchase Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 21) Airing a single 30-second television commercial on a national network costs an average of ________. A) $318,000 B) $105,000 C) $1.2 million D) $434,000 E) $55,000 Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 22) The aim of ________ is to make an advertisement so useful or entertaining that people want to watch it. A) branded entertainment B) advertainment C) viral marketing D) buzz marketing E) word-of-mouth advertising Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 23) In addition to advertainment, advertisers are creating content that ________. A) provides much more information than ads did in the past B) they expect to go viral 6

C) helps the advertiser save money D) looks less like ads and more like short films or shows E) confuses viewers about whether they are ads Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 24) Embedding a product as a prop in television program or movie is an example of ________. A) brand integration B) advertainment C) direct marketing D) buzz marketing E) sales promotion Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 25) Which term refers to the general idea that will be communicated to consumers through an advertisement? A) advertising appeal B) message strategy C) consumer-generated message D) creative concept E) message execution Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 26) Advertising located on the web or social media that is designed to look like the surrounding content in form and function is known as ________. A) comparative advertising B) advertainment C) native advertising D) branded entertainment E) brand integration Answer: C AACSB: Written and oral communication 7

Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 27) Developing an effective message strategy begins with identifying ________ that can be used as advertising appeals. A) consumer trends B) competitors' weaknesses C) competitors' strengths D) customer benefits E) consumer emotions Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 28) ________ tend to be straightforward outlines of benefits and positioning points that the advertiser wants to stress. A) Promotion mix plans B) Message strategy statements C) Creative concept strategies D) Advertainment statements E) Branded entertainment plans Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 29) After creating a message strategy statement, the advertiser must develop a compelling ________ that will bring the message strategy to life in a distinctive and memorable way. A) creative concept B) customer strategy C) customer benefit D) execution style E) media vehicle Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 8

30) Which of the following are the three characteristics that an advertising appeal should have? A) engaging, informative, and stylish B) trendy, compelling, and appealing C) meaningful, believable, and distinctive D) unique, emotional, and entertaining E) humorous, memorable, and interesting Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 31) Timex has positioned their watches as affordable yet durable. The saying “Timex takes a licking and keeps on ticking” is an example of their . A) brand integration B) execution style C) advertising appeal D) advertainment E) distinctiveness Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 32) The advertiser must find the best approach, style, words, format, and ________ for executing the message. A) media B) cost C) visuals D) tone E) endorser Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 33) A shoe company ran an ad featuring someone hiking in the wilderness wearing a pair of their new hiking boots. Which of the following message execution styles is illustrated in this example? A) lifestyle 9

B) scientific evidence C) slice of life D) personality symbol E) testimonial evidence Answer: A AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 34) An Ikea ad features people living in rooms furnished with Ikea furniture and household goods. Which of the following message execution styles is illustrated in this example? A) testimonial evidence B) slice of life C) fantasy D) scientific evidence E) mood or image Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 35) An ad for Athleta active wear shows a woman in a complex yoga pose and states: "If your body is your temple, build it one piece at a time." This ad uses the ________ execution style. A) slice of life B) lifestyle C) fantasy D) scientific evidence E) personality symbol Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 36) A maker of fine watches ran an ad focusing on the Swiss reputation for making luxury timepieces. What type of execution style are they using? A) endorsement B) scientific evidence C) slice of life D) technical expertise E) testimonial evidence 10

Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 37) A pharmaceutical ad features a world-renowned heart surgeon describing the benefits of a medication. Which of the following message execution styles is illustrated in this example? A) mood or image B) fantasy C) personality symbol D) musical E) testimonial evidence Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 38) Crest toothpaste ads focus on the product’s cavity fighting abilities. Which of the following message execution styles is illustrated in this example? A) personality symbol B) scientific evidence C) testimonial endorsement D) lifestyle E) slice of life Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 39) The advertisements that use the Travelocity gnome or the GEICO gecko are using the message execution style of ________. A) lifestyle B) technical expertise C) testimonial evidence D) slice of life E) personality symbols Answer: E AACSB: Analytical thinking Skill: Application 11

Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 40) What type of message execution style involves evoking an emotion such as happiness or joy? A) personality symbol B) fantasy C) endorsement D) mood or image E) slice of life Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 41) Which of the following message execution styles is used in an advertisement where stay-athome dads talk about a product that controls odor? A) musical B) mood or image C) testimonial evidence D) lifestyle E) slice of life Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 42) Maybelline used a model to endorse a new range of cosmetics. This message execution style is referred to as ________. A) lifestyle B) testimonial evidence C) image D) technical expertise E) personality symbol Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate

43) An ad for men’s cologne highlighted a sailor applying the cologne and a mermaid chasing the ship. What type of execution style are they using? A) fantasy B) slice of life C) lifestyle D) slogan E) musical Answer: A AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 44) Doritos ran a contest asking for ad submissions that the firm could use in a Super Bowl ad. What type of strategy are they using? A) high audience selectivity B) low absolute costs C) mass-marketing coverage D) fleeting exposure E) consumer-generated content Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 45) What is an advantage of consumer-generated content? A) It will be less expensive. B) It cannot be controlled by the company. C) It can provide new creative ideas. D) It can entice customers to become brand evangelists. E) It can use social media sites more effectively than the company can. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 46) Which of the following is a major step in selecting advertising media? A) determining reach, frequency, and impact B) selecting message execution style C) developing a compelling creative concept 13

D) deciding on format elements E) planning a message strategy Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 47) ________ is a measure of the percentage of people in a target market who are exposed to an ad campaign during a given period of time. A) Frequency B) Qualitative value C) Impact D) Premium E) Reach Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 48) Which of the following is an advantage of using newspapers as an advertising medium? A) high selectivity B) good mass-marketing coverage C) large pass-along audience D) high believability E) good local acceptance Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 49) You receive a report that 68 percent of your target market has been exposed to your ad campaign during a given period of time. Which of the following aspects of media selection is represented by this information? A) frequency B) reach C) impact D) engagement E) qualitative value Answer: B AACSB: Analytical thinking 14

Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 50) Which of the following statements about direct mail as an advertising medium is true? A) Direct mail has good local acceptance. B) Direct mail has high audience selectivity. C) Direct mail has a lot of competition in the same medium. D) Direct mail is relatively low cost. E) Direct mail has immediacy. Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 51) Jill’s store focuses on selling baby clothes and a few other toddler necessities. She is running an ad in the Sunday paper since it has a section on new parents. She wondered if the Sunday paper was the appropriate place to run the ad. What is Jill concerned about? A) targeting B) turnover rate C) efficiency D) media impact E) frequency Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 52) Which of the following is a disadvantage of using direct mail as an advertising medium? A) low audience selectivity B) no flexibility C) severe ad competition D) relatively high cost per exposure E) lack of personalization Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 15

53) Jill’s store focuses on selling baby clothes and a few other toddler necessities. She is running an ad in the Sunday paper since it has a section on new parents. She is trying to decide whether to run the ad one time or run the ad for several weeks. What is Jill concerned about? A) targeting B) turnover rate C) efficiency D) media impact E) frequency Answer: E AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 54) Which of the following statements is most likely true about radio as an advertising medium? A) Radio advertising is typically quite expensive. B) Radio ensures good attention from the target audience. C) Radio offers very low audience selectivity. D) Radio prohibits the use of segmentation strategies. E) Radio advertising is characterized by good local acceptance. Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 55) What type of media is a billboard attached to a shopping cart? A) digital media B) direct media C) alternative media D) consumer media E) visual media Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 56) Jim’s Outdoor Store was in the planning stages of a big sales promotion. Since their product list focused on outdoor activities Jim wanted to place some boats and canoes around town with ads pasted on the sides. What is a primary benefit of this type of outdoor advertising? A) It has no creative limitations. B) It is characterized by higher costs per exposure. 16

C) It has good positional selectivity. D) It has very limited flexibility. E) It has high audience selectivity. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 57) You want to advertise your new product. You want good mass marketing coverage and low cost per exposure. You also want to combine sight, sound, and motion and make the advertisement appealing to the senses. You should choose ________ as your advertising media. A) newspaper B) radio C) magazines D) television E) direct mail Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 58) Which of these actions is an example of a consumer expression? A) a social media “Like” B) viewing a commercial online C) listening to a radio ad D) buying the product E) reading the product label Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 59) Media engagement typically occurs A) by televised broadcasting B) through buzz marketing C) inside the consumer’s head D) via media multitasking E) through personal selling Answer: C AACSB: Analytical thinking 17

Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 60) A specific communication task to be accomplished with a specific target audience during a specific period of time is known as . A) an advertising objective B) informative advertising C) persuasive advertising D) convincing advertising E) an advertising strategy Answer: A AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 61) Modern Family and The Wall Street Journal are both examples of ________–specific media within each general media type. A) alternative media B) major media C) media vehicles D) media multitaskers E) micromedia Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 62) When selecting a media vehicle, the media planner looks both at the total cost of using a medium and at the ________. A) cost per thousand persons reached B) cost of premium offers C) cost of the magazine it is using D) profit margin E) continuity cost Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 18

63) When a media planner determines whether an advertisement for diapers should be placed in Parents magazine or Sports Illustrated magazine, the planner is evaluating the media vehicle's ________. A) profit margin B) flexibility C) rate of depreciation D) audience quality E) cost per exposure Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 64) Audience quality, audience engagement, and editorial quality are most likely to be considered when a media planner ________. A) decides on media timing B) selects an execution style C) selects a media vehicle D) evaluates return on investment E) measures the communication effects of an advertisement Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 65) A media planner for seasonal products will probably focus more on relative to other non-seasonal products. A) media timing B) continuity C) sequencing D) narrowcasting E) seasonal advertising Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 66) To measure the ________ effects of an ad after it has aired, the advertiser can evaluate how 19

the ad affected consumer recall, product awareness, attitude changes, and preference. A) sales B) profit C) communication D) continuity E) associativity Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 67) Which of these questions is geared toward finding out about return on advertising investment? A) How do we know we are spending the right amount of money on advertising? B) What is our target audience? C) What medium should we use to reach our target audience? D) Is comparative advertising effective given our product’s characteristics? E) How can we encourage more customer-generated content? Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 68) Which of these businesses is a marketing services firm that assists companies in planning, preparing, implementing, and evaluating ways to get their message out to consumers? A) Public relations firm B) Advertising agency C) Market research firm D) Fulfillment services firm E) Media relations company Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 69) Which of these terms refers to ensuring that everyone has equal access to the same resources and opportunities? A) diversity B) inclusion C) equity 20

D) equality E) minority representation Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 70) What percentage of U.S. consumers expect companies to take a stand on issues of diversity, equity, and inclusion (DEI)? A) 20% B) 35% C) 50% D) 70% E) 85% Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 71) Brands with the most representative ads, or those perceived to have greater DEI representation, . A) outperformed brands with less DEI representation B) underperformed their less inclusive counterparts C) achieved greater notoriety D) grew at slightly lower rates E) had no noticeable increase in their customer base Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate

Refer to the following scenario to answer questions 72, 73, 74, and 75. Most clients of Second Avenue have learned about the store through word-of-mouth communication. This small retailer of quality secondhand children's clothing thrives on the sale of a vast inventory of children's clothing placed on consignment. "Because small children grow so quickly," Second Avenue's owner commented, "they often outgrow many of their clothes before they've hardly been worn!" 21

Second Avenue provides a way for people to sell their children's clothing, earn a few dollars, and buy the next larger size. "We're extremely picky about the condition of the clothing we stock," the owner stated, "but we sell most items at a 60-percent discount." 72) Which of the following media options would be the LEAST costly for Second Avenue's promotional efforts? A) periodic advertising in a local newspaper that follows a regular monthly schedule B) daily advertisements on a cable television station C) daily commercials during the local evening news D) a billboard placed on the nearest interstate highway E) a billboard placed in a supercenter Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Challenging 73) Second Avenue has just developed a 30-second television ad that features three different shoppers enthusiastically shopping in the store and appreciating its products. This ad uses the ________ execution style. A) slice of life B) technical expertise C) personality symbol D) fantasy E) image Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Challenging 74) Second Avenue’s target consumer group will probably not respond well to advertising since the products are used goods. Answer: False AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 75) What are some potential advertising media that might work well for Second Avenue? Answer: Newspapers and radio ads both provide good local coverage for a reasonable price. Second Avenue might consider alternative advertising such as ads on shopping carts at the local grocery stores or bus benches near their locale. Various forms of digital media and mobile media 22

would also work well to get the word out. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Challenging

76) To break through the clutter, JCPenney once posted incoherent tweets, grabbing widespread attention and leading to speculation that the retailer’s social media person was either drunk or had been hacked. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 77) Issues of diversity, equity, and inclusion are now highly important to consumers and marketers. Answer: TRUE Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 78) An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 79) Compared to communication effects, the sales and profit effects of advertising and other content are often more difficult to measure. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 80) Media timing is the least important advertising decision. Answer: FALSE 23

AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 81) Tesla’s fan-made ads are an example of consumer-generated content. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 82) The mood or image message execution style tries to evoke an emotion that we associate with the product. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy

83) What is an advertising objective? What are the three primary types of advertising objectives? Answer: An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time. Advertising objectives can be classified by primary purpose–whether the aim is to inform, persuade, or remind. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 84) Describe the objectives of informative advertising. Answer: The objectives of informative advertising are: -Communicating customer value -Building a brand and company image -Telling the market about a new product -Explaining how a product works -Suggesting new uses for a product -Informing the market of a price change -Describing available services and support -Correcting false impressions AACSB: Written and oral communication Skill: Concept 24

Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 85) Describe the three characteristics that advertising appeals should have? Answer: Advertising appeals should be meaningful, believable, and distinctive. Meaningful appeals point out benefits that make the product more desirable or interesting to consumers. Believable appeals lead consumers to believe that the product or service will deliver the promised benefits. Finally, distinctive appeals should tell how the product is better than the competing brands. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 86) When would a marketer most likely use a comparative ad? Answer: Comparative ads are a type of persuasive ad in which a company directly or indirectly compares its brand with one or more other brands. This type of ad is used as competition increases within a category. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 87) Describe the objectives of reminder advertising. Answer: The objectives of reminder advertising are: -Maintaining customer relationships -Reminding consumers that the product may be needed in the near future -Reminding consumers where to buy the product -Keeping the brand in a customer's mind during off-seasons AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 88) Discuss the concepts of advertainment and branded entertainment. Answer: This merging of advertising and entertainment takes one of two forms: advertainment or branded entertainment. The aim of advertainment is to make ads themselves so entertaining, or so useful, that people want to watch them. Branded entertainment (or brand integrations) involves making the brand an inseparable part of some other form of entertainment. The most common form of branded entertainment is product placements–embedding brands as props within other programming. 25

AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 89) What are the two key elements of an advertising strategy? Answer: Advertising strategy consists of two key elements: creating advertising messages and selecting advertising media. In the past, many companies viewed media planning as secondary to message creation. After the creative department created advertisements, the media department purchased the best media for carrying them to target audiences. Today, however, soaring media costs, focused target marketing strategies, and the blizzard of new digital media have made media planning more important. The decision about which media to use—television, newspapers, magazines, video, a website, social media, mobile devices, or email—is now as critical as the creative elements.. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 90) How does a personality symbol impact a brand? Answer: A personality symbol is a character that represents the product and with whom the consumer can relate; the personality symbol helps a consumer connect with the product. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 91) Give an example of testimonial evidence and explain the importance of the source. Answer: Students answers will vary. Testimonial evidence features a highly believable or likable source endorsing the product. Under Armour uses Dwayne "The Rock" Johnson and Pepsi used Steve Carrell and Cardi B in a Super Bowl ad. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 92) Why is reach an important measure for a marketer? Answer: Reach is a measurement of the percentage of people in the target market who are exposed to the ad campaign during a given period of time. AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising 26

program. Difficulty: Moderate 93) Explain why an ad might need to be modified from one country to the next. Answer: Differences in culture, demographics, and economic conditions will impact how effective or acceptable an advertisement will be in other countries. In addition, changes in the use of language and imagery may be required to be appropriate to the foreign culture. Also, countries have varying laws regulating advertising. AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 94) Describe the four major steps in media selection. Answer: First, the advertiser needs to decide on reach, frequency, and impact. Reach is a measure of the percentage of people who are exposed to the advertisement; frequency is the measure of how many times the average person is exposed to the message; impact is how people feel about the advertisement. Next, media planners need to choose among major media types: television, newspapers, magazines, direct mail, radio, outdoor, and Internet. They may also select newer digital media such as cell phones. After the media type is selected, the specific media vehicles must be identified. The last decision is media timing, which involves determining how to schedule the advertising over the course of a year. AACSB: Written and oral communication Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 95) List any four major media types and identify some of the strengths and weaknesses of each of them. Answer: Students' answers may include any four of the following. -Television: Advantages are good mass marketing coverage, low cost per exposure, and appeals to the senses; weaknesses are high total costs and high clutter. -Newspapers: Strengths are timeliness, good local market coverage, and high believability; weaknesses are short life and poor reproduction quality. -Direct mail: Strengths are flexibility and capacity for personalization; weaknesses are relatively high cost per exposure and "junk mail" image. -Magazines: Strengths are high audience selectivity, credibility, and good pass-along readership; weaknesses are high costs and long lead times. -Radio: Strengths are good local acceptance and low cost; weaknesses are low attention and fleeting exposure to messages. -Outdoor: Strengths are flexibility, low cost, and low message competition; weaknesses are low audience selectivity and creative limitations. -Internet: Strengths include high selectivity, low cost, and interactive capabilities; weaknesses 27

are audience control of exposure and potentially low impact. AACSB: Analytical thinking Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 96) Explain how seasonality impacts media timing. Answer: An advertiser must decide how to schedule the advertising over the course of a year. Suppose sales of a product peak in December and drop in March (for winter outdoor gear, for instance). The firm can vary its advertising to follow the seasonal pattern, oppose the seasonal pattern, or be the same all year. Most firms do some seasonal advertising. For example, Mars currently runs M&M's special ads for almost every holiday and "season," from Easter, Fourth of July, and Halloween to the Super Bowl season and the Oscar season. The Picture People, the national chain of portrait studios, advertises more heavily before major holidays, such as Christmas, Easter, Valentine's Day, and Halloween. Some marketers do only seasonal advertising: for instance, P&G advertises its Vicks NyQuil only during the cold and flu season. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Challenging 97) Discuss the advantages of using the services of an advertising agency. Answer: Today's agencies employ specialists who can often perform advertising tasks better than the company's own staff can. Agencies also bring an outside point of view to solving the company's problems, along with lots of experience from working with different clients and situations. So, today, even companies with strong advertising departments of their own use advertising agencies. Most large advertising agencies have the staff and resources to handle all phases of an advertising campaign for their clients, from creating a marketing plan to developing ad campaigns and preparing, placing, and evaluating ads and other brand content. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 98) Discuss the emerging importance of diversity, equity, and inclusion to consumers and marketers? Answer: Although slow to develop at first, issues of diversity, equity, and inclusion (DEI) in advertising have grown now to become highly important to consumers and marketers alike. Seventy percent of U.S. consumers today expect companies to take a stand on DEI issues, and 61 percent of consumers see diversity in marketing as crucial. These figures are typically higher for younger demographics and people identifying as members of marginalized groups. Ads and marketing content perceived as diverse and inclusive achieved higher recall rates. Two-thirds of respondents in one study indicated they have acted upon an ad they perceived to be inclusive or 28

diverse, while 57 percent of consumers are more loyal to brands that act to address social inequities. Brands with the most representative ads achieved 83 percent higher preference and 69 percent better performance compared with brands with less DEI representation. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 99) Explain the concept of return on advertising investment. Answer: Measuring the return on advertising investment has become a hot issue for most companies. Top management at many companies is asking marketing managers, “How do we know that we’re spending the right amount on advertising?” and “What return are we getting on our advertising investment?” These are essentially “how much bang for the buck” questions that are often difficult to answer. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 100) What is consumer-generated content? Provide one example of consumer-generated content. Answer: Taking advantage of today’s digital and social media, companies are now tapping consumers for marketing content, message ideas, or even actual ads and videos. If done well, user-generated content can incorporate the voice of the customer into brand messages and generate greater customer engagement. For example, carmaker Tesla held a fan-made ad contest, with three winning “charmingly low-budget” commercials selected from 10 finalists by public voting (via Twitter likes). Tesla posted the finalist ads online simultaneously with the launch of its Model 3 sedan, drawing millions of views and sparking interactions among dedicated Tesla fans. One top-three winner: “Sonja’s Super Quick Tesla Fan Video” by YouTuber Sonja Jasansky of Minnesota, a super-quick and ultra-quirky video highlighting Tesla specifications and debunking common misconceptions. AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Moderate 101) What is native advertising? Answer: Native advertising is content that appears to be “native to” the web or social media site in which it is placed. The brand content looks in form and function like the other natural content surrounding it. It might be an article on a website such as The Huffington Post, BuzzFeed, Mashable, or even The New York Times or The Wall Street Journal that is paid for, written by, and placed by an advertiser but uses the same format as articles written by the editorial staff. AACSB: Application of knowledge Skill: Concept 29

Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 102) How much does it cost to create and run a television commercial? Answer: It can cost from $20,000 to $1 million to produce a single 30-second commercial. Then each time they show it, they pay an average of $105,000 for 30 seconds of advertising time on a national network. They pay even more if it’s an especially popular program, such as Sunday Night Football ($811,579), This Is Us ($317,981), or a mega-event such as the Super Bowl (averaging $6.5 million per 30 seconds!). AACSB: Application of knowledge Skill: Concept Objective: LO 15.2: Describe the major decisions involved in developing an advertising program. Difficulty: Easy 103) Which of the following promotion tools involves building up a positive corporate image and handling unfavorable stories and events? A) sales promotion B) personal selling C) direct marketing D) public relations E) advertising Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 104) Kathy Champe, a public relations specialist for a regional chain of pharmacies, regularly contacts members of the local and statewide media with information about community events and charity fundraisers sponsored by her company. This is an example of the ________ function of public relations. A) press relations B) product publicity C) investor relations D) lobbying E) development Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 105) One of the functions performed by a PR department is ________, which involves building and maintaining relations with legislators and government officials to influence legislation and 30

regulation. A) direct marketing B) press relations management C) investor relations management D) lobbying E) public affairs management Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 106) One of the functions performed by a PR department is ________, which involves working with donors or members of nonprofit organizations to gain financial or volunteer support. A) direct marketing B) press relations management C) investor relations management D) development E) lobbying Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 107) The public relations department of every firm . A) can be a powerful brand-building tool B) functions just like the overall marketing department C) does not generate a high return on investment D) plays a much smaller role in today’s firm E) is only useful for banks and oil companies with poor images Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Challenging 108) Which of the following public relations functions involves maintaining relationships with shareholders and those in the financial community? A) direct marketing B) press relations management C) investor relations management D) development E) lobbying Answer: C AACSB: Written and oral communication 31

Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 109) Which of the following statements is most likely true of public relations? A) It requires participating companies to pay for media space or time. B) It can have the same impact on public awareness as advertising at much lower costs. C) It is always handled by a third-party agency hired by the firm. D) It forms a huge portion of the overall marketing budget of most large firms. E) It plays an insignificant role in brand building with the increasing popularity of advertising. Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 110) How can public relations have a strong impact at a much lower cost than advertising? A) The firm can pay for content to be spread. B) Interested consumers can create the content on their own and spread it. C) Interesting brand stories, events, videos, or other content can be shared by sources out of the company's control, but to its benefit. D) Advertising agencies can minimize the impact of competitors' news. E) Advertising costs have changed dramatically due to changing technologies. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 111) Which of the following has transformed the role of public relations and moved it from the back office to the forefront of brand development and customer engagement? A) stockholders activism B) the rise of social media C) the negativity that exists in the press D) greater employee engagement E) DEI awareness Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 112) Which of the following best explains why public relations is often overlooked as a tool for supporting product marketing objectives? A) Public relations departments are typically large divisions within corporations. B) The time and costs associated with public relations prohibit its extensive use. 32

C) Public relations specialists lack the skills necessary to work with marketing experts. D) Many public relations professionals see their jobs as communicating, not brand building. E) The public relations department handles stockholders and legislators but not employees. Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate Refer to the following scenario to answer questions 113, 114, 115, and 116. Most clients of Second Avenue have learned about the store through word-of-mouth communication. This small retailer of quality secondhand children's clothing thrives on the sale of a vast inventory of children's clothing placed on consignment. "Because small children grow so quickly," Second Avenue's owner commented, "they often outgrow many of their clothes before they've hardly been worn!" Second Avenue provides a way for people to sell their children's clothing, earn a few dollars, and buy the next larger size. "We're extremely picky about the condition of the clothing we stock," the owner stated, "but we sell most items at a 60-percent discount." 113) The owner of Second Avenue wants to establish a community clothing drive to collect clothes for a local children's shelter. The owner is planning to set up collection barrels outside Second Avenue. In this case, which of the following public relations tools is being used by the owner? A) press relations B) product publicity C) lobbying D) development E) public affairs Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Challenging 114) The owner of Second Avenue was approached by a large investment bank about promoting the store’s work on the clothing drive. They have agreed to pay Second Avenue a fee for collecting and distributing the clothing. However, the bank wants the new media to be there when they make the announcement of the partnership. Which of the following public relations tools is being used by the bank? A) press relations B) product publicity C) lobbying D) development E) public affairs Answer: A 33

AACSB: Analytical thinking Skill: Application Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Challenging 115) Second Avenue will have to pay for the positive press generated by the clothing drive. Answer: FALSE AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 116) What is the primary PR benefit Second Avenue will receive from the clothing drive? Answer: Second Avenue will be in the news in a positive way so they are building brand awareness and informing the public about their location and what they do. They are also building strong community relationships. AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 117) Nonprofit organizations commonly use PR for development activities. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 118) The modern PR office is largely a back office component of the overall marketing department. Answer: FALSE AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 119) Effective PR programs can be a powerful brand-building tool. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 120) The rise of social media is reducing the impact of the PR department. Answer: FALSE AACSB: Written and oral communication 34

Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 121) More than any other department, PR has always been responsible for creating relevant marketing content that draws consumers to a brand rather than pushing messages out. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 122) Describe the significance of public relations as a mass-promotion tool. Answer: Public relations is used to promote products, people, places, ideas, activities, organizations, and even nations. Companies use PR to build good relations with consumers, investors, the media, and their communities. Trade associations have used PR to rebuild interest in commodities, such as eggs, apples, potatoes, milk, and even onions. AACSB: Application of knowledge Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 123) Explain why a public relations campaign can be a more cost-effective option for corporations than an advertising campaign. Answer: Public relations can have a strong impact on public awareness at a much lower cost than advertising can. The company does not pay for the space or time in the media. Rather, it pays for a staff to develop and circulate information and to manage events. If the company develops an interesting story or event, it could be picked up by several different media, having the same effect as advertising that would cost millions of dollars. And it would have more credibility than advertising. AACSB: Application of knowledge Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 124) Describe public relations and any three of its main functions. Answer: Student answers may include this description and any three function descriptions. Public relations departments build good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Some of its functions are: -Product publicity: publicizing specific products -Public affairs: building and maintaining national or local community relations -Lobbying: building and maintaining relations with legislators and government officials to influence legislation and regulation -Press relations: creating and placing newsworthy information in the new media to attract attention to a person, product, or service associated with the company 35

-Investor relations: maintaining relationships with shareholders -Development: working with donors or members of nonprofit organizations to gain financial or volunteer support AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 125) How has social media impacted the PR function? Answer: In this digital age, the lines between advertising, PR, and other content have blurred. For example, consider brand websites, blogs, video content, and social media activities. Are they advertising, PR, or something else? All are part of a company’s broader marketing content efforts. And as the use of earned and shared digital content grows rapidly, PR is playing a bigger role in marketing. The rise of social media is moving public relations professionals from the backroom, crafting press releases and organizing events, to the forefront of brand development and customer engagement. AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 126) Explain how CVS used PR to publicize its decision to no longer sell tobacco products. Answer: CVS Health announced its bold decision to stop selling cigarettes and tobacco products in its stores, even though it meant sacrificing $2 billion in tobacco-related revenues, it knew that the decision would make headlines. But it left little to chance about how the full story would be told. Instead, CVS crafted a comprehensive “CVS Quits for Good” public relations campaign to tell consumers, Wall Street, and the health-care community that the decision would benefit both customers and the company. The campaign garnered a total of 218 million media impressions and over 2,500 broadcast mentions. AACSB: Written and oral communication Skill: Concept Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 127) Which of the following is NOT a major public relations tool? A) trade shows and conferences B) stationery, logos, and uniforms C) public service activities D) videos E) annual reports and brochures Answer: A AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 36

128) Which of the following is a major tool used by PR professionals? A) standardized global advertising B) market penetration C) news D) bait-and-switch strategy E) product packaging Answer: C AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 129) News conferences, press tours, and grand openings are examples of ________, a type of tool commonly used by public relations professionals. A) public service activities B) special events C) social networking D) development E) investor relations Answer: B AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 130) Which of the following would most likely be included in the written materials prepared by PR professionals to reach and influence target markets? A) employee code of conduct B) annual reports C) memorandum of association D) advertisement jingles E) white papers Answer: B AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 131) Which of the following is an example of audiovisual material used by PR professionals? A) blogs B) logos C) vision statements D) brochures E) online videos Answer: E AACSB: Analytical thinking 37

Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Moderate 132) Logos, uniforms, brochures, and company trucks are all examples of ________ materials that can be used to help a company create a visual image which the public can immediately recognize. A) direct marketing B) social marketing C) public service D) corporate identity E) buzz marketing Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 133) In an attempt to set the company apart from its competitors, Central Parcel Service (CPS) has its employees wear brown uniforms and drive brown trucks. What type of public relations tool is being used by CPS? A) buzz marketing B) corporate logos C) corporate identity materials D) product publicity E) public service materials Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Moderate 134) Steps involved in determining when and how to use product public relations include ________, choosing the PR message and media, implementing the PR plan, and evaluating the results, plus integrating with the full marketing communications effort. A) defining the budget B) hiring the media creators C) collecting feedback D) setting PR objectives E) determining the messenger Answer: D AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 38

135) Which of these core PR strengths works well on social media? A) storytelling B) advertising C) production of corporate identity materials D) public service activities E) cash donations Answer: A AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 136) Corporate identity materials help create a corporate identity that the public immediately recognizes. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Moderate 137) A company's website is not commonly used for PR. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 138) A brand tour or a sponsorship is an example of a special event that a PR department might use to create awareness and reach their target publics. Answer: TRUE AACSB: Written and oral communication Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Easy 139) Public relations specialists use several tools. Identify three of these tools and describe how they can help a company communicate with the public. Answer: Students' answers may include any three of the following. PR professionals find or create favorable news about the company and its products or people. Sometimes news stories occur naturally, and sometimes the PR person can suggest events or activities that would create news. Speeches can also create product and company publicity. Increasingly, company executives must field questions from the media or give talks at trade associations or sales meetings, and these events can either build or hurt the company's image. Another common PR tool is special events, ranging from news conferences, press tours, grand openings, and fireworks displays to laser shows, hot air balloon releases, multimedia 39

presentations, or educational programs designed to reach and interest target publics. Public relations people also prepare written materials to reach and influence their target markets. These materials include annual reports, brochures, articles, and company newsletters and magazines. Audiovisual materials, such as slide-and-sound programs, DVDs, and online videos are being used increasingly as communication tools. Corporate identity materials can also help create a corporate identity that the public immediately recognizes. Logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, and company cars and trucks–all become marketing tools when they are attractive, distinctive, and memorable. Companies can improve public goodwill by contributing money and time to public service activities. AACSB: Application of knowledge Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Moderate 140) How does storytelling help the PR department reach their publics? Answer: Storytelling is one of the core PR strengths and it works well for online and digital media such as blogs, websites, and social media platforms. AACSB: Application of knowledge Skill: Concept Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Moderate Quantitative Questions 1) Ninety-seven percent of U.S. households have at least one Kraft Heinz product in their refrigerator or pantry. How many U.S. households have a Kraft Heinz product assuming there are 2.6 persons per household and 332 million people living in the U.S.? A) 113.86 million B) 123.86 million C) 127.54 million D) 129.11 million E) 131.06 million Answer: B; To determine the number of U.S. households you divide 332/2.6 = 127.69 million households x .97 = 123.86 million households with a Kraft Heinz product. AACSB: Analytical thinking Skill: Application Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Moderate 2) Worldwide, spending on advertising is an estimated $763 billion. Amazon, the world’s largest advertiser last year, spent $10.4 billion on U.S. advertising and promotion alone. What percent of total global advertising does Amazon’s advertising spending represent? A) 5.00% 40

B) 4.12% C) 1.36% D) 2.69% E) 3.45% Answer: C; You compute this by dividing $10.4/$763 = .0136, or 1.36%. AACSB: Analytical thinking Skill: Application Objective: LO 15.1: Define the role of advertising in the promotion mix. Difficulty: Easy Use the following information to answer questions 3, 4, 5, and 6. The following table contains information on the cost of advertising spots for various shows the number of viewers per show. The table also contains viewership data on the 18-49 year old group. Marketers covet reaching this group since they are difficult to reach. TV Show

Avg. cost per 30second ad

Show V Show W Show X Show Y Show Z

$175,348 $411,114 $332,620 $162,507 $265,512

Avg. number of viewers (in millions) 6.58 10.12 8.54 7.11 8.05

Avg. number of viewers aged 18-49 (in millions) 1.21 2.57 3.64 1.78 2.08

3) What is the cost per thousand (CPM) of running an ad on Show X? A) $32.98 B) $38.95 C) $22.86 D) $26.65 E) $40.62 Answer: B; To compute the answer you take ad cost/audience size x 1,000. So, ($332,620/8,540,000) x 1,000 = $38.95. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major advertising decisions involved in developing an advertising plan. Difficulty: Moderate

