Test Bank For Contemporary Marketing 17th Edition by Louis E. Boone (Author), David L. Kurtz (Author by QuentinAxel

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 1. Information technologies give organizations fast new ways to interact and develop long-term relationships with their customers and suppliers. a. True b. False ANSWER: True 2. Production and marketing of goods and services are two basic functions that create utility. a. True b. False ANSWER: True 3. Form utility refers to conversion of raw materials and components into finished goods and services. a. True b. False ANSWER: True 4. An auto manufacturer creates ownership utility for its consumers by combining metal, rubber, plastic and petroleum products. a. True b. False ANSWER: False 5. Within a business environment, the marketing function is responsible for the creation of time, place, and ownership utility, whereas the production function creates form utility. a. True b. False ANSWER: True 6. Buying an iPod generates ownership utility; however, buying a concert ticket does not. a. True b. False ANSWER: False 7. Owen buys a car for himself. Owen has created ownership utility. a. True b. False ANSWER: True

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 8. An organization creates a customer through a three-step approach: identifying needs in the marketplace, finding out which needs the organization can profitably serve, and developing goods and services to convert potential buyers into customers. a. True b. False ANSWER: True 9. The expanded concept of marketing activities permeates all functions in businesses and not-for-profit organizations. a. True b. False ANSWER: True 10. Marketing is the organizational function that refers to all forms of selling from institutional sales to personal selling. a. True b. False ANSWER: False 11. Marketing of a product begins after it hits the shelf. a. True b. False ANSWER: False 12. The establishment of the WTO, the passage of NAFTA, and the creation of the Euro are examples of protectionism on the part of nations concerned with increased globalization of the marketplace. a. True b. False ANSWER: False 13. An exchange process is an activity in which two or more parties give something of value to each other to satisfy perceived needs. a. True b. False ANSWER: True 14. Production orientation is a business philosophy that stresses on the importance of quantity of products rather than the quality of products. a. True b. False ANSWER: False

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 15. In the sales era, firms attempted to match their output to the potential number of customers who would want it. a. True b. False ANSWER: True 16. A seller’s market is one in which there are more goods and services than people willing to buy them. a. True b. False ANSWER: False 17. The marketing era is the successive historical outcome of the production era. a. True b. False ANSWER: False 18. The marketing era is defined by a shift in focus from products and sales to satisfying a consumer’s needs. a. True b. False ANSWER: True 19. The emergence of the marketing concept can be linked to the shift from a seller’s market to a buyer’s market. a. True b. False ANSWER: True 20. The advent of a strong buyer’s market created the need for consumer orientation by businesses. a. True b. False ANSWER: True 21. The marketing concept focuses on the objective of achieving short-term profits instead of long-run success during tough economic times. a. True b. False ANSWER: False

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 22. It can be said that Glen Inc., a woolen products manufacturing company based in Switzerland, is a firm that uses a market-driven strategy because it produces goods based on local customers’ experiences, needs, and preferences. a. True b. False ANSWER: True 23. While many firms claim to have adopted the marketing concept, there is little evidence that a strong market orientation contributes to market success and overall performance. a. True b. False ANSWER: False 24. A firm with a fully developed marketing concept is one with a company-wide consumer orientation with the objective of achieving long-term success. a. True b. False ANSWER: True 25. The relationship era builds on the marketing era’s customer orientation by only focusing on maintaining relationships with customers. a. True b. False ANSWER: False 26. Product-oriented rather than customer-oriented management endangers the future growth of an organization. a. True b. False ANSWER: True 27. Marketing myopia occurs when management fails to recognize the scope of its business. a. True b. False ANSWER: True 28. Wesley Pvt. Ltd., can avoid marketing myopia by finding innovative ways to reach new markets with existing goods and services. a. True b. False ANSWER: True

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 29. Firms that narrowly define their organizational goals can avoid the problem of marketing myopia. a. True b. False ANSWER: False 30. The private sector has an even greater array of not-for-profit organizations than the public sector. a. True b. False ANSWER: True 31. Not-for-profit organizations have numerous organizational objectives other than profitability due to their diversity. a. True b. False ANSWER: True 32. The financial bottom line refers to the limitations laid on the budgets of a firm. a. True b. False ANSWER: False 33. The main goal of not-for-profit organizations is to generate revenues above and beyond their costs to make money for all stakeholders involved. a. True b. False ANSWER: False 34. An important difference between not-for-profit and for-profit organizations is that, not-for-profit organizations cannot market tangible goods. a. True b. False ANSWER: False 35. Not-for-profit organizations are generally less concerned with the bottom line than for-profit organizations. a. True b. False ANSWER: True

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 36. A service user of a not-for-profit organization has more control over the organization’s destiny than customers of a profit-seeking firm. a. True b. False ANSWER: False 37. Not-for-profit organizations face complex decision-making issues about the correct markets to target as they often must market to multiple publics. a. True b. False ANSWER: True 38. On account of their unselfish goals of serving society, not-for-profit organizations are not required to have marketing objectives. a. True b. False ANSWER: False 39. The most obvious distinction between not-for-profit organizations and for-profit firms is the focus on generating revenues above and beyond the costs. a. True b. False ANSWER: True 40. For-profit organizations tend to focus more on their customers than not-for-profits do. a. True b. False ANSWER: True 41. Celebrities use person marketing as a way to increase their value in the marketplace. a. True b. False ANSWER: True 42. Promotional events designed to attract visitors to a particular area or to improve the image of a city, state, or nation would be examples of event marketing. a. True b. False ANSWER: False

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 43. Branches of the U.S. military sometimes show recruitment advertisements in cinemas featuring movies that are most likely to attract viewers of military age. This is an example of place marketing. a. True b. False ANSWER: False 44. A theater group promoting a performance to raise funds in the fight against cancer is an example of both cause marketing and event marketing. a. True b. False ANSWER: True 45. Marketing of sporting, cultural, and recreational activities to selected target markets is known as cause marketing. a. True b. False ANSWER: False 46. Virtually all colleges and universities have alumni associations that publish magazines, hold reunions, and try to raise funds. These activities constitute organization marketing. a. True b. False ANSWER: True 47. The traditional view of marketing can be described as transaction-based marketing. a. True b. False ANSWER: True 48. According to relationship marketing, the lifetime value of a customer should exceed the investment made by the firm to attract and keep the customer. a. True b. False ANSWER: True 49. In relationship marketing, employees serve customers within an organization as well as outside it. a. True b. False ANSWER: True

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 50. According to relationship marketing, firms must apply higher standards of customer satisfaction to external customer relationships over intradepartmental relationships. a. True b. False ANSWER: False 51. Programs that improve customer service inside a company raise productivity and staff morale, resulting in better customer relationships outside the firm. a. True b. False ANSWER: True 52. Relationship marketing moves customers up a loyalty ladder—from new customers to regular purchasers, then to loyal supporters of the firm and its goods and services, and finally to advocates who not only buy its products but recommend them to others. a. True b. False ANSWER: True 53. Relationship building in marketing starts with excellent customer service after purchase. a. True b. False ANSWER: False 54. Relationship marketing tries to rebuild damaged relationships and rejuvenate unprofitable customers. a. True b. False ANSWER: True 55. Interactive marketing refers to buyer-seller communication in which the customer controls the amount and type of information received from a marketer. a. True b. False ANSWER: True 56. Interactive promotions put customers in control because they can gain immediate access to key product information when they want it. a. True b. False ANSWER: True

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 57. Mobile marketing is a term used to describe marketing messages sent via wireless technology. a. True b. False ANSWER: True 58. Interactive marketing allows marketers and consumers to customize their communication. a. True b. False ANSWER: True 59. The cost of finding new customers is far less than the cost of maintaining existing ones. a. True b. False ANSWER: False 60. Compared to transaction marketing, relationship marketing relies more heavily on information technologies. a. True b. False ANSWER: True 61. Firms that make the most efficient use of buzz marketing claim that it is a “one-way” approach to building customer relationships. a. True b. False ANSWER: False 62. Information technology has enhanced the effectiveness of relationship marketing by leveraging mass-marketing campaigns. a. True b. False ANSWER: False 63. Buzz marketing excludes visual aspects as it does not consist of a tangible expression of an issue or position. a. True b. False ANSWER: False

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 64. A strategic alliance is defined as a partnership between a for-profit business and a not-for-profit organization. a. True b. False ANSWER: False 65. The limitation of a strategic alliance is that it eliminates competitive advantage. a. True b. False ANSWER: False 66. In the past, firms have viewed their suppliers as adversaries against whom they must fiercely negotiate prices, playing one off against the other. a. True b. False ANSWER: True 67. Company A provides a component to Company B, which then sells it under its own brand. This is an example of a vertical alliance. a. True b. False ANSWER: True 68. Product development partnerships and vertical alliances are two examples of strategic alliances. a. True b. False ANSWER: True 69. On average, marketing expenses account for half of the costs involved in a product. a. True b. False ANSWER: True 70. Intermediaries that operate between producers and resellers are known as wholesalers. a. True b. False ANSWER: True

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 71. Buying, selling, transporting, and storing are known as the facilitating functions of marketing because they represent the exchange and physical distribution functions. a. True b. False ANSWER: False 72. The functions of marketing can be grouped into three major categories: exchange functions, physical distribution functions, and financing functions. a. True b. False ANSWER: False 73. The physical distribution functions of marketing are related to advertising, personal selling, and sales promotion in the attempt to match products and services to consumer needs. a. True b. False ANSWER: False 74. Manufacturers engage in risk taking when they create goods and services based on research and their belief that consumers need them. a. True b. False ANSWER: True 75. Marketing is the indirect connection between a firm and its customers. a. True b. False ANSWER: False 76. Social responsibility includes marketing philosophies, policies, procedures, and actions whose primary objective is to enhance society and protect the environment through sustainable products and practices. a. True b. False ANSWER: True 77. Sustainable products are products that can be produced, used, and disposed of with minimal impact on the environment. a. True b. False ANSWER: True

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 78. ARC Inc., a waste management company, expands its scope of business to recycle liquids that can be turned into fuel-grade ethanol, demonstrating the socially responsible approach of the company. a. True b. False ANSWER: True 79. Electronic commerce and computer technologies have created unprecedented opportunities in business today. a. True b. False ANSWER: True 80. Noel Pvt. Ltd. combines metal, rubber, and other components in the production of appliances. In doing so the company creates _____ utility. a. ownership b. form c. place d. time ANSWER: b 81. The utility of a product or service is its: a. want-satisfying power. b. re-usability. c. function as a commodity. d. design quality. ANSWER: a 82. Fame-us is a talent hunt agency focusing on the youth looking to enter Hollywood. As part of their marketing strategy, Fame-us generates time and place utility by: a. creating a nationwide advertising campaign to attract applicants. b. launching roadshows across cities and conduct talent hunts at campuses during Thanksgiving. c. endorsing their services using famous celebrities from Hollywood. d. opening a well-equipped studio with pre and post-production facilities. ANSWER: b 83. The ability to transfer title to goods or services from marketer to buyer is described as: a. ownership utility. b. form utility. c. time utility. d. place utility. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 84. Availability of goods and services at convenient locations creates: a. form utility. b. time utility. c. place utility. d. ownership utility. ANSWER: c 85. Creating _____ utility is the responsibility of the production function. a. place b. form c. time d. ownership ANSWER: b 86. Banks have recently begun to install ATMs in supermarkets to address customers’ wants for instant cash when they go shopping. What type of utility are banks creating for customers? a. Form b. Possession c. Place d. Ownership ANSWER: c 87. The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have values for customers, clients, partners, and society at large is called _____. a. marketing b. financing c. operations d. administration ANSWER: a 88. Which of the following is true regarding marketing? a. The marketing concept emphasizes creating and maintaining short-term successful relationships with customers and suppliers. b. Marketing encompasses such a broad scope of activities and ideas that settling on one definition is often difficult. c. Marketing refers to an activity in which two or more parties give something of value to each other to satisfy perceived needs. d. The marketing concept is a belief that consumers will resist purchasing nonessential goods and services. ANSWER: b

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 89. Which of the following statements concerning the global marketplace is true? a. The global marketplace is diminishing because of Internet technology. b. The global marketplace is growing because of trade agreements. c. The global marketplace is growing due to the threat of the ability of a single nation to manufacture, supply, and consume all that it produces. d. The global marketplace is growing owing to the talent shortage in the home countries of national companies. ANSWER: b 90. The marketing philosophy summarized by the phrase “a high-quality product will sell itself” is a characteristic of the _____ era. a. production b. sales c. marketing d. relationship ANSWER: a 91. Which of the following factors contributed to the transition from the production era to the sales era? a. Increased consumer demand b. Sophisticated production techniques c. Increase in urbanization d. The Great Depression ANSWER: b 92. A company produces a high-quality product, with a maximum monthly output of 10,000 units. Production levels are constant and the company relies on its marketing department to find customers for its output. This approach is consistent with which era in marketing history? a. Production era b. Relationship era c. Marketing era d. Sales era ANSWER: d 93. A company with a _____ orientation assumes that customers will resist purchasing nonessential goods and services and that the task of personal selling and advertising is to persuade them to buy. a. production b. marketing c. sales d. relationship ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 94. A market in which there are more buyers for fewer goods and services is known as a: a. seller’s market. b. monopoly. c. buyer’s market. d. oligopoly. ANSWER: a 95. Which of the following statements regarding the marketing era is true? a. Marketing and selling would no longer be considered synonymous terms. b. Marketing was relegated to a supplemental role performed after the production process. c. The marketing concept was linked to a shift from a buyer’s market to a seller’s market. d. Business success often was defined solely in terms of production successes. ANSWER: a 96. A buyer’s market is characterized by: a. more goods and services than buyers to buy them. b. a small number of firms dominating the production of goods offered. c. practically no competition in the marketplace. d. a single firm producing a major share of the products or services offered. ANSWER: a 97. The emergence of the marketing concept can best be explained by: a. higher production levels. b. greater sophistication in the production of goods. c. the shift from a seller’s market to a buyer’s market. d. a focus on product quality. ANSWER: c 98. Assume you want to increase the number of customers by applying the marketing concept. Which of the following strategies would be most consistent with this approach? a. Reduce product costs b. Offer more product variety than competitors c. Target markets d. Employ inexpensive labor ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 99. Indigo Ltd. wanted to increase its customers by applying the marketing concept. Which of the following would be an appropriate way to apply this approach? a. Maximize production of goods b. Focus on meeting the needs of the consumers c. Offer more product variety than competitors d. Produce high quality goods ANSWER: b 100. Which of the following is true of a company with strong market orientation? a. It designs products with advantages and levels of quality compatible with its competitors. b. It assumes that customers will resist purchasing nonessential goods. c. It stresses on efficiency in producing a quality product, with the attitude toward marketing that “a good product will sell itself.” d. It has a focus on new-product development and the introduction of innovative products. ANSWER: d 101. The business philosophy incorporating the marketing concept that emphasizes first determining unmet consumer needs and then designing a system for satisfying them is known as: a. customer persuasion. b. consumer orientation. c. aggressive marketing. d. sales orientation. ANSWER: b 102. The _____ is a companywide consumer orientation with the objective of achieving long-run success. a. marketing myopia b. exchange process c. marketing concept d. seller’s market ANSWER: c 103. Which of the following is true regarding the marketing concept? a. During tough economic times, the marketing concept focuses on the objective of achieving short-term profits instead of long-run success. b. The marketing concept believes that consumers will resist purchasing nonessential goods and services. c. The marketing concept emphasizes cutting costs and boosting revenues during tough economic times. d. A firm’s survival and growth are built into the marketing concept. ANSWER: d

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 104. In the relationship era, firms focus on: a. short-term relationships with suppliers. b. long-term relationships with customers and suppliers. c. short-term relationships with customers and suppliers. d. short-term relationships with customers. ANSWER: b 105. Which of the following would be visible in relationship marketing? a. Focus on producing high quality goods b. Sales orientation c. Companywide consumer orientation d. Strategic alliances ANSWER: d 106. The future growth of a company is endangered when management: a. adopts a consumer orientation. b. is aware of the scope of its business. c. is committed to maintaining a product-oriented philosophy. d. is focused on converting customer needs to wants. ANSWER: c 107. If a company such as J.B. Trucking wanted to avoid marketing myopia, it should define its business as: a. a provider of transportation solutions. b. a trucking company. c. a materials handling company. d. a freight hauling firm. ANSWER: a 108. Which of the following refers to marketing myopia? a. A companywide consumer orientation with the objective of achieving long-run success b. A market in which there are more buyers for fewer goods and services c. A management’s failure to recognize the scope of its business d. A market in which there are more goods and services than people willing to buy them ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 109. Which of the following statements is correct regarding not-for-profit organizations? a. The sole common factor between not-for-profit organizations and for-profit firms is the financial bottom line. b. Not-for-profit organizations hope to generate as much revenue as possible to support their causes. c. Not-for-profit organizations are all found in the public sector. d. Historically, not-for-profit firms have had more exact goals and marketing objectives than for-profit firms. ANSWER: b 110. Which of the following holds true when not-for-profit organizations are compared with for-profit organizations? a. N ot-for-profit organizations tend to focus their marketing on just one public—their customers. b. N ot-for-profit organizations often possess some degree of monopoly power in a given geographical area. c. N ot-for-profit organizations depend on strategic alliances with for-profits to provide advertising and visibility. d. A service user of a not-for-profit organization may have more control over the organization’s destiny than customers of a profit-seeking firm. ANSWER: b 111. An alliance between a not-for-profit organization and a for-profit organization: a. rarely benefits either party. b. often benefits both parties. c. typically benefits the not-for-profit more than the for-profit. d. typically benefits the for-profit more than the not-for-profit. ANSWER: b 112. The most obvious distinction between not-for-profit and for-profit organizations is: a. not for-profit organizations have more exact marketing goals. b. not-for-profit organizations have a different view of what constitutes the bottom line. c. customers of not-for-profit organizations have more control. d. not-for-profit organizations market services not goods. ANSWER: b 113. The term ‘bottom line’ is a reference to: a. overall company profitability. b. a firm’s social responsibility. c. the limits on marketing budgets. d. the ethical and social viability of marketing. ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 114. In not-for-profit organizations, _____ may interfere with the organization’s marketing program. a. stockholders b. the government c. service-users d. major contributors ANSWER: d 115. Which of the following is an example of person marketing? a. A firm creating awareness of the importance of using public transport. b. A country promoting its sightseeing spots and cuisines. c. A mall being inaugurated by a popular commercial actor. d. A firm promoting an inter-state soccer match. ANSWER: c 116. Melissa is campaigning for Janet, her friend, who is contesting for the presidency of the student council at Riverdale Junior College. Melissa’s effort is an example of _____ marketing. a. cause b. person c. place d. organization ANSWER: b 117. The basic objective of place marketing is to: a. attract visitors or new businesses to a particular area. b. influence others to accept the goals of the sponsoring organization. c. convince people to attend a sporting or cultural event. d. bring to the attention of the public some charitable issue. ANSWER: a 118. State bureaus of tourism and conventions typically engage in _____ marketing. a. organization b. person c. place d. cause ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 119. Wild Escape advertises jungle safaris, chimpanzee tracking, and gorilla tracking tours. This is an example of _____. a. form utility creation b. place marketing c. organization utility d. sports marketing ANSWER: b 120. Phoebe was asked to bring a can of food for the local food bank as the “price of admission” for a certain ceremony. This is an example of _____. a. person marketing b. organization marketing c. ownership utility d. cause marketing ANSWER: d 121. Some Florida drivers have license plates that say “Save the Manatee.” This is an example of _____ marketing. a. organization b. cause c. place d. event ANSWER: b 122. Fred Foods Inc. provides free cereals and biscuits to support a program that aims to end hunger in various emerging nations. This is an example of _____ marketing. a. organization b. person c. cause d. place ANSWER: c 123. The Tour de Cure is a bicycle ride, not a race, to raise money for the American Diabetes Association and is held in 40 states nationwide. This is an example of: a. event marketing. b. organization marketing. c. person marketing. d. place marketing. ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 124. As an official sponsor of the Olympics, The Coca-Cola Company engages in _____ marketing. a. place b. event c. person d. organization ANSWER: b 125. Which of the following is a combination of person, cause, and organization marketing? a. Tiger Woods’ endorsement of Nike, a sports company and Accenture, a consulting company b. The Nobel Peace Prize for Al Gore for his work on global warming c. UNICEF’s work to improve the living conditions of children across the world d. Angelina Jolie’s role as a UN Goodwill Ambassador for refugees ANSWER: d 126. A university sells customized sweatshirts, pullovers, and jerseys to its students and staff. This is an example of _____. a. cause marketing b. organization marketing c. person marketing d. event marketing ANSWER: b 127. The revenues and intangible benefits accrued to the firm, minus the investment to attract and keep a customer is known as the: a. gradient of return on investment. b. intangible benefit stream. c. investment-benefit differential. d. lifetime value of the customer. ANSWER: d 128. Many hotel chains offer free stays and other perks to repeat customers. This is an example of: a. relationship marketing. b. transaction-based marketing. c. interactive marketing. d. social marketing. ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 129. In the practice of relationship marketing, the definition of a customer is taken to another level. Which of the following best illustrates how a company practicing relationship marketing is different from a traditional transaction-based marketer? a. The city pool allows kids 12 years and younger to swim for free on Fridays. b. A local coffee shop distributes coupons for $.50 off each cup of coffee. c. The purchasing department of a defense contractor invites its suppliers to attend an annual golf outing. d. The heads of the financial departments meet with the Chief Financial Officer to discuss year-end financial reporting. ANSWER: c 130. What is the ultimate objective of relationship marketing? a. Find new customers b. Create regular purchasers c. Turn customers into advocates d. Turn customers into loyal supporters ANSWER: c 131. The application of relationship marketing requires attention to levels of customer loyalty. Which of the following is the highest level as defined by this type of marketing? a. Loyal supporter of the company and its goods and services. b. Advocate who not only buys the products but recommends them to others. c. Regular purchaser of the company's products. d. Stockholder who literally buys into the organization and its mission. ANSWER: b 132. An example of interactive marketing would be: a. a customer creating their own products, as in the case of Subway or Build-a-Bear. b. an intermediary wholesaler who links sale of goods from manufacturer to consumer. c. buyer-seller communication through the Internet and virtual reality kiosks. d. sponsoring local sports teams. ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 133. Interactive marketing refers to: a. sequential marketing efforts beginning with frontline salespersons and proceeding to detailed instructions by a technical expert. b. marketing efforts vis-a-vis interactive programs where customers can post their queries directly to the management. c. buyer–seller communications in which the customer controls the amount and type of information received from a marketer. d. software-controlled marketing strategy which uses central databases to segment the market on various demographic and psychographic factors. ANSWER: c 134. Mobile marketing refers to: a. running promotional campaigns on transport media like trains and airplanes. b. marketing messages transmitted via wireless technology. c. promoting associated products or services alongside mobile technologies. d. the use of online social media as a communications channel for marketing messages. ANSWER: b 135. By converting indifferent customers into loyal ones through relationship marketing, companies can: a. increase the cost of maintaining existing customers. b. start a process by which customers become bound contractually to the business. c. avoid the necessity of improving customer service in the long run. d. generate repeat sales. ANSWER: d 136. Which of the following is true of relationship marketing? a. It focuses on finding new customers. b. It prefers not to maintain existing customers due to high costs. c. It does not believe in generating repeat sales. d. It believes in maintaining existing customers. ANSWER: d 137. Relationship marketing focuses more attention on _____ customers because new customers are _____ to acquire compared to existing customers. a. existing; less expensive b. new; less expensive c. existing; more expensive d. new; more expensive ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 138. Sally Myers, head of marketing at Sally’s Salon, serviced six new customers over the past two weeks. Through a feedback form, Sally learned that all of them had acted upon the opinions of their friends and family members. What Sally encountered is an example of: a. transaction-based marketing. b. sales orientation. c. marketing myopia. d. buzz marketing. ANSWER: d 139. Which of the following holds true regarding relationship marketing? a. It applies only to individual consumers and employees. b. It affects distributors as well as other types of corporate partnerships. c. It does not allow marketers and customers to customize their communication. d. It is a buyer–seller communication in which the marketer controls the amount and type of information received from a customer. ANSWER: b 140. Relationship marketing relies heavily on: a. mass marketing and global promotions. b. technology to store customer data and to customize products/services. c. strategic alliances and creating competitive advantage. d. aligning business goals with a social cause. ANSWER: b 141. A gaming corporation and a mobile manufacturer work together to develop unique games which are made available on the applications of the phones. This is an example of: a. an exchange function. b. marketing research. c. social marketing. d. a strategic alliance. ANSWER: d 142. Buying and selling are: a. the two exchange functions of marketing. b. physical distribution functions. c. exchange and distribution functions, respectively. d. distribution and exchange functions, respectively. ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 143. What are the subfunctions of physical distribution? a. Buying, selling, and financing b. Risk taking and market research c. Storing and transporting d. Standardizing and grading ANSWER: c 144. The facilitating functions of marketing include: a. securing marketing information and financing. b. buying and selling. c. securing market information and storage. d. risk taking and transporting. ANSWER: a 145. The financing function of marketing involves: a. making sufficient quantities of goods available in the marketplace. b. ensuring products meet established quality and quantity standards. c. providing funds to buyers for building inventories prior to sales. d. using advertising, personal selling, and sales promotion to match goods and services to customers. ANSWER: c 146. Financing is one of the _____ functions of marketing. a. exchange b. distribution c. decisional d. facilitating ANSWER: d 147. ACB Ltd. provides credit to dealers, as well as buyers of Alfresco Automobiles. The marketing function performed in this case is: a. financing. b. exchange. c. distribution. d. risk taking. ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 148. When marketers apply quantity control standards, they are: a. engaging in the process of exchange. b. reducing the need for purchasers to inspect each item they purchase. c. determining the amount an individual will be allowed to buy on credit. d. developing channels of distribution for a product. ANSWER: b 149. William Cutlery Inc. sells its products at its stores and via door-to-door sales. Selling, order taking, delivery, and limited customer service are all conducted by the drivers. Which two marketing functions overlap as a result of the drivers’ required responsibilities? a. Facilitation and distribution b. Exchange and facilitating c. Distribution and exchange d. Exchange and financing ANSWER: c 150. Which of the following forms the first half of the exchange process? a. Standardizing b. Buying c. Selling d. Storing ANSWER: b 151. Which of the following functions of marketing involves advertising? a. Standardizing b. Buying c. Selling d. Storing ANSWER: c 152. Which of the following is a facilitating function of marketing? a. Buying b. Selling c. Standardization and grading d. Distribution ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 153. Which function of marketing helps marketers determine what consumers want and need and how to offer goods and services to satisfy them? a. Financing b. Securing market information c. Risk taking d. Standardizing and grading ANSWER: b 154. Manufacturers create goods and services based on research and their belief that consumers need them. In doing so, what marketing function are they performing? a. Financing b. Standardizing and grading c. Risk taking d. Physical distribution ANSWER: c 155. Ethics are: a. beliefs or customs taught by one generation to the next, often orally. b. the social causes promoted by the company. c. established patterns of behavior that can be objectively verified within a particular social setting. d. the moral standards of behavior expected by society. ANSWER: d 156. _____ involves marketing philosophies, policies, procedures, and actions whose primary objective is the enhancement of society. a. Social responsibility b. Customer orientation c. Ethics d. Relationship marketing ANSWER: a 157. When a firm contributes to environment protection and human welfare programs, which type of behavior is it exhibiting? a. Relationship marketing b. Social responsibility c. Economic neutrality d. One-to-one marketing ANSWER: b

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 158. Products that can be produced, used, and disposed of with minimal impact on the environment are called: a. non-renewable products. b. bio-gradable products. c. sustainable products. d. modulated effluents. ANSWER: c 159. What is the role of marketing in sustainability efforts? a. Firms stand to exploit newer markets that are opened up to them. b. Firms gain credibility from their efforts to protect the environment. c. Firms can expect to save on costs incurred in discarding older, ineffective technology in favor of newer, stateof-the-art technology. d. Firms can increase their profitability by enhancing their carbon-footprint. ANSWER: b 160. Define utility and discuss the four types of utility. Give examples and list the functional areas within an organization that are responsible for each. ANSWER: Utility is the want-satisfying power of a good or service. The four types of utility are (1) form (conversion of raw materials and components into finished products), (2) time (availability of goods and services when consumers want them), (3) place (availability of goods and services at convenient locations), and (4) ownership (ability to transfer title to goods and services from marketer to buyer). Examples of each type of utility are: form – Mixing alloys, steel, and rubber to manufacture radial tires; time – courier delivery on time; place – banks at the supermarket; ownership – owning a new TV. Marketing is responsible for ownership, time and place. The production function is responsible for form utility. 161. Compare the purchase of an AM/FM radio with the purchase of a satellite radio. Describe the creation of utility from the perspective of the manufacturer and marketer. Describe the utility relationship between the customer and the marketer. ANSWER: The manufacturer of the clock radio creates form and ownership utility. The consumer will usually end the relationship with the manufacturer once the product is purchased, unless service is required. The broadcasts to this radio, generated by the local radio station, provide time and place utility to the customer. As the broadcast is free to the listener, however, the ownership utility for the broadcast is generated for the advertisers and sponsors. The latter, in turn, expect, but are not guaranteed to have a utility relationship with the listener in the way of future sales. The relationship between the customer and the satellite radio provider is different because it is ongoing in nature. The manufacture and sale of the radio hardware achieves form and ownership utility. The subscription required between the listener and the broadcaster creates time, place, and ownership utility. The amount of utility generated between the two can vary over time. Adding top celebrities can generate more utility to the listener. In turn, better broadcasts bring in more subscribers, adding to the profitability of the broadcaster.

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 162. List the activities that marketers must perform in order to create the customers organizations want. ANSWER: Marketing specialists are responsible for most of the activities necessary to create the customers the organization wants. These activities include the following: • identifying customer needs • designing products that meet those needs • communicating information about those goods and services to prospective buyers • making the items available at times and places that meet customers’ needs • pricing merchandise and services to reflect costs, competition, and customers’ ability to buy • providing the necessary service and follow-up to ensure customer satisfaction after the purchase 163. Explain the concept of marketing. What are some common misconceptions about marketing? ANSWER: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have values for customers, clients, partners, and society at large. Marketing involves analyzing customer needs, securing information needed to design and produce products that match buyer expectations, efficiently distributing products, satisfying customer preferences, and creating and maintaining relationships with customers and suppliers. Marketing applies to both profit-seeking and not-for-profit organizations. Due to the continuous exposure to advertising and personal selling, many people equate marketing with selling, or think that marketing begins only after a product has been produced. 164. Explain the essence of marketing. ANSWER: The essence of marketing includes managing customer relationships and the exchange process, in which two or more parties give something of value to each other to satisfy perceived needs. Often, people exchange money for tangible goods such as groceries, clothes, a car, or a house. In other situations, they exchange money for intangible services such as a haircut or a college education. Many exchanges involve a combination of goods and services. People also make exchanges when they donate money or time to a charitable cause. Managing customer relationships like these are the essence of successful marketing. 165. List the four eras in marketing history in chronological order. Briefly describe the philosophy behind each era. ANSWER: The four eras are: the production era (quality products will sell themselves), the sales era (creative selling and advertising will overcome consumer resistance and convince them to buy), the marketing era (the consumer rules; find a need and satisfy it), and the relationship era (build and maintain cost-effective long-term relationships with customers, employees, suppliers, and other parties for mutual benefit). 166. What is the major difference between the sales era and marketing era? ANSWER: The sales era was characterized by the belief that consumers would resist purchasing nonessential goods and services, and the attitude that only creative advertising and personal selling could overcome consumers’ resistance and persuade them to buy. The sales era was typified by the trend of seller’s markets. The marketing era was characterized by the business philosophy incorporating the marketing concept that emphasized first determining unmet consumer needs and then designing a system for satisfying them. There was a shift in the focus of companies away from products and sales to satisfying customer needs. Advertising not only communicated the benefits of products but also created needs and wants in the minds of consumers. The marketing era was influenced by the trend of buyer’s markets. Copyright Cengage Learning. Powered by Cognero.

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 167. Define marketing myopia, and describe how a company can overcome a myopic view. Give an example of a successful avoidance of marketing myopia. ANSWER: Marketing myopia is defined as management’s failure to recognize the scope of its business. Firms in a number of industries have overcome myopic thinking by developing broader marketing-oriented business ideas that focus on consumer need satisfaction. A trucking company defining itself as a transportation company and a telephone company defining itself as a communications company are examples of how to avoid marketing myopia. Nokia defining itself as only a cell phone manufacturer would be a myopic view. However, Nokia’s mission of connecting people shows that the creative focus of the company is toward the broader perspective of bringing people together using telecommunications. 168. Explain the need for and the role of A-Head: Marketing in Not-for-Profit Organizations. ANSWER: Today’s organizations—both profit oriented and not-for-profit—recognize universal needs for marketing and its importance to their success. More than a quarter of all U.S. adults volunteer in one or more of the 2.3 million not-for-profit organizations across the country. In total, these organizations generate hundreds of billions of dollars of revenues each year through contributions and from fund-raising activities. Not-for-profits operate in both public and private sectors. Federal, state, and local organizations pursue service objectives not keyed to profitability targets. Regardless of their size or location, all of these organizations need funds to operate. Adopting the marketing concept can make a great difference in their ability to meet their service objectives. Some not-for-profits form partnerships with business firms that promote the organization’s cause or message. Generally, the alliances formed between not-for-profit organizations and commercial firms and their executives benefit both. The reality of operating with multimillion-dollar budgets requires not-for-profit organizations to maintain a focused business approach. 169. List and describe the five types of A-Head: Nontraditional Marketing. Give an example of each. ANSWER: Cause marketing is the identification and promotion of a social issue, cause, or idea to selected target markets (Hurricane Katrina Relief Fund, Save the Rainforest). Person marketing is designed to cultivate the attention and preference of a target market toward a person (Oprah Winfrey). Place marketing is designed to attract visitors to, improve the image of, or entice business opportunity to utilize a particular city, state, nation or geographic area. (A city vying for the rights to host an Olympic event will place market to the Olympic committee.) Event marketing is the promotion of specific recreational, sporting, cultural or charitable activities to a specific target market (concert promotion, the Super Bowl and county fairs are all examples). Organizational marketing is the effort to influence others to recognize the goals, accept the goods and services, or contribute in some way to the organization (Salvation Army Christmas campaign, American Red Cross ads, Army recruiting).

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 170. Define lifetime value of a customer. How has Apple, with the development of the iPod product line and iTunes software, gained a competitive advantage over competitors? Will Apple experience a higher or lower lifetime value of a customer and why? ANSWER: The lifetime value of a customer is the measure of the revenue and intangible benefits a customer brings to the organization over the average lifetime, minus the investment that the firm has made to attract and keep the customer. Apple has developed hardware and proprietary software that revolutionized the way that music, purchased or downloaded, can be stored, catalogued and replayed. Because of the digital file structure, only Apple products can play the software. This links the hardware sales to the repeat purchases of music through the software, increasing the lifetime value of the customer. By expanding iTunes to include movies, books, television shows and podcasts, Apple is increasing its market with customers buying up the product line and expanding the media purchases through the software. Other companies failed to integrate hardware and software and have thus been relegated to smaller segments of the market. Since it has linked its hardware sales to the increasing demand for media downloads and purchases, Apple could experience a higher lifetime value of a customer. 171. Define relationship marketing and explain its characteristics. ANSWER: Relationship marketing is the development and maintenance of long-term, cost-effective relationships with individual customers, suppliers, employees, and other parties for mutual benefit. Strategic alliances and partnerships among manufacturers, retailers, and suppliers often benefit everyone. It broadens the scope of external marketing relationships to include suppliers, customers, and referral sources. In relationship marketing, the term customer takes on a new meaning. Employees serve customers within an organization as well as outside it; individual employees and their departments are customers of and suppliers to one another. They must apply the same high standards of customer satisfaction to intradepartmental relationships as they do to external customer relationships. Relationship marketing recognizes the critical importance of internal marketing to the success of external marketing plans. Programs that improve customer service inside a company also raise productivity and staff morale, resulting in better customer relationships outside the firm. Relationship marketing gives a company new opportunities to gain a competitive edge by moving customers up a loyalty ladder—from new customers to regular purchasers, then to loyal supporters of the firm and its goods and services, and finally to advocates who not only buy its products but recommend them to others. 172. Describe the process of relationship building in marketing. ANSWER: Relationship building begins early in marketing. It starts with determining what customers need and want, then developing high-quality products to meet those needs. It continues with excellent customer service during and after purchase. It also includes programs that encourage repeat purchases and foster customer loyalty. Marketers may try to rebuild damaged relationships or rejuvenate unprofitable customers with these practices as well.

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 173. Differentiate between transaction-based marketing and relationship marketing. ANSWER: Historically, marketing was viewed as a simple exchange process, that is, a process that moved from transaction to transaction without any significant carry-forward of effects. In other words, closing deals was more important than making friends. More recently, a new concept explicitly realizes that relationships are important and maintaining a long-term relationship between marketing firm and customer is not only satisfying, but cost–effective too. If a one-time customer can be converted to a loyal customer, more sales will be generated over the long run. In short, it is cheaper to retain a customer than to constantly find new ones. Effective relationship marketing also relies heavily on information technologies such as computer databases to record customers’ tastes, price preferences, and lifestyles. This technology helps companies become one-to-one marketers that gather customer-specific information and provide individually customized goods and services. The firms target their marketing programs to appropriate groups rather than relying on mass-marketing campaigns. Companies that study customer preferences and react accordingly gain distinct competitive advantages. 174. Describe interactive marketing and social media. What are the advantages of interactive marketing and social marketing? ANSWER: Interactive media technologies combine computers and telecommunications resources to create software that users can control. Interactive marketing refers to buyer–seller communications in which the customer controls the amount and type of information received from a marketer. This technique provides immediate access to key product information when the consumer wants it, and it is increasingly taking place on social media sites like Facebook, Twitter, and blogs. Interactive marketing allows marketers and consumers to customize their communication. Customers may come to companies for information, creating opportunities for one-to-one marketing. They also can tell the company what they like or dislike about a product, and they can just as easily click the exit button and move on to another area. As interactive promotions grow in number and popularity, the challenge is to attract and hold consumer attention. Social marketing is the use of online social media as a communications channel for marketing messages. Social media also allow larger exchanges in which consumers communicate with one another using email or social networking sites. These electronic conversations can establish innovative relationships between users and the business, providing customized information based on users’ interests and levels of understanding. 175. Give a brief description of strategic alliances and business partnerships. ANSWER: Relationship marketing does not apply just to individual consumers and employees. It also affects a wide range of other markets, including business-to-business relationships with the firm’s suppliers and distributors as well as other types of corporate partnerships. In the past, companies often have viewed their suppliers as adversaries against whom they must fiercely negotiate prices, playing one off against the other. But this attitude has changed radically as both marketers and their suppliers discover the benefits of collaborative relationships. The formation of strategic alliances—partnerships that create competitive advantages—is also on the rise. Alliances take many forms, including product development partnerships that involve shared costs for research and development and marketing, and vertical alliances in which one company provides a product or component to another firm, which then distributes or sells it under its own brand.

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 176. List the eight universal functions of marketing. ANSWER: Marketing is responsible for the performance of eight universal functions: buying, selling, transporting, storing, standardizing and grading, financing, risk taking, and securing marketing information. Some functions are performed by manufacturers, others by retailers, and still others by marketing intermediaries called wholesalers. 177. Explain the exchange and distribution functions of marketing. ANSWER: Buying and selling represent exchange functions. Buying is important to marketing on several levels. Marketers must try to understand consumer behavior. Because they generate time, place, and ownership utilities through purchases, marketers must anticipate consumer preferences for purchases to be made several months later. Selling is the second half of the exchange process. It involves advertising, personal selling, and sales promotion in an attempt to match the firm’s goods and services to consumer needs. Transporting and storing are physical distribution functions. Transporting involves physically moving goods from the seller to the purchaser. Storing involves warehousing goods until they are needed for sale. 178. Define ethics and social responsibility. Why are these two concepts important for marketers? Give an example of each behavior. ANSWER: Ethics consists of moral standards of behavior expected by a society. Most businesspeople follow ethical practices. More than half of all major corporations now offer ethics training to employees, and most corporate mission statements include pledges to protect the environment, contribute to communities, and improve workers’ lives. Social responsibility includes marketing philosophies, policies, procedures, and actions whose primary objective is to enhance society and protect the environment through sustainable products and practices. Social responsibility often takes the form of philanthropy, making gifts of money or time to humanitarian causes. Many firms, both large and small, include social responsibility programs as part of their overall mission. These programs often produce such benefits as improved customer relationships, increased employee loyalty, marketplace success, and improved financial performance. 179. What are sustainable products? What are the benefits of sustainability efforts? ANSWER: Sustainable products are those that can be produced, used, and disposed of with minimal impact on the environment. Many such firms have added annual sustainability reports and a top-level executive position to develop and promote their sustainability efforts. Sustainability must permeate every firm’s corporate strategy from the top down, so all areas in the firms can align their environmental goals in the same direction for the greatest effectiveness. Firms stand to gain needed credibility from their efforts to protect the environment by reducing waste and pollution. Match each definition to the corresponding term. a. utility b. buzz marketing c. exchange process d. seller’s market e. buyer’s market f. marketing myopia g. social responsibility Copyright Cengage Learning. Powered by Cognero.