4) What is the cost per thousand (CPM) of running an ad on Show Y? A) $32.98 B) $38.95 C) $22.86 D) $26.65 E) $40.62 41

Answer: C; To compute the answer you take ad cost/audience size x 1,000. So, ($162,507/7,110,000) x 1,000 = $22.86. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major advertising decisions involved in developing an advertising plan. Difficulty: Moderate 5) Which show generates the most viewers per dollar spent in the age 18-49 demographic? A) Show V B) Show W C) Show X D) Show Y E) Show Z Answer: D; To compute this answer you need to compute the CPM of the 18-49 demographic for each show. CPM = ad cost/audience size x 1,000. CPMv = $144.92; CPMw = $159.97; CPM x = $91.38; CPMy = $91.30; CPMz = $127.65. Show Y is the lowest cost per CPM. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major advertising decisions involved in developing an advertising plan. Difficulty: Challenging 6) Which show generates the most viewers per dollar spent overall? A) Show V B) Show W C) Show X D) Show Y E) Show Z Answer: D; To compute this answer you need to compute the CPM for each show. CPM = ad cost/audience size x 1,000. So, CPMv = $26.65; CPMw = $40.62; CPMx = $38.95; CPMy = $22.86; CPMz = $32.98. The lowest CPM is Show Y. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major advertising decisions involved in developing an advertising plan. Difficulty: Moderate 7) Trendy Magazine covers an eclectic topic and has a circulation of 87,000 readers. A full-page ad costs about $36,000. How much does it cost to reach 1,000 readers if you run an ad in this magazine? A) $402.36 B) $413.79 C) $436.59 D) $487.12 E) $498.51 42

Answer: B; The cost per thousand, or CPM = ad cost/audience size x 1,000. So, $36,000/87,000 = $413.79. AACSB: Analytical thinking Skill: Application Objective: LO 15.2: Describe the major advertising decisions involved in developing an advertising plan. Difficulty: Moderate 8) Believable Inc. conducted a successful public relations campaign highlighting the firm’s social responsibility efforts. The firm’s stock price increased from $47.32 to $56.12 a share after the one week campaign. What percentage increase did the firm’s stock price experience? A) 12.67% B) 15.68% C) 16.24% D) 18.60% E) 19.12% Answer: D; % change = (P1 – P0)/P0; So, ($56.12 - $47.32)/$47.32 = .1860, or 18.60%. AACSB: Analytical thinking Skill: Application Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Moderate 9) Caronica Inc. just finished a public relations campaign that generated positive buzz and the firm’s stock price increased by 7.4% in one day. What was Caronica’s stock price at the end of the day if it started trading that morning at $32.35 a share? A) $34.12 B) $34.41 C) $34.74 D) $34.99 E) $35.25 Answer: C; To compute the end of day price you take the beginning price and increase it by 7.4%. So, $32.35 x 1.074 = $34.74. AACSB: Analytical thinking Skill: Application Objective: LO 15.3: Define the role of public relations in the promotion mix. Difficulty: Easy 10) Company XXY hosted a special event to highlight their products. The total event cost was $255,640 to tour 10 cities and entertain target audiences. The PR manager estimated that the 10city tour exposed 1,650,000 people to the firm’s products. How much did it cost per thousand to reach this group? A) $154.93 B) $186.35 C) $199.21 D) $421.59 E) $811.47 43

Answer: A; CPM = ($255,640/1,650,000) x 1,000 = $154.93. AACSB: Analytical thinking Skill: Application Objective: LO 15.4: Explain how companies use PR to communicate with relevant publics. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 16 Personal Selling and Sales Promotion 1) People involved in personal selling typically have all the following titles EXCEPT A) account executives B) district managers C) financial analysts D) sales engineers E) agents Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy 2) The best salespeople are the ones who________ A) work closely with customers for mutual gain. B) use “yell and sell” tactics C) lack social skills D) have managements skills E) meet their sales quota Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy 3) Personal selling is the _______ arm of the promotion mix. A) interpersonal B) creative C) order-getting D) prospecting E) financial Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy 4) A salesperson might be largely a(n)______, such as the department store salesperson standing behind the counter. A) social seller B) order taker. 1

C).creative seller D) order getter E) relationship builder Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy 5) This concept of _______lends even more importance to the representative’s customerrelationship-building abilities. A) company loyalty B) brand loyalty. C) product loyalty. D) management loyalty E) salesperson-owned loyalty Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy

6) At Price & Wallace Inc., a pharmaceuticals company, members of the sales force and marketing department tend to have disagreements when things go wrong with a customer. The marketers blame the salespeople for poorly executing their strategies, while the salespeople blame the marketers for being out of touch with customers. Which of the following steps should upper management at Price & Wallace take to help bring the sales and marketing functions closer together? A) establish a customer sales force structure and make sure that sales quotas are easily achievable B) establish a complex sales force structure C) emphasize traditional methods of selling D) adopt a sales force automation system and implement team selling E) appoint a high-level marketing executive to oversee both marketing and sales Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Moderate 7) All companies must have salespeople. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy

8) ________involves interactions between salespeople and individual customers. A) Advertising B) Sampling C) Personal selling D) Marketing management E) Sales promotion Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy 9) Salespeople relay customer concerns about company products and actions back inside to those who can handle them. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy 10) Describe the nature of personal selling and the role of the sales force. Answer: Today, most salespeople are well-educated and well-trained professionals who work to build and maintain long-term customer relationships by listening to their customers, assessing customer needs, and organizing the company's efforts to solve customer problems. The best salespeople are the ones who work closely with customers for mutual gain. Personal selling is the interpersonal arm of the promotion mix. The sales force acts as a critical link between a company and its customers. Salespeople represent the company to the customer and the customer to the company to produce customer satisfaction and company profit. AACSB: Written and oral communication Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Moderate

11) Strategies for bringing marketing and sales together do NOT include____ A) increasing communication through joint meetings B) spelling out communication channels C) blaming sales for poor execution of marketing strategy D) creating opportunities to work together E) creating joint objectives and rewards Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships Difficulty: Easy 12) ________includes analyzing, planning, implementing, and controlling sales force activities. A) Recruiting B) Evaluating C) Sales force management D) Brand management E) Marketing management Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 13) What is the first step in sales force management? A) designing sales force strategy and structure B) recruiting and selecting salespeople C) training salespeople D) compensating salespeople E) supervising salespeople Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

14) In the ________, each salesperson is assigned to an exclusive geographic area and sells the company's full line of products or services to all customers in that region. A) territorial sales force structure B) digital marketing system C) product sales force structure D) geographical operations system E) customer sales force structure Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 15) Ultra Tech Inc., a company manufacturing gardening tools, has decided to switch to a territorial sales force structure. Which of the following benefits is the company most likely to gain as a result of this decision? A) The cost of training new recruits would be eliminated. B) An increased focus on short-term customer relationships would boost local sales of specialized products. C) Each salesperson would be assigned to sell a single product in which he/she specializes. D) The capacity for mass production of a wide range of products would significantly increase. E) As each salesperson travels within a limited geographic area, travel expenses would decline. Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging

16) Which of the following is true about the product sales force structure? A) A product sales force structure is most appropriate for a company that manufactures a small number of simple products. B) In a product sales force structure, each salesperson is assigned to an exclusive geographic area and sells the company's full line of products or services to all customers in that territory. C) In a product sales force structure, salespersons specialize in only a particular product line as the company produces numerous and complex products. D) In a product sales force structure, a single salesperson can become an expert in all product categories. E) In a product sales force structure, specialization is highly discouraged. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 17) Organizing the sales force around customers can _________ A) build a territorial sales force structure B) help a company build a digital marketing system C) help a company build closer relationships with important customers D) help a company specialize along product lines E) create a product sales force structure Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

18) P&G sales reps are integrated into Customer Business Development (CBD) teams. Each CBD team is assigned to a major P&G customer, such as Walmart, Safeway, or CVS Health. This is an example of ____________ A) special sales forces for individual large customers B) a customer sales force structure C) a territorial sales force structure D) a complex sales force structure E) a workload approach to sales Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 19) Johnson Business Solutions maintains one sales force for its copy machines and a separate sales force for its computer systems. Johnson Business Solutions utilizes a ________. A) product sales force structure B) customer sales force structure C) territorial sales force structure D) digital marketing system E) geographical operations system Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 20) In what situation is a complex sales force structure used? A) when a company sells a narrow variety of products to few types of customers over a broad geographic area B) when a company sells a wide variety of products to many types of customers over a broad geographic area C) when a company sells a wide variety of products to many types of customers over a small geographic area D) when a company sells a wide variety of products to few types of customers over a small geographic area E) when a company sells a narrow variety of products to many types of customers over a small geographic area Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 21) Morrill Motors splits the United States of America into 10 sales regions. Within each of those regions, the company has separate sales personnel selling the company's full line of 8

products. Morrill Motors uses a ________ sales force structure. A) territorial B) complex C) customer D) product E) market Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 22) The workload approach takes into account all of the following EXCEPT ________. A) customer account status B) amount of effort required to maintain the account C) customer account size D) number of times each class of account is to be contacted E) success rate at closing orders with account Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 23) Robin works in a manufacturing company in Ohio. She sells products and handles customer requests via the company's online live chat feature. In her company, Robin is most likely a part of the ________. A) outside sales force B) inside sales force C) product designing team D) operations management team E) executive management Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 24) Which of the following is true with regard to the inside sales force of a company? A) The inside sales force is invariably more attentive to customer needs than the outside sales force. B) Unlike the outside sales force, the inside sales force does not require training. C) Inside sales representatives engage in face-to-face interaction with customers. D) The inside sales force is far more knowledgeable about customer habits than are outside salespeople. E) Inside salespeople provide support for the outside sales force, freeing them to spend more 9

time selling to major accounts and finding new prospects. Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 25) Kelly works as a sales representative at Ginner Machine Works. She uses the phone and the Internet to identify prospects and make sales. Kelly calls customers and explains the products offered by Ginner and the advantages of using them. If requested, she also mails the customer product information brochures. Which of the following is most likely Kelly involved in? A) outside selling B) technical sales support C) telemarketing and online selling D) research and administrative backup E) field sales Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy

26) Travis Computing Systems earns most of its revenue from sales and in-person computer services. The sales force at Travis recently began telemarketing and online selling. How would telemarketing and online selling most likely benefit Travis? A) The need for an outside sales force would be completely eliminated through telemarketing. B) Travis sales reps would be able to engage in more frequent face-to-face interaction with large, high-value customers. C) Travis sales reps would be able to service hard-to-reach customers more effectively. D) The overhead costs of Travis would significantly decrease. E) The current liabilities of Travis would decrease. Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 27) Amanda Perkins is a senior sales manager in Arlington Steelworks. As the customer base of her company has grown larger and more demanding over the last few years, Amanda insists on ________, or using groups of people from various departments such as sales, technical support, engineering, and even upper management to service complex accounts. A) cross selling B) e-procurement C) team selling D) observational research E) vendor screening Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 28) the 200-person P&G Walmart Customer Business Development team is a complete, multifunctional customer service unit. The team includes a CBD manager and several CBD account executives (each responsible for a specific P&G product category), supported by specialists in marketing strategy, product development, operations, information systems, logistics, finance, and human resources. This example shows that the main advantage of team selling is that____________ A) one person cannot be an expert in everything the customer needs. B) salespersons are used to having customers all to themselves C) salespersons may have trouble trusting others on a team D) teams can confuse or overwhelm the customer. E) there are difficulties in evaluating individual contributions Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 11

29) Most firms have adopted________ : computerized, digitized sales force operations that let salespeople work more effectively anytime, anywhere. A) time-and-duty analyses B) call reports C) sales force automation systems D) call plans E) inside sales forces Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 30) Hannah Adams is a senior sales manager in Elmo Corp., a rapidly growing company manufacturing personal computers and printers. In order to handle sales effectively, Hannah insists on using the services of different groups of people from different departments within the company such as the sales, marketing, technical support, and finance departments. In this instance, Hannah makes use of ________. A) team selling B) competitive marketing intelligence C) hybrid selling D) occasion segmentation E) sales force automation systems Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 31) Management can boost sales force morale and performance through all of the following EXCEPT______ A) its organizational climate B) sales quotas C) positive incentives D) sales meetings E) handling aggressive, competing salespeople Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 32) Eric Brown is a human resource manager in a company selling and manufacturing personal computers. Who among the following is Eric most likely to hire as a salesperson if his objective is to minimize training costs post recruitment? 12

A) Juliya, a fresh college graduate B) Richard, a product developer from a competing firm C) Nancy, an experienced engineer with no prior experience in personal selling D) Melissa, a proven salesperson from a competing firm E) Jose, a young salesperson with a few months' experience in a large MNC Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 33) The purpose of a training program for salespeople is to teach them about all of the following EXCEPT ________. A) customers' buying habits B) customers' buying motives C) competitor strategies D) industry history E) company goals Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 34) Today, much training is done through digital programs. Online training may range from all of the following EXCEPT A) simple self-paced text- and video-based product training B) internet-based sales exercises that build sales skills C) simulations that recreate the dynamics of real-life sales calls D) increased onsite training E) blending digital training with live classroom events and one-to-one coaching. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

35) The__________, which might be commissions or bonuses based on sales performance, rewards the salesperson for greater effort and success. A) variable amount B) fixed amount C) fringe benefits D) expenses E) stipend Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 36) More and more companies are moving away from high-commission plans because ________. A) outside salespeople tend to undermine the efforts of the inside sales team B) high-commission plans require salespeople to work overtime C) salespeople tend to become pushy which affects customer relationships D) salespeople are prone to taking multiple sales jobs to maximize their income E) salespeople end up spending too much time traveling to meet customers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy

37) A sales force compensation plan has all of the following advantages EXCEPT A) motivating salespeople B) directing the activities of salespeople C) encouraging salespeople to aim towards salesforce objectives. D) pushing too hard to make short-term grabs for business E) leading salespeople toward marketing objectives Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 38) One supervising tool is the weekly, monthly, or annual _________that shows which customers and prospects to reach out to and which activities to carry out. A) customer relationship management tool B) call plan C) time-and-duty analysis tool D) outsourcing relationship management tool E) sales force automation system Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 39) Which of the following is the best way for a company to increase selling time? A) implementing high-commission plans B) reducing the number of customers C) sharing less information with customers D) simplifying administrative duties E) implementing mass customization Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 40) __________describes the feeling that salespeople have about their opportunities, value, and rewards for a good performance. A) Organizational climate B) Digital training C) Time-duty analysis D) A sales force automation system E) A field service management system Answer: A 15

AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 41) Which of the following is NOT a tool for motivating salespeople? A) recognition and honors B) sales meetings C) positive incentives D) market reports E) merchandise and cash awards Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 42) Marco wants to evaluate the salespeople at West Texas Pipe Company. Which of the following is NOT an evaluation tool for Marco? A) reviewing the organizational climate B) monitoring the sales and profit performance in a salesperson’s territory C) personal observation D) talking with other salespeople E) customer surveys Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

Refer to the scenario below to answer questions 43-46. Reliable Tools Company is a manufacturer of hubs and axles for the trailer and heavy truck industry. Although Reliable Tools only has 15 customers, the company is the sole supplier of hub and axle components to those customers. Monthly sales at Reliable Tools are approximately $1 million. "You might say we have all our eggs in one basket," says owner Arthur Deetz. It is critical that a competent sales force be maintained in order to nurture those few but large accounts. Ninety-five percent of Reliable Tools' customers are located in Michigan, Ohio, and Indiana, which means that travel time to all customers is relatively short. However, given the nature of the industry, time spent with each customer is crucial. 43) How would a customer sales force structure benefit Reliable Tools? A) It would eliminate the need for the company's salespeople to travel to meet customers. B) It would enable the company's salespeople to build close relationships with customers. C) It would help the company's salespeople become experts in the products they sell. D) It would enable the company's management to cut training costs substantially. E) It would make telemarketing irrelevant. Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 44) For sales managers to understand how the members of the Reliable Tools sales force spend their time, the salespeople must submit a(n) ________. A) expense report B) time-and-duty analysis C) mobile conferencing schedule D) sales forecast E) incentive plan Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging

45) Since generating new leads and new business can be a goal for the sales force, which compensation plan approach is MOST likely to motivate and direct the salespeople in that direction? A) straight commission B) salary plus bonus C) straight salary D) salary plus commission E) salary, commission, and bonus Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 46) How can Reliable Tools motivate its sales force? Answer: Selling can be frustrating. Salespeople often work alone, and they must sometimes travel away from home. They may also face aggressive competing salespeople and difficult customers. Therefore, salespeople often need special encouragement to do their best. Management can boost sales force morale and performance through its organizational climate, sales quotas, and positive incentives. AACSB: Application of knowledge Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 47) Disadvantages of social selling include ________. A) its impact on efficiency B) its ability to provide information C) its expense and the difficulty of presenting some things via the Internet D) the ability to spot opportunities E) its impact on productivity Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 48). The COVID-19 pandemic, with its social distancing and stay-at-home mandates, also had a substantial impact on how selling is conducted. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 49) In the territorial sales force structure, each salesperson is responsible for selling a single, 18

exclusive product across different geographical regions. Answer: FALSE AACSB: Written and oral communication Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 50) Technology can greatly enhance the selling process, but it can’t replace many of the functions that salespeople perform. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 51) If a company has numerous and complex products, it can adopt a product sales force structure, in which the sales force specializes along product lines. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 52) Today’s customers have much more control over the sales process than they had in the days when brochures, pricing, and product advice were available only from sales reps and others through in-person sales meetings. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 53) In a complex sales force structure, salespeople can be specialized by customer and territory; product and territory; product and customer; or territory, product, and customer. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 54) Experts recommend that sales executives use online and social media technologies to spot prospects and opportunities, provide information, maintain customer contact, and make preliminary client sales presentations but resort to old-fashioned, face-to-face meetings when the time draws near to close a big deal. 19

Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 55) Telemarketing has ceased to be an important tool for most B-to-B marketers owing to the federal government's Do Not Call Registry. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 56) Using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts is known as complex selling. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 57) Training online instead of on-site can cut travel and other training costs, and it takes up less of a salesperson's selling time. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 58) Companies are increasingly adopting high-commission plans to make sure that salespersons are motivated to build long-term relationships with customers. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 59) Customers can browse corporate websites and social media sites to identify and qualify sellers and to compare and evaluate their offers. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 20

60) Social selling emphasizes personal contact between the company and its customers. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 61) What are the goals of training programs? Answer: Training programs have several goals. First, salespeople need to know about customers and how to build relationships with them. Therefore, the training program must teach them about different types of customers and their needs, buying motives, and buying habits. It must also teach them how to sell effectively and train them in the basics of the selling process. And salespeople need to know and identify with the company, its products, and its competitors. Therefore, an effective training program teaches them about the company’s objectives, organization, products, and the strategies of major competitors. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 62) Under what conditions is a company most likely to use a product sales force structure? Answer: If a company has numerous and complex products, it can adopt a product sales force structure, in which the sales force specializes along product lines. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 63) Why and how do companies use workload approach? Answer: Many companies use some form of workload approach to set sales force size. Using this approach, a company first groups accounts into different classes according to size, account status, or other factors related to the amount of effort required to maintain the account. It then determines the number of salespeople needed to call on each class of accounts the desired number of times. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 64) Distinguish between an outside sales force and an inside sales force. Answer: Outside sales force (or field sales force) consists of salespeople who travel to call on customers in the field. On the other hand, inside sales force consists of salespeople who conduct business from their offices via telephone, the Internet, or visits from prospective buyers. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. 21

Difficulty: Moderate 65) Describe the elements of successful recruiting. Answer: When recruiting, a company should analyze the sales job itself and the characteristics of its most successful salespeople to identify the traits needed by a successful salesperson in its industry. Then it must recruit the right salespeople. The human resources department looks for applicants by getting names from current salespeople, using employment agencies, searching the internet and social media, posting ads and notices on its website and industry media, and working through college placement services. Another source is to attract top salespeople from other companies. Proven salespeople need less training and can be productive immediately. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 66) What does a call plan show? Answer: The weekly, monthly, or annual call plan shows which customers and prospects to call on and which activities to carry out. AACSB: Written and oral communication Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 67) Why have firms adopted sales force automation systems? Answer: Many firms have adopted sales force automation systems to help their salespeople better manage their time, improve customer service, lower sales costs, and increase sales performance. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 68) Why is a firm's organizational climate an important part of building a successful sales staff? Answer: Organizational climate describes the feeling that salespeople have about their opportunities, value, and rewards for a good performance. Some companies treat salespeople as if they are not very important, so performance suffers accordingly. Other companies treat their salespeople as valued contributors and allow virtually unlimited opportunity for income and promotion. Not surprisingly, these companies enjoy higher sales force performance and less turnover. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 69) Discuss the differences between the three major sales force structures. What are the potential benefits of each structure? 22

Answer: In the territorial sales force structure, each salesperson is assigned to an exclusive geographic area and sells the company's full line of products or services to all customers in that territory. This organization clearly defines each person's job, fixes accountability, and increases the person's desire to build local business relationships that improve selling effectiveness. The product sales force structure allows the sales force to sell along product lines; the seller becomes very knowledgeable about products. The customer sales force structure organizes its sales force along customer or industry lines. This can help a company build closer relationships with important customers. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 70) Why are more companies using team selling? What are its pros and cons? Answer: Team selling is useful for servicing large, complex accounts. Sales teams can uncover problems, solutions, and sales opportunities that no individual salesperson could. In many cases, the move to team selling mirrors similar changes in customers' buying organizations. Many large customer companies have implemented team-based purchasing, requiring marketers to employ equivalent team-based selling. When dealing with large, complex accounts, one salesperson can't be an expert in everything the customer needs. Instead, selling is done by strategic account teams, quarterbacked by senior account managers or customer business managers. Team selling does have some pitfalls, however. For example, salespeople are by nature competitive and have often been trained and rewarded for outstanding individual performance. Salespeople who are used to having customers all to themselves may have trouble learning to work with and trust others on a team. In addition, selling teams can confuse or overwhelm customers who are used to working with only one salesperson. Finally, difficulties in evaluating individual contributions to the team selling effort can create some sticky compensation issues. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate 71) How do companies select applicants? Answer: The selection procedure can vary from a single informal interview to lengthy testing and interviewing. Many companies give formal tests to sales applicants. Tests typically measure sales aptitude, analytical and organizational skills, personality traits, and other characteristics. But test scores provide only one piece of information in a set that includes personal characteristics, references, past employment history, and interviewer reactions. AACSB: Application of knowledge Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

72) Describe some of the methods used to supervise salespeople and help them work more efficiently. Answer: Through supervision, or helping salespeople "work smart," companies can help salespeople do the right things in the right way. This includes helping salespeople identify target customers and manage their time. A weekly, monthly, or annual call plan is used in many companies to show salespeople which customers and potential customers to call on within a given time period and which activities to carry out. Companies often use time-and-duty-analysis. In addition to time spent selling, the salesperson spends time traveling, waiting, taking breaks, and doing administrative chores. Companies are always looking for ways to save time– simplifying administrative duties, developing better sales calls and routing plans, supplying more and better customer information, and using phone, e-mail, or Internet conferencing instead of traveling. Many firms have adopted sales force automation systems: computerized, digitized sales force operations that let salespeople work more effectively anytime, anywhere. Companies now routinely equip their salespeople with technologies such as laptops or tablets, smartphones, wireless connections, videoconferencing technologies, and customer-contact and relationship management software. Armed with these technologies, salespeople can more effectively and efficiently profile customers and prospects, analyze and forecast sales, schedule sales calls, make presentations, prepare sales and expense reports, and manage account relationships. The result is better time management, improved customer service, lower sales costs, and higher sales performance. In all, technology has reshaped the ways in which salespeople carry out their duties and engage customers. AACSB: Written and oral communication Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

73) Explain the methods of evaluating the performance of a sales force. Why is the evaluation of a company's sales force considered necessary? Answer: Management gets information about its salespeople in several ways. The most important source is sales reports, including weekly or monthly work plans and longer-term territory marketing plans. Salespeople also write up their completed activities on call reports and turn in expense reports for which they are partly or wholly reimbursed. The company can also monitor the sales and profit performance data in the salesperson's territory. Additional information comes from personal observation, customer surveys, and talks with other salespeople. Using various sales force reports and other information, sales management evaluates the members of the sales force. It evaluates salespeople on their ability to "plan their work and work their plan." Formal evaluation forces management to develop and communicate clear standards for judging performance. It also provides salespeople with constructive feedback and motivates them to perform well. On a broader level, management should evaluate the performance of the sales force as a whole. Is the sales force accomplishing its customer relationship, sales, and profit objectives? Is it working well with other areas of the marketing and company organization? Are sales force costs in line with outcomes? As with other marketing activities, the company wants to measure its return on sales investment. AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

74) Describe social selling and what changes it is bringing to the selling process. Answer: The fastest-growing sales trend is the explosion in social selling–the use of online, mobile, and social media to engage customers, build stronger customer relationships, and augment sales performance. New digital sales force technologies are creating exciting new avenues for connecting with and engaging customers in the digital and social media age. Used properly, online and social media technologies will make salespeople more productive and effective. The new digital technologies are providing salespeople with powerful tools for identifying and learning about prospects, engaging customers, creating customer value, closing sales, and nurturing customer relationships. Social selling technologies can produce big organizational benefits for sales forces. They help conserve salespeople's valuable time, save travel dollars, and give salespeople new vehicles for selling and servicing accounts. Social selling hasn't really changed the fundamentals of selling. Sales forces have always taken the primary responsibility for reaching out to and engaging customers and managing customer relationships. Now, more of that is being done digitally. However, online and social media are dramatically changing the customer buying process. As a result, they are also changing the selling process. In today's digital world, many customers no longer rely as much as they once did on information and assistance provided by salespeople. Instead, they carry out more of the buying process on their own–especially the early stages. In response to this new digital buying environment, sellers are reorienting their selling processes around the new customer buying process. They are "going where customers are"–social media, forums, online communities, blogs–in order to engage customers earlier. They are engaging customers not just where and when they are buying, but also where and when they are learning about and evaluating what they will buy. Salespeople now routinely use digital tools that monitor customer social media exchanges to spot trends, identify prospects, and learn what customers would like to buy, how they feel about a vendor, and what it would take to make a sale. Today's sales forces are also ramping up their own use of social media to engage customers throughout the buying process. AACSB: Analytical thinking Skill: Concept Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Moderate

75) Which of the following is the second step in the personal selling process? A) handling objections B) follow-up C) presentation and demonstration D) preapproach E) recruiting and selecting salespeople Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 76) Prospects can be qualified by looking at all of the following characteristics EXCEPT ________. A) occupational mobility B) financial ability C) volume of business D) location E) possibilities for growth Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy

77) During the _______step, the salesperson should know how to meet and greet the buyer and get the relationship off to a good start. A) cold-calling B) preapproach C) presentation D) prospecting E) approach Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 78) The best source of leads is________. A) competing salespeople B) referrals C) follow-up D) active listening E) cold calling Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 79) Before calling on a prospect, the salesperson should learn as much as possible about the organization and its buyers. This step is known as ________. A) preapproach B) closing C) approach D) presentation E) prospecting Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 80) According to the steps in the selling process, prospects can be ________by looking at their financial ability, volume of business, special needs, location, and possibilities for growth. A) qualified B) demonstrated C) approached 28

D) handled E) customized Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 81) Which of the following will NOT be a call objective in a preapproach plan? A) qualify the prospect B) find the initial lead C) gather information D) determine the best approach and timing E) make an immediate sale Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 82) Salespeople can consult standard industry and online sources, acquaintances, and others to learn about the company. They can scour the prospect’s web and social media sites for information about its products, buyers, and buying processes. The company’s AI activities can supply data and analyses on prospect characteristics and needs. These activities occur in the step of the selling process A) prospecting B) preapproach C) follow-up D) approach E) closing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate

83) The qualities that buyers like most in salespeople include_______ A) being pushy B) being unprepared C) being a good listener D) being overly talkative E) being disorganized Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 84) Today’s salespeople are employing the following advanced presentation technologies EXCEPT A) tablets B) interactive whiteboards C) online interactive presentation technologies D) sales presentation flip charts E) videoconferencing technologies Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 85) Which of the following is NOT true about handling rejections? A) The salesperson should use a positive approach B) The salesperson should seek out hidden issues C) The salesperson does not need training in handling objections D) The salesperson should take objections as an opportunity for more information E) The salesperson should turn objections into reasons for buying Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 86) Which of the following is NOT a closing technique used by salespeople? A) asking for the order B) offering a special reason to close---a lower price C) offering additional services if the buyer closes D) reviewing points of agreement E) following-up after the sale 30

Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 87) Which step in the selling process is NOT part of follow-up? A) making sure of proper installation B) telling the value story to the buyer C) completing details on delivery time D) ensuring proper servicing E) reviewing purchase terms Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 88) Which of the following is true with regard to value selling? A) Value selling refers to earning business from customers by cutting down prices of value products. B) Value selling refers to delivering superior customer value and capturing a fair return on that value. C) Value selling refers to the mass production of inferior-quality goods for sale. D) Value selling dilutes customer loyalty in the long run. E) Value selling tarnishes the brand image of a product in the long run. Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 89) A salesperson of a manufacturing company has qualified a number of leads. Which of the following is most likely the next step in the selling process? A) calling on all the prospects one by one B) closing the deal with the most promising prospect C) learning as much as possible about the qualified prospects D) handling all objections raised by the prospects E) narrating the "value story" to the buyer Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 16.3: Discuss the personal selling process, distinguishing between transaction31

oriented marketing and relationship marketing. Difficulty: Moderate 90) Melissa Price is a member of the sales force at Urban Fashions, a Houston-based manufacturer of women's apparel. Melissa is preparing for a first meeting with a wholesaler who is a potential customer. She is learning as much as she can about her prospect and his organization. Melissa is in the ________ step of the personal selling process. A) prospecting B) qualifying C) preapproach D) follow-up E) demonstration Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 91) Which of the following is true with regard to prospecting? A) Salespersons meet and greet the buyer. B) Salespersons learn as much as possible about the organization. C) Salespersons identify qualified potential customers. D) Salespersons tell the "value story" to the buyer, showing how the company's offer solves the customer's problems. E) Salespersons ask for the order, review points of agreement, and offer to write up the order. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 92) Richard, a salesperson, works for Wellington Steelworks. After researching a qualified lead, Richard is preparing opening lines for meeting the customer for the first time. Which step of the selling process is he about to enter? A) follow-up B) handling objections C) approach D) presentation E) preapproach Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. 32

Difficulty: Moderate 93) Capitalizing on the customer's complaints about the previous detergents she has used, Sheila, a salesperson, explains to the customer why her company's detergent Swish is better and how it can be a one-stop solution for everyday washing. In which of the following steps of the selling process is Sheila? A) follow-up B) handling objections C) preapproach D) presentation E) prospecting Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 94) After successfully overcoming a potential customer's objection to buying the vacuum cleaner he was selling, Terrence, a salesperson, asked the customer for an order. Terrence is in the ________ stage of the selling process. A) follow-up B) approach C) preapproach D) closing E) prospecting Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 95) Right after closing, Joshua, a senior sales manager at Halcyon Technologies, called up the customer to ensure that she was satisfied with Halcyon's products. By calling the customer, Joshua also wanted to ensure repeat business. In this instance, Joshua is in the ________ stage of the selling process. A) follow-up B) handling objections C) preapproach D) closing E) prospecting Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.3: Discuss the personal selling process, distinguishing between transaction33

oriented marketing and relationship marketing. Difficulty: Moderate

96) . Describe the presentation step of the selling process. Answer: During the presentation step of the selling process, the salesperson tells the “value story” to the buyer, showing how the company’s offer solves the customer’s problems. The customer-solution approach fits better with today’s relationship marketing focus than does a hard sell or glad-handing approach. The goal should be to show how the company’s products and services fit the customer’s needs. Buyers want insights and solutions, not smiles; results, not razzle-dazzle. Moreover, buyers don’t want just products; they want to know how those products will add value to their businesses. They want salespeople who listen to their concerns, understand their needs, and respond with the right products and services. AACSB: Application of knowledge Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 97) Today’s information-overloaded customers demand richer presentation experiences. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 98) Most companies want their salespeople to practice value selling—demonstrating and delivering superior customer value and capturing a return on that value that is fair for both the customer and the company Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 99) Unfortunately, in the heat of closing sales, salespeople too often take the easy way out by cutting prices rather than selling value. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 34

100) Buyers prefer to work with salespeople who are good listeners. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Easy 101) What are call objectives? Answer: The salesperson should set call objectives, which may be to qualify the prospect, gather information, or make an immediate sale. Another task is to determine the best approach, which might be a personal visit, a phone call, a video meeting, an email, or a text. The ideal timing should be considered carefully because many prospects are busiest at certain times of the day or week. Finally, the salesperson should give thought to an overall sales strategy for the account. AACSB: Written and oral communication Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 102) How does a company use artificial intelligence (AI) to identify and evaluate sales prospects? Answer: Companies are increasingly using artificial intelligence and other advanced data analytics to identify and evaluate sales prospects. They are using AI to amass and sift through the mountains of data regarding potential customers’ characteristics, behaviors, and purchasing patterns to generate and rank good sales leads. AI can also be used to assess prospective client needs and suggest company solutions that might make salespeople more effective in landing new business. In recent years, says one analyst, AI “has gone from predictive to prescriptive, meaning it can suggest the prospect to call that is most likely to result in a sale, or the best combination of offers to construct a successful sale.” AACSB: Written and oral communication Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 103) Why is active listening so important for salespeople? Answer: Great salespeople know how to sell, but more important, they know how to listen and build strong customer relationships. A recent large survey found that buyers rank “active listening” as the number one skill they want from salespeople. AACSB: Written and oral communication Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. 35

Difficulty: Easy 104) What are the different steps in the selling process? Briefly describe each step. Answer: The selling process consists of seven steps: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up. 1. The first step in the selling process is prospecting, in which a salesperson or company identifies qualified potential customers. 2. Before calling on a prospect, the salesperson should learn as much as possible about the organization (what it needs, who is involved in the buying) and its buyers (their characteristics and buying styles). This step is known as preapproach. 3. The sales step in which a salesperson meets the customer for the first time is known as approach. During the approach step, the salesperson should know how to meet and greet the buyer and get the relationship off to a good start. 4. During the presentation step of the selling process, the salesperson tells the "value story" to the buyer, showing how the company's offer solves the customer's problems. 5. The sales step in which a salesperson seeks out, clarifies, and overcomes any customer objections to buying is known as handling objections. 6. After handling the prospect's objections, the salesperson next tries to close the sale. This step is known as closing, in which a salesperson asks the customer for an order. 7. The last step in the selling process–follow-up–is necessary if the salesperson wants to ensure customer satisfaction and repeat business. In this step, a salesperson follows up after the sale to ensure customer satisfaction and repeat business. AACSB: Written and oral communication Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate

105) What is the follow-up step of the selling process? Why is it important? Answer: The follow-up step is important if the salesperson wants to ensure customer satisfaction and repeat business. Right after closing, the salesperson should complete any details on delivery time, purchase terms, and other matters. The salesperson then should schedule a follow-up call after the buyer receives the initial order to make sure proper installation, instruction, and servicing occur. This visit would reveal any problems, assure the buyer of the salesperson's interest, and reduce any buyer concerns that might have arisen since the sale. AACSB: Application of knowledge Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 106) How are the personal selling process and customer relationship management interrelated? What are the primary requirements of value selling? Answer: The selling process should be understood in the context of building and maintaining profitable customer relationships, as companies are interested in more than simply securing a one-time sale. Successful sales organizations recognize that winning and keeping accounts requires more than making good products and directing the sales force to close lots of sales. If the company wishes only to close sales and capture short-term business, it can do this by simply slashing its prices to meet or beat those of competitors. Instead, most companies want their salespeople to practice value selling–demonstrating and delivering superior customer value and capturing a return on that value that is fair for both the customer and the company. Unfortunately, in the heat of closing sales–especially in a tight economy–salespeople often take the easy way out by cutting prices rather than selling value. Sales management's challenge is to transform salespeople from customer advocates for price cuts into company advocates for value. Value selling requires listening to customers, understanding their needs, and carefully coordinating the whole company's efforts to create lasting relationships based on customer value. AACSB: Application of knowledge Skill: Concept Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Moderate 107) ________ consists of short-term incentives to encourage the purchase of a product or service. A) Value selling B) Conditional sale C) Advertising D) Sales promotion E) Benchmarking Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 37

108) Which of the following factors has most likely contributed to the rapid growth of sales promotion, particularly in consumer markets? A) declining interest in quality B) declining advertising efficiency C) rising hostility toward large firms D) increasing popularity of e-procurement E) increasing number of international firms Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 109) Sales promotions are targeted toward members of the sales force, business customers, retailers, wholesalers, and ________. A) final buyers B) employees C) manufacturers D) suppliers E) upstream companies Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 110) ________ weakens a given promotion's ability to trigger an immediate purchase. A) A customer-oriented promotion mix B) Promotion clutter C) Puffery D) Local marketing E) Niche marketing Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy

111) A 20-page Best Buy freestanding insert in the Sunday paper offers hundreds of great Black Friday Doorbuster deals; a Rooms to Go insert offers special prices and 60 months’ free interest. Overstock.com offers four-day online flash sales featuring limited-time discounts on select items. These are examples of ________. A) sales promotions B) cold calling C) value selling D) business promotions E) trade promotions Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 112) ________ are targeted towards retailers and wholesalers A) Consumer promotions B) Trade promotions C) Business promotions D) Sales force promotions E) International promotions Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 113) Which of the following factors has NOT contributed to high sales promotion levels? A) product managers face pressures to increase sales B) companies face stiff competition C) competing brands are less differentiated D) sales promotion can help differentiate the offer E) advertising efficiency has declined Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate

114) Manufacturers are searching for ways to rise above the clutter by using all of the following EXCEPT A) digital promotions B) social media C) more direct mail advertising D) larger coupon values E) more dramatic point-of-purchase displays Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 115))_____ offer consumers savings off the regular price of a product. A) Allowances B) Premiums C) Price packs D) Samples E) Buy-back guarantees Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 116) McDonald’s has offered a variety of _______in its Happy Meals—from Star Wars toys to Disney Princesses and Sonic the Hedgehog characters. Customers can visit www.happymeal.com to play games, read e-books, and watch commercials associated with the current happy Meal sponsor. A) coupons B) premiums C) price packs D) rebates E) cents-off deals Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy

117) A ______calls for consumers to submit their names for a drawing A) sweepstakes B) coupon C) contest D) sample E) game Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 118) ________ might include anything from mobile brand tours to festivals, reunions, marathons, concerts, or other sponsored gatherings. A) rebates B) premiums C) event sponsorships D) POP promotions E) Samples Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 119) .A _____presents consumers with something—bingo numbers, missing letters—every time they buy, which may or may not help them win a prize. A) contest B) sweepstake C) sample D) game E) rebate Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy

120) Think of your last visit to the local Costco, Walmart, or Bed Bath & Beyond. Chances are good that you were tripping over aisle displays, promotional signs, “shelf talkers,” or demonstrators offering free tastes of featured food products. These are examples of ______ A) point-of-purchase promotions B) sweepstakes C) team selling D) event marketing E) personal selling Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 121) What are rebates? Answer: Rebates (or cash refunds) are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet. The customer sends proof of purchase to the manufacturer, which then refunds part of the purchase price by mail. For example, Toro ran a clever preseason promotion on some of its snowblower models, offering a rebate if the snowfall in the buyer’s market area turned out to be below average. Competitors were not able to match this offer on such short notice and the promotion was very successful. AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate

122) How did COVID-19 affect the use of samples? Answer: When the COVID-19 pandemic restricted the use of in-person and in-store sampling, many brands were forced to find innovative new sampling approaches. Many increased their use of sampling by mail. Others developed hybrid sampling programs that allowed users to sample products in their homes while still chatting about them online. Still others found new delivery platforms. AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 123) _____ are useful articles imprinted with an advertiser’s name, logo, or message that are given as gifts to consumers A) Advertising specialties B) Rebates C) Samples D) Coupons E) Premiums Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 124) Premiums are goods offered either free or at low cost as an incentive to buy a product. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy

125) Objectives for trade promotions do NOT include getting retailers to______ A) carry new items B) carry more inventory C) promote the company’s products D) buy ahead E) give them less shelf space Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 126) Uber Rewards gives loyal customers points for Uber rides and Uber Eats that can be converted to redeemable Uber Cash—the more you use Uber, the more you benefit. Higher Uber Rewards membership levels—from blue to gold, platinum, or diamond—earn perks such as priority service from Uber support agents, flexible cancellations, locked-in pricing between favorite points, priority airport pickups, access to highly rated drivers, and complimentary upgrades at no extra cost This is an example of a ________. A) rebate B) consumer promotion C) price pack D) frequency marketing program E) trade promotion Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 127) Monty Boyd, an account manager, travels frequently on West Coast Airlines. Monty earns points for every mile he flies, and he will soon have enough points to receive a free airline ticket. West Coast Airlines is attempting to build a strong customer relationship with Monty through a ________. A) trade promotion B) promotional product C) rebate offer D) point-of-purchase promotion E) frequency marketing program Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate

128) Renee's, a company selling winter clothing in Chicago, ran a preseason promotion on some of its fur jackets, offering cash refunds if the snowfall in the customer's market area turned out to be below average. This exemplifies ________. A) puffery B) satisficing C) prospecting D) a price pack E) a rebate Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 129) A five-foot high cardboard display of Terry the polar bear, mascot of Terry's protein shake, next to the shelf containing Terry's products in a supermarket is an example of a(n) ________. A) sample B) point-of-purchase promotion C) business promotion D) advertising specialty E) rebate Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 130) Kirk Wilkins renewed his cell phone contract with Zip Wireless Services and purchased a new cell phone through the Zip Web site. If Kirk mails Zip Wireless Services his transaction receipt, he would be eligible to receive $50 as cash refund. Which of the following types of sales promotion is evident here? A) point-of-purchase promotion B) advertising specialty C) premium D) price pack E) rebate Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate

131) Happy Pet is a large pet food company that has convinced the retailers and the wholesalers of the New England area to resell its products. Happy Pet promises to reimburse the advertising costs to its retailers and wholesalers for advertising its products. This is an example of a(n) ________. A) trade promotion B) point-of-purchase promotion C) sweepstake D) price pack E) advertising specialty Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 132) To celebrate school reopenings, Walmart’s #MyTeacherWins challenge asked students to submit a TikTok video explaining why their favorite teacher deserved recognition. Walmart then selected 100 teachers to receive a $5,000 gift card, and nominators who followed Walmart’s TikTok account received school supply–filled backpacks. The goal was to attract customers to the retailer’s TikTok account and its shoppable TikTok experiences. This is an example of a ______ A) promotional product B) rebate C) price pack D) sweepstakes E) contest Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 133) To measure the returns on their sales promotion, marketers should asked all of the following questions EXCEPT A) Should we modify our product? B) Can we hold onto these new customers and purchases? C) Did the promotion attract new customers or more purchasing from current customers D) Did the promotion engage consumers and enhance our brand’s positioning? E) Will the long-run customer relationship and sales gains from the promotion justify its costs? Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate

134) Blue Fizz Inc. sponsors every race that takes place at the Sears Racing Track in Orange County, California. The high-octane racing at Sears is perfect for Blue Fizz to sell its energy drinks and to establish the desired brand image of the company. Which type of promotion is evident here? A) event marketing B) mass marketing C) point-of-purchase promotion D) solution selling E) advertising specialties Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate Refer to the scenario below to answer questions 135 -136. Reliable Tools Company is a manufacturer of hubs and axles for the trailer and heavy truck industry. Although Reliable Tools only has 15 customers, the company is the sole supplier of hub and axle components to those customers. Monthly sales at Reliable Tools are approximately $1 million. "You might say we have all our eggs in one basket," says owner Arthur Deetz. It is critical that a competent sales force be maintained in order to nurture those few but large accounts. Ninety-five percent of Reliable Tools' customers are located in Michigan, Ohio, and Indiana, which means that travel time to all customers is relatively short. However, given the nature of the industry, time spent with each customer is crucial. 135) Which of the following promotions would be most appropriate for Reliable Tools to use in its attempt to promote its products and generate new business leads? A) rebates and price packs B) premiums C) specialty advertising D) samples E) conventions and trade shows Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Easy 136) How could Reliable Tools use sales promotion to support the firm’s selling process? Answer: Trade and business sales promotions support the firm’s personal selling process. Examples include the various frequency marketing programs and loyalty cards. Most hotels, supermarkets, airlines, and retailers offer frequent- guest/buyer/flier programs that give rewards to regular customers to keep them coming back. Such promotional programs can build loyalty through added value rather than discounted prices. 47

AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 137) What are digital and mobile coupons? Answer: Digital and mobile coupons represent today’s fastest-growing coupon segment. Digital coupons can be individually targeted and personalized in ways that print coupons can’t. Whether printed at home, loaded to a loyalty card, or redeemed via smartphone or other mobile device, digital coupons claim much higher redemptions rates than traditional newspaper freestanding insert coupons. Digital load- to-card coupons have now surpassed newspaper freestanding insert coupons in both number issued and redemptions. Load-to-card coupons now account for 85 percent of digital coupons. AACSB: Analytical thinking Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 138). What is promotion clutter? Answer: The heavy use of sales promotion has resulted in promotion clutter, which is similar to advertising clutter. With so many products being sold on deal these days, a given promotion runs the risk of being lost in a sea of other promotions, weakening its ability to trigger an immediate purchase. Manufacturers are now searching for ways to rise above the clutter, such as offering larger coupon values, creating more dramatic point-of-purchase displays, or delivering promotions through digital, mobile, and social media. Digital promotions can help drive both instore and online sales. AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 139) How are samples used for sales promotion? Answer: Samples are offers of a trial amount of a product. Sampling is the most effective—but most expensive—way to introduce a new product or create new excitement for an existing one. Some samples are free; for others, the company charges a small amount to offset its cost. The sample might be sent by mail, handed out in a store or at a kiosk, attached to another product, or featured in an ad, email, or mobile offer. Samples are sometimes combined into sample packs, which can then be used to promote other products and services AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate

140). How do marketers develop the sales promotion program? Answer: Beyond selecting the types of promotions to use, marketers must make several other decisions in designing the full sales promotion program. First, they must determine the size of the incentive. A certain minimum incentive is necessary if the promotion is to succeed; a larger incentive will produce more sales response. The marketer also must set conditions for participation. Incentives might be offered to everyone or only to select groups. AACSB: Application of knowledge Skill: Concept Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate Quantitative Questions 1) Salesforce’s innovative products have made it the world’s number-one and fastest-growing CRM platform, ahead of blue-chip competitors such as Microsoft, Oracle, SAP, and IBM. The company’s revenues hit $26.5 billion during 2021. The current growth rate should push revenues to $50 billion by 2026. What growth rate is Salesforce expecting over the next five years? A) 10.19% B) 11.56% C) 13.54% D) 14.15% E) 18.23% Answer: C; The easiest way to compute a growth rate is to use a financial calculator with the following inputs; PV = -26.5; FV = 50; N = 5; PMT = 0; CPT I/Y = 13.54%. AACSB: Analytical thinking Skill: Application Objective: LO 16.1: Discuss the role of a company’s salespeople in engaging customers, creating customer value, and building customer relationships. Difficulty: Challenging 2) Company ZZ currently has 35 salespersons on staff that generate $55 million in total sales. Their average total compensation is $121,500. How much revenue does the salesforce generate per salesperson? A) $1.39 million B) $1.57 million C) $1.64 million D) $1.71 million E) $1.82 million Answer: B; You compute this by dividing $55 million/35 = $1.57 million per salesperson. AACSB: Analytical thinking Skill: Application Objective: LO 16.1: Discuss the role of a company’s salespeople in engaging customers, creating customer value, and building customer relationships. Difficulty: Easy 3) Company ZZ currently has 35 salespersons on staff that generate $55 million in total sales. 49

Their average total compensation is $121,500. How much revenue does the salesforce generate per dollar spent on salesforce compensation? A) $11.85 B) $12.01 C) $12.28 D) $12.93 E) $14.36 Answer: D; Total dollars spent = 25 x $121,500 = $4,252,500. So, $55,000,000/$4,252,500 = $12.93. AACSB: Analytical thinking Skill: Application Objective: LO 16.1: Discuss the role of a company’s salespeople in engaging customers, creating customer value, and building customer relationships. Difficulty: Moderate 4) Jameson Industries determines the size of its salesforce using a workload approach. The firm has two groups of clients that require different levels of service. Group A clients need about 15 contacts per year and there are 2,800 Group A accounts. Group B clients need about 20 contacts per year and there are 4,000 Group B accounts. Each salesperson can make about 300 contacts per month. How many salespersons should Jameson Industries employ? A) 34 B) 28 C) 61 D) 15 E) 38 Answer: A; You need to compute the total contacts needed per year and then divide that by the total contacts a single salesperson can make in a year. So, (15 x 2,800) + (20 x 4,000) = 122,000 contacts needed. Each salesperson can make 300 x 12 = 3,600 contacts per year. So, 122,000/3,600 = 33.88, or 34 salespersons. AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 5) Jameson Industries determines the size of its salesforce using a workload approach. The firm has two groups of clients that require different levels of service. Group A clients need about 15 contacts per year and there are 2,800 Group A accounts. Group B clients need about 20 contacts per year and there are 4,000 Group B accounts. Each salesperson can make about 300 contacts per month. How many new salespersons should Jameson Industries employ if it wants to grow both types of accounts by 10%? A) 34 B) 28 C) 61 D) 15 E) 38 Answer: E; You need to compute the total contacts needed per year assuming 10% growth and 50

then divide that by the total contacts a single salesperson can make in a year. So, (15 x 2,800 x 1.10) + (20 x 4,000 x 1.10) = 134,200 contacts needed. Each salesperson can make 300 x 12 = 3,600 contacts per year. So, 134,200/3,600 = 37.27, or 38 salespersons. AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 6) Routine B2B field sales calls cost about $600 each. Firm Z’s salesforce make 545 of these calls each year. What is the total cost of Firm Z’s B2B field sales calls? A) $255,400 B) $261,000 C) $275,000 D) $327,000 E) $395,000 Answer: D; Total cost = $600 x 545 = $327,000. AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Easy 7) Routine B2B field sales calls cost about $600 each. Firm Z’s salesforce make 545 of these calls each year. However, telemarketing calls cost the firm about $75 per call. How much will Firm Z save if it switches to telemarketing calls for half of its business contacts? A) $20,437.50 B) $99,456.75 C) $143,062.50 D) $163,500.00 E) $183,937.50 Answer: C; Total cost now = $600 x 545 = $327,000. Total cost after the switch = (545/2 x $600) + (545/2 x $75) = $163,500 + $20,437.50 = $183,937.50. The savings = $327,000 $183,937.50 = $143,062.50. AACSB: Analytical thinking Skill: Application Objective: LO 16.2: Identify and explain the six major sales force management steps. Difficulty: Challenging 8) Bobo Industries spends about $2,125 per closed sale. The firm also spends $985 on sales leads that do not result in a sale. About 40% of the firm’s leads result in a sale. Last year the firm completed 3,291 sales. How much does it cost Bobo Industries per sale? A) $3,602.65 B) $2,125.00 C) $985.00 D) $4,862.80 E) $4,936.75 Answer: A; The total sales contacts = 3,291/.40 = 8,227.5, or 8,228. Subtract the closed sales to 51

get sales contacts that did not pan out, 8228 – 3,291 = 4,936.8, or 4,937. Total costs are (3,291 x $2,125) + (4,937 x $985) = $6,993,375 + $4,862,945 = $11,856,320. Now divide by completed sales; $11,856,320/3,291 = $3,602.65. AACSB: Analytical thinking Skill: Application Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing. Difficulty: Challenging

9) Consumer Products Company II (CPC II) is running a sales promotion for the next month. Customer can purchase the product of $19.95 and get a $10 rebate if they mail in the receipt in the next 30 days. How much will this promotion cost CPC II they sell 3,200 products and 45% of the customers follow through to get the rebate? A) $9,800 B) $11,500 C) $12,000 D) $14,400 E) $17,600 Answer: D; You compute this by computing the number of people getting a rebate and multiplying by the $10 rebate. So, 3,200 x .45 x $10 = $14,400. AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate 10) Consumer Products Company II (CPC II) is offering $2 off coupons on personal hygiene products. The coupons are delivered to your smartphone when you enter the store if you register online. To date, CPC II customers have redeemed 1,455 coupons per store, but the firm’s sales are up $22,000 per store. Management attributes this increase to the coupons. How much additional net revenue did the firm earn from this promotion if they have 11 retail stores? A) $195,550 B) $201,005 C) $209,990 D) $229,650 E) $242,000 Answer: C; The increase in net revenue per store = $22,000 – ($2 x 1,455) = $19,090 x 11 stores = $209,990. AACSB: Analytical thinking Skill: Application Objective: LO 16.4: Explain how sales promotion campaigns are developed and implemented. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 17 Digital Marketing 1) Amazon.com and GEICO approach customers via websites or mobile apps. This is an example of ________ marketing. A) mass B) niche C) individual D) channel E) digital Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 2) is the use of technology-intensive platform such as the Internet, mobile networks and devices, and social media to engage directly with targeted consumers. A) Network marketing B) Consumer marketing C) Multi-modal marketing D) Digital marketing E) Channel marketing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 3) Digital marketing can be used for all of the following purposes EXCEPT to ________. A) provide information B) persuade consumers C) provide consumer equity D) induce brand purchase E) build long-term relationships Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Challenging 4) Which of the following statements is true of digital marketing? A) Digital marketing will account for an estimated two-thirds of all ad spending by 2023. 1

B) Digital marketing is very labor intensive and requires a large sales staff. C) Digital marketing is a high-cost alternative for reaching markets. D) Digital marketing involves two or more intermediaries. E) Digital marketing gives consumers a commission every time they buy a product. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 5) Mobile ad spending now accounts for of all U.S. ad spending. A) 19% B) 28% C) 34% D) 44% E) 55% Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 6) Which of the following is true about digital marketing? A) Digital marketing is also referred to as multi-level marketing. B) Salespersons are compensated for other salespeople they recruit. C) Digital marketing allows sellers to create immediate, timely, and personal offers. D) Digital marketing involves two or more intermediaries. E) In digital marketing, outside and inside sales forces coordinate to provide value products to customers. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 7) All of the following are benefits of digital marketing for sellers EXCEPT ________. A) access to small groups or individuals B) program flexibility C) immediate product access D) low cost E) easy to personalize products Answer: C AACSB: Analytical thinking 2

Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 8) Digital marketing benefits consumers in all of these ways EXCEPT . A) it increases information access B) it increases competition C) it reduces competition D) by providing a sense of brand engagement E) by providing unlimited product access Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 9) Sellers can benefit from digital marketing . A) only when they have an extensive IT budget B) if consumers are jaded C) when product costs increase D) if they have a limited ad budget E) only when product information changes rapidly Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Challenging 10) For some companies, digital marketing serves as a for companies which sell purely digital products and typically deliver value to consumers entirely via online or mobile platforms. A) complete business model B) fragmented business model C) partial business model D) direct business model E) immersive business model Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 3

11) Which of these brands is a direct-to-consumer brand? A) Costco B) Dollar Shave Club C) Walmart D) Dollar General E) Mountain Dew Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 12) Pepsi’s Mountain Dew brand makes extensive use of digital platforms which is an example of using digital media for a(n) . A) partial business model B) complete business model C) alternative media event D) direct-to-consumer campaign E) complimentary function Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 13) Digital marketing involves targeting broad segments of customers. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 14) Total digital advertising spending now makes up an estimated 58 percent of all U.S. advertising spending. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 15) Digital information can be used for decision making across electronic networks—at a significant cost. 4

Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 16) Digital marketing gives consumers the ability to respond immediately to purchase a product or service. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 17) Digital marketing gives small vendors a low-cost opportunity to market their products around the world. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 18) Digital marketing is an expensive way of reaching target markets. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 19) Digital marketing can serve as a supplementary channel for selling directly to customers. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 20) Costco is an example of a firm that uses digital marketing for its complete business model. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to 5

customers and companies. Difficulty: Easy 21) What are direct-to-consumer brands? Provide some examples of direct-to-consumer brands. Answer: Direct-to-consumer brands avoid direct competition with traditional brands by selling only through online and mobile channels and shipping purchased products directly to consumers. Examples include Dollar Shave Club and Harry’s (razors and shaving products), Peloton (fitness equipment and programs), and Casper (mattresses and bedding). AACSB: Application of knowledge Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 22) How does digital marketing provide flexibility for sellers? Answer: Digital marketing allows the marketer to make ongoing adjustments to its prices and programs or make immediate, timely, and personal announcements and offers. Online catalogs, if used, can be adjusted daily or even hourly if needed. AACSB: Application of knowledge Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 23) What is real-time marketing? Provide an example of real-time marketing. Answer: Real-time marketing links brands to important moments and trending events in consumers’ lives. Online and social media can engage consumers in the moment by linking brands to important trending topics, real-world events, causes, personal occasions, or other happenings. For example, fast-food brand Wendy’s is known for its skillful use of real-time social media to spark an ongoing dialogue with the brand’s fans about anything or nothing at all. For example, Wendy’s responses to its fans on Twitter are often irreverent and hilarious. One fan asked: “How much does a Big Mac cost?” Wendy’s tongue-in-cheek response: “Your dignity.” AACSB: Application of knowledge Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 24) Explain the major benefits of digital marketing for buyers. Answer: For buyers, digital marketing is convenient, easy, and private. It gives buyers anywhere, anytime, and personalized access to an almost unlimited assortment of goods and a wealth of product and buying information. Buyers can customize products and information they want, order on the spot, and receive delivery within days or even hours. In the digital marketplace, consumers often benefit from increased price competition. Competitors are only a mouse click away, making price and product comparisons remarkably easy for both consumers 6

and companies. Finally, for consumers who want it, digital marketing through online, mobile, and social media platforms provides a sense of brand engagement and community. AACSB: Application of knowledge Skill: Concept Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate Refer to the following scenario to answer questions 25, 26, 27, and 28. The Treble Clef sells music books, musical instruments, and novelty gifts of a musical nature. In recent years, owner Gary Zahn has served as the local representative of several musical instrument manufacturers, providing a contact person for three local schools. He sends a sample of a manufacturer's products to schools that request a demonstration or presentation. "If we don't have it, we can definitely get it for you," Gary tells all Treble Clef visitors and customers. Most walk-ins are particularly interested in a specific piece of sheet music from a particular era or just browsing among the hundreds of music knick-knacks in the store. Gary spends most of his time making presentations to beginners at the local schools and making biweekly visits to the schools to deliver instruments, make minor repairs, or pick up instruments to ship to the manufacturer for more complicated repairs. After establishing a loyal customer base, Gary was convinced that a Treble Clef website could benefit a variety of customers. He began with a simple website that provided information about the store and the types of gifts and services available. The site received so much response that Gary added a question-and-answer option. Questions poured in, ranging from "Where can I get sheet music for 'Hello, Dolly'?" to "Do you carry clarinet reeds?" to "My saxophone needs two new pads. When will you be at Elmhurst School to repair it?" The website is now able to accept credit card orders, and gifts can even be wrapped and shipped for no extra charge. "This website idea was fantastic!" Gary admitted. "It allows us to be so responsive. And our novelties sales have doubled!" Gary was now trying to decide whether putting a storefront on Amazon.com would be worth the time and effort. The Treble Clef had a Facebook page, but Gary rarely made any updates and also paid little attention to the feedback. He was now considering hiring a person to do all of the store’s digital marketing. 25) The Treble Clef’s first venture into digital marketing was . A) hiring someone to oversee the store’s digital efforts B) creating a Facebook page C) opening a storefront on Amazon.com D) establishing the website E) using real-time marketing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective 7

digital marketing campaign. Difficulty: Challenging 26) The Treble Clef would not benefit much from digital marketing since it is a small business. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 27) The Treble Clef’s Facebook page and business website are both examples of digital marketing. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 28) How could The Treble Clef use real-time marketing? Answer: The Treble Clef could collect emails and push out concert dates and start times followed with ads for various products. The ads could offer the sheet music for the songs played at a specific event or ads for music lessons. Gary could offer to give estimates on repairing instruments at the events or could ask for people to stop by his booth to chat if the venue supported vendors. Gary could also push out ads when he was giving presentations so more people would attend. AACSB: Application of knowledge Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Challenging 29) are detailed, nuanced, and tangible representations of prototypical consumers to be targeted by the digital campaign. A) Avatars B) Digital consumer personas C) Wikis D) Targeted consumers E) Influencers Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective 8

digital marketing campaign. Difficulty:

Easy

30) Karan received a digital coupon delivered to her smartphone when she passed by a coffee shop in the mall. This is an example of . A) information intensity B) digital consumer persona C) crowdsourcing D) location-based digital marketing E) tangibility Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 31) A digital consumer persona for a coffee shop might tell marketers all of the following EXCEPT . A) time preferences for drinking coffee B) the consumer’s political views C) the consumer’s reason for drinking coffee D) the typical consumer’s ordering preference E) the price point where the consumer will buy coffee Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 32) is the consumer’s use of multiple marketing channels, both digital and nondigital, across stages of the consumer buying decision process.. A) Consumer omni-channel navigation behavior B) Consumer purchasing pattern behavior C) Channel navigations series D) Patterning purchase behavior E) Experimentation Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 33) Marketers can assess the effect on sales when prices are raised or lowered by testing what happens to 1,000 consumers when the price changes. This is called . 9

A) omni-channeling B) navigation C) experimentation D) branding E) polarizing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 34) Marketers can use digital marketing to determine the impact of various promotion strategies of sales prior to rolling out a nationwide campaign. This type of exercise is known as experimentation or and it can help identify and refine effective tactics before investing heavily in them. A) digital investigation B) wikileaking C) crowdsourcing D) A/B testing E) Omni-channel navigation Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 35) Location tracking apps on smartphones . A) can be used by law enforcement to determine shoplifting guilt or innocence B) are illegal C) are increasingly viewed as an invasion of consumer privacy D) can only be used for product promotion E) are not sophisticated enough to pinpoint a consumer’s exact location Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 36) Tracking consumers through the omni-channel decision process can be difficult since it plays out across different channels and physical locations. Compounding the issue of identifying omnichannel consumer behavior is the fact that . A) the technology is too advanced to be effective B) tracking cookies are difficult to use C) age groups tend to move uniformly through channels 10

D) consumers often exhibit homogenous behaviors E) patterns of navigation differ across consumers Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Challenging 37) Today’s marketers must embrace the concept of , which is integrating data from different sources—such as cookies, location tracking, website and mobile navigation, credit and loyalty card usage, consumer research, and others—to build a comprehensive picture of consumer omni-channel behavior. A) data generation B) data fusion C) big data D) data integration E) data sophistication Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 38) Marketers should aim to reduce , or potential interactions across the experimental and control groups. For example, if customers in the control group get wind of and resent the lower prices offered to the experimental group, they may reduce purchases. This can distort the findings. A) experimental noise B) behavioral bias C) digital misrepresentation D) omni-channel distortion E) navigation error Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Moderate 39) Leading streaming digital content provider Netflix’s experimentation research has shown that the image displayed with a specific movie or show title strongly affects how many viewers click on and view it. Answer: TRUE AACSB: Analytical thinking 11

Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 40) As digital marketing has grown, its costs have steadily fallen. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 41) The consumer decision process varies across buying stages and channels. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 42) Modern consumers are increasingly adept at engaging multiple channels across the stages of their buying decision process, from initial information search and identifying purchase options to making the final purchase and postpurchase engagement. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 43) Tracking the consumer through the omni-channel decision process is an easy process given today’s advanced technologies. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 44) Creating a digital consumer persona requires identifying an actual customer to model their behavior. Answer: FALSE 12

AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 45) Explain how marketers use location-based digital marketing. Answer: Location-based digital marketing can fine-tune the targeting of marketing offers and messages to consumers based on their physical locations anytime and anywhere. For example, consumers could receive a 25-percent-off coupon for Starbucks coffee on their phone app by just entering a circle of a 100-yard radius around a Starbucks location. AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Moderate 46) What is a digital consumer persona and how do marketers use this tool? Answer: Digital consumer personas are detailed, nuanced, and tangible representations of prototypical consumers to be targeted by the digital campaign. Digital marketing is informationintensive, and it can pervade many activities in a consumer’s daily life. These digital personas help marketers devise better ways to reach their target consumer that conventional marketing techniques do not allow. AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Challenging 47) What is consumer omni-channel navigation behavior and why is it important for marketers to understand? Answer: Consumer omni-channel navigation behavior is the consumer’s use of multiple marketing channels, both digital and nondigital, across stages of the consumer buying decision process. Modern consumers are increasingly adept at engaging multiple channels across the stages of their buying decision process, from initial information search and identifying purchase options to making the final purchase and postpurchase engagement. Consumers’ buying processes now routinely span marketing channels ranging from physical stores and printed catalogs to online stores, mobile apps, and social media platforms. To appeal to consumers with the right marketing content at the right place and time, marketers must understand which channels consumers are using at each stage of the customer journey. AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Moderate 13

48) What are some of the problems marketers face understanding channel navigation? Answer: Tracking the consumer through the omni-channel decision process is difficult, given that it plays out across different channels and physical locations. the specific pattern of channel navigation varies across consumers. Therefore, a one-size-fits-all marketing approach will not work well. Finally, the consumer decision process varies across buying stages and channels. AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Challenging 49) How can marketers use experimentation to help them make decisions about where, how, and how much they spend on digital marketing? Answer: Marketers can use experimentation to assess the effects of a reduced price (the “treatment”). For example, a company might drop the product price in an experimental group of 1,000 randomly chosen customers but keep it the same as before in a control group of another 1,000 randomly chosen customers. Assuming that the two groups are otherwise similar, the subsequent difference in average per-customer unit sales across the two groups will capture the impact of the lowered price. Other “treatments” can determine the impact of other changes on sales. AACSB: Analytical thinking Skill: Concept Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Easy 50) Companies that engage in use both offline and online marketing channels. A) start-up retailing B) click-only retailing C) omni-channel retailing D) brick-and-mortar retailing E) brick-only retailing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 51) The is an immersive digital environment, often using virtual- or augmentedreality technology, where virtual avatars representing real people work, play, learn, socialize, shop, and generally communicate with one another. A) livestream 14

B) webverse C) metaverse D) internet E) universe Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 52) Karesh worked on his avatar until he was satisfied that it bore a very close resemblance to him. His old avatar did not look at all like him but now that he was spending more time gaming and shopping in this virtual universe he felt like he needed a makeover. Karesh is probably updating his avatar for the . A) livestream B) webverse C) wiki D) metaverse E) universe Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 53) By 2026, approximately percent of organizations worldwide will have products available on the metaverse. A) 10 B) 20 C) 30 D) 40 E) 50 Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 54) What type of platform is Yelp where you can find consumer opinions about almost any product or service? A) livestream platform 15