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Chapter 01: Marketing: The Art and Science of Satisfying Customers h. relationship marketing i. person marketing j. place marketing k. event marketing l. organization marketing m. interactive marketing n. lifetime value of a customer o. social marketing p. one-to-one marketing q. strategic alliances r. not-for-profit organizations s. ethics t. mobile marketing u. wholesalers v. transaction-based marketing 180. The want satisfying power of a product is its _____. ANSWER: a 181. The _____ occurs when two or more parties exchange something of value. ANSWER: c 182. A(n) _____ occurs when buyers outnumber sellers or product supply. ANSWER: d 183. A(n) _____ occurs when there are more sellers (or products) than buyers. ANSWER: e 184. _____ describes the current era in the history of marketing. ANSWER: h 185. _____ results from management’s failure to recognize the scope of its business. ANSWER: f 186. The American Cancer Society in the private sector and The Department of Natural Resources in the public sector are examples of _____. ANSWER: r 187. A musician endorses a certain automobile. This is an example of ____. ANSWER: i 188. An advertisement titled “The Ultimate Place for a vacation” is an example of _____. ANSWER: j

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 189. The concert of a French rock band was promoted by a certain firm in the United States. This is an example of _____. ANSWER: k 190. Many not-for-profits utilize _____ in order to influence people to accept their goals or contribute in some way. ANSWER: l 191. _____ refers to buyer and seller exchanges characterized by limited communications and little or no ongoing relationships between the parties. ANSWER: v 192. The _____ equals the revenues and benefits a customer brings to an organization, minus expenses to attract and maintain the relationship. ANSWER: n 193. The growth of wireless technology has given rise to a new marketing strategy called _____. ANSWER: t 194. Buyer-seller communications in which the customer controls the amount and type of information received from a marketer is called _____. ANSWER: m 195. The use of online social media as a communications channel for marketing messages is known as _____. ANSWER: o 196. _____ is a customized marketing program designed to build long-term relationships with individual customers. ANSWER: p 197. “Word-of-mouth” advertising that has grown in effectiveness with the advent of the Internet is called _____. ANSWER: b 198. For-profit organizations and not-for-profit organizations often form _____. ANSWER: q 199. _____ are intermediaries that operate between producers and resellers. ANSWER: u 200. The moral standards of behavior expected by a society are known as _____. ANSWER: s 201. Corporations that voluntarily recycle paper, glass and electronics practice _____. ANSWER: g

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 202. Marketers have been forced to adopt a more global perspective with their strategies. Which of the following is a key factor in driving this change? a. I ncreasing international travel b. I ncreasing consumer spending in the United States c. G reater interdependence of the world's economies d. I ncreasing economic clout of special interest groups e. C hanging political leadership in China ANSWER: c 203. Companies must broadly define their goals so they focus on fulfilling consumer needs in order to avoid _____________. a. C ustomer value destruction b. P roduction era thinking c. R isk taking d. M arketing myopia e. U nethical marketing ANSWER: d 204. Tim Howard, the goal keeper for the U.S. Men’s soccer team, has just signed a major marketing deal with your company. You plan to utilize him in a variety of marketing campaigns leading up to the 2018 Men’s Soccer World Cup in Russia. Which one of the following categories of nontraditional marketing will you emphasize in this situation? a. S ports marketing b. P erson marketing c. S ocial media marketing d. P lace marketing e. E vent marketing ANSWER: b 205. Your technology company has decided to form a strategic alliance with a major technology company based in South Korea. Which of the following statements is TRUE about the characteristics, benefits and business aspects of a strategic alliance? a. Each company will give up some of its autonomy while gaining new opportunities from the alliance. b. T he alliance will require both companies to change their organizational structures. c. T he alliance will guarantee that each company will expand into new markets. d. T he alliance may help each company to develop an advantage over its competition. e. T he alliance will involve your company and the South Korean company pooling resources to form a separate business entity. ANSWER: d

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 206. You work on the assembly line at Ford Motor Company. Your line produces the hot selling, Ford Focus hybrid. Your line creates _________ utility for Ford’s customers. a. P roduct b. F orm c. V alue d. Place e. Ownership ANSWER: b 207. T he primary objective of a firm’s social responsibility actions is to achieve_______________? a. A clean environment b. I ncreased shareholder value c. E nhancement of society d. S atisfied customers e. Increased market share ANSWER: c 208. A corporate recruiter called you recently about a great marketing opportunity with a company headquartered in Miami, Florida. He did not give you the name of the company, but he described it as follows: 1. Contributors of financial resources to the company sometimes try to influence the company’s marketing to promote their own agenda. 2. More than 25% of the U.S. adult population works in one or more of these types of companies. 3. Earnings-per-share is not a major focus for this type of company. 4. Marketing is very important to the success of this type of company. Which one of the following types of companies is the recruiter describing? a. A Fortune 500 company b. A special interest company c. A not-for-profit company d. A joint venture company e. A for-profit company ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 209. Y ou just graduated from college with a degree in business. You are excited about beginning your professional career. To begin your job search, you are doing some soul searching to decide what type of company you want to work for. You have come up with the following list of characteristics that your ideal company would have: 1. Your ideal company does not seek to maximize shareholder value. 2. Your ideal company will be a service organization with a public mission. 3. Your ideal company will consider marketing an essential function. 4. Your ideal company will reinvest all its revenues into achieving the organization’s objectives. Based on these characteristics, you should most appropriately pursue professional opportunities in a _____________ company. a. N on-profit b. Social services c. P rofit oriented d. Consumer advocacy e. S trategic alliance ANSWER: a 210. The NBA Sacramento Kings play their home games in the Arco Arena. The naming of their stadium is an example of which one of the following five types of nontraditional marketing? a. S tadium naming rights marketing b. S ports team marketing c. O rganization marketing d. E vent marketing e. P lace marketing ANSWER: d 211. Which one of the following statements about marketing is false? a. Mobile marketing refers to marketing messages transmitted via wireless technology. b. E ffective relationship marketing relies heavily on data and computer databases. c. T he lifetime value of a customer consists of the revenues and intangible benefits derived from the firm’s relationship with the customer. d. B uzz marketing involves using airplanes to “buzz” outdoor events with flying banners. e. I nteractive marketing gives more control to the customer. ANSWER: d

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 212. When a company conducts a marketing research project, it is engaging in which one of the Eight Universal Marketing Functions? a. E nvironmental analysis b. S elling c. R elationship management d. P romotion e. B uying ANSWER: e 213. An article titled, "Jeff Bezos Says Amazon is Seriously Serious about Drone Deliveries", recently appeared in a widely circulated business publication. Which of the following statements is true about this statement and its relationship to the Eight Universal Marketing Functions? a. T his statement relates to the physical distribution function of storing. b. This statement relates to the exchange function of selling. c. T his statement relates to the facilitating function of risk taking. d. This statement relates to the physical distribution function of transporting. e. T his statement relates to the facilitating function of selling. ANSWER: d 214. You have worked in marketing for over twenty years, and you have seen the discipline and the environment it operates in change dramatically over that period of time. However, you believe the marketing environment in the 21st Century is changing at a pace faster than you have ever witnessed. Which of the following statements is TRUE about the marketing environment in the 21st Century? a. T he activities of the marketing organization must be broader in the 21st Century in order to avoid marketing myopia. b. S ocial media and other technological advances have increased selling and marketing costs. c. E -commerce has not changed how firms reach new markets. d. S ustainability will not be an important consideration for the marketer in the 21st Century. e. T echnology is negatively impacting the marketer’s ability to enhance relationships with customers and suppliers. ANSWER: a 215. I n this era of marketing, strategic alliances are (were) very important. a. T he social era b. T he production era c. T he marketing era d. The sales era e. T he relationship era ANSWER: e

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 216. Which one of the following statements is true about past geopolitical events and the five eras in the history of marketing? a. T he production era was heavily influenced by the Korean War. b. T he marketing era was interrupted by World War II. c. T he sales era was heavily influenced the rise of capitalism in China. d. T he social era was heavily influenced by the tearing down of the Berlin Wall. e. T he sales era began during the Great Depression. ANSWER: b 217. Marketing myopia refers to management’s failure to recognize the broad scope and nature of its business. This can be avoided if the firm adopts marketing oriented ideas and actions that are focused on satisfying customers by meeting their needs. A firm can convey its focus on customer needs and satisfaction with its company slogan. Which one of the following company slogans is least effective in conveying a focus on customer needs and satisfaction? a. “ We Never Forget Who We Are Working For” b. “ The Power of Choice” c. “Have It Your Way” d. “ CHC Moves the Industry That Moves the World” e. “ You’re in Good Hands” ANSWER: d 218. The newly elected president of a low-resourced, developing nation has hired marketing consultants to help his country. Realistically, what can he expect the marketers to do? a. Reduce income inequality. b. Improve energy efficiency. c. Obtain loans from the World Bank and other global institutions. d. Get insight into the needs and wants of citizens. e. Improve the country’s image to attract international investment. ANSWER: d, e 219. You are the director of a health and wellness center which was successfully launched by using only marketing tools and techniques developed during the social era. Now that the business is established, the owner wants you to experiment with other approaches. Which of the following would respond correctly to her request? a. Recruiting a nutritionist to blog on your website. b. Offering a mobile pay app for members. c. Creating a retail section in the center to sell workout clothes. d. Offering discounts on dues and merchandise to long-term members. e. Hiring an efficiency expert to reduce operating expenses. ANSWER: c, d

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 220. Your coffeehouse is struggling to build a customer base, despite your prime location adjacent to a big university. When you confide in your former marketing professor, he tells you the problem is with insufficient time utility. How can you address this aspect of your marketing? a. Encourage customers to relax and spend more time in the coffeehouse. b. Set up a kiosk in the campus bookstore. c. Lower prices over time. d. Open earlier in the morning. e. Create a beans-by-mail program to reduce people’s coffee shopping time. ANSWER: d 221. As a consultant, you help firms challenged by marketing myopia. One of your clients is a bakery that specializes in low fat cakes sweetened with organic fruit juice. To most effectively broaden their perspective, which of the following business ideas do you advise them to adopt? a. We make a healthy lifestyle taste better. b. Every ingredient is 100% natural. c. We give you the best prices in the industry. d. Our cakes are kid-tested. e. We deliver 24 hours a day. ANSWER: a 222. After receiving a marketing degree with honors, you surprised your friends by going to work for an animal rescue organization. They thought the job would be so easy that you wouldn’t be able to put your skills and knowledge to good use. You decide to set them straight, explaining that the unique challenges of marketing the group are exactly what attracted you to the field. What do you say? a. Marketing a nonprofit has nothing in common with marketing a profit-seeking business. b. Marketing a nonprofit is made especially difficult by the fact that these organizations do not have access to social networking tools. c. Nonprofit marketing is complicated by the need to serve multiple publics at once. d. Nonprofit marketing is exactly the same as marketing a business – just with fewer, smaller resources. e. Nonprofit marketers offer only intangible services, not tangible goods. ANSWER: c

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 223. Your boss, the CEO of a restaurant chain, is very bullish on nontraditional marketing. He has instructed you to implement some of his team’s ideas in the next six months – but first, to flag any of the ideas that are inaccurate applications of nontraditional marketing. Which of the following should you flag? a. Implement cause marketing by donating $1 from every dinner check to antipoverty agencies. b. Implement place marketing by locating new restaurants in impoverished urban areas that need economic investment. c. Implement event marketing by sponsoring a high-profile sports tournament. d. Implement person marketing by obtaining endorsements of the company’s food from celebrity chefs. e. Implement organic marketing by switching to organic-certified ingredients. ANSWER: b, e 224. It cost your firm a lot of money to sponsor a talk on relationship marketing by a so-called business guru. You feel the money was not well spent, because the speaker failed to discuss all key points. From the following list, choose the key point(s) about relationship marketing that should have been covered in the talk. a. Relationship marketing broadens the scope of external marketing relationships. b. Relationship marketing narrows the scope of external marketing relationships. c. Relationship marketing prioritizes external, customer-facing efforts over internal, intradepartmental efforts. d. To be successful in relationship marketing, firms must hire or develop a charismatic CEO. e. Relationship marketing is synonymous with social marketing. ANSWER: a 225. In your recent performance review, you were advised to sharpen your skills in managing the facilitating functions of marketing. You will begin by paying extra attention to which of the following activities? a. Building relationships with wholesalers and retailers. b. Evaluating studies of your customers’ needs and wants. c. Assessing the effectiveness of different advertising themes. d. Pursuing access to new sources of funds to finance inventories. e. Understanding government standards for grading and quality control. ANSWER: d, e 226. You are pleased to learn that the firm you’ve just joined has begun a sustainability initiative. In fact, one of your first assignments is to write a memo describing the key dimensions of such an effort. But when you submit a draft of the memo to your supervisor, she points out at least one significant error. Identify the sentence(s) with a mistake. a. Sustainability must permeate a firm’s corporate strategy from the bottom up. b. Sustainability must permeate a firm’s corporate strategy from the top down. c. In order to minimize environmental impacts, successful sustainability efforts usually allow for some performance reductions. d. Successful sustainability efforts minimize environmental impacts while maximizing performance. e. Sustainability is basically a cost containment strategy. ANSWER: a, c, e

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 227. When you first learn that your firm’s new Chief Marketing Officer has announced a major push to collaborate with international suppliers, you are confused. In your last job, suppliers were viewed as adversaries who were always increasing their prices and driving up the company’s costs. But in a podcast distributed to all employees, you feel the CMO effectively explains this move as part of a broader relationship marketing strategy. Which point(s) does she make? a. She has identified a group of vendors who regularly discount their prices. b. By collaborating with international suppliers, she hopes to create a price discounting model that will improve relationships with US suppliers. c. The company can avoid certain US taxes by buying from suppliers abroad. d. She plans to use strategic alliances with suppliers to create competitive advantages. e. This move involves a nontraditional supply strategy, which goes hand in hand with a relationship marketing strategy. ANSWER: d 228. Netflix has become a popular media streaming company and provides consumers the opportunity to view programming at their leisure whenever it's convenient for them. In addition, consumers can stream programming on smart TVs, tablets, computers or smart phones. What type of utility is Netflix offering? a. t ime b. c onvenience c. f orm d. o wnership ANSWER: a 229. Which of the following is NOT part of the definition of marketing? a. s eek to solely satisfy the needs of the organization by earning a profit b. i dentifying customers c. c reating value for customers, clients, partners, and society at large d. e mphasizes the importance of creating and maintaining long-term relationships with customers and suppliers ANSWER: a 230. Forever 21 is a popular fashion clothing company for women and often attracts customers to its website or retail stores by posting pictures to its Facebook and Instagram account. Forever 21 has over 10 million followers on Instagram and over 13 million on Facebook. What marketing era best describes Forever 21 and its approach to marketing activities? a. s ocial b. m arketing c. s ales d. p roduction ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 231. Nations Bank has engaged in extensive marketing research to learn more about its customers - especially those in the 18 to 30 age group. The research identified that these consumers do not enjoy visiting a bank branch location and prefer to manage their banking via their smart phone, tablet or computer. The bank has invested in sophisticated applications which enable consumers to deposit checks, check their balances, pay bills, and transfer funds. Nations Bank believes this investment in research to understand consumer needs enables them to develop the right array of services which will lead to improved market success and overall performance. This is an example of a(n): a. m arketing concept b. c onsumer listening c. m arketing advocation d. s ales orientation ANSWER: a 232. Starbucks has continued to garner a large share of customer's wallets by expanding their product offering - including additional beverages such as beer and wine as well as an expanded food menu. Members of Starbucks rewards program can also obtain free downloads on music, games and other applications. Starbucks strategy clearly emphasizes that the stores are more than "just coffee" and have successfully managed to avoid ________. a. m arketing myopia b. c ompetition c. c onsumer disenchantment d. s ingle product focus ANSWER: a 233. Which of the following statements is true regarding marketing myopia? a. A firm who focuses on product orientation endangers future growth b. F irms who apply a customer orientation are in danger of lower levels of profiability c. F ailure to recognize the impact of social media can lead to myopia d. M arketing myopia only applies to companies with a physical or tangible product ANSWER: a 234. Which of the following is a characteristic which distinguishes profit-oriented firms from non-profit organizations? a. P rofit-oriented businesses tend to focus their marketing activities on one public - their customers b. N ot-for-profit organizations seek to generate revenues above and beyond their costs to make money for all stakeholders involved c. N ot-for-profit organizations do not market tangible goods d. P rofit-oriented businesses often operate as a monopoly in their industry ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 235. Which of the following is NOT a non-profit organization? a. G olden State Warriors - an NBA franchise b. B oston College, a private university c. A lzheimer's Association d. Boys and Girls Clubs of America ANSWER: a 236. The Today Show partnered with the US National Parks in 2016 to celebrate 100 years of national parks. Various Today Show regulars such as Matt Lauer and Al Roker were featured visiting the parks. This campaign is an example of _____ marketing, a type of nontraditional marketing. a. p lace b. p erson c. e vent d. cause ANSWER: a 237. Austin, Texas is host to a popular festival, South by Southwest (SXSW) which recently celebrated its 30th anniversary. It has released dates for the new year and invites participants for the unique music, film, and interactive events or sessions from March 10th through 19th. Which category of nontraditional marketing would best characterize the marketing activities to attract attendees for the multi-day festival? a. e vent b. cause c. o rganization d. p lace ANSWER: a 238. According to the text, once a company's customers have become "loyal supporters", the company should seek to further the relationship with those customers so that they become _______. a. a dvocates b. r eferral generators c. c lients d. repeat purchasers ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 239. Both customers and companies are making extensive use of social media sites such as Facebook, Twitter, Pinterest and Instagram. These sites enable marketers to create and disseminate content and customers or followers may choose to engage with the organization thereby controlling their exposure to the information. This activity is termed _________ marketing. a. i nteractive b. m obile c. s hared d. u ser-controlled ANSWER: a 240. DHL has developed a reputation as an international business specialist enabling companies who produce or distribute products to economically ship finished goods to customers. Which function of marketing does DHL provide to companies? a. t ransporting b. s elling c. r isk taking d. s elling ANSWER: a 241. Edward Don & Company maintains over 12,000 food service and supply items for the hospitality industry as well as any organization that provides food service such as hospitals, schools, or prisons. Customers enjoy the opportunity to streamline their transactions by purchasing a large number of items from a single company. Customers may place orders online or order from their Edward Don sales representative. Edward Don purchases their items directly from the manufacturer and provides them to the business customer. What business function does Edward Don & Company provide? a. w holesaling b. f inancing c. r isk taking d. s toring ANSWER: a 242. Enterprise Rent-A-Car has invested in new equipment to reduce their carbon footprint and conserve energy. A large percentage of Enterprise's airport shuttle buses use cleaner fuel such as biodiesel. Focusing on reducing their carbon footprint is one way that Enterprise is demonstrating __________. a. s ocial responsibility b. c arbon dating c. e nvironmental consciousness d. s trategic conservation ANSWER: a

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Chapter 01: Marketing: The Art and Science of Satisfying Customers 243. Plastic bottles can take up to 1,000 years to decompose in a landfill. An enterprising entrepreneur recently developed an alternative bottle made from algae that is biodegradable. The algae bottle is an example of a _______ product. a. s ustainable b. new c. i nnovative d. c reative ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 1. The planning process identifies objectives and determines the actions that are needed to attain those objectives. a. True b. False ANSWER: True 2. The planning process creates a blueprint that everyone in the organization must follow in order to achieve the organizational objectives. a. True b. False ANSWER: True 3. The planning process is an intermittent process held after substantial intervals. a. True b. False ANSWER: False 4. Marketing planning establishes the basis for a firm's overall strategic plan. a. True b. False ANSWER: False 5. Relationship-building goals and strategies are seldom included in the plans of business firms. a. True b. False ANSWER: False 6. Good relationships with customers can equip a firm with vital strategic weapons. a. True b. False ANSWER: True 7. Strategic planning has a minimal impact on a firm's destiny because it provides only short-term direction to the decision makers. a. True b. False ANSWER: False

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Chapter 02: Strategic Planning in Contemporary Marketing 8. Planning often is classified on the basis of its scope or breadth. a. True b. False ANSWER: True 9. Tactical plans typically determine an organization’s primary strategic objectives and exclude short-term actions from their purview. a. True b. False ANSWER: False 10. Tactical planning usually involves the production of quarterly and semiannual plans, along with divisional budgets, policies, and procedures. a. True b. False ANSWER: True 11. Middle and supervisory-level managers spend less time as compared to CEOs on planning activities. a. True b. False ANSWER: True 12. The chief executive officer (CEO) and vice president of marketing spend a greater proportion of their time on operational planning than do managers at all other organizational levels. a. True b. False ANSWER: False 13. Operational planning that involves the creation and implementation of tactical plans for the departments within an organization is primarily the responsibility of top-level management. a. True b. False ANSWER: False

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Chapter 02: Strategic Planning in Contemporary Marketing 14. The advertising director, marketing research manager, and other middle-level managers have the primary responsibility of devising and implementing the strategic plan of the company. a. True b. False ANSWER: False 15. Employees at middle-management levels engage themselves in business unit budgets and divisional policies and procedures. a. True b. False ANSWER: True 16. To be most effective, the planning process should include input from a wide range of sources both internal and external to the organization. a. True b. False ANSWER: True 17. As the senior vice-president of marketing, Naomi will be closely involved in her firm’s strategic planning. a. True b. False ANSWER: True 18. Supervisory managers tend to focus exclusively on strategic planning. a. True b. False ANSWER: False 19. The planning process begins at the corporate level with the first step being the development of strategic objectives. a. True b. False ANSWER: False

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Chapter 02: Strategic Planning in Contemporary Marketing 20. Adjustments in the mission statement of an organization reflect changing business environments and management philosophies. a. True b. False ANSWER: True 21. Organizations within the same industry usually have the same mission. a. True b. False ANSWER: False 22. The statement of Starbucks to “inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” is an example of a mission statement. a. True b. False ANSWER: True 23. A firm describes its overall goals and operational scope in its standard operating procedures manual. a. True b. False ANSWER: False 24. A mission can be defined as an essential purpose that differentiates one company from others. a. True b. False ANSWER: True 25. A statement such as “to hit the 300 employee mark by the end of the year” is typically a part of a mission statement. a. True b. False ANSWER: False 26. An organization lays out its basic objectives, or goals, in its complete mission statement. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 27. Detailed organizational objectives should state specific intentions, such as “Snapple Corporation seeks to increase its share of the non-carbonated soft drink market to 25 percent within the next two years.” a. True b. False ANSWER: True 28. An organizational objective should specify time frames stating “Our organization aims to generate a 15 percent profit over the next 24 months.” a. True b. False ANSWER: True 29. Organizational resources include the capabilities of the firm’s production, marketing, finance, technology, and employees. a. True b. False ANSWER: True 30. Marketing strategy is an overall company-wide program for selecting a particular target market and satisfying consumers through a careful blend of the elements of the marketing mix. a. True b. False ANSWER: True 31. Each element of the marketing mix—product, price, distribution, and promotion—is a subset of the overall marketing strategy. a. True b. False ANSWER: True 32. Strategies once implemented should not be changed even if the actual performance does not meet the desired results. a. True b. False ANSWER: False

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Chapter 02: Strategic Planning in Contemporary Marketing 33. Marketers put the marketing strategy into action in order to monitor performance to ensure that objectives are being achieved. a. True b. False ANSWER: True 34. All planning strategies have the goal of creating a sustainable competitive advantage for a firm which other companies cannot imitate. a. True b. False ANSWER: True 35. Porter’s Five Forces are potential new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products, and rivalry among competitors. a. True b. False ANSWER: True 36. The Internet has impacted business for new firms by increasing the barriers to market entry. a. True b. False ANSWER: False 37. The number of suppliers available to a manufacturer or retailer affects the bargaining power of buyers. a. True b. False ANSWER: False 38. It can be said that the buying power enjoyed by customers has increased with Internet presence as the Internet provides detailed information that is not easily available elsewhere. a. True b. False ANSWER: True

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Chapter 02: Strategic Planning in Contemporary Marketing 39. With increased availability of information, rivalry heats up among competitors who try to differentiate themselves from the crowd. a. True b. False ANSWER: True 40. Apple iTunes is an example of a successful first mover. a. True b. False ANSWER: True 41. Data suggests that business owners who adopt the first mover strategy will always be long-term market winners. a. True b. False ANSWER: False 42. The idea of first movers being completely replaced by second movers and the resulting disappearance of first movers from the marketplace is a myth. a. True b. False ANSWER: False 43. SWOT analysis refers to an examination of a firm that is limited to the variables of its stability, work ethic, organizational structure, and technological expertise. a. True b. False ANSWER: False 44. A SWOT analysis helps planners compare internal organizational strengths and weaknesses with external opportunities and threats. a. True b. False ANSWER: True 45. The disadvantage of core competencies is that they can be easily duplicated by competitors. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 46. Matching an external opportunity with an internal weakness produces a situation known as leverage. a. True b. False ANSWER: False 47. In a SWOT analysis, marketers face a problem when environmental threats attack their organization's weaknesses. a. True b. False ANSWER: True 48. A strategic window is defined as a collection of situations where organizations are unable to capitalize on opportunities because of internal limitations. a. True b. False ANSWER: False 49. A customer-driven organization begins its marketing strategy with a detailed description of its target market. a. True b. False ANSWER: True 50. A target market is a group of customers toward whom a firm directs its marketing efforts. a. True b. False ANSWER: True 51. Targeting consumers in specific global markets represents a challenge. a. True b. False ANSWER: True 52. A marketing mix should be an ever-changing combination of variables to achieve success. a. True b. False ANSWER: True

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Chapter 02: Strategic Planning in Contemporary Marketing 53. A product strategy includes decisions about customer service, package design, brand names, trademarks, patents, and warranties. a. True b. False ANSWER: True 54. The ability to download Microsoft and IBM software products directly from the Internet is a part of each firm’s pricing strategy. a. True b. False ANSWER: False 55. Promotion is the communications link between sellers and buyers. a. True b. False ANSWER: True 56. The pricing strategy is the area of marketing that receives the least amount of public scrutiny. a. True b. False ANSWER: False 57. Fred’s Wholesale Club sends emails and catalogs to all members. Additionally, in-store pamphlets promote the benefits of its products. All of these materials are part of the integrated marketing communications intended to send a consistent and unified promotional message. a. True b. False ANSWER: True 58. The five dimensions of the marketing environment are competitive, political-legal, economic, technological, and social-cultural. a. True b. False ANSWER: True

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Chapter 02: Strategic Planning in Contemporary Marketing 59. The five dimensions of the marketing environment exert a fairly constant and static influence on marketing strategies. a. True b. False ANSWER: False 60. Toyota’s introduction of the hybrid-powered Prius is an example of how it has turned public concerns and legal issues about the natural environment into an opportunity. a. True b. False ANSWER: True 61. The rule of three states that the third major company in an industry has little chance of survival. a. True b. False ANSWER: False 62. Strategic business units are key business units within small companies that offer only a few items to its customers. a. True b. False ANSWER: False 63. Strategic business units (SBUs) of a diversified firm have common managers, resources, objectives, and competitors. a. True b. False ANSWER: False 64. Each strategic business unit (SBU) in a firm has to prepare its plans in collaboration with other units in the organization. a. True b. False ANSWER: False 65. Each SBU pursues its own distinct mission and often develops its own plans independently. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 66. The position of an SBU along the horizontal axis indicates the annual growth rate of the market. a. True b. False ANSWER: False 67. According to the BCG matrix, stars require considerable inflows of cash to finance further growth. a. True b. False ANSWER: True 68. According to the BCG matrix, cash cow businesses produce strong cash flows and invest heavily in the unit’s own promotions and production capacity. a. True b. False ANSWER: False 69. According to the BCG matrix, if a question mark cannot become a star, the firm should pull out of the market and target other markets with greater potential. a. True b. False ANSWER: True 70. According to the BCG matrix, dog products can be sold to other firms, where they are a better fit. a. True b. False ANSWER: True 71. The process of anticipating future events and conditions and determining the best way to achieve organizational objectives is known as: a. retrospecting. b. planning. c. archiving. d. correlating. ANSWER: b

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Chapter 02: Strategic Planning in Contemporary Marketing 72. Product lines, pricing decisions, selection of appropriate distribution channels, and decisions relating to promotional campaigns are____. a. fixed and unchanging b. independent of the impact of external factors c. dynamic in today’s boundaryless business environment d. determined from a purely retrospective viewpoint ANSWER: c 73. Marketing planning establishes the: a. resource base provided by the firm's strategy. b. economic impact of additional sales. c. daily and weekly schedules for individual employees. d. basis for any marketing strategy. ANSWER: d 74. Relationship marketing can help a company: a. create long-term and cost-effective links with individual customers and suppliers for mutual benefit. b. reduce its strategic planning effort since the need for such planning is greatly diminished by relationship marketing. c. locate more effective media for use in advertising and mass marketing. d. eliminate the strategic planning process and move into tactical plans directly. ANSWER: a 75. Effective relationship marketing often involves: a. inside information about competitors that is not in the public domain. b. databases to track customer preferences. c. large advertising budgets aimed solely at end-users. d. internal sources of performance-related data. ANSWER: b 76. Relationship marketing refers to a firm’s effort to develop long-term, cost-effective links with individual customers and suppliers. Many companies: a. have been reluctant to adopt such initiatives because there is no evidence of their effectiveness. b. focus on relationship marketing as the sole purpose of their marketing research efforts. c. include relationship-building goals and strategies in their larger plans for the organization. d. believe that relationship marketing is just a fad and may not be sustainable or profitable in the long run. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 77. Long-term plans focusing on those organizational objectives that will significantly affect a firm for five or more years are usually referred to as _____ plans. a. strategic b. marketing c. economic d. tactical ANSWER: a 78. ADA Inc. stopped its production of oral care goods after determining apparel production to be its new primary objective. This is a direct result of the _____ planning process at ADA Inc. a. tactical b. research c. strategic d. economic ANSWER: c 79. Strategic planning has a critical impact on a firm’s destiny because it provides _____ to its decision makers. a. customer input b. individual goals c. departmental goals d. long-term direction ANSWER: d 80. If an automobile manufacturer was planning to introduce a sports car powered by a hydrogen-oxygen fuel cell when the price of gasoline in the United States reached $4 per gallon, this would best be described as a direct result of its _____ plan. a. short-term b. operational c. strategic d. tactical ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 81. The U.S. Sports and Fitness Federation is determining where they should build their permanent training facility. They want it to be located near a populated center but it must also provide ample access to those who don’t reside in cities. The federation is engaged in _____ planning. a. strategic b. short-term c. operational d. economic ANSWER: a 82. An event management company decided to use radio advertising in order to promote an upcoming music festival. The executives of the company suggested various activities that could be used for the radio campaign. These activities are a part of the company’s _____. a. tactical planning efforts b. standard operating procedures c. weekly scheduling plans d. unit-wise budgeting plans ANSWER: a 83. A company’s plans that focus largely on its current and near-future activities and are determined by its middle level management are referred to as _____ plans. a. strategic b. long-term c. operational d. tactical ANSWER: d 84. Preparation of quarterly and semiannual plans by personnel such as the general sales manager or advertising director would be classified as _____ planning. a. consumer b. tactical c. procedural d. operational ANSWER: b

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Chapter 02: Strategic Planning in Contemporary Marketing 85. Compared to other organization personnel, more time is devoted to long-range strategic planning by the: a. middle management. b. manufacturing labor. c. top management. d. supervisory management. ANSWER: c 86. In the planning hierarchy, plans dealing with organization-wide objectives, long-term plans, and the total budget would be classified as _____ plans. a. weekly b. tactical c. operational d. strategic ANSWER: d 87. Employees of Popsie Inc., a small grocery store chain, are working on its tactical plans. The personnel most involved in this level of its planning process would be its: a. top management, such as the owner. b. middle management, such as the merchandising and advertising managers. c. store managers. d. supervisory management, such as shift managers and night auditors. ANSWER: b 88. Operational planning: a. should be used to establish the fundamental strategies of the organization. b. is used to determine departmental rules and procedures. c. is the primary responsibility of the top management. d. should be completed at the same time the total budget is prepared. ANSWER: b 89. Which of the following statements is true of tactical planning? a. It is conducted exclusively by the supervisory personnel. b. It is used to generate weekly plans, unit budgets, departmental rules and procedures. c. It is designed to determine annual budgets and long-range strategic goals. d. It is performed to substitute the strategic planning process in large organizations. ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 90. Comcast’s NBC division acquired Universal Studios and the highest executive who approved this acquisition was most likely Comcast’s CEO. This decision is the direct result of _____ planning process at Comcast. a. tactical b. strategic c. operational d. technological ANSWER: b 91. The first step of the marketing planning process involves: a. writing the mission statement. b. establishing organizational objectives. c. formulating a marketing plan. d. hiring a senior planner. ANSWER: a 92. Which of the following best represents a mission statement? a. U.S. Army: Be all that you can be b. Bass Pro Shop: To be the leading merchant of outdoor recreational products, inspiring people to love, enjoy, and conserve the great outdoors c. Kellogg's: Breakfast cereals at a price everyone can afford d. Walmart: Stores big enough to make shopping interesting for every family member ANSWER: b 93. Which of the following defines an organization’s mission? a. Process of anticipating future events and conditions b. Companywide program for scaling down the product-lines that are low on profitability c. Essential purpose that differentiates one company from others d. Collection of limited periods during which key requirements of a market and a firm’s particular competencies best fit together ANSWER: c 94. A company can modify a strategy when its actual performance is not in line with expected results by: a. redefining the firm’s mission. b. focusing exclusively on long-range strategic issues. c. putting the marketing strategy into action and monitoring performance. d. interpreting the mission, vision, and values of the company differently. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 95. The basic objectives or goals of an organization are derived from its: a. standard operating procedures. b. operational plans. c. supervisory management strategy. d. mission statement. ANSWER: d 96. The _____ is the organizational program for selecting a target market and satisfying customers in that market through the marketing mix. a. operational plan b. marketing strategy c. relationship marketing approach d. short-term plan ANSWER: b 97. All planning strategies have the goal of creating: a. sustainable competitive advantage. b. undifferentiated markets. c. a market with no distinct segments. d. barriers to market entry. ANSWER: a 98. Business strategist Michael E. Porter identified five competitive forces that influence _____ in a model called Porter’s Five Forces. a. planning strategies b. corporate social responsibility c. consumer behavior d. sustainable development ANSWER: a 99. Which of the following is a dimension of Porter’s Five Forces model? a. Bargaining power of buyers b. Existence of second-movers c. Existing firms in the business environment d. Rivalry among strategic business units ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 100. Promotional schemes like frequent shopper programs provide incentives to loyal buyers. Considering Porter’s Five Forces model, such offers will: a. reduce the threat of new entrants. b. decrease the rivalry among competitors. c. decrease the bargaining power of the supplier. d. increase the threat of substitute products. ANSWER: a 101. Business strategies are impacted by the widespread use of the Internet. Which of the following is true with respect to its impact? a. The Internet has eliminated all forms of substitution threats. b. The Internet has reduced barriers to market entry. c. The Internet has reduced the bargaining power of end-users. d. The Internet has reduced consumer awareness about the differences among competitors. ANSWER: b 102. An automobile manufacturer is dependent on a single supplier for tires. Based on this information, which of the following statements is true? a. The barriers to market entry are low. b. The buyer has greater bargaining power. c. The threat of new entrants is high. d. The supplier has significant bargaining power. ANSWER: d 103. A shoe manufacturer has multiple suppliers for leather. Based on this information, which of the following statements is true? a. The suppliers have lesser bargaining than the buyer. b. The barriers to market entry are high. c. The rivalry among competitors is low. d. The buyer has lesser bargaining power than the suppliers. ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 104. Which of the following conditions would lead a company’s marketers to find a new market, change prices, or compete in other ways to maintain an advantage? a. When the bargaining power of suppliers is low b. When the bargaining power of buyers is low c. When the threat of substitute products is high d. When the threat of new entrants it low ANSWER: c 105. In addition to the four forces of the Five Forces Model, which of the following influences rivalry among competitors? a. Decreased availability of information of competitors b. Decreased consumption during a lull in the economy c. Lack of differentiation between products d. Lack of major differences in pricing strategies ANSWER: c 106. Bell Weddings was the company that pioneered the wedding planning industry. The owners realized that customizing weddings to the wishes of the families, taking charge of the responsibilities, and creating a day that is memorable for clients was an incredible business venture. The case of Bell Weddings illustrates the value of _____. a. organizational vulnerabilities b. the first mover strategy c. operating plans d. portfolio analysis ANSWER: b 107. Which of the following statements is indicative of a second mover strategy? a. Entering new markets with existing products b. Making significant innovations that turn old products into new ones c. Observing closely the innovations of first movers and then improving on them d. Entering new markets with new products before any other entrants ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 108. Atari, a consumer electronics and video games company, observed the innovations of Nintendo Co., the most powerful video game company at that time, and destroyed the market share of Nintendo eventually. This implies that Atari: a. followed a first-mover strategy. b. created a new product indigenously. c. remained uninfluenced by Nintendo. d. applied a second-mover strategy. ANSWER: d 109. Core competencies are capabilities that customers value and competitors: a. can easily copy. b. tend to overestimate. c. find difficult to duplicate. d. undervalue. ANSWER: c 110. A certain social networking corporation has the highest number of users in the social networking industry. This is an example of the firm’s: a. opportunity. b. constraint. c. strength. d. threat. ANSWER: c 111. A SWOT analysis is designed to reveal, among other things, a firm's core competencies, which reflect its: a. threats. b. strengths. c. opportunities. d. vulnerabilities. ANSWER: b 112. Matching an internal strength with an external opportunity produces a situation known as: a. leverage. b. constraint. c. vulnerability. d. plateau. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 113. An example of a firm's strength discovered by a SWOT analysis might be: a. ownership of valuable patents. b. a narrow current product line. c. changing buyer tastes in the marketplace. d. existing government policies favoring the industry. ANSWER: a 114. In SWOT analysis, situations where organizations are unable to capitalize on opportunities because of internal limitations are referred to as: a. strategic windows. b. threats. c. constraints. d. leverages. ANSWER: c 115. Which of the following would qualify as an example of a firm’s weakness? a. A bill passed by the government regarding the work timings of all organizations b. A competitor planning to open a new branch close to the firm’s place of operations c. The firm’s failure to pay its taxes on time leading to a poor reputation in the market d. A ban imposed on the use of animals for testing cosmetics ANSWER: c 116. DK Motors' difficulty in competing with other car makers due to its lack of responsiveness to changing consumer preferences constitutes a: a. strategic window. b. leveraged situation. c. threat from the environment. d. constraint on its activity. ANSWER: d 117. Assume that a firm would like to expand its product line. A complete expansion would cost $100 million, but the firm can only raise $75 million in financing. This is best classified as a(n): a. constraint. b. opportunity. c. threat. d. instance of leverage. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 118. Which of the following would qualify as an example of a firm’s weakness? a. Changing buyer tastes in the marketplace b. The presence of modern production facilities c. Inadequate financing capabilities d. An addition to the current product line ANSWER: c 119. An example of a threat to a firm discovered by a SWOT analysis might be: a. the presence of cost advantages due to advanced technology. b. the chance to acquire firms with the needed technology. c. the entry of new competitors in the industry. d. the narrow product line produced by the firm. ANSWER: c 120. The limited occasions when the key requirements of a market and the particular competencies of a firm best fit together are referred to as: a. barriers to entry. b. strategic windows. c. question marks. d. threats. ANSWER: b 121. At a time when computer users were having trouble storing, sending, and displaying photos, Apple introduced the iMac computer, which was equipped with a digital camera interface and photo-handling software. This product was a result of Apple recognizing its: a. economies of scale. b. competitive constraints. c. strategic window. d. second-mover benefits. ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 122. When a massive fuel hike affected the expenses of users of Cadmia significantly, Flare Inc. introduced automobiles that run on solar energy. The introduction of such automobiles indicates that Flare Inc.: a. switched over to less sustainable fuels. b. recognized its competitive constraints. c. applied a second-mover advantage. d. made the best of a strategic window. ANSWER: d 123. Jose is part of a team that is analyzing current demographic trends. The team will make a recommendation concerning the groups of consumers toward whom the firm should direct its new marketing effort. Jose’s team is involved in which of the following elements of the firm’s marketing strategy? a. Target market b. Distribution c. Product d. Promotion ANSWER: a 124. The group of people to whom a firm directs its marketing efforts and ultimately its merchandise is known as its _____ market. a. undifferentiated b. unsegmented c. mass d. target ANSWER: d 125. The term marketing mix describes: a. a composite analysis of all environmental factors inside and outside the firm. b. a series of business decisions that aid in selling a product. c. the relationship between a firm's marketing strengths and its business weaknesses. d. a blend of the four strategic marketing elements to satisfy specific target markets. ANSWER: d

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Chapter 02: Strategic Planning in Contemporary Marketing 126. In marketing, the term product: a. refers only to tangible items that can be seen, tasted, or touched. b. refers to a broad concept encompassing the satisfaction of consumer needs. c. limits itself to include goods alone. d. excludes package design, brand name, or warranty from its purview. ANSWER: b 127. Jenny has been appointed the marketing manager for Spark Cleaning Products. Her job focuses on decisions involving customer service, package design, brand names, and warranties. In this scenario, Jenny is closely associated with the _____ dimension of the marketing planning. a. product strategy b. resource valuation and pricing c. retailing and distribution d. target market ANSWER: a 128. Decisions relating to the product strategy primarily revolve around _____. a. the promotional offers that would increase the visibility of the product in the market b. the features of the products being released in the market c. the choice of high/low or everyday low pricing by the company d. the selection of wholesalers and retailers to transport the stock to the market ANSWER: b 129. Decisions involving transportation, warehousing, inventory control, and order processing relate to the _____ strategy component. a. pricing b. competitive c. product d. distribution ANSWER: d 130. Decisions about distribution strategy primarily involve challenges such as: a. how to advertise the product. b. how to position a product. c. when to raise prices to cover costs. d. which marketing channels to adopt. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 131. Maxwell has been promoted to an upper-level management position at QVC. He will be involved in matters relating to transportation media, order processing, and development of marketing channels. Maxwell is involved in developing _____ strategies for the marketing team. a. product b. distribution c. promotional d. test marketing ANSWER: b 132. Which of the following best describes the activity of promotion? a. Making new products available to meet consumer demand b. Finding a convenient location to sell the products in c. Maintaining a high level of regulation in production d. Communicating between buyers and sellers ANSWER: d 133. Newsletters, catalogs, and invitations to company-sponsored events are most closely associated with the marketing mix activity of: a. product pricing. b. product distribution. c. product development. d. product promotion. ANSWER: d 134. Many companies use an approach called _____ to coordinate all promotional activities so that the consumer receives a unified and consistent message. a. intra-organizational communications b. internal marketing strategies c. integrated marketing communications d. corporate communications ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 135. The marketing mix decisions which are closely regulated and subject to public scrutiny usually relate to a company’s _____ strategy. a. short-term b. resource c. distribution d. pricing ANSWER: d 136. A bill passed by the government stipulates the mandatory use of revised engine mapping and particulate filters in the automobile industry. Which of the following factors of the marketing environment has affected the automobile industry in this scenario? a. competitive b. political-legal c. economic d. social-cultural ANSWER: b 137. The rule of three states that the three leading firms in an industry will control _____ percent of the market. a. less than 25 b. less than 50 c. between 70 and 90 d. 100 ANSWER: c 138. An international apparel manufacturer changed its pricing strategy as it entered a new market where recessionary trends are being observed. This implies that the _____ factors of the marketing environment led the firm to change its pricing decisions. a. legal b. political c. environmental d. economic ANSWER: d

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Chapter 02: Strategic Planning in Contemporary Marketing 139. Carmen is a marketer for a global consumer products company. She is designing a promotional campaign for a foreign market and wants to ensure that the promotional campaign is clearly understood by the target consumers. She is also taking special care to see that the campaign is free from controversies and does not inadvertently offend anyone. In this scenario, Carmen is specifically trying to take into account variables of the country’s _____ environment. a. social-cultural b. political-legal c. competitive d. economic ANSWER: a 140. As chief executive of Stalwart Shipfitting Company, a diversified producer of marine supplies and equipment, John needs a method for spotting promising product lines that warrant commitment of additional resources, as well as those that should be removed from the firm's product portfolio. A good choice for this firm at this stage would be to use: a. computer models. b. strategic business units. c. a marketing audit. d. an industry analysis. ANSWER: b 141. The strategic business unit (SBU) concept is best identified as a: a. planning tool that separates tactical and operational issues for analysis. b. strategic approach used primarily to separate marketing costs from production expenses. c. marketing planning tool that best suits the needs of large, diversified organizations. d. marketing approach appropriate for small enterprises producing a single product. ANSWER: c 142. Which of the following is true of a strategic business unit? a. A strategic unit directly adopts the mission of its parent organization. b. Each strategic unit depends on plans of the other units in the organization. c. A strategic unit has its own managers, resources, objectives, and competitors. d. A strategic unit is a key business unit within a small company that does not differ significantly from the parent company. ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 143. In a(n) _____, firms evaluate their products and divisions to determine the strongest and weakest. a. organizational appraisal b. market analysis c. utilization analysis d. portfolio analysis ANSWER: d 144. The performance framework developed by the Boston Consulting Group (BCG) plots: a. market share against market growth potential. b. market attractiveness against number of product lines. c. current market conditions against past trends. d. performance in test markets before a full-scale rollout. ANSWER: a 145. The quadrant of the BCG market share/market growth matrix that represents both a high market share and a high rate of market growth represents the: a. cash cows. b. innovators. c. stars. d. strivers. ANSWER: c 146. Microsoft Windows generates considerable income for its parent company but is expensive to support. However, the expense is acceptable because Windows is the world's dominant operating system. Based on this information, Windows would be categorized under the BCG market share/market growth matrix as a: a. star. b. cash cow. c. question mark. d. dog. ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 147. According to the BCG market share/market growth matrix, the SBU that produces strong cash flows which can be used to finance the growth of other SBUs is the: a. dog. b. question mark. c. cash cow. d. laggard. ANSWER: c 148. According to the BCG market share/market growth matrix, the revenues earned from cash cows should be used to finance the growth of: a. question marks and dogs. b. dogs and stars. c. stars and question marks. d. question marks and cash cows. ANSWER: c 149. One of General Electric’s business units produces a variety of light bulbs and generates healthy revenue. The revenues of this business unit are used to finance the growth of other business units with higher growth potentials. How would this unit be classified on the BCG market share/market growth matrix? a. Cash cow b. Star c. Question mark d. Dog ANSWER: a 150. The BCG market share/market growth matrix classifies products with a low relative share of a high-growth market as _____. a. stars b. question marks c. cash cows d. dogs ANSWER: b

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Chapter 02: Strategic Planning in Contemporary Marketing 151. In terms of the BCG Matrix, which of the following SBUs are characterized by earning only low market shares in low-growth markets? a. Stars b. Question marks c. Dogs d. Cash cows ANSWER: c 152. YOU Inc., a radio cassette manufacturer, sold its business due to poor market shares. According to the BCG Matrix, the firm sold its business because the business had become a _____ as seen in its poor prospects and performance. a. star b. question mark c. cash cow d. dog ANSWER: d 153. According to the BCG market share/market growth matrix, _____ typically require more cash than they generate. a. cash cows b. stars c. question marks d. achievers ANSWER: c 154. The product manager for a line of mousetraps informs the board of directors at the company’s annual meeting that the product has been classified as a “dog” according to the BCG market share/market growth matrix. This means the product: a. requires a “go/no go” decision within the next several years. b. has low market share of a high-growth rate market. c. should be withdrawn from the market or sold off as quickly as possible. d. needs heavy investment to make it a star. ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 155. Define and explain the term “planning” in the context of marketing. ANSWER: Planning is the process of anticipating future events and conditions and determining the best way to achieve organizational objectives. Planning is a continuous process that includes identifying objectives and then determining the actions through which a firm can attain those objectives. The planning process creates a blueprint for marketers, executives, production staff, and everyone else in the organization to follow for achieving organizational objectives. It also defines checkpoints so that people within the organization can compare actual performance with expectations to indicate whether current activities are moving the organization toward its objectives. Before marketing planning begins, an organization must define its objectives. 156. Define marketing planning. ANSWER: Marketing planning is the process of implementing planning activities devoted to achieving the marketing objectives. It establishes the basis for a marketing strategy. Product lines, pricing decisions, selection of appropriate distribution channels, and decisions relating to promotional campaigns all depend on plans formulated within the marketing organization. 157. How does planning differ at various levels of organizational management? ANSWER: a) Top managers spend greater proportions of their time engaged in strategic planning than managers at middle and supervisory levels. b) Middle-level managers tend to focus on operational planning, which involves creating and implementing tactical plans for their own departments. c) Supervisory personnel engage in developing daily and weekly programs for meeting the goals in their areas of responsibility. 158. Describe the aspects of strategic and tactical planning. ANSWER: Strategic planning is the process of determining an organization's primary objectives and adopting courses of action that will achieve these objectives. Strategic planning has a critical impact on the organization's destiny because it provides long-term direction for its decision makers. Tactical planning guides the implementation of activities specified in the strategic plan. Tactical plans are usually shorter in duration than strategic plans and focus on current and near-future activities that a firm must complete to implement the larger strategies. 159. Distinguish between an organization’s mission and its objectives. Provide an example of each. ANSWER: An organization’s mission is its essential purpose that differentiates it from other organizations. An example of a mission statement is: “To be regarded as the quality and market leader of the hotel industry worldwide.” Objectives are organizational goals and guide the development of supporting marketing objectives and plans. Well-conceived objectives should state relatively specific intentions. An example of an objective is: “attain a 20 percent share of the market by 2018.”

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Chapter 02: Strategic Planning in Contemporary Marketing 160. What is a marketing strategy? Explain the process of implementing the marketing strategy into action. ANSWER: A marketing strategy is an overall, companywide program for selecting a particular target market and then satisfying consumers in that market through a careful blending of the elements of the marketing mix—product, distribution, promotion, and price—each of which is a component of the overall marketing strategy. In the two final steps of the planning process, marketers put the marketing strategy into action; then they monitor performance to ensure that objectives are achieved. Sometimes strategies need to be modified if the product’s or company’s actual performance is not in line with expected results. 161. Describe the structure and dynamics of Porter’s Five Forces model. How has the Internet affected the operation of this model? ANSWER: Michael E. Porter identified five competitive forces that influence planning strategies in a model called Porter’s Five Forces. They are potential new entrants, the bargaining power of buyers, the bargaining power of suppliers, threat of substitute products, and rivalry among competitors. The first four forces influence the fifth force. Potential new entrants are sometimes blocked by the cost or difficulty of entering a market. The Internet has reduced the barriers to market entry in many industries. If customers have considerable bargaining power, they can greatly influence a firm’s strategy. The Internet can increase a customer’s buying power by providing information that might not otherwise be easily accessible. The number of suppliers available to a manufacturer or retailer affects their bargaining power. If customers have the opportunity to replace a company’s products with goods or services from a competing firm or industry, the company’s marketers may have to find a new market, change prices, or compete in other ways to maintain an advantage. The four previous forces influence the rivalry among competitors. In addition, issues such as cost and differentiation or lack of differentiation of products —along with the Internet—influence the strategies that companies use to stand out from their competitors. With increased availability of information, which tends to level the playing field, rivalry heats up among competitors, who try to differentiate themselves from the crowd. The Internet has increased the speed and availability of information that the customers, suppliers, and competitors can use to make decisions. This leads to leveling of the competitive playing field which, in turn, increases the marketing challenge to stand out from the pack of competitors. 162. Explain the forces that influence the rivalry among competitors in Porter’s Five Forces Model. ANSWER: The four forces of Porter Five Forces Model including potential new entrants, bargaining power of buyers, bargaining power of suppliers, and threat of substitute products influence the rivalry among competitors. In addition, issues such as cost and differentiation or lack of differentiation of products —along with the Internet—influence the strategies that companies use to stand out from their competitors. With increased availability of information, which tends to level the playing field, rivalry heats up among competitors who try to differentiate themselves from the crowd.

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Chapter 02: Strategic Planning in Contemporary Marketing 163. Explain the difference between a first-mover and a second-mover strategy. Give examples of companies that have followed each strategy. ANSWER: The first-mover strategy is based on the notion that the company who is first to offer a product in the marketplace will capture the greatest market share and be the long-term winner. Being the first can also refer to entering new markets with existing products or creating significant innovations that effectively turn an old product into a new one. An example of a successful first mover is eBay. The second-mover strategy, on the other hand, is based on the notion that the best way to gain advantage in the marketplace is to closely observe the innovations of first movers and then improve on them. Microsoft is famous for adopting a second-mover strategy. 164. Define SWOT analysis and explain its importance. ANSWER: SWOT analysis is an important strategic planning tool that assists planners in their planning task. SWOT stands for strengths, weaknesses, opportunities, and threats. The analysis provides a) managers with a critical view of an organization's internal and external environment and helps them evaluate the firm’s fulfillment of its basic mission. The analysis allows planners to match the firm's internal strengths with external opportunities b) to secure organizational leverage in the marketplace. It further assists the firm in recognizing internal weaknesses that might prevent capitalizing on c) opportunities, which would constrain its activities. SWOT analysis aids in the identification of environmental threats to the firm's strengths that d) could lead to vulnerabilities. Finally, SWOT analysis helps spot internal weaknesses that environmental threats might e) attack, which would present the firm with problems. 165. What is a strategic window? Give an example of a strategic window that exists today. ANSWER: A strategic window is a limited period during which the key requirements of a market and the particular competencies of a firm best fit together. The growth of China has increased the number of strategic windows as their demand for products increases. The auto industry, in particular, is facing a strategic window as the demand for automobiles rises in the Chinese market. 166. Describe the basic elements of a marketing strategy. ANSWER: Success for a product in the marketplace—whether it is a tangible good, a service, a cause, a person, a place, or an organization—depends on an effective marketing strategy. An effective marketing strategy reaches the right buyers at the right time, persuades them to try the product, and develops a strong relationship with them over time. The basic elements of a marketing strategy consist of (1) the target market and (2) the marketing mix variables of product, distribution, promotion, and price that combine to satisfy the needs of the target market.

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Chapter 02: Strategic Planning in Contemporary Marketing 167. What is a marketing mix? In order for a product to succeed, what can be said about the variables in the marketing mix? ANSWER: The marketing mix variables - product, distribution, promotion, and price - are combined to satisfy the needs of the target market. Product is a broad concept encompassing goods, services and ideas, but also including the satisfaction of all consumer needs with respect to the relevant good, service, or idea. Distribution refers to getting products to consumers in the right quantities, at the right place, and at the right times. Promotion refers to the communications that link buyers and sellers. Pricing deals with the means of setting justifiable and profitable prices. Successful products have a marketing mix where all variables are on target. Great pricing, product, and promotion mean nothing if the customer cannot find the product. Lack of promotion could leave a great product gathering dust on retail shelves. 168. What does a distribution strategy involve? Define two marketing channels. ANSWER: Marketers develop distribution strategies to ensure that consumers find their products in the proper quantities at the right times and places. Distribution decisions involve modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels. Marketing channels are intermediaries that may be involved in a product’s movement from the producer to the final consumers. Technology continually opens new channels of distribution in many industries. The Internet has caused the biggest revolution in distribution since the mail-order catalog. Two important types of marketing channels are wholesalers and retailers. 169. Discuss pricing strategy in the marketing mix and its relevance in the changing economy. ANSWER: Pricing strategy deals with the methods of setting profitable and justifiable prices. It is closely regulated and subject to considerable public scrutiny. One of the many factors that influence a marketer’s pricing strategy is competition. A good pricing strategy should create value for customers, building and strengthening their relationship with a firm and its products. But sometimes conditions in the external marketing environment cause difficulties in pricing strategies. Political unrest overseas, the soaring price of fuel, or a freeze that destroys crops could all affect the price of goods and services. If the economy is booming, consumers generally have more confidence and are willing to shop more often and pay more for discretionary goods. But when the economy takes a downturn, consumers look for bargains—they want high quality at low prices. It is a challenge for marketers to strike the right balance in order to make enough profits to survive and grow.

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Chapter 02: Strategic Planning in Contemporary Marketing 170. List the environmental characteristics that influence strategic decisions. What is the "rule of three?" Provide an example of this phenomenon. ANSWER: Marketers do not make decisions about target markets and marketing mix variables in a vacuum. They must take into account the dynamic nature of the five dimensions of the marketing environment, i.e., competitive, political-legal, economic, technological, and social-cultural factors. In the competitive environment, some experts have coined the phrase "rule of three," meaning that in any industry, the three strongest, most efficient companies dominate between 70 and 90 percent of the competitive market. For example, the pharmaceutical industry is dominated by Merck, Pfizer, and Bristol-Myers Squibb. 171. Describe the strategic business unit concept. ANSWER: Strategic business units (SBUs) are key business units within diversified firms. Each SBU has its own managers, resources, objectives, and competitors. A division, product line, or single product may define the boundaries of an SBU. Each SBU pursues its own distinct mission and often develops its own plans independently of other units in the organization. Strategic business units, also called categories, focus the attention of company managers so that they can respond effectively to changing consumer demand within limited markets. Companies may have to redefine their SBUs as market conditions dictate. 172. Describe the market share/market growth matrix. ANSWER: The market share/market growth matrix places business units in a four-quadrant chart that plots market share - the percentage of the market the firm controls - against market growth potential. Stars are units with high market shares and high growth potential. The firm should invest more funds for future growth. Cash cows are units with high market shares but low growth potential. They generate strong cash flows that should be used to finance the growth of stars. Question marks are units with low market shares but high growth potential. The firm needs to watch these units carefully, making prudent investment decisions. These units typically use more cash than they generate. Dogs are units with low market shares and low growth potential. These units are least attractive and the firm should consider withdrawal. Match each definition to the corresponding term. a. planning b. marketing planning c. strategic planning d. tactical planning e. cash cows f. first mover strategy g. SWOT analysis h. strategic window Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing i. marketing mix j. product strategy k. strategic business units l. Porter’s Five Forces m. marketing strategy n. dogs o. stars p. annual growth rate 173. _____ is the process of anticipating future events and conditions and determining the best way to achieve organizational objectives. ANSWER: a 174. The _____ process involves implementing planning activities devoted to achieving marketing objectives. ANSWER: b 175. The process of determining an organization’s primary objectives and adopting courses of action that will achieve these objectives is known as _____. ANSWER: c 176. Strategic planning is complemented by _____ which guides the implementation of activities specified in the strategic plan. ANSWER: d 177. A _____ is the overall, companywide program for selecting a particular target market and then satisfying consumers in that market through the marketing mix. ANSWER: m 178. The _____ is the blending of the four strategy elements to fit the needs and preferences of a specific target market. ANSWER: i 179. _____ identifies five competitive forces that influence planning strategies. ANSWER: l 180. A firm that adopts a _____, attempts to capture the greatest market share and develop long-term relationships by being the pioneer to enter the market with a good or service. ANSWER: f 181. _____ is a review that helps planners compare internal organizational strengths and weaknesses with external opportunities and threats. ANSWER: g Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 182. Limited periods during which the key requirements of a market and the resources and skills of an organization best fit together are called the _____. ANSWER: h 183. _____ primarily involves decisions concerning the goods and services to be offered by a firm. ANSWER: j 184. _____ are key business units within diversified firms. ANSWER: k 185. _____ represent units with high market shares in high-growth markets. ANSWER: o 186. In the BCG matrix, the position of an SBU along the vertical axis indicates the _____ of the market. ANSWER: p 187. _____ command high market shares in low-growth markets. ANSWER: e 188. SBUs in the category of _____ promise poor future prospects, and marketers should withdraw from these businesses or product lines as quickly as possible. ANSWER: n 189. Every company, whether for-profit or not-for-profit, must plan. Otherwise, the company will find itself reacting to future events rather than proactively positioning itself to take advantage of future events. Which of the following statements is false in regards to strategic planning? a. I t includes the process of determining the organization’s primary objectives. b. I t is done after the company completes its tactical planning activities. c. I t involves choosing actions that will facilitate the achievement of its primary objectives. d. I t provides longer term guidance for the marketers and other decision makers in the firm. e. I t establishes the company objectives that are used to develop the tactical plan. ANSWER: b

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Chapter 02: Strategic Planning in Contemporary Marketing 190. T here are many roles played in the planning process for a typical company. Depending on the organizational level, the planning focus and the effort devoted will be different. Which of the following statements is true about planning within an organization? a. I n their role in the planning process, top management focuses on short-term operational objectives for the company. b. O nly top management spends time focused on strategic and operational planning activities for the organization. c. M iddle management employees spend more of their time focusing on planning than other levels of the organization. d. S upervisors are tasked with developing specific programs and tactics for achieving the goals of their responsibility areas. e. M iddle managers are primarily focused on strategic planning considerations. ANSWER: d 191. You are the head of market strategies for a large media company, and you are responsible for leading the enterprise through its annual marketing planning process. Which one of the following statements is true about this process? a. Y our organization’s objectives are the essential set of statements that outlines its purpose and differentiates it from other organizations. b. Y our organization’s objectives specify the organization’s goals and operational scope. c. A fter your firm establishes its objectives, the next step in the marketing planning process is to develop the marketing strategy. d. T he last step in your marketing planning process should include an analysis of the risks and opportunities that you will face in striving to achieve your objectives. e. Y our organization’s objectives should be specific in describing what achievements are intended and desired. ANSWER: e

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Chapter 02: Strategic Planning in Contemporary Marketing 192. Marketers can rely on a full arsenal of tools and techniques to facilitate the development of effective marketing plans. With respect to these tools and techniques, which one of the following statements is true? a. P orter’s Five Forces Model is a model that identifies five competitive pricing strategies for an organization to use in its marketing mix. b. A second mover strategy suggests that the firm that is second to offer a product or service will likely be the long term winner in the market. c. T he bargaining power of suppliers is influenced by the number of buyers in the market. d. S ocial responsibility and philanthropy influence the strategies that companies use to distinguish themselves from their competitors. e. T he strategic window refers to periods of time where what a firm does well is a close fit to what the requirements are in a given market. ANSWER: e 193. The concept of _________________ refers to the ways that marketers make sure their customers get the right amount of products at the right time and place. a. P roduct strategy b. P romotion strategy c. R etail strategy d. D istribution strategy e. C ustomer service strategy ANSWER: d 194. The rule of three refers to the theory that in any industry, the three strongest competitors dominate between ______________ percent of the competitive market. a. 6 0 and 80 b. 2 0 and 80 c. 7 0 and 90 d. 6 0 and 90 e. 5 0 and 95 ANSWER: c

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Chapter 02: Strategic Planning in Contemporary Marketing 195. The BCG (Boston Consulting Group) matrix places strategic business units into which of the following fourquadrants: a. S trengths, Weaknesses, Opportunities and Threats b. O ligopoly, Monopoly, Monopolistic Competition and Perfect Competition c. M icro, Small, Medium, and Large d. N orth, South, East and West e. S tars, Cash Cows, Question Marks and Dogs ANSWER: e 196. If a firm decides to make a major investment in a firm that supplies raw materials to it, this would be an example of ______________ planning. If a university decides to add courses in ethics and business analysis to its master’s degree program, this would be an example of ____________ planning. a. T actical, Strategic b. M arketing, Operational c. S trategic, Organizational d. O rganizational, Tactical e. S trategic, Tactical ANSWER: e 197. You are the project manager for this year’s planning process for your firm. Unlike in the past, you intend to get input from a variety of stakeholders during the course of the planning process. You are doing this because: a. T his will ensure that the planning process will be completed faster than in previous years. b. I t will ensure that many ideas are considered and these stakeholders will become advocates for the final plan. c. Y our company’s mission statement mandates that this approach be taken. d. A ll stakeholders must approve the plan once it is finalized. e. T he plan will include responsibilities for all stakeholders. ANSWER: b 198. A good marketing plan revolves around an efficient, flexible, and adaptable ____________. a. S trategic plan b. M arketing strategy c. M arketing mix d. M ission statement e. S WOT Analysis ANSWER: b

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Chapter 02: Strategic Planning in Contemporary Marketing 199. Porter’s Five Forces is a model which identifies five competitive forces that influence planning strategies. In regards to this model, which one of the following statements is true? a. I t separates the forces into internal and external categories. b. T he model was later updated to include the impact of the Internet on a firm’s strategies. c. I t identifies the threat of regulatory controls as one of the five forces. d. I t only applies to firms that manufacture their own products. e. I t is an integral part of the SWOT Analysis. ANSWER: b 200. The basic elements of a marketing strategy consist of ____________. a. P roduct and promotion b. S trategic planning and tactical planning c. T he customer and the exchange d. S trategic planning and marketing planning e. T he target market and the marketing mix ANSWER: e 201. What has five dimensions, is dynamic and ever changing, and drives the marketer’s decisions about target markets and the marketing mix? a. T he strategic plan b. T he rule of three c. T he marketing concept d. T he marketing environment e. T he customer orientation ANSWER: d 202. W ith respect to the BCG matrix, which one of the following generates considerable income, but requires sizeable investments to underwrite further growth in the future? a. C ash cows b. S tars c. Q uestion marks d. S BUs e. D ogs ANSWER: b

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Chapter 02: Strategic Planning in Contemporary Marketing 203. Y ou are the head of marketing for a technology company in Boston, and you are meeting with your company’s CEO to discuss a new market opportunity that you believe offers significant profit potential for the firm. You are anxious to launch an initiative to establish the firm’s presence in this new market as quickly as possible. However, your CEO is a bit more cautious about the potential in this market and would prefer that you take a more conservative approach to entering the market. In fact, your CEO would rather see what others do in the market before launching the firm’s initiative. In order to appease your CEO, which of the following strategies should you pursue? a. A target marketing strategy. b. A first mover strategy. c. A marketing research strategy. d. A product strategy. e. A second mover strategy. ANSWER: e 204. After working as an analyst in the marketing department of a large consumer products firm, you have been promoted to marketing team lead for the company’s leisure products line. In your new role, you will be responsible for the following major functional areas related to this product line: I nventory control Order processing Warehousing Logistics Within the context of the marketing mix, your responsibilities are primarily focused on a. P roduct strategy b. P romotion strategy c. R etail strategy d. D istribution strategy e. C ustomer service strategy ANSWER: d

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Chapter 02: Strategic Planning in Contemporary Marketing 205. As the marketing director for a public health advocacy group, you recently obtained approval from the board to pursue a new set of strategic objectives. Among them: to achieve 80% community awareness of the group's name and purpose. Now you must turn to tactical planning. Which of the following tasks should you undertake a. Develop a five-year funding allocation plan.

b. Reserve advertising space in local newspapers for the next six months. c. Recruit an assistant to write press releases. d. Improve the visibility of your headquarters building. ANSWER: b, c, d 206. You are excited about being promoted to general sales manager, a middle management job, but you feel a bit overwhelmed as you anticipate the demands of the new position. A colleague tries to help, pointing out that you will also be shedding some responsibilities. Which of the following will not be part of your new job? a. Quarterly plans

b. Daily and weekly plans c. Divisional policies d. Divisional procedures e. Semiannual plans ANSWER: b 207. You are responsible for writing the statements of organizational goals to be included in the mission statement of your retail company. Choose the goal(s) that are not stated appropriately for this purpose. a. Add 5 new stores each quarter of the next two years.

b. Create an aura of prestige. c. Improve recycling by 10 percent within six months. d. Reduce the costs of employee turnover by 5 percent within a year. e. Add two new clothing designers to your list of vendors within a year. ANSWER: b 208. You've just started a new job as Chief Marketing Officer for a restaurant chain, and you've learned that the marketing planning process is already underway. In fact, the first two steps have been completed. What do you need to do now? a. Define the chain's mission.

b. Determine the chain's specific objectives. c. Formulate a marketing strategy. d. Implement strategy. e. Assess organizational resources and opportunities. ANSWER: e Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 209. You are explaining the elements of your bookstore's marketing strategy to a summer intern. Which of the following do you include? a. A target market of adults 18-62

b. A wide array of bestselling fiction and nonfiction titles c. Prices competitive with online sellers d. Low employee turnover e. Advertising in local newspapers ANSWER: a, b, c, e 210. Based on your understanding of Porter's Five Forces, you have identified potential new entrants as the key threat to your florist business. Choose the most accurate reason(s) for this situation. a. The Internet has reduced barriers to entry.

b. The Internet has increased barriers to entry. c. The number of flower suppliers has increased. d. The quality of silk flowers has improved. e. All of the above are accurate reasons. ANSWER: a 211. When you open an organic food store, you intend to follow a second mover strategy. Choose the benefit(s) of this approach. a. You can observe and avoid the mistakes of Whole Foods and other innovative retailers.

b. You can be the first to enter this market. c. You may be able to improve upon the innovations of first movers. d. You can promote this strategy in your advertising. e. Second movers can charge less than first movers. ANSWER: a, c 212. You are about to launch a digital advertising startup. Your former marketing professor warns you to get the first element in the marketing strategy right -- because otherwise, your new company is doomed to failure. Which is this essential element? a. Target market

b. Promotion c. Price d. Distribution e. Product ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 213. As you plan to expand your children's clothing line internationally, you realize the necessity of considering the marketing environment. In particular, you are worried about potential new trade restrictions that could be imposed by other countries. Your concern primarily involves which dimension of the marketing environment? a. Economic.

b. Social-cultural. c. Competitive. d. Political-legal. e. Technological. ANSWER: d 214. Within your diversified processed-food firm, there are SBUs for fruits, vegetables, dairy products, and baked goods. Each SBU has its own: a. Managers

b. Resources c. Objectives d. Competitors e. Portfolios ANSWER: a, b, c, d 215. Jamal is the marketing director of a third party logistics firm operating in the United States. Jamal and his team recently engaged in ________ to determine the company's primary objectives over the next three years and identified specific actions that the company would initiate to achieve the objectives. a. s trategic planning b. t actical planning c. o perations planning d. n ear-term planning ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 216. Jose is the social media manager for a children's museum and is making decisions about the best mix of social media tools to utilize in order to achieve the objective of increasing the number of family memberships by 10% during the year. Jose likes to use Twitter, Instagram, Facebook and Pinterest to reach the museum's desired target market but he spends most of his time developing the appropriate content and determining the frequency of posts. Which term best describes Jose's activity related to determining the use of social media? a. t actical planning b. m edia scheduling c. s trategic planning d. o perations planning ANSWER: a 217. A two-day offsite retreat was held for a team of executives of a major hospital including the hospital's CEO, President, and Vice-Presidents. Over the course of the two-days, the executives engaged in brainstorming sessions and worked together to articulate the direction the hospital should take and specific objectives that should be achieved over the next 5 years. The team focused considerable attention to objectives related to the Affordable Care Act and rising numbers of patients eligible for Medicare. The executives were engaged in _______. a. s trategic planning b. t actical planning c. o perational planning d. d efensive planning ANSWER: a 218. Jamie is the regional sales manager for Sherwin Williams paint company and oversees a team of 40 outside sales representatives. She meets with her sales managers on a monthly basis to review budgets and track the team's progress in meeting its sales quotas in order to reach company objectives. Jamie requires that each sales manager collaborate with their individual sales representatives to develop weekly call schedules and account plans. What type of planning is Jamie and her sales managers engaged in? a. o perational planning b. s trategic planning c. t actical planning d. c onstructive planning ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 219. H&M stores have grown quickly and established a high share of the market by targeting women who like to wear the latest fashion trends and are price conscious. H&M determines their mix of product, pricing, promotion strategy, and retail store location based upon extensive research regarding consumer preferences and style trends. The identification of a target market and blending of marketing mix elements is known as the ________. a. m arketing strategy b. e nvironmental plan c. t arget market mix d. c ompetitive strategy ANSWER: a 220. The Original Penguin clothing brand which features a cute penguin with a tie wrapped around its neck has made a successful comeback to men's fashions since 2003. The brand is popular among young men and the company recently articulated its interest in generating a 10% increase in sales among college students in the United States for the next year. Which step in the marketing planning process best corresponds to the articulation of a 10% increase in sales? a. d etermine organizational objectives b. a ssess organizational resources and evaluate risks and opportunities c. f ormulate strategy d. i mplement strategy through operational plans ANSWER: a 221. Budweiser and its stable of beer brands including Michelob, Bud Lite and Budweiser Platinum have faced significant inroads in sales by craft breweries such as Boston Beer Company and Sierra Nevada Brewing Company. The craft breweries represent a(n) ______ to Budweiser. a. t hreat b. w eakness c. s trategic window d. o pportunity ANSWER: a

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Chapter 02: Strategic Planning in Contemporary Marketing 222. Elger Labs introduced the MPMAN F10 in 1998 which is regarded as the world's first MP3 player featuring only 32 MB of memory in 1998. Other competitors entered the market and the Apple iPod made its debut in 2001 and included a 1.8-inch Toshiba 5GB hard drive and a large black-and-white display. The model retailed for $400 and it was only compatible with Mac computers. The early brands are no longer available and the iPod has become the market leader. What type of strategy did Apple employ with its introduction of the iPod in 2001? a. s econd mover strategy b. f irst mover strategy c. s trategic window strategy d. c ompetitive differential strategy ANSWER: a 223. Retailers such as Bed Bath and Beyond often use the ______ element of the marketing mix to influence consumers to purchase a greater number of products by offering a discount if a customer purchases multiple units such as 3 for $10. a. p rice b. p romotion c. p roduct d. d istribution ANSWER: a 224. Justin is the marketing director for Tire Rack and is responsible for working with their advertising agency and identifying the messages and means for communicating with customers. Justin's job involves the ______ strategy of the marketing mix. a. p romotion b. p roduct c. c ommunication d. d istribution ANSWER: a 225. Heather is the director of human resources at a medium-sized firm and has spent significant time in workshops and working with her insurance suppliers to understand the Affordable Care Act and how it might impact the benefits that the company provides its employees. The Affordable Care Act is an example of a(n) _______ factor that can impact organizations. a. p olitical-legal b. c ompetitive c. s ocio-cultural d. e conomic ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 02: Strategic Planning in Contemporary Marketing 226. Luxury brands such as Louis Vuitton and Gucci are experiencing a decline in sales as luxury buyers prefer to purchase non-branded merchandise as they are concerned with flaunting their wealth. Instead, they are purchasing luxury brands that do not feature the brands logo on the product. This trend is related to the fact that high income consumers have increased their wealth in the last several years while middle-income earners' wealth has declined. The decline in sales for Louis Vuitton and Gucci is related to the ________ environmental influence. a. s ocial-cultural b. t echnological c. p olitical-legal d. c ompetitive ANSWER: a 227. Kraft Mac & Cheese first hit the shelves in 1937 and remains a favorite product for families. The product has undergone changes in formulation as well as packaging over the years and Kraft recently reformulated the product so it does not contain any artificial ingredients. Sales of Kraft Mac & Cheese in the familiar blue box continue to be strong and help Kraft fund other products since it generates such a strong cash flow. Kraft continues to invest in its Mac & Cheese brand through both research and development as well as promotional activities. It's likely that Kraft views Mac & Cheese as a ______ according the BCG matrix. a. s tar b. c ash cow c. q uotation mark d. d og ANSWER: a 228. TaB is a cola product marketed by Coca Cola company and has a loyal following due to its low levels of sodium and no caffeine. However, the TaB product has low market share and low growth rate. TaB is a ______ according the BCG matrix. a. d og b. c ash cow c. q uotation mark d. s tar ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 1. Changes in an environment are most often the result of sudden crises. a. True b. False ANSWER: False 2. In addition to planning for change, marketers must set goals to meet the concerns of customers, employees, shareholders, and members of the general public. a. True b. False ANSWER: True 3. Major oil companies, such as ExxonMobil and Chevron, often donate large amounts of money toward political campaigns in an attempt to influence government policy in their favor. This is an example of environmental management. a. True b. False ANSWER: True 4. Environmental scanning is the process of collecting external data, analyzing it, and determining whether the trends identified are opportunities or threats to the company. a. True b. False ANSWER: True 5. The environmental scanning process helps firms to determine the best response to a particular environment change. a. True b. False ANSWER: True 6. Environmental management rarely works because marketers cannot hope to influence the external environment, they can only respond to changes in it. a. True b. False ANSWER: False

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 7. The firm that provides regional expertise in a strategic alliance does not share the risks associated with the business. a. True b. False ANSWER: False 8. Strategic alliances are necessary in countries where local laws require foreign companies to work with local businesses. a. True b. False ANSWER: True 9. A pharmaceutical company that owns a patent for a new drug obtains exclusive rights to produce and market that drug for an entire lifetime. a. True b. False ANSWER: False 10. The deregulation movement has ended total monopoly protection for most utilities. a. True b. False ANSWER: True 11. Maros, an agricultural biotechnology company, is the sole supplier of genetically engineered seeds and controls 84 percent of the market share for genetically modified crops. This is an example of a monopoly. a. True b. False ANSWER: True 12. A large pharmaceutical company invents a very small device that can be implanted in people with diabetes to provide time-released amounts of insulin. A patent for this invention will set up a temporary oligopoly for the company. a. True b. False ANSWER: False

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 13. Six firms - GM, Ford, Chrysler, Toyota, Honda, and Nissan - share 90 percent of all U.S. auto sales. Hence the U.S. auto market can be regarded as a monopoly. a. True b. False ANSWER: False 14. The antitrust laws in the United States were designed to protect the interests of organizations having monopoly positions. a. True b. False ANSWER: False 15. The most direct form of competition occurs among marketers of dissimilar products. a. True b. False ANSWER: False 16. Marketing theory would define Starbucks, Caribou Coffee, and Dunkin’ Donuts as indirect competitors because some coffee drinkers are particular about the brands they purchase. a. True b. False ANSWER: False 17. The competition between Amtrak, Hertz, and Delta Airlines for the travelers’ dollar is considered indirect competition because these services can be substituted for one another. a. True b. False ANSWER: True 18. The success or failure of a product is independent of the competitive environment. a. True b. False ANSWER: False 19. Acquisitions and mergers help firms with limited resources to gain access to new markets or new expertise. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 20. Improved product quality and superlative customer service can help a company gain a competitive advantage in the marketplace. a. True b. False ANSWER: True 21. The decision of whether or not to compete should be based on a firm’s resources, objectives, and expected profit potential. a. True b. False ANSWER: True 22. Time-based competition is a strategy of developing and distributing goods and services after a competitor to observe the customers’ response to a particular product. a. True b. False ANSWER: False 23. The strategy of time-based competition can be advantageous to companies most affected by technology.

a. True b. False ANSWER: True 24. The existing U.S. legal framework was constructed in a logical, systematic manner, resulting in a coherent and easily understood body of laws. a. True b. False ANSWER: False

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 25. The governmental regulations that affect marketing practices are mainly for advertising and distribution, and do not place any restrictions and prohibitions on the design and packaging of products. a. True b. False ANSWER: False 26. The Sherman Antitrust Act, Clayton Act, and Federal Trade Commission Act are evidence of federal commitment to maintaining a competitive business environment in the United States. a. True b. False ANSWER: True 27. The first phase of federal regulation of business was aimed at protecting competitors and included the RobinsonPatman Act, passed in the 1930s. a. True b. False ANSWER: False 28. The industry deregulation phase has focused on increasing the competition in industries such as utilities and financial services. a. True b. False ANSWER: True 29. The newest regulatory frontier in the United States is cyberspace, where state and federal regulators are investigating ways to police the Internet and online services. a. True b. False ANSWER: True 30. A customer of All World Bank receives telemarketing calls and emails from the bank’s business partners, Specialty Insurance and Global Investments. Since the customer has signed into the Do Not Call Registry, these companies are in violation of the federal regulation. a. True b. False ANSWER: False

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 31. The government’s Do Not Call Registry exempts callers representing not-for-profit organizations and political candidates. a. True b. False ANSWER: True 32. The Federal Trade Commission was established to facilitate trade by removing tariffs and other trade barriers among Canada, Mexico, and the United States. a. True b. False ANSWER: False 33. The Federal Food and Drug Act was designed to maintain a competitive environment in the food and drug industries. a. True b. False ANSWER: False 34. A clothing manufacturer sells to 300 retail chains and boutiques within the United States. Since West Coast retailers have a more affluent clientele, they can command higher retail prices. This is likely to be considered illegal under the Clayton Act. a. True b. False ANSWER: True 35. One way the Federal Trade Commission can enforce laws is by issuing a consent order in which a firm accused of violations can agree to voluntary compliance without admitting guilt. a. True b. False ANSWER: True 36. Public and private consumer interest groups and self-regulatory organizations are part of the legal environment. a. True b. False ANSWER: True

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 37. The FTC and U.S. Department of Justice can stop mergers if they believe the proposed acquisition will reduce competition by making it harder for new companies to enter the field. a. True b. False ANSWER: True 38. The gross domestic product (GDP) of a nation does not take into consideration the goods and services that are exported to foreign markets. a. True b. False ANSWER: False 39. Consumer spending sinks to its lowest level during an economic depression. a. True b. False ANSWER: True 40. Sears offers discount coupons and lowers prices on 1,000 items in the store in order to generate sales. This is most likely to occur during an economic recession. a. True b. False ANSWER: True 41. During the recession stage of the business cycle, consumers have enough money to spend, but caution often restraints their willingness to buy. a. True b. False ANSWER: False 42. As economic recovery begins after a period of recession, consumption patterns would reveal a sharp spike. a. True b. False ANSWER: False

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 43. During an eighteen-month period, sales of Mercedes automobiles, Carnival Cruise vacations, and Florida real estate increased by at least 20 percent. A marketer might deduce that the business cycle is in the late stages of recovery or experiencing a period of economic prosperity. a. True b. False ANSWER: True 44. Economic recovery can be described as a period when consumer spending begins to cautiously increase, while companies try to hold down rising costs. a. True b. False ANSWER: True 45. During an economic recession, marketers look to emphasize value in their offerings by reducing prices in order to help consumers stretch their budget dollars. a. True b. False ANSWER: True 46. Deflation is necessarily better for the economy than inflation as inflation devalues money and reduces the purchasing power of consumers. a. True b. False ANSWER: False 47. Laura decided to quit her job and travel for a year. She can be considered a part of the population that is unemployed. a. True b. False ANSWER: False 48. A major constraint on consumer spending is deflation, which devalues money by reducing the products it can buy through persistent price increases. a. True b. False ANSWER: False

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 49. Long deflationary periods can cause a freefall in business profits, lower returns on most investments, and widespread job layoffs. a. True b. False ANSWER: True 50. The extent of consumer spending is directly related to the rate of unemployment. a. True b. False ANSWER: False 51. A stay-at-home mother, a high school senior, and a retired government employee are considered unemployed if they do not have a job and don’t want one. a. True b. False ANSWER: False 52. Discretionary income is the amount of money people have to spend on buying necessities such as food, clothing, and housing. a. True b. False ANSWER: False 53. Marketers are usually more concerned with the amount of discretionary income in households. a. True b. False ANSWER: True 54. Not-for-profit organizations are not impacted by the rate of discretionary spending. a. True b. False ANSWER: False 55. Electric power companies often give advice on how consumers can use less electricity during the summer and save money on their electric bills. This is an example of demarketing. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 56. Demarketing is a reaction to a surplus of production materials that results in product supply exceeding demand. a. True b. False ANSWER: False 57. Foreign currency fluctuations, labor costs, and political stability are part of an international economic environment that affects U.S. marketers. a. True b. False ANSWER: True 58. Technological advancement helps reduce prices and offers superior, cost-efficient distribution methods. a. True b. False ANSWER: True 59. Technological innovations create not just new goods and services but also entirely new industries. a. True b. False ANSWER: True 60. Despite its many advantages, technology can seldom address social concerns. a. True b. False ANSWER: False 61. Colleges and universities, and other not-for-profit institutions play major roles in the development of new technology. a. True b. False ANSWER: True 62. The U.S. military has historically been a source of product innovation and many of its technologies have been adapted for the consumer markets. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 63. Creative applications of technology can benefit society, but rarely give firms a definite competitive edge since other firms can simply copy the technology. a. True b. False ANSWER: False 64. The United States is becoming culturally more diverse and subculture populations are rising. a. True b. False ANSWER: True 65. The cultural diversity of the United States results in various submarkets, each with unique values, cultural characteristics, purchasing behaviors, and consumer preferences. a. True b. False ANSWER: True 66. Marketing strategies that work for a particular cultural group in the United States will always work when applied to the same cultural group abroad. a. True b. False ANSWER: False 67. The choice between pleasing all consumers and remaining profitable—thus surviving—defines one of the most difficult dilemmas facing business. a. True b. False ANSWER: True 68. The basic consumer rights expounded by President Kennedy include “the right to be safe,” referring to the idea that the goods and services people buy should not be injurious in normal use. a. True b. False ANSWER: True

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 69. The local government in Colorado has made it mandatory for firms to publish information on labels, regarding the environmental impact of their products. The government is trying to protect the consumers’ right to be safe. a. True b. False ANSWER: False 70. Sentencing guidelines act as an incentive for corporations to implement effective ethics compliance programs—if they are hauled into court, the existence of such a program can help reduce penalties. a. True b. False ANSWER: True 71. Ensuring ethical practices means promising customers and business partners to sacrifice quality and fairness for profit. a. True b. False ANSWER: False 72. People develop standards of ethical behavior based on their own systems of values. a. True b. False ANSWER: True 73. The Direct Marketing Association helps consumers to get their names removed from marketers’ targeted lists. a. True b. False ANSWER: True 74. The federal government has imposed strict regulations on food advertising for children based on their nutritional standards. a. True b. False ANSWER: False

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 75. Paying universities for the use of their logo, team name, and mascot in advertising products and services to their students is considered ethical. a. True b. False ANSWER: False 76. Managers of firms have traditionally focused on improving their relationship with the government and the general public as part of their social responsibility. a. True b. False ANSWER: False 77. Fresh Meadows, an organic yogurt manufacturer, organizes camps to assist and encourage farmers in adopting organic farming practices. Fresh Meadows is engaging in socially responsible marketing. a. True b. False ANSWER: True 78. The main purpose of the community development financial institutions certified by the U.S. Treasury Department is to educate low-income borrowers. a. True b. False ANSWER: True 79. Production, promotion, and reclamation of environmentally sensitive products is the basic premise of ethical marketing. a. True b. False ANSWER: False 80. The demand for green products is increasing as consumers have responded by purchasing more and more green goods, providing profits and opportunities for growth to the companies that make and sell them. a. True b. False ANSWER: True

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 81. The process of collecting information about the external marketing environment to identify and interpret potential trends is called _____. a. market profiling b. target marketing c. marketing management d. environmental scanning ANSWER: d 82. Monitoring local newspapers and television news shows for general information relating to a firm’s business would be an example of: a. environmental scanning. b. economic analysis. c. socio-political manipulation. d. technological development. ANSWER: a 83. A pharmaceutical company that works with the Food and Drug Administration to create new regulations is practicing: a. strategic planning. b. environmental scanning. c. marketing research. d. environmental management. ANSWER: d 84. When Kevin analyzes recent data from the U.S. Census Bureau to uncover new markets for his firm’s product, he is engaging in: a. demarketing. b. time-based competition. c. environmental scanning. d. marketing management. ANSWER: c

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 85. Achieving organizational objectives by predicting and influencing the competitive, political-legal, economic, technological, and social-cultural environment is referred to as _____. a. research and development b. marketing research c. environmental management d. SWOT analysis ANSWER: c 86. The goal of _____ is to analyze information and decide whether the identified trends represent significant opportunities or pose major threats to the company. a. environmental scanning b. green marketing c. benchmarking d. social marketing ANSWER: a 87. To acquire regional expertise and comply with the local laws of a country, international firms often find it desirable to: a. form political action committees. b. export goods and services to that country. c. form strategic alliances with domestic companies in that country. d. relocate manufacturing facilities to that market. ANSWER: c 88. Alliances are considered essential in countries where: a. markets are monopolistic in nature. b. laws require foreign firms doing business there to work with local companies. c. partners combine resources and capital to create competitive advantages in an established market. d. efforts are required to achieve organizational objectives by predicting and influencing the technological environments. ANSWER: b

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 89. The Coffee Cup, a popular coffee chain in Switzerland, is trying to expand its business into Canada. It decides to enter into a partnership with a Canadian bookstore chain to set up coffee shops inside bookstores, an arrangement which will benefit both firms. This type of partnership that helps to create a competitive advantage in a new market is known as a _____. a. strategic alliance b. franchising agreement c. joint venture d. buy out ANSWER: a 90. Friums & You, a Canadian firm, together with its subsidiaries, manufactures and markets snacks, confectionery, and quick meal products worldwide. The firm has been trying to expand its business into China. As Chinese laws require foreign firms to do business with local companies, Friums & You will have to be involved in a _____ to start operations in China. a. limited liability partnership b. buyout c. strategic alliance d. hostile takeover ANSWER: c 91. Corea Inc., a pharmaceutical company, is involved in the research, development, manufacture, and marketing of prescription medicines. A new drug developed by Corea has been awarded patent rights by the U.S. Food and Drug Administration. The patent grants them exclusive rights to manufacture and market the drug for 3 years. Based on this information, which of the following statements will be true? a. C orea Inc. will operate in a market with monopolistic competition. b. C orea Inc. will have exclusive rights to produce and market the product forever. c. C orea Inc. will operate in a perfectly competitive market. d. C orea Inc. will have a temporary monopoly in the market for this drug. ANSWER: d 92. Pharmaceutical companies often get patents granting them the exclusive right to produce and market drug formulations they have developed. These patents are: a. the result of non-compete agreements signed by pharmaceutical firms. b. in violation of ethical principles on which business is based. c. probably of little use because what one firm can patent, another can duplicate. d. rewards for the millions that firms have invested in the research and development process. ANSWER: d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 93. A market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes is called a(n) _____. a. oligopoly b. monopoly c. monopsony d. perfect market ANSWER: b 94. Which of the following statements is true regarding a monopoly? a. It is enjoyed by an organization who is the sole suppliers of a good or service. b. It is common in the telecommunications industry. c. It cannot be achieved temporarily, even through the use of patents and similar legal devices. d. It is the most common type of competition in the U.S. market. ANSWER: a 95. Marketers must constantly monitor their competitors’ products, prices, distribution, and promotional efforts because: a. competitors may be violating truth-in-advertising laws. b. it can lower a firm’s command over the market price. c. it will help prevent indirect competition. d. firms may need to adjust their marketing mix based on new competing products. ANSWER: d 96. Which of the following has ended total monopoly protection for most utilities like natural gas, electricity, water, and cable TV service? a. Deregulation movement b. Disinvestment c. Temporary monopoly d. Perfect competition ANSWER: a 97. An industry with only a few large competing firms is called a(n): a. regulated monopoly. b. pure monopoly. c. perfect market. d. oligopoly. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 98. The airline industry in a particular country has only four dominant players. Large capital investments and government regulations often prevent new players from entering the market. Based on this information, the structure of the airline industry in this country is _____. a. a duopoly b. perfectly competitive c. an oligopoly d. a monopoly ANSWER: c 99. A(n) _____ is a structure that refers to a limited number of sellers in an industry in which high start-up costs form barriers to keep out new competitors while ensuring that corporations remain innovative. a. duopoly b. monopoly c. oligopoly d. monopsony ANSWER: c 100. Indirect competition occurs among marketers of: a. similar products. b. products that satisfy different needs. c. products that can be easily substituted. d. products that belong to different categories. ANSWER: c 101. Which of the following is an example of indirect competition? a. A Sony home entertainment system competing with a Jacuzzi hot tub b. An ExxonMobil station opening across the street from a Shell retail outlet c. Competition among Verizon, AT&T, and T-Mobile d. The purchase of a Honda Accord competing with a Toyota Camry ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 102. In the United States, four major music companies receive 80 percent of recording revenues. Such a market structure is termed as a(n) _____. a. monopsony b. oligopoly c. monopoly d. duopoly ANSWER: b 103. Last summer, the Thomas family had to decide whether to buy a new car, go to Disney World, or remodel their basement. They chose the vacation. This illustrates: a. that competition can be defined in terms of dissimilar products vying for a limited supply of discretionary buying power. b. how the most direct form of competition plays a role in a consumer’s decision making. c. how competition for essential items leaves unlimited discretionary funds for non-essentials. d. that there can be no competition among dissimilar products. ANSWER: a 104. Which of the following helps time-based competitors to improve product quality, reduce costs, and expand product offerings to satisfy new market segments and enhance customer satisfaction? a. Validity and reliability b. Flexibility and responsiveness c. Rigidity and vision d. Profitability and coverage ANSWER: b 105. Lockheed Martin won the largest military contract ever by proving it could be the first company to develop and fly a new model plane. This illustrates the importance of _____. a. rapid prototyping of new products b. demarketing c. time-based competition d. the legal environment ANSWER: c

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 106. The _____ component of the marketing environment consists of laws that require firms to operate under competitive conditions and to protect consumer rights. a. economic b. competitive c. social-cultural d. political-legal ANSWER: d 107. The history of U.S. government regulation can be divided into four phases: the antimonopoly period, _____, consumer protection, and industry deregulation. a. protecting trade b. protecting competitors c. protecting cyberspace d. protecting privacy ANSWER: b 108. In which phase of U.S. government regulation were major laws such as the Sherman Antitrust Act, the Clayton Act, and the Federal Trade Commission Act passed to maintain a competitive environment? a. The phase aimed at protecting competitors b. The industry deregulation phase c. The antimonopoly period d. The consumer protection phase ANSWER: c 109. The Robinson-Patman Act was passed to: a. provide legal protection to individual merchants against competition from larger chain stores. b. increase competition in the telecommunications and utilities industry by deregulation. c. protect consumers by specifying safety standards for products. d. maintain a competitive environment by prohibiting monopolization. ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 110. Which of the following phases in the history of U.S. government regulation sought to increase competition among industries by permitting them to expand their services into the new markets? a. The consumer protection phase b. The antimonopoly period c. The industry deregulation phase d. The phase aimed at protecting competitors ANSWER: c 111. Which of the following is the newest regulatory frontier for federal and state regulators in the United States? a. Protecting competitors b. Industry deregulation c. Antimonopoly d. Cyberspace ANSWER: d 112. In the context of cybercrime, luring consumers to provide personal information is called _____. a. piracy b. viral marketing c. logging d. phishing ANSWER: d 113. When Jonathan was contacted by his insurance firm regarding certain medical claims he had made recently, he realized that someone else had used his name and insurance information without his consent to make false claims for medical services and goods. Which of the following acts will enable Jonathan to take action against the person who stole his personal information? a. The Clayton Act b. The Identity Theft Enforcement and Restitution Act c. The Sherman Antitrust Act d. The Digital Millennium Copyright Act ANSWER: b

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 114. The government’s Do Not Call Registry that helps consumers to avoid telemarketing calls exempts callers who represent: a. financial institutions. b. not-for-profit organizations. c. service companies. d. insurance companies. ANSWER: b 115. Which of the following was the prime reason behind the formation of regulations aimed at protecting competitors? a. To provide legal protection to independent merchants against competition from larger chain stores b. To reduce the concentration of industry power in the hands of a small number of competitors c. To increase competition in industries like telecommunications, utilities, transportation, and financial services by discontinuing many regulations d. To permit firms to expand their service offerings to new markets by discontinuing many regulations ANSWER: a 116. Artisanal Brands, Inc. markets and distributes a line of specialty, artisanal, and farmstead cheese products in the United States. The company gives bulk discounts to their wholesalers. The result is that smaller stores are getting the products at a higher rate as compared to supermarkets and large shopping chains. These stores will be protected under the _____. a. Sherman Antitrust Act b. Robinson-Patman Act c. Wheeler-Lea Act d. Celler–Kefauver Act ANSWER: b 117. Which act prohibits restraint of trade and monopolization and identifies a competitive marketing system as a national policy goal? a. The Wheeler-Lea Act b. The Sherman Antitrust Act c. The Federal Trade Commission Act d. The Clayton Act ANSWER: b