B) crowdsourcing platform C) metaverse platform D) wiki platform E) reviews and ratings platform Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 55) are collaborative knowledge networks that are created and managed by the public. A) Wikis B) Metaverses C) Livestream platforms D) Blogs E) Location platforms Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 56) Ronaldo uses WhatsApp to show his love of pugs. The cute little dogs are adorable, and he posts a new photo and a few words about his two pugs every day. What type of platform is Ronaldo using? A) Microblog B) Messaging platform C) Metaverse platform D) Wiki E) Location platform Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 57) Instagram, Flickr, and TikTok are all examples of A) microblogs B) image and video platforms C) metaverse platforms

D) wikis E) location platforms Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 58) Which of the following is NOT a reason that companies use social media? A) cost effectiveness B) engagement and social sharing capabilities C) ease of creating content D) immediacy and timeliness E) interactiveness Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 59) Which of the following is a challenge of marketing through online social media? A) Results are hard to measure. B) Users seldom have control over the online social networks. C) Most existing networks are already controlled by major corporations and therefore do not favor competitors. D) It is difficult to get the approval of the online advisory board to post an ad in a social network. E) Marketing via online social networks is expensive and time-consuming. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 60) Social media are all of the following EXCEPT ________. A) expensive B) interactive C) personal D) targeted E) timely Answer: A AACSB: Analytical thinking Skill: Concept 17

Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 61) An integrated social marketing campaign likely could include all of the following EXCEPT ________. A) Facebook pages B) Twitter postings C) Instagram photos D) television ads E) YouTube videos Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 62) ________ marketing features marketing messages and promotions delivered to on-the-go consumers through their handheld devices. A) Kiosk B) Ambush C) Direct-mail D) Mobile E) Catalog Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 63) Mobile marketing is used to enrich the brand experience, stimulate immediate buying, or ________. A) decrease advertising costs B) help friends contact friends C) make shopping easier D) create new customer relationships E) find new suppliers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 18

64) Joanna uses her smartphone to accomplish many tasks every day. She is also an avid shopper. Which online marketing tool will benefit Joanna the most to help her shop? A) email messages from sites to which she subscribes B) banking app for her bank C) instant deals and digital coupons D) YouTube video E) Facebook friends Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 65) Kirk's Comic Store has its own mobile app that users can download for free. The app lets users know about special events, discounts, and merchandise currently available in the store. Which of the following forms of marketing is exemplified from this scenario? A) social media marketing B) kiosk marketing C) direct-response television marketing D) mobile marketing E) direct-mail marketing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 66) James is looking for a new suit for a job interview. He is shopping at Smith & Jones, a wellregarded menswear store. While he looks at various styles and uses his smartphone to scan codes, the menswear shopping app provides him with suggestions for shirts, ties, and shoes that would complete the ensemble he needs to make a strong, positive impact at his interview. The ability of the app to provide this information serves to ________. A) enrich the brand experience B) annoy James C) complicate the shopping experience D) use James' data plan E) interrupt the shopping experience Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 19

67) Gant Hardware is a huge chain of hardware stores. GantHardware.com helps customers conduct product research and also lets them order directly online or redirects them to the nearest Gant retail store. Which of the following best describes GantHardware.com? A) marketing website B) digital catalog C) social network D) podcast E) blog Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 68) A(n) ________ is designed to present brand content that engages consumers and creates customer-brand community. A) podcast B) brand community website C) search engine D) digital catalog E) online magazine Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 69) Oscarz Aviation's website, GoOscarzAv.com, informs customers about a wide variety of services offered by the firm. It also has a guestbook where customers can provide feedback on their experiences with Oscarz Aviation. They can also view videos Oscarz Aviation posts, as well as read and respond to blogs and ask questions. GoOscarzAv.com is an example of a(n) ________. A) online social network B) blog C) personal website D) brand community website E) digital catalog Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 20

70) Spartan Sportsgear is a company that sells sports equipment for adventure sports. It recently launched ExtremeSpartan.com to showcase products and provide testimonials of famous adventure sports athletes who use Spartan's products. It also includes videos and blogs. Which of the following best describes ExtremeSpartan.com? A) brand community website B) digital catalog C) social network D) podcast E) blog Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 71) Runner Sprintz, a particular brand of shoes, has its own website, myrunnersprintz.com that welcomes consumers to "the Runner Sprintz Century," invites readers to post their Runner Sprintz stories, and offers a wide variety of shoes for direct purchase. The site even allows customers to individually design their own shoes and share them among their circles on the website. Which of the following best describes myrunnersprintz.com? A) Web directory B) blog C) corporate website D) digital catalog E) brand community website Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 72) Which of the following is NOT a specific goal of brand community websites? A) present brand content that engages consumers B) build closer customer relationships C) generate engagement with and between the brand and its customers D) increase online sales E) allows visitors to interact with likeminded people to explore and communicate experiences with the brand Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 21

73) Companies must attract visitors to their websites. Which of the following is a method companies use to entice visitors not just to visit but also to return to a site? A) using flashy graphics, bright colors, and vivid pictures B) aggressively promoting the site in broadcast advertising and through ads and links on other sites C) offering prizes for visiting the site D) providing rewards for visitors connecting their friends to the site E) requiring registration on the first visit to the site Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 74) Effective websites contain interactive tools that help find and evaluate content of interest, links to other related sites, useful information, changing promotional offers, and ________. A) celebrity endorsers B) respected columnists C) advertising for unrelated products D) enticements for customers to include their friends and contacts E) entertaining features that create excitement Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 75) Online ads that incorporate animation, video, sound, and interactivity are called ________. A) search-related ads B) rich media ads C) content-based ads D) digital catalogs E) parody ads Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 76) In ________, text-based ads and links appear alongside search engine results on sites such as Google, Yahoo!, and Bing. A) content sponsorships 22

B) digital billboards C) digital catalogs D) contextual advertising E) RSS feeds Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 77) While comparing hotel rates on Google's search engine, Brenda came across text-based ads and links alongside the search results. This form of advertising is known as ________. A) contextual advertising B) rich media ads C) content sponsorship D) catalog advertising E) social media advertising Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 78) Which of the following is true about email marketing messages? A) Email marketing messages involve sending an offer, announcement, reminder, or sample to a person living at a particular address. B) Email marketing messages involve connecting directly with carefully targeted consumers, exclusively on a one-to-one, interactive basis. C) Email marketing messages are effective in reaching the desired target market and result in low costs. D) Email marketing messages cost more per thousand people reached than mass media such as television or magazines. E) Email marketing messages create a stronger emotional connection with the customers compared to traditional direct mail. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 79) (A) ________ is an unsolicited, unwanted commercial email message that clogs up emailboxes. A) catalog 23

B) spam C) podcast D) tweet E) blog Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 80) Which of the following best describes permission-based email marketing? A) sending unsolicited, unwanted commercial email messages B) sending requests to users to join online social networking communities C) sending email pitches only to customers who "opt-in" D) offering free promotional materials to new customers E) gathering demographic details for customer databases Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 81) After selecting a sweater on the Land's End website, Kelly was asked to fill in details for the customer database. Kelly was given a form that required her to fill in her name, date of birth, and email address. Kelly then checked a box that was next to the following statement: "Yes, I would like to receive weekly promotional information from Land's End online." Which of the following practices is evident from this scenario? A) email hosting service B) email spoofing C) catalog marketing D) contextual advertising E) permission-based email marketing Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 82) Randy keeps getting unwanted and annoying emails from several marketing firms unknown to him. The number of these emails is alarmingly high in his inbox. Which of the following best describes these emails? A) malware B) adware 24

C) Trojan D) firewall E) spam Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 83) ________ involves creating a video, email, mobile message, advertisement, or other marketing event that is so infectious that customers will seek it out or pass it along to their friends. A) Telemarketing B) Omni-channel marketing C) Integrated marketing D) Viral marketing E) Email marketing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 84) Uptown-Clean Crew is a company that provides house-cleaning services in major urban and suburban areas. Marketers at Uptown-Clean Crew developed a short, humorous video promoting the company's services and posted it online. Soon the video was a rage as customers who saw the video found it hilarious and they passed it on to their friends and colleagues calling it the "Uptown comedy." Which form of marketing is illustrated from this scenario? A) telemarketing B) viral marketing C) integrated marketing D) omni-channel marketing E) smartphone marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 85) What is a disadvantage of a viral success? A) Many people will see the marketing message. B) The cost per exposure is relatively low. C) Word-of-mouth is strong. 25

D) Publicity is always good. E) Marketers have little control over where the message ends up. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 86) Clenzo is a company that provides house cleaning services in major urban and suburban areas. Marketers at Clenzo developed a short, humorous video promoting the company's services and hope that customers who see the video will be so entertained that they will pass the video on to their friends and colleagues. The marketers at Clenzo are using techniques to facilitate ________. A) direct-mail marketing B) viral marketing C) catalog marketing D) contextual advertising E) display advertising Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 87) Which of the following statements is true of viral marketing? A) Marketers have significant control over where their viral messages end up. B) Viral marketing gives consumers online places to congregate, socialize, and exchange views. C) Because customers find and pass along the message, viral marketing can be very inexpensive. D) In viral marketing, links appear alongside search engine results on sites such as Google and Bing. E) Viral marketing messages are blocked by most search engines, security software, and social networking sites. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 88) Which of the following is most likely a disadvantage of viral marketing? A) Viral marketing usually takes time to make an impact. B) Viral marketing is very inexpensive. C) Marketers have little control over who receives the viral message. D) Viral marketing messages are offensive to the audiences who are not a part of the targeted 26

market. E) Viral marketing messages are blocked by most search engines. Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 89) Which of the following is most likely an advantage of viral marketing? A) Viral marketing reinforces consumers' attitudes about a brand. B) Most messages are likely to "go viral." C) Consumers want to be a part of viral marketing. D) Viral marketing can easily be successfully accomplished. E) Viral marketing produces engagement and positive exposure for a brand. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 90) Which of the following is a reason a consumer would follow a company's blog? A) The blog offers fresh insights or new ideas about the company or products. B) The blog provides the consumer with familiar information. C) The blog allows consumers to communicate with each other. D) A well-followed blog gives the company influence in the marketplace. E) Consumers know that companies want them to follow the blog postings. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 91) Coca-Cola Unbottled is an online forum where Coke fans and company insiders can "look at what's beyond the bottle," sharing posts on everything from new products and sustainability initiatives to fun and inspiring fan stories. This is an example of a ________. A) blog B) catalog C) search engine D) spam post E) viral message Answer: A AACSB: Analytical thinking Skill: Concept 27

Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 92) ________ are online journals where people post their thoughts, usually on a narrowly defined topic. A) Social networks B) Blogs C) Forums D) Search engines E) Web directories Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 93) Which of the following is a benefit of using blogs as marketing tools for companies? A) Blogs provide companies with a platform to help portray wider merchandise. B) Blogs are online selling platforms for people located in hard-to-reach places. C) Blogs help reach a wider audience compared to other online direct marketing tools. D) Demographic information about customers can be easily discovered. E) Blogs can offer a fresh, original, personal, and cheap way to enter into consumer conversations. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 94) Which of the following is a disadvantage of using blogs as a marketing tool? A) The blogosphere is cluttered and difficult to control. B) Advertising on a blog is typically expensive and time consuming. C) Using blogs as a marketing tool offers minimum reach to a target audience. D) Blogs, when used as a marketing tool, have a low rank in Web directories and search engines. E) Blogs do not provide the kind of personalized approach that today's marketers are looking for. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate

95) While blogs are a fundamentally a consumer-controlled medium, marketers can ________. A) directly contact customers through them B) use insights from them to improve their marketing programs C) offer special promotions to new customers D) retrieve research data from clicks in them E) provide content Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 96) What is a significant issue for social media and for companies using it as a marketing tool? A) measuring viewership B) creating content C) identifying target markets D) monetizing the tool E) recognizing effective social media sites Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 97) While shopping at KelfanDesigns.com, Shelly came across a checkbox beside which a statement said, "I want to receive promotional offers from KelfanDesigns.com." Which of the following types of marketing is illustrated in this example? A) telemarketing B) viral marketing C) direct response television marketing D) contextual advertising E) permission-based email marketing Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 98) Consumers welcome email marketing messages; opportunities to control the messages they receive are frequently ignored. Answer: FALSE AACSB: Analytical thinking Skill: Concept 29

Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 99) Email can be the ultimate direct marketing tool, as it lets marketers send highly targeted, tightly personalized, relationship-building messages. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 100) Spam is unsolicited, unwanted commercial email messages that clog up users' emailboxes. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 101) Viral marketing allows marketers to send tailored messages to targeted customers who have chosen to receive them. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 102) Blogs can be used to appeal to specific special-interest groups, about almost any topic. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 103) Social media marketing can be inexpensive for companies to use. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 30

104) Social media sites primarily exist for broad topics, making it difficult for marketers to appeal to smaller communities and niche markets. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 105) While many consumers welcome the convenience that mobile marketing ads offer, marketers still must be smart about how they engage people on mobile devices. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 106) Describe how marketers can engage in social media. Answer: Marketers can engage in social media in two ways: They can use existing social media, or they can set up their own. Using existing social media seems easiest, but many companies have also created their own online brand communities. AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 107) Describe two ways that marketers can participate in online social networks. What are the challenges and advantages of these approaches? Answer: Marketers can engage in social media in two ways: They can use existing social media, or they can set up their own. Using existing social media seems the easiest. Thus, many brands now use a host of social media sites. Although large social media networks are most familiar, countless niche social media have also emerged. Niche online social networks cater to the needs of smaller communities of likeminded people, making them ideal vehicles for marketers who want to target special interest groups. Beyond these independent social media, many companies have created their own online brand communities. Using social media presents both advantages and challenges. On the plus side, social media are targeted and personal, interactive, immediate, and timely. Social media can be very cost effective. Perhaps the biggest advantage of social media is their engagement and social sharing capabilities. Social media are especially well suited to creating customer engagement and community–for getting customers involved with the brand and with each other. Social media marketing also present challenges. First, many companies are still experimenting with how to use them effectively, and results are hard to measure. Second, such social networks are largely user controlled. The company's goal in using social media is to make the brand a part of consumers' conversations and their lives. However, marketers must become a valued part of 31

the online experience by developing a steady flow of engaging content. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 108) Explain the strengths of mobile marketing from the marketer's point of view. Answer: Companies can use mobile marketing to stimulate immediate buying, make shopping easier, enrich the brand experience, or all of these. It lets marketers provide consumers with information, incentives, and choices at the moment they are expressing an interest or when they are in a position to make a buying choice. The rich-media ads can create substantial engagement and impact. They can enrich the brand experience by providing information or even entertainment. They can target "anytime, anywhere, and everywhere." AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Challenging 109) Provide two reasons why companies are shifting more of their marketing dollars to online advertising. Answer: As consumers spend more and more time online, companies are shifting more of their marketing dollars to online advertising to build brand sales or attract visitors to their Internet, mobile, and social media sites. The main forms of online advertising are display ads and searchrelated ads. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 110) Describe the largest form of online advertising. Answer: The largest form of online advertising is search-related ads, or contextual advertising. Text- and image-based ads and links appear atop or alongside search engine results on sites such as Google, Yahoo!, and Bing. A search advertiser buys search terms from the search site and pays only if consumers click through to its site. AACSB: Analytical thinking Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 111) Explain the goal of viral marketing. Answer: Viral marketing is the digital version of word-of-mouth marketing. Viral marketing involves creating videos, ads, or other marketing content that are so infectious that customers 32

will want to pass them along to their friends. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 112) Explain how a company benefits from monitoring the blogosphere. Answer: They can offer a fresh, original, personal, and cheap way to enter into consumer online and social media conversations. Beyond their own brand blogs, many marketers use third-party blogs to help get their messages out. Marketers can use insights from consumer online conversations to improve their marketing programs. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 113) Identify the major advantage of the following forms of digital and social media marketing: websites, viral marketing, email, blogs, social media, and mobile ads and apps. Answer: websites are designed to engage the customers. Marketing websites want to move them closer to a direct purchase or other marketing outcomes. Branded community websites want to provide content that builds closer customer relationships and generates engagement with and between the brand and its customers. Viral marketing can be very inexpensive when customers find and pass along the message or promotion. Email lets marketers send highly targeted, tightly personalized, relationship-building messages. Blogs can offer a fresh, original, personal, and cheap way to enter into consumer online and social media conversations. Social media first and foremost are targeted and personal. Mobile ads and apps are used to increase convenience for customers, whether in making a purchase or accessing information. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Challenging 114) Compare and contrast the purpose and content of a branded community website to that of a marketing website. Answer: Branded community websites are designed to present brand content that engages consumers and builds closer customer relationships, rather than to sell the company's products directly. Such sites typically offer a rich variety of brand information, videos, blogs, activities, and other features that build closer customer relationships and generate engagement with and between the brand and its customers. In contrast, marketing websites are designed to engage consumers in an interaction that will 33

move them closer to a direct purchase. A marketing website allows customers to view, research, and purchase specific items. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 115) What are the characteristics of a successful website? Answer: To attract visitors, companies aggressively promote their websites in offline print and broadcast advertising and through ads and links on other sites. The key is to create enough engaging and valued content to get consumers to come to the site, stick around, and come back again. At the very least, a website should be easy to use and visually appealing. Ultimately, however, websites must also be USEFUL. When it comes to online browsing and shopping, most people prefer substance over style and function over flash. Thus, effective websites contain deep and useful information, interactive tools that help find and evaluate content of interest, links to other related sites, changing promotional offers, and entertaining features that lend relevant excitement. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 116) What are the strengths and weaknesses of email marketing? Answer: Email is still the king as people send out 406 million emails every day. Thanks to low costs, email marketing brings one of the highest marketing returns on investment. It lets marketers send highly targeted, personalized, relationship-building messages that are colorful, inviting, and interactive. However, spam has produced consumer irritation and frustration given its ubiquity. Marketers want to add value for consumers but not be intrusive and annoying. AACSB: Application of knowledge Skill: Concept Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate Refer to the following scenario to answer questions 117, 118, 119, and 120. The Treble Clef sells music books, musical instruments, and novelty gifts of a musical nature. In recent years, owner Gary Zahn has served as the local representative of several musical instrument manufacturers, providing a contact person for three local schools. He sends a sample of a manufacturer's products to schools that request a demonstration or presentation. "If we don't have it, we can definitely get it for you," Gary tells all Treble Clef visitors and customers. Most walk-ins are particularly interested in a specific piece of sheet music from a particular era 34

or just browsing among the hundreds of music knick-knacks in the store. Gary spends most of his time making presentations to beginners at the local schools and making biweekly visits to the schools to deliver instruments, make minor repairs, or pick up instruments to ship to the manufacturer for more complicated repairs. After establishing a loyal customer base, Gary was convinced that a Treble Clef website could benefit a variety of customers. He began with a simple website that provided information about the store and the types of gifts and services available. The site received so much response that Gary added a question-and-answer option. Questions poured in, ranging from "Where can I get sheet music for 'Hello, Dolly'?" to "Do you carry clarinet reeds?" to "My saxophone needs two new pads. When will you be at Elmhurst School to repair it?" The website is now able to accept credit card orders, and gifts can even be wrapped and shipped for no extra charge. "This website idea was fantastic!" Gary admitted. "It allows us to be so responsive. And our novelties sales have doubled!" Gary was now trying to decide whether putting a storefront on Amazon.com would be worth the time and effort. The Treble Clef had a Facebook page, but Gary rarely made any updates and also paid little attention to the feedback. He was now considering hiring a person to do all of the store’s digital marketing.

117) In addition to sending samples of sheet music to schools, Gary sends school music directors messages with links to sample digital clips of the compositions. What kind of marketing is this? A) email marketing B) viral marketing C) channel marketing D) mobile marketing E) catalog marketing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Challenging 118) Gary wants to expand the reach of his business. An effective approach to reaching the most likely potential customers would be ________ marketing. The message will include a link to Treble Clef's website. A) email B) viral C) kiosk D) mobile E) catalog Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how 35

companies employ them to create an omni-channel marketing strategy. Difficulty: Challenging 119) The Treble Clef’s primary digital marketing tool is its website. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Challenging 120) Explain how Gary might use blog posts to increase traffic to his website. Answer: Blogs offer a fresh, original, personal, and inexpensive way to engage in online and social media conversations with consumers and to build customer relationships. If Gary posts frequently with interesting content then he could pull consumers to his site and enhance customer relationships, increase sales, and introduce new products. AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Challenging 121) Charlie Putnam received an email promoting a new financial services institution that offers surprisingly low mortgage rates. The email simply asked customers to provide their address, date of birth, social security number, and current mortgage information in order to receive a free loan quote. Suspicious of the offer, Charlie researched the company and discovered that the email was a fraud. This is an example of ________. A) cyberbullying B) phishing C) adware D) spamdexing E) viral marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Challenging 122) Which of the following is generally regarded as the toughest issue of public policy and ethics confronting the direct marketing industry? A) customization of search results B) unwanted email spam C) invasion of consumer privacy D) increasing costs of browsing 36

E) restrictions on digital offers and discounts Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 123) Josh received an email stating that he had won a lottery of $500,000 from Lottors Corporation. The email asked Josh to send his bank account details and social security number to transfer cash directly to his account. Josh did not remember buying any lottery tickets, and so was apprehensive about providing his bank details without verification. Which of the following is illustrated from this scenario? A) adware B) viral marketing C) telemarketing D) cyberbullying E) phishing Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Challenging 124) Which of the following is a type of identity theft that uses deceptive emails and fraudulent websites to fool consumers into revealing their personal data? A) bait-and-switch B) cyber spying C) viral marketing D) phishing E) spam Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 125) All of the following are internet marketing concerns EXCEPT ________. A) financial scams B) access by vulnerable or unauthorized groups C) phishing D) identity theft E) secure online and digital websites Answer: E 37

AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Moderate 126) What action do consumers continue to perform even though a majority are concerned with identify theft? A) shopping online B) searching for product information C) reading reviews from friends on Facebook D) sending and responding to email messages E) watching videos Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 127) Consumers' names and additional information likely become part of ________ whenever they enter a sweepstakes, apply for a credit card, visit a website, or send a tweet. A) other consumers' contact lists B) telemarketers' lists C) their computer's cookie history D) a company's database E) the FTC's surveys regarding online privacy Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 128) To decrease direct marketing abuses, government agencies are investigating do-not-call lists, do-not-mail lists, do-not-track-online lists, and ________. A) claimed fraudulent credit card charges B) CAN-SPAM legislation C) possibly deceptive television advertising D) offerings of illegal products E) bait-and-switch offers Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. 38

Difficulty: Moderate 129) To enable customers to opt out of seeing particular ads, marketers use a(n) ________. This is added to behaviorally targeted online ads to tell consumers why they are seeing a particular ad. A) advertising option icon B) opt-in question C) X to close the ad D) survey E) questionnaire Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 130) Which of the following acts requires that website operators obtain parental consent before collecting personal information about children under the age of 13? A) Safe Children's Act of 2001 B) Children's Online Privacy Protection Act C) Children's Online Protection Act D) Adam Walsh Child Protection and Safety Act E) Children's Act for Responsible Employment Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 131) TRUSTe, a nonprofit self-regulatory organization, works with other companies to audit online privacy and security measures. It lends its TRUSTe privacy seal to all the following communication channels that meet its privacy and security standards EXCEPT ________. A) mobile apps B) email marketing C) telemarketing D) websites E) social media Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy

132) The ad industry uses an advertising option icon that allows consumers to opt out of seeing a particular ad. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 133) One common form of Internet fraud is phishing, a type of identity theft that uses deceptive emails and fraudulent online sites to fool users into divulging personal data. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 134) Because of strict consumer privacy regulations, invasion of privacy is no longer a concern for the direct marketing industry. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 135) The Children's Online Privacy Protection Act requires online operators targeting children to post privacy policies on their sites and notify parents about any information they are gathering and obtain parental consent before collecting information from children under age 13. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 136) One recent survey found that 77 percent of U.S. consumers are very concerned about data privacy. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 40

137) In 2021, the Internet Crime Complaint Center (IC3) received close to 2,850,000 complaints from the American public, with reported losses exceeding $16.9 billion. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 138) Although Facebook, Twitter, Instagram, and other social networks allow no children under age 13 to have profiles, all have significant numbers of underage users. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Easy 139) Internet marketing practices have raised a number of ethical and legal questions. Why is invasion of privacy perhaps the number one online marketing concern? Answer: Website activities provide extensive personal information. This may leave consumers open to information abuse if companies make unauthorized use of the information in marketing their products or exchanging databases with other companies. Critics worry that through database marketing, marketers know too much about consumers' lives and may not use that information responsibly, taking unfair advantage of consumers. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Moderate 140) What are the antitrust concerns related to the social media giants? Answer: Online behemoths like Apple, Amazon, and Google have grown at tremendous rates. Each of them currently has a market value more than $1.5 trillion, easily topping “old economy” giants such as ExxonMobil. Policy makers worry that their size and dominance let them act as monopolies.. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 17.4: Identify and discuss the public policy issues presented by digital marketing. Difficulty: Moderate Quantitative Questions 1) Firm X devoted 40% of its advertising budget to digital media and sales increased by 12%. 41

How much additional revenue is the firm generating due to the increased digital media focus if the firm’s total advertising budget was $42 million and sales before the switch were $867 million? A) $100.26 million B) $104.04 million C) $112.00 million D) $113.28 million E) $115.23 million Answer: B; You compute this by multiplying revenue before the switch by 12%. So, $867 x .12 = $104.04 million. AACSB: Analytical thinking Skill: Application Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 2) Coca-Cola’s Facebook page has more than 109 million fans. The two main corporate CocaCola accounts draw 4.4 million Twitter followers, 2.8 million Instagram followers, 3.7 million YouTube subscribers, and 6.7 million LinkedIn followers. Coca-Cola fills its always-on, endlessly connected websites and social media pages with interactive content designed to connect consumers with the brand and the times. How many total followers does Coca-Cola have across these digital platforms? A) 126.6 million B) 119.9 million C) 116.2 million D) 111.8 million E) 109.0 million Answer: A; Sum the fans and followers across all platforms, 109 + 4.4 + 2.8 + 3.7 + 6.7 = 126.6 million. AACSB: Analytical thinking Skill: Application Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 3) What percentage of the world’s 8 billion people is connected to the internet if there are 4.7 billion internet users and 4.2 billion social media users? A) 50.00% B) 52.50% C) 58.75% D) 61.25% E) 65.50% Answer: C; You compute this by dividing the 4.7 billion users by the world’s population of 8 billion. So, 4.7/8 = .5875, or 58.75%. AACSB: Analytical thinking Skill: Application 42

Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Easy 4) Hi-Tech Product Firm X maintains a website where users can search the database for answers to their tech problems. The firm estimates that the website keeps it from having to hire and train another 10 service reps. The annual cost to hire and train one service rep, including their annual compensation, is $74,300. The website costs the firm about $250,000 a year to maintain. What is the annual savings to Hi-Tech Product Firm X of keeping this website active and current? A) $250,000 B) $325,000 C) $481,000 D) $493,000 E) $743,000 Answer: D; Annual savings = (10 x $74,300) - $250,000 = $493,000. AACSB: Analytical thinking Skill: Application Objective: LO 17.1: Define digital marketing and discuss its rapid growth and benefits to customers and companies. Difficulty: Moderate 5) Firm ZZZ contracted with a social media platform to run a digital ad. Firm ZZZ pay on “per click” basis. The cost per click falls as more people click on the ad. The first 10,000 clicks cost $1 each and then each successive 10,000 clicks cost 10 cents less per click. How much will Firm ZZZ pay for 34,500 clicks this month? A) $3,015 B) $29,500 C) $27,000 D) $34,500 E) $30,150 Answer: E; The total cost = ($1 x 10,000) + ($0.90 x 10,000) + ($0.80 x 10,000) + ($0.70 x 4,500) = $10,000 + $9,000 + $8,000 + $3,150 = $30,150. AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Moderate 6) Firm ZZZ contracted with a social media platform to run a digital ad. Firm ZZZ pay on “per click” basis. The cost per click falls as more people click on the ad. The first 10,000 clicks cost $1 each and then each successive 10,000 clicks cost 10 cents less per click. Approximately 22% of the clicks result in sales that averages $87 each. How much revenue will Firm ZZZ generate if there were 34,500 clicks this month? A) $552,250 B) $630,180 C) $660,330 43

D) $2,341,170 E) $3,001,500 Answer: C; You compute this by multiplying the successful clicks by $87. So, 34,500 x .22 x $87 = $660,330. AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Moderate 7) Firm ZZZ contracted with a social media platform to run a digital ad. Firm ZZZ pay on “per click” basis. The cost per click falls as more people click on the ad. The first 10,000 clicks cost $1 each and then each successive 10,000 clicks cost 10 cents less per click. Approximately 22% of the clicks result in sales that averages $87 each. How much revenue net of the click costs will Firm ZZZ generate if there were 34,500 clicks this month? A) $552,250 B) $630,180 C) $660,330 D) $2,341,170 E) $3,001,500 Answer: B; You compute click revenue by multiplying the successful clicks by $87. So, 34,500 x .22 x $87 = $660,330. The click costs are = ($1 x 10,000) + ($0.90 x 10,000) + ($0.80 x 10,000) + ($0.70 x 4,500) = $10,000 + $9,000 + $8,000 + $3,150 = $30,150. So, the revenue net of click costs = $660,330 - $30,150 = $630,180. AACSB: Analytical thinking Skill: Application Objective: LO 17.2: Discuss the consumer and market research required to design an effective digital marketing campaign. Difficulty: Challenging 8) Assume search ad spending grows by 15% a year for the next three years. How much will it be in three years if it is now $255 billion? A) $293.3 billion B) $337.2 billion C) $353.1 billion D) $387.8 billion E) $402.7 billion Answer: D; FV = $255 billion x (1 + .15)3 = $387.8 billion. AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate 9) The average person receives 121 emails per day and 85% of those are spam emails. How many legitimate emails do consumers receive each day? 44

A) 99 B) 12 C) 94 D) 18 E) 103 Answer: D; You compute this by multiplying the total emails by the ones that are NOT spam. So, 121 x .15 = 18.15, or 18 emails per day. AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Easy 10) Popular influencer Unknown Person receives $11,000 to promote a product. She promotes an average of 67 products a year on her blog. How much does she earn in monthly revenue from these promotions? A) $55,456 B) $58,984 C) $61,417 D) $62,111 E) $65,898 Answer: C; You compute this by multiplying the $11,000 per promotion x 67 promotions in then dividing by 12. So, ($11,000 x 67)/12 = $61,417. AACSB: Analytical thinking Skill: Application Objective: LO 17.3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 18 Creating Competitive Advantage 1) Strategies that strongly position the company against competitors and give it the greatest possible competitive advantage are called_______ A) objectives B) competitive marketing strategies C) guidelines D) strengths and weaknesses E) reaction patterns Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 2) __________requires delivering more value and satisfaction to target customers than competitors do A) Competitor analysis B) Customer relationship C) Competitive marketing D) Competitive advantage E) Customer identification Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 3) (A)_________is the process of identifying, assessing, and selecting key competitors. A) Competitive advantage B) Competitor analysis C) Economies of scale D) Entrepreneurship E) Industry analysis Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy

4) Ritz-Carlton competes against other hotels. Even more broadly, competitors might include all companies making products that supply the same service. Here Ritz-Carlton would see itself competing not only against other hotels but also against businesses large and small that supply rooms for busy travelers, from Airbnb to private bed- and-breakfasts. This is an example of _____

A) identifying competitors B) market leader strategies C) organizational evaluation D) perfect competition E) quantitative analysis Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 5) Companies can identify their competitors from both ________ points of view. A) industry and market B) product and customer C) customer and location D) location and product E) product and strategy Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 6) Amazon at first defined itself in product terms—as online bookstore competing against physical bookstores by offering a huge selection of books, conveniently available and at marketbeating prices. Before long, however, Amazon adopted a broader view. It defined itself as “the Earth’s most customer-centric company,” where customers could find and discover anything they might want to buy online. This is an example of _____ A) the market concept of competition B) a niche strategy C) a market follower strategy D) the competitor concept E) product adaptation Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 2

7) A company wants to know the relative importance that a competitor places on all of the following EXCEPT, A) current profitability B) market share growth C) cash flow D) technological leadership E) company history Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 8) The once-blazing-hot video-rental superstore Blockbuster didn’t go bankrupt at the hands of other traditional brick-and-mortar retailers. Instead, it fell victim first to unexpected competitors such as direct marketer Netflix. This is an example of ________. A) a blue ocean strategy B) market leadership C) competitor analysis D) competitor myopia E) differentiation Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 9) Fosters and Mason House, two major coffee brands, competed neck and neck based on their product attributes and price promotions. They were soon blindsided by the arrival of Starcoffeez, which focused more on the coffee experience rather than the coffee. This resulted in major losses for the two companies. This is an example of ________. A) self-competition B) competitor myopia C) competitor backlinking D) marketing myopia E) perfect competition Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate

10) Nintendo, producer of the Wii video game console, might define its competitors as other makers of physically interactive video games. But from a(n) ________ point of view, it would include all firms making physically interactive recreational products. A) industry B) market C) segment D) niche E) interdependent Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 11) A company that pursues low-cost leadership will react much more strongly to a competitor’s cost-reducing manufacturing breakthrough than to the same competitor’s increase in advertising. This example shows that____ A) each competitor has a mix of objectives. B) competitors’ have the same mix of objectives C) companies fall into competitor myopia D) cash flow is the main objective E) technological leadership is a competitor’s main objective Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 12) A competitor’s objectives, strategies, and strengths and weaknesses suggest all of the following EXCEPT A) reactions to company moves B) reactions to price cuts C) reactions to promotion increases D) reactions to company history E) reactions to new product introduction Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 13) The existence of competitors results in several strategic benefits to include all EXCEPT. A) sharing costs of market development 4