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 118. Which act prohibits price discrimination in sales to wholesalers, retailers, or other producers? a. The Wheeler-Lea Act b. The Robinson-Patman Act c. The North American Free Trade Agreement d. The Federal Trade Commission Act ANSWER: b 119. The Federal Trade Commission Act is a law that: a. prohibits copying or downloading of digital files. b. facilitates trade by removing tariffs and other trade barriers. c. prohibits unfair methods of competition. d. restricts practices such as exclusive dealing, tying contracts, and interlocking boards of directors. ANSWER: c 120. Which of the following acts gives the FTC jurisdiction over false and misleading advertising? a. The Wheeler-Lea Act b. The Clayton Act c. The Robinson-Patman Act d. The Consumer Product Safety Act ANSWER: a 121. Which of the following bans the purchase of domain names that are identical or confusingly similar to existing registered trademarks? a. The Anticybersquatting Consumer Protection Act b. The Identity Theft and Assumption Deterrence Act c. The Antitrust Act d. The Privacy Protection Act ANSWER: a 122. Which law protects intellectual property rights by prohibiting the copying or downloading of digital files? a. The Real ID Act b. The Electronic Signature Act c. The Digital Millennium Copyright Act d. The Identity Theft and Assumption Deterrence Act ANSWER: c

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 123. HandyBrands Inc., a consumer goods company, engages in the design, manufacture, sourcing, and sale of apparel essentials in the United States and abroad. They have a very good e-tailing portal. Online shopping constitutes 40 percent of their sales. Recently, they have faced complaints by customers that orders are not getting processed. The reason was the existence of a website with similar content and an identical domain name. HandyBrands Inc. should take the help of the _____. a. Electronic Signature Act b. Anticybersquatting Consumer Protection Act c. Identity Theft and Assumption Deterrence Act d. Credit Card Accountability, Responsibility and Disclosure Act ANSWER: b 124. The Telecommunications Act of 1996 was passed to: a. set annual fees for telemarketers to access the Do Not Call Registry. b. create the national Do Not Call Registry prohibiting telemarketing calls to registered numbers. c. deregulate the telecommunication industry by removing barriers to competition. d. prohibit the sale of cell phone records. ANSWER: c 125. If a business refuses to comply with a request by the _____, the agency can issue a cease-and-desist order, which gives a final demand to stop an illegal practice. a. Environmental Protection Agency b. Consumer Product Safety Commission c. U.S. Department of Justice d. Federal Trade Commission ANSWER: d 126. The Council of Better Business Bureaus is a national organization devoted to consumer service and _____. a. business self-regulation b. deregulation c. corporate lobbying d. socially responsible investing ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 127. JP Video Rentals is offering a “Rent 2 get 1 free” video rental coupon. They have been accused of deceptive advertising throughout the U.S. Which division of the Council of Better Business Bureaus is designated to handle such cases? a. The National Advertising Division b. The Advertising Standards Authority c. The Direct Marketing Association d. The Institute of Sales Promotion ANSWER: a 128. Which of the following agencies supports consumer rights through its initiative of informing consumers of their right to modify or discontinue receiving solicitations? a. The Federal Trade Commission b. The Direct Marketing Association c. The Council of Better Business Bureaus d. The Consumer Product Safety Commission ANSWER: b 129. Which of the following components of the marketing environment consists of factors that influence consumer buying power and marketing strategies? a. Competitive environment b. Cultural environment c. Economic environment d. Regulatory environment ANSWER: c 130. In times of prosperity, marketers respond to consumer buying behavior by: a. launching special value-priced products that are likely to appeal to cost-conscious buyers. b. holding down costs and offering superior services at lower prices. c. lowering prices and increasing promotions that include special offers to stimulate demand. d. offering new products, increasing their promotional efforts, and expanding distribution. ANSWER: d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 131. During which phase in the business cycle do marketers consider lowering prices and increasing promotions that include special offers to stimulate demand? a. Prosperity b. Recession c. Growth d. Maturity ANSWER: b 132. When marketers offer new products, increase their promotional efforts, and expand their distributional limits, it is a sign of: a. low inflation and low unemployment. b. low inflation and high unemployment. c. high inflation and high unemployment. d. high inflation and low unemployment. ANSWER: a 133. Which of the following is a trend usually observed during an economic depression? a. Consumers are willing to spend more for premium versions of well-known brands. b. Consumers have money to spend, but caution often restrains their willingness to buy. c. Consumers focus on more basic, functional products that carry lower price tags. d. Businesses offer new products, expand distribution, and raise prices to widen profit margins. ANSWER: c 134. The Robinson family recently bought a car as they were offered a no-interest financing option. The family’s annual vacation was also booked through a discount travel firm. The family has purchasing power, but they prefer to spend their money cautiously like most other families in the country. The above stated instances indicate which stage of the business cycle? a. Depression b. Prosperity c. Recession d. Recovery ANSWER: d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 135. Which of the following stages in the business cycle forces businesses to hold down costs, trim payrolls, and cut down travel costs in order to earn profits and cope with uncertain consumer demand? a. Recovery b. Growth c. Prosperity d. Maturity ANSWER: a 136. In Australia, consumer spending in the past few months has seen an upward trend, and buyers are willing to spend more on premium brands. From this pattern, we can say that Australia is in the _____ stage of the business cycle. a. recovery b. prosperity c. recession d. depression ANSWER: b 137. In the recovery period, which type of firms have the best possible chance to create loyal customers by providing exceptional service? a. Brands b. Sick units c. Providers of superior services at lower prices d. Price skimmers ANSWER: c 138. Which of the following usually indicates a strong economy? a. Growth in services such as banking and restaurants b. Cautious spending by businesses and consumers c. A focus on basic, functional products with lower price tags d. Increase in purchasing power coupled with uncertain consumer demand ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 139. _____ are used by the federal government to control extreme fluctuations in the business cycle that can lead to a depression. a. Deregulation b. Monetary and fiscal policies c. Stringent environmental policies d. Mergers and acquisitions ANSWER: b 140. It is believed that marketers need to reevaluate their strategies and concentrate on their most promising products during the _____ stage of the business cycle. a. recession b. recovery c. maturity d. prosperity ANSWER: a 141. Which of the following devalues money and reduces its purchasing power through persistent increase in prices? a. Disinflation b. Stagflation c. Inflation d. Deflation ANSWER: c 142. The amount of money available with people after buying necessities such as food, clothing, and housing is referred to as _____. a. basic income b. gross income c. discretionary income d. personal income ANSWER: c

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 143. _____ can lead to a damaging downward spiral, causing a freefall in business profits, lower returns on most investments, and widespread job layoffs. a. Deflation b. Lower interest rates c. Inflation d. A federal budget surplus ANSWER: a 144. News reports from Zimbabwe indicate that a small pack of locally produced coffee beans costs approximately 1 billion Zimbabwean dollars, an amount that would have bought 60 new cars less than ten years ago in the same country. It can be surmised that Zimbabwe is experiencing extremely high levels of _____ which has spiraled out of control in the past ten years. a. growth b. stagflation c. deflation d. inflation ANSWER: d 145. It has been seen that periods of major innovations often lead to: a. reduced personal consumption. b. higher standards of living. c. decreased annual spending. d. reduced discretionary income. ANSWER: b 146. The process of reducing consumer demand for a product to a level that a firm can reasonably supply is called __________. a. indirect marketing b. economic marketing c. direct marketing d. demarketing ANSWER: d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 147. Baier Oil Co. encourages consumers to reduce oil consumption by engaging in environmentally friendly commuting through its promotional campaigns. It also provides tips for people to employ green commuting. These measures employed by the company to reduce the demand for oil shows that they are engaging in: a. socially responsible investing. b. demarketing. c. product redesigning. d. green marketing. ANSWER: b 148. _____ leads to new goods and services for consumers, improves existing products, offers better customer service, and often reduces prices through new, cost-efficient production and distribution methods. a. Reintermediation b. Consumerism c. Disintermediation d. Technology ANSWER: d 149. A leading e-Learning company is expanding its operations in Japan. To ensure smooth communication between branches, it needs a communication technology which provides facilities such as call plans, call waiting, and three way calling. Additionally it would like to keep costs low. Which technology should it adopt? a. IMS b. VoIP c. JIT d. RFID ANSWER: b 150. MedicaPlus, a pharmaceutical company, is finding it difficult to track and locate slow moving medicines. Pharmaceutical distributors have been complaining about the time it takes for their orders to arrive. One technology that can be used effectively to shorten this waiting period, locate, and track items easily is: a. VoIP. b. Logistics. c. RFID. d. GPS. ANSWER: c

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 151. Which technology creates a common interface for data to be carried across networks between different devices? a. IMS b. Wi-Fi c. VoIP d. RFID ANSWER: a 152. Which of the following protects the consumer by exerting legal, moral, and economic pressures on business and government? a. Consumerism b. Corporate branding c. Socialism d. Capitalism ANSWER: a 153. Jonathan Nash, aged 60, feels young at heart and spends most of his leisure time networking with family and friends online or surfing the Web. He can be characterized as: a. a social animal b. a generation Xer c. a baby boomer d. a Web addict ANSWER: c 154. The four basic consumer rights are: the right to be informed, the right to be heard, the right to be safe, and: a. the right to feedback. b. the right to choose freely. c. the right to sue. d. the right to demand. ANSWER: b 155. As suggested by President John. F. Kennedy, the consumers’ right to be _____ states that consumers should be assured that the goods and services they purchase are not injurious with normal use. a. able to choose b. informed c. safe d. heard ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 156. Marketers’ standards of conduct and moral values is termed as _____. a. social marketing b. corporate identity c. green marketing d. marketing ethics ANSWER: d 157. Which of the following is a critical issue facing governmental agencies regarding ethics in marketing research? a. Personal selling b. Truth in advertising c. Planned obsolescence d. Invasion of personal privacy ANSWER: d 158. Which of the following ethical issues is associated with firms’ product strategies? a. Exclusive territories b. False and deceptive advertising c. Planned obsolescence d. Bait-and-switch advertising ANSWER: c 159. In marketing, _____ involves accepting an obligation to give equal weight to profits, consumer satisfaction, and social well-being in evaluating a firm’s performance. a. green washing b. consumerism c. social responsibility d. demarketing ANSWER: c 160. Bank of Norasmus is one of the few banks that provides credit to disadvantaged communities. These loans are used for housing, small business creation, and education or personal development. Such an organization is said to be involved in _____. a. credit based investing b. socially responsible investing c. sustainability d. environmental management ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 161. The production, promotion, and reclamation of environmentally sensitive products is called _____. a. social media marketing b. green washing c. demarketing d. green marketing ANSWER: d 162. Jen’s Dairy markets milk and other milk products that are purely organic and grown using sustainable farming methods. They also have a program under which they recycle used cans of their products. These marketing strategies employed by Jen’s Dairy show that they are involved in _____. a. demarketing b. green marketing c. socially responsible investing d. competitive marketing ANSWER: b 163. Define environmental scanning. How does it contribute to environmental management? ANSWER: Environmental scanning is the process of collecting information about the external marketing environment to identify and interpret potential trends. The goal of this process is to analyze the information and decide whether these trends represent significant opportunities or pose major threats to the company. Environmental scanning is a vital component of environmental management as it analyzes the various components of the marketing environment so that the marketers can predict changes and align their strategies to tackle the changes. 164. What is a strategic alliance? Why do firms engage in strategic alliances? ANSWER: A strategic alliance is a partnership in which two or more companies combine resources and capital to create competitive advantages in a new market. Many domestic and international firms competing with industry leaders frequently involve in strategic alliances. They are especially common in international marketing, in which partnership with local firms provide regional expertise for a company expanding its operations abroad. Strategic alliances are considered essential in countries such as China, where the local laws require foreign firms doing business there to work with the local companies.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 165. Explain the difference between a monopoly and an oligopoly. What creates oligopolies? ANSWER: A monopoly is a market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes. An oligopoly is a structure that consists of a limited number of suppliers in an industry. Oligopolies are often created in industries with high start-up costs and other barriers to entry. These barriers to entry make it difficult for new suppliers to enter the industry. 166. Differentiate between direct and indirect competition with examples. ANSWER: Direct competition occurs among marketers of similar products. Example: Competition between AT&T and T-Mobile. Indirect competition involves products that can be easily substituted. Hence, marketers have to find ways to attract consumers to their specific brand as well as to their type of product. Example: Traditional hot spots for family vacations competing with outdoor adventure trips. 167. What are the questions that can help a company to determine a competitive strategy? Discuss. ANSWER: The three questions that determine the competitive strategy of a firm are:

Should we compete? This decision depends on the firm’s resources, objectives, and the expected profit potential. A firm may decide not to pursue or continue operating a potentially successful venture that does not mesh with its resources, objectives, or profit expectations. In what markets should we compete? The firm’s limited resources must be examined to determine the scale and nature of its competitive effort. The resources must be allocated to the areas of greatest opportunity. How should we compete? Answering this question requires marketers to make product, pricing, distribution, and promotion decisions designed to give the firm a competitive advantage in the marketplace. Firms can compete on a variety of bases, including product quality, price, and customer service.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 168. List out the four phases in the history of U.S. government regulations. Why were these regulations passed? ANSWER: The first phase was the antimonopoly period of the 19th and 20th centuries. Major laws such as the Sherman Antitrust Act, Clayton Act, and the Federal Trade Commission Act were passed during this phase to maintain a competitive environment by reducing the trend toward increasing concentration of industry power in the hands of small number of competitors. The second phase that emerged during the Great Depression Era of the 1930s was aimed at protecting competitors, when independent merchants felt the need for legal protection against competition from larger chain stores. The third regulatory phase focused on consumer protection. The laws that were passed during this period include Sherman Act, Federal Trade Commission Act, and the Federal Food and Drug Act. The fourth phase that began in the late 1970s focused on industry deregulation and continues to the present. During this phase the government has sought to increase competition in industries such as telecommunications, utilities, transportation, and financial services by discontinuing many regulations and permitting firms to expand their service offerings to new markets. 169. Why has cyberspace become an important regulatory frontier for government regulators? What are the measures being taken by the government to police the Internet and other online services? Governments in certain countries are attempting to censor the Internet. Do you think this is ethical? Justify your answer. ANSWER: Cyberspace has become the newest regulatory frontier as cybercrime is spreading quickly. Attacks by malicious software that contain codes capable of stealing account logons, passwords, and other confidential data are on the rise. The Federal Trade Commission (FTC), along with private organizations and other government agencies, has created a site, www.onguardonline.gov, where consumers can take quizzes designed to educate them about ID theft, spam, phishing, and online shopping scams. Numerous state laws as well as the federal Identity Theft Enforcement and Restitution Act enable victims of identity theft to seek restitution and make it easier for the government to prosecute phishing and those who threaten to steal or divulge information from a computer. The Children’s Online Privacy Protection Act sets rules and requires marketers to obtain parental permission before obtaining marketing research information from children over the web. There is also a Do Not Call Registry that provides protection to consumers who do not want to be contacted by telemarketers. Students’ answers on the ethicality of Internet censorship will vary.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 170. What is the role of the Federal Trade Commission (FTC) in the regulation of marketing activities? ANSWER: The FTC wields the broadest powers of any agency to influence marketing activities at the federal level. The FTC enforces laws regulating unfair business practices and stops false and deceptive advertising. It regulates communication by wire, radio, and television. It may issue a consent order through which a business accused of violations can agree to voluntary compliance without admitting guilt. If a business refuses to comply with an FTC request, the agency can issue a cease-and-desist order, which gives a final demand to stop an illegal practice. Firms often challenge cease-and-desist orders in court. The FTC can require advertisers to provide additional information about products in their advertisements, and it can force firms using deceptive advertising to correct earlier claims with new promotional messages. In some cases, the FTC can require a firm to give refunds to consumers misled by deceptive advertising. It can also stop mergers if the agency believes that the proposed acquisition will reduce competition by making it harder for new companies to enter the field. 171. Define the terms inflation and deflation. Discuss their effects on the economy with the help of real-life examples. ANSWER: Inflation is a period of rising prices caused by some combination of excess consumer demand and increases in the costs of one or more factors of production. Inflation devalues money by reducing the products it can buy through persistent price increases. These in turn increase the marketers’ costs, such as expenditures for wages and raw materials, and the resulting high prices may therefore negatively affect sales. Deflation is a period of sustained price decreases and increasing business inventories. Deflation, if prolonged, can cause a freefall in corporate profits, lower returns on most investments, and widespread job layoffs. Student examples will vary. 172. Summarize the economic factors that influence marketing decision making and consumer buying behavior. a. ANSWER: b.

c. d. e.

The business cycle is a pattern of economic activity that includes periods of prosperity, recession, depression, and recovery. Consumer buying differs in each stage of the business cycle, and marketers must adjust their strategies accordingly. Inflation is a rising price level that leads to reductions in consumer buying power because the purchasing power of the currency declines. Deflation refers to falling prices that make products more affordable. Unemployment is the proportion of people in the work force who are not employed and are actively seeking employment. Unemployed people have relatively little money to spend, and hence unemployment has a direct effect on consumer spending. Shortage in resources that results from political instability, lack of raw materials, components, and labor can also have a profound effect on consumer behavior. Discretionary income or the lack of it affects the ability of people to buy nonessential goods.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 173. What is demarketing? Give examples of methods used by businesses to compensate for limited resources. ANSWER: Demarketing is the process of reducing consumer demand for a good or service to a level that the firm (or industry) can supply. Demarketing is a common approach in an industry dealing with increased demand for fixed amounts of resources. Oil companies publicize tips for consumers on how to cut gasoline consumption, and utility companies encourage homeowners to install more insulation to reduce heating costs. Other companies, such as paper and aluminum producers, encourage recycling. 174. Explain the importance of the technological environment on marketing. ANSWER: The technological environment represents the application to marketing of knowledge based on discoveries in science, inventions, and innovations. Technology leads to new goods and services for consumers; it also improves existing products, offers better customer service, and often reduces prices through new, cost-efficient production and distribution methods. Marketers monitor the technological environment for a number of reasons. Creative applications of new technologies not only give a firm a definite competitive edge but can also benefit society. Marketers who monitor new technology and successfully apply it may also enhance customer service. Technology can quickly make products obsolete but it can just as quickly open new marketing opportunities sometimes in entirely new industries. 175. Which particular challenge does the telecommunications industry face because of the fast pace of product innovation? What steps are being taken to correct these barriers? ANSWER: The telecommunications industry lacks standardization guidelines that would allow the networks that drive cell phones, the Internet, Wi-Fi, and VoIP to interface easily. This presents an obstacle for business users and consumers. The industry is attempting to create product standards called the Internet Protocol Multimedia Subsystem (IMS). It will attempt to set a common interface so that data can be carried across networks between different devices. 176. What is consumerism? What can marketers do to protect the consumer’s right to be informed? ANSWER: Consumerism is defined as a social force within the environment that aids and protects the buyer by exerting legal, moral, and economic pressures on businesses and governments. Marketers can protect the consumer’s right to be informed by providing them with enough information about the products to enable them to be responsible buyers.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 177. Discuss each of the consumer rights presented by President John F. Kennedy. ANSWER: The consumer rights presented by President John F. Kennedy include the following: a. The right to choose freely from among a range of goods and services. The right to be informed through enough education and product information to become b. responsible buyers. The right to be heard, if they wish to express their legitimate displeasure to appropriate c. parties such as sellers, consumer assistance groups, and city or state consumer affairs officers. The right to be safe, implying that the goods and services available to consumers should not d. be injurious with normal use. Goods and services should be designed in such a way that the average consumer can use them safely. 178. Why is ethics regarded as a critical issue in marketing research? What are the steps taken by the government to ensure consumer safety and privacy? ANSWER: Invasion of personal privacy has become a critical issue in marketing research. The proliferation of databases, the selling of address lists, and the ease with which consumer information can be gathered through Internet technology have increased public concern. One marketing research tool particularly problematic is the promise of cash or gifts in return for marketing information that can then be sold to direct marketers. Consumers commonly disclose their personal information in return for an email newsletter or a favorite magazine. Several agencies, including the FTC, offer assistance to Internet consumers. The Direct Marketing Association also provides services such as the Mail, Telephone, and the Email Preference Services, to help consumers get their names removed from the marketers’ targeted lists. Registration for the U.S. Government’s Do Not Call Registry is available. 179. What ethical issues might arise when developing a product strategy? ANSWER: Product quality, packaging, planned obsolescence, and brand similarity all raise ethical questions. Feeling the competition, some marketers have tried packaging practices that might be considered misleading, deceptive, or unethical. Larger packages take up more shelf space, and consumers notice them. An odd-sized package makes price comparisons difficult. Bottles with concave bottoms give the impression that they contain more liquid than they actually do. Planned obsolescence refers to a practice of intentionally offering products with limited durability. 180. Describe the role of ethics in the promotion of products and services. ANSWER: Promotion raises many ethical questions because it is the most direct link between a firm and its customers. Personal selling has always been a target of criticism—and jokes about untrustworthiness. Promotion covers many areas, ranging from advertising to direct marketing, and it is vital for marketers to monitor their ethics in all marketing communications. Truth in advertising—representing accurately a product’s benefits and drawbacks, warranties, price, and availability—is the bedrock of ethics in promotion. Marketing to children is also under close scrutiny as children do not have the skills to receive marketing messages critically and simply believe everything they see and hear. Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 181. How can marketers help companies to meet their social responsibility? What impact does social responsibility have on the public’s perception of an organization? Give examples of companies that have undertaken socially responsible initiatives. ANSWER: Marketers must consider the global effects of their marketing decisions. They should also consider the long-term effects of their decisions and the well-being of the future generations. Manufacturing processes that damage the environment or that use up natural energy resources are easy targets for criticism. Marketers can use several methods to help their companies behave in socially responsible ways. Socially responsible marketing involves campaigns that encourage people to adopt socially beneficial behaviors such as safe driving, eating more nutritious food, or improving the working conditions of people half a world away. And organizations that sponsor socially responsible programs not only help society but also develop goodwill for an organization, which could help the bottom line in the long run. Companies can also help entire communities through socially responsible investing. Student examples will vary. 182. What is green marketing? Explain the influence of ecology on marketing. ANSWER: Many companies respond to consumers’ growing concern about ecological issues through green marketing. Green marketing refers to the production, promotion, and reclamation of environmentally sensitive products. Ecology is the relationship between organisms and their natural environments. It has become a driving force in influencing how businesses operate. Many industry and government leaders rank the protection of the environment as the biggest challenge facing today’s corporations. Environmental issues such as water pollution, waste disposal, acid rain, depletion of the ozone layer, and global warming affect everyone. They influence all areas of marketing decision making, including product planning and public relations, spanning such topics as planned obsolescence, pollution control, recycling waste materials, and resource conservation. Match each definition to the corresponding term. a. environmental scanning b. environmental management c. competitive environment d. time-based competition e. economic environment f. demarketing g. consumerism h. marketing ethics i. social responsibility j. green marketing Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility k. oligopoly l. gross domestic product m. planned obsolescence n. inflation o. socially responsible marketing p. political-legal environment q. VoIP r. discretionary income s. antitrust t. strategic alliance 183. _____ is the process of collecting information about the external marketing environment to identify and interpret potential trends. ANSWER: a 184. Attainment of organizational objectives by predicting and influencing the competitive, political-legal, economic, technological and socio-cultural environments is called _____. ANSWER: b 185. A partnership in which two or more companies combine resources and capital to create competitive advantages in a new market is called a(n) _____. ANSWER: t 186. The _____ is an interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power. ANSWER: c 187. _____ laws are designed to prevent restraints on trade such as business monopolies. ANSWER: s 188. A market condition where relatively few producers compete because of barriers like high start-up costs that restrict entry is called a(n) _____. ANSWER: k 189. _____ is a strategy of developing and distributing goods and services more quickly than other firms. ANSWER: d 190. The component of the marketing environment that consists of laws that require firms to protect consumer rights is referred to as the _____. ANSWER: p Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 191. The factors that influence consumer buying power and marketing strategies are part of the _____ of a market. ANSWER: e 192. _____ is the sum of all goods and services produced by a nation in a year. ANSWER: l 193. Rising prices caused by excess demand and increases in the costs of raw materials, component parts, human resources, or other factors of production is referred to as _____. ANSWER: n 194. _____ is the amount of money people have to spend after buying necessities such as food, clothing, and housing. ANSWER: r 195. _____ is the process of reducing consumer demand for a good or service to a level that a firm can supply. ANSWER: f 196. _____ is a telecommunication service that helps in connecting a personal computer with any type of broadband Internet connection. ANSWER: q 197. _____ is a social force within the marketing environment that aids and protects the consumer by exerting pressures on the business and government. ANSWER: g 198. The marketers’ standards of conduct and moral values are called _____. ANSWER: h 199. _____ consists of marketing philosophies, policies, procedures, and actions that have the enhancement of society’s welfare as a primary objective. ANSWER: i 200. Marketers intentionally offering products with limited durability are engaging in _____. ANSWER: m 201. Toyota’s promotion of cars using hybrid technology is an example of _____. ANSWER: j 202. _____ involves campaigns that encourage people to adopt beneficial behaviors such as safe driving, eating more nutritious food, or improving the working conditions of people half a world away. ANSWER: o

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 203. Marketers are constantly challenged by the dynamic forces operating in the marketing environment. However, with the right approach this dynamic environment can be tamed enough to make it possible to implement effective marketing strategies. The marketer who successfully achieves organizational objectives by predicting and influencing the five components of the marketing environment is doing which of the following: a. E nvironmental scanning b. R isk management c. P orter’s Five Forces modelling d. S WOT Analysis e. E nvironmental management ANSWER: e 204. Y our company is the market leader in your industry. You consistently beat your competition by developing and distributing your goods and services more quickly than they are able to do. Which of the following best describes what you are doing to beat your competition? a. P romotion superiority b. E nvironmental scanning c. J ust-in-time inventory management d. T ime-based competition e. S upply chain management ANSWER: d 205. S ince the latter part of the 19th century, the U.S. government has played an activist role in the financial markets and the market for goods and services. The emphasis of their role has varied over this time as different issues and dynamics were at the forefront of business and economic trends. The first phase of the U.S. government’s active regulatory role, in the early part of the 20th century, can be best described as which of the following? a. T he cyberspace phase b. T he consumer protection phase c. T he protecting consumers phase d. T he antimonopoly phase e. T he industry deregulation phase ANSWER: d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 206. T he overall health of the economy has a significant impact on consumers’ ability and willingness to purchase goods and services. The most reliable measure of the economy’s health is the sum of all final goods and services produced in the country in a given period. This measure is called____________. a. N ational income b. G ross national product c. C onsumer expenditures d. G ross domestic product e. C orporate profits ANSWER: d 207. T he technological environment that a company operates in represents all the discoveries made via science, inventions and innovation that impacts the firm’s marketing strategy. Which one of the following statements is false regarding the impact of technology on the firm’s marketing endeavors? a. T echnology can lead to new goods and services b. T echnology can improve existing products and customer service c. T echnology can reduce prices through new production and distribution methods d. S ince it is equally accessible by all competitors, it offers limited competitive advantages e. I t can help address social concerns ANSWER: d 208. C onsumerism is defined as a social force within the marketing environment that aids and protects the consumer by exerting legal, moral, and economic pressures on business and government. The conceptual framework for consumer rights include all of the following except: a. T he right to be safe b. T he right to choose freely c. T he right to be informed d. T he right to fair pricing e. T he right to be heard ANSWER: d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 209. M arketing raises a number of ethical questions about the how, when, what, where, and who of marketing implications on individuals and society at large. Ethics are of concern in every aspect of marketing. Your company offers cash rewards to consumers in return for them giving you information that you could use in your own marketing or that you could sell to direct marketers. Which category of ethics does this scenario represent? a. E thics in product strategy b. E thics in promotion c. E thics in marketing research d. E thics in pricing e. E thics in customer relationship management ANSWER: c 210. M arketers are keenly aware that good marketing alone is not enough to win the hearts and minds of consumers anymore. Now, marketers must market in a socially responsible manner or risk alienating consumers in ways that can be irreparable. Which one of the following statements is trueregarding social responsibility? a. G overnment legislation can mandate socially responsible actions. b. C onsumer activism cannot promote social responsibility. c. T here are five dimensions of social responsibility. d. C onsumers demand that marketers give more weight to profits than to social well-being. e. T he traditional concept of social responsibility only extended to employees. ANSWER: a 211. M arketers use _______________ to collect information about the external marketing environment to identify and interpret potential trends. a. C RM software b. P romotional giveaways c. T arget marketing d. E nvironmental scanning e. T est marketing ANSWER: d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 212. T he interactive exchange between firms and their customers creates the competitive environment. There are multiple types of competitive environments, and each has its own characteristics. Your company operates in a competitive environment where there are only a limited number of competitors. Moreover, it is hard for new competitors to enter the industry because of the high startup costs involved. Which one of the following competitive environments best describes the industry your company is in? a. M onopolistic competition b. M onopoly c. O ligopoly d. P erfect competition e. S ocialism ANSWER: c 213. The Sherman Act, FTC Act, and the Food and Drug Act were all laws passed by Congress in an effort to regulate certain activities and practices in the economy. These laws were passed during the ___________ phase of government regulation. a. I ndustry deregulation b. A ntimonopoly c. C yberspace d. C onsumer protection e. P rotecting competitors ANSWER: d 214. T he business cycle refers to the pattern of stages in the level of economic activity: prosperity, recession, depression, and recovery. During periods of prosperity, consumers are willing to spend ___________, and during periods of recession, consumers are willing to spend _____________. a. L ess, more b. M ore, less c. M ore, more d. L ess, less e. T he same, less ANSWER: b

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 215. G iven the rapid pace of technological innovation over the last few decades, the technological forces a firm must contend with are arguably the most dynamic of all the forces impacting the marketing environment. These technological forces can have either negative or positive implications for the firm. Which of the following statements is true about technology in a marketing context? a. T echnology can lead to new products and services for a firm, but seldom has any impact on existing products and services. b. T echnological changes can be expensive, and always lead to higher production and distribution costs. c. T echnological innovations only come from the private sector of the economy. d. M any technological innovations, such as the Internet, come from the government sector. e. N ot-for-profit companies do not produce technological innovations. ANSWER: d 216. T he social-cultural environment a firm operates in is constantly changing, and having a significant impact on marketing strategies. The change is so rapid and immense that some firms have created a new position in the organization to handle this change. Which title best describes the new position described in the scenario? a. M anager of Customer Relationships b. M anager of public policy research c. M anager of social media d. V ice President of diversity marketing e. V ice President of consumer advocacy ANSWER: b 217. B ecause of competitive pressures, some firms have used packaging and labelling practices that are questionable, misleading, deceptive and unethical. This is an example of issues related to __________. a. E thics in customer relationships b. E thics in pricing c. E thics in product strategy d. E thics in promotion e. E thics in marketing research ANSWER: c

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 218. M arketers are increasingly emphasizing to consumers that their products are not only high-quality, but they also have no health risks and they do not damage the environment. This emphasis is consistent with which of the following concepts? a. S ocially conscious promotion b. E thical marketing c. G reen marketing d. E nvironmental management e. C ustomer relationship management ANSWER: c 219. The aerospace industry has been shaken up by SpaceX, a small company building innovative passenger spacecraft. However, because of extremely high startup costs, the industry remains dominated by a small number of large corporations. Its market structure may be described as a(n) __________. a. Monopoly

b. Oligopoly c. Temporary monopoly d. Transitional monopoly e. None of the above. ANSWER: b 220. You own a high-end restaurant competing for the business of well-heeled diners. Now you're worried, because a gourmet takeout store just opened across the street. The new store will mean increased _____ competition. a. direct

b. indirect c. generic d. mealtime e. price ANSWER: b 221. A consultant has given you a list of questions to help determine a competitive strategy for your online editing business. Which of the following questions were most likely included on the list? a. Should we compete in the editing business?

b. Should we compete in the student market, or in the professional writing market? c. How should we compete in the editing business? d. Why should we compete in the editing business? ANSWER: a, b, c

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 222. You just had a job interview at a firm that develops housing complexes around the country. The interviewer seemed impressed by your knowledge of the complex political-legal environment affecting the industry. Which level(s) of government impose(s) regulations on real estate developers -- as well as on many other industries? a. Federal

b. State c. Local d. Civic e. Administrative ANSWER: a, b, c 223. It's not only the government that regulates what toys your store can sell to children. Non-governmental regulatory forces include: a. Public consumer interest groups focused on protecting kids

b. Private consumer interest groups focused on protecting kids c. Self-regulatory organizations d. Better Business Bureau e. Consumer Product Safety Commission ANSWER: a, b, c, d 224. You are thinking about starting a new business, now that the economy is emerging from recession and consumer purchasing power is increasing. Which of the following statements accurately describes this stage in the business cycle? a. This is the recovery stage.

b. This is the prosperity stage. c. While consumers have money to spend, they may still be cautious about spending it. d. Consumer demand is uncertain. e. Consumer demand is stable. ANSWER: a, c, d 225. You aspire to a career developing new biomedical technologies. Choose the type(s) of institutions that might play a role in your future endeavors. a. Government

b. Industry c. Universities d. Not-for-profit organizations e. Technology analysts ANSWER: a, b, c, d Copyright Cengage Learning. Powered by Cognero.

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 226. Before accepting a job offer from a restaurant chain, you want to be sure your future employer is in tune with the social-cultural environment of the United States. You get worried when your interviewer makes a comment on this topic which is clearly inaccurate. What does she say? a. We need to cater to retirees, because consumers are getting older.

b. We may be able to raise prices in the future, because consumers are getting more affluent. c. We need to be welcoming to all ethnic groups, because consumers are becoming more culturally diverse. d. We need to cater to large families, because the birthrate is rising. e. We should buy eco-friendly products, because consumers are concerned about the natural world. ANSWER: d 227. You are creating an ethics compliance program for your corporation. Which of the following issues is it unnecessary for you to address? a. Exclusive territories

b. Product warranties c. Price fixing d. Cannibalization e. Promotional allowances ANSWER: d 228. You feel strongly about working for a socially responsible company, so you are pleased when a prospective employer brings this up. He shows you a set of statements that are posted in all the firm's offices to remind people of the basic steps in the social responsibility pyramid. Choose the statements that appear in this set. a. Be profitable.

b. Obey the law. c. Be ethical. d. Be a good corporate citizen. e. Put efficiency first. ANSWER: a, b, c, d

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 229. Caterpillar and First Solar, Inc. launched a ______ where First Solar will design and manufacture a preengineered turnkey package for use in remote microgrid applications, such as small communities and mine sites. The package will feature Cat-branded solar panels manufactured by First Solar and will include a balance of system components. The products will be sold exclusively through Caterpillar's extensive worldwide dealer network. a. s trategic alliance b. g lobal partnership c. c ompetitive agreement d. l icensing agreement ANSWER: a 230. A food lobbying group funded by Coca Cola worked to counter proposed legislation about school lunches and the availability of soda in vending machines at schools across the country. Coca Cola supports lobbyists in an effort to engage in _________. a. e nvironmental management b. e nvironmental scanning c. e nvironmental screening d. c ompetitive intelligence ANSWER: a 231. Technological changes and the increased use of wi-fi has enabled companies such as Netflix to create a large consumer following and changed consumer's viewing habits. Netflix has emerged as an entertainment company offering original content that's not available on cable or satellite networks. Netflix is a _____ competitor to cable and satellite companies. a. d irect b. i ndirect c. i nsignificant d. s ubstitute ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 232. Zara and H&M are market leaders in the world of "fast fashion" where they're able to design and manufacture clothing based on the latest fashion trends in a quick and affordable manner. Due to their ability to partner with manufacturing firms in developing countries and their use of supply chain strategies, Zara and H&M can reduce the time between design and availability in the retail store which is a significant competitive advantage. These companies make use of _______ competition. a. t ime-based b. d irect c. i ndirect d. f ashion ANSWER: a 233. The regulatory agency which can require advertisers to provide additional information about products in their advertisements is the _____. a. F ederal Trade Commission (FTC) b. E nvironmental Protection Agency (EPA) c. F ood and Drug Administration (FDA) d. F ederal Advertising Commission (FAC) ANSWER: a 234. Manufacturers of vitamins and nutrition supplements have greater freedom in the manufacture and marketing of their products since many of their products are not regulated by the _______ in the same way that drugs are since double-blind efficacy studies are not required. a. F DA b. F TC c. E PA d. E EOC ANSWER: a 235. Brock recently graduated from college and began his job as a media analyst earning $50,000 per year. He wants to start saving for retirement and use a weekly budget to keep him from spending too much money. He determines that his _______ income is $120 per week for entertainment, dining out, clothes, and other nonessential items. a. d iscretionary b. n et c. g ross d. f rivolous ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 236. Recently, a top economist to the Federal Reserve bank predicted that market conditions would be favorable with low levels of inflation and low unemployment rates. Which of the following might be a response by marketers to this economic forecast? a. i ncreasing promotional efforts b. l imiting new product offerings c. r educing distribution d. l ower prices ANSWER: a 237. Widespread adoption of wireless networks and in-home Internet use has led to an increased availability of "smart" products for the home such as thermostats, lighting, security, systems and smoke detectors. Which environmental factor is most related to the new smart home products? a. t echnological b. s ocial-cultural c. e conomic d. p olitical-legal ANSWER: a 238. Air travel today is not very glamorous and takes a lot of patience but many changes have occurred to enhance convenience for travelers. First, consumers can book their own travel via the Web rather than use a travel agent. Before their flight, they can check-in remotely via their smart phone or other mobile device and print their boarding pass. Alternately, they can use their smart phone to display their boarding pass to the gate agent who scans the digital image. Once on-board and safely cruising, some airlines offer in-flight wifi to enable travelers to check their e-mail, send documents, surf the web or catch up on a Netflix series or movie. These conveniences are most related to the ________ environmental factor. a. t echnological b. s ocial-cultural c. p olitical-legal d. e conomic ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 239. Tim was on his way to work one morning and he noticed smoke coming from under the hood of his truck. He pulled over to the side of the road, turned off the ignition, and had his vehicle taken to the dealership. The dealership found a faulty wire and wanted to charge him for the service. However, since the vehicle was still under warranty, Tim contacted the manufacturer as well as the National Highway Traffic Safety Administration (NHTSA) to report the incident. Tim's "right" to contact the manufacturer and NHTSA is related to the right to _______, one of the consumer rights mentioned in a speech by President John F. Kennedy. a. be h eard b. b e safe c. be i nformed d. c hoose freely ANSWER: a 240. Consumers who are part of the Millennial generation rely on social media and the influence of peers when making decisions about purchasing products and brands compared to Baby Boom generation consumers who might prefer to read reviews by sources such as Consumer Reports. This distinction is important to marketers and part of the ______ environment. a. s ocial-cultural b. e conomic c. t echnological d. d emographic ANSWER: a 241. A local furniture store was recently penalized for continuously using a "going out of business" message in its marketing communications to influence shoppers to visit the store and assume that prices would be very low. This ethical issue is linked to the _____ variable of the marketing mix. a. p romotion b. p roduct c. d istribution d. p rice ANSWER: a

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Chapter 03: The Marketing Environment, Ethics, and Social Responsibility 242. Kia Motors has gained consumer confidence and increased sales through its warranty program which includes a 10-year and 100,000 mile limited warranty. Kia Motors notes that all warranties are "limited" and consumers are encouraged to read the fine print to fully understand what the warranty covers. Which element of the marketing mix is the warranty linked when considering a company's ethical behavior? a. p roduct b. p rice c. p romotion d. d istribution ANSWER: a 243. Cabi, a women's clothing company based in Los Angeles, CA partners with Opportunity International to make small business loans to female entrepreneurs in developing countries through its "Make a Change Program" where customers can round-up their purchase to the nearest dollar amount and contribute "change" for a change. This program is part of the _______ dimension of social responsibility. a. p hilanthropic b. economic c. l egal d. e thical ANSWER: a 244. Companies often reorganize their operations which might include lay-offs, divestiture of business units, or other decisions linked to their ability to maximize profitability. Which dimension of social responsibility is related to a firm's desire to maximize profits? a. e conomic b. l egal c. e thical d. p hilanthropic ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 1. Social media includes different forms of electronic communication. a. True b. False ANSWER: True 2. Every social network has its own search engine, which allows users to search for topics that interest them. a. True b. False ANSWER: True 3. Making a list of keywords and using those keywords throughout the social media campaign can help marketers to guide users to the right place on the media platform. a. True b. False ANSWER: True 4. CafeMom is a website that provides a platform for mothers and mothers-to-be to interact with each other. The website also provides information on various topics such as parenting dilemmas, baby care, and green living. CafeMom can be regarded as a social networking site. a. True b. False ANSWER: True 5. The content programmer of a social news site decides which news postings get the most prominent display on the site. a. True b. False ANSWER: False 6. DailyHub is a popular website that allows users to post reviews and news items on the latest electronic gadgets in the market. DailyHub is an example of a social news site. a. True b. False ANSWER: True

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Chapter 04: Social Media: Living in the Connected World 7. Connotea is a social media platform aimed primarily at scientists and clinicians, where users can post news items and links to outside articles, then vote on which postings get the most prominent display. Connotea is an example of an online forum. a. True b. False ANSWER: False 8. Bon Appétit! is a website that contains recipes written by Elise Bauer. In the website, Bauer also writes various articles regarding simple cooking methods. Bon Appétit! can be regarded as an online forum. a. True b. False ANSWER: False 9. A blogging site is a social media platform where users post news items and hold conversations on specified topics. a. True b. False ANSWER: False 10. MacRumors.com, a website that aggregates Mac and Apple related news, rumors, and reports, can be regarded as a blogging site as it allows users to post all the news related to a specific group of products. a. True b. False ANSWER: False 11. Microblogging allows people to communicate extensively through lengthy blog postings. a. True b. False ANSWER: False 12. Marketers often use blog postings to educate consumers and business customers about new products. a. True b. False ANSWER: True

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Chapter 04: Social Media: Living in the Connected World 13. Wonderlist is a task and note manager for mobile phones that helps users to organize “to-do” lists and increase efficiency. Wonderlist is an app. a. True b. False ANSWER: True 14. QR codes can be scanned only with the help of a dedicated QR code reader. a. True b. False ANSWER: False 15. Sports celebrities and actors use social media marketing to create a positive public image. a. True b. False ANSWER: True 16. Marketers generally view the goal of social media marketing as developing a conversation with potential customers. a. True b. False ANSWER: True 17. Social media marketing creates a buzz that carries the marketing message from one user to the next until it becomes viral. a. True b. False ANSWER: True 18. Social media marketing allows customers to promote the firm’s messages themselves. a. True b. False ANSWER: True 19. The majority of online consumers use social media to make purchase decisions. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World 20. Most online shoppers who start with search engines do so because these provide the greatest amount of information about products and companies. a. True b. False ANSWER: True 21. Communities created by social media help steer consumers toward new brands and products. a. True b. False ANSWER: True 22. Business-to-business (B2B) firms rarely use social media for marketing their businesses. a. True b. False ANSWER: False 23. The nature of relationships between B2B marketers and their customers is similar to that of firms that market products to consumers. a. True b. False ANSWER: False 24. Not-for-profit organizations use social media to connect with the general public, the business community, and each other. a. True b. False ANSWER: True 25. Effective social media marketing requires setting goals and developing strategies to reach a target audience. a. True b. False ANSWER: True 26. All companies follow a standard format for social media marketing plans. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World 27. The executive summary of a social media marketing plan is said to be effective when it gives compelling reasons as to why the plan should be adopted. a. True b. False ANSWER: True 28. The first step in creating a social media marketing plan is to write an executive summary. a. True b. False ANSWER: False 29. The overview of a social media marketing plan describes the overall market conditions and the firm’s current position in social media. a. True b. False ANSWER: True 30. Social media marketing seeks to control the content and message received by the audience. a. True b. False ANSWER: False 31. The audience’s trust is essential for the success of social media marketing efforts. a. True b. False ANSWER: True 32. Marketers direct some parts of their social media marketing efforts toward trust building in order to facilitate the two-way conversation between the company and the consumer. a. True b. False ANSWER: True 33. The basis for social media is conversation. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World 34. Social media helps marketers to connect with influencers. a. True b. False ANSWER: True 35. Setting clear goals helps everyone involved in the marketing campaign to aim their efforts in the right direction. a. True b. False ANSWER: True 36. The goals of a social media marketing plan have to be flexible for marketers to be able to adapt to the changing conditions in the marketing environment. a. True b. False ANSWER: True 37. Social media efforts customize marketers’ approach to targeted audiences more than many types of traditional marketing. a. True b. False ANSWER: True 38. Television commercials are much more effective in specifically targeting interested consumers than social media efforts. a. True b. False ANSWER: False 39. The target audience for a social media marketing campaign depends on the goal of the marketing effort. a. True b. False ANSWER: True 40. Marketing efforts aimed at creating brand awareness will have a broader target audience compared to those aimed at strengthening relationships with existing customers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World 41. People who want to learn about a product and its features in detail are more likely to search out this information on Twitter, while those interested in a promotional event are more likely to follow Facebook. a. True b. False ANSWER: False 42. While determining the target audience for a particular social media marketing campaign, marketers not only pinpoint the products which will best serve the group, but also determine the social media that will be effective in delivering the message. a. True b. False ANSWER: True 43. Developing the best strategies for social media marketing requires a thorough understanding of the target audience. a. True b. False ANSWER: True 44. Marketers most often use a single social media platform to reach their target audience. a. True b. False ANSWER: False 45. Directing consumers to a specific landing page for a marketing campaign, rather than the company’s home page first, helps potential consumers to participate in a conversation with the marketers. a. True b. False ANSWER: True 46. After developing strategies of the campaign, marketers focus on specific tactics such as recruiting influencers, setting up contests, or offering coupons and discounts. a. True b. False ANSWER: True