B) decreasing total demand C) sharing costs of product development D) serving less-attractive segments E) leading to more product differentiation Answer: B AACSB: Application of knowledge Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 14) Country Kitchen and Perkins are both a chain of family restaurants featuring diner-like menus with reasonably priced items. These companies are in the same ________. A) focus group B) control group C) strategic group D) target group E) experimental group Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 15) The competitive intelligence system includes all of the following EXCEPT____ A) identifying the competitive information needed B) identifying the best sources of information C) withholding information from decision makers D) collecting information from the field—sales force, suppliers E) checking information for validity and reliability Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 16) Cinnabon's realization that it doesn't just sell cinnamon rolls but instead sells "irresistible indulgence" is an example of a firm taking a(n) ________. A) narrow view B) market view C) industry view D) firm view E) competitor view Answer: B 5

AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 17) In the major home appliance industry, Whirlpool, Maytag, and LG all follow similar strategies in the same market. These firms would be considered a(n) ________. A) appliance group B) niche group C) strategic group D) market group E) target group Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 18) Rather than competing head-to-head with established competitors, many companies seek out unoccupied positions in _________market spaces. A) uncontested B) international C) strong D) differentiated E) highly-competitive Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 19) Spirit Airlines competes strictly on rock- bottom prices, even if that means sacrificing service and extras. Its “Bare Fare” prices run as much as 90 percent lower than those of competing airlines. Thanks to its industry-lowest cost per seat-mile, Spirit still reaps industryleading profit margins. Spirit’s rebellious pricing causes headaches for competitors that can’t match its low fares and make decent margins. Spirit is an example of a________. A) bad competitor B) good competitor C) entrepreneurial competitor D) intrapreneurial competitor E) market-based competitor Answer: A 6

AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 20) A market research firm conducts a survey of soft-drink consumers to assess Pepsi's and Coke's strengths and weaknesses in attributes valued by both company's target customers. The market research firm is using a ________. A) customer lifetime value estimation B) global marketing strategy C) competitive marketing strategy D) customer value analysis E) blue ocean strategy Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 21) Benchmarking is a powerful tool for increasing a company’s ___________. A) market share. B) profitability. C) market segments D) competitiveness E) interests Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 22) To gain competitive advantage, a company should do all of the following EXCEPT A) examine how its offer compares to that of its competitors B) compare an offer to that of its competitors in each customer segment C) find out how to deliver greater value than competitors do D) deliver value at the same price as competitors and decrease market share E) deliver greater value to justify a higher price and increase profits Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 7

23) . An example of blue ocean competitors is the recent surge of _____ This is called a________. A) horizontal integration approach B) commercialization process C) direct-to-consumer (DTC) brands. D) customer-related approach E) good competitor approach Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 24) Rather than competing against deeply entrenched, old-line credit card–processing companies, Square reinvented a card reader and the services behind it for the underserved small and medium-sized business (SMB) marketspace This is an example of (a)_________ A) blue ocean strategy B) differentiation C) new uses for existing products D) value innovation E) market-leader strategy Answer: E AACSB: Application of knowledge Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 25) Tomorrow's leading companies will succeed by seeking out unoccupied positions in uncontested market spaces. Such strategic moves, termed ________, create powerful leaps in value for both the firm and its buyers, creating new demand for new products. A) customer lifetime value B) customer equity C) value innovation D) market segmentation E) customer intimacy Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 26) Which of the following is the first step taken in the competitive intelligence system? 8

A) collect published data and information from the field B) check, interpret, and organize gathered information C) identify the vital types of competitive information needed D) respond to inquiries from managers about competitors E) create a new brand image and marketing concept for the firm Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 27) The competitive intelligence system does all of the following EXCEPT ________. A) sends relevant information to decision makers and responds to inquiries from managers B) takes action against the competitors once the data has been analyzed C) collects information from the field and published data D) checks the information for validity, interprets it, and organizes it E) identifies vital types of competitive information needed and the best sources Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Challenging Refer to the scenario below to answer questions 28-30. Essential-Beauty is a rapidly growing firm that manufactures women's makeup, perfumes, and nail-care products. The company has established itself as a high-end cosmetic product brand available at most national drug stores. In the past, almost all of the advertising for EssentialBeauty has been in women's fashion magazines. The firm is now launching a new line of skin care products, ranging from facial cleansers to body lotion. These products are designed to be marketed to a broader audience, so the marketing team is exploring the effectiveness of different promotional mixes. 28) Essential-Beauty considers one of its most important competitors to be Look-Lovely, another marketer of high-end makeup and skin care products sold in drug stores. Based on this, it is most accurate to say that Look-Lovely and Essential-Beauty are both ________. A) niche marketers B) in the same strategic group C) distant competitors D) overall cost leaders E) market followers Answer: B AACSB: Analytical thinking 9

Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Challenging 29) Essential-Beauty e-mailed a survey to a group of its most frequent, loyal customers. The survey asked what makeup and skin care characteristics were most important to them. The company's marketing staff then ranked the performance of Essential-Beauty products in each of these categories. Essentials was conducting a(n) ________. A) customer lifetime value survey B) entrepreneurial marketing strategy C) intrapreneurial marketing strategy D) customer value proposition E) customer value analysis Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Challenging 30) How should Essential-Beauty identify its competitors? Answer: Companies can identify their competitors from an industry point of view. They might see themselves as being in the oil industry, the pharmaceutical industry, or the beverage industry. A company must understand the competitive patterns in its industry if it hopes to be an effective player in that industry. Companies can also identify competitors from a market point of view. Here they define competitors as companies that are trying to satisfy the same customer need or build relationships with the same customer group. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 31) A group of firms in an industry following the same or a similar strategy in a given target market is known as a strategic group. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 32) When benchmarking you typically compare your firm to the leading firms in the industry. Answer: TRUE AACSB: Analytical thinking 10

Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 33) Benchmarking involves comparing the firm's products and processes to those of the competitors to identify best practices to improve quality and performance. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 34) Strategic moves—termed value innovation—create powerful leaps in value for both the firm and its buyers, creating all-new demand and rendering rivals obsolete. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 35) As a first step, companies can gather data on each competitor’s goals, strategies, and performance over the past few years. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 36) The aim of customer value analysis is to determine the benefits that target customers value and how customers rate the relative values of various competitors’ offers. Answer: TRUE AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate

37) The goal of a "blue ocean strategy" is to make competition irrelevant. Answer: TRUE 11

AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 38) Companies can identify their competitors from an industry point of view. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 39) Knowing a competitor’s mix of objectives reveals whether the competitor is satisfied with its current situation and how it might react to different competitive actions Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 40) A competitive analysis involves first identifying and assessing competitors and then selecting which competitors to attack or avoid. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 41) Discuss the different levels at which competitors can be identified. Answer: At the narrowest level, a company can define its competitors as other companies offering similar products and services to the same customers at similar prices. However, the company might also define competitors as all firms making the same product or class of products. Even more broadly, competitors might include all companies making products that supply the same service. Finally, and still more broadly, competitors might include all companies that compete for the same consumer dollars. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Easy 12

42) Explain how the United States Postal Service has "competitor myopia." Answer: The U.S. Postal Service loses billions of dollars every year, but direct competitors such as FedEx and UPS aren't the problem. Instead, indirect competition from the Internet has hurt the U.S. Postal Service's revenue, as more people e-mail and make online transactions rather than mail transactions. AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Challenging 43) Give examples of competitor objectives and discuss the importance of knowing a competitor's mix of objectives. Answer: Each competitor has a mix of objectives. The company wants to know the relative importance that a competitor places on current profitability, market share growth, cash flow, technological leadership, service leadership, and other goals. Knowing a competitor's mix of objectives reveals whether the competitor is satisfied with its current situation and how it might react to different competitive actions. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 44) Describe competition among strategic groups. Answer: There is rivalry among strategic groups. First, some strategic groups may appeal to overlapping customer segments. For example, no matter what their strategy, all major appliance manufacturers will go after the apartment and home builder’s segment. Second, customers may not see much difference in the offers of different groups; they may see little difference in quality between LG and Whirlpool. Finally, members of one strategic group might expand into new strategy segments. Thus, LG’s Signature line of appliances competes in the premium-quality, premium-price category with Viking and Sub-Zero. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 45) How can companies learn about their competitors’ strengths and weaknesses? Answer: Companies normally learn about their competitors’ strengths and weaknesses through secondary data, personal experience, and word of mouth. They can also conduct primary marketing research with customers, suppliers, and dealers. They can check competitors’ online and social media sites. Or they can try benchmarking themselves against other firms, comparing the company’s products and processes to those of competitors or leading firms in other industries to identify best practices and find ways to improve quality and performance. Benchmarking is a powerful tool for increasing a company’s competitiveness. 13

AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 46) What is an example of blue ocean competitors? Answer: An example of blue ocean competitors is the recent surge of direct-to-consumer (DTC) brands. Instead of than competing head-to-head with established competitors in retail stores, DTC brands have staked out new competitive space by selling and shipping directly to consumers through online and mobile channels. DTC brands have found success in categories ranging from beauty and personal care, eyewear, apparel, and food to home furnishings and fitness. Just a few examples include Dollar Shave Club and Harry’s (razors and shaving products), Peloton (fitness equipment and programs), Warby Parker (eyewear), Casper (mattresses and bedding), Allbirds (environmentally friendly foot-wear), and BarkBox (dog toys, treats, and goodies). By bypassing intermediaries, DTC companies can cut costs and lower prices, offer greater convenience, build closer direct customer relationships, and deliver hyperfocused offerings. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 47) Discuss why a company really needs and benefits from competitors. Answer: The existence of competitors results in several strategic benefits. Competitors may share the costs of market and product development and help to legitimize new technologies. They may serve less-attractive segments or lead to more product differentiation. Finally, competitors may help increase total demand. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 48) Discuss the need to understand competitors as well as customers through competitor analysis. Answer: In order to prepare an effective marketing strategy, a company must consider its competitors as well as its customers. Building profitable customer relationships requires satisfying target consumer needs better than competitors do. A company must continually analyze competitors and develop competitive marketing strategies that position it effectively against competitors and give it the strongest possible competitive advantage. Competitor analysis first involves identifying the company's major competitors, using both an industry-based and a market-based analysis. The company then gathers information on competitors' objectives, strategies, strengths and weaknesses, and reaction patterns. With this information in hand, it can select competitors to attack or avoid. Competitive intelligence must be collected, interpreted, and 14

distributed continuously. Company marketing managers should be able to obtain full and reliable information about any competitor affecting their decisions. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 49) Although competition is most intense within a strategic group, explain why there is also rivalry among groups. Give examples. Answer: First, some of the strategic groups may appeal to overlapping customer segments. For example, no matter what their strategy, all major appliance manufacturers will go after the apartment and home builders segment. Second, the customers may not see much difference in the offers of different groups; they may see the little difference in quality between GE and Whirlpool. Finally, members of one strategic group might expand into new strategy segments. Thus, General Electric's Monogram and Profile lines of appliances compete in the premiumquality, premium-price line with Viking and Sub-Zero. AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 50) Marketing managers need a deep understanding of a given competitor's mentality if they want to anticipate how the competitor will act or react. Discuss the different ways competitors act or react. Why do they do so? Use examples to support your thoughts. Answer: Student answers will vary. Each competitor reacts differently. Some do not react quickly or strongly to a competitor's move. They may feel their customers are loyal; they may be slow in noticing the move; they may lack the funds to react. Some competitors react only to certain types of moves and not to others. Other competitors react swiftly and strongly to any action. For example, Procter & Gamble does not let a new detergent come easily into the market. Many firms avoid direct competition with P&G and look for easier prey, knowing that P&G will react fiercely if challenged. In some industries, competitors live in relative harmony; in others, they fight constantly. Knowing how major competitors react gives the company clues on how best to attack competitors or how best to defend the company's current positions. AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 51) An industry often contains "good" competitors and "bad" competitors. Define each term and discuss scenarios with both "good" and "bad" competitors. How might "good" competitors choose to react to "bad" competition? Answer: Student answers will vary. Good competitors play by the rules of the industry. Bad competitors, in contrast, break the rules. They try to buy share rather than earn it, take large risks, 15

and play by their own rules. For example, Yahoo! Music Unlimited sees Napster, Rhapsody, AOL Music, Amazon.com, and most other digital music download services as good competitors. They share a common platform, so that music bought from any of these competitors can be played on almost any playback device. However, it sees Apple's iTunes Music Store as a bad competitor, one that plays by its own rules at the expense of the industry as a whole. With the iPod, Apple created a closed system with mass appeal. A company might be smart to support good competitors, aiming its attacks at bad competitors. AACSB: Reflective thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Challenging 52) Discuss the functions and goals of a competitive intelligence system. Answer: The competitive intelligence system first identifies the vital types of competitive information needed and the best sources of this information. Then, the system continuously collects information from the field (sales force, channels, suppliers, market research firms, trade associations, Web sites) and from published data (government publications, speeches, articles). Next, the system checks the information for validity and reliability, interprets it, and organizes it in an appropriate way. Finally, it sends key information to relevant decision makers and responds to inquiries from managers about competitors. With this system, company managers will receive timely intelligence information about competitors in the form of phone calls, e-mails, bulletins, newsletters, and reports. In addition, managers can connect with the system when they need an interpretation of a competitor's sudden move, when they want to know a competitor's weaknesses and strengths, or when they need to know how a competitor will respond to a planned company move. AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 53) Which of the following statements is true of intrapreneurial strategy? A) Intrapreneurial companies need to build more marketing initiative encouraging employees to be more entrepreneurial B) As small companies achieve success, they inevitably move away from more-formulated marketing. C) Within a company, a single strategy exclusively applies to all different businesses and products. D) Formulated marketing seldom involves developing formal marketing strategies and adhering to them closely. E) Formulated marketing encourages more marketing initiative and "intrapreneurship" at the local level. Answer: A AACSB: Application of knowledge Skill: Concept 16

Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 54) Boston Beer Company employs a large sales force and has a marketing department that carries out market research and plans strategy. Although Boston Beer Company is much smaller and less formal in its strategy than Anheuser-Busch InBev, it has adopted many of the tools used in professionally run marketing companies. Boston Beer uses___________ A) formulated marketing B) intrapreneurial marketing C) entrepreneurial marketing D) international marketing E) blue ocean marketing Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 55) What are the stages that the approaches to marketing strategy and practice usually pass through? A) ambush marketing, multi-level marketing, and guerrilla marketing B) guerrilla marketing, ambush marketing, and affinity marketing C) multi-level marketing, undercover marketing, and evangelism marketing D) entrepreneurial marketing, formulated marketing, and intrapreneurial marketing E) undercover marketing, affinity marketing, and ambush marketing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 56) Jim Koch, founder of Boston Beer Company, whose Samuel Adams Boston Lager beer has become one of the top-selling craft beers in America, started out in 1984 brewing a cherished family beer recipe in his kitchen. Koch visualized an opportunity and took risks. Which approach to marketing strategy does this example illustrate? A) exponential marketing B) formulated marketing C) entrepreneurial marketing D) affinity marketing E) ambush marketing Answer: C AACSB: Application of knowledge Skill: Concept 17

Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 57) When Gary Hirshberg started the Stonyfield Farm yogurt company, he stated that his company could do better with less advertising, less marketing research, and more guerrilla marketing. He came up with innovative marketing ideas to promote his products such as having sales personnel dress up as large yogurt cartons to distribute free yogurt samples. Which of the following marketing strategies was being implemented by Hirshberg? A) formulated marketing B) entrepreneurial marketing C) ambush marketing D) undercover marketing E) intrapreneurial marketing Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Challenging 58) Informal ways of developing strategy include all of the following EXCEPT A) forming buyers’ clubs B) using buzz marketing C) implementing formal competitive marketing strategies D) engaging customers up close E) focusing on winning customer loyalty Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 59) Companies that have been in existence for some time often lose the marketing creativity and passion that they had at the start. They often need to refresh their marketing strategies and try new approaches, known as ________. A) multi-level marketing B) formulated marketing C) ambush marketing D) intrapreneurial marketing E) affinity marketing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on 18

creating value for customers. Difficulty: Easy 60) Many approaches to developing effective competitive marketing strategies exist. There may be ________ between the formulated side of marketing and the creative side, as creativity and passion help build and maintain success. A) collaboration B) strong disagreements C) managerial conflicts D) productive meetings E) constant tension Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 61) According to Michael Porter, what are three effective competitive positioning strategies? A) middle-of-the-roaders, focus, and overall cost leadership B) focus, differentiation, and middle-of-the-roaders C) overall cost leadership, differentiation, and middle-of-the-roaders D) overall cost leadership, differentiation, and focus E) differentiation, market segmentation, and focus Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 62) In this strategy, the company works hard to achieve the lowest production and distribution costs. Low costs let the company price lower than its competitors and win a large market share. Walmart, Lenovo, and Spirit Airlines are leading practitioners of this strategy. This strategy is called _______. A) overall cost leadership B) differentiation C) focus D) blue ocean E) market segmentation Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 19

63) Nike and Caterpillar follow a(n)__________ strategy in apparel and heavy construction equipment. They concentrate on creating a product line and marketing program that comes across as the class leader in the industry. Most customers would prefer to own these brands if their prices were not high. A) overall cost leadership B) focus C) middle-of-the-roaders D) differentiation E) blue ocean Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 64) Ritz-Carlton focuses on the top 5 percent of corporate and leisure travelers. Bose concentrates on very high-quality electronics products that produce better sound. These companies serving a few market segments well rather than going after the whole market. They use a ________strategy A) focus B) blue ocean C) overall cost leadership D) differentiation E) middle-of-the-road Answer: A AACSB: Application of knowledge Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 65) Sears, Levi-Strauss, and Holiday Inn encountered difficult times because they did not stand out as the lowest in cost, highest in perceived value, or best in serving some market segment. _________try to be good on all strategic counts but end up being not very good at anything. A) jack-of-all-trades B) middle-of-the-roaders C) niches D) red oceans E) laggards Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. 20

Difficulty: Easy 66) Using a strategy of ______ , a company such as IKEA or Walmart provides superior value by leading its industry in price and convenience. It works to reduce costs and create a lean and efficient value delivery system. A) niches B) operational excellence C) middle-of the roaders D) customer intimacy E) product leadership Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 67) Which of the following are value discipline strategies? A) operational excellence, overall cost leadership, and differentiation B) customer intimacy, operational excellence, and focus C) employee relations, product leadership, and overall cost leadership D) product leadership, customer intimacy, and focus E) operational excellence, customer intimacy, and product leadership Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 68) Using the strategy of __________ , the company provides superior value by precisely segmenting its markets and tailoring its products or services to exactly match the needs of targeted customers. A) customer intimacy B) overall cost leadership C) operational excellence D) product leadership E) differentiation Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 69) Walmart, Costco, and Southwest Airlines serve customers who want reliable, good-quality 21

products or services that are also reasonable and easily available. These companies are all known for pursuing a value discipline known as ________. A) operational excellence B) customer intimacy C) product differentiation D) product leadership E) focus Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 70) Apple has churned out one cutting-edge product after another. It all started with the sleek, affordable Apple Macintosh, the first personal computer ever to feature a graphic user interface and mouse. That was followed by an Apple-led revolution in which ground- breaking Apple product. Apple is an example of A) customer intimacy B) product differentiation C) operational excellence D) product leadership E) focus Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 71) American Express will do almost anything to build long-term customer loyalty and to capture customer lifetime value. Which of the following competitive marketing strategies is being pursued by American Express? A) consumer capitalism B) customer equity C) product differentiation D) product leadership E) customer intimacy Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 72) If a company's aim is to make its own and competing products obsolete and serve customers 22

who want state-of-the-art products and services, it is using a value discipline called ________. A) overall cost leadership B) product activation C) product binning D) product leadership E) customer intimacy Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 73) Most excellent companies focus on and excel at a single value discipline while meeting industry standards on the other two. For example, Walmart offers good customer service and an excellent product assortment. Still, it purposely offers less customer service than Nordstrom’s and focuses obsessively on _______ A) operational excellence B) customer intimacy C) product leadership D) product activation E) product binning Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 74) Each _______defines a specific way to build lasting customer relationships. A) value discipline B) marketing objective C) customer-service strategy D) competitor analysis E) customer-intimacy approach Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 75) A _______ is a firm that serves small segments not being pursued by other firms. A) surrogate consumer B) market analyst 23

C) market maven D) market nicher E) laggard Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 76) Most of the market is in the hands of the ________, the firm with the largest market share. A) market challenger B) market follower C) market leader D) market nicher E) market maven Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 77) ________ are runner-up firms that want to hold their share in an industry without rocking the boat. A) Market leaders B) Market challengers C) Market followers D) Market mavens E) Market nichers Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 78) Fifty percent of the market is in the hands of Company A, 30 percent is in the hands of Company B, 15 percent is in the hands of Company C, and the remaining 5 percent is in the hands of Company D. Based on these hypothetical numbers, Company C is the market ________. A) leader B) challenger C) follower D) nicher E) maven 24

Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 79) A runner-up firm that is fighting hard to increase its market share in an industry is a ___________ A) market follower B) market maven C) market challenger D) market nicher E) market leader Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 80) How does a small search engine compete against global powerhouses? It finds a unique place. That’s the strategy of DuckDuckGo, a plucky search engine that has carved out its own special market space. DuckDuckGo is an example of a ________. A) market follower B) market maven C) market challenger D) market nicher E) market leader Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 81) Fifty percent of the market is in the hands of Company A, 30 percent is in the hands of Company B, 15 percent is in the hands of Company C, and the remaining 5 percent is in the hands of Company D. Based on these hypothetical numbers, Company D is the market ________. A) leader B) challenger C) follower D) nicher E) maven Answer: D 25

AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 82) If a company is a market leader in one category, and a market challenger or market nicher in other categories, it will follow ________ strategies for each category. A) different B) the same C) unique D) multiple E) complex Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 83) Which of the following is a market leader strategy? A) expanding market share B) multiple niching C) full frontal attack D) following at a distance E) following closely Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 84) Home Depot invented the home-improvement superstore. However, after observing Home Depot’s success, number-two Lowe’s, with its brighter stores, wider aisles, and arguably more helpful salespeople, positioned itself as the friendly alternative to Big Bad Orange. That let follower Lowe’s substantially close the gap in sales and market share with Home Depot. This is an example of a ___________ A) market leader strategy B) competitor analysis strategy C) market follower strategy D) market nicher strategy E) market challenger strategy Answer: E AACSB: Application of knowledge Skill: Concept 26

Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 85) To remain number one, leading firms can take any of three actions. First, they can find ways to expand total demand. Second, they can protect their current market share through good defensive and offensive actions. Third, they can ________. A) focus exclusively on divestment B) evaluate current employees and reduce costs through downsizing C) run smaller companies out of business, causing them to sell out to larger firms D) try to expand their market share further, even if market size remains constant E) shut down current company locations and reopen in highly populated areas Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 86) Market challengers may launch a(n) _______, matching the competitor’s product, advertising, price, and distribution efforts. It attacks the competitor’s strengths rather than its weaknesses. A) continuous innovation strategy B) full frontal attack C) value analysis D) entrepreneurial strategy E) niche strategy Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 87) What must the market leader NOT do to protect its position? A) prevent weaknesses B) protect against competitor attacks C) fulfill its value promise D) be content with the way things are E) engage valued customers in strong relationships Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Challenging 27

88) The WD-40 Company’s knack for finding new uses has made the product one of the truly essential survival items in homes around the world. This example shows that A) a market leader strategy is to find new uses for existing products B) a market challenger should use a full-frontal attack C) a market follower should not try to challenge the market leader D) market nichers should follow market leader strategies E) a market leader should increase advertising Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 89) Market leaders can expand the market by ________ and more usage of the product. A) identifying competitors B) initiating monopolistic practices C) developing new users D) ensuring users adhere to higher standards E) initiating new rules for product users Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 90) Lovelies is the leading workout and fitness center for women. The regional chain of gyms has traditionally catered to women aged 40 and older who are interested in strength and cardiovascular training. Lovelies has recently begun promotions to bring younger women into its gyms. This is an example of how the market leader ________. A) competes with mature products B) changes its product line C) develops new rules D) develops new users E) increases competition Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 91) Which of the following is the best response a company can make to competitive threats? A) continuous innovation 28

B) surrender to the competitor C) exit from the market D) divestment E) globalization Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 92) Profitability increases as a business gains share relative to competitors in its ________. A) higher market B) direct market C) secondary market D) served market E) valued market Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 93) ________ can adopt one of two competitive strategies: they can challenge the leader, or they can play along with competitors and not rock the boat. A) Runner-up firms B) Market nichers C) Global investors D) Localized marketers E) Market developers Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 94) Although it might seem that the market leader has the most going for it, challengers often have what some strategists call a(n) ________. The challenger observes what has made the leader successful and improves upon it. A) "marketing myopia" B) "second-mover advantage" C) "absolute advantage" D) "blue ocean strategy" E) "red ocean strategy" 29

Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 95) A market challenger must first define _____ A) which competitors to challenge B) which products to develop C) whether to launch a full frontal attack D) exiting from the current market E) whether to use a blue ocean strategy Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 96) Rather than challenging head on, a challenger can make a(n) ________ attack on the competitor's weaknesses or on gaps in the competitor's market coverage. A) bypass B) frontal C) indirect D) guerrilla E) preemptive Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 97) Which of the following conditions would enable higher market share to produce higher profits? A) when unit costs drop as market share increases B) when unit costs increase as market share increases C) when production volume drops as market share increases D) when production volume remains unaltered as market share increases E) when the company fails to break even Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. 30

Difficulty: Challenging 98) Cozy Country Market entered the candle business with a unique product: a line of candles made from soy that produces less smoke and lasts up to twice as long as other candles. The firm sold this unique product exclusively to a few niches. The candles were priced at twice the cost charged for normal candles. The product was also sold online and in unconventional outlets not dominated by market leaders. In this case, Cozy Country Market was using a(n) ________ against the market leaders. A) preemptive attack B) guerrilla attack C) counter offensive attack D) indirect attack E) frontal attack Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Challenging 99) Which of the following statements is most likely true of market follower strategies? A) Market followers have the resources to expand the market by developing new users, new uses, and more usage of its products. B) Market followers must expand internationally first to ensure distribution effectiveness, cost savings, and quality control. C) Market followers should conduct indirect attacks on competitors' weaknesses to gain market share quickly and inexpensively. D) Market followers benefit from pursuing subsegments of target markets due to their limited resources. E) Market followers must keep manufacturing costs and prices low or product quality and services high. Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Challenging 100) The key idea in niching is _______ A) specialization B) advertising blitzes C) price wars D) frontal attacks E) retaliations Answer: A AACSB: Application of knowledge 31

Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 101) Market niching is profitable because the company ________. A) copies or improves on the leader's products and programs, usually with much less investment B) bears the cost of developing new products and markets, expanding distribution, and educating the market C) knows the needs of the target customer segment better than other firms that casually attempt to sell to the same segment D) either keeps its manufacturing costs and prices low or its product quality and services high E) can achieve economies of scale much faster by selling the same product to the global market Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 102) Whereas the mass marketer achieves ________, the nicher achieves ________. A) low margins; low volume B) low volume; high margins C) high volume; high margins D) high volume; low margins E) high margins; high volume Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 103) Computer mouse and interface device maker AdvTechPRO is only a fraction the size of software giant Terminal Time Software Inc. AdvTechPRO manufactures every variation of computer mouse imaginable (for left-handed people, wireless mice, shaped like actual mice, LED mice, etc.). Through skillful ________, the firm dominates the PC mouse market, with Terminal Time Software as its runner up. A) centralization techniques B) niching C) brand imaging D) vertical integration E) benchmarking Answer: B AACSB: Analytical thinking Skill: Application 32

Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Challenging 104) All of the following are true of market follower strategies EXCEPT A) the follower is not passive B) the follower must know how to hold current customers C) the follower must avoid retaliation D) the follower must use a full-frontal attack E) the follower must bring distinct advantages to the target market Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 105) A market nicher can most likely specialize along all of the following lines EXCEPT ________. A) specific end users B) unique products C) customized services D) quality-price E) mass marketing Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 106) The market subsegment that a company exclusively caters to may dry up, or it might grow to the point that it attracts larger competitors. This is why such companies practice ________. A) multiple niching B) mass marketing C) overall cost leadership D) low-price strategies E) dumping Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy Refer to the scenario below to answer questions 107-109. 33

Essential-Beauty is a rapidly growing firm that manufactures women's makeup, perfumes, and nail-care products. The company has established itself as a high-end cosmetic product brand available at most national drug stores. In the past, almost all of the advertising for EssentialBeauty has been in women's fashion magazines. The firm is now launching a new line of skin care products, ranging from facial cleansers to body lotion. These products are designed to be marketed to a broader audience, so the marketing team is exploring the effectiveness of different promotional mixes. 107) Before deciding to launch the new line of products, Essential-Beauty conducted extensive market research to make sure the products were optimally positioned. A complete marketing plan including mobile advertising, magazine advertising, event sponsorship, and sales promotions was established long before the products themselves were ready for market. In this case, EssentialBeauty was using ________. A) cost leadership B) entrepreneurial marketing C) intrapreneurial marketing D) formulated marketing E) operational excellence Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Challenging 108) The bottom line for Essential Beauty is that there are many approaches to developing effective competitive marketing strategies. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 109) Why sould Essential Beauty become a customer-centered company?. Answer: A customer-centered company focuses more on customer developments in designing its strategies. Clearly, the customer-centered company is in a better position to identify new opportunities and set long-run strategies that make sense. By watching customer needs evolve, it can decide what customer groups and what emerging needs are the most important to serve. Then it can concentrate its resources on delivering superior value to target customers. AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. 34

Difficulty: Moderate 110) Entrepreneurial marketing exclusively involves developing formal marketing strategies and adhering to them closely. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 111) Market leaders can expand the market by developing new users, new uses, and more usage of its products. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 112) The market leader refuses to be content with the way things are and leads the industry in new products, customer services, distribution effectiveness, promotion, and cost cutting. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 113) According to the overall cost leadership competitive strategy, the company works hard to achieve the lowest production and distribution costs. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 114) A market challenger may launch a full frontal attack, matching the competitor’s product, advertising, price, and distribution efforts. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. 35

Difficulty: Moderate 115) A market follower must know how to hold current customers and win a fair share of new ones. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 116) Michael Porter suggested four basic competitive positioning strategies that companies can follow, three winning strategies and one losing one. Name and describe these four different strategies. Answer: Overall cost leadership is when the company works hard to achieve the lowest production and distribution costs. Differentiation is when the company concentrates on creating a highly differentiated product line and marketing program so that it comes across as the class leader in the industry. Focus is when the company puts its efforts on serving a few market segments well rather than going after the whole market. Middle-of-the-roaders are firms that do not pursue a clear strategy. These firms do the worst. AACSB: Written and oral communication Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 117) Companies do not differ in how they approach the strategy-planning process. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 118) What advantages can the market follower gain? Answer: A follower can gain many advantages. The market leader often bears the huge expenses of developing new products and markets, expanding distribution, and educating the market. By contrast, as with challengers, the market follower can learn from the market leader’s experience. It can copy or improve on the leader’s products and programs, usually with much less investment. Although the follower will probably not overtake the leader, it often can be as profitable. AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 36

119) What is a market nicher? Answer: A market nicher can specialize along any of several market, customer, product, or marketing mix lines. For example, it can specialize in serving one type of end user, as when a law firm specializes in the criminal, civil, or business law markets. The nicher can specialize in serving a given customer-size group. Many nichers specialize in serving small and midsize customers who are neglected by the majors. Some nichers focus on one or a few specific customers, selling their entire output to a single company, such as Walmart or General Motors. Still other nichers specialize by geographic market, selling only in a certain locality, region, or area of the world. For example, Vegemite is primarily sold and consumed in Australia. Quality-price nichers operate at the low or high end of the market. For example, Manolo Blahnik specializes in the high-quality, high-priced women’s shoes. Finally, service nichers offer services not available from other firms. AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 120) Discuss customer intimacy. Why is it important? Provide an example of a company that successfully abides by this value discipline. Answer: Student answers will vary. A company provides superior value by precisely segmenting its markets and tailoring its products or services to match exactly the needs of targeted customers. It specializes in satisfying unique customer needs through a close relationship with and intimate knowledge of the customer. It builds detailed customer databases for segmenting and targeting, and empowers its marketing people to respond quickly to customer needs. Customer-intimate companies serve customers who are willing to pay a premium to get precisely what they want. They will do almost anything to build long-term customer loyalty and to capture customer lifetime value. Examples include Nordstrom, Lexus, American Express, British Airways, and Ritz-Carlton hotels. AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 121) Compare and contrast the four competitive positions that are often used to describe market structures. Answer: Determining which competitive marketing strategy makes the most sense depends on the company's industry and on whether it is a market leader, challenger, follower, or nicher. A market leader has to mount strategies to expand the total market, protect market share, and expand market share. A market challenger is a firm that tries aggressively to expand its market share by attacking the leader, other runner-up companies, or smaller firms in the industry. The challenger can select from a variety of direct or indirect attack strategies. A market follower is a runner-up company that chooses not to rock the boat, usually from fear that it stands to lose more than it might gain. But the follower is not without a strategy and seeks to use its particular skills 37

to gain market growth. A market nicher is a smaller firm that is unlikely to attract the attention of larger firms; it often becomes a specialist in some end use, customer size, specific customer, geographic areas, or service. AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 122) Discuss two ways a market challenger can best attack the chosen competitor and achieve its strategic objectives. Explain when a challenger should use these attacks and provide examples of companies that have used these methods. Answer: Student answers will vary. The market challenger may launch a full frontal attack, matching the competitor's product, advertising, price, and distribution efforts. It attacks the competitor's strengths rather than its weaknesses. The outcome depends on who has the greater strength and endurance. If the market challenger has fewer resources than the competitor, however, a frontal attack makes little sense. Thus, many new market entrants avoid frontal attacks, knowing that the market leaders can head them off with ad blitzes, price wars, and other retaliations. Rather than challenging head-on, the challenger can make an indirect attack on the competitor's weaknesses or on gaps in the competitor's market coverage. It can carve out toeholds using tactics that the established leaders have trouble responding to or choose to ignore. Red Bull is a successful example of an indirect attack. PepsiCo challenges Coca-Cola by launching a full frontal attack. AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 123) A company can become so ________ centered that it loses its even more important focus on maintaining profitable ________ relationships. A) customer; competitor B) competitor; customer C) market; customer D) market; competitor E) competitor; product Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate 124) Which of the following is a negative aspect of a competitor-centered company? A) It becomes too reactive. B) It develops a customer-relationship strategy. 38

C) It extends industry practices D) It concentrates its resources on delivering superior value to target customers. E) It ends up seeking innovative ways to create more value for customers. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate 125) On the positive side, the _______company develops a fighter orientation, watches for weaknesses in its own position, and searches out competitors’ weaknesses. A) cost-centered B) market-centered C) customer-centered D) competitor-centered. E) product-centered. Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate 126) The ________company is in a better position to identify new opportunities and set long-run strategies that make sense. A) market-centered B) cost-centered C) competitor-centered D) customer-centered E) product-centered Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Easy 127) A ________ company watches both their customers and their competitors A) market-centered B) cost-centered C) competitor-centered D) product-centered E) customer-centered Answer: A 39

AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Easy 128) Greener-grass Inc. is a lawn care company providing landscaping and lawn maintenance services to customers in and around Kansas City. The marketing team at Greener-grass carefully tracks the moves of competing companies, watching for shifting strategies and new promotions. The marketing team is also in constant touch with customers, using surveys and other feedback methods to find out what kind of services customers value the most. Greener-grass is most accurately described as having a ________ orientation. A) market B) product C) customer D) competitor E) leadership Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Challenging 129) A disadvantage of a competitor-centered company is that it ends up simply matching or extending industry practices rather than seeking innovative new ways to create more value for customers. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate 130) A market-centered company most likely has a stronger competitor and customer focus than a customer-centered company. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate 131) Describe a competitor-centered company? Answer: A competitor-centered company is one that spends most of its time tracking competitors’ moves and market shares and trying to find strategies to counter them. This 40

approach has some pluses and minuses. On the positive side, the company develops a fighter orientation, watches for weaknesses in its own position, and searches out competitors’ weaknesses. On the negative side, the company becomes too reactive. Rather than carrying out its own customer relationship strategy, it bases its own moves on competitors’ moves. As a result, it may end up simply matching or extending industry practices rather than seeking innovative new ways to create more value for customers. AACSB: Application of knowledge Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate 132) What is the primary focus of a customer-centered company? Answer: A customer-centered company focuses more on customer developments in designing its strategies. By watching customer needs evolve, a customer-centered company can decide what customer groups and what emerging needs are the most important to serve. AACSB: Written and oral communication Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Easy 133) Discuss the four evolving company orientations. Which orientation is considered most successful and why? Answer: In the first orientation, companies are product oriented, paying little attention to either customers or competitors. In the second orientation, they become customer oriented and start to pay attention to customers. In the third orientation, when they start to pay attention to competitors, they become competitor oriented. Today, companies need to be market oriented, paying balanced attention to both customers and competitors. Rather than simply watching competitors and trying to beat them on current ways of doing business, companies need to watch customers and find innovative ways to build profitable customer relationships by delivering more customer value than competitors do. AACSB: Analytical thinking Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate 134) What is a competitive advantage? Answer: A competitive advantage is an advantage over competitors gained by offering consumers greater value. AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. 41

Difficulty: Easy 135) How does a company identify competitors? Answer: Normally, identifying competitors would seem to be a simple task. At the narrowest level, a company can define its competitors as other companies offering similar products and services to the same customers at similar prices. Thus, Facebook (Meta) might see Twitter, TikTok, and other social media as competitors but not Google, Microsoft, or Amazon. RitzCarlton might see the Four Seasons hotels as a major competitor, but not Airbnb, Holiday Inn, Hampton Inn, or any of the thousands of bed-and-breakfasts that dot the nation. AACSB: Application of knowledge Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 136) What are some examples of “competitor myopia”? Answer: Companies must avoid “competitor myopia.” A company is more likely to be “buried” by its latent competitors than its current ones. For example, Kodak didn’t lose out to competing film makers such as Fuji; it fell to the makers of digital cameras and phones that use no film at all. Once-blazing-hot video-rental superstore Blockbuster didn’t go bankrupt at the hands of other traditional brick-and-mortar retailers. It fell victim first to unexpected competitors such as direct marketer Netflix and kiosk marketer Redbox and then to a host of digital streaming services and technologies. By the time Blockbuster recognized and reacted to these unforeseen competitors, it was too late. AACSB: Analytical thinking Skill: Concept Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 137) What is entrepreneurial marketing? Answer: Entrepreneurial marketing. Most companies are started by individuals who live by their wits. They visualize an opportunity, construct flexible strategies on the backs of envelopes, and knock on every door to gain attention. Jim Koch, founder of Boston Beer Company, whose Samuel Adams Boston Lager beer has become one of the top-selling craft beers in America, started out in 1984 brewing a cherished family beer recipe in his kitchen. For marketing, AACSB: Application of knowledge Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 138) What is a differentiation strategy? Answer: Here the company concentrates on creating a highly differentiated product line and marketing program so that it comes across as the class leader in the industry. Most customers 42

would prefer to own this brand if its price is not too high. Nike and Caterpillar follow this strategy in apparel and heavy construction equipment, respectively. AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 139) Describe operational excellence. Answer: Operational excellence. The company provides superior value by leading its industry in price and convenience. It works to reduce costs and create a lean and efficient value delivery system. It serves customers who want reliable, good-quality products or services but want them cheaply and easily. Examples include Walmart, IKEA, Zara, Southwest Airlines, and no-frills grocery retailer Lidl. AACSB: Analytical thinking Skill: Concept Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 140) How do market leaders expand demand? Answer: The leading firm normally gains the most when the total market expands. If Americans eat more fast food, McDonald’s stands to gain the most because it holds a much larger fast-food market share than competitors such as Subway, Wendy’s, Burger King, or Taco Bell. If McDonald’s can convince more Americans that fast food is the best eating-out choice, it will benefit more than its competitors. Market leaders can expand the market by developing new users, new uses, and more usage of its products. They usually can find new users or untapped market segments in many places. AACSB: Application of knowledge Skill: Concept Objective: LO 18.3: Illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. Difficulty: Moderate Quantitative Questions Use the following information to answer questions 1, 2, 3, 4, and 5. Marketing managers at Firm YYQ want to benchmark some performance metrics with their top competitors. They learned that in the most recent year (this year) the top three firms in this market have 81% of the overall market with the remaining 19% spread among about 12 other niche firms. Firm YYQ’s management is concerned about declining performance and want to determine if their primary competitors are outperforming them and gaining market share or if it is simply due to a declining economy. They have compiled the following table of data to help them conduct their analysis. 43

Firm

Firm YYQ Comp. A Comp. B

Total Revenue (in millions) $185 $212 $158

Marketing Budget (in millions) $18.5 $27.2 $18.1

Net Income (in millions) $22.2 $19.1 $25.3

% Market Share – this year 27% 31% 23%

% Market Share – last year 28% 29% 21%

1) What is highest profit margin among these three firms? A) 9% B) 16% C) 12% D) 11% E) 18% Answer: B; To compute profit margins you divide net income by total revenue. So, Firm YYQ = $22.2/$185 = .12, or 12%; Comp. A = $19.1/$212 = .09, or 9%; Comp. B = $25.3/$158 = .16, or 16%. AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 2) What was the percentage change in Firm YYQ’s market share from the previous year? A) -3.57% B) 6.89% C) 9.52% D) -3.70% E) -4.12% Answer: A; You compute % change by the following formula; % change = (P1 – P0)/P0. So, (27 – 28)/28 = -.0357, or -3.57%. AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 3) What was the percentage change in Comp. B’s market share from the previous year? A) -3.57% B) 3.57% C) 9.52% D) -3.70% E) -4.12% Answer: C; You compute % change by the following formula; % change = (P1 – P0)/P0. So, (23 – 21)/21 = .0952, or 9.52%. AACSB: Analytical thinking Skill: Application 44

Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 4) What percentage of revenue does Firm YYQ spend on marketing? A) 7.3% B) 8.1% C) 9.0% D) 10.0% E) 11.5% Answer: D; You compute this by dividing the marketing budget by total revenue. So, $18.5/$185 = .10, or 10%. AACSB: Analytical thinking Skill: Application Objective: LO 18.1: Discuss the need to understand competitors as well as customers through competitor analysis. Difficulty: Moderate 5) What percentage of revenue does Comp. B spend on marketing? A) 7.3% B) 8.1% C) 9.0% D) 10.0% E) 11.5% Answer: E; You compute this by dividing the marketing budget by total revenue. So, $18.1/$158 = .115, or 11.5%. AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 6) Retail Grocer Inc. just introduced a new store brand that is 15% cheaper than their existing name brand products. However, the profit margin is 5% instead of 2% on the name brand products. How much profit does Retail Grocer make on $80 million in sales with their new store brand? A) $1.88 million B) $1.60 million C) $4.00 million D) $4.90 million E) $2.22 million Answer: C; Profit is computed by multiplying the profit margin x sales. So, .05 x $80 = $4 million. AACSB: Analytical thinking Skill: Application 45

Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 7) Retail Grocer Inc. just introduced a new store brand that is 15% cheaper than their existing name brand products. However, the profit margin is 5% instead of 2% on the name brand products. How much profit would Retail Grocer have made before introducing the store brand if they had $80 million in sales with their new store brand? A) $1.88 million B) $1.60 million C) $4.00 million D) $4.90 million E) $2.22 million Answer: A; The name brand sales would have been 15% higher so $80 million/(1 -.15) = $94.1 million x .02 = $1.88 million. AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Challenging

Use the following information to answer questions 8, 9, and 10. Jeremiah Industries has 26% of the current market share. However, Jeremiah’s management believes they can expand the current $455 million market by 15% and increase their market share to 28%. 8) What is the size of the market if Jeremiah Industries is successful with their expansion efforts. A) $473.75 B) $484.50 C) $502.25 D) $523.25 E) $571.75 Answer: D; The new market will equal the current market of $455 x 1.15 = $523.25. AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Easy 9) How much will Jeremiah Industries generate in new revenue? A) $121.31 B) $127.40 C) $136.05 D) $139.55 E) $146.51 46

Answer: E; The new market will equal the current market of $455 x 1.15 = $523.25. So, .28 x $523.25 = $146.51. AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate 10) What was the percentage increase in Jeremiah Industries’ revenue attributed to the market share expansion and higher market share? A) 21.05% B) 23.85% C) 24.51% D) 25.47% E) 26.29% Answer: B; The pre-expansion revenue was .26 x $455 = $118.3. The revenue after market expansion will equal the current market of $455 x 1.15 x .28 = $146.51. You compute % change by the following formula; % change = (P1 – P0)/P0. So, (146.51 – 118.3)/118.3 = .2385, or 23.85%. AACSB: Analytical thinking Skill: Application Objective: LO 18.2: Explain the fundamentals of competitive marketing strategies based on creating value for customers. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 19 The Global Marketplace 1) Firms that decide against international expansion to play it safe ________. A) protect themselves from competition at home B) gain a competitive edge against imports in their home markets C) successfully shield themselves from foreign competition D) risk losing their home markets E) increase their chances of entering other markets Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 2) Companies risk losing their home markets ________. A) by protecting themselves from competition at home B) to other domestic competitors C) as they may find foreign competitors in their own backyards D) by focusing only on their home markets E) in hopes of growing market share at home Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 3) Which of the following is a risk associated with international trade? A) technological obsolescence B) highly unstable governments C) market monopolization D) lack of trade barriers E) currency stagnation Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 4) Risks of global trade include all of the following EXCEPT ________. A) high trade barriers B) corruption C) restrictive government policies 1

D) unstable currencies E) increased opportunities for growth Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Easy 5) A ________ company is one that, by operating in more than one country, gains marketing, production, research and development, and financial advantages that are not available to purely domestic competitors. A) global B) domestic C) federally chartered D) direct investment E) free trade zone Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Easy 6) Since the global company sees the world as one market, it raises capital, obtains components and materials, and manufactures and markets its goods ________. A) at home B) in the lowest-cost country near where each product will be sold C) in each country in which it does business D) in the lowest-cost country on each continent E) wherever it can do the best job Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 7) Which question should most likely be answered by all companies due to the rapid move toward globalization? A) How should we eliminate domestic competition? B) Should we diversify in a new business area in the home country? C) Who will our global competitors be, and what are their strategies and resources? D) How should we fulfill our environmental obligations? E) Which medium of advertising should we use in our home country? Answer: C 2

AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 8) Which of the following major decisions should a company make immediately after it decides to operate internationally? A) deciding which markets to enter B) deciding how to enter the market C) deciding on the global marketing organization D) deciding on the global marketing program E) deciding on the global communication program Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Easy 9) Immediately after deciding which markets to enter, the company should determine ________. A) the most suitable global communication program B) how to price its products in different markets C) the global marketing organization D) the global marketing program E) how to enter the market Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Easy

10) Global marketing and global trade are synonymous. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Easy

11) Even though trade barriers continue to fall it does not appear to increase competition. Answer: FALSE AACSB: Analytical thinking 3

Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Easy 12) Companies that go global confront several major risks. Describe three of these risks. Answer: Companies that go global may face unstable governments and currencies abroad, as well as restrictive government policies and regulations designed to protect domestic companies or to protect the culture. High trade barriers are another issue. Also, some companies have to deal with corruption abroad, as some officials award business contracts to the highest briber. AACSB: Written and oral communication Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 13) Provide a few examples of global firms headquartered in other countries entering the U.S. market. Answer: Numerous companies based in other countries have succeeded in the United States. For example, Toyota, Samsung, Nestlé, IKEA, adidas, and TikTok have become household words. Other products and services that appear to be American are, in fact, produced or owned by nonU.S. companies, including Ben & Jerry’s ice cream, Budweiser beer, Purina pet foods, 7-Eleven, and Motel 6. Michelin, the French tire manufacturer, now does 37 percent of its business in North America. . AACSB: Written and oral communication Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 14) What is the risk faced by domestic firms that decide against global expansion to “play it safe?” Answer: Few industries are safe from nondomestic competition. Companies that stay at home to play it safe might not only lose their chances to enter growing markets in Western and Eastern Europe, China and Southeast Asia, Russia, India, Brazil, and elsewhere but also risk losing their home markets. AACSB: Written and oral communication Skill: Concept Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 15) Before a company decides to go global, it must evaluate all of the following environments EXCEPT the ________ environment. A) sociocultural B) natural 4

C) political D) technological E) economic Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 16) Which of the following terms refers to a tax levied by a foreign government against certain imported products to raise revenue or to protect domestic firms? A) embargo B) tariff C) excise D) exchange control E) quota Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 17) Which of the following is a nontariff trade barrier? A) strike B) quota C) boycott D) exchange premium E) restrictive product standards Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 18) A(n) ________ is a limit on the amount of goods that an importing country will accept in certain product categories. A) embargo B) tariff C) benchmark D) quota E) exchange control Answer: D 5

AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 19) A(n) ________ serves to limit the amount of foreign exchange and the exchange rate against other currencies. A) exchange premium B) free trade zone C) quota D) exchange control E) tariff trade barrier Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 20) Which of the following was designed to help foster trade between nations? A) tariffs B) GATT C) exchange controls D) quotas E) nontariff trade barriers Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 21) Which of these countries is likely to be more receptive to foreign investment? A) Vietnam B) China C) India D) Russia E) Pakistan Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 6

22) Foreign businesses in India appear to receive unusually close scrutiny and special regulations, aimed at protecting the local businesses. This is an example of a(n) ________. A) nontariff trade barrier B) tariff C) boycott D) exchange control E) quota Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 23) Which of these is NOT one of Hofstede’s Six Dimensions of National Culture? A) Power Distance Index−High versus Low B) Individualism versus Collectivism C) Personal Space Index-Near versus Far D) Toughness versus Tenderness E) Uncertainty Avoidance Index-High versus Low Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Challenging 24) Which of these nations is most likely to score highest on individualism using Hofstede’s Six Dimensions of National Culture framework? A) Korea B) Saudi Arabia C) China D) United States E) Guatemala Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Challenging 25) Which of the following was a result of the first seven rounds of the GATT and WTO trade talks? A) Tariffs on the world's remaining merchandise increased by 30 percent. B) The international protection of copyrights, patents, and trademarks is no longer a point of dispute. 7

C) The average worldwide tariff on manufactured goods fell from 45 percent to 5 percent. D) NATO was established for purposes of collective security. E) The EU agreed to reduce trade barriers and increase cooperation among its members. Answer: C Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 26) Growing Green, a U.S. company that markets organic and environmentally friendly gardening and landscaping supplies and equipment, wants to expand the business internationally. Growing Green managers are currently examining the rules imposed by the WTO and the agreements made by USMCA and the EU. In which decision stage of the international marketing process is Growing Green? A) deciding on the global pricing strategies B) deciding which markets to enter C) deciding how to enter the market D) deciding on the global marketing program E) looking at the global marketing environment Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 27) Which of these nations was the first country to make corporate social responsibility (CSR) mandatory? A) Saudi Arabia B) United States C) India D) China E) France Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 28) Economic communities are also known as ________. A) global firms B) free trade zones C) management communities D) production communities E) open channels 8

Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 29) Which of the following is an example of an economic community? A) NATO B) BRICS C) The EU D) GATT E) WTO Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 30) Which of these trade agreements has 11 member nations with a combined population of over 500 million people that represent 14% of the world’s GDP? A) NAFTA B) the European Union C) GATT D) USMCA E) CPTPP Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 31) Which of these economic communities has a shared currency? A) WTO B) EU C) GATT D) USMCA E) CPTPP Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 9

32) Which of these nations left the EU in January 2021? A) Cyprus B) Portugal C) France D) Greece E) The United Kingdom Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 33) In 1994, ________ established a free trade zone among the United States, Canada, and Mexico. A) GATT B) the WTO C) NAFTA D) the EU E) CAFTA Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 34) NAFTA was replaced in July 2020 by . A) CPTPP B) GATT C) USMCA D) Brexit E) the EU Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 35) Trusted Wholesalers is a company that currently purchases products made in Mexico and sells them to companies based in the United States and Canada. Trusted Wholesalers is considering whether to also purchase products produced in Australia and Malaysia. To make their decision about sourcing from this region, members of management at Trusted Wholesalers 10

will most likely evaluate the agreements made by ________. A) the EU B) USMCA C) CPTPP D) GATT E) USMCA Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 36) Some nations impose currency restrictions that mandate goods purchased from sellers from other nations be paid . A) from the WTO B) in U.S. dollars C) in their own currency D) in euros E) in gold Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 37) The two key economic factors reflecting a country's attractiveness as a market are its industrial development and its ________. A) communication adaptation B) nontariff trade barriers C) exchange controls D) income distribution E) transportation systems Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 38) A country's ________ shapes its product and service needs, income levels, and employment levels. A) international trade system B) income distribution C) industrial development 11

D) political structure E) foreign exchange system Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 39) Which of these advances in technology is energizing global marketing? A) Big data B) Artificial intelligence C) Digital commerce platforms D) Machine learning E) Alternative energy sources Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 40) Which of these countries is one of the BRICS? A) Sweden B) Russia C) the United Kingdom D) Chile E) Indonesia Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 41) Which of these statements describes the “Amazon effect?” A) Climate change driven by “cutting and burning” land clearing in the Amazon river basin. B) Small, local sellers shutting shop because they can’t compete against powerful Amazon’s global scale and reach. C) The ability to get products from anywhere in the world due to the ease of listing on Amazon. D) The global dominance of Amazon’s business model that is being adopted by businesses worldwide. E) The tendency to drive product prices lower in global markets. Answer: B AACSB: Analytical thinking Skill: Concept 12

Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Challenging 42) Some countries engage in barter to . A) get around international prohibitions on trade B) get rid of obsolete goods C) avoid paying for products D) circumvent currency restrictions E) avoid trade embargos Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 43) Which of the following is an economic factor that a company should consider before deciding to enter into a new country? A) industrial development B) natural resources C) cultural and social norms D) political stability E) climate Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 44) While much of Africa consists of countries with subsistence economies, companies are increasingly targeting ________ consumers in subsistence and emerging economies. A) upper-class B) "bottom of the pyramid" C) middle-income D) low-income E) middle-income and low-income Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 13

45) Which of these obstacles to global trade is a nontariff barrier often implemented by a nation’s government to protect domestic industries? A) economies of scale B) restrictive product standards C) high taxes on imports D) minimizing market size E) lowering national incomes Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Challenging 46) Which of the following involves the direct exchange of goods and services? A) cash transaction B) compensation C) buyback D) blocked currency E) barter Answer: E AACSB: Application of knowledge Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy

47) Nontariff trade barriers include restrictions that prohibit foreign firms from selling their own products directly to consumers online. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 48) Widespread adoption of the euro has increased much of the currency risk associated with doing business in Europe. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 14

49) CPTPP has eliminated all trade barriers and investment restrictions among the United States, Canada, and Mexico. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 50) BRICS is the economic community of South American nations. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 51) China is known for throwing up nontariff obstacles to protect the nation’s small, informal retailers, who control 88 percent of China’s $1.1 trillion in retail sales. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 52) As more developed markets stagnate and become increasingly competitive, many marketers are now targeting growth opportunities in emerging markets. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate

53) Global marketers must understand the impact of widely varying sustainability regulations on their products and operations in individual global markets. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 15

54) Briefly explain how the adoption of a common currency helped increase trade among EU nations but also created problems for some EU nations. Answer: The widespread adoption of the euro decreased much of the currency risk associated with doing business in Europe, making member countries with previously weak currencies more attractive markets. However, the adoption of a common currency has also caused problems, with European economic powers such as Germany and France stepping in to prop up weaker economies such as those of Greece, Portugal, and Cyprus. This recurrent “euro crisis” has from time to time led some analysts to predict the possible breakup of the eurozone as it is now set up. AACSB: Written and oral communication Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 55) Compare and contrast a tariff and a quota. Answer: A tariff is a tax levied by a foreign government against certain imported products. A quota is a set of limits on the amount of goods the importing country will accept in certain product categories. Both tariffs and quotas can be used to protect domestic firms from foreign competition. AACSB: Analytical thinking Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 56) Briefly explain why economic communities are formed. Answer: Economic communities are groups of nations organized to work toward common goals in the regulation of international trade; economic communities benefit member nations by reducing barriers to the free flow of products, services, finances, and labor across borders. AACSB: Written and oral communication Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 57) Describe the purpose, roles, and achievements of GATT and the WTO. Answer: The General Agreement on Tariffs and Trade (GATT), established in 1947 and modified in 1994, was designed to promote world trade by reducing tariffs and other international trade barriers. Member nations, currently numbering 164, have met repeatedly to reassess trade barriers and set new rules for international trade. The most recently completed GATT negotiations promote long-term global trade growth, reducing the world's remaining merchandise tariffs, extending GATT to cover trade in agriculture and a wide range of services, and toughening international protection of copyrights, patents, trademarks, and other intellectual property. The most recent round of GATT negotiations resulted in the creation of the World Trade Organization (WTO) to enforce GATT rules. In general, the WTO acts as an umbrella 16

organization, overseeing GATT, mediating global disputes, and imposing trade sanctions. AACSB: Written and oral communication Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 58) Explain how labor restrictions might affect the decision to conduct business in a foreign country. Answer: Some countries may impose labor restrictions that impact the balance of power between employers and labor. In countries like the United States, companies generally have significant flexibility in expanding or downsizing their labor forces. However, labor laws in many other countries can make it difficult to lay off existing employees, even if the market shrinks. Such restrictions can help a country’s labor force in the short run but may discourage global companies from making and selling products in that country. AACSB: Written and oral communication Skill: Concept Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Moderate 59) Which of the following is a political factor that a company should consider before deciding to enter into a new country? A) monetary and trade regulations B) transportation structure C) population size and growth D) industrial infrastructure E) business norms and approaches Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 60) Which of these justifications is NOT a good reason to enter the global marketplace? A) Some countries may have less restrictive product standards. B) Global competitors might attack the company’s home market. C) A diversified presence across many countries can reduce risk. D) The company’s customers might be expanding abroad and require servicing. E) Global markets might provide better opportunities for growth. Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. 17

Difficulty: Challenging 61) Demographic characteristics, geographic characteristics, economic factors, sociocultural factors, and political and legal factors all help a company ________. A) determine a market's potential B) determine a country's degree of globalization C) evaluate its marketing objectives D) evaluate its value delivery network E) determine a country's income distribution Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 62) Which of the following is a demographic factor that a company should consider before deciding to enter into a new country? A) transportation infrastructure B) natural resources C) political stability D) government regulations E) educational attainment Answer: E AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 63) Which of the following is a sociocultural factor that a company should consider before deciding to enter into a new country? A) political stability B) population density (urban vs. rural) C) education D) income distribution E) consumer lifestyles, beliefs, and values Answer: E AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate

64) Which of the following is a geographic factor that a company should consider before deciding to enter into a new country? A) climate B) population size C) GDP size and growth D) government bureaucracy E) business norms and approaches Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 65) Which of the following is the LEAST critical decision a company should make before going abroad? A) Can the company learn to understand buyer behavior of consumers in other countries? B) Can the company offer competitively attractive products? C) Can the company adapt to other countries' business cultures? D) How many foreign nationals should the company employ? E) Do the company's managers have the necessary international experience? Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 66) A company should make several important decisions before deciding which markets to enter. These include all of the following EXCEPT ________. A) how many countries it wants to enter B) what volume of foreign sales it wants C) how many different products it wants to offer D) what its international marketing objectives are E) what its international marketing policies are Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Challenging 67) Market size, market growth, the cost of doing business, competitive advantage, and risk level all help a company ________. A) determine a market's potential B) determine a country's degree of globalization 19

C) evaluate its marketing objectives D) evaluate its value delivery network E) determine a country's income distribution Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate Refer to the following scenario to answer questions 68, 69, 70, 71, and 72. Selman & Saks, a maker of men's and women's razors and electric hair trimmers, had little reason to become involved in the global arena. But after acquiring Wellman Enterprises, whose largest division engages in a licensing agreement with a German firm to produce women's hosiery, managers at Selman & Saks wondered whether a company-wide global focus would be more profitable after all. Managers at Selman & Saks studied Wellman's licensing agreement in great detail. Even after seeing the benefits Wellman achieved with the licensing agreement, managers decided that Selman & Saks would target the French market merely via exporting. With the assistance of a domestic export department, Selman & Saks razors and hair trimmers entered France. For six months, sales were mediocre. But after that, sales suffered. Opinions varied among numerous managers as to the cause of the failure. "Who knows the local market better than people who live there?" was a comment heard throughout Selman & Saks. "Maybe we needed an alliance with a French firm, or a licensing agreement, before racing to get there." 68) What did Selman & Saks hope to gain by entering the French market? A) access to new consumer markets B) access to less expensive labor C) access to less expensive materials D) access to foreign investment incentives E) the ability to offset domestic economic cycles Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 69) Which of the following reasons is the most likely cause of Selman & Saks mediocre sales in France? A) legal uncertainty B) political uncertainty C) unstable currency 20

D) cultural barriers E) operational inefficiency Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Challenging 70) Saks & Selman decided to enter the global market after acquiring Wellman Enterprises which had a licensing agreement with a German firm. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 71) Selman & Saks attempted to export their products to all EU nations. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 72) Why do you think Selman & Saks’ entry into the French market generated lackluster results? Answer: Selman & Sakes did not understand the French culture and entered the market blind. The firm they hired to help them was a domestic firm that also did not appear to have expertise in France. AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Challenging 73) Rapid expansion into global markets is usually the best option since it generates instant brand recognition. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Easy 21

74) Legal indicators of market potential include whether the country has labor restrictions or currency controls. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 75) Why is it important for companies to understand cultural differences and nuances before entering a foreign country's market? Give two examples of cultural differences that would be important for a company to know. Answer: Student answers will vary. Before planning a marketing program in a new country, a seller should understand the ways that consumers in that country think about and use the product. To succeed abroad, a company must adapt to local cultural values and traditions rather than trying to force its own. Examples could include the following: French men use twice as many grooming aids as French women, many Chinese women put on makeup before going to bed while American women take off makeup at that time, and a clock is an inappropriate gift in China. AACSB: Reflective thinking Skill: Application Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Challenging 76) Describe the factors that might draw a company into the international arena. Answer: Any of several factors might draw a company into the international arena. Global competitors might attack the company's home market by offering better products or lower prices. The company might want to counterattack these competitors in their home markets to tie up their resources. The company's customers might be expanding abroad and require international servicing. Or the company's home market might be stagnant or shrinking, and foreign markets may present additional sales and profit opportunities. AACSB: Analytical thinking Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 77) Name two of the five indicators of market potential and provide an example of each. Answer: Student answers will vary. The five indicators of market potential include demographic characteristics (education, population size and growth, population age composition), geographic characteristics (climate, country size, population density), economic factors (GDP size and growth, income distribution, natural resources, industrial infrastructure), sociocultural factors (consumer lifestyles and beliefs, languages, business norms, cultural and social norms), and political and legal factors (national priorities, political stability, government 22

bureaucracy, monetary and trade regulations). AACSB: Written and oral communication Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 78) What internal factors should a company consider before going abroad? Answer: Even if the balance tilts strongly toward going global, the company must evaluate its available assets and capabilities for strong global performance. Does it have an open and global managerial mindset? Does it have the resources available to fund global expansion? Can it quickly gain global customer and market insights and find a pathway to build the global brand? Can it find good global sourcing and distribution partners? In short, planning for global market entry should go hand in hand with planning for global strategy execution. AACSB: Written and oral communication Skill: Concept Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 79) PharmaCom serves millions of customers across several Asian countries after joining forces with foreign investors to create local businesses in which they share possession and control. PharmaCom now has several joint pharmaceutical manufacturing sites in China, Japan, and Korea. This is an example of ________. A) licensing B) exporting C) joint ownership D) contract manufacturing E) management contracting Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 80) The simplest way to enter a foreign market is through ________. A) joint venturing B) direct investment C) exporting D) joint ownership E) contract manufacturing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 23

81) When entering a foreign market, companies typically start with ________, working through independent intermediaries to sell products produced in the home country. A) direct exporting B) embargo C) product adaptation D) indirect exporting E) licensing Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 82) Which of the following characterizes indirect exporting? A) It requires more investment than joint venturing. B) It requires an overseas marketing organization or network. C) It involves less risk and investment than other entry methods. D) The potential returns are greater than direct exporting. E) It involves joining with foreign companies to produce or market products or services. Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 83) In the case of ________ exporting, sellers handle their own exports. A) direct B) licensed C) indirect D) countervailing E) multilateral Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 84) Think Ink is a growing company that sells a variety of inks for home and business printers. Management at Think Ink has decided to open a sales branch overseas to handle sales and distribution abroad. Think Ink is engaging in ________. A) indirect exporting B) direct exporting C) licensing D) joint ownership 24

E) management contracting Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Challenging 85) Working with foreign companies to produce or market products or services is known as ________. A) direct export B) global distribution C) direct investment D) joint venturing E) indirect export Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 86) Which of the following is a type of joint venturing? A) trade embargo B) contract manufacturing C) direct investment D) direct exporting E) indirect exporting Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 87) Coca-Cola uses as its primary method of entering global markets. A) indirect exporting B) licensing C) contract manufacturing D) management contracting E) joint ownership Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 88) In Japan, Budweiser beer flows from Kirin breweries, and Moringa Milk Company produces Sunkist fruit juice. These are examples of ________. 25

A) contract manufacturing B) management contracting C) licensing D) joint venturing E) direct investment Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 89) An advantage of licensing to a company is that it ________, while the licensee gains production expertise or a well-known product without having to start from scratch. A) does not maintain the same level of control over product quality B) must send employees to work with the licensee in training, selling, and distribution C) might create a competitor D) gains entry to a foreign market at little risk E) requires significant financial investment Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 90) Which of the following is true of contract manufacturing? A) It provides a chance to start faster but with more risks. B) It involves decreased control over the manufacturing process. C) It leads to an increase in potential profits on manufacturing. D) It is the simplest way to enter a foreign market. E) It involves entering a foreign market by exporting surplus products. Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 91) Hilton helps others run their hotels by providing the management know-how. This type of joint venture is known as ________. A) contract manufacturing B) licensing C) management contracting D) joint ownership E) direct investment Answer: C AACSB: Analytical thinking 26

Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 92) Disney’s Hong Kong Disneyland is run by Hong Kong International Theme Parks Ltd, of which the local government owns 53 percent and Disney owns 47 percent. This is an example of ________. A) licensing B) contract manufacturing C) management contracting D) joint ownership E) indirect exporting Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 93) ________ ventures consist of one company joining forces with foreign investors to create a local business in which they share ownership and control. A) Joint ownership B) Licensing C) Contract manufacturing D) Management contracting E) Indirect exporting Answer: A AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 94) ________ involves entering a foreign market by developing foreign-based assembly or manufacturing facilities. A) Indirect exporting B) Direct investment C) Joint venturing D) Contract manufacturing E) Direct exporting Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 95) Lower costs in the form of cheaper labor or raw materials, foreign government investment incentives, freight savings, and the opportunity to improve the company image are the factors 27

that would most likely lead a company to enter a foreign market using the market entry strategy of ________. A) direct exporting B) licensing C) management contracting D) indirect exporting E) direct investment Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate