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Chapter 04: Social Media: Living in the Connected World 47. The goal of content marketing is to drive the target audience toward a desired action. a. True b. False ANSWER: True 48. Social media marketing content focuses on its audience rather than promoting the company outright. a. True b. False ANSWER: True 49. An effective social media marketing campaign should contain good keywords that the targeted audience are most likely to search for when looking for information about goods and services. a. True b. False ANSWER: True 50. Experts recommend that marketers refrain from scheduling content more than a week away in order to avoid confusion that might arise owing to shifts in consumer responses. a. True b. False ANSWER: True 51. The rules of engagement for social media mainly focus on making the exchange between marketers and their targeted audience overly positive for the customers. a. True b. False ANSWER: False 52. Every social media channel has an intended use by its community. a. True b. False ANSWER: True

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Chapter 04: Social Media: Living in the Connected World 53. Campalyst is an example of a social media analytics tool as it tracks followers from a like or a tweet on a social network to a purchase on the company’s website. It can also be used to measure the impact of a campaign or hashtag. a. True b. False ANSWER: True 54. Comment Sniper helps companies to monitor the comments on their products and also the discussions on online forums. Comment Sniper is an example of social media analytics tool. a. True b. False ANSWER: True 55. Marketers select monitoring tools based on the needs of their own firms. a. True b. False ANSWER: True 56. Marketers use reach and frequency as variables to calculate the return on investment of their social media marketing initiatives. a. True b. False ANSWER: True 57. The majority of the firms measure the success of their social media marketing plan in terms of their social media presence. a. True b. False ANSWER: True 58. An understanding of a company’s brand is neither imperative nor central to the task of managing a social media marketing campaign. a. True b. False ANSWER: False

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Chapter 04: Social Media: Living in the Connected World 59. Protection of consumer privacy is a major ethical issue faced by social media marketers. a. True b. False ANSWER: True 60. Well-written social media policies of a firm are consistent with its organizational culture and values. a. True b. False ANSWER: True 61. A person who manages external engagement with customers in social media channels is called a social media developer. a. True b. False ANSWER: False 62. An online community manager is the primary decision maker who runs the firm’s social media program. a. True b. False ANSWER: False 63. A person who oversees the social media analytics function in a firm’s social media campaign is responsible for measuring the results of the marketing effort. a. True b. False ANSWER: True 64. Noah Bennett works for a technology company and is responsible for creating the content of the social media marketing campaign. He also informs the public about topics such as product releases. Noah is a social media developer. a. True b. False ANSWER: False

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Chapter 04: Social Media: Living in the Connected World 65. Adrian works with the marketing team of an automobile company. He oversees the look and feel of the online communities that the company uses to market its products. His role is similar to that of a social media designer. a. True b. False ANSWER: True 66. A(n) _____ is software that enables users to communicate with each other online. a. bookmarking site b. social media analytics c. online forum d. social media tool ANSWER: d 67. Which of the following can be categorized as a social media tool? a. A social news site b. A social networking site c. An app d. An online forum ANSWER: c 68. Which of the following best describes the function of social media tools? a. Allow users to build, integrate, or facilitate an online community b. Enable users to communicate with each other online c. Act as a home base for online communities d. Allow marketers to track, measure, and interpret data related to users’ social media marketing initiatives ANSWER: b 69. Snaptell allows shoppers to retrieve more information about products while shopping in brick-and-mortar stores. It is an example of a(n) _____. a. microblog b. social network c. app d. firewall ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 70. _____ are websites that provide virtual communities for people to share daily activities and increase their circle of online friends. a. Blogging sites b. Social networking sites c. Bookmarking sites d. Social news sites ANSWER: b 71. Which of the following types of social media platforms allow their users to create an online profile of biographical data including photos and information such as employment, education, and relationship status, and to invite friends to join their circle? a. Social news sites b. Blogging sites c. Microblogs d. Social networking sites ANSWER: d 72. Badoo is a global, multilingual, social media platform that provides an opportunity for its members to meet new people in their locality, share daily activities, and post opinions on different topics. Badoo is a type of _____. a. application b. social networking site c. bookmarking site d. blogging site ANSWER: b 73. Eons.com is a website for baby boomers that allows members to find friends, share experiences on various topics, and post photos and videos. It also provides information on health, fitness, retirement and insurance, and access to various special interest groups. Eons.com is an example of a _____. a. blogging site b. social news site c. social networking site d. microblog ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 74. Which of the following social media platforms gives users a place to save, organize, or manage links to websites or other Internet resources? a. Social news site b. Social networking site c. Bookmarking site d. Blogging site ANSWER: c 75. Oneview is a social media platform that provides a space for its users to save, organize, and tag links of their favorite websites. The users can also share these links with other members of the platform. Oneview is an example of a _____. a. social networking site b. social news site c. blogging site d. bookmarking site ANSWER: d 76. Which of the following is an example of a bookmarking site? a. PistonHeads.com, which allows users to share information related to automotive industry and also buy/sell cars. b. Linkswarm.com, which allows users to save, organize, and manage links to their favorite websites c. LiveJournal.com, which allows users to write articles on their experiences and favorite topics and share it with other users. d. NowPublic.com, which allows users to post news articles and videos. ANSWER: b 77. Which of the following social media platforms allow users to report on the happenings in their communities and then vote on which postings get the most prominent display on the site? a. Blogging sites b. Online forums c. Social news sites d. Social networking sites ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 78. Topix.net is a website that allows people to comment on news articles and report on events occurring in their local communities. It also allows users to edit and rate the topics of their choice. Topix.net can be grouped under which of the following social media platforms? a. Social blogging sites b. Social networking sites c. Online forums d. Social news sites ANSWER: d 79. A(n) _____ is a social media platform where users post messages and hold conversations on specified topics. a. social news site b. online forum c. blogging site d. bookmarking site ANSWER: b 80. AlphaDevelopers.com is a website that provides a platform for users to post general information on mobile phones, tablets, and other electronic devices. The users can rate the devices and also answer queries from other users. AlphaDevelopers.com is an example of a(n) _____. a. blogging site b. social networking site c. social news site d. online forum ANSWER: d 81. Which of the following refers to a platform where a host or writer posts information or opinions on various topics and followers may respond? a. An application b. A social news site c. A bookmark d. A blogging site ANSWER: d

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Chapter 04: Social Media: Living in the Connected World 82. Odyssey is a website where the host regularly posts photos and articles on his favorite travel destinations and his experiences therein. Users of the site are allowed to respond or post comments on these articles. Odyssey is an example of a _____. a. blogging site b. social news site c. database d. bookmarking site ANSWER: a 83. A blog posting, such as a Tweet, that contains only a few words is called a(n) _____. a. moblog b. microblog c. splog d. edublog ANSWER: b 84. Blunk is a service that allows users to send updates through posts that contain only a few words. These updates are sent to the users who have signed up to receive them. Blunk can be regarded as a(n) _____. a. blogging site b. social networking site c. microblog d. online forum ANSWER: c 85. A(n) _____ is a free or paid software download that links users to a wide range of goods and services, media and text content, social media platforms, search engines, and the like. a. QR code b. blog c. social media analytics tool d. app ANSWER: d

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Chapter 04: Social Media: Living in the Connected World 86. Hootsuite is a social media management software that allows users to manage multiple social network profiles, keep track of brand mentions, and send regular updates to their Twitter account. Hootsuite is an example of a(n) _____ a. blogging site b. app c. microblog d. social networking site ANSWER: b 87. ReadUp is a social media management software that allows its users to read free books available on the Internet and browse through various articles and international dailies for information. ReadUp can be regarded as a(n) _____. a. social news site b. blogging site c. online forum d. app ANSWER: d 88. Stinson’s, a chain of luxury department stores, uses a unique two-dimensional code on pamphlets and brochures that can be read by mobile phones with cameras. These codes provide detailed information regarding the products available in the store along with their prices. Which of the following are being used by Stinson’s in the above scenario? a. Apps b. Fact tags c. QR codes d. Social networks ANSWER: c 89. Which of the following is a unique feature of social media marketing? a. It is limited by geographical boundaries. b. It creates ways for customers to engage in conversations with each other and the organization. c. It seeks to control the content and message received by the audience. d. It mainly focuses on promoting the company outright rather than focusing on the audience. ANSWER: b

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Chapter 04: Social Media: Living in the Connected World 90. Consumers rely on communities created by social media for their buying decisions mainly to: a. gather relevant information about the functional strategies of companies. b. gather relevant insights about the fluctuation in stock prices. c. conduct research and share information. d. build partnerships with companies. ANSWER: c 91. In a B2B context, businesses use social media mainly to: a. share views and make final buying decisions. b. learn about new goods and services. c. connect with the general public. d. build relationships, including partnerships with other companies. ANSWER: d 92. Not-for-profit organizations use social media to: a. learn about new methods of production. b. connect with the general public, the business community, and each other. c. learn about new goods and services. d. lobby for political gains. ANSWER: b 93. Which of the following is true about a social media marketing plan? a. It is never documented in writing. b. It identifies and describes methods for monitoring, measuring, and managing the SMM effort. c. It shares no common element with a traditional marketing plan. d. It precludes an analysis of the competition. ANSWER: b 94. A social media marketing plan is important because: a. it helps companies to generate donations or other types of funding. b. it helps consumers to make final purchase decisions. c. it helps companies to have full control over the content and the message received by the audience. d. it documents in writing the company’s goals and strategies for the SMM initiative. ANSWER: d

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Chapter 04: Social Media: Living in the Connected World 95. In an SMM plan, _____ refers to a paragraph or two that explains the who, what, when, where, how, and why of the plan, and gives compelling reasons why the plan should be adopted. a. the overview b. the executive summary c. the analysis of the competition d. the body of the plan ANSWER: b 96. The executive summary of a social media marketing plan is said to be effective if: a. it provides an expert view on the competitors’ presence in the social media, including the platforms they choose and their overall effectiveness. b. it clearly describes the overall market conditions and the firm’s current position in social media. c. it effectively defines the methods for monitoring, measuring, and managing the social media marketing efforts. d. it gives compelling reasons as to why the plan should be adopted by the firm. ANSWER: d 97. Bullseye, Inc., an online marketing company that designs marketing campaigns for firms, is developing a social media marketing plan for a consumer goods company. The development team has created the entire plan and is now trying to compile the salient features of the plan that cites the reasons for adopting it. The development team is writing the _____ of the marketing plan. a. executive summary b. overview c. analysis component d. body ANSWER: a 98. The overview of a social media marketing plan: a. briefly describes the overall market conditions, and the firm’s current position in the social media. b. gives compelling reasons as to why the plan should be adopted by the firm. c. describes in detail the goals and strategies, the target audience, and the methods for implementing, monitoring, measuring, and managing the marketing campaign. d. examines competitor’s presence in social media, including which platforms and tools they select and an evaluation of their overall effectiveness. ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 99. Redline is a popular men’s clothing brand in the United States. As a part of the firm’s new online marketing campaign, the marketing team at Redline has been asked to prepare a synopsis of the overall market condition, including the current position of the firm on social media. The marketing team is most likely to document its findings in the _____ of the marketing plan. a. overview b. competitive analysis section c. body d. executive summary ANSWER: a 100. The _____ of a social media marketing plan examines and evaluates the competitors’ presence in social media, including the platforms and tools they select and their overall effectiveness. a. competitive analysis b. executive summary c. overview d. body ANSWER: a 101. The marketing team at Sienna Technologies has decided to use social media to market the firm’s products, and is in the process of creating a social media marketing (SMM) plan. Currently, the marketing team at Sienna Technologies is preparing a report on the various social media platforms and tools being used by its primary competitors. In which of the following sections of the SMM plan is this most likely to be included? a. The executive summary b. The body of the plan c. The overview d. The competitive analysis ANSWER: d 102. Which of the following sections of a social media marketing plan covers the statements of goals and strategies, target audience, budget and the returns as well as the methods for monitoring, measuring, and managing the marketing campaign? a. The overview of the plan b. The executive summary c. The body of the plan d. The competitive analysis ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 103. MarkPro Solutions is developing a social media marketing plan for an automobile company in order to help it market its products through social networking sites. MarkPro Solutions has designed a marketing campaign, and is currently in the process of documenting the goals and strategies of the plan together with the implementation and monitoring methods. Which of the following sections of the SMM plan is being developed by MarkPro Solutions in the above scenario? a. The overview of the plan b. The competitive analysis c. The body of the plan d. The executive summary ANSWER: c 104. Social media marketing differs from traditional marketing in that social media marketing: a. seeks to control the content and message received by the audience. b. focuses mainly on promoting the company outright, rather than building credibility among customers. c. covers all forms of media including print media and television commercials. d. solicits the audience’s participation in the message. ANSWER: d 105. Fred Wilson, a journalist working for a popular news channel, has a vast knowledge of electronic gadgets. His reviews of these products are highly regarded and trusted by others. Wilson also runs a weekly show on the channel called “The Technocrat,” where he analyzes the latest high-tech gadgets. Much like his reviews, Wilson’s show enjoys a wide viewership, and is believed to have a considerable impact on the buying decisions of the audience. Fred Wilson can be regarded as a(n) _____. a. influencer b. laggard c. innovator d. relationship manager ANSWER: a 106. Marketers focus their efforts on setting clear goals in the initial step of a social media marketing campaign because: a. it helps buyers make final purchase decisions. b. it helps everyone involved in the campaign to aim their efforts in the right direction. c. it is effective in engaging the target audience in a conversation. d. it helps marketers to have control over the content of the marketing message received by the audience. ANSWER: b

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Chapter 04: Social Media: Living in the Connected World 107. Sparks, a manufacturer of smart phones and tablets, is currently gathering information on demographics to pinpoint the audience for its social media marketing campaign. In other words, Sparks is collecting information on: a. the social media platforms and tools used by its competitors and their overall effectiveness. b. what potential customers need or want c. which of its products and social media will meet the needs and wants of a particular group of people. d. characteristics such as age, gender, geographic location, income, ethnicity, and marital status of a target group. ANSWER: d 108. Which of the following is the most essential requirement for developing the best strategies for a social media marketing campaign? a. An interactive media channel b. An innovative product c. A thorough understanding of the target audience d. A thorough analysis of the competitors’ media presence ANSWER: c 109. Which of the following phases in the development of a social media marketing campaign involves the selection of social media platforms and social media tools to be used to reach the target audience? a. Setting goals b. Developing strategies and choosing tactics c. Producing content d. Implementing the plan ANSWER: b 110. Once marketers answer the question of who they are trying to reach by targeting their audience, they ask a second vital question in social media marketing: a. “What is the goal of the campaign?” b. “How do we engage the audience in a conversation?” c. “How do we identify the needs or wants of our potential customers?” d. “How do we create content with the firm’s goals and strategies in mind?” ANSWER: b

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Chapter 04: Social Media: Living in the Connected World 111. While developing a social media marketing campaign, marketers can make it easy for potential customers to participate in the conversation by: a. introducing a wide range of merchandise. b. offering attractive discounts on goods and services. c. creating a specific landing page for the marketing campaign. d. sending frequent mails and updates regarding goods and services to potential customers. ANSWER: c 112. In order for a social media marketing plan to succeed, the content of its messages must: a. attract venture capitalists. b. include a detailed analysis of competitors’ media marketing plans. c. be simple. d. engage the target audience in the conversation. ANSWER: d 113. _____ involves creating and distributing relevant and targeted material to attract and engage an audience, with the goal of driving them to a desired action. a. Content marketing b. Social media monitoring c. Crowdsourcing d. Social bookmarking ANSWER: a 114. Jason’s Foods is a manufacturer of organic food products. The company is planning to market its products through social media sites and has developed effective strategies for the marketing campaign. The marketing team plans to use messages that focus on the health benefits of organic foods in order to generate greater awareness about its products and engage its target audience in the conversation. In doing so, the marketing team of Jason’s Foods would be engaging in _____. a. social media monitoring b. content marketing c. behavioral targeting d. social bookmarking ANSWER: b

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Chapter 04: Social Media: Living in the Connected World 115. The content for a social media marketing campaign is said to be effective if it: a. focuses on promoting the company outright. b. contains detailed information about competing product offerings in the market. c. has a strong brand focus. d. presents the SMM effort as a one-way conversation, much like traditional marketing. ANSWER: c 116. The rules of engagement for social media are meant to: a. track, measure, and evaluate a firm’s social media marketing initiatives. b. make the exchange between marketers and their target audience a positive one. c. protect the privacy of consumers by imposing laws and regulations on the company. d. explain to the employees why they should take certain steps or actions, or avoid them. ANSWER: b 117. The process of tracking, measuring, and evaluating a firm’s social media marketing initiatives is called _____. a. social media management b. content marketing c. social bookmarking d. social media monitoring ANSWER: d 118. The marketing team at Neptune Networks has recently rolled out its social media marketing plan and is trying to measure the impact of its campaign by tracking the social media platforms that were used for this purpose. The marketing team is using a few entry-level tools to track the blogs, the online communities, and also the firm’s Facebook and Twitter accounts. This process of tracking and evaluating a firm’s SMM initiatives is known as _____. a. content marketing b. social media monitoring c. digital marketing d. search marketing ANSWER: b

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Chapter 04: Social Media: Living in the Connected World 119. Which of the following tools help marketers trace, measure, and interpret data related to social media marketing initiatives? a. Social media platforms b. Social media analytics c. QR codes d. Apps ANSWER: b 120. Crowdtrail is a tool used by marketers to evaluate their social media presence by tracking and evaluating users’ influence across various virtual communities. It provides information regarding the number of clicks on a company’s website and also helps in measuring the total reach, frequency, engagement, and other factors. Crowdtrail is an example of a _____. a. social networking site b. bookmark c. blog d. social media analytics tool ANSWER: d 121. The rate of revenues received for every dollar spent on an expense is known as _____. a. return on investment b. resource rent c. earnings per share d. return on equity ANSWER: a 122. Which of the following is true with regard to managing a social media marketing campaign? a. It does not require a flexible approach. b. It does not require familiarity with, or knowledge about the company’s brand. c. It requires knowledge of the benefits and drawbacks of the different social media platforms. d. It is damaging for a firm involved in managing a potential social media crisis to be transparent. ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 123. Which of the following is a major ethical issue faced by social media marketers during their marketing campaigns? a. Copyright infringement b. Consumer privacy c. Lack of funding d. Contractual concerns ANSWER: b 124. Job seekers can use social media to improve their job prospects in the market by: a. being active on most of the social media sites. b. including friends and family on their LinkedIn network. c. accepting all LinkedIn requests in order to widen their network. d. being proactive on LinkedIn and connecting with people who work for companies of interest. ANSWER: d 125. A person who oversees all of the company’s social media functions, ranging from blogging copywriter to social media strategist is called a _____. a. content programmer b. social media marketing manager c. social media developer d. social media specialist ANSWER: b 126. The primary decision maker who runs a firm’s social media program is called a(n) _____. a. content manager b. online community manager c. social media strategist d. social media designer ANSWER: c 127. Who among the following is responsible for online public relations and management of the brand over social media sites? a. An online community manager b. A social media analytic c. A brand analyst d. A brand manager ANSWER: d

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Chapter 04: Social Media: Living in the Connected World 128. A _____ is generally responsible for generating programs necessary to build and assemble the features for social tools such as blogs and communities. a. social media developer b. social media specialist c. brand manager d. copywriter ANSWER: a 129. The individual who creates and oversees the look and feel of an online community, Facebook page, or other branded content for a particular company is called a(n) _____. a. online community manager b. social media designer c. content programmer d. blogger ANSWER: b 130. A person who is in charge of social media analytics is responsible for: a. implementing a company’s entire social media program. b. managing external engagement with customers in social media channels. c. measuring the results of the social media marketing effort. d. developing the program necessary to build and assemble the features for social tools such as blogs and communities. ANSWER: c 131. Matt Reed works for the marketing team at a mobile manufacturing company and is responsible for creating content and generating discussions on social media sites regarding the company’s product releases and other lifestyle conversations. His responsibilities in the marketing team are similar to those of a _____. a. social media developer b. content programmer c. copywriter d. brand manager ANSWER: b

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Chapter 04: Social Media: Living in the Connected World 132. Jonathan Grey, who has experience in graphics design, was hired by a firm to oversee the look and feel of its Facebook page. Jonathan was most likely hired as a _____. a. social media designer b. copywriter c. social media developer d. brand manager ANSWER: a 133. Sharon Rice is part of a team that handles the social media marketing campaign of a company. She is responsible for managing external engagement with customers in social media channels such as Facebook, Twitter, and other blogging sites. Sharon can be regarded as a(n) _____. a. social media designer b. social media developer c. brand manager d. online community manager ANSWER: d 134. Zac Rampton loves traveling. He maintains an online journal that contains descriptions of his travel experiences and also pictures of the places he visits. His journal is quite popular among people who are interested in traveling to unexplored destinations. Noticing the popularity of his posts, Zac was hired by a travel firm that wanted him to write engaging articles about its travel packages and other offerings in his online journal. Zac was hired as a _____. a. social media designer b. blogger c. social media developer d. microblogger ANSWER: b 135. According to experts, job applicants can further their chances of landing their first social media marketing job by: a. commenting actively on posts and links posted by other users on social media sites. b. widening their social network. c. taking online courses that teach social media marketing skills. d. connecting their LinkedIn accounts to personal blogs and tweets. ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 136. Define social media. What are the basic forms of social media? ANSWER: Social media is defined collectively as the different forms of electronic communication through which users can create online communities to exchange information, ideas, messages, and other content such as videos or music. Although innovators constantly find new ways to branch out the tree of social media, to date there are several basic forms. These may be divided into two main categories: social media platforms and social media tools. 1. Social media platforms include social networking sites, bookmarking sites, social news sites, blogging sites, and online forums. 2. Social media tools include apps, blog comments, tags, photo and video shares, and other technology items. 137. Differentiate between social media platforms and social media tools. ANSWER: A social media platform is a type of software or technology that allows users to build, integrate, or facilitate a community, provide interaction among users, and generate user-authored content. Social networking sites, bookmarking sites, social news sites, and blogging sites are social media platforms. A social media tool enables users to communicate with each other online. Examples include apps, blog postings, and QR codes. 138. Write a note on any two social media platforms. ANSWER: Students’ answers might vary, but should include any two of the following social media platforms: social networking sites, bookmarking sites, social news sites, blogging sites, and online forums. Social networking sites: Social networking sites are websites that provide virtual communities for people to share daily activities, post opinions on various topics, increase their circle of online friends, and more. Every social network has its own search engine, which allows users to search for topics that interest them. Facebook and LinkedIn are two of the most popular social networking sites. Social news sites: People post news items or links to outside articles on a social news site, then vote on which postings get the most prominent display—and are viewed by the most readers. Because viewers vote using whatever criteria they want, it would be tricky for a marketer to predict whether a message will get any attention. Digg and Reddit are two top social news sites. 139. Differentiate between online forums and blogging sites. ANSWER: Online forums are social media platforms where users can post messages and hold conversations on specified topics. Some people form special groups on social networking sites like LinkedIn or Facebook in order to create forums on everything from political causes to recipe exchanges. Blogging sites are platforms where a host or writer posts information or opinions on various topics and followers may respond. Blogging sites typically focus on specific topics such as favorite travel destinations, support for military veterans, or parenting experiences.

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Chapter 04: Social Media: Living in the Connected World 140. How do blogs and microblog postings help companies to market their products? ANSWER: Marketers use blog postings to educate consumers and business customers about new products, to ask for feedback about particular goods and services, to notify the public about social responsibility initiatives, and to manage public relations crises. Many companies designate certain staff members as bloggers, while others hire professional bloggers either in-house or on a consulting basis because they believe in the power of skilled blogging to influence readers’ opinions about their goods and services. Microblogging, on the other hand, offers short bursts of news. Twitter is the most popular microblog. Companies pay huge sums to celebrities to Tweet about their goods and services to followers. 141. What is social media marketing? What are its essential features? ANSWER: Social media marketing refers to the use of social media portals to create a positive influence on consumers or business customers toward an organization’s brand, products, public image, or website. Social media marketing contains three essential features: 1. It creates a buzz. Buzz is the engine that drives social media marketing. Buzz carries the marketing message from one user to the next until it becomes viral, spreading as far and as rapidly as possible. The message doesn’t have to be related directly to a firm’s goods or services, but it must be compelling and memorable. 2. It creates ways for customers or fans to engage in conversations with each other and the organization. Social networking sites, blogs, and forums promote these conversations. 3. It allows customers to promote the firm’s messages themselves. Social networking sites such as Facebook and Twitter enable customers to easily become a firm’s promoter. 142. Describe the ways in which consumers rely on social media for their buying decisions. ANSWER: According to one recent report, roughly half of online consumers use a combination of search engines and social media to make purchase decisions. Consumers rely on the communities created by social media for their buying decisions in the following ways: 1. To learn about new goods and services. Sites such as YouTube, Facebook, Twitter help consumers to learn about new brands and products. 2. To conduct research and share information. Consumers visit blogs and social networking sites to delve further into a topic whether it’s an industry, a company, a brand, or a specific product. Reviews or rankings by fellow consumers, along with other shared information, can carry a lot of weight in certain purchase decisions. 3. To make final purchase decisions. Consumers in general are much more apt to buy a certain brand after liking it on Facebook or following the brand on a blog. If they have learned about the product and conducted more research about it online, engaging with the company as well as other consumers via social media, they become part of the community that the product’s marketers want to create. Consumers may purchase the product and then share their response to it through social media, widening the circle even more.

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Chapter 04: Social Media: Living in the Connected World 143. Explain with the help of an example how not-for-profit organizations use social media to market themselves to individuals or organizations. ANSWER: Not-for-profit organizations use social media to market themselves to individuals as well as to other organizations. They might promote a fundraising auction or road race on Twitter; ask for donations on Facebook; or blog about a cause in an appeal to potential business partners. They use social media to connect with the general public, the business community, and each other. Best Friends Animal Society helps find permanent homes (called “forever homes”) for dogs and cats, some of which have been designated “unadoptable” by others. Its Invisible Dogs Campaign is a grassroots movement that employs user-generated content created through the iPhone or Android app named My Dog ID. The app lets people take photos of themselves and then applies facial recognition to find their perfect dog match. In addition to being entertaining, the app prompts people to share their photo matches with friends on Twitter, Facebook, and Best Friends’ “Dog Wall.” This gets dog lovers involved with the cause and allows them to spread the word about dogs in need. 144. What is the importance of a social media marketing plan? List the various elements of the SMM plan. ANSWER: A social media marketing plan is important because it documents in writing the firm’s goals and strategies for the SMM initiative, its budget and expected returns, as well as the company’s chosen methods for monitoring, measuring, and managing the effort. Most SMM plans contain the following information: 1. An executive summary: This is a paragraph or two explaining the who, what, when, where, how, and why of the plan. An effective summary gives compelling reasons why the plan should be adopted, for example, to remain competitive in a particular market. Most marketers write the executive summary last, even though it appears first in the plan. 2. A brief overview: The overview briefly describes the overall market conditions, the firm’s current position in social media, and any other factors that the social media marketing effort will address. 3. Analysis of the competition: The plan examines competitors’ presence in social media, including which platforms and tools they select and an evaluation of their overall effectiveness. 4. The body of the plan: The remaining sections of the SMM plan cover statement of goals and strategies, target audience, budget and expected returns, as well as methods for implementing, monitoring, measuring, and managing the SMM campaign. 145. How does social media marketing differ from traditional marketing? ANSWER: Traditional marketing seeks to control the content and message received by an audience, whereas social media marketing actively solicits the audience’s participation in the message, and more often than not the audience creates its own message. Furthermore, successful social media marketing efforts require the audience’s trust; without credibility, the two-way conversation between a company and its consumer can’t occur.

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Chapter 04: Social Media: Living in the Connected World 146. How do social media marketers determine the target audience for a marketing campaign? ANSWER: In order to pinpoint the audience for social media marketing, firms gather information on the following: 1. Demographics: This refers to features of the group within the larger population that the firm wants to reach. Characteristics include age, gender, geographic location, income, ethnicity, marital status, and so forth. 2. What the group (or organization) needs or wants: Marketers identify what their potential customers need or want and determine if and how the firm’s products could satisfy this. If the company decides that a particular group of people represents a good match for its products, marketers then begin to develop strategies for engaging the group through social media. 3. Which of the firm’s products and social media will meet the needs and wants of particular groups of people: Marketers not only identify a target group, they also pinpoint which of their goods and services will best serve that group, and begin to determine through which social media they should deliver the messages that will spark interest and interaction. 147. Briefly explain how firms develop strategies for a social media marketing plan. ANSWER: Once marketers have determined their target audience, they ask a second vital question, “How do we engage the audience in a conversation?” Then they develop strategies for developing and delivering the content that will drive the interaction. They decide: 1. Which social media platforms to use, and how to combine them to reach and engage with the audience. 2. Which social media tools should deliver the campaign’s content, and how best to link them with the selected social media platforms. 3. Who will participate in the conversation on behalf of the company (staff members, professional bloggers, celebrities, and other influencers). 4. How to make it easy for potential customers to locate and participate in the conversation.

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Chapter 04: Social Media: Living in the Connected World 148. What is content marketing? What are the characteristics of an effective social media marketing content? ANSWER: Content marketing involves creating and distributing relevant and targeted material to attract and engage an audience, with the goal of driving them to a desired action. Content for an effective SMM campaign has the following qualities: 1. A strong brand focus: Every communication includes current messages relevant to the brand. 2. A focus on the audience rather than the organization: While it’s important to maintain a strong brand identity and meet marketing goals, SMM content focuses on its audience rather than promoting the company outright. 3. Targeted keywords: Good keywords are those the targeted audience will most likely search on when looking for information about goods and services. Marketers may obtain outside research on this or research it themselves. 4. Relevant information: Content may include problem-solving tips, answers to frequently asked questions, community polls, guest writers, interviews, statistics, case studies, and so forth. 5. Shareworthy text and images: Marketers can turn customers into storytellers by encouraging them to post images related to the brand. 6. Invitations to generate content via posts, shares, discussions, reviews, or other forms of dialogue with the organization as well as with fellow customers. 7. Promotions that offer discounts, gifts, or other special deals in exchange for participation. 149. What are the different rules of engagement in social media marketing? ANSWER: Marketers who use social media to reach their targeted audience are entering into conversations with customers—and must respect the conventions of personal interaction if they want to build successful relationships. The rules of engagement for social media are meant to make the exchange between marketers and their target audience a positive one. The rules of engagement include: 1. Follow rules and guidelines: Social networking sites often have strict rules about advertising, and some have rules governing membership. Marketers shouldn’t try to sidestep these in an effort to get marketing messages to users, as it may backfire and result in a ban from any kind of presence on the site. 2. Use social media channels as they were intended: Each social media channel has an intended use by its community. Marketers should be aware of these functions and stay within those parameters. 3. Think before posting or deleting: Marketers must be absolutely certain that the content they are making public is exactly what they want to say, and that it will be received in the intended manner before publishing it. Also, marketers should avoid sending spam. Social media strategists advise organizations not to delete comments, no matter how painful or unflattering they may be. Instead, they recommend that marketers weather legitimate criticism and deal directly with an online crisis instead of trying to avoid it.

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Chapter 04: Social Media: Living in the Connected World 150. What are social media analytics? Give two examples. ANSWER: Social media analytics are tools that help marketers trace, measure, and interpret data related to social media marketing initiatives. Students’ examples might vary. 1. Google Analytics is a tool that monitors user traffic, including what percentage comes from social media links. 2. Simply Measured provides competitive analysis for social impact, analytics for Facebook and Twitter, and a complete suite of monitoring and reporting tools. 151. How do companies measure the success and efficiency of their social media marketing plan? ANSWER: Measuring the success of a social media marketing plan includes such factors as share of voice (number of conversations about the company versus competitors and overall market); awareness of the company or brand, level of engagement by the targeted audience, influence created, and popularity among target audience members. Most companies measure the success by measuring their social media presence. Firms also calculate the return on investment of their social media marketing initiatives, using reach and frequency as variables. Expenses are weighed against savings. Although not all marketers agree on the validity of measuring SMM campaigns this way, companies do concede that they look for quantitative ways such as this to evaluate the efficiency of the marketing effort. 152. Explain with the help of an example how violation of privacy laws and guidelines could destroy a company’s reputation. ANSWER: Marketers must not distribute any personal information of their customers without consent. Because social media is interactive by its nature, marketers must be vigilant about confidentiality and not letting personal information or other data accidentally slip into unauthorized hands. Violation of these practices and other privacy laws and guidelines could destroy a company’s reputation and cost millions of dollars. Almost immediately after Sony revealed a breach of its PlayStation Network customers’ personal data, the first lawsuit was filed, alleging that the firm took too long to notify people, failing to allow customers to make an informed decision as to whether to change credit card numbers, close the exposed accounts, check their credit reports, or take other actions. Although Sony temporarily turned off its PlayStation Network and Qriocity service, and hired an outside security firm to investigate the unauthorized intrusion, the company’s reputation was damaged and claims were predicted to be very costly.

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Chapter 04: Social Media: Living in the Connected World 153. What are the steps that companies need to take while resolving an ethical or legal mistake that has occurred during social media marketing? ANSWER: When mistakes happen, smart social media marketers should take action to solve the problem or resolve the issue. First, marketers should acknowledge the problem and take responsibility for it. Second, they should communicate with the right people, via the most relevant channels, and promise to take steps necessary to correct the situation. Third, they should implement the agreed-upon changes or make other concessions, and evaluate ways to avoid similar problems in the future. While it’s important for businesses to be accountable for their actions, they must do so in a realistic manner, making changes that are relevant to the situation. 154. What is the role of a social media strategist and social media developer in social media marketing? ANSWER: A social media strategist is the primary decision maker who runs the firm’s social media program. A social media developer develops programs that are necessary to build and assemble the features for social tools such as blogs and communities. 155. Outline some tips for landing a job in social media marketing. ANSWER: Some tips for landing a job in social media marketing are as follows: 1. Land an internship: Internships, whether paid or not, are a good way to gain some experience in the chosen field. Job seekers might get a chance to contribute to blogs or learn some of the skills necessary to begin programming features for social tools. 2. Take online courses that teach social media marketing skills: Taking online courses demonstrates the willingness and ability of a person to learn prior to landing his or her first job. 3. Highlight your own online social profile: Job seekers should regularly update their Facebook, LinkedIn, Twitter, and YouTube accounts to be sure they are professional and polished as potential employers do look at these qualities. 4. Point out your personality: Job seekers should inform employers about their individual characteristics. When building a team, employers often look for traits such as a sense of humor, creativity, passion for the business, and communication skills.

a. influencers b. social networking sites c. social media monitoring d. app e. online forum f. demographics g. social media tool h. return on investment Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World i. microblog j. social media marketing k. social media l. transparency m. social media marketing plan n. bookmarking site o. social media strategist p. social media analytics q. social media platform r. content marketing s. social news site t. QR codes 156. A(n) _____ is a type of software or technology that allows users to build, integrate, or facilitate a community, interaction among users, and user generated content. ANSWER: q 157. The term _____ refers to different forms of electronic communication through which users can create online communities to exchange information, ideas, messages, and other content. ANSWER: k 158. A(n) _____ is a software that enables users to communicate with each other online. ANSWER: g 159. Websites such as Facebook and LinkedIn that provide virtual communities through which people can share information, post opinions, and increase their circle of online friends are referred to as _____. ANSWER: b 160. A(n) _____ is a platform that gives users a place to save, organize, and manage links to websites and other Internet resources. ANSWER: n 161. A platform where users can post news items or links to outside articles, then vote on which postings get the most prominent display is known as a(n) _____. ANSWER: s 162. A(n) _____ is a platform that allows users to post messages and hold conversations on specified topics. ANSWER: e 163. A(n) _____ is a blog post that contains only a few words. ANSWER: i Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World 164. A(n) _____ is a free or paid software download that links users to a wide range of goods and services, media and text content, social media platforms, search engines, and the like. ANSWER: d 165. _____ are two-dimensional bar codes that can be read by some mobile phones with cameras and are used in ads to provide product details to the consumers. ANSWER: t 166. The use of social media portals to create a positive influence on consumers or business customers toward an organization’s brand, products, public image, or website is known as _____. ANSWER: j 167. A(n) _____ is a formal document that identifies and describes goals and strategies, targeted audience, budget, and implementation methods as well as tactics for monitoring, measuring, and managing the campaign efforts. ANSWER: m 168. Individuals who are capable of affecting the opinions and actions of others are called _____. ANSWER: a 169. The term _____ refers to the features of a group or target audience such as age, gender, income, geographic location, and so on, within the larger population that the firm wants to reach. ANSWER: f 170. _____ involves creating and distributing relevant and targeted material to attract and engage an audience, with the goal of driving them to a desired action. ANSWER: r 171. The process of tracking, measuring, and evaluating a firm’s social media marketing initiatives is called _____. ANSWER: c 172. _____ are tools that help marketers trace, measure, and interpret data related to social media marketing initiatives. ANSWER: p 173. The rate of revenues received for every dollar spent on an expense is referred to as _____ ANSWER: h 174. Timeliness and _____ are vital approaches for a firm involved in managing a potential social media crisis. ANSWER: l 175. A(n) _____ is the primary decision maker who runs a firm’s social media program. ANSWER: o Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World 176. W hen the term social media is mentioned, most consumers immediately think of Facebook. However, social media is actually a collection of different forms of online or electronic communication that enable users to exchange ideas, information, messages and other content online. Suppose that you are a marketing professional and you want you expand your company’s use of social media to build and enhance your relationships with your customers. More specifically, you would like to create a community of users of your products so they can share ideas and your firm can maintain an ongoing dialogue with them. In order to accomplish this, you would build which of the following? a. A social media commerce site b. A social media bookmarking site c. A social media platform d. A social media ratings site e. A social media news site ANSWER: c 177. W hile consumers are heavy users of social media, it should be noted that businesses are big users of social media as a means of connecting with existing and potential customers. Which one of the following statements is false about consumer and business use of social media? a. B usinesses use social media to build partnerships with other companies b. S ome experts contend that social media can shift the way consumers behave within entire industries. c. N ot-for-profit organizations use social media to market themselves. d. B usiness-to-business (B2B) marketers are not having much success with social media marketing efforts. e. C onsumers use social media to make final purchase decisions. ANSWER: d 178. In order to ensure that it gets the most out of its social media marketing efforts, a firm needs to create a social media marketing (SMM) plan. An effective SMM plan should begin with: a. A SWOT analysis of the proposed SMM initiative b. A budget for the SMM initiative c. A discussion of compelling reasons why the SMM plan should be adopted. d. T he company’s methods for monitoring, measuring and managing the plan efforts e. A n analysis of the firm’s competition ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 179. T o be most effective, a firm’s social media marketing campaign should be well-structured, and it should include a number of key phases. The first phase of the campaign should be ___________. The last phase of the plan should be _______________. a. s trategy development; monitoring b. i dentify target audience; implement plan c. g oal setting; implement plan d. g oal setting; measurement e. p roduce content; implement plan ANSWER: d 180. A s usage of social media marketing continues to increase, marketers are learning that content is a big key to success of any campaign. More specifically, they understand that an effective social media marketing campaign (SMM) has which of the following qualities: a. T he chosen keywords in the campaign are targeted specifically for the campaign. b. T he campaign’s main focus is to get the consumer to make a purchase immediately.. c. T he campaign emphasizes the company’s privacy policy. d. T he campaign avoids offering any discounts or other deals in exchange for the consumer’s participation. e. T he campaign has text only.. ANSWER: a 181. M arketers should not simply assume that their social media marketing (SMM) campaigns are achieving the desired results. Rather, formal monitoring and measuring techniques should be used to assess the effectiveness of an SMM. Some firms calculate return on investment (ROI) for SMM campaigns. An ROI measurement of an SMM should asses the percentage of people exposed to the SMM, also called __________ as well as the number of times a consumer is exposed to the SMM, also called __________. a. b reath; depth b. e ffectiveness; efficiency c. s pan; quantity d. r each; frequency e. v olume; velocity ANSWER: d

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Chapter 04: Social Media: Living in the Connected World 182. M arketers face a new set of ethical and legal issues as social media becomes more essential to the success of the firm’s marketing strategies. Moreover, as the social media landscape continues to evolve and expand, new ethical situations continue to appear. As a marketer, it is almost guaranteed that you or your organization will eventually make a mistake with your use of social media. So, when you make that certain-to-occur mistake with social media, which of the following should you do? a. I mmediately hire a public relations firm to do damage control. b. L imit all communications with external media sources. c. H old a press conference to deny all allegations. d. T ry to deflect the blame for the mistake to something or someone else. e. B e accountable and take action to resolve the issue. ANSWER: e 183. T he use of social media in marketing and other aspects of business is expected to continue to grow exponentially over the next decade. Many great career opportunities currently exist in the field, and others will be created as the market evolves. You are excited about the career possibilities in this new field and you have been preparing yourself to take advantage of them. You did a self-assessment and determined that you would love to be the person who is responsible for running a firm’s total social media program. Given this, which of the following social media jobs should you pursue? a. S ocial media strategist b. B rand manager c. C ontent programmer d. S ocial media analytics e. O nline community manager ANSWER: a 184. _ ______________ are websites that provide virtual communities for people to share daily activities and post opinions on various topics. a. B logs b. E -Commerce sites c. S ocial networking sites d. I nstant messaging portals e. M essage boards ANSWER: c

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Chapter 04: Social Media: Living in the Connected World 185. S ocial media is not just for profit-oriented companies. Not-for-profit companies have discovered a variety of effective uses for social media in their business models. For example, non-profits use social media to ___________ the public about a situation or cause. They also use social media to _________ donations or other types of funding. Most often, they will use social media to _________ an event for fundraising or educational purposes. a. i nterview; organize; record b. m otivate; consolidate; review c. a lert; return; schedule d. e ducate; generate; promote e. p oll; distribute; broadcast ANSWER: d 186. Y ou have recently taken over responsibility for your firm’s social media marketing strategy. You believe your chances for success will be enhanced if you follow a structured approach to developing the strategy. In the past, using the traditional six-step approach to developing a social media strategy has worked well for you. You are inclined to stay with the same process as you develop your firm’s strategy. Since you believe in the process, which of the following guidelines will you follow as you set goals for the strategy? a. A clear set of goals will facilitate the strategy development. b. T he goals should be somewhat vague in order to allow the marketer to claim success regardless of the outcome. c. T he goals should not be constrained by the firm’s social media policies. d. T he goals should be set so they are easily attainable. e. T he goals should identify which social media platforms are to be used. ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 187. Y our new marketing assistant just handed you a presentation that you are to give on the phases of an effective social media marketing campaign. One of the slides lists the phases of a typical campaign as follows: 1. Goal setting 2. Develop strategies 3. Target audience 4. Produce content 5. Implement the plan 6. Monitor 7. Measure Is there anything wrong with the ordering of these phases? a. N o, the phases are listed in the correct order. b. Y es, the phases are ordered incorrectly. Measure and Monitor should be switched. c. Y es, the phases are ordered incorrectly. Target audience and Develop strategies should be switched. d. Y es, the phases are ordered incorrectly. Goal setting and Develop strategies should be switched. e. Y es, the phases are ordered incorrectly. Produce content and Target audience should be switched. ANSWER: c 188. U sing social media to communicate with customers and potential customers requires the marketer to follow some rules of social media etiquette. You clearly understand that when you use social media to reach your target audience you entering into a conversation with your customers. Since this has enormous implications for your firm’s relationships with its customers, which of the following will you be certain to do? a. D o not respond to customer complaints or comments. b. T hink before posting or deleting social media content. c. D elete any customer comments that are negative about the company. d. T est the boundaries of what is acceptable content on social media sites. e. A lways have a marketing objective in all your social media communications. ANSWER: b 189. O ver the years, you have been involved in a number of social media marketing (SMM) campaigns. You have come to believe the number of times an individual is exposed to the marketing material during the campaign is the most significant determinant of its success. Given this belief, you should a. e mphasize cost when developing social media marketing initiatives. b. e mphasize frequency when developing social media marketing initiatives. c. e mphasize target market size when developing social media marketing initiatives. d. e mphasize reach when developing social media marketing initiatives. e. e mphasize privacy when developing social media marketing initiatives. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 04: Social Media: Living in the Connected World 190. Because of the ethical and legal issues that come with the benefits of social media, marketers must be extra careful about what they include in the postings, ads, comments, and even images they include in their social media communications. You are well aware of this important requirement, so you always check your social media communications: a. t o ensure they use the latest social media slang language. b. t o ensure they make fair and realistic claims or promises. c. t o ensure the appropriate fonts are used. d. t o ensure they encourage the consumer to take action immediately. e. t o ensure they are presented in multiple languages. ANSWER: b 191. It is expected that the various social media platforms, tools and services will continue to expand at a rapid pace in the years to come. As always, this kind of change will create opportunities and risks for individuals and organizations. Within the context of marketing, you should expect these changes will: a. e liminate jobs in marketing. b. c ause marketing salaries to fall. c. g uarantee the success of marketing campaigns. d. a utomate the marketing function. e. c reate two-way conversations between marketers and customers. ANSWER: e 192. You've been promoted to head of social media. Now you must make assignments to your team. Carol is a technology and software expert, while David has expertise in communication. You should give David responsibility for all of the following except: a. social media tools

b. blog postings c. video shares d. apps e. social media platforms ANSWER: e

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Chapter 04: Social Media: Living in the Connected World 193. As head of social media for your firm, you're giving a talk at a lunch for coworkers who are unfamiliar with social media tools. The organizer of the lunch gives you an agenda that includes a mistake -- one of the topics concerns a social media platform, not a tool. Identify this mistake. a. Understanding microblogs

b. How to use media sharing c. Effective blog posting d. A review of the newest app in our industry ANSWER: a 194. A consultant has offered to help your team build mobile apps. She starts by explaining QR codes. Which of the following points does she make? a. QR stands for Quick Reality.