96) Licensing and contract manufacturing are both forms of joint venturing. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy

97) Direct investment exposes the company to many risks including currency devaluation and changes in government. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy 98) The most intense involvement in global markets comes through joint ventureships. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy

99) How is joint venturing riskier and more complex than merely exporting? Answer: With a joint venture, a company joins forces with another foreign company to produce or market products or services. With a joint venture, the company is not merely producing domestically and then shipping abroad; the company is working hand-in-hand with a foreign company toward a common purpose. AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. 28

Difficulty: Moderate 100) What are two possible risks involved with licensing? Answer: The firm has less control over the licensee than it would over its own production facilities. Furthermore, if the licensee is very successful, the firm has given up these profits, and if and when the contract ends, it may find it has created a competitor. AACSB: Analytical thinking Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 101) What are two possible reasons that management contracting is prevalent in the hotel industry? Answer: Student answers will vary. A hotel, such as Hilton, that has an international reputation and is highly regarded would bring brand value as well as experience to a foreign firm. For the company supplying the contracting, the investment is minimized because the foreign company supplies the capital. AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 102) Discuss direct and indirect exporting. What are the advantages of exporting? Answer: Companies typically start with indirect exporting, working through independent international marketing intermediaries. Indirect exporting involves less investment because the firm does not require an overseas marketing organization or network. It also involves less risk. International marketing intermediaries bring know-how and services to the relationship, so the seller normally makes fewer mistakes. Sellers may eventually move into direct exporting, whereby they handle their own exports. The investment and risk are somewhat greater in this strategy, but so is the potential return. One advantage of exporting is that the company produces all of its goods in its home country, so it does not need to invest in manufacturing facilities abroad. Also, exporting involves the least change in the company's product lines, organization, investments, and mission. With exporting, a company can make a minimal commitment to a foreign market and take minimal risks. AACSB: Application of knowledge Skill: Concept Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 103) ________ involves essentially using the same marketing strategy approaches and marketing mix worldwide A) Adapted global marketing B) Ambush marketing C) Standardized global marketing D) Export marketing 29

E) Niche marketing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Easy 104) ________ means adjusting the marketing strategy and mix elements to each international target market. A) Standardized global marketing B) Ambush marketing C) Adapted global marketing D) Mass marketing E) Whole channel viewing Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Easy 105) Black & Decker sells tools globally in essentially the same form. Which type of marketing strategy is Black & Decker using? A) Product adaptation B) Product invention C) Communication adaptation D) Straight product extension E) Product augmentation Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Easy 106) P&G developed a waterless line of shampoos and other hair care products that required no water for South African consumers facing severe water shortages. Which of the following product strategies is illustrated in this example? A) product adaptation B) straight product extension C) product invention D) product augmentation E) communication adaptation Answer: C AACSB: Analytical thinking 30

Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 107) When Amazon entered India’s market with the Amazon Echo it changed the Echo’s virtual assistant Alexa’s voice to be able to converse in Hinglish. Although many Indian’s understand both English and Hindi, they feel more comfortable with an Alexa who sounds like them. This is an example of ________. A) product invention B) straight product extension C) product adaptation D) product augmentation E) communication adaptation Answer: C AACSB: Application of knowledge Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 108) ________ involves changing the product to meet local requirements, conditions, or wants. A) Product invention B) Straight product extension C) Standard global marketing D) Communication adaptation E) Product adaptation Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 109) ________ consists of creating something new to meet the needs of consumers in a given country. A) Communication adaptation B) Joint venturing C) Product invention D) Straight product extension E) Product adaptation Answer: C AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. 31

Difficulty: Moderate 110) Global companies often have difficulty crossing language barriers and many of them have made terrible mistakes. Interbrand of London recently compiled a “hall of shame” list of some of the brands you will likely not see introduced in U.S. markets. Which of these brand names is NOT on Interbrand of London’s hall of shame list? A) Krapp toilet paper (Denmark) B) Plopp chocolate (Scandinavia) C) Snott cola (Germany) D) Crapsy fruit cereal (France) E) Poo curry powder (Argentina) Answer: C AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Challenging 111) The fiercely competitive academic environment in China causes many Chinese parents to view play as a distraction from schoolwork that does not contribute to learning and development. As a result, although China has almost five times the population of the United States, Chinese parents spend less than half of what U.S. parents spend on toys. To meet this challenge, U.S. toymakers adapted their Chinese advertising campaigns to emphasize how play helps children to succeed by boosting their knowledge, skills, and creativity. Which marketing strategy is being followed by U.S. toymakers? A) straight product extension B) product adaptation C) product invention D) communication adaptation E) straight communication extension Answer: D AACSB: Application of knowledge Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 112) In Chinese, the KFC slogan "finger-lickin' good" came out as "eat your fingers off." And Motorola's Hello-moto ringtone sounded like "Hello, Fatty" in India. Which of the following strategies can be used to avoid such mistakes? A) communication adaptation B) standardized global marketing C) straight product extension D) product adaptation E) communication extension Answer: A 32

AACSB: Application of knowledge; Diverse and multicultural work environments Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 113) Advertising media must be adapted internationally. Which of the following is NOT true about the need for communication adaptation? A) Advertising time is limited in Europe. B) Mobile phone ads are widely accepted in Europe and Asia. C) Advertisers must buy advertising time far in advance. D) The same advertisement can be presented in all countries in Europe. E) Magazines are important in Italy, but not in Austria. Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Challenging 114) Designing international channels that consider the entire global supply chain and marketing channel, thus forging an effective global value delivery network, recognizes a company must have a ________. A) whole-channel view B) direct-distribution channel C) large-scale channel D) transportation network E) retail channel Answer: A AACSB: Diverse and multicultural work environments Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Easy 115) ________ are the first link between the seller and the final buyer. They move company products from points of production to the borders of countries within which they are sold. A) Channels between nations B) Channels within nations C) Retail channels D) Large-scale channels E) Value chain channels Answer: A AACSB: Analytical thinking Skill: Concept 33

Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Easy Refer to the following scenario to answer questions 116, 117, 118, 119, and 120. Selman & Saks, a maker of men's and women's razors and electric hair trimmers, had little reason to become involved in the global arena. But after acquiring Wellman Enterprises, whose largest division engages in a licensing agreement with a German firm to produce women's hosiery, managers at Selman & Saks wondered whether a company-wide global focus would be more profitable after all. Managers at Selman & Saks studied Wellman's licensing agreement in great detail. Even after seeing the benefits Wellman achieved with the licensing agreement, managers decided that Selman & Saks would target the French market merely via exporting. With the assistance of a domestic export department, Selman & Saks razors and hair trimmers entered France. For six months, sales were mediocre. But after that, sales suffered. Opinions varied among numerous managers as to the cause of the failure. "Who knows the local market better than people who live there?" was a comment heard throughout Selman & Saks. "Maybe we needed an alliance with a French firm, or a licensing agreement, before racing to get there." 116) If Selman & Saks allowed a French company to produce and market razors and trimmers carrying the company's brand in exchange for a royalty, Selman & Saks would be using the market entry strategy of ________. A) exporting B) franchising C) licensing D) contract manufacturing E) joint ownership Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 117) Selman & Saks offered the same razors and trimmers in France as in the United States. Selman & Saks is an example of a ________. A) product adaptation B) communication adaptation C) product invention D) straight product extension E) standardized global marketing plan Answer: E AACSB: Analytical thinking 34

Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 118) Selman & Saks decided to enter France via a licensing agreement. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 119) Selman & Saks decided the best course of action to enter EU markets was through direct investment. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 120) Why did the managers at Selman & Saks decide to use exporting when they entered the French market instead of licensing since it had been successful in Germany? Answer: Answers will vary. Exporting is typically the lowest risk way to enter a market. However, given the successful licensing venture used in the German market it might have been a better option. Licensing the product to a French firm that understands the French culture might have made the entry more successful. Using a domestic firm to handle the exporting did not help Selman & Saks overcome the apparent cultural barriers. AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Challenging 121) Distribution systems in developing countries may be scattered, inefficient, or altogether lacking. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 122) Companies that produce a product domestically and sell it abroad can face price escalation problems due to transportation costs, importer margins, tariffs, and other costs that must be 35

added on to the product’s price in the foreign market. Answer: TRUE AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 123) Samsung developed a less expensive smartphone to sell in Pakistan. This is an example of straight product extension. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate

124) What types of products would be successful with standardized global marketing? Answer: Products that require no change to the product itself or to the product's promotion would follow a standardized marketing mix. AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 125) Explain why a global company would need to adjust a highly standardized promotion campaign for different markets. Answer: Some language and cultural differences make adjustments necessary, as a slogan might not translate well, or a certain image or color may hold a vastly different meaning in a different culture. AACSB: Application of knowledge Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 126) Why is a company unlikely to set a uniform price all around the world? Answer: A uniform price would be too low in rich countries and too high in poor ones; the price would not reflect the costs of transportation, tariffs, wholesale margins, and retailer margins that will differ from country to country. AACSB: Application of knowledge Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing 36

mixes for global markets. Difficulty: Moderate 127) Identify and describe the three product strategies a company entering a foreign market can use. Answer: A company can choose straight product extension, product adaptation, or product invention. Straight product extension means marketing a product in a foreign market without any change. This involves no additional product development costs, manufacturing changes, or new promotion. But it can be costly in the long run if products fail to satisfy foreign consumers. Product adaptation involves changing the product to meet local conditions or wants. Product invention consists of creating something new for a specific country market. AACSB: Application of knowledge; Written and oral communication Skill: Concept Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate 128) Compare and contrast the advantages and disadvantages of standardized global marketing and adapted global marketing. Answer: Companies that use standardized global marketing use largely the same marketing strategy approaches and marketing mix worldwide. On the other hand, with adapted global marketing, the producer adjusts the marketing strategy and mix elements to each target market, bearing more costs but hoping for a larger market share and return. Some global marketers believe that technology is making the world a smaller place and that consumer needs around the world are becoming more similar. This paves the way for "global brands" and standardized global marketing. Global branding and standardization, in turn, result in greater brand power and reduced costs from economies of scale. On the other hand, the marketing concept holds that marketing programs will be more effective if tailored to the unique needs of each targeted customer group. Despite global convergence, consumers in different countries still have widely varied cultural backgrounds and still differ significantly in their needs and wants, spending power, product preferences, and shopping patterns. Standardized global marketing does not take these differences into account and may therefore be less effective, albeit less expensive. AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Challenging 129) A company can manage its international marketing in all of the following ways EXCEPT ________. A) becoming a global organization B) organizing an export department C) creating a global division D) advertising internationally E) shipping its goods internationally Answer: D 37

AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Easy 130) A firm often enters international marketing by simply shipping its goods out of the country. If its international sales expand, the company often organizes a(n) ________. A) indirect exporting venture B) joint ownership C) export department D) global division E) standardized global marketing strategy Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Easy 131) World product groups, geographical organizations, and international subsidiaries are all options for organizing a(n)________. A) export department B) indirect exporting venture C) joint ownership D) global division E) standardized global marketing strategy Answer: D AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Moderate 132) When a company exports to one country, licenses to another, has a joint ownership venture in a third, and owns a subsidiary in a fourth, it likely will create a(n) ________ to handle its international activity. A) global organization B) global division C) world product group D) export department E) indirect exporting venture Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Moderate 133) Global divisions are organized in several ways. Their operating units can include all of the 38

following EXCEPT ________. A) international subsidiaries B) world product groups C) corporate staff providing services to operating units D) geographical organizations E) departmental units Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Moderate 134) In a(n) ________, executives are trained in worldwide operations, not just domestic or international operations. A) direct exporting company B) joint venture C) global division D) international subsidiary E) global organization Answer: E AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Easy 135) At Comfort Homes, a manufacturer of furniture and home accessories, the global operating units report directly to the chief executive instead of a head of a global division. The company recruits management from many countries and buys components and supplies where they cost the least. Comfort Homes is most accurately classified as a(n) ________. A) direct exporter B) geographical organization C) international subsidiary D) global organization E) world product group Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Moderate 136) When a firm organizes global divisions geographically each operating unit is responsible for its own global sales and profits. sales and profits.. Answer: FALSE AACSB: Analytical thinking 39

Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Easy 137) As a fifth and final step in the global marketing process, a company must set up a global marketing organization. Answer: TRUE AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Easy

138) Identify the three major ways a company can manage its international marketing. Answer: The company must develop an effective organization for international marketing. Most firms start with an export department and graduate to a global division. A few become global organizations, with worldwide marketing planned and managed by the top officers of the company. Global organizations view the entire world as a single, borderless market. AACSB: Written and oral communication Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Moderate 139) What might drive a company to create global divisions or subsidiaries? Discuss the three ways these divisions can be organized. Answer: Many companies get involved in several international markets and ventures, such as exporting to one country, licensing to another, having a joint ownership venture in a third, and owning a subsidiary in a fourth. With increased international activity, the company will need to move from simply having an export department to having more specialized global divisions or subsidiaries. Global divisions are organized in a variety of ways. A global division's corporate staff consists of marketing, manufacturing, research, finance, planning, and personnel specialists. It plans for and provides services to various operating units, which can be organized in one of three ways. They can be geographical organizations, with country managers who are responsible for salespeople, sales branches, distributors, and licensees in their respective countries. Or the operating units can be world product groups, each responsible for worldwide sales of different product groups. Finally, operating units can be international subsidiaries, each responsible for its own sales and profits. AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Moderate 140) Why do most large firms need to consider entering global markets in ways other than exporting? Answer: Major companies must become global if they hope to compete effectively. As nondomestic competitors invade their home markets, companies must move more aggressively into 40

global markets. They must shift from treating their global operations as afterthoughts to viewing the entire world as a single borderless market.. AACSB: Analytical thinking Skill: Concept Objective: LO 19.6: Identify the three major forms of global marketing organization. Difficulty: Challenging Quantitative Questions 1) What is the annual rate of growth in global trade if it was $3.5 trillion 30 years ago and it is $28 trillion today? A) 6.25% B) 7.18% C) 7.84% D) 8.125 E) 9.56% Answer: B; You can compute the growth rate using a financial calculator with the following inputs. PV = -$3.5; FV = $28; N = 30; PMT = 0; CPT I/Y = 7.18% per year. AACSB: Analytical thinking Skill: Application Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Challenging 2) French tiremaker Michelin does 37% of its business in the U.S. How much revenue did Michelin generate from U.S. sales if 2021 total revenue was 23.8 billion euros? A) 8.81 billion euros B) 11.45 billion euros C) 13.29 billion euros D) 15.36 billion euros E) 23.80 billion euros Answer: A; Michelin’s revenue in 2021 was 23.8 billion euros x .37 = 8.81 billion euros. AACSB: Analytical thinking Skill: Application Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Moderate 3) How much U.S. dollar profit did Michelin tires make if the firm made 1.45 billion euros in profit from U.S. sales and the exchange rate is .94€/$? A) $1.11 billion B) $1.45 billion C) $1.54 billion D) $1.65 billion E) $1.91 billion 41

Answer: C; If the exchange rate is .94€/$ you can divide the euro profit by .94 to get dollar profits. So, 1.45/.94 = $1.54 billion. AACSB: Analytical thinking Skill: Application Objective: LO 19.1: Define global marketing and the questions companies must ask in deciding whether and how to go global. Difficulty: Challenging 4) In 2007, Netherlands-based Vodafone International Holdings paid $11 billion to acquire a 67 percent interest in Hutchison Essar Limited, a competing telecom company in India. The Indian government claimed that the transaction yielded capital gains taxable in India and demanded $2.2 billion in capital gains taxes. What percentage tax did Vodafone pay on the acquisition? A) 14% B) 16% C) 18% D) 20% E) 22% Answer: D; Vodafone paid $2.2 billion/$11.0 billion = .20, or a 20% tax rate. AACSB: Analytical thinking Skill: Application Objective: LO 19.2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company’s global marketing decisions. Difficulty: Easy 5) Netflix entered India’s market with the goal of capturing 100 million new customers from the nation’s 1.4 billion people within its first five years in India. Netflix’s original entry price in India was $8 per month. What was the total revenue forecast in year 5? A) $1,400 million B) $1,200 million C) $800 million D) $9,600 billion E) $9,600 million Answer: E; You compute this by $8 x 12 = $96 year per customer x 100 million customers = $9,600 million. AACSB: Analytical thinking Skill: Application Objective: LO 19.3: Discuss how companies decide whether to go global and, if so, which markets to enter. Difficulty: Moderate 6) Firm ABC wants to export to Country X. The firm’s management believes they can sell 100,000 units at a price of $121 each. However, Country X charges a tariff of 15% on products imported into their country. How much will the product cost in Country X? A) $121.15 B) $139.15 C) $141.15 42

D) $155.50 E) $159.15 Answer: B; The product will cost $121 x 1.15 = $139.15. AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 7) Firm ABC wants to export to Country X. The firm’s management believes they can sell 100,000 units at a price of $121 each. However, Country X charges a tariff of 15% on products imported into their country. Firm ABC believes the higher price will reduce the quantity sold by 20%. How much will the firm’s after-tariff revenue change if the tariff is assessed? A) $2,240,000 less B) $4,650,000 less C) $6,710,000 more D) $9,860,000 less E) $12,100,000 more Answer: A; After the tariff the product will cost $121 x 1.15 = $139.15. So, revenue after the tariff will be 100,000 x (1 - .20) x $121 = 9,860,000. Before the tariff it would be 100,000 x $121 = $12,100,000. The change in revenue = ($12,100,000 - $9,860,000 = $2,240,000 less. (Hint: the firm does not keep the tariff so the revenue per unit is still $121 to the firm) AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Challenging 8) Firm CCC entered into a contract manufacturing agreement with Country X to avoid a 12% tariff on imports. How much money will Firm CCC save with the agreement if it would normally import $45 million of product into Country X? A) $3.6 million B) $4.1 million C) $4.5 million D) $5.4 million E) $5.8 million Answer: D; The savings are equal to $45 million x .12 = $5.4 million. AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Easy

9) Firm XXY purchases a manufacturing plant in County B for $75 million. The firm also spent another $12 million on upgrades and $4.7 million on recruiting and training new workers. What is the firm’s total investment in property, plant, and equipment for this greenfield investment? A) $12.0 million B) $75.0 million 43

C) $79.7 million D) $87.0 million E) $91.7 million Answer: D; The total investment in property, plant, and equipment is $75 + $12 = $87 million. AACSB: Analytical thinking Skill: Application Objective: LO 19.4: Describe three key approaches to entering global markets. Difficulty: Moderate 10) Firm HH is doing a product adaptation to enter another country. The cost of the adaptation is about 7% more per unit and the units are currently priced at $18.50. How much revenue will the firm generate if it adds the cost of the adaptation to the existing price and sells 112,250 units? A) $2,076,625.00 B) $2,221,988.75 C) $2,251,125.25 D) $2,315,111.50 E) $2,421,865.75 Answer: B; Total revenue will be 112,250 units x ($18.50 x 1.07) = $2,221,988.75. AACSB: Analytical thinking Skill: Application Objective: LO 19.5: Explain how companies adapt their marketing strategies and marketing mixes for global markets. Difficulty: Moderate

Principles of Marketing, 19e, Global Edition (Kotler) Chapter 20 Sustainable Marketing: Social Responsibility and Ethics 1) The strategic planning concept ________. A) considers sales and profit maximization B) considers future company needs C) serves short-term interests over long-term gains D) serves the company's interests over the consumers' E) promotes value and company gain Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Easy 2) ________ considers the future welfare of consumers and society. A) Sustainable marketing B) The societal marketing concept C) Consumerism D) Environmentalism E) Strategic planning Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Easy 3) According to the text, McDonald's was criticized for all of the following EXCEPT ________. A) burdening the health system B) damaging consumer health C) creating poor eating habits in children D) marketing tasty fast foods E) contributing to the obesity epidemic Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Moderate 4) The ________ concept calls for socially and environmentally responsible actions that meet the immediate and future needs of consumers, society, and the company. A) societal marketing B) business-to-business C) sustainable marketing D) strategic planning E) marketing myopia 1

Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Easy 5) The BeautyShop, a manufacturer of skin care products, uses only plant-based materials for its cosmetic products. It supports several environmental protection movements and movements defending human rights. This accounts for the company's efforts to build good will and corporate social responsibility. This exemplifies the ________ concept. A) consumer business B) strategic planning C) consumerism D) direct marketing E) sustainable marketing Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Moderate 6) McDonald’s was criticized for its large environmental footprint, from wasteful packaging and solid waste creation to inefficient energy use. Thus, McDonald’s strategy was not sustainable from a consumer or company perspective. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Challenging 7) What is the marketing concept? Answer: The marketing concept recognizes that organizations thrive by determining the current needs and wants of target customers and fulfilling them more effectively and efficiently than competitors do. It focuses on meeting the company’s sales, growth, and profit needs by engaging customers and giving them what they want now. However, solely focusing on satisfying consumers’ immediate needs and desires doesn’t always serve the future best interests of consumers, the business, or society. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Moderate 8) Consumer advocates, government agencies, and other critics have accused marketing of harming consumers through ________. A) technological obsolescence B) sales promotion tactics 2

C) viral marketing D) anti-trust laws E) planned obsolescence Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 9) McDonald’s has committed to designing all packaging from renewable or certified resources and making recycling an option at all locations by 2025. This is an example of (a)______ A) deceptive packaging B) deceptive promotion C) sustainability initiative D) deceptive practice E) branding Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 10) A longstanding charge against intermediaries is that they mark up prices beyond the ________. A) value of their services B) delivery charges C) going market price D) promotion cost E) resale value Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 11) Critics charge that promotion adds only ________ to a product. A) functional value B) psychological value C) moderate value D) strategic value E) qualitative value Answer: B AACSB: Ethical understanding and reasoning 3

Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 12) Marketers respond that although advertising increases costs, it also does all of the following EXCEPT_______ A) assures buyers of consistent quality B) adds value by informing buyers of the brand’s availability C) informs potential buyers of the merits of a brand D) provides psychological benefits to consumers E) decreases competition in the market Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 13) Dan's Drugstore sells medicine to consumers for $20 that only costs $2 to produce. Critics accuse Dan's of ________. A) deceptive promotion B) deceptive packaging C) false advertising D) excessive markups E) redlining Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 14) Deceptive practices fall into three groups: pricing, promotion, and ________. A) product B) placement C) packaging D) publicity E) service Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 4

15) Hart's Department Store was accused of deceptive promotion. Which of the following best explains what might have happened? A) Hart's refused to advertise sale prices in the local paper. B) Hart's advertised a bargain price on an out-of-stock product. C) Hart's advertised a large price reduction from a phony high retail list price. D) Hart's used misleading labeling on certain products. E) Hart's exaggerated its package contents through subtle design. Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Challenging 16) Which of the following advertising situations would LEAST likely be considered "puffery"? A) Mr. Clean coming to a housewife's rescue B) instantly toned thighs and legs as a result of using the Thigh Master for only 15 minutes C) children immediately growing into attractive adults as a result of drinking milk D) a retired couple drinking a vitamin and protein shake and then going bicycling E) a sleepy mom who wakes up to a gray day, drinks a cup of coffee, and then looks out her window to see golden sunshine, beautiful flowers blooming, songbirds singing, and a rainbow on the horizon Answer: D AACSB: Reflective thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Challenging 17) ________ focuses on overstating contents using misleading design elements, inaccurate labeling, or exaggerated product dimensions. A) Deceptive packaging B) High-pressure selling C) Strategic marketing D) Redlining E) Reverse redlining Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 18) In which of the following scenarios would high-pressure selling tactics typically be most advantageous for marketers? 5

A) selling situations with long-time customers B) selling situations with new customers with a high likelihood of becoming repeat customers C) selling situations with a company's most highly valued customers D) selling situations with one-time customers E) selling situations with dissatisfied customers Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments.. Difficulty: Moderate 19) The success of the Tom Dennis Ford dealership has been built largely on return customers and word-of-mouth recommendations. The majority of sales are made to customers who previously purchased a vehicle at the dealership or who know someone who had a positive experience of purchasing a vehicle there. The sales force at the Tom Dennis Ford dealership most likely knows that using high-pressure selling is ineffective if the dealership wants to ________. A) achieve short-term gains B) move last year's models C) obey local and federal law D) build long-term customer relationships E) maintain a database of local customers Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 20) Imagine a P&G account manager trying to pressure a Walmart buyer or an IBM salesperson trying to browbeat an information technology manager at GE. This example shows that highpressure selling can seriously damage ______________ A) long-term, trust-based relationships B) short-term planning C) planned obsolescence D) nonfunctional warranties E) deceptive promotion Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments.. Difficulty: Easy 21) Trendy Teens manufactures fashionable clothing and accessories for the tween and teen 6

female markets. New merchandise with a very different look is rolled out each season and heavily promoted as the "must-have" style in a variety of media. This information indicates that Trendy Teens is most likely to be criticized for ________. A) deceptive promotions B) shoddy products C) high-pressure selling D) poor service to disadvantaged consumers E) perceived obsolescence Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 22) The fast-fashion industry has constantly changing clothing fashions, which some critics claim creates a wasteful disposable clothing culture. “Too many garments end up in landfill sites,” bemoans one designer. This is an example of _______________ A) consumer-centered marketing B) consumerism. C) high-pressure selling D) materialism E) planned obsolescence Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 23) If Apple produced a new iPhone or iPad that would last 10 years, few consumers would want it. Instead, buyers want _______ A) products that last B) highly promoted products C) low-priced products D) the latest technological innovations E) well-packaged products Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 24) Marketers are most effective when they appeal to ________ rather than when they 7

________. A) short-term needs; focus on long-term needs B) teenagers; target older people C) existing wants; attempt to create new ones D) emotions; appeal to actual needs E) the mass market; appeal to market segments Answer: C AACSB: Analytical thinking Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 25) Which of the following is one of the social costs associated with cars? A) traffic congestion B) water pollution C) new highways D) new automobile models E) cleaner roads Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 26) TerraPass is a company that offers consumers the opportunity to buy carbon offsets, which are contributions to projects that combat global warming by reducing carbon emissions. TerraPass offers contribution packages for driving, flying, and home energy use. Through TerraPass, consumers can pay some of the ________ costs of their private goods and services. A) promotional B) safety C) health D) distribution E) social Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 27) Critics charge the marketing system with creating _________by constantly assaulting our senses with marketing and advertising messages. A) cultural pollution B) air pollution 8

C) language barriers D) inflation E) redlining Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 28) In response to charges of ________, marketers point out that because of ads, many television and radio sites are free to users and also keep down the cost of magazines and newspapers. A) deceptive pricing B) creating false wants C) creating materialism D) high promotion costs E) cultural pollution Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 29) Karl Harris, a marketing critic, is concerned about the pervasiveness of marketing. He points out that advertising messages are everywhere, from Web sites and e-mails to unwanted direct mail and catalogs to television commercials and product tie-ins to billboards and store signage. Karl is concerned about ________. A) high packaging costs B) cultural pollution C) deceptive practices D) false wants and too much materialism E) the balance between private goods and social goods Answer: B AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 30) Critics have charged that the marketing system creates all of the following EXCEPT___ A) an obsessive focus on material possessions B) an unsustainable focus on worldly possessions C) an endless cycle of mass consumption D) judgement of people based on who they are E) false wants 9

Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments.. Difficulty: Moderate 31). New York City may charge motorists to enter Manhattan’s busiest areas. The toll would raise more than $1 billion a year to improve the city’s worn-down public transit systems. This is an example of_______ A) making consumers pay social costs B) costs related to private goods. C) planned obsolescence D) perceived obsolescence . E) overselling private goods Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 32) Critics charge that a company's marketing practices can harm other companies and reduce competition. One of the problems critics identified is ________. A) pollution B) barriers to entry C) unfair discrimination D) bait-and-switch advertising E) fair packaging and labeling Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 33) Critics who assert that the marketing system promotes too much interest in material possessions are most likely concerned that the result of successful marketing will be ________. A) high-pressure selling tactics B) unsustainable overconsumption C) perceived obsolescence D) planned obsolescence E) deceptive pricing Answer: B AACSB: Ethical understanding and reasoning Skill: Concept 10

Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 34) Critics claim all of the following are true when companies expand by acquiring competitors EXCEPT_______. A) Competition is reduced. B) Consumers are harmed. C) Innovation is curtailed D) New products are created E) Cultural pollution occurs Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate Refer to the scenario below to answer questions 35-37. Bryant and Anne are the owners of the Good Green Grocer, a small but successful chain of organic food stores. The organic food sold by Good Green Grocer is of good quality. Also, it is tasty and has long-term health benefits. Bryant and Anne's business has expanded as more and more consumers are interested in eating organic foods. What started as one shop in Vermont has expanded to 15 stores in Vermont, New Hampshire, Massachusetts, and Maine. Much to their delight, Bryant and Ann have found that many people are willing to pay a bit more for food that is organically grown. Sunday ads for the Good Green Grocer run in area newspapers, with special promotional prices offered for a list of the "Top Ten Take Homes" each week. Regular customers of the Good Green Grocer know that the promotional items often run out of stock by mid-week, so the store typically sees its heaviest traffic on Sunday and Monday. 35) Some customers believe that the Good Green Grocer purposefully runs weekly promotional prices on items that are low in stock, leaving most customers who come to the store hoping for lower prices but unable to buy the out-of-stock sale items. If this were true, then the Good Green Grocer would most likely be accused of ________. A) using puffery B) deceptive pricing C) deceptive promotions D) deceptive packaging E) green washing Answer: C AACSB: Analytical thinking Skill: Application 11

Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 36) Given the nature of mass-communication channels, some Good Green Grocer ads are bound to reach people who have no interest in their products and are therefore bored or annoyed. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 37) Is Good Green Grocer contributing to cultural pollution through its advertising? Answer: Marketers at Good Green Grocer could answer the charges of cultural pollution with these arguments: First, they hope that their ads primarily reach the target audience. Given the nature of mass-communication channels, some ads are bound to reach people who have no interest in the product and are therefore bored or annoyed. People who buy magazines they like or who opt in to email, social media, or mobile marketing programs rarely complain about the ads because they involve products and services of interest. AACSB: Analytical thinking Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. .Difficulty: Moderate 38) Brand name products give buyers assurances of consistent quality. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 39) Though marketers may make long-term gains with high-pressure selling tactics, this approach can do serious damage to short-term customer relationships. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 40) What are predatory practices? 12

Answer: Some companies have used unfair competitive marketing and business practices to hurt or destroy competitors. They may set their prices below costs, threaten to cut off business with suppliers, discourage buying a competitor’s products, or use their size and market dominance to otherwise unfairly damage rivals. Although various laws aim to prevent such behavior, proving that the intent or action was truly predatory can be challenging. Predatory practices can be difficult to differentiate from effective, if hard- nosed, competitive strategies and tactics. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 41) Critics of marketing view consumer interest in material things as a natural state of mind rather than as a matter of false wants created by marketing. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 42) Marketers are the least effective when they appeal to existing wants rather than when they attempt to create new ones. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 43) Do marketers give poor service to disadvantaged customers? Answer: The American marketing system has been accused of poorly serving disadvantaged consumers. Urban low-income consumers often have to shop in smaller stores that charge higher prices and carry inferior goods. Placing large national chain stores in low-income communities would help lower prices and increase product selection and quality. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 44) What is deceptive promotion? Answer: Deceptive promotion includes practices such as misrepresenting the product’s features or performance or luring customers to the store for a bargain that is out of stock. AACSB: Ethical understanding and reasoning 13

Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 45) Explain the criticism of channel members and their response. Answer: Greedy marketing channel members have been accused of marking up prices well beyond the value of their services. Consumers ultimately pay for this practice through higher prices. Channel members respond that they do work that manufacturers or consumers would otherwise have to do. Their markups reflect services that consumers want— convenience, larger stores and assortments, more service, longer store hours, return privileges, and others. In fact, they argue, retail competition is so intense that margins are actually quite low. Further, resellers such as Walmart, Costco, Amazon, and others pressure their competitors to operate efficiently and lower prices. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 46) Explain why critics charge that some companies mark up goods excessively. Answer: Critics charge that some companies mark up goods excessively, leading to high prices. They point to the auto repair industry and to the drug industry, where a pill costing five cents to make may be priced at $5. Marketers respond that most businesses try to price fairly because they want to build consumer relationships and repeat business. They also assert that consumers often don’t understand the reasons for high markups. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 47) What is deceptive pricing? Answer: Deceptive pricing includes falsely advertising “factory” or “wholesale” prices or a large price reduction from a fictional high retail “list price.” For example, retailers from JCPenney and Kohl’s to Neiman Marcus, Nordstrom, and Old Navy have been hit with lawsuits alleging that they used inflated original prices. Ross Stores paid a $4.9 million settlement to settle a class action suit accusing it of duping customers with “false and/or misleading comparative prices which purport to be charged by other merchants for the same products.” AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Easy 48) What are the criticisms leveled at the soft-drink industry in regard to their marketing efforts? 14

Answer: Industry critics have blamed the plentiful supply of sugar-laden, high-calorie soft drinks for the obesity epidemic and other health issues in the United States. They are quick to fault what they see as greedy beverage marketers for cashing in on vulnerable consumers, turning us into a nation of soda guzzlers. Although U.S. consumption of soft drinks has dropped recently, beverage companies are now looking to emerging markets for growth. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 49) What is planned obsolescence? Answer: Critics have charged that some companies practice planned obsolescence, causing their products to become obsolete before they should usually need replacement. They accuse some producers of using materials and components that break, wear, rust, or rot sooner than they should. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 50) Describe and give examples of cultural pollution. Answer: Student answers will vary. Cultural pollution is the constant assault on our senses by advertising. Examples will vary but may include commercials that interrupt serious programs, pages of ads that obscure magazine articles, spam that fills e-mailboxes, and billboards that mar beautiful scenery. AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 51) Why is meant by redlining and food deserts? Answer: Critics accuse major chain retailers of redlining, implicitly drawing a red line around disadvantaged neighborhoods and avoiding placing stores there. In fact, the nation’s low-income areas have 30 percent fewer supermarkets than otherwise comparable affluent areas do. As a result, many low-income consumers find themselves in “food deserts,” AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 52) Discuss the ways in which critics accuse marketing of harming the consumer. Answer: Marketers are charged with causing prices to be higher than they need to be. They are 15

sometimes accused of deceptive practices that lead consumers to believe they will get more value than they actually do. Sometimes salespeople pressure consumers to purchase products they neither want nor can afford. Others are accused of selling shoddy or unsafe products. Others are blamed for developing products that become obsolete before they actually need replacement. Last, marketers are accused of delivering poor service to disadvantaged consumers or not making products available to them. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 53) Describe and compare the three different categories of deceptive marketing practices. Answer: Deceptive pricing includes practices such as falsely advertising factory or wholesale prices or advertising a large price reduction from a phony high retail list price. Deceptive promotion includes practices such as misrepresenting the product's features or performance or luring customers to the store for a bargain that is out of stock. Deceptive packaging includes exaggerating package contents through subtle design, using misleading labeling, or describing size in misleading terms. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 54) How do marketers respond to critics' accusations of planned obsolescence? Answer: Marketers respond that consumers like style changes; they get tired of the old goods and want a new look in fashion. Or they want the latest high-tech innovations, even if older models still work. No one has to buy the new product, and if too few people like it, it will simply fail. Finally, most companies do not design their products to break down earlier; they do not want to lose customers to other brands. Instead, they seek constant improvement to ensure that products will consistently meet or exceed customer expectations. Much of the so-called planned obsolescence is the working of the competitive and technological forces in a free society–forces that lead to ever-improving goods and services. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 55) Identify the social costs of increased automobile ownership, and then describe two options for restoring the balance between private and public goods. Give specific examples. Answer: For cars, some of the social costs include traffic congestion, gasoline shortages, and air pollution. One option for restoring the balance between private and public goods is to make producers bear the full social costs of their operations. The government could require automobile manufacturers to build cars with more efficient engines and better pollution control systems. 16

Automakers would then raise their prices to cover extra costs. A second option is to make consumers pay the social costs. For example, many cities around the world are starting to charge "congestion tolls" in an effort to reduce traffic congestion; drivers entering high-traffic areas are required to pay a fee. Similarly, the U.S. government has recently proposed a bill that would create rush-hour fees in congested urban areas across the country. If the costs of driving increase enough, the government hopes, consumers will travel at nonpeak times or find alternative transportation modes. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 56) How do marketers respond to charges of "commercial noise"? Answer: Marketers answer the charges of "commercial noise" with these arguments. First, they hope that their ads reach primarily the target audience. But because of mass-communication channels, some ads are bound to reach people who have no interest in the product and are therefore bored or annoyed. People who buy magazines addressed to their interests–such as Vogue or Fortune–rarely complain about the ads because the magazines advertise products of interest. Second, ads make much of television and radio free to users and keep down the costs of magazines and newspapers. Many people think commercials are a small price to pay for these benefits. Consumers find many television commercials entertaining and seek them out–for example, ad viewership during the Super Bowl usually equals game viewership. Finally, today's consumers have alternatives. For example, they can zip or zap TV commercials on recorded programs or avoid them altogether on many paid cable or satellite channels. Thus, to hold consumer attention, advertisers are making their ads more entertaining and informative. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 57) ________is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. A) Consumerism B) Protectionism C) Liberalism D) Capitalism E) Materialism Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 17

58) ________ is an organized movement of concerned citizens, businesses, and government agencies designed to protect and improve people’s current and future living environment. A) Environmentalism B) Protectionism C) Liberalism D) Consumerism E) Capitalism Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 59) Which of the following is a traditional buyers' right? A) the right to charge any price if no discrimination exists B) the right to expect the product to be safe C) the right to promote any product to any audience D) the right to use any product message if it is not misleading E) the right to introduce any product in any size and style Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 60) Which of the following is a traditional sellers' right? A) the right to resell the product B) the right not to buy a product that is offered for sale C) the right not to pay any taxes included in the final price D) the right to use buying incentive programs E) the right to demand a discount on the product Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 61) Natural & Safe sells a concentrated, biodegradable bathroom cleaner in a recycled container. This is best described as a component of the company's internal ________ program. A) green marketing B) consumerism C) sustainability D) environmental 18

E) sociological Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 62) Consumer advocates call for additional consumer rights, including ________. A) the right to be protected from unwanted marketing messages B) the right to be well informed about important product aspects C) the right not to pay any taxes included in the final price D) the right to resell the product E) the right to exchange the product if it is of the wrong size or style Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 63) The right to be informed includes all of the following EXCEPT A) the true cost per unit of a brand (unit pricing) B) the true interest on a loan (truth in lending) C) the ingredients in a product (ingredient labeling D) the true benefits of a product (truth in advertising) E) the right to spend any amount to promote a product (pricing rights) Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 64) Consumer advocates call for the following additional rights which do NOT include: A) The right to be well informed about important aspects of the product B) The right to be protected against questionable products and marketing practices C) The right to influence products and marketing practices to improve “quality of life” D) The right to consume in a way that preserves the world for future generations E) The right to charge different prices to different customers for the same item Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 19

65) ________champions the creation of empowered consumers who have not only the right but also some of the responsibility to protect their own interests. A) Planned obsolescence B) Consumer protection C) Consumerism D) Cultural pollution E) Sustainable marketing Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 66). The term ________captures the total negative atmospheric impact associated with a product or service. A) sustainable marketing B) carbon footprint C) consumerism D) global warming E) consumer protection Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 67) ________ assert that the marketing system’s goal should not be to maximize consumption, consumer choice, or consumer satisfaction but to maximize life quality. A) Consumerism proponents B) Environmentalists C) Protectionists D) Socialists E) Liberals Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 68) Environmentalism is concerned with all of the following EXCEPT________ 20

A) the growth of government spending B) humanity’s damage to the ecosystem caused by global warming C) resource depletion D) toxic and solid wastes E) the contamination of fresh water, Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 69) Environmentalism is concerned with damage to the ecosystem caused by global warming, toxic and solid waste, chemically treated food, resource depletion, and ________ along with other issues. A) wage inequity B) nutritional information C) technological changes impacting individuals D) the availability of fresh water E) truth in lending laws Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 70) The apparel industry, with its focus on the latest fads and fashions, is actually more harmful to the environment than the airline and shipping industries. This is an example of the ___________of your clothing purchases. A) carbon footprint B) environmentalism C) sustainability D) sustainable ecology E) conspicuous consumption Answer: A AACSB: Application of knowledge Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 71) At the most basic level of environmental sustainability, a company can practice ________. A) pollution prevention B) product stewardship C) beyond greening activities 21

D) new clean technology E) sustainability vision Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 72) Environmentalists do NOT urge or require companies to change how their market offerings are ________. A) sourced B) produced C) transported D) placed E) sold Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 73) Nike produces shoes out of "environmentally preferred materials," recycles old sneakers, and educates young people about conserving, reusing, and recycling. Nike is practicing ________. A) new clean technology B) product stewardship C) pollution prevention D) sustainability vision E) design for environment Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 74) Deceptive practices have led to legislation and other consumer protection actions. In 1938, Congress enacted the _______, which gave the Federal Trade Commission (FTC) power to regulate “unfair or deceptive acts or practices.” A) Wheeler-Lea Act B) Federal Trade Commission (FTC) C) Robinson Act D) Federal Communications Commission (FCC) E) Food and Drug Administration (FDA) 22

Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 75) Companies that are engaged in socially sustainable marketing practices do NOT ____________. A) increase profitability B) increase market share C) have a short-term impact in increasing purchasing intentions D) hire employees that focus only on compensation and rewards E) have a long-term impact on improving a firm’s reputation Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 76) A sustainability vision does all of the below EXCEPT: A) provides a framework for pollution control B) serves as a guide for the future C) provides a framework for product stewardship D) does not offer environmental strategies E) guides new environmental technology Answer: D AACSB: Application of knowledge Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 77) Electrola Inc. is currently designing a new product line with the goal of making each product easy to recover, reuse, or recycle. Electrola Inc. hopes to recover many of these products when they reach the end of their life cycle and reuse their components in new products. Electrola Inc. is in the ________ stage of environmental sustainability. A) pollution prevention B) new clean technology C) product stewardship D) beyond greening E) sustainability vision Answer: C AACSB: Analytical thinking Skill: Application 23

Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 78) Beyond greening activities do NOT include ______________. A) using new clean technology B)) using non-recyclable packaging C) having a sustainability vision D) adopting product stewardship E) carrying out pollution prevention Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 79) Xerox Corporation's Equipment Remanufacture and Parts Reuse Program converts end-oflife office equipment into new products and parts. This not only helps sustain the environment, but it is also highly profitable for the company. This practice is an example of a ________. A) pollution prevention practice B) green marketing practice C) beyond greening practice D) cradle-to-cradle practice E) new environmental technology Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 80) Companies that plan to implement ________ develop innovative sets of environmental skills and capabilities. A) product stewardship B) a sustainability vision C) pollution prevention D) new clean technology E) a DFE practice Answer: D AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Challenging 24

81) ________ serves as a guide to the future by showing how the company's products and services, processes, and policies must evolve and what new technologies must be developed to get there. A) New clean technology B) A cradle-to-cradle practice C) Pollution prevention D) Product stewardship E) A sustainability vision Answer: E AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 82) Before designing and producing new offerings, athletic shoe and apparel maker Adidas evaluates their environmental impact. This results in low-waste footwear and apparel, such as Duramo shoes, which yield both performance and sustainability benefits. This example shows that__________. A) a company can practice pollution prevention. B) a firm's employees can identify personal ways to impact the environment C) companies can generate profits and increase market share D) companies can increase their carbon footprint E) consumers prefer socially responsible companies Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 83) Independent of the pressure from environmentalists and regulators, companies are increasingly engaging in socially sustainable marketing practices. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 84) Pollution prevention means eliminating or minimizing waste before it is created. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept 25

Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 85) Why should companies embrace socially sustainable policies? Answer: Companies that embrace socially sustainable practices can infuse that spirit into the fabric of their brands. This helps draw in customers by strengthening the brand externally. Beyond that, it can also build that spirit into their internal—or employer—branding. This increasingly important concept captures a company’s corporate culture and employee experience. For example, does the company radiate a sense of “joy at work” that motivates employees to give their best every day? Today’s employees focus not just on compensation and rewards; they place a premium on working for companies that seek to improve the world in which we live. Companies that champion and credibly implement socially sustainable business practices can attract the best employee talent, especially from the millennial and post-millennial generations. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 86) Environmental sustainability is a management approach that involves developing strategies that both sustain the environment and produce profits for the company. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 87) Pollution prevention means eliminating waste after it is created. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 88) What is product stewardship? Answer: Companies can practice product stewardship—minimizing environmental impacts across the entire product life cycle while simultaneously reducing costs. Many companies have adopted design for environment (DFE) and cradle-to-cradle practices. This involves thinking ahead to design products that are easier to recover, reuse, recycle, or safely return to nature after usage, thus becoming part of the ecological cycle. DFE and cradle-to-cradle practices can be both environmentally friendly and highly profitable. 26

AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 89) What is the carbon footprint? Answer: The term carbon footprint captures the total negative atmospheric impact associated with a product or service. The carbon footprint focuses on greenhouse gas emissions that trap and retain atmospheric heat. High carbon emissions contribute to global warming and, ultimately, climate change. The carbon footprint is expressed in terms of CO2e, or CO2 equivalent, a standardized measure of all greenhouse gases (carbon dioxide, nitrous oxide, methane, and others) converted into the equivalent amount of carbon dioxide in terms of warming potential. For products, the carbon footprint is calculated by adding together the greenhouse gas emissions resulting from every stage of a product or service’s lifetime, from raw material production, sourcing, manufacturing, packaging, transport, and wholesale and retail processes to consumer usage and end-of-life disposal. AACSB: Analytical thinking Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 90) What are the various issues that are covered under environmentalism? Answer: Environmentalism is concerned with damage to the ecosystem caused by global warming, resource depletion, toxic and solid wastes, litter, the availability of fresh water, and other problems. Other issues include the loss of recreational areas and the increase in health problems caused by bad air, polluted water, and chemically treated food. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Easy 91) What is involved in pollution prevention? Give at least one example. Answer: Student answers will vary. Pollution prevention means more than pollution control, or the cleaning up of waste after it has been created. It involves the elimination or minimization of waste before it is created. Biodegradable packaging, better pollution controls, and more energyefficient operations are all examples of pollution prevention. AACSB: Analytical thinking Skill: Application Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 92) List the consumer rights called for by consumer advocates. 27

Answer: Consumer advocates call for the following consumer rights: 1. The right to be well informed about important aspects of the product 2. The right to be protected against questionable products and marketing practices 3. The right to influence products and marketing practices in ways that will improve "quality of life" 4. The right to consume now in a way that will preserve the world for future generations of consumers AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 93) What are the two levels in the sustainability portfolio that deal with "beyond greening" activities that tend to pay off in the longer term? Answer: Today's greening activities focus on improving what companies already do to protect the environment. The beyond greening activities look to the future. First, internally, companies can plan for new clean technology. Many organizations that have made good sustainability headway are still limited by existing technologies. To create fully sustainable strategies, they will need to develop innovative new technologies. Companies can also develop a sustainability vision, which serves as a guide to the future. It shows how the company's products and services, processes, and policies must evolve and what new technologies must be developed to get there. This vision of sustainability provides a framework for pollution control, product stewardship, and new environmental technology for the company and others to follow. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 94) ________focus(es) on improving what companies already do to protect the environment. A) Consumer-centric marketing B) Greening activities C) Sense-of-mission marketing D) Societal marketing E) Customer value marketing Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. 95) Under the ________ concept, a company's marketing should support the best long-run performance of the marketing system. A) corporate social responsibility B) direct marketing 28

C) sustainable marketing D) free enterprise system E) strategic planning Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 96) IBM’s Global Asset Recovery Services business is designed to reuse and recycle parts from returned mainframe computers and other equipment. In a recent year, IBM processed more than 37 million pounds of end-of-life products and product waste worldwide, stripping down old equipment to recover chips and valuable metals. This is an example of ______ A) consumerism B) design for environment (DFE) C) environmentalism D) carbon offsetting E) societal marketing Answer: B AACSB: Application of knowledge Skill: Concept Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

97) Jacob Engineering Group views and organizes its marketing activities from the viewpoint of its buyers. Management works hard to sense, serve, and satisfy the needs of its well-defined group of buyers. What does Jacob Engineering Group practice? A) consumer-centric marketing B) societal marketing C) sense-of-mission marketing D) consumer value-building marketing E) innovative marketing Answer: A AACSB: Reflective thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 98) When a company makes improvements in a product's quality, features, or convenience, it is practicing ________. A) consumer-centric marketing B) sense-of-mission marketing C) innovative marketing D) consumer value-building marketing E) societal marketing 29

Answer: D Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Easy 99) The principle of ________ requires that the company continuously seek real product and marketing improvements. A) consumer-centric marketing B) innovative marketing C) consumer value-building marketing D) sense-of-mission consumer value-building marketing E) ambush marketing Answer: B Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 100) The Wii system, developed by Nintendo, with its intuitive motion-sensitive controller and interactive games, appealed not only to teen boys but also to their sisters, moms, dads, and even grandparents. This is a successful example of ________ marketing. A) consumer-centric B) innovative C) customer-value D) societal E) sense-of-mission Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Challenging 101) Some firms define their purpose in narrow product terms. Others that define their purpose in broad social terms follow ________. A) societal marketing B) sense-of-mission marketing C) consumer-centric marketing D) consumer value-building marketing E) consumerism Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Easy 102) One look at a Pedigree ad or a visit to the Pedigree.com Web site confirms that the people behind the Pedigree Brand really do believe the "We're for dogs" mission. Associates are even 30

encouraged to take their dogs to work. To further fulfill the "We're for dogs" brand promise, the company created the Pedigree Foundation, which along with the Pedigree Adoption Drive campaign, has raised millions of dollars for helping "shelter dogs" find good homes. This information indicates that Pedigree is practicing ________. A) consumerism B) environmental sustainability C) a sustainability vision D) innovative marketing E) sense-of-mission marketing Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 103) Dove wanted to do more than just sell its beauty care products. The company was on a quest to discover "real beauty" and help women be happy just the way they are. As a result, the Dove Campaign for Real Beauty was successfully launched in 2004. Which of the following types of marketing did Dove use? A) sense-of-mission marketing B) consumer-centric marketing C) consumer value-building marketing D) innovative marketing E) social marketing Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 104) While companies have learned that "doing good" and "doing well" go hand in hand, companies have also learned that to do good, they must first do well in terms of ________. A) successful advertising campaigns B) hiring of strong employees C) designing of attractive products D) profitable business operations E) ethical, as well as legal, decision making Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 105)_______ marketing refers to applying high standards of ethics and morality when making marketing decisions. A) Ethical 31

B) Societal C) Sense-of-mission D) Consumer-centric E) Customer-value Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 106) To help resolve moral dilemmas, companies need to develop a set of______, broad guidelines that all employees must follow. A) advertising objectives B) pricing decisions C) corporate marketing ethics D) consumer-centric policies E) customer-value guidelines Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 107) Under the ______marketing concept, each manager must look beyond what is legal and allowed and develop standards based on corporate conscience, personal integrity, and long-run consumer, company, and societal welfare. A) societal B) pleasing C) salutary D) deficient E) desirable Answer: A AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 108) Bribes and kickbacks are illegal for U.S. firms, and various treaties against bribery and corruption have been signed and ratified by more than 60 countries. Yet these are still standard business practices in many countries. This example shows that A) ethical behavior and standards present special challenges for international marketers. B) business standards and practices do not vary across countries C) companies do not need a code of ethics D) bribery is acceptable according to the American Marketing Association E) kickbacks are an ethically acceptable form of international business 32

Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 109) The American Marketing Association (AMA), an international association of marketing managers and scholars, developed a code of ethics that calls on marketers to adopt all of the following ethical norms EXCEPT___________ A) Do no harm B) Foster trust in the marketing system C) Lower standards to compete effectively D) Embrace ethical values E) Strive for good faith and fair dealing Answer: C AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 110) __________marketing means that the company should view and organize its marketing activities from the consumer’s point of view. It should work hard to sense, serve, and satisfy the needs of defined consumer segments—both now and into the future. A) Societal B) Consumer-centric C) Environmental D) Sustainable E) Profitable Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Easy 111) More than half of Gen Z consumers aged 18 to 23 years old will always research a company to ensure that it aligns with their position on social responsibility issues before making a purchase. This example shows that A) consumers choose eco-friendly products that align with their social values B) consumers choose the lowest-priced products C) consumers choose the most convenient shopping outlets D) consumers do not choose products that align with their social values E) consumers are influenced by word-of-mouth marketing Answer: A AACSB: Analytical thinking Skill: Application 33

Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 112) In ________marketing, a company should put most of its resources into long-term consumer value–building marketing investments. A) environmental B) consumer value-building C) societal D) sustainable E) international Answer: B AACSB: Analytical thinking Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Easy 113) Which of the following is the best example of a salutary product? A) breakfast cereal B) insurance policies C) foul-tasting medicine D) junk food E) cigarettes Answer: B AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 114) Companies should try to turn all of their offerings into “__________products” that provide both high immediate satisfaction and high long-run benefits. A) salutary B) desirable C) pleasing D) durable E) serviceable Answer: B AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Easy 115) Maytag's front-loading Neptune washer provides superior cleaning and energy efficiency. The Neptune washer is an example of a ________ product. A) deficient B) pleasing C) salutary 34

D) desirable E) nondurable Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 116) _________give high immediate satisfaction but may hurt consumers in the long run. Examples include cigarettes and junk food A) Salutary products B) Desirable products C) Pleasing product D) Durable product E) Deficient product Answer: C AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4:. Understand how to build a sustainable marketing organization. Difficulty: Moderate 117) Bicycle helmets have low immediate appeal, but they tend to benefit consumers in the long run. This indicates that a bicycle helmet is an example of a(n) ________ product. A) salutary B) desirable C) pleasing D) durable E) aesthetic Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 118) ____products, such as bad-tasting and ineffective medicine, have neither immediate appeal nor long-run benefits. A) Deficient B) Pleasing C) Desirable D) Innovative E) Salutary Answer: A AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. 35

Difficulty: Moderate 119) Envirosax reusable shopping bags are stylish and affordable, and they eliminate the need for plastic store bags. Envirosax reusable shopping bags most likely fall in the category of ________ products. A) deficient B) pleasing C) mature D) desirable E) unpleasing Answer: D AACSB: Ethical understanding and reasoning Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate Refer to the scenario below to answer questions 120-122. Bryant and Anne are the owners of the Good Green Grocer, a small but successful chain of organic food stores. The organic food sold by Good Green Grocer is of good quality. Also, it is tasty and has long-term health benefits. Bryant and Anne's business has expanded as more and more consumers are interested in eating organic foods. What started as one shop in Vermont has expanded to 15 stores in Vermont, New Hampshire, Massachusetts, and Maine. Much to their delight, Bryant and Ann have found that many people are willing to pay a bit more for food that is organically grown. Sunday ads for the Good Green Grocer run in area newspapers, with special promotional prices offered for a list of the "Top Ten Take Homes" each week. Regular customers of the Good Green Grocer know that the promotional items often run out of stock by mid-week, so the store typically sees its heaviest traffic on Sunday and Monday. 120) Good Green Grocer wants to keep its customers happy. Its marketing strategy should be designed with this goal. Which strategy focuses on satisfying the needs of Good Green Grocer's customers? A) societal marketing B) consumer value-building marketing C) sense-of-mission marketing D) innovative marketing E) consumer-centric marketing Answer: E AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 121) Good Green Grocer practices sustainable marketing which consists of five principles: 36

consumer-centric marketing, consumer value-building marketing, innovative marketing, senseof-mission marketing, and societal marketing. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 122) Why does Good Green Grocers believe strongly in ethical marketing conduct? Answer: Good ethics are a cornerstone of sustainable marketing. In the long run, unethical marketing harms customers and society as a whole. Further, it eventually damages a company’s reputation and effectiveness, jeopardizing its very survival. Thus, the sustainable marketing goals of long-term consumer and business welfare can be achieved only through ethical marketing conduct. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 123) A company that makes marketing decisions by considering consumers' wants and long-run interests, the company's requirements, and society's long-run interest is said to be practicing consumer-centric marketing. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 124) Sense-of-mission marketing means that the company should define its mission in broad social terms rather than narrow product terms. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 125) When a company views and organizes its marketing activities from only the consumer's point of view, it is practicing societal marketing. Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 126) Societal problems are opportunities for alert businesses. Answer: TRUE AACSB: Ethical understanding and reasoning; Reflective thinking 37

Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 127) Deficient products give both high immediate satisfaction and high long-run benefits, such as a tasty and nutritious breakfast fast-casual food. Answer: FALSE AACSB: Analytical thinking Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 128) Xorbate Blue is a relatively new food supplement that provides both high immediate satisfaction and high long-run benefits, such as improved energy levels and muscle tone. Xorbate Blue is best classified as a pleasing product. Answer: FALSE AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 129) How is consumer-centric marketing different from consumer value-building marketing? Answer: Consumer-centric marketing means that the company should view and organize its marketing activities from the consumer's point of view; consumer value-building marketing takes that a step further, as the company puts most of its resources into customer-value-building marketing investments. AACSB: Analytical thinking Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 130) Explain how a firm benefits from using sense-of-mission marketing. Answer: Sense-of-mission marketing means that the company should define its mission in broad social terms rather than narrow product terms; when a company defines a social mission, employees feel better about their work and have a clearer sense of direction. AACSB: Analytical thinking Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 131) Describe the five sustainable marketing principles. Answer: Consumer-centric marketing acts from the consumers' point of view. Innovative marketing seeks real product and marketing improvements. Consumer value-building marketing exists when a firm puts most of its resources into value-building investments. When a company defines its mission in broad social terms rather than narrow product terms, it is practicing senseof-mission marketing. Finally, societal marketing exists when the company makes its decisions 38

by considering its own, consumers', and society's long-run interests. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 132) Compare and contrast the four types of products in the societal classification of products. Provide examples of each. Answer: Student answers will vary. Deficient products are at the bottom because they have neither immediate appeal nor long-run benefits. Desirable products are at the top because they give both high immediate satisfaction and high long-run benefits. In between are pleasing products and salutary products. Pleasing products give high immediate satisfaction but may hurt consumers in the long run. Salutary products have low appeal but may benefit consumers in the long run. Examples will vary to include some of the following: cigarettes, junk food, sour-tasting and ineffective medicine, seatbelts, and tasty and nutritious breakfast foods. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 133) Monica Carey is a conscientious marketing manager. Sometimes it is unclear what decisions to make when she and her staff are faced with moral dilemmas. To help them handle such situations, Monica and other managers should create broad guidelines that everyone in the organization must follow. Which of the following terms best describes these guidelines? A) corporate value statements B) company mission statement C) company vision statement D) corporate marketing ethics policies E) company financial statement Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 134) Which of the following is being followed as a guiding principle by a company that produces and heavily markets cigarettes, with many promotions aimed at young (although legal age) nonsmokers? A) the philosophy that companies should have a social conscience and be morally responsible for current and future populations B) the philosophy that companies can do in good conscience whatever the market and legal systems allow C) the philosophy of environmentalism D) the philosophy of consumer-centric marketing E) the philosophy of consumerism Answer: B 39

AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. Difficulty: Moderate 135) Under the ________ concept, each manager must look beyond what is legal and develop standards based on personal integrity, corporate conscience, and long-run consumer welfare. A) sustainable marketing B) consumer marketing C) societal marketing D) strategic planning E) direct marketing Answer: C AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Challenging Refer to the scenario below to answer questions 136-138. Bryant and Anne are the owners of the Good Green Grocer, a small but successful chain of organic food stores. The organic food sold by Good Green Grocer is of good quality. Also, it is tasty and has long-term health benefits. Bryant and Anne's business has expanded as more and more consumers are interested in eating organic foods. What started as one shop in Vermont has expanded to 15 stores in Vermont, New Hampshire, Massachusetts, and Maine. Much to their delight, Bryant and Ann have found that many people are willing to pay a bit more for food that is organically grown. Sunday ads for the Good Green Grocer run in area newspapers, with special promotional prices offered for a list of the "Top Ten Take Homes" each week. Regular customers of the Good Green Grocer know that the promotional items often run out of stock by mid-week, so the store typically sees its heaviest traffic on Sunday and Monday. 136) The organic food sold by Bryant and Anne is of good quality. Also, it is tasty and has longterm health benefits. This information indicates that the organic food sold by Bryant and Anne would fall into the category of ________ products. A) salutary B) mature C) deficient D) desirable E) pleasing Answer: D AACSB: Analytical thinking Skill: Application Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 40

137) Is Good Green Grocer an example of sense-of-mission marketing? Answer: Yes, Good Green Grocer is an example of sense-of-mission marketing Sense-ofmission marketing means that the company should define its mission in broad social terms rather than narrow product terms. When a company defines a social mission, employees feel better about their work and have a clearer sense of direction. Beyond just the “job” and salary, an effective and engaging mission makes employees come to work energized every day. Brands linked with broader missions can best serve the long-run interests of both the brand and consumers. AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate 138) Consumer-focused businesses across industries are realizing that consumers increasingly prefer sustainable brands and practices. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 139) Companies are now investing more time and effort in teaching managers about important ethics issues so that they can find the proper responses in difficult situations. Answer: TRUE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Easy 140) Sense-of-mission marketing means that a company should define its mission in narrow product terms rather than broad social terms Answer: FALSE AACSB: Ethical understanding and reasoning Skill: Concept Objective: LO 20.4: Understand how to build a sustainable marketing organization. . Difficulty: Moderate Quantitative Questions 1) Socially conscious clothing firm Patagonia’s 2021 revenue was $209.1 million. How much of this revenue was generated during November and December if 60% of sales occur during the first 10 months of the year? A) $64.52 million 41

B) $83.64 million C) $125.46 million D) $156.41 million E) $209.11 million Answer: B; You compute this by taking total revenue $209.1 x (1- .6) = $83.64 million. AACSB: Analytical thinking Skill: Application Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Easy Use the following information to answer questions 2, 3, and 4. Restaurant XXY is committed to changing its menu to provide healthier fare. However, the transition is increasing the costs per meal by 11% and sales have fallen off by 6%. Profit margin before the change was 12.1%. Sales revenue before the transition was $487 million and the meal costs were $119 million. Assume other costs remained a constant percentage of sales. 2) What is the firm’s revenue after the change? A) $433.85 million B) $442.54 million C) $457.78 million D) $466.16 million E) $487.00 million Answer: C; Revenue after the transition is $487 x (1 - .06) = $457.78 million. AACSB: Analytical thinking Skill: Application Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Challenging 3) How much did the firm spend on meal costs after the transition? A) $123.97 million B) $128.32 million C) $132.09 million D) $136.21 million E) $144.11 million Answer: A; Meal costs before the transition were $119/$487 = .244, or 24.4% of total sales. However, now they are 11% higher and represent the following fraction of sales. So, 24.4 x 1.11 = .2708, or 27.08 %. Now multiply this fraction .2708 x new sales of $487 x (1 - .06) = $457.78 million = $123.97 million. AACSB: Analytical thinking Skill: Application Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Challenging 4) What is Restaurant XXY’s profit margin after the transition? A) 8.67% 42

B) 8.98% C) 9.23% D) 9.42% E) 12.10% Answer: D; Total costs as a percentage of income before the change are equal to 100% - 12.1% = 87.9%. Meal costs before the transition were $119/$487 = .244, or 24.4% of total costs. However, now they are 11% higher and represent the following fraction of sales. So, 24.4 x 1.11 = .2708, or 27.08 % of sales. The new percentage of costs is 87.9 – 24.4 + 27.08 = 90.58%. The new profit margin = 100.0 – 90.58 = 9.42%. AACSB: Analytical thinking Skill: Application Objective: LO 20.1: Define sustainable marketing and discuss its importance. Difficulty: Challenging 5) Modern marketing is also accused of pushing up prices to finance unnecessary advertising, sales promotion, and packaging. How much would a family with a household income of $121,000 per year need to make if they did not pay more for products due to higher marketing costs? Assume they spend 100% of their annual income on goods and services that have been marked up by an average of 14% for marketing expenses. A) $100,635.28 B) $102,001.45 C) $106,140.35. D) $111,403.21. E) $121,000.00 Answer: C; You compute this by dividing income by 1 + % change in prices. So, $121,000/1.14 = $106,140.35. AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 6) How much did each customer receive due a class action lawsuit settlement of $47.9 million assuming there were 75 million customers that each received an equal amount, and the legal costs were 40% of the settlement? A) 75.0 cents B) 21.1 dollars C) 56.2 cents D) 38.3 dollars E) 38.3 cents Answer: E; You compute this by dividing the amount distributed to customers ($47.9 x .60) by 75 million = .383, or 38.3 cents each. AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. 43

Difficulty: Moderate 7) Approximately 17.4% of the nation’s population live in a food desert. How many people does this represent if the current population of the U.S. is 332 million? A) 51.24 million B) 53.60 million C) 57.77 million D) 60.32 million E) 65.12 million Answer: C; You compute this by multiplying the current population of 332 x .174 = 57.77 million. AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Moderate 8) Firm GGH decided to target food deserts by placing grocery stores within walking distance of underserved Americans. The firm’s initial year sales were $34 million, and it forecast sales growth of 6% a year for the next five years. How much will revenues be in five years? A) $39.5 million B) $45.5 million C) $51.2 million D) $55.6 million E) $59.4 million Answer: B; You compute this by taking current revenue of $34 million x (1.06)5 = $45.5 million. AACSB: Analytical thinking Skill: Application Objective: LO 20.2: Identify the major social criticisms of marketing and some counterarguments. Difficulty: Challenging 9) The average American’s fashion carbon footprint is 1,620 pounds of carbon emissions per year. How much carbon is released into the atmosphere due to our clothing and footwear consumption choices if there are 332 million people in the U.S.? A) 537,840 million pounds B) 611.254 million pounds C) 625,874 million pounds D) 651,699 million pounds E) 674,122 million pounds Answer: A; To compute this answer you multiply 332 million x 1,620 pounds carbon = 537,840 million pounds. AACSB: Analytical thinking Skill: Application 44

Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate 10) The average American’s fashion carbon footprint is 1,620 pounds of carbon emissions per year. Each item of clothing releases about 17 pounds of carbon during its manufacture and shipping. However, buying one used item of clothing at a thrift store will reduce the amount of carbon emissions of that item by 82%. How much will carbon emission fall per person if they buy 3 used clothing items each year instead of a 3 new ones? A) 51.8 pounds per person B) 47.9 pounds per person C) 44.5 pounds per person D) 41.8 pounds per person E) 40.3 pounds per person Answer: D; To compute this multiply 3 items x 17 pounds x .82 = 41.8 pounds per person. AACSB: Analytical thinking Skill: Application Objective: LO 20.3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy. Difficulty: Moderate

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