b. QR codes are three-dimensional barcodes. c. Some mobile phones are equipped with dedicated QR readers. d. QR codes can contain information leading to content, but not to video e. QR stands for Quick Response ANSWER: c, e 195. You know that your customers use social media to learn about your product and to conduct research about it. But you don't believe they use social media to make final purchase decisions. A coworker says you're wrong. What argument(s) does he make? a. Online reviews are a primary driver of purchase decisions.

b. Social media create a new customer-service access point. c. Consumers only discuss products on social media after making a final purchase decision. d. Consumers rely on social media to learn about products, conduct research, and make final purchase decisions.

e. Online reviews are a growing but currently insignificant influence on final purchase decisions. ANSWER: a, d

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Chapter 04: Social Media: Living in the Connected World 196. You learned the difference between strategic goals and implementation tactics in a marketing course, but you're having trouble differentiating between them in practice. In your social media marketing plan, which of the following is a tactic? a. Create awareness of our brand.

b. Reach new customers. c. Offer coupons on Facebook. d. Generate sales leads. e. Increase customer satisfaction. ANSWER: c 197. Unfortunately, some of the bread used in your sandwich shop turned out to be stale. Many customers complained by posting nasty comments online. Which of the following responses is (are) appropriate? a. Delete the comments.

b. Ignore the comments. c. Delete comments that are obscene or profane. d. Respond to the comments. e. Respond only to comments from loyal customers. ANSWER: c, d 198. Jon is in charge of measuring the impact of his firm’s social media plan. For which of the following tasks is he likely to be responsible? a. Assessing awareness of the company

b. Calculating the company's share of voice c. Responding to online criticism d. Deciding when to use Facebook and Instagram e. Gauging the level of target audience involvement with the company ANSWER: a, b, e 199. In drafting your firm's written policy for the ethical use of social media, you want to be simple and clear. You decide to write a memo with just three points that summarize the most important ethical guidelines. These include all of the following except: a. Be honest.

b. Be accountable. c. Respect privacy. d. Be efficient. ANSWER: d

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Chapter 04: Social Media: Living in the Connected World 200. You are embarrassed to admit it, but you sent out the wrong information to customers who requested the price of a new product. What steps should you take? a. Acknowledge your error in pricing information.

b. Ignore your error unless a customer challenges the pricing information. c. Communicate with the customers who received the wrong price. d. Send corrected information to customers who received the wrong price. e. Promise the customers you will never make such a mistake again. ANSWER: a, c, d 201. As the hiring manager for a firm that relies heavily on social media marketing, you are always looking for new talent. Now you need someone who will manage external engagement with customers on Facebook, Twitter, and blogs. What job title should you advertise? a. Social media analytics specialist

b. Online community manager c. Influencer relations manager d. Social media marketing manager e. Brand manager ANSWER: b 202. Kim is getting married in 18 months and is starting to plan her wedding. She likes to make things and wants to keep her decorating expenses low by creating the wedding and reception decorations herself. She has started a Pinterest board where she can collect ideas from others as well as share her own ideas with her fiance, family, and friends. Pinterest is a type of _________ which provides a virtual community and enable people to share information, post opinions, and increase their circle of online friends. a. s ocial-networking site b. b log c. m edia sharing service d. b ookmarking platform ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 203. Dave Carroll a musician and song writer was traveling on United Airlines with his Taylor guitar and when he arrived at his destination he found that his guitar had been damaged. After multiple attempts to receive financial compensation from United for his guitar, Dave used Twitter and YouTube to share a song he wrote called "United Breaks Guitars". Within 1 week of posting, the video had been viewed over 3 million times and mainstream media such as CNN, CBS and The Wall Street Journal interviewed Dave. The generation of 3 million views within a week and further exposure through other media options is an example of which feature of social media marketing? a. c reate a buzz b. c reate a mechanism for consumers to engage in conversations with each other and the organization c. e nables customers to promote the firms message themselves d. c reates a positive public image for the organization ANSWER: a 204. Jose is visiting Boston on a business trip and has heard that the North End is known for its restaurants and entertainment venues. He checks TripAdvisor to see the list of restaurants and those rated highest by members. He also reads reviews and narrows his choice to Mamma Maria's which is ranked #3 of 133 restaurants in the North End. How has TripAdvisor assisted Jose in his purchasing decision process? a. c onducting research b. i dentifying new products c. i dentifying a need d. e valuating the purchase ANSWER: a 205. Brandon is an avid bicyclist and is interested in purchasing a new bike that's designed specifically for people who compete in triathlons. Brandon reads product reviews posted in online forums and decides to buy the Kestrel 4000, a carbon fiber bike that's moderately priced at $2500. Which of the following best describes how product reviews assisted Brandon in his purchase decision? a. m ake a final purchase decision b. i dentify a need c. s earch for available options d. l earn about new products ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 206. Bailee is an account executive with an advertising agency and specializes in helping clients utilize and leverage a variety of media options to persuasively communicate with their target audiences. As part of her work with one of her accounts, she crafts a document to identify and describe the goals and strategies, target audience, budget and the implementation tactics for using Facebook, Twitter, and Instagram. The document also includes how the agency will monitor, measure and determine the success of the campaign. What is this document called? a. s ocial media marketing plan b. s ocial media implementation report c. c reative social media engagement plan d. d etailed social media accountability report ANSWER: a 207. Fred is a strategic analyst for a specialty retail store chain that sells sports apparel. He's working with the marketing team and is reviewing the _____ section of the social media marketing plan which contains information about how other sports apparel stores are using social media and the success of their efforts. a. c ompetitor analysis b. e xecutive summary c. o verview d. g oals and strategies ANSWER: a 208. Gigi Hadid is an international fashion model with contracts with Maybelline and has over 4.5 million followers on Instagram. She's on a quest to find the best cheeseburger in New York City and recently posted that her favorite was from J.G. Melon on 3rd Avenue. According to the text, Gigi Hadid is considered a(n) _________ since she has the capability to affect the opinions and actions of others through social media. a. i nfluencer b. i nnovator c. m edia mogul d. c elebrity ANSWER: a 209. The first question marketers ask when they begin to develop strategies for any marketing effort including social media is: a. W ho are we trying to reach? b. W hat is our budget? c. W hich tactics should we implement? d. W hich product(s) or service(s) should we promote? ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 210. Jason is creating his profile on LinkedIn and hopes the content will attract potential employers to consider him for a career opportunity. He is trying to leverage his background, skills, and education to gain a position in a marketing research consulting firm. He knows that employers are seeking candidates who are proficient in SPSS, Excel, Google Analytics, and have excellent writing and verbal communication skills. He uses these capabilities throughout his profile since he understands the importance of search engine optimization. Which quality of social media marketing campaign development is Jason using as he creates content for his LinkedIn profile? a. t argeted keywords b. s trong brand focus c. i nvitation to generate content d. f ocus on the audience ANSWER: a 211. Each year, the network HGTV (Home and Garden Television) builds a dream home and invites the public (age 18 and over) to register for a chance to win the home. HGTV allows people to enter once each day for a chance to win the home. Which quality of social media marketing effective campaign development is HGTV utilizing with their Dream Home promotion? a. O ffering discounts, gifts or other special deals in exchange for participation b. I nvitations to generate content c. S hareworthy text and images d. R elevant information ANSWER: a 212. Facebook is a popular social media application for individuals and businesses. Business users who manage a page have a variety of tools to measure the effectiveness of their posts. For example, at the click of a button, Facebook will display the number of people exposed to the post, the number who reacted to the post (e.g. liked), and the number who shared the post. Facebook is providing _______ which help marketers track, measure and interpret data related to social media marketing initiatives. a. a nalytics b. e ngagement c. r eturn-on-investment figures d. s ymbols ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 213. Trek Bicycles recently launched an effective social media marketing campaign to celebrate the retirement of professional racer, Jens Voigt using #HourRecord and determined that 85% of people in the target market were reached with this campaign. This percentage is called _______. a. r each b. f requency c. d istribution d. r eturn on investment ANSWER: a 214. Which of the following ethical or legal issues has the greatest potential to develop trust among followers and contribute to impacting the strength of a brand? a. b e honest b. enforce w orkplace ethics c. b e accountable d. r espect privacy ANSWER: a 215. Most companies today invest heavily in cyber security initiatives to be vigilant about confidentiality and not allow consumer's personal information or other data to accidentally become available to unauthorized parties. The field of cyber security in this context is related to which of the following ethical and legal issues? a. r espect privacy b. b e accountable c. ensure workplace ethics d. b e honest ANSWER: a 216. Nicole works for Harley Davidson and is responsible for managing the Harley Owners Group Facebook, Twitter, and Instagram accounts to create engagement with customers through these various forums. Her job is primarily concerned with a. m anaging online communities b. s ocial media analytics c. b rand management d. s ocial media strategy ANSWER: a

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Chapter 04: Social Media: Living in the Connected World 217. Dr. Johnson is advising a sophomore-level student about obtaining an entry-level job in social media marketing. Which of the following is most likely a recommendation that Dr. Johnson would make? a. g ain experience through an internship b. t ake courses in accounting c. p ost Instagram and Facebook photos of her nights out at local bars d. d elete her Facebook page ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 1. The Internet allows retailers and vendors to exchange vital information, improving the overall functioning of supply and distribution. a. True b. False ANSWER: True 2. The term Internet penetration refers to the percentage of a region’s population who use the Internet. a. True b. False ANSWER: True 3. The United States has the highest number of Internet users in the World. a. True b. False ANSWER: False 4. One of the benefits of e-marketing is the ability to reach anyone connected to the Internet anywhere in the world. a. True b. False ANSWER: True 5. Online marketing refers to marketing activities that connect buyers and sellers electronically through interactive computer systems. a. True b. False ANSWER: True 6. The term “societal marketing” refers to buyer–seller communications in which the customer controls the amount and type of information received from a marketer through such channels as the Internet and virtual reality kiosks. a. True b. False ANSWER: False 7. E-marketing is an integral component of e-business. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 8. Online marketing differs from e-marketing as online marketing encompasses digital technologies that do not involve computers. a. True b. False ANSWER: False 9. The application of electronic tools, such as email, instant messaging, and blogs, to contemporary marketing has the potential to greatly reduce costs and increase customer satisfaction by increasing the speed and efficiency of marketing interactions. a. True b. False ANSWER: True 10. E-marketing can significantly reduce the costs of reaching a wide audience for small businesses. a. True b. False ANSWER: True 11. Integrated marketing refers to the ability to provide a product at the exact time needed. a. True b. False ANSWER: False 12. In interactive marketing, the customer controls the amount and type of information received from a marketer. a. True b. False ANSWER: True 13. The main purpose of a corporate website is to increase purchases by visitors. a. True b. False ANSWER: False 14. Products that require demonstration or trials are better sold in person than through company’s marketing websites. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 15. B2B e-marketing refers to the use of the Internet for business transactions between organizations. a. True b. False ANSWER: True 16. Majority of e-marketing activities are business-to-consumer transactions. a. True b. False ANSWER: False 17. Business-to-business transactions typically involve more steps than consumer purchases. a. True b. False ANSWER: True 18. The Internet is an attractive option for business buying and selling as orders placed over the Internet contain fewer errors compared to handwritten ones. a. True b. False ANSWER: True 19. Web services require compatible hardware and software systems to exchange data over a network. a. True b. False ANSWER: False 20. Businesses can efficiently collaborate with vendors, partners, and customers through intranets. a. True b. False ANSWER: False 21. Virtual private networks are less expensive compared to leasing dedicated lines for information traveling over public communications media. a. True b. False ANSWER: True

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Chapter 05: E-Business: Managing the Customer Experience 22. A private exchange is a secure website at which a company and its suppliers share all types of data related to emarketing, from product design through order delivery. a. True b. False ANSWER: True 23. A private exchange is also called c-business because of its relatively more collaborative nature. a. True b. False ANSWER: True 24. The state of North Carolina established a website where governmental departments could invite bids from participating suppliers for supplying goods and services. This is an example of e-procurement. a. True b. False ANSWER: True 25. In the early stages of B2B transactions, marketers believed that online trading was limited to only a few types of products. a. True b. False ANSWER: False 26. The term e-tailing refers to online retail sales. a. True b. False ANSWER: True 27. The term “societal marketing” refers to online retail sales. a. True b. False ANSWER: False 28. Increased capability of smart phones has boosted online retail sales. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 29. Majority of the online sales is through mobile retail. a. True b. False ANSWER: False 30. Competitive pricing is one of the main reasons for consumers preferring to shop online than from a brick-andmortar store. a. True b. False ANSWER: True 31. Bots are programs that aid online consumers in comparison shopping. a. True b. False ANSWER: True 32. The use of bots has made shopping easier, as it can search hundreds of websites for information on products that meet certain criteria set by the customer. a. True b. False ANSWER: True 33. A women’s fashion brand allowing its customers to mix and match the clothes and accessories on their website before placing an order is an example of a business offering personalized service to their online customers. a. True b. False ANSWER: True 34. Amazon.com maintains a record of each customer’s purchases and makes recommendations based on purchase behavior whenever the customer logs in for the next purchase. This is an example of the interactive marketing capability of e-business. a. True b. False ANSWER: False

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Chapter 05: E-Business: Managing the Customer Experience 35. Women’s apparel, consumer electronics, and video games top the list of top products sold online. a. True b. False ANSWER: True 36. Consumers’ online shopping experience has been steadily improving in quality and convenience due to the efforts of the retailers. a. True b. False ANSWER: True 37. Some of the most significant challenges facing e-business today involve the security of online monetary transactions and the protection of consumer privacy. a. True b. False ANSWER: True 38. Encryption is the process of encoding data for security purposes. a. True b. False ANSWER: True 39. The public key in the Secure Sockets Layer (SSL) technology is used to decipher encrypted information. a. True b. False ANSWER: False 40. The private key in the Secure Sockets Layer (SSL) technology is used to encrypt information. a. True b. False ANSWER: False 41. Electronic signatures are used to enter into legal contract policies online. a. True b. False ANSWER: True

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Chapter 05: E-Business: Managing the Customer Experience 42. Cookies and spyware are software used for protecting a website by encrypting it. a. True b. False ANSWER: False 43. C ompanies that display TRUSTe logo on their websites need not disclose to consumers how they collect personal data and what they do with that information. a. True b. False ANSWER: False 44. A firewall is an electronic barrier between a company’s internal network and the Internet that limits access into and out of the network. a. True b. False ANSWER: True 45. Firewalls used by companies to prevent unauthorized users from tapping into private corporate data are impenetrable. a. True b. False ANSWER: False 46. It is more challenging for companies to defend against insiders stealing classified information than the attacks that come from outside organizations. a. True b. False ANSWER: True 47. Phishing is the voice equivalent of vishing. a. True b. False ANSWER: False

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Chapter 05: E-Business: Managing the Customer Experience 48. Phishing involves the use of authentic-looking email or pop-up messages to get unsuspecting victims to reveal personal information. a. True b. False ANSWER: True 49. If consumers search for information about a product online and then buy it from a brick-and-mortar store, it is known as reverse logistics. a. True b. False ANSWER: False 50. To be successful at e-business, firms must establish and maintain competitive standards for customer service. a. True b. False ANSWER: True 51. Pure-play e-retailers, even with no real experience of selling and satisfying customers, have been more successful than traditional retailers who entered e-business. a. True b. False ANSWER: False 52. Conflicts between producers, wholesalers, and retailers are called channel conflicts. a. True b. False ANSWER: True 53. E-marketing can lead to copyright disputes when a site hosts content to which someone else holds the rights. a. True b. False ANSWER: True 54. E-business is the most popular Web function, followed by communication. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 55. The communication function of the Internet can be used by marketers to advance their organizational objectives. a. True b. False ANSWER: True 56. Spam filters help Internet users to automatically eliminate junk email from their in-boxes. a. True b. False ANSWER: True 57. O nline forums are a source of information exchange and can take the form of blogs, a classified ad directory, or a library of information. a. True b. False ANSWER: True 58. Online communities facilitate B2B marketing. a. True b. False ANSWER: True 59. Using the Internet to build communities helps companies find other organizations that may be interested in forming an alliance. a. True b. False ANSWER: True 60. A wiki is a Web page that anyone can edit. a. True b. False ANSWER: True 61. Blogs have created interest among marketers as they can be effective at quickly forming public opinion. a. True b. False ANSWER: True

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Chapter 05: E-Business: Managing the Customer Experience 62. Marketers typically shun blogs that focus on new-technology products, because they require technological authenticity to generate positive marketing outcomes. a. True b. False ANSWER: False 63. Internet advertising includes banner ads, pop-up ads, and links listed with major search engines. a. True b. False ANSWER: True 64. Companies can improve their positioning on the search list of search engines by paying a particular fee. a. True b. False ANSWER: True 65. The first step to be taken in developing a Web presence for a company is to determine the domain name for the website. a. True b. False ANSWER: False 66. After making content decisions and designing the site, the next step in the process of developing a website is connecting to the Internet by placing the required computer files on a server. a. True b. False ANSWER: True 67. Although developing a commercial website with interactive features can cost as little as $30, putting it online can cost tens of thousands of dollars a month for a spot on the server of a Web host. a. True b. False ANSWER: False

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Chapter 05: E-Business: Managing the Customer Experience 68. The highly variable cost of a website includes not only development expenses but also the cost of placing the site on a Web server, maintaining and updating it, and promoting it. a. True b. False ANSWER: True 69. For many companies, revenue is not a major website objective. a. True b. False ANSWER: True 70. Some Web pages display counters that measure the number of visits. These counters can also measure the amount of time users spend on those sites. a. True b. False ANSWER: False 71. Web advertising has become more attractive in recent times due to a rise in click-through rates. a. True b. False ANSWER: False 72. The conversion rate is a basic measurement of the percentage of visitors to a website who make purchases at the site. a. True b. False ANSWER: True 73. A company can use its advertising cost, site traffic, and conversion rate data to find out the cost to win each customer. a. True b. False ANSWER: True

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Chapter 05: E-Business: Managing the Customer Experience 74. If a website is rated high based on its engagement, it implies that a large number of visitors purchase products from that website. a. True b. False ANSWER: False 75. Webtrends Analytics can be used to analyze marketing data from mobile, social, and Web channels. a. True b. False ANSWER: True 76. The term “Internet penetration” refers to the: a. the amount of time spent on the Internet by the people in a region. b. depth of information available on a subject on the Internet. c. percentage of Internet usage per individual for a given period. d. percentage of a region’s population who use the Internet. ANSWER: d 77. Big Martin Corporation uses its website to target customers and promote its products. Big Martin is engaged in: a. integrated marketing. b. Web services. c. e-marketing. d. online trading. ANSWER: c 78. The strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools is called: a. electronic marketing. b. online trading. c. digital servicing. d. Web economics. ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 79. _____ describes the wide range of transactions taking place via Internet applications such as email and virtual shopping carts. a. Webonomics b. E-business c. Web servicing d. Digital transcription ANSWER: b 80. Which of the following terms refers to an advantage brought about by the advent of the Internet as a shopping medium by eliminating the geographic protections and limitations of local business and by giving smaller firms a wider audience? a. Personalization b. Digital tooling c. Interactivity d. Global reach ANSWER: d 81. References to the Internet's global reach have to do with its: a. ability to communicate with consumers located anywhere in the world. b. capacity to overcome cultural barriers between nations. c. power to insulate national economies from events occurring outside their borders. d. ability to use a single language, English, to communicate with world markets. ANSWER: a 82. How is online marketing different from e-marketing? a. Online marketing encompasses financial transactions in addition to promotion of sales, as opposed to emarketing. b. Online marketing is applicable to both goods and services, while e-marketing is for goods alone. c. Online marketing is limited to interactive computer systems, while e-marketing encompasses technologies not involving computers. d. Online marketing is suited for geographically smaller regions, while e-marketing provides the benefits of a truly global reach. ANSWER: c

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Chapter 05: E-Business: Managing the Customer Experience 83. When customers control the amount and type of information received from a marketer through such channels as the Internet and virtual reality kiosks, they are engaged in: a. personalization. b. interactive marketing. c. integrated marketing. d. right-time marketing. ANSWER: b 84. Lehmann Systems provides a space on its website for users to provide feedback on products and also to suggest new ideas and ideas for improvement. Customers can also subscribe to a newsletter sent by Lehmann Systems, which informs the customers about latest offers and sales. Lehmann systems is engaging in: a. social welfare marketing. b. interactive marketing. c. integrated marketing. d. search marketing. ANSWER: b 85. An e-business vendor who creates products, such as clothing or computers, to the exact specifications of individual customers is practicing: a. personalization. b. interactive marketing. c. integrated marketing. d. right-time marketing. ANSWER: a 86. Travel Time is an online travel site that assists customers in booking their holidays. They make advance bookings for the customers, they also notify them about a reduction in air fares immediately so to that it can offer the lowest fare to the customers. It also helps the customers to check the status of their booking online. This type of marketing strategy employed by Travel Time is an example of: a. right-time marketing. b. integrated marketing. c. search marketing. d. real time marketing. ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 87. By enabling the coordination of all promotional activities to produce a unified, customer-focused promotional message, e-marketing helps reach consumers through: a. personalization. b. interactive marketing. c. mass marketing. d. integrated marketing. ANSWER: d 88. Best Health Labs is a company that provides medical diagnostics services. The company is focused on providing rapid diagnostic and healthcare services based on the philosophy of high quality, low price and superior flexibility. The marketing team coordinates all its promotional activities to convey a unified message to the customers regarding its philosophy of making medical diagnostics more affordable for people around the world. The strategy of the marketing team at Best Health Labs is called _____. a. right-time marketing b. integrated marketing c. interactive marketing d. personalized marketing ANSWER: b 89. The corporate website of a company is established with an intention to: a. sell its goods and services directly to the consumers. b. increase the purchase of its products by consumers by engaging them in interactions. c. increase the visibility of the company and promote their offerings. d. provide a transaction gateway for goods and services. ANSWER: c 90. The most important goal of a marketing website is to: a. give prospective employees the opportunity to apply for jobs online. b. provide financial information to investors. c. increase purchases by visitors. d. build relationships with customers. ANSWER: c

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Chapter 05: E-Business: Managing the Customer Experience 91. The marketing website of a company differs from its corporate website as the marketing website is established: a. to increase the visibility of the company and promote its offerings. b. to provide financial information to investors. c. to increase the purchase of products by visitors by engaging them in interactions that will lead to purchase of the product. d. to provide a communication channel for consumers and other interested parties via email, blogs, and online forums. ANSWER: c 92. Which of the following is true of B2B E-marketing? a. It cannot be used to provide detailed product descriptions. b. It can help slash order-processing expenses. c. It is a minor part of the e-business activity and typically involves less steps compared to consumer purchases. d. It is not a very attractive option for buying and selling as more errors occur when orders are placed over the Internet. ANSWER: b 93. _____ e-marketing is the use of Internet for business transactions between organizations. a. Societal b. Differentiated c. Business-to-business d. Consumer centered ANSWER: c 94. B2B e-marketing has been shown to: a. create price increases in the distribution component of the marketing mix. b. make it possible for marketers to find new markets and customers. c. lag behind B2C transactions in terms of volume and revenue generation. d. increase purchasing costs by nearly 25 percent. ANSWER: b

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Chapter 05: E-Business: Managing the Customer Experience 95. Electronic data interchanges, once limited by operating system incompatibility, have found new life due to: a. Web services using open-source XML. b. open-source operating systems. c. use of secure virtual private networks. d. uniform OS programming practices. ANSWER: a 96. Secure networks used for e-marketing and accessible through a firm’s website by external customers, suppliers, or other authorized users for purposes of collaboration are called: a. cybernets. b. extranets. c. intranets. d. ethernets. ANSWER: b 97. TechnoMarket, a retailer of consumer electronics, has its branches worldwide in around 25 countries. The company is looking for a website that will allow it to communicate with its employees worldwide. The website should also enable the employees to access details regarding the new products, their functionality, and their availability in the store. Which of the following will best suit this purpose? a. Private exchange b. Extranet c. Electronic storefront d. Intranet ANSWER: d 98. Adecco systems has a website service which allows the company to interact with its suppliers and share all types of data related to e-marketing. This innovative website can be regarded as: a. a marketing website. b. a private exchange. c. a corporate website. d. an electronic storefront. ANSWER: b

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Chapter 05: E-Business: Managing the Customer Experience 99. A private exchange is a secure website used by companies to: a. improve the efficiency of their bidding and purchasing processes. b. share all types of data related to e-marketing with its suppliers. c. give financial information to its investors. d. share information with the employees in different locations. ANSWER: b 100. TecMag is a technology firm that builds computer systems and other related components. TecMag sources its raw materials from various manufacturing firms and is looking for a website that can help in effectively placing orders with the manufacturers online, and also in tracking the order. Which of the following websites can help TecMag accomplish this task efficiently? a. Social website b. Intranet c. Private exchange d. Corporate website ANSWER: c 101. _____ is a Web-based system that enables all types of organizations to improve the efficiency of their bidding and purchasing processes. a. Private exchange b. Electronic data interchange c. Extranet d. E-procurement ANSWER: d 102. Which of the following statements about B2C e-marketing is true? a. B2C e-business involves online sale of services as much as physical goods. b. B2C transactions account for most of the e-marketing activity. c. B2C e-marketing facilitates transactions between organizations. d. Service providers prefer the B2B model to B2C as there is not enough scope for service transactions in B2C e-business. ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 103. Which of the following terms refers to a company website that sells products to customers? a. Information kiosk b. Corporate website c. Online community d. Electronic storefront ANSWER: d 104. Noe’s Gifts is a gift and accessories retail chain. The company has a website that allows customers not only to buy products online, but also provides information regarding the various offers available, gifting ideas and other information related to the products. The website also provides an opportunity to the consumers to provide feedback on the products and services the company offers. This type of website used by a company to sell its products to consumers is called a(n): a. extranet. b. private exchange. c. electronic storefront. d. electronic exchange. ANSWER: c 105. Simply-Fyde Shopping’s website has an online catalog with the details of the products on offer. When customers pick their choices from the list, the items are automatically populated into a(n): a. online trading database. b. electronic shopping cart. c. point-of-sale system. d. Web browser. ANSWER: b 106. Which of the following is most likely to be a reason why consumers prefer shopping online? a. Only online purchases offer reduced rates to customers on branded credit cards. b. E-marketers offer better warranties on products compared to brick and mortar retailers. c. Products that are purchased online are delivered free of cost whereas brick and mortar stores charge customers for delivering goods to their door steps. d. Online stores allow customers to compare prices and features at their leisure. ANSWER: d

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Chapter 05: E-Business: Managing the Customer Experience 107. A(n) _____ is a software program that allows online shoppers to compare the price of a particular product offered by several online retailers. a. electronic shopping cart b. extranet c. electronic storefront d. bot ANSWER: d 108. Rigala.com is an online shopping store that sells a wide variety of products. The company saves the shipping information of customers when they place orders to save time during future purchases. The company sends an email to the customer after the purchase of the product and provides a tracking number that allows them to track their order. All these strategies have helped the company to increase the sale of their products online. Which of the following features of online shopping is attracting consumers to the website in the above scenario? a. Access and convenience b. Competitive pricing c. Security d. Personalized service ANSWER: a 109. When you are welcomed back by your name to a website you’ve shopped at before and offered products suited specifically to your tastes and budget (based on your past purchase), you are being targeted by: a. personalized marketing. b. geotargeting. c. interstitial advertising. d. engagement ads. ANSWER: a 110. Fred purchased six paperbacks from books2u.com three months back. This week, when he logged on to books2u.com, the home page had his name and recommended 6 new books on his favorite topics. This is an example of: a. information leak. b. breach of privacy. c. geotargeting. d. personalized marketing. ANSWER: d

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Chapter 05: E-Business: Managing the Customer Experience 111. Most shoppers use the Internet mainly to: a. check the availability of the products in the nearby store. b. research products online before buying them at a store. c. obtain information regarding the retailer selling the product. d. check the company’s internal information before purchasing. ANSWER: b 112. Which of the following was one of the early online offerings? a. Food products b. Luxury clothing c. Airline tickets d. Financial services ANSWER: c 113. Which of the following is one of the top products sold online? a. Event tickets b. Food items c. Video games d. Books ANSWER: c 114. The process of encoding data for security purposes is called _____. a. authorization b. authentication c. encryption d. randomization ANSWER: c 115. It is now possible to enter into legal contracts online, due to the development of: a. the electronic shopping cart. b. the electronic signature. c. cloud computing. d. data scrambling technology. ANSWER: b

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Chapter 05: E-Business: Managing the Customer Experience 116. Which of the following measures, when adopted, will help an online retailer to build customers’ trust? a. Using third party cookies issued by Web servers b. Use of behavioral targeting to research customer preferences c. Installing spyware on Web browsers d. Prominently displaying a privacy policy ANSWER: d 117. _____ are software used by online companies to automatically collect data from Internet browsers in order to track their customers’ shopping and viewing habits. a. JARs b. Cookies c. Embedded systems d. Pop-ups ANSWER: b 118. Virtue.com, a women’s clothing brand that sells its products online intends to automatically collect data from Internet browsers to track the customer’s preferences. These data will help the company to improve its website to provide better search results and also to target its ads well. Which of the following types of software can be used by the company to collect customer information? a. Firewall b. Spyware c. Shopbot d. RSS ANSWER: b 119. _____ is a technology that secures a website by encrypting information and providing authentication. a. SMTP b. HTTP c. SSL d. TCP/IP ANSWER: c

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Chapter 05: E-Business: Managing the Customer Experience 120. Which of the following measures is taken by Internet companies to indicate their promise to disclose how they collect personal data and what they do with the customer information? a. Installing software tools such as spyware when users log onto their websites b. Issuing third party cookies to anonymously track user activity c. Using behavioral targeting practices to improve customer privacy d. Displaying the TRUSTe logo on their websites ANSWER: d 121. To prevent intrusions, companies install combinations of hardware and software called _____ to keep unauthorized Web users from tapping into private corporate data. a. firewalls b. shopbots c. cookies d. podcasts ANSWER: a 122. Aaron Corporation is an insurance firm that provides a range of consumer directed health insurance products. The company has detailed personal information of its patients including their date of birth, email address, health related and occupation details, and address. Which of the following types of software can the company use to protect the consumer information from hackers? a. Spyware b. Shopbot c. Webtrends Analytics d. Firewall ANSWER: d 123. The term _____ is used to describe a high-tech scam that uses authentic-looking email or pop-up messages to get unsuspecting victims to reveal personal information. a. e-tailing b. phishing c. data harvesting d. shoulder surfing ANSWER: b

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Chapter 05: E-Business: Managing the Customer Experience 124. The term _____ is used to describe dot-com retailers without traditional stores or catalogs. a. multichannel b. brick-and-mortar c. high-street d. pure-play ANSWER: d 125. The customers of a national bank recently received emails from a fake email address asking them to make a phone call to a number mentioned in the email and provide information regarding their account numbers, recent transactions, and online passwords. The email informed them that it was a check being conducted by the bank to update their personal information. This is an example of: a. phishing. b. search marketing. c. vishing. d. data mining. ANSWER: a 126. Some manufacturing companies prefer to sell only high-priced specialty products online because: a. the companies want their customers to use online banking rather than cash for the transaction. b. the customers are not able to purchase specialty items from store locations. c. the warehousing costs for specialty products can erode any profits to be made from their sales. d. the companies do not wish to enter into a direct competition with its wholesale and retail partners. ANSWER: d 127. Channel conflicts can be defined as conflicts: a. over revenue sharing between manufacturers and their workers. b. among manufacturers, wholesalers, and retailers. c. among customers and marketers regarding data privacy and information security. d. between marketers and the government over legal issues. ANSWER: b 128. Which of the following is the most popular web function? a. E-business b. Entertainment c. Communication d. Research ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 129. Seth reads an online tour journal from his favorite musician. With the help of this journal, fans can post comments or occasionally ask questions to the musician. This online journal is an example of a(n): a. blog. b. social network. c. electronic bulletin board. d. newsgroup. ANSWER: a 130. Online communities like Internet forums and social networking sites take advantage of the _____ function of the Internet. a. entertainment b. communication c. information d. comparison ANSWER: b 131. _____ are Web pages that are publicly accessible journals for individuals or organizations. a. Electronic bulletin boards b. Podcasts c. Blogs d. Social networks ANSWER: c 132. _____ are audio or video files that can be downloaded to other digital devices. a. Cookies b. Podcasts c. JARs d. Newsgroups ANSWER: b 133. Josh is interested in mountain biking and regularly visits a specialized online service that provides information on various topics related to mountain biking. Josh is most likely to be visiting a(n): a. corporate website. b. podcast. c. electronic bulletin board. d. electronic storefront. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 134. A(n) _____ is an online journal for an individual or organization. a. blog b. social network c. bulletin board d. wiki ANSWER: a 135. A _____ is a Web page anyone can edit, so that a reader can, in addition to asking questions or posting comments, actually make changes to the Web page. a. blog b. wiki c. tweet d. news feed ANSWER: b 136. Which of the following is the most common form of Internet advertising? a. Preroll video ad b. Pop-up ad c. Search marketing d. Banner ad ANSWER: d 137. Sandra is surfing the Web. After entering a popular site for attorneys, a separate window suddenly appears on the screen promoting a new line of legal software. This is an example of a _____ ad. a. banner b. pop-up c. search marketing d. preroll ANSWER: b 138. _____ are strip messages placed in high-visibility areas of frequently visited websites. a. Pop-up ads b. Banner ads c. Interstitial ads d. Engagement ads ANSWER: b

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Chapter 05: E-Business: Managing the Customer Experience 139. A(n) _____ is a separate window that appears on a user’s screen with an advertising message. a. banner ad b. widget c. pop-up ad d. image ad ANSWER: c 140. _____ involves paying search engines, such as Google, a fee to make sure the company’s listing appears toward the top of the search results. a. Search engine optimization b. Page ranking c. Interactive marketing d. Contextual advertising ANSWER: a 141. Keith is a marketer for Olympus cameras. He arranged for an agreement with a search engine whereby Olympus would pay the search engine for listing its products among the top three results whenever a computer user ran a search for digital cameras. This is an example of: a. integrated marketing. b. active marketing. c. search marketing. d. interactive marketing. ANSWER: c 142. Marketing messages that appear before an online video are called _____. a. widgets b. interstitials c. podcasts d. preroll video ads ANSWER: d

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Chapter 05: E-Business: Managing the Customer Experience 143. SunDay Holidays paid a fee to Google to display a link of their website when a user enters a keyword related to holidays or vacations. The link gets displayed on the right side of the search results page. This link is an example of: a. a sponsored link. b. an organic search. c. a home page. d. a natural search page. ANSWER: a 144. The first step in creating an effective website is to: a. create an eye-catching home page. b. establish the layout of the website. c. determine the tools to be used and their graphical content. d. understand the purpose of the site. ANSWER: d 145. A retail chain that sells consumer electronics is developing a website in-house to sell its products online. The company has finalized name, appearance, and purpose of the website. The next step in the website development process is to: a. measure the effectiveness of the website. b. decide on the primary objective of the site. c. connect the site to the Internet by placing the required computer files on the server. d. determine and develop the content of the site. ANSWER: d 146. Web-to-store shoppers are a group of consumers who: a. purchase an item online after having inquired about it by visiting a store. b. purchase the primary item on the Web and go to the store to buy accessories. c. use the Internet as a tool when shopping at brick-and-mortar retailers. d. promote online purchasing of products. ANSWER: c

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Chapter 05: E-Business: Managing the Customer Experience 147. For those companies that do not intend to generate revenue from their website, online success is measured in terms of: a. the numbers of visitors who make repeat purchases. b. increased brand awareness and brand loyalty. c. the amount of time a customer spends on a website before making a purchase. d. the number of people who search information by visiting a store and then make online purchase. ANSWER: b 148. The click-through rate is a measure of the: a. number of clicks performed by an average user when searching for information through a search engine. b. number of ads served up to a user on a search engine per query. c. percentage of people presented with a banner ad who click on it. d. number of Web pages viewed by a user after clicking through an ad. ANSWER: c 149. A basic measurement of website’s effectiveness is the conversion rate, which is the: a. number of people who, having previously visited the site, return to it for additional visits. b. proportion of visitors who mark the website as a favorite. c. percentage of people presented with a banner ad who click on it. d. percentage of website visitors who make purchases. ANSWER: d 150. The Metrics Group is a firm that helps companies improve the performance of their websites. The firm rates the effectiveness of the website based on the percentage of website visitors making purchases through the site. Which of the following measures is being used by the firm while assessing the effectiveness of the websites? a. Click-through rate b. Brand awareness c. Conversion rate d. Customer engagement ANSWER: c

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Chapter 05: E-Business: Managing the Customer Experience 151. China and United States have the most number of Internet users. What is the use of Internet to people in these countries? ANSWER: I n the United States, Internet usage is mostly about communication, information, and purchases. Nearly all American users say they use email and use a search engine for information; almost 85 percent get news or look for maps or driving directions. About four- fifths search for health or medical news or check the weather. About three quarters look for information about items they’re interested in buying or go online just to pass the time or to have fun. In China, where Internet users tend to be young, instant messaging and using search engines are the most popular activities, followed by downloading music, blogging, viewing videos, online gaming, and other modes of social networking. After a relatively slow start, online purchase transactions in China have jumped significantly, helped by the spread of local online payment systems. 152. What is meant by e-business? Name the five broad categories of e-business. ANSWER: Electronic business or e-business refers to conducting business via the Internet and has turned virtual reality into reality. Today, e-business describes the wide range of business activities taking place via Internet applications such as email and virtual shopping carts. E-business can be divided into the following five broad categories: (1) e-tailing or virtual storefronts on websites; (2) business-tobusiness transactions; (3) electronic data interchanges (EDI), the business-to-business exchange of data; (4) email, instant messaging, blogs, podcasts, and other Web-enabled communication tools and their use as media for reaching prospective and existing customers; and (5) the gathering and use of demographic, product, and other information through Web contacts. 153. What is e-marketing? Differentiate between e-marketing and online marketing. ANSWER: E-marketing is a strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools. E-marketing can encompass digital technologies ranging from DVDs to interactive store kiosks that do not involve computers, whereas online marketing refers to marketing activities that connect buyers and sellers electronically through interactive computer systems. 154. Discuss the five benefits e-marketing offers to contemporary marketers. ANSWER: Through the Internet and related technology, e-marketing provides the marketer with: Global reach, which is the ability to reach anyone connected to the Internet anywhere in the a) world. Personalization, which involves creating products to meet the exact requirements of b) individual customers. Interactive marketing, buyer-seller communications through such channels as the Internet c) and the interactive kiosks. Right-time marketing, which is the ability of a marketer to provide a product at the exact d) time needed. Integrated marketing, which coordinates all promotional activities and communications to e) create a unified, customer-oriented, promotional message Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 155. Distinguish between a corporate website and a marketing website. ANSWER: Corporate websites are sites designed to increase a firm’s visibility, promote its offerings, and provide information to interested parties. Rather than selling goods and services directly, these sites attempt to build customer goodwill and assist channel members in their marketing efforts. In addition to using the Web to communicate product information and build relationships with customers, many companies also use their corporate websites for a variety of other purposes, including disseminating financial information to investors; giving prospective employees the opportunity to apply online for jobs; and providing a communication channel for customers and other interested parties via email, blogs, and online forums. Marketing websites often include information about company history, products, locations, employment opportunities, and financial information, and their goal is to increase purchases by visitors. Many marketing websites try to engage consumers in interactions that will move them closer to a demonstration, trial visit, purchase, or other marketing outcome. 156. What is business-to-business (B2B) e-marketing? What are its features? What are the tools that are associated with the functions of B2B e-marketing? ANSWER: Business-to-business (B2B) e-marketing is the use of the Internet for business transactions between organizations. In addition to generating sales revenue, B2B e-marketing also provides detailed product descriptions whenever needed. Payments and other information are exchanged on the Web, and B2B e-marketing can slash order-processing expenses. Business-to-business transactions, which typically involve more steps than consumer purchases, can be much more efficient on the Internet. Orders placed over the Internet usually contain fewer errors than handwritten ones, and when mistakes occur, the technology can quickly locate them. This makes the Internet an attractive option for business buying and selling. B2B e-marketing activity has become more varied in recent years. In addition to using the Web to conduct individual sales transactions and provide product information, companies use such tools as EDI, Web services, extranets, private exchanges, electronic exchanges, and e-procurement.

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Chapter 05: E-Business: Managing the Customer Experience 157. Briefly describe the role of technological tools in the functioning of B2B transactions. ANSWER: One of the oldest applications of technology to business transactions is electronic data interchange (EDI), computer-to-computer exchanges of price quotations, purchase orders, invoices, and other sales information between buyers and sellers. EDI requires compatible hardware and software systems to exchange data over a network. Use of EDI cuts paper flow, speeds the order cycle, and reduces errors. In addition, by receiving daily inventory status reports from vendors, companies can set production schedules to match demand. The Internet also offers an efficient way for businesses to collaborate with vendors, partners, and customers through extranets, secure networks used for e-marketing and accessible through the firm’s website by external customers, suppliers, or other authorized users. Extranets go beyond ordering and fulfillment processes by giving selected outsiders access to internal information. Like other forms of e-marketing, extranets provide additional benefits such as enhanced relationships with business partners. Intranets are secure internal networks that help companies share information among employees, no matter how many or how widespread they are. The next generation of extranets is the private exchange, a secure website at which a company and its suppliers share all types of data related to e-marketing, from product design through order delivery. A private exchange is more collaborative than a typical extranet, so this type of arrangement is sometimes called c-business. The participants can use it to collaborate on product ideas, production scheduling, distribution, order tracking, and any other functions a business wants to include. 158. What is e-procurement? What are its benefits? ANSWER: E-procurement is the use of Internet by organizations to solicit bids and purchase goods and services from suppliers. E-procurement are Web-based systems that enable all types of organizations to improve the efficiency of their bidding and purchasing processes. E-procurement also benefits the public sector. These Web-based systems allow state and local agencies and government offices, as well as the state’s colleges and universities, to invite bids, receive quotes, and place orders. 159. What are electronic storefronts? How do they function? ANSWER: Electronic storefronts are company websites that sell products to consumers. Online retailers set up these websites and provide an online catalog where visitors click on items they want to buy. These items are placed in a file called an electronic shopping cart or shopping bag. When the shopper indicates that he or she wants to complete the transaction, the items in the electronic shopping cart are listed on the screen, along with total amount due, so the customer can review the whole order and make changes before paying.

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Chapter 05: E-Business: Managing the Customer Experience 160. What benefits do B2C e-marketing efforts have to offer to consumers? ANSWER: Many consumers prefer shopping online to the time needed to drive to a store and select purchases. Three main reasons are most often cited in consumer surveys for consumers’ preference for online shopping: competitive pricing, access and convenience, and personalized service. Competitive pricing: Many of the best deals on products, such as airfares and hotels, can be found on the Internet. The Web is an ideal method for savvy shoppers to compare prices from dozens, or even hundreds of sellers. Online shoppers can compare features and prices at their leisure. Bots aid consumers in comparison shopping. Bots are search programs that check hundreds of sites, gather and assemble information, and bring it back to the sender. Access and convenience: A second important factor in prompting online purchases is shopper convenience. Cybershoppers can order goods and services from around the world at any hour of the day or night. Most e-marketers allow customers to register their credit card and shipping information for quick use in making future purchases. Personalized service: While online shopping transactions often operate with little or no human interaction, successful B2C e-marketing companies know how important personalization is to the quality of the shopping experience. Customer satisfaction is greatly influenced by the marketer’s ability to offer service tailored to many customers. But each person expects a certain level of customer service. Consequently, most leading online retailers offer customized features on their websites. 161. How has the online shopping behavior of customers changed over the last few years? ANSWER: A broader range of Internet users now purchase products online compared with a few years ago. Women make up more than 60 percent of people who shop online, and the typical Internet user is likely to be between 18 and 64 years of age. More than half of all users make at least one purchase online each month, and more than six in ten research products online before buying them in a store. Half of all shoppers spend three quarters of total shopping time doing product research. Many online shoppers are loyal and buy mostly from a single site; Amazon and eBay are the most popular. Women’s apparel, consumer electronics, and video games top the list of top products sold online. Sales of health and beauty products have increased, with tools showing a decline. Thanks to retailers’ efforts, consumers’ online shopping experiences have been steadily improving in quality and convenience.

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Chapter 05: E-Business: Managing the Customer Experience 162. What are the various safety measures employed by e-marketers to develop safe online payment systems? ANSWER: Companies have developed secure payment systems in response to consumer concerns about the safety of sending credit card numbers over the Internet. Most companies contain sophisticated encryption systems to protect sensitive information. Encryption is the process of encoding data for security purposes. When such a system is active, users see a special icon that indicates they are at a protected website. To further increase consumer security, most companies use Secure Sockets Layer (SSL) technology to encrypt information and provide authentication. SSL consists of a public key and a private key. The public key is used to encrypt information and the private key is used to decipher it. When a browser points to a domain with an SSL certificate, the technology authenticates the server and the visitor and establishes an encryption method and a unique session key. Both parties can then begin a secure session that guarantees message privacy and integrity. 163. Why is privacy a major concern for consumers? What are the measures taken by online marketers to assuage such fears? ANSWER: Marketing research indicates privacy as one of the top concerns of many Internet users. Thanks to cookies and spyware, software used to automatically collect data from Internet browsers, online companies can track their customers’ shopping and viewing habits. Amazon.com, for instance, has long employed sophisticated data collection systems to track customer preferences, and Google and other search engines gather users’ search terms as a way to better target the ads that provide their revenue. The way companies use this technology has the potential both to make visits to the website more convenient and to invade computer users’ privacy. Most consumers want assurances that any information they provide won’t be sold to others without their permission. In response to these concerns, online merchants take steps to protect consumer information. For example, many Internet companies have signed on with Internet privacy organizations such as TRUSTe. By displaying the TRUSTe logo on their websites, they indicate their promise to disclose how they collect personal data and what they do with the information. Prominently displaying a privacy policy is an effective way to build customers’ trust.

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Chapter 05: E-Business: Managing the Customer Experience 164. List out the various Internet fraud issues that consumers and businesses face in e-marketing. ANSWER: Fraud is another impediment to the growth of e-business and e-marketing. One growing type of Internet fraud is called phishing. It is a high-tech scam that uses email or pop-up messages that claim to be from familiar businesses or organizations such as banks, Internet service providers, or even government agencies. The message usually asks the reader to “update” or “validate” account information, often stating that some dire consequence will occur if the reader doesn’t respond. The purpose of phishing is to get unsuspecting victims to disclose personal information such as credit card numbers, bank account numbers, Social Security numbers, or computer passwords. Phishing is also commonly used to distribute viruses and malicious spyware programs to computer users. In vishing, the voice equivalent of phishing, an email or VoIP phone call requests the user to make a phone call to a voice response system that asks for the caller’s credit card number. The latest spin on phishing is smishing, a scam delivered via text message. Payment fraud is another growing problem for many e-marketers. Orders are placed online and paid for using a credit card, and the retailer ships the merchandise. Then the cardholder asks the credit card issuer for a chargeback to the e-tailer, claiming he or she never made the purchase or never received the merchandise. Some claims are legitimate, but many involve fraud. Because an online purchase doesn’t require a customer’s signature or credit card imprint, the merchant—not the card issuer—bears the liability in most fraud cases. 165. How can e-marketers increase the sale of their products through their websites? ANSWER: E-marketers must meet buyers’ expectations to attract and keep customers. Customers want to find products easily and have questions answered quickly. Product reviews, shopping information, popup discount offers, and instant messaging for customer questions can help online retailers to close sales. Companies can also include three-dimensional product photos and video demonstrations on their sites as better site design helps to increase the number of shoppers who actually buy what they put in their shopping carts. Companies can also improve on the merchandise delivery and returns by allowing customers to track orders from placement to delivery on their websites. They can also implement the process of reverse logistics. Some companies provide detailed instructions on how to return the merchandise, including preprinted shipping labels and even pay the shipping costs for returns.

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Chapter 05: E-Business: Managing the Customer Experience 166. What are channel conflicts? Give an example describing how channel conflicts should be dealt with. ANSWER: Conflicts between producers, wholesalers, and retailers are called channel conflicts. Companies spend time and money nurturing relationships with their partners. But when a manufacturer uses the Internet to sell directly to customers, it can compete with its usual partners. Retailers often have their own websites, so they don’t want their suppliers competing with them for sales. As e-business broadens its reach, producers must decide whether these relationships are more important than the potential of selling directly on the Web. M attel, well known for producing toys such as Barbie, Cabbage Patch dolls, and Matchbox cars, sells most of its products in toy stores and toy departments of other retailers such as Target and Walmart. The company wants an Internet presence, but it would cut the retailers out of this important source of revenue if it sold toys online to consumers. Mattel cannot afford to lose the goodwill and purchasing power of major retailers such as Toys “R” Us, so the company sells only specialty products online, including pricey American Girl dolls. 167. Describe how companies use the communication function of the Web in their marketing strategies. ANSWER: Contemporary marketers use the communication function of the Internet to advance their organizational objectives. Companies have long used email to communicate with customers, suppliers, and other partners. Firms also use email to inform customers about events such as new products and special promotions. In addition to email, many firms also use Internet forums, newsgroups, electronic bulletin boards, and social networks that appeal to people with common interests. Members congregate online and exchange views and information on topics of interest. Firms often use forums to ask questions and exchange information with customers. Marketers can also step up to advertising on social networking sites like Facebook, which offers a variety of ad-buying options. Firms can also use mediums like blogs and podcasts in their e-business strategies. Of particular interest to marketers are blogs that focus on new-technology products, because they can prove effective at quickly forming public opinion. 168. Write a brief note on search marketing. ANSWER: Search marketing is considered one of the most effective forms of Web-based advertising. Companies pay search engines fees to have their websites or ads pop up after a user enters certain words into the search engine, or to make sure their firm’s listing appears toward the top of the search results. Google and other search engines now include “Sponsored Links” on the right side of the search results page. A user who clicks on one of the sites listed under Sponsored Links is taken to that site, and the company pays the search engine a small fee. Google and Microsoft among others have made major investments in improving their search marketing services and capabilities.

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Chapter 05: E-Business: Managing the Customer Experience 169. What are the three primary steps involved in building a website?

ANSWER:

The first and the most important step in a website development process is to decide on the company’s objective for the website. Objectives also determine the scope of the project. Other key decisions include whether to create and maintain a site in-house or to contract with outside designers. Naming the website is another important early step in the planning process. A domain name should reflect the company and its products and be easy to remember. Implementing the goals of the site is the next stage, and content is one of the most important factors in determining whether the visitors return to the site. Many e-business websites try to distinguish themselves by offering additional features. Standards for good content vary for every site, but available resources should be relevant to viewers; easy to access and understand; updated regularly; and written or displayed in a compelling, entertaining way. After making content decisions and designing the site, the next step is connecting to the Internet by placing the required computer files on a server. Companies can have their own dedicated Web servers or contract to place their websites on servers at Internet Service Providers (ISPs) or other host companies.

170. How does the measure of effectiveness of a website differ with type of the website? ANSWER: Measuring the effectiveness of the website often depends on the purpose of the website. Profitability is relatively easy to measure in companies that generate revenues directly from online product orders, advertising, or subscription sales. But for many companies, revenue is not a major website objective. Most company websites are classified as corporate websites, not shopping sites, meaning that firms use their sites to showcase their products and to offer information about their organizations. For such companies, online success is measured by increased brand awareness and brand loyalty, which presumably translates into greater profitability through offline transactions. Match each definition to the corresponding term. a. wiki b. extranet c. encryption d. e-marketing e. private exchange f. bot g. search marketing h. electronic signature i. phishing j. blog k. click-through rate l. conversion rate Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience m. electronic shopping cart n. firewall o. e-procurement p. vishing q. spam r. podcast s. preroll video ad t. engagement 171. _____ is the strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools. ANSWER: d 172. A(n) _____ is a secure network used for e-marketing and accessible through the firm’s website by external customers, suppliers, or other authorized users. ANSWER: b 173. A(n) _____ is a secure website in which a company and its suppliers share data related to e-marketing, from product design through order delivery. ANSWER: e 174. _____ is the use of the Internet by organizations to solicit bids and purchase goods and services from suppliers. ANSWER: o 175. A(n) _____ is a file that holds items the online shopper has chosen to buy. ANSWER: m 176. A(n) _____ is a software program that allows online shoppers to compare the price of a particular product offered by several online retailers. ANSWER: f 177. The process of encoding data for security purposes is called _____. ANSWER: c 178. A(n) _____ is an electronic identification that allows legal contracts such as home mortgages and insurance policies to be executed online. ANSWER: h 179. A(n) _____ is an electronic barrier between a company’s internal network and the Internet that limits access into and out of the network. ANSWER: n Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 180. _____ is a high-tech scam that uses authentic-looking email or pop-up messages to get unsuspecting victims to reveal personal information. ANSWER: i 181. _____ is a scam that collects personal information through voice response systems. ANSWER: p 182. A(n) _____ is a Web page that anyone can edit. ANSWER: a 183. _____ is the popular name for junk email. ANSWER: q 184. A(n) _____ is a Web page that serves as a publicly accessible personal journal. ANSWER: j 185. A(n) _____ is an online audio or video file that can be downloaded to other digital devices. ANSWER: r 186. _____ is a brief marketing message that appears before expected video content. ANSWER: s 187. _____is an arrangement by which a marketer pays a fee to have his or her firm’s website or ads pop up after a computer user enters a key word or words into a search engine. ANSWER: g 188. _____ refers to the percentage of people presented with a banner ad who click on it. ANSWER: k 189. _____ refers to the percentage of visitors to a website who make a purchase. ANSWER: l 190. The term _____ refers to the amount of time users spend on sites. ANSWER: t

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Chapter 05: E-Business: Managing the Customer Experience 191. Y our company is planning to launch a new online gaming website. Users will be able to choose from a selection of over 100 games to play. You will earn revenue through the membership fees you charge to users, and from advertising fees charged to companies that want to place their ads in some of your games. You want to increase your chances of success by launching the website in the country that has the most Internet users in the world. In which one of the following countries should you launch your website? a. U nited States b. C hina c. J apan d. I ndia e. S weden ANSWER: b 192. Y our company is a direct competitor of Netflix, the online, movie-streaming service that allows viewers to select a movie for viewing online whenever they want it. You noticed that not all of Netflix’s movies are available for online viewing immediately. For many of their movies, the user has to request a DVD be mailed to them. Your company intends to exploit this situation by making more movies available for immediate online viewing by users. Which of the following e-marketing capabilities most closely describes what your company is doing to exploit this opportunity? a. G lobal reach b. P ersonalization c. R ight-time marketing d. I nteractive marketing e. I ntegrated marketing ANSWER: c 193. Y ou recently joined a major retailing company as head of its Internet marketing strategies group. Immediately, you started assessing the breadth and effectiveness of all elements of the company’s Internet presence to see which areas need immediate improvement. Your initial conclusion is the company does a very good job of providing information via its various websites, but it is extremely deficient in using its Internet presence to drive sales to its customers. Which of the following actions should you take to remedy this situation? a. E nhance, overhaul and otherwise improve the company’s marketing website. b. E nhance, overhaul and otherwise improve the company’s corporate website. c. E nhance, overhaul and otherwise improve the company’s weekly blog. d. E nhance, overhaul and otherwise improve the company’s online learning management system. e. E nhance, overhaul and otherwise improve the company’s email system. ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 194. You are head of supply chain management at a major manufacturing company. Over the last few months, there have been some high-profile breakdowns in marketing and data coordination between your company and different members of your supply chain. You are meeting with the company’s CEO to develop a strategy for preventing these breakdowns going forward. The CEO has tasked you with developing an online means through which your company can collaborate with its supply chain members more efficiently and effectively. Which of following B2B tools would be most appropriate to address this issue? a. E DI b. A virtual private network c. A n extranet d. A n intranet e. A private exchange ANSWER: e 195. Y ou and a couple of your college roommates have decided to launch an online business that will sell college sweatshirts from colleges and universities around the world. Customers would be able to logon to your site and see a full catalog of college sweatshirts emblazoned with the name, logo and mascot of over 2,000 colleges and universities from all over the world. Which of the following statements best describes the type of Internet presence your company would have in order to sell these sweatshirts? a. A n intranet b. A n electronic storefront c. A blog d. A corporate website e. A private exchange ANSWER: b

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Chapter 05: E-Business: Managing the Customer Experience 196. Y ou just recently joined a pilot program offered by the Small Business Administration and designed to assist individuals from certain demographic groups to establish e-commerce businesses. You are excited to be a part of the program, and you are working hard to develop your business idea. The program stipulates that your business idea must be a business that sells products online. You have done extensive research into online buying trends and you have selected the target market that you think represents the largest number of online shoppers. Which of the following statements best describes the target market that you have selected? a. W omen under the age of 25 b. M en between the ages 18 and 35 c. W omen between the ages 18 and 35 d. M en between the ages 18 and 64 e. W omen between the ages 18 and 64 ANSWER: e 197. _ ________________ provide(s) a way to obtain a form of electronic identification and verifying the buyer’s identity with this software a. E lectronic signatures b. S ecure socket layers c. E ncryption d. E xtranets e. I ntranets ANSWER: a 198. W hich of the following is the most widely used Internet function? a. E -business b. E ntertainment c. C ommunication d. I nformation e. T ravel planning ANSWER: c

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Chapter 05: E-Business: Managing the Customer Experience 199. When assessing the effectiveness of a website, __________________.

a. m arketers recognize that click-through rates are increasing b. e ngagement measures how many pages a user views c. c onversion rate measures how much time users spend on sites d. r evenue is not the major objective e. c ompanies are not looking to increase brand loyalty ANSWER: d 200. T he Internet is mainly used for communication, information, purchases, social networking and ___________. a. o nline education b. b logging c. S treaming movies d. r eal estate transactions e. o nline gaming ANSWER: e 201. W hich of the following refers to connecting buyers and sellers electronically through interactive computer systems? a. E lectronic marketing b. E DI c. O nline marketing d. V irtual private networks e. S ocial media ANSWER: c 202. Companies use which of the following primarily to increase their visibility and provide information? a. C ompany websites b. E -commerce c. I ntranets d. E -marketing e. M arketing websites ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 203. The limitations of which of the following were overcome with the introduction of Web services? a. M arketing websites b. I ntranets c. E xtranets d. E DI e. V irtual private networks ANSWER: d 204. Online shopping has been influenced by the increased availability of _______________. a. s mart phones b. b logging sites c. d igital signatures d. c onsumer education e. c ompany websites ANSWER: a 205. _________ make up the majority of online shoppers. a. B usinesses b. T eenagers c. M en d. R etired Baby Boomers e. W omen ANSWER: e 206. Online retailers normally provide directions on how to return merchandise when they deliver a customer’s order. This is called _____________.

a. s upply chain management b. f ulfillment c. r everse logistics d. l ogistics e. d istribution ANSWER: c

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Chapter 05: E-Business: Managing the Customer Experience 207. _____________ are tiny interactive applications that Internet users can copy and add to their own pages to play music, video, or slide shows a. P op-up ads b. W eb services c. P odcasts d. W idgets e. B anner ads ANSWER: d 208. With respect to building an effective web presence, ____________________. a. I nternet merchants need to attract customers who conduct business on the spot b. s uccess should mean the same thing to all businesses c. t he scope of the project determines the objectives of the website d. a domain name should be catchy even if it is hard to remember e. t he speed of the site will be the primary factor in whether people return to the site ANSWER: a 209. As you plan for the future of your online music service, you want to expand into the four countries that lead the world in number of Internet users. These countries include: a. China

b. the United States c. Japan d. Germany e. Canada ANSWER: a, b, c 210. Your boss at a bicycle manufacturing firm is unenthusiastic about making big investments in e-marketing, because he has little experience with it. You are determined to change his mind, and give him examples of e-marketing's potential. Which of the following is not one of your examples? a. E-marketing would enable us to reach cyclists around the globe.

b. E-marketing would enable us to customize bikes to meet customer specifications. c. E-marketing would enable us to interact with customers and get their feedback. d. E-marketing would make us more profitable. e. E-marketing would enable us to provide our bikes exactly when cyclists need them. ANSWER: a, b, c, e

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Chapter 05: E-Business: Managing the Customer Experience 211. Kathy is a summer intern who is eager to take on new challenges in the e-marketing department. Unfortunately, she lacks experience. When told to analyze competitors' marketing websites, she confuses them with corporate websites. Kathy should have focused on competitive websites that are primarily intended to: a. increase company visibility

b. promote company offerings c. increase purchases by visitors d. provide company information ANSWER: c 212. To develop expertise in B2B e-marketing, you are reading about extranets. Now you understand enough about these networks to write a paper on the topic for your marketing professor. Choose the error(s) she identified while grading your paper. a. Extranets are accessible to both customers and suppliers.

b. Extranets are the next generation of private exchanges. c. Use of private exchanges differs from c-business. d. Extranets provide secure internal networks. e. Extranets are used for more than ordering and fulfillment processes. ANSWER: b, c, d 213. You are fascinated with the proliferation of shopbots. As a consumer, you are glad to take advantage of these search programs, which help you: a. compare prices from many sellers

b. avoid paying sales tax c. obtain personalized service d. compare shipping expenses from many sellers ANSWER: a, d 214. Because you hope to build a career in e-business, you'd like to work for a company making one of the top products sold online. You are most likely to interview with firms offering any of the following except: a. Women's apparel

b. Consumer electronics c. Over the counter drugs d. Video games e. Men's apparel ANSWER: c, e

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Chapter 05: E-Business: Managing the Customer Experience 215. Many companies have been forced to deal with a type of online fraud that lures their employees into disclosing personal information. The employees receive an email that appears to come from the Internal Revenue Service, demanding confirmation of their Social Security numbers. The message threatens that noncompliance will mean criminal penalties. These employees are victims of: a. phishing

b. smishing c. vishing d. drishing ANSWER: a 216. If a book publisher decides to bypass Barnes and Noble by selling directly to readers online, this would be most likely to create a serious _____: a. ethical issue

b. channel conflict c. profitability challenge d. customer loyalty challenge e. channel overlap ANSWER: b 217. You are determined to build and facilitate communication among an online community of people who share an interest in knitting. Which of the following forms of social media could help you accomplish these goals? a. Internet forums

b. Blogs c. Podcasts d. Banner ads e. Wikis ANSWER: a, b, c, e

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Chapter 05: E-Business: Managing the Customer Experience 218. You work for a not-for-profit organization, and are not sure of the best way to assess the effectiveness of its website. After researching the options, you settle on one that seems most appropriate in light of the organization's goal -- to maximize time spent by visitors on its site. What measurement metric did you choose? a. Click-through rates

b. Conversion rates c. Engagement d. Enthusiasm e. Comprehension ANSWER: c 219. Which of the following statements is true about how consumers use the Internet according to the text? a. C onsumers aged 55 and older are the fast growing age group using Twitter. b. C onsumers aged 30 to 54 are most likely to check their Facebook pages before getting out of bed in the morning. c. C onsumers in China rarely use the Internet for downloading music. d. C onsumers in the United States do not trust the Internet for maps or driving directions. ANSWER: a 220. According to the text, which of the following factors has led to increased use of the Internet for making purchases by consumers in China? a. T he availability of local online payment systems. b. T he increased number of companies who offer free shipping or delivery to consumers homes. c. T he enhanced speed of Internet bandwidth which enables consumers to stream online videos advertisements. d. T he decreased regulations of Chinese government on private enterprise. ANSWER: a 221. The LifeguardStore.com is an Internet-based business serving customers by providing products which meet their swim, lifeguard or facility needs. The company offers a dedicated team of consultants to work with swim teams across the globe to design and deliver apparel appropriate for their needs. Once designed, a dedicated web portal is created so members of the swim team can purchase their items directly from The LifeguardStore.com. The ability to customize products for swim teams is an example of the _____ capability of e-marketing. a. p ersonalization b. g lobal reach c. r ight-time marketing d. i ntegrated marketing ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 222. Jessica is visiting Chicago with several friends from college and wants to book reservations at one of the top restaurants in the city. She accesses the OpenTable application on her smart phone and reviews several restaurants that are near her location. After discussing with her friends, she makes a reservation at 8 p.m. at one of the restaurants for that evening. Which capability of e-marketing has Jessica utilized to obtain a reservation for dinner? a. r ight-time marketing b. g lobal reach c. p ersonalization d. i ntegrated marketing ANSWER: a 223. What is the primary difference or distinction between corporate websites and marketing websites? a. T he goal of marketing websites is to increase purchases by visitors. b. T he goal of corporate websites is to increase purchases by visitors. c. M arketing websites enable prospective employees to view available job openings and complete online applications. d. C orporate websites are solely utilized by companies who offer products for sale via the Internet. ANSWER: a 224. Companies should apply caution and commonsense when making their products available for sale via the Internet. Which of the following products would be most likely to be sold using the Internet? a. sports apparel b. p oint-of-purchase computer system for a restaurant c. p rescription bifocal glasses d. l eaded glass window for a church ANSWER: a 225. Stepan, a global chemical supplier maintains an external, private exchange called a(n) ________ which enables its raw materials suppliers to share information such as new product development and work cohesively as partners to arrange logistics and schedule delivery to various Stepan manufacturing facilities across the globe. a. c -business exchange b. i ntranet c. e lectronic date interchange d. e -business portal ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 226. Unity Point Hospital system implemented a web-based system that provides the capability for suppliers to place bids and once approved, submit invoices, schedule delivery and receive payment electronically. The purchasing managers for Unity Point appreciate the enhanced efficiency of working with multiple vendors to obtain the various products and services needed by the Unity Point system of hospitals and physician offices. This webbased system is called: a. e -procurement b. i ntranet c. c ollaborative procurement d. e lectronic purchasing network ANSWER: a 227. Zach is a sports enthusiast and enjoys staying fit by participating in a CrossFit program, playing basketball and soccer. He has been a loyal customer of Eastbay.com and when he signs-in to his account, Eastbay offers suggestions on new products that Zach might like based upon his purchasing history. The ability of the Eastbay.com web store to offer product suggestions based on Zach's purchasing history is known as the _______ benefit of B2C e-marketing. a. p ersonalized service b. c onvenience c. c ompetitive pricing d. s hopbots ANSWER: a 228. Bailee works approximately 60 hours each week as an account executive with an advertising agency and rarely has time to shop. She loves the _______ of shopping online and is a VIP customer with Zappos. She can order shoes or clothing and receive the item within 24 hours delivered right to her door by UPS with free delivery. a. c onvenience b. p ersonalized service c. c ompetitive pricing d. p roduct assortment ANSWER: a 229. Which of the following is TRUE regarding online B2C shoppers? a. M any online shoppers are loyal to one single site b. S ales of tools such as hammers and power saws have increased in the last few years c. M ore than 90% of Internet users make at least one purchase online each month d. O nly 20% of Internet users conduct research on products online before purchasing ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 05: E-Business: Managing the Customer Experience 230. Which age group of shoppers are most likely to spend time on the Internet? a. C onsumers aged 18 to 29 b. C onsumers aged 65 or older c. C onsumers aged 11 or under d. C onsumers aged 50 to 64 ANSWER: a 231. Keisha received an e-mail from the IT department at her university saying that she should update her password. However, before following the instructions in the e-mail, Keisha checked the University's technology notices and read a post cautioning users about recent ______ activity on student accounts. a. p hishing b. v ishing c. s mishing d. f ishing ANSWER: a 232. Courtney visits the website, Fashion4Less.com and is considering purchasing a new purse. She's not familiar with the company but notices that the website uses SSL technology. Which of the following is true regarding SSL technology? a. S SL technology encrypts information and provides authentication b. S SL technology reduces the safety of sending credit card numbers over the Internet c. S SL technology is infrequently used by Fortune 500 companies d. S SL is an acronym for System Secure Location ANSWER: a 233. The New York Times offers its business advertisers the opportunity to receive a reduced rate on a ______ ad, a small strip message which is placed in a high visibility area of their website if they also place display advertisements in the physical newspaper. a. b anner b. p op-up c. p re-roll d. s tream ANSWER: a

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Chapter 05: E-Business: Managing the Customer Experience 234. Caleb followed a friend's Facebook link to a CNN video featuring a story about a political candidate. However, after about 30 seconds he stopped watching because prior to the CNN video a _______ advertisement for Coca Cola was playing. a. p re-roll b. p op-up c. d isplay d. b anner ANSWER: a 235. CallowayGolf.com is a popular website for consumers who enjoy golf and are seeking information about the products and/or those who wish to order directly from the website. CallowayGolf.com notices that its _______ is relatively low with very few visitors actually purchasing from the website. However, it believes the website is effective for ______ shoppers who typically visit locally-owned golf retailers to sample the clubs and make a purchase. a. c onversion rate; web-to-store b. c lick-through rate; traditional c. c onversion rate; traditional d. e ngagement; web-to-store ANSWER: a 236. Amazon boasts a very high _____ when using banner ads placed on CNN.com based upon the percentage of people who are exposed to the advertisement and follow the link to view the advertisement. a. c lick-through rate b. e ngagement c. c onversion rate d. h osting rate ANSWER: a

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Chapter 06: Consumer Behavior 1. Consumer behavior refers to the process through which ultimate buyers make their purchase decisions. a. True b. False ANSWER: True 2. Kurt Lewin’s theory of human behavior defines behavior as a function of the interactions of personal influences and pressures exerted by external environmental forces. a. True b. False ANSWER: True 3. Human behavior is solely a function of pressures exerted by external environmental forces on the individual. a. True b. False ANSWER: False 4. According to Kurt Lewin’s theory of human behavior, the personal factors affecting consumer behavior are one’s attitudes, learning, and perception. a. True b. False ANSWER: True 5. The only inputs that affect a consumer’s purchasing decisions are those provided by his or her psychological makeup. a. True b. False ANSWER: False 6. Culture refers to the values, beliefs, preferences, and tastes that are handed down from one generation to the next. a. True b. False ANSWER: True 7. Culture is the broadest environmental determinant of consumer behavior. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 8. The core values of American culture include work ethic and the desire to accumulate wealth. a. True b. False ANSWER: True 9. The basic core values of a culture are highly dynamic and flexible. a. True b. False ANSWER: False 10. The baby boomer generation is most adept at learning and using rapidly changing communications technology. a. True b. False ANSWER: False 11. Marketing strategies that prove successful in one country are invariably applied successfully in international markets as well. a. True b. False ANSWER: False 12. Dale and Lisa, ranchers from Wyoming, found that the meat of their large, slow-growing hogs were not selling in American grocery stores. However, the animals command premium prices in Japan where the meat is enjoyed for its flavor and fat content. The purchasing influence they are experiencing is a cultural influence. a. True b. False ANSWER: True 13. It was not until the introduction of the Chevrolet Nova in Mexico that marketers realized “no va” in Spanish means “won’t go.” This linguistic error demonstrates how Chevrolet overlooked cultural differences in its product introduction. a. True b. False ANSWER: True

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Chapter 06: Consumer Behavior 14. Understanding of differences among subcultures is essential for developing effective marketing strategies. a. True b. False ANSWER: True 15. Subcultures are groups within a larger culture that have their own distinct modes of behavior. a. True b. False ANSWER: True 16. The three largest and fastest-growing U.S. ethnic subcultures are Hispanic Americans, African Americans, and Asian Americans. a. True b. False ANSWER: True 17. The American population is becoming increasingly homogenous as the ethnic and racial minority groups are adopting the U.S. culture through acculturation. a. True b. False ANSWER: False 18. All Hispanics speak the single universal form of Spanish. a. True b. False ANSWER: False 19. The Hispanic American population is not a single homogeneous group, but a composite of a number of culturally distinct groups. a. True b. False ANSWER: True 20. The majority of the Hispanic population is first-generation living in the United States. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 21. African Americans are part of every economic group in the United States. a. True b. False ANSWER: True 22. African Americans possess buying power that nearly equals Hispanics in the United States. a. True b. False ANSWER: True 23. The Asian American subculture consists of numerous ethnic groups, each of which brings its own language, religion, and values to the marketplace. a. True b. False ANSWER: True 24. Individuals who aspire to become members of a certain group most often adopt its standards of behavior and values. a. True b. False ANSWER: True 25. Group membership influences an individual’s purchase decisions and behavior in both overt and subtle ways. a. True b. False ANSWER: True 26. Groups do not intentionally create formal roles, nor do they ever have expectations that roles and statuses will develop within their membership. a. True b. False ANSWER: False 27. If a middle manager buys a Audi automobile because several top executives in the firm own Audis, this demonstrates the influence of membership groups. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 28. The buying behavior of an individual in a group is not only affected by the norms of the group, but also by that individual’s role and status within the group. a. True b. False ANSWER: True 29. Chris decides to proceed with a majority decision, even though the decision goes against his beliefs. Chris is exhibiting the Asch phenomenon in this scenario. a. True b. False ANSWER: True 30. A reference group’s influence on the purchasing decision of a member is often greater when the product is more conspicuous and not commonly owned. a. True b. False ANSWER: True 31. Groups whose value structures and standards influence a person’s behavior are known as reference groups. a. True b. False ANSWER: True 32. The influence of reference groups is more significant in case of children, when compared to adults. a. True b. False ANSWER: True 33. While cultural and family influences significantly affect consumer behavior, the influence of reference groups on consumer behavior tends to be minimal, especially for children. a. True b. False ANSWER: False

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Chapter 06: Consumer Behavior 34. Social class is determined by the sole criterion of income. a. True b. False ANSWER: False 35. Social class has rankings determined by income, occupation, education, family background, and location of residence. a. True b. False ANSWER: True 36. The buying behaviors exhibited by members of the different classes are homogeneous and exclusive. a. True b. False ANSWER: False 37. Well-known luxury retailers offer unique or prestigious products at price ranges slightly lower than their premium brands to attract middle-class consumers aspiring to the upper class. a. True b. False ANSWER: True 38. Opinion leaders are the first consumers to try new products and then share their experience by word of mouth. a. True b. False ANSWER: True 39. Opinion leaders rise to prominence because of their interest and expertise in certain products. a. True b. False ANSWER: True 40. Syncratic role is seen when partners independently make an equal number of purchase decisions. a. True b. False ANSWER: False

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Chapter 06: Consumer Behavior 41. A life insurance salesperson explaining the benefits of a policy to both husband and wife in a two-income family is perceiving the adoption of the policy to be a syncratic purchase decision. a. True b. False ANSWER: True 42. Marketers are finding new product opportunities with two-income families demanding goods and services that fill the need for convenience, health, safety, and time constraints. a. True b. False ANSWER: True 43. Households with two wage earners are more likely than others to make joint purchasing decisions. a. True b. False ANSWER: True 44. A need is an imbalance between the consumer’s actual and desired states. a. True b. False ANSWER: True 45. Motives are inner states that direct a person toward the goal of satisfying a need. a. True b. False ANSWER: True 46. According to Maslow’s hierarchy of needs, some people fixate on a need and fail to move beyond it. a. True b. False ANSWER: True 47. Maslow’s hierarchy of needs begins with self-actualization needs and progresses to physiological needs at the highest level. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 48. According to Maslow’s hierarchy of needs, the desire to accomplish, achieve, and command respect is a safety need. a. True b. False ANSWER: False 49. Critics of Maslow pointed out that depending on the personal value system of an individual, he/she might skip the level of esteem needs and move directly toward self-actualization. a. True b. False ANSWER: True 50. Perception is the meaning a person attributes to incoming stimuli gathered through the senses of hearing, taste, smell, touch, and sight. a. True b. False ANSWER: True 51. A person’s perception of a product results solely from its physical characteristics such as size, color, shape, and weight. a. True b. False ANSWER: False 52. Closure refers to a person’s tendency to be influenced by messages that close the gap between a product’s real and perceived advantages. a. True b. False ANSWER: False 53. Advertisements that utilize closure have a good chance of catching the attention of consumers as they try to complete the advertising message with a limited amount of stimuli. a. True b. False ANSWER: True

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Chapter 06: Consumer Behavior 54. Consumers with strong loyalties to certain products are more difficult to reach with competitive advertising. a. True b. False ANSWER: True 55. Brand loyalty is valued by marketers as it not only ensures that the consumer purchases the product but it also acts as a buffer against competitive messages getting to the consumer. a. True b. False ANSWER: True 56. Subliminal advertising has proven to be successful in inducing the desired purchasing behavior in numerous experiments. a. True b. False ANSWER: False 57. Attitudes of a person toward some object or idea are highly resistant to change. a. True b. False ANSWER: True 58. The cognitive component of attitude essentially deals with feelings or emotional reactions. a. True b. False ANSWER: False 59. Jacqueline plans to purchase a 40-inch flat-screen television. After reading Consumer Reports, comparing technologies and prices on the Internet, and talking with friends and family who have made similar purchases, Jacqueline makes her selection. The component of attitude that is most apparent in this situation is the cognitive component. a. True b. False ANSWER: True

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Chapter 06: Consumer Behavior 60. Aston decides to buy all electronic goods from a particular retailer because of his satisfactory past experiences with the retailer. Aston is exhibiting the affective component of attitude. a. True b. False ANSWER: False 61. Over the past decade, the market for fresh spinach has increased dramatically. However, an outbreak of E. coli bacteria from certain spinach fields reduced spinach sales temporarily. The behavioral component of attitude was most likely affected by this event. a. True b. False ANSWER: True 62. Marketers can attempt to change consumer attitudes by engaging them in new buying behavior. a. True b. False ANSWER: True 63. A restaurant owner who places signs along the interstate highway to advertise his service knows that the signs will act as a cue for hunger causing consumers to stop at the restaurant. a. True b. False ANSWER: True 64. A frequent-flyer program usually announced by airlines is a form of purchasing reinforcement. a. True b. False ANSWER: True 65. When making purchasing decisions, consumers will most likely choose products that move them closer to their real self-images. a. True b. False ANSWER: False

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Chapter 06: Consumer Behavior 66. The self-image is the image to which an individual aspires and hence, it serves as a personal set of objectives. a. True b. False ANSWER: False 67. The consumer decision process does not apply to low-involvement purchases. a. True b. False ANSWER: False 68. Purchasing music from the Apple iTunes website is considered a high-involvement purchase decision because music is a unique personal choice. a. True b. False ANSWER: False 69. The number of brands included in the evoked set may vary according to the situation and the person. a. True b. False ANSWER: True 70. An evoked set is limited in case of an immediate need. a. True b. False ANSWER: True 71. Cognitive dissonance is likely to increase when the purchase decision has a major effect on the buyer. a. True b. False ANSWER: True 72. After purchasing a new oven and a cooking range, Martha was contacted by the store where she purchased the products. The salesperson inquired about the delivery, installation, and her overall satisfaction with the purchase. Such strategies employed by marketers help in reducing cognitive dissonance. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 73. The situation in which a consumer makes a purchase by rapidly choosing a preferred brand is referred to as limited problem solving. a. True b. False ANSWER: False 74. Repurchasing the same brand of detergent during each trip to the grocery store is an example of limited problemsolving behavior by a consumer. a. True b. False ANSWER: False 75. Consumers are most likely to exhibit routinized response behavior while purchasing low-involvement products. a. True b. False ANSWER: True 76. The degree of external search increases as purchasing behavior moves from routine to limited to extended problem solving. a. True b. False ANSWER: True 77. Considerable external search for alternatives is typical when consumers are involved in extended problem solving. a. True b. False ANSWER: True 78. Understanding the consumer decision process can be used by marketers to change consumers’ attitudes about their products. a. True b. False ANSWER: True

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Chapter 06: Consumer Behavior 79. If ‘B’ represents consumer behavior, ‘I’ represents interpersonal influences, ‘P’ represents personal influences, and ‘E’ represents pressures exerted by outside environmental forces, Kurt Lewin’s statement, rewritten to apply to consumer behavior, states that: a. B = f (I,P). b. P = f (B,P). c. B = (I,E). d. P = (I,E). ANSWER: a 80. Kurt Lewin’s theory of consumer behavior asserts that consumer behavior is a function of personal factors and their interaction with: a. perceptual forces. b. learning. c. innate attitudes. d. interpersonal influences. ANSWER: d 81. According to psychologist Kurt Lewin, understanding consumer behavior is facilitated by an understanding of the two key factors of: a. learning levels and group power. b. psychological makeup and inputs from others. c. attitudes and perception. d. reference groups and group norms. ANSWER: b 82. Jorge plans to buy a car and discusses the purchase with his parents. Their influence on his buying decision is considered: a. impersonal. b. interpersonal. c. personal. d. institutional. ANSWER: b

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Chapter 06: Consumer Behavior 83. Rachel, an advertising executive, shops for clothing at a trendy store in town. The sales clerk shows her the latest styles in bright prints and bold colors. Although these are the styles worn at her office, she rejects them and purchases traditionally formal clothes in neutrals and black. Rachel’s decision is most likely driven by _____ factors. a. impersonal b. interpersonal c. personal d. institutional ANSWER: c 84. Which of the following statements reflects Carla’s interpersonal determinants concerning her purchase of an Apple computer? a. She believes you get what you pay for when purchasing products. b. She perceives that Apple offers the best customer service though her family and friends do not share this opinion. c. She makes purchases to satisfy the expectations of her family members who insist on buying Apple products. d. She identifies with the brand and periodically purchases new Apple products. ANSWER: c 85. The broadest environmental determinant of consumer behavior is: a. income or purchasing power. b. educational background. c. culture. d. social status. ANSWER: c 86. The interpersonal influences on consumer behavior include a person’s _____. a. attitudes b. perceptions c. family d. self-concept ANSWER: c

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Chapter 06: Consumer Behavior 87. Which of the following is true of culture in the United States today? a. The basic core values in the American society have changed to collectivism and spirituality. b. The American culture still emphasizes the importance of family and home life despite changes in the family structures over the years. c. The marketing strategies that are successful in one state can be extended to other states as well due to lack of diversity among different American states. d. The U.S. culture is composed of relatively few subcultures compared to other developed nations. ANSWER: b 88. Which of the following is a core value emphasized by the American culture? a. Collectivism b. High power distance c. Aversion to consumerism d. Efficiency ANSWER: d 89. A shift in cultural values away from accumulating material possessions to spending time with family and friends benefit those who market: a. expensive automobiles. b. luxury cars. c. amusement parks and picnic areas. d. children’s designer clothes. ANSWER: c 90. Cultural differences are particularly important for: a. firms marketing internationally. b. local not-for-profit organizations. c. firms marketing to a specific target market in a single city. d. firms that are marketing to the same segment of consumers for years. ANSWER: a 91. Majority of the Hispanic population in the United States originate from _____. a. Brazil b. Peru c. Cuba d. Mexico ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 92. Which of the following is true of the Hispanic population in the United States? a. They have mostly descended from families who have lived in the United States for many generations. b. They tend to be younger than the typical Americans. c. They are a homogenous group. d. They do not use mobile apps on a regular basis. ANSWER: a 93. Marketing to Asian American consumers is challenging as: a. they belong to multiple ethnic groups with their own language, religion, and value systems. b. they have a high acculturation rate. c. they are widely spread in different regions of the United States. d. they have considerably less disposable income compared to other minority groups. ANSWER: a 94. When groups establish values and behaviors they deem appropriate for their members, those values and behaviors are called group _____. a. cliques b. norms c. dyads d. shifts ANSWER: b 95. The relative position of an individual member in a group is called _____. a. dyad b. norm c. status d. stereotype ANSWER: c 96. The Asch phenomenon states that individuals will: a. follow their personal influences more closely than any other influence. b. conform to majority rule, even if it contradicts their beliefs. c. purchase products that the majority deems unfit. d. avoid problem-solving behavior for all purchases. ANSWER: b

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Chapter 06: Consumer Behavior 97. An individual’s reference group is most likely to influence his purchase decision while buying a(n) _____. a. external hard drive b. automobile c. frozen dinner d. latte ANSWER: b 98. Reference groups have a greater impact on the purchasing decision when the: a. consumer is already established as the opinion leader in the group. b. product is hard to recognize or see by the group. c. purchased product is a commonly used commodity. d. purchase is unique and conspicuous. ANSWER: d 99. The single group within society that is most vulnerable to reference group influence is: a. the older consumer who feels somewhat left out of things. b. unmarried women, many of whom feel a need for stability in their lives. c. new immigrants who want to capture the American dream. d. children, who base most of their buying decisions on outside influences. ANSWER: d 100. It is crucial for marketers to focus their marketing strategies on opinion leaders in a group as opinion leaders: a. limit their purchases to the products and services typical of the social class they belong to, rather than imitating the reference group. b. represent the only medium to carry information about products to general public. c. represent the trendsetters who purchase products before others in the group and then influence the buying decisions of other group members. d. possess the highest purchasing power in a group. ANSWER: c 101. _____ are determined by occupation, income, education, family background, and residence location. a. Class rankings b. Opinion leaders c. Reference groups d. Subcultures ANSWER: a

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Chapter 06: Consumer Behavior 102. A(n) _____ role is seen when the partners independently make equal numbers of decisions regarding household purchases. a. syncratic b. husband-dominant c. autonomic d. wife-dominant ANSWER: c 103. Autonomic role in decision making differs from syncratic role as autonomic role: a. occurs when the husband makes most of the purchase decisions. b. occurs when the partners independently make equal number of purchase decisions. c. occurs when the wife is allowed to make certain purchase decisions independently. d. occurs when both the partners jointly make purchase decisions. ANSWER: b 104. A _____ role is typically seen in purchase of products such as garden supplies and electronic equipments. a. wife-dominant b. syncratic c. husband-dominant d. autonomic ANSWER: c 105. Which of the following products is typically a wife-dominant purchase? a. Apartment b. Auto insurance c. Children’s clothing d. Furniture ANSWER: c 106. _____ roles are mostly seen in households with two wage earners while making purchase decisions. a. Syncratic b. Husband-dominated c. Wife-dominated d. Dictatorial ANSWER: c

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Chapter 06: Consumer Behavior 107. A newly married couple is looking to rent an apartment. This decision is most likely to be: a. syncratic. b. made by the husband. c. made by the wife as she will manage the household. d. autocratic. ANSWER: a 108. The purchase of which of the following products will follow a syncratic pattern? a. Health insurance b. Shampoo c. Lawnmower d. Children’s clothes ANSWER: a 109. Which of the following would fall under the category of personal determinants of consumer behavior? a. The culture in which a person is raised b. The needs and motives of the individual c. The subculture to which one belongs d. The reference groups that the individual looks up for guidance ANSWER: b 110. _____ is an imbalance between a consumer’s actual and desired states. a. Need b. Attitude c. Affect d. Equilibrium ANSWER: a 111. A motive is an inner state that directs a person to create: a. equilibrium between the actual and desired states. b. excitement in attaining the need satisfaction. c. equity between the cost and benefits of the need satisfaction. d. a sense of cognitive dissonance in the process of need satisfaction. ANSWER: a

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Chapter 06: Consumer Behavior 112. According to Maslow, _____ needs concern essential requirements for survival such as food, water, shelter, and clothing. a. self-actualization b. esteem c. physiological d. belongingness ANSWER: c 113. Bristol-Myers Squibb, a large pharmaceutical company, has developed a campaign featuring Lance Armstrong promoting their development of cancer drugs. The campaign has a slogan, “Together We Can Prevail.” This marketing strategy is being used by the company to satisfy ____ needs in the Maslow’s hierarchy of needs. a. esteem b. safety c. self-actualization d. physiological ANSWER: d 114. Helene made sure that her company car was equipped with OnStar in case she ever has car trouble or gets lost while traveling between appointments. Which level of Maslow’s hierarchy of needs is Helene addressing? a. Social needs b. Safety needs c. Esteem needs d. Self-actualization needs ANSWER: b 115. Be Wise is an insurance firm that helps people save money for retirement and health purposes. It markets its health and life insurance products with a tag line “save for future.” Be Wise is trying to address which of the following needs in the Maslow’s hierarchy of needs? a. Esteem needs b. Safety needs c. Physiological needs d. Social needs ANSWER: b

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Chapter 06: Consumer Behavior 116. In Maslow’s hierarchy of needs, _____ needs refer to the desire of a person to be accepted by people and groups important to that individual. a. self-actualization b. safety c. belongingness d. physiological ANSWER: c 117. According to Maslow, an individual’s desire to realize his full potential and find fulfillment by expressing his unique talents and capabilities can be regarded as his _____ needs. a. self-actualization b. physiological c. social d. esteem ANSWER: a 118. Martin, a marketing manager, contributes toward community development and volunteers for various civic awareness programs. These activities help Martin in satisfying his _____ needs. a. physiological b. belongingness c. self-actualization d. safety ANSWER: c 119. Joining a local bowling league for social interaction is an attempt to meet _____ needs. a. self-actualization b. belongingness c. physiological d. safety ANSWER: b 120. Which of the following products is aimed at satisfying the esteem needs of people? a. Basic goods b. Cleaning products c. Auto safety features d. Luxury watch ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 121. Peoples’ perception of an object or event results from an interaction between their: a. likes and dislikes. b. emotions and thoughts. c. stimulus factors and individual factors. d. needs and wants. ANSWER: c 122. Which of the following is most likely to break through a person’s perceptual screen? a. Unique packaging b. Black-and-white classified ad c. Simple message, simple background d. Fewer colors used in an ad ANSWER: a 123. Neuromarketing is defined as: a. using the Internet to view products on informational websites. b. selling products solely through the brick and mortar stores. c. eliciting emotions to motivate people toward a purchase. d. using data analysis techniques to project consumption data. ANSWER: c 124. Which of the following can be categorized under the cognitive component of an attitude? a. Buying behaviors b. Emotional reactions c. Knowledge of the product d. Value placed upon the product ANSWER: c 125. Food manufacturers often set up tables in grocery stores where customers can sample featured products. The goal of this type of promotion is to specifically influence the _____ component of attitude. a. behavioral b. emotional c. cognitive d. affective ANSWER: a

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Chapter 06: Consumer Behavior 126. The _____ component of attitude specifically involves tendencies to act in a certain manner. a. cognitive b. affective c. behavioral d. intellectual ANSWER: c 127. An advertisement that creates warm feelings of goodwill toward the advertiser and his products is altering the _____ component of attitude. a. tangible b. behavioral c. traditional d. affective ANSWER: d 128. In the learning process, reinforcement is: a. the expected change in behavior that results from experience. b. the reduction in drive that results from a proper response. c. an individual’s reaction to a set of cues. d. any strong stimulus that impels action. ANSWER: b 129. Which of the following scenarios best illustrates reinforcement in purchasing decisions? a. A chef purchases mushrooms for a second time from a wholesaler, even though the first order was disappointing. b. An appliance distributor replaces a dishwasher free of charge and provides excellent after-sales service. c. A needle on the gas gauge signals a driver to pull into a gas station. d. The smell of hot dogs at a ballpark induces an obese man to order “a dog with everything on it.” ANSWER: b 130. In a marketing context, the immediate or expected change in consumer behavior that results from experience is called a _____. a. drive b. script c. perception d. learning ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior 131. The process of applying a series of rewards and reinforcements to permit more complex consumer behavior to evolve is known as ____. a. scaling b. screening c. shaping d. shadowing ANSWER: c 132. At specific mileage intervals, Capitol sends coupons to owners of their automobiles offering discounts on repair services through the dealerships. Each repair visit is overseen by a trained service representative, and the completed repairs are followed up to ensure customer satisfaction. The attention given by the dealership is called _____. a. scaling b. screening c. shaping d. shadowing ANSWER: c 133. A company that manufactures frozen food items is employing the shaping process to get consumers to try its products. The free samples offered by the company along with discount coupons have been received well by the consumers. The next step in the shaping process is to: a. motivate the customers to make repeat purchases at moderate costs. b. entice the customers to buy the product at low prices with little financial risk. c. sell the product at moderate costs with no additional discount coupons. d. sell the product at its true price to the customers. ANSWER: b 134. Which of the following actions is shaped by the effective application of learning theory within the marketing strategy context? a. Repeat purchase behavior b. Impulse buying behavior c. Cognitive dissonance d. Domino effect ANSWER: a

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Chapter 06: Consumer Behavior 135. While making purchasing decisions, consumers are likely to buy products they believe will move them closer to their _____ self. a. real b. neutral c. actual d. ideal ANSWER: d 136. In the area of self-concept theory, the real self is: a. the self which has achieved self-actualization. b. the way the individual thinks other people see him or her. c. the individual’s personal set of objectives to which he or she aspires. d. the objective view of the total person. ANSWER: d 137. The looking-glass self is defined as: a. the objective view of oneself. b. the way an individual thinks others see him or her. c. the way an individual views himself or herself. d. the ideal view one has of oneself. ANSWER: b 138. The purchase decisions for high-involvement products differ from those of low-involvement products as highinvolvement purchase decisions: a. pose little risk to the consumer. b. require less time and less research on information. c. require limited problem solving and limited efforts for external searches. d. pose greater economic and social consequences. ANSWER: d 139. Which of the following is a low-involvement product? a. Cars b. Laptops c. Stationery d. Jewelry ANSWER: c

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Chapter 06: Consumer Behavior 140. Which of the following product purchases would most likely require a high-involvement decision? a. Shampoo b. Magazine subscription c. Car d. Hair dryer ANSWER: c 141. Purchases that have substantial social or economic consequences: a. usually require relatively less investment of time and effort. b. represent routine purchases that pose little risk. c. require independent decision making. d. represent high-involvement purchase decisions. ANSWER: d 142. During the search step of the consumer decision process, the consumer: a. realizes that it is time to make a change from the present situation. b. develops a set of evaluative criteria to guide the purchase decision. c. begins to notice favorable word-of-mouth communication about the product. d. gathers information about the attainment of a desired state of affairs. ANSWER: d 143. In which of the following steps of the consumer decision-making process does the marketer try to help prospective buyers identify and identify potential needs? a. Search b. Problem or opportunity recognition c. Evaluation of alternatives d. Postpurchase evaluation ANSWER: b 144. The number of alternatives a consumer actually considers in making a purchase decision is referred to as the _____. a. evoked set b. postpurchase evaluation c. evaluative criteria d. problem space ANSWER: a

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Chapter 06: Consumer Behavior 145. Product features that consumers consider while choosing among alternatives are known as the: a. evoked sets. b. evaluative criteria. c. heuristics. d. problem sets. ANSWER: b 146. Sharon is purchasing a food processor and has done extensive research on all the models available in the market. She is convinced about a particular product and is trying to finalize a store from where to make the purchase. Sharon is in the _____ stage of consumer decision process. a. purchase decision and purchase act b. search c. postpurchase evaluation d. problem recognition ANSWER: a 147. The evaluative criteria used by consumers in the decision-making process may be: a. set aside if the consumer finds a better means of making the purchase decision. b. used to identify alternative brands for consideration and possible purchase. c. invoked during the first stage of the consumer decision process. d. objective facts or subjective opinions about the alternatives. ANSWER: d 148. Edward is looking to purchase a new laptop because he is not satisfied with the features of his old one. He gathers information from his coworkers about the new models available in the market with the desired features and lists down all the available options. The next step in Edward’s decision-making process is to: a. continue looking for more options available in the market. b. identify the problem he is facing with his current computer. c. purchase the product from a trusted dealer recommended by his family. d. compare the prices and features of all the available brands in his list. ANSWER: d

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Chapter 06: Consumer Behavior 149. Marketers can influence the outcome of the evaluation stage of the consumer purchase decision process by: a. attempting to convince consumers that certain attributes are more important than others in deciding which product to buy from among an array of them. b. identifying which evaluative criteria are important to the individual, and pointing out which brand best meets those criteria. c. trying to get the customer to reduce the size of the evoked set to exclude many of the choices. d. attempting to convince the consumer to spend more than what was budgeted for the purchase to acquire more features they might prefer. ANSWER: b 150. When a consumer begins to feel dissatisfied with a product or service recently purchased, the anxiety they feel is called: a. cognitive dissonance. b. functional fixedness. c. product revaluation. d. mental set. ANSWER: a 151. At which stage of the consumer decision-making process is cognitive dissonance most likely to occur? a. Search b. Evaluation c. Purchase decision and purchase act d. Postpurchase evaluation ANSWER: d 152. The postpurchase evaluation of the consumer decision process attempts to measure the: a. selling success experienced by the vendor. b. follow-up effectiveness of the firm. c. consumer satisfaction with the purchase. d. advertising influence on the purchase. ANSWER: c

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Chapter 06: Consumer Behavior 153. Consumers are more likely to experience cognitive dissonance when: a. the purchase has been made at discount prices. b. the purchase decision has potential economic consequences. c. the purchased product has routine uses. d. the product company offers excellent after-sales service. ANSWER: b 154. Marketers can attempt to shape the outcome of the post purchase evaluation by: a. helping consumers to identify potential problems or needs. b. offering personal assistance with any problem experienced with the product. c. attempting to convince consumers that a competing brand does not meet their criteria. d. trying to get consumers to expand their evoked sets to include their product. ANSWER: b 155. Which of the following consumer problem-solving behaviors requires the least effort? a. Extended problem solving b. Limited problem solving c. Routinized response behavior d. Variety seeking buying behavior ANSWER: c 156. The introduction of a new brand into an array of familiar brands for which a consumer has previously set evaluative criteria may create the need for: a. limited problem solving. b. extended problem solving. c. routinized problem solving. d. intensive problem solving. ANSWER: a 157. When a product is unique or difficult to categorize, the thought process involved in a purchase decision is known as: a. research analysis. b. extensive buying analysis. c. limited problem solving. d. extended problem solving. ANSWER: d

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Chapter 06: Consumer Behavior 158. Trevor Miguel, a Mexican national, is relocating to America. He is in search of a house and is following up closely with the realtor and his agents. Trevor would be involved in which of the consumer problem-solving behaviors? a. Routinized response behavior b. Variety-seeking buying behavior c. Extended problem solving d. Limited problem solving ANSWER: c 159. Cynthia and William enter Franklin’s Electronics to buy a television set. They had previously planned to replace their 10-year-old color set with a new model of the same brand but are surprised by the array of brands the store offers, each having a special feature. They decide to take their time and look at every type of TV Franklin’s has to offer. Cynthia and William are exhibiting _____ response behavior. a. routinized b. variety seeking c. extended d. limited ANSWER: d 160. Define consumer behavior. Describe Kurt Lewin’s proposition and how it has been adapted for consumer behavior. ANSWER: Consumer behavior is the process through which the ultimate buyers make purchase decisions. Lewin defines behavior (B) as a function (f) of the interactions of personal influences (P) and the pressures exerted by outside environmental forces (E) or B=f (P, E). This statement is rewritten to apply to consumer behavior as follows: B = f (I , P) Consumer behavior (B) is a function (f) of the interactions of interpersonal influences (I), such as culture, friends, classmates, coworkers, and relatives, and personal factors (P), such as attitudes, learning, and perception.

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Chapter 06: Consumer Behavior 161. What are the interpersonal determinants of consumer behavior? Describe the influence of culture on consumer behavior. ANSWER: Cultural, social, and family influences are the interpersonal determinants of consumer behavior. Culture can be defined as the values, beliefs, preferences, and tastes handed down from one generation to the next. Culture is the broadest environmental determinant of consumer behavior. Some cultural values change over time, but basic core values do not. Core values include importance of education, freedom, youth, volunteerism, work ethic, and efficiency. Each of these values influence consumer behavior. Values that change over time also have their effects. As technology rapidly changes the way people exchange information, consumers adopt values that include communicating with anyone, anytime, anywhere in the world. Cultural differences are particularly important for international marketers as marketing strategies that prove successful in one country often cannot be successfully extended to other international markets because of cultural variations. 162. What are subcultures? Why should marketers pay attention to subcultures? ANSWER: Subcultures are groups with their own distinct modes of behavior. Cultures are not homogeneous entities with universal values, but include numerous subcultures. Understanding the differences among subcultures can help marketers develop more effective marketing strategies. Marketers need to be sensitive to the shifts in the population, and the differences in shopping patterns and buying habits of the members of the different subcultures. Understanding these differences will help them to develop marketing messages that consider the needs of these different types of consumers. 163. Describe the Asch phenomenon. Discuss the influence of reference groups on consumer behavior. ANSWER: The Asch phenomenon describes the impact of groups and group norms on individual behavior. S.E Asch through his research found that individuals conformed to the majority rule, even if it went against their beliefs. The Asch phenomenon can play a major role in purchase decisions. The value structures and the standards of reference groups influence a person’s behavior. Consumers usually try to coordinate their purchase behavior with the perceptions of the values of their reference groups. The influence of a reference group on a member’s purchase decision requires two conditions: 1. The purchased product must be one that others can see and identify. 2. The purchased item must be conspicuous; it must stand out as something unusual, a brand or product that not everyone owns. The influence of reference groups might also create elastic consumers, consumers who make decisions to save or splurge in the same economy. 164. What are the different social classes in a society? What are the factors that determine the class rankings? ANSWER: W. Lloyd Warner through his research identified six classes within the social structures: the upperupper, lower-upper, upper-middle, lower-middle classes, followed by working class and lower class. Class rankings in a society are usually determined by occupation, income, education, family background, and residence location.

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Chapter 06: Consumer Behavior 165. Who are opinion leaders? Why are they important to marketers? ANSWER: Opinion leaders are trendsetters who purchase new products before others in a group and then influence others in their purchases. In every reference group, a few members act as opinion leaders. Individuals tend to act as opinion leaders for specific goods or services based on their knowledge of or interest in those products. Opinion leaders are important for marketers as they are the first people to buy new products and share their experiences and opinions via word of mouth. The purchase decisions of the other members of the reference groups are influenced by the reports of the opinion leaders. Some opinion leaders influence purchases by others merely through their own actions. 166. Marketers define the role of each spouse in terms of four categories. List the categories and provide an example of a purchase decision that traditionally falls into each category. ANSWER: Autonomic role is seen when the partners independently make equal numbers of purchase decisions. Purchases of personal-care products fall into this category. Husband-dominant role occurs when the husband usually makes certain purchase decisions. Purchase of a generator or woodstove most often fall into this category. Wife-dominant role has the wife making most of certain buying decisions. Children’s clothing is a typical wife-dominant purchase. Syncratic role refers to joint decisions by spouses. The purchase of a house follows a syncratic pattern. 167. Discuss the role of children and teenagers in the consumer marketplace. How are marketers targeting this market? ANSWER: Children and teenagers represent a huge market and they influence what their parents buy, from cereal to automobiles. These consumers are bombarded with messages from a variety of media. They are presented with a wide array of choices. Young people now wield $211 billion of their own spending power. They also have a significant influence over the goods and services their families purchase. As teens obtain their driver’s licenses, they put pressure on their families to purchase more vehicles. While parents tend to focus on safety features and cost, teens lean toward style and performance. But teens don’t necessarily shy away from practicality. In fact, some studies show they want fuel-efficient cars that are environmentally friendly and cheaper to fill with gas. 168. Differentiate between a need and a motive. ANSWER: A need is an imbalance between the consumer’s actual and desired states. A person who recognizes or feels a significant or urgent need then seeks to correct the imbalance. A motive is an inner state that directs a person toward the goal of satisfying a need. The individual takes action to reduce the state of tension and return to a condition of equilibrium.

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Chapter 06: Consumer Behavior 169. Discuss Maslow’s hierarchy of needs and list a product that can be promoted to fulfill each of the different levels of needs. ANSWER: Psychologist Abraham H. Maslow developed a theory that characterized needs and arranged them into a hierarchy. He identified five levels of needs, beginning with physiological needs and progressing to the need for self-actualization. According to Maslow, a person must at least partially satisfy lowerlevel needs, before higher needs can influence behavior. Physiological needs are at the most basic level and concern essential requirements for survival, such as food, water, shelter, and clothing. Products such as food, water, medicines, and exercise equipments can be used to satisfy this need. Safety needs at the second level include financial or lifestyle security, protection from physical harm, and avoidance of the unexpected. Products such as health and life insurance, auto safety features, and antibacterial cleaners can be promoted to fulfill this need. Social/belongingness needs refer to the desire of an individual to be accepted by people and groups important to that individual. Products such as cosmetics, entertainment, home furnishings, clubs, and organizations can be promoted to fulfill this need. Esteem needs refer to the desire for a sense of accomplishment and achievement. It is the desire to gain the respect of others and even exceed others’ performance. Products such as electronics, gourmet foods, travel, spas, and credit cards can be used to fulfill this need. Self-actualization needs refers to the desire of individuals to realize their full potential and find fulfillment by expressing their unique talents and capabilities. Products such as education, cultural events, travel, sports, and hobbies can be used to fulfill this need. 170. What is perception? What are the factors that influence a person’s perception of an object or event? ANSWER: Perception is the meaning that a person attributes to incoming stimuli gathered through the five senses of sight, hearing, touch, taste, and smell. A person’s perception of an object or event results from the interaction of two types of factors: 1. stimulus factors, such as characteristics of the physical object such as size, color, weight, and shape. 2. individual factors, like unique characteristics of the individual, including not only sensory processes but also experiences with similar inputs and basic motivations and expectations.

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Chapter 06: Consumer Behavior 171. What are perceptual screens? Explain the different marketing strategies that companies can use to break through these screens. ANSWER: Perceptual screens are the mental filtering processes of an individual through which all inputs must pass. People respond selectively to messages that break through their perceptual screens. Doubling the size of an ad, using certain colors or graphics, or developing unique packaging are some techniques that marketers use to elicit a positive response from consumers. The psychological concept of closure also helps marketers create messages that stand out. Closure is the human tendency to perceive a complete picture from an incomplete stimulus. Advertisements that allow consumers to do this often succeed in breaking through perceptual screens. Old marketing techniques, such as use of billboards incorporated with one or more life-sized mannequins and word of mouth are also effective. High-tech marketing tools such as virtual reality and social media also assist marketers in breaking through the perceptual screens. 172. What are the three components of attitude? How can marketers attempt to change consumer attitudes? ANSWER: An attitude has cognitive, affective, and behavioral components. The cognitive component refers to the individual’s information and knowledge about an object or concept. The affective component deals with feelings or emotional reactions. The behavioral component involves tendencies to act in a certain manner. Marketers can attempt to change consumer attitudes in one of the two ways: 1. By attempting to produce consumer attitudes that will lead to the purchase of an existing product. 2. By evaluating existing consumer attitudes and creating or modifying products to appeal to these attitudes. It’s always easier to create and maintain a positive attitude toward a product than it is to change an unfavorable one to favorable. But if consumers view a product unfavorably, the seller might redesign the product, offer new or desired options, or enhance service. Sometimes an attitude isn’t unfavorable, but consumers just don’t feel a need for the product. They aren’t motivated to make the purchase. So marketers must find a way to change shoppers’ attitude to include the desire to buy. Marketers can also modify attitudes by providing evidence of product benefits and by correcting misconceptions. They can also change attitudes of consumers by engaging them in new buying behavior such as providing free samples. Use of new technologies, such as Internet coupons and personalized shopping alerts can also encourage consumers to change their attitudes.

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Chapter 06: Consumer Behavior 173. As a marketing research intern for a personal-care products company, you are asked to present information on the learning process to the marketing department. Discuss the elements of learning you would include in your presentation. What advice would you give your peers about shaping? ANSWER: Learning, in a marketing context, refers to immediate or expected changes in consumer behavior as a result of experience. The learning process includes the component of drive, which is any strong stimulus that impels action. Fear, pride, greed, jealousy, hunger, thirst, comfort, and rivalry are examples of drives. Learning also relies on a cue—any object or signal in the environment that determines the nature of the consumer’s response to a drive. A response is the individual’s reaction to a set of cues and drives. Marketers must find a way to develop a desired outcome such as repeat purchase behavior gradually over time. Shaping is the process of applying a series of rewards and reinforcements to permit more complex behavior to evolve. Marketers can use various strategies to motivate consumers to become regular buyers of certain merchandise. Offering a free sample package that includes a substantial discount coupon for the next purchase is the first step in getting consumers to buy a product. The second step is to entice the consumer to buy the product at little financial risk and the discount coupon enclosed within the free sample performs this function. The third step is to motivate the person to buy the item again at a moderate cost. A discount coupon accomplishes this objective, but this time the purchased package includes no additional coupon. The only reinforcement comes from satisfactory product performance. The final test comes when the consumer decides whether to buy the item at its true price without a discount coupon. Satisfaction with product performance provides continuing reinforcement. Repeat purchase behavior literally is shaped by effective application of learning theory within a marketing strategy context. 174. Discuss the four components of self-concept and explain how marketers can utilize this information. ANSWER: Self-concept is a person’s multifaceted picture of himself or herself and has following four components: 1. The real self: It is an objective view of the total person. 2. The self-image: It is the way an individual views himself or herself. 3. The looking-glass self: It is the way an individual thinks others see him or her. 4. The ideal-self: This serves as a personal set of objectives, because it is the image to which the individual aspires. When making purchase decisions, consumers will more likely choose products that move them closer to their ideal self-images. Marketers can use this knowledge to convince customers that buying certain products will move them closer to their ideal self-images.

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Chapter 06: Consumer Behavior 175. Differentiate between a high-involvement purchase decision and a low-involvement purchase decision. Give an example for each. ANSWER: Purchases with high levels of potential social or economic consequences are said to be highinvolvement purchase decisions. Buying a car or deciding where to go to college are examples of high-involvement decisions. Routine purchases that pose little risk are low-involvement purchase decisions. Buying a loaf of bread or a pint of ice cream at the corner grocery store is a good example. Consumers generally invest more time and effort in buying decisions for high-involvement products than in those for low-involvement products. Both decisions go through the steps of the consumer decision-making process, but it is on a more compressed scale for low-involvement products. 176. Briefly describe the steps involved in the consumer decision process. ANSWER: The following are the various steps in the consumer decision process: 1. Problem recognition: This is the first stage in the decision-making process during which the consumer becomes aware of a gap between the existing situation and a desired situation. 2. Search: During this stage the consumer gathers information about the attainment of a desired state. This search identifies different ways to solve the problem. A high-involvement purchase might mean conducting an extensive search for information, whereas a low-involvement purchase might require much less research. The collection of alternatives a consumer actually considers in making a purchase decision is known in marketing as the evoked set. 3. Evaluation of alternatives: The third step in the consumer decision process is to evaluate the evoked set of options. The outcome of the evaluation stage is the choice of a brand or product within the evoked set, or possibly a decision to keep looking for alternatives. 4. Purchase decision and purchase act: The search and alternative evaluation stages of the decision process result in the purchase decision and the actual purchase. At this stage, the consumer has evaluated each alternative in the evoked set based on his or her personal set of evaluative criteria and narrowed the alternatives down to one. The consumer then decides where and from whom to make the purchase and sometimes this decision is part of the evaluation. 5. Postpurchase evaluation: The buyer feels either satisfaction at the removal of the discrepancy between the existing and desired states or dissatisfaction with the purchase. Consumers are generally satisfied if purchases meet, or exceed their expectations. But sometimes they experience postpurchase anxiety called cognitive dissonance. 177. What are evaluative criteria? What are some of the evaluative criteria a consumer might use while searching for an apartment? ANSWER: Evaluative criteria are the features that a consumer considers in choosing among alternatives. These criteria can either be objective facts or subjective impressions. For many consumers, while shopping for an apartment, some of the evaluative criteria would be monthly rent, location, constructed area, type of unit, number of bedrooms, and availability of parking.

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Chapter 06: Consumer Behavior 178. Define cognitive dissonance. How can marketers manage a consumer’s cognitive dissonance? ANSWER: Cognitive dissonance is the anxiety that results from an imbalance among a person’s knowledge, beliefs, and attitudes that occurs after an action or a decision, such as a purchase. Dissonance is more likely with high-involvement purchases than with those that require low involvement. Marketers can help buyers reduce cognitive dissonance by providing information that supports the chosen item. Advertisements that stress customer satisfaction also help reduce cognitive dissonance. A final method of dealing with cognitive dissonance is to change products. The consumer may ultimately decide that one of the rejected alternatives would have been the best choice, and vow to purchase that item in the future. Marketers may capitalize on this with advertising campaigns that focus on the benefits of their products or with effective tag lines. 179. Describe the three categories of problem-solving behavior with examples. ANSWER: Marketers recognize three categories of problem-solving behavior: 1. Routinized response behavior: Consumers make many purchases routinely by choosing a preferred brand or one of a limited group of acceptable brands. The consumer has already set evaluative criteria and identified available options. External search is limited in such cases, which characterize extremely low-involvement products. This type of rapid consumer problem-solving is referred to as routinized response behavior. A routine purchase of the same brand of dog food or the renewal of a magazine subscription are examples. 2. Limited problem-solving: This is usually seen in situations when the consumer already has set evaluative criteria for a particular kind of purchase but then encounters a new, unknown brand. The consumer knows the evaluative criteria for the product but has not applied these criteria to assess the new brand. Such situations demand moderate amounts of time and effort for external searches. Limited problem-solving is affected by the number of evaluative criteria and brands, the extent of external search, and the process for determining preferences. The introduction of a new shampoo is an example of a limited problem-solving situation. 3. Extended problem-solving: This results when brands are difficult to categorize or evaluate. The first step is to compare one item with similar ones. The consumer needs to understand the product features before evaluating alternatives. Most extended problem-solving efforts involve lengthy external searches. High-involvement purchase decisions, such as cars, homes, and colleges usually require extended problem solving. Match each definition to the corresponding term. a. evoked set b. consumer behavior c. culture d. reference group e. Asch phenomenon f. opinion leader g. need h. motive Copyright Cengage Learning. Powered by Cognero.

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Chapter 06: Consumer Behavior i. perception j. attitude k. learning l. subliminal perception m. high-involvement purchase decision n. closure o. cognitive dissonance p. routinized response behavior q. shaping r. perceptual screens s. evaluative criteria t. self-concept 180. _____ is the process through which the ultimate buyers make purchasing decisions about a product or service. ANSWER: b 181. _____ describes the values, beliefs, preferences, and tastes handed down from one generation to the next. ANSWER: c 182. The _____ describes the tendency of people to conform to majority rule. ANSWER: e 183. _____ are people or institutions whose opinions are valued and to whom a person looks for guidance in his or her own behavior. ANSWER: d 184. A(n) _____ is a trendsetter who purchases new products before others in a group and then influences others in their purchases. ANSWER: f 185. A(n) _____ is an imbalance between a consumer’s actual and desired states. ANSWER: g 186. An inner state that directs a person toward the goal of satisfying a need is a(n) _____. ANSWER: h 187. _____ is the meaning that a person attributes to incoming stimuli gathered through the five senses. ANSWER: i

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Chapter 06: Consumer Behavior 188. _____ is a psychological concept that refers to the human tendency to perceive a complete picture from an incomplete stimulus. ANSWER: n 189. _____ are the mental filtering processes of a person through which all inputs must pass. ANSWER: r 190. A person’s enduring favorable or unfavorable evaluation, emotion, or action toward some object or idea is referred to as _____. ANSWER: j 191. _____ is knowledge or skill that is acquired as a result of experience, which changes consumer behavior. ANSWER: k 192. The process of applying a series of rewards and reinforcements to permit more complex behavior to evolve is called _____. ANSWER: q 193. _____ is a person’s multifaceted picture of himself or herself. ANSWER: t 194. The subconscious receipt of incoming information is referred to as _____. ANSWER: l 195. A(n) _____ is one with high levels of potential social or economic consequences. ANSWER: m 196. The number of alternatives the consumer actually considers in the purchasing decision is called the _____. ANSWER: a 197. _____ are the features a consumer considers in choosing among alternatives. ANSWER: s 198. The imbalance among a person’s knowledge, beliefs, and attitudes that occurs after an action or decision is called _____. ANSWER: o 199. A consumer problem solving behavior in which the consumer makes purchases ordinarily by choosing a preferred brand or one of a limited group of acceptable brands is called _____. ANSWER: p

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Chapter 06: Consumer Behavior 200. As a marketing director, you have developed a line of skincare products focused on current needs that consumers have, including matters like wrinkles, sun effects, fine lines, and exfoliation for both men and women. Selena and her husband David have purchased several products from the skincare line and are satisfied consumers. S elena decides to purchase a cream to minimize fine lines because she notices some developing around her eyes. David’s brother, André, purchases a product for sun effects after David mentioned how well it worked. Which types of consumer behaviors are exhibited in the scenario above? a. S elena and André both exhibit interpersonal influence. b. S elena exhibits a personal factor and André exhibits interpersonal influence. c. A ndré exhibits an impulse factor and Selena exhibits interpersonal influence. d. A ndré and Selena both exhibit personal factors. e. S elena exhibits an impulse factor and André exhibits interpersonal influence. ANSWER: b 201. T he engine in Marcel’s lawn mower recently stopped working. Marcel has decided that it’s a better financial decision to purchase a new lawn mower rather than to replace the engine. He has decided to purchase either a Craftsman or a John Deere model. Marcel feels that the Craftsman is a high-quality lawn mower. On the other hand, his father has used a John Deere mower for years and has recommended it to him. Marcel decides to purchase the Craftsman lawn mower. __________ is the process that Marcel is undergoing in deciding which lawn mower to purchase, and his purchase is being affected by ___________. a. c onsumer behavior; personal factors b. c onsumer behavior; interpersonal influences c. p ersonal factors; consumer behavior d. i nterpersonal influences; consumer behavior e. p ersonal factors; interpersonal influences ANSWER: a

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Chapter 06: Consumer Behavior 202. Marketers must understand a target group’s culture if they hope to construct an effective marketing mix for the target group. Culture is the accumulation of values, beliefs, preferences, and tastes that the target group possesses. Culture includes such tangible items as _____________. Culture also includes such intangible items as ________________. a. e ducation; food b. s ocial customs; artwork c. a rtwork; food d. e ducation; clothing e. c lothing; principles ANSWER: e 203. Seventeen-year-old Mai Ly has moved to the United States from Vietnam with her parents because her father’s job transferred him to a different branch of his company. They have decided to buy their groceries from a local supermarket that caters to Asian cuisine due to their _________ influences. Mai Ly has recently passed her driver’s license exam and has said that she would like to have her own car so that she doesn’t have to share one with her parents. Her parents have agreed to purchase a car for her as long as she pays for her own gas and insurance. This decision is an example of a ________ influence. a. f amily; cultural b. s ocial; family c. c ultural; family d. c ultural; social e. s ocial; cultural ANSWER: c

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Chapter 06: Consumer Behavior 204. According to Abraham Maslow’s hierarchy of needs, human beings have five levels of needs they are constantly seeking to satisfy. Marketers who are knowledgeable of the hierarchy of needs are able to manufacture products accordingly, and develop marketing strategies that help make consumer purchase decisions easier. A mos is in the market for a luxury car and has been researching different brands, their costs, and expenses associated with maintaining these vehicles. The luxury car commercials he has seen deal with social status, feeling good, and the esteem needs of potential consumers. For the most part, all of the brands he was considering were similar until he saw an ad for a luxury car company that was highlighting efficiency rates of the car’s airbags and seat belts in crash control tests. Amos decided to buy this company’s all wheel drive. Which of the following statements can be inferred from the scenario provided above? a. A mos’s decision to buy a luxury car was an impulsive purchase decision. b. A mos was able to reach self-actualization with his purchase of the luxury car. c. A mos’s decision about which car to purchase was ultimately based on his self esteem. d. M arketers who consider Maslow’s hierarchy of needs in their advertising campaigns sell more product. e. A consumer purchase decision may be informed by more than one aspect of Maslow’s hierarchy of needs. ANSWER: e 205. Consumers are influenced by their ____________ or meaning of the incoming stimuli that they receive from each of the five senses: sight, smell, touch, taste, and hearing. The ___________ are the mental filtering processes through which all inputs must pass. a. p erceptions; individual factors b. i ndividual factors; perceptions c. p erceptual screens; perceptions d. p erceptions; perceptual screens e. p erceptual screens; individual factors ANSWER: d

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Chapter 06: Consumer Behavior 206. Candace has been using the same shampoo brand for decades. When she finally dyes her hair, however, her hairdresser informs her that she will need to find a new shampoo that can help maintain her new color, prevent breakage, and condition her hair. Before going to the beauty supply store, Candace calls a few friends for recommendations and conducts web-based research on shampoos that address her specific needs. What can one infer about purchase decisions? a. E very consumer approaches purchase decisions the same way. b. B uying shampoo can be a high-involvement purchase decision. c. P urchase decisions are always based on personal factors and preferences. d. T he same purchase decision requires the same level of involvement every time. e. P roduct cost is the only factor that determines whether a consumer will engage in a low- or highinvolvement purchase decision. ANSWER: b 207. You overhear your parents having a conversation about the family’s grocery list and which of them is going to do the shopping this coming weekend. Your mother typically does the grocery shopping and has a comprehensive process, which entails researching supermarkets that have the best sales, clipping coupons, and identifying which items she wants from the circulars that are mailed weekly to the house. She prefers to do the shopping herself but has to go out of town, leaving your dad with this responsibility. Your dad generally just buys whatever he thinks you and your siblings will like and prefers to be in and out of the grocery store. What can be said about your parents’ purchase decision styles? a. B oth of them engage in high-involvement decisions. b. I nvolvement in purchase decisions may vary from one person to the next. c. M en are more likely to rely on personal determinants when making purchase decisions. d. Y our mom’s purchase decision process requires low-involvement because she does most of the grocery shopping for your family. e. M ore time elapses between the problem/opportunity recognition and the purchase act stages of the purchase decision process for your dad. ANSWER: b 208. The consumer buying decision process involves _______ steps. The first step is ____________, and the last step is _____________. a. f ive; evaluation of alternatives; postpurchase evaluation b. f ive; information search; purchase c. s ix; problem recognition; purchase d. s ix; problem recognition; postpurchase evaluation e. s ix; evaluation of alternatives; purchase ANSWER: d

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Chapter 06: Consumer Behavior 209. As Markel drives buy a local restaurant, he realizes that he hasn’t eaten all day and is famished. He stops at the restaurant, and without referring to the menu, orders a burger because that’s what he typically buys at this particular restaurant. This scenario suggests that: a. M arkel’s hunger caused him to experience cognitive dissonance. b. a ll purchase decisions go through the six steps of the consumer decision making process. c. M arkel would have probably made a different food choice had he not been famished. d. s ome people may skip steps in the consumer decision making process, particularly for high-involvement decisions. e. l ow-involvement decisions may sometimes enable consumers to skip steps in the consumer decision making process. ANSWER: e 210. First time drivers who are trying to decide which car to buy and how to select an insurance company, and newlyweds looking to buy their first home, both undergo the same problem solving processes with respect to their level of involvement in their buying decisions. Which of the following best describes this common buying process? a. i mpulse buying behavior b. r easoned purchasing behavior c. e xtended problem solving d. r outinized response behavior e. l imited problem solving ANSWER: c 211. Philippe exhibited extended problem solving when he spent a large amount of time researching and comparing various criteria for a certain product or service. Which scenario in the choices below best describes the extended problem solving that Philippe used? a. H e renewed the contract for his monthly pest control service. b. H e opted to purchase a new flavor of ice cream instead of the flavor he normally buys. c. H is Sports Illustrated magazine subscription ran out and he paid for another year of it. d. I nstead of his usual morning decaf coffee, he elects to try the flavor of the month at Dunkin’ Donuts. e. H e pored over college catalogs and visited various campuses before choosing the one his son would attend. ANSWER: e

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Chapter 06: Consumer Behavior 212. You take pride in your understanding of consumer behavior. You apply that knowledge in planning for your educational toy business. Specifically, you remind your salespeople that the behavior of your customers will be influenced not only by their own psychological makeup and other personal factors, but also by such interpersonal influences as: a. cultural expectations of children

b. friends who have children c. coworkers who have children d. relatives who have children e. the customer’s learning about children ANSWER: a, b, c, d 213. As an observant marketer, you read newspapers and magazines regularly to keep up with trends in American cultural values. But you realize that certain core values do not change over time. When considering various slogans to promote a new line of kitchen appliances, you identify one that fails to tap into a core value. Which slogan is it? a. Keeps Families Eating Together

b. Keeps Mom in the Kitchen c. Helps Make Healthy Meals d. Save Energy, Save the Environment e. Makes Home the Best Eatery ANSWER: b 214. Your boss often talks about the importance of marketing to subcultures, but he includes only Hispanic Americans, African Americans, and Asian Americans. You know that a subculture can be defined by characteristics other than nationality or ethnicity. In a memo, you identify some of these characteristics, including: a. age

b. rural vs. urban location c. religion d. geographic distribution e. bargain hunters ANSWER: a, b, c, d

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Chapter 06: Consumer Behavior 215. Many buyers of your luxury line of fine jewelry are middle class. You're not surprised, since middle-class consumers often buy items they associate with the upper classes. Which of the following promotional messages would be likely to appeal to these aspirational customers? a. Feel like a billionaire.

b. Be practical. c. Spend less on your look. d. Live a luxury lifestyle. ANSWER: a, d 216. Before deciding how to market the houses designed by your architectural firm, you want to understand the role of each spouse in making this type of purchasing decision. After researching the topic, you learned that most house purchases fall into a particular role-based category. This category is: a. Husband-dominant

b. Wife-dominant c. Autonomic d. Syncratic e. Evaluative ANSWER: d 217. According to Maslow's hierarchy, an art enthusiast joining an art appreciation society would be satisfying which level of her consumer needs? a. Self-actualization

b. Esteem c. Belongingness d. Safety e. Physiological ANSWER: c 218. As a home builder, you frequently hear from buyers who have completed a purchase from your company but are experiencing cognitive dissonance. When you interview prospective sales agents, you warn them about this phenomenon. Cognitive dissonance is especially likely in the home market, you say, because: a. Homes are expensive purchases.

b. Home purchases have major effects on the buyers. c. Home buyers see ads from rival builders touting features that your homes do not provide. d. Home buyers have unique evaluative criteria. ANSWER: a, b, c

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Chapter 06: Consumer Behavior 219. In marketing your baby food, you want to understand the most common evaluative criteria used by your customers during the relevant stage of the consumer decision process: evaluation of alternatives. Based on research, these criteria are likely to include all of the following except: a. Where and from whom to buy your baby food

b. The ingredients in your baby food c. The price of your baby food d. The image of your brand e. The image of your company ANSWER: a 220. You want to buy a fleet of company cars. Because this will be a high-involvement purchase, you are likely to: a. Spend time reading online reviews of different cars b. Spend time talking to industry colleagues who have bought company cars c. Skip steps in the consumer decision process d. Spend time at every step of the consumer decision process ANSWER: a, b, d 221. When a bride purchases a wedding dress, her problem-solving process is likely to differ from the process she used when buying dresses to wear to work. Once in the wedding dress market, most brides will shift from ____ problem solving to ____ problem solving. a. extended, routinized

b. routinized, limited c. limited, extended d. limited, evaluative e. evaluative, limited ANSWER: c 222. Which of the following disciplines is a major influence on marketing? a. s ociology b. a ccounting c. f inance d. s ocial engineering ANSWER: a

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Chapter 06: Consumer Behavior 223. As defined in the text, consumer behavior is a function of the interaction of interpersonal influences and personal factors. Which of the following is an example of an interpersonal influence? a. c ulture b. a ttitudes c. l earning d. p erception ANSWER: a 224. Mateo recently graduated from high school and it's always been assumed that he would go to college after graduation. His family believe education is important to success in life and know that Mateo will be able to achieve success with a combination of hard work, persistence, and knowledge. Mateo has been influenced by a. c ulture b. a dvertising c. g overnment d. f riends ANSWER: a 225. The demographics of people living in the United States continues to diversify and several groups - Hispanics, African Americans, and Asians represent the largest _______. a. s ubcultures b. t arget markets c. segmented populations d. m icromarket ANSWER: a 226. Maya is in the purchase process for a new car and is considering a Hyundai Sonata and believes their Assurance or warranty program is the best available since it offers 10-years or 100,000 miles of coverage including a 5-year 24X7 roadside assistance plan. Maya's belief about Hyundai represents the _______ component of her attitude. a. c ognitive b. a ffective c. c onative d. f eeling ANSWER: a

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Chapter 06: Consumer Behavior 227. Ayden is shopping at the local Costco on a Saturday afternoon and loves trying all the product samples. He's learned that he can usually try 5 to 7 different products while he's shopping in the store and the samples almost always taste great! He usually purchases the sampled item because he likes the taste and knows that he'll use it once he gets the item home. What type of marketing technique is utilized by offering product samples? a. s haping b. s ubliminal perception c. p erceptual screens d. m otivations ANSWER: a 228. Ryder and Reagan have been dating for several years and Ryder has started browsing for engagement/wedding rings. He has heard that it's typical to spend the equivalent of 5 months of salary on a ring which would equate to approximately $15,000. He is excited about making a life commitment and is willing to invest in the relationship by purchasing the ring. What type of purchase decision does the engagement/wedding ring represent for Ryder? a. h igh-involvement b. l ow-involvement c. m edium-involvement d. s purious involvement ANSWER: a 229. Bed Bath & Beyond offers an extensive selection of coffee makers for consumers to consider when they're making a purchase decision. They offer several different models of the Keurig as well as Cuisinart, Jura and Mr. Coffee. Brittany stopped in the store to see the different models and make comparisons between them. She wasn't ready yet to make a purchase but was primarily interested in learning about the different features and prices of brands. Which stage in the buying decision process is Brittany most likely in? a. s earch b. e valuation of alternatives c. p urchase decision d. p roblem recognition ANSWER: a

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Chapter 06: Consumer Behavior 230. Paul is a sales representative at Midwest Mazda and recently sold a CX9 to Summer and Brian for their growing family. Paul knows how important it is to reassure his clients that they've made the right decision and usually calls his customers within 2-3 days of purchase to ask what they think so far and remind them of all the great features. He provides lots of reassurance and wants his customers to know he cares about them and values their business. Which of the following is a possible reason why Paul might contact his customers and provide reassurance they made the right purchase decision? a. C ounter potential cognitive dissonance b. O btain referrals from the customer c. R eceive higher satisfaction scores on the post-purchase survey d. R educe subliminal perceptions ANSWER: a 231. Tabitha is interested in purchasing new head phones and has set a budget of up to $350. She's narrowed her choice to Bose, Beats by Dr. Dre and Exeo Psyko. These three brands are known as her _____ set.: a. e voked b. a lternative c. p urchase d. a cceptance ANSWER: a 232. Carlos is at the grocery store to pick-up a few items for dinner. While he's in the store, he remembers that he's just run out of laundry detergent. He walks to the aisle where the laundry detergent is and picks up the brand he always buys - Tide liquid. What type of purchasing decision did Carolos make when selecting the Tide detergent? a. r outinized response behavior b. l imited problem solving c. e xtended problem solving d. f amily purchase behavior ANSWER: a

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Chapter 06: Consumer Behavior 233. Shannon and Jeff were recently married and purchased a home. Now, they're shopping for a lawn mower and are looking for one that is easy to use and is self-propelled. Jeff had a lawn mowing business when he was in high school and college and is fairly familiar with the brands and features. They visit a local WalMart and although Jeff wasn't familiar with the brand names, within a few minutes making comparisons across the models in-stock, they make their purchasing decision. What type of decision process did Shannon and Jeff utilize? a. l imited problem solving b. r outinized response behavior c. e xtended problem solving d. f amily decision making ANSWER: a

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Chapter 07: Business-to-Business (B2B) Marketing 1. Firms usually sell fewer standardized products to organizational buyers than to ultimate consumers. a. True b. False ANSWER: True 2. Personal selling plays a much bigger role in consumer markets than in business markets. a. True b. False ANSWER: False 3. B2B relationships tend to last longer than those in the consumer market. a. True b. False ANSWER: True 4. The distribution channels in consumer markets are relatively shorter compared to those in business markets. a. True b. False ANSWER: False 5. Purchasing decisions in the B2B sectors are more complex, take longer to negotiate, and often include many levels of decision making.

a. True b. False ANSWER: True 6. Business marketers advertise primarily to announce new products and to attract potential customers. a. True b. False ANSWER: True 7. The primary purchasing need of an organization is meeting the demands of its own customers. a. True b. False ANSWER: True

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Chapter 07: Business-to-Business (B2B) Marketing 8. As compared to business-to-business marketing, consumer marketing puts greater emphasis on advertising. a. True b. False ANSWER: True 9. When Cannondale purchases aluminum for use in its bicycle frames, the company is participating in the commercial market.

a. True b. False ANSWER: True 10. The commercial market consists of wholesalers and retailers who purchase goods primarily to sell it to the final consumers.

a. True b. False ANSWER: False 11. Governmental organizations represent the largest segment of the B2B marketplace. a. True b. False ANSWER: False 12. Members of the trade industries acquire products primarily to support the production of other goods and services. a. True b. False ANSWER: False 13. The term “reseller” is often used to describe marketing intermediaries who operate in trade industries. a. True b. False ANSWER: True 14. The primary motivation of government purchasing is to provide some form of public benefit such as national defense or pollution control.

a. True b. False ANSWER: True

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Chapter 07: Business-to-Business (B2B) Marketing 15. Not-for-profit organizations are considered to be a part of the business market. a. True b. False ANSWER: True 16. Most of the early Internet marketers failed because they did not consider basic marketing principles such as targeting their customers and making sure to fulfill their needs.

a. True b. False ANSWER: True 17. Geographic location is one of the criteria considered during demographic segmentation of the business market. a. True b. False ANSWER: False 18. A company that groups its customers into categories like manufacturers, wholesalers, and retailers based on buyer’s product specifications, is using the psychographic segmentation approach.

a. True b. False ANSWER: False 19. Organizational buyers tend to have much more precise and complex requirements for goods and services than ultimate consumers.

a. True b. False ANSWER: True 20. The NAICS categorizes the business marketplace into more detailed market segments compared to the SIC system and can be used across borders.

a. True b. False ANSWER: True 21. The sixth digit of the NAICS codes accounts for specific data needs of each of the member nations of NAFTA. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 22. The NAICS classification system is a useful tool for segmenting business markets by demographic characteristics. a. True b. False ANSWER: False 23. End-use application segmentation focuses on the precise way in which a business purchaser will use a product. a. True b. False ANSWER: True 24. With the help of customer relationship management systems, businesses can segment their customers in terms of the stage of the relationship between the business and the customer.

a. True b. False ANSWER: True 25. In the automobile industry, suppliers of components and assemblies frequently build plants close to their customers. a. True b. False ANSWER: True 26. The business market features a limited number of buyers compared to consumer markets. a. True b. False ANSWER: True 27. The federal government is the largest single source of statistical information on business markets. a. True b. False ANSWER: True 28. Relationships in consumer markets are often more complex than those in business-to-business markets. a. True b. False ANSWER: False

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Chapter 07: Business-to-Business (B2B) Marketing 29. Relationship marketing focuses on developing long-term, value-added customer relationships. a. True b. False ANSWER: True 30. Global sourcing involves contracting with suppliers from around the world to purchase goods and services. a. True b. False ANSWER: True 31. Demand characteristics remain the same across business and consumer markets, although the marketing techniques tend to vary.

a. True b. False ANSWER: False 32. If Product A is used primarily to manufacture Product B, then the demand for product A is said to be “derived” from the demand for Product B.

a. True b. False ANSWER: True 33. As the demand for personal computers increases, the demand for microprocessor chips will also increase. This is an example of derived demand.

a. True b. False ANSWER: True 34. Capital items are items that are consumed within short time periods. a. True b. False ANSWER: False 35. Organizational purchases such as office buildings and computer systems can be categorized as expense items. a. True b. False ANSWER: False

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Chapter 07: Business-to-Business (B2B) Marketing 36. Depreciation is an accounting term that refers to charging a portion of an expense item’s cost against the company’s annual revenue for purposes of determining their net income.

a. True b. False ANSWER: False 37. Airlines continue to purchase the same amount of fuel in order to meet their operational needs regardless of the rise in prices of jet fuel. The type of demand for jet fuel in the above situation is an example of an inelastic demand.

a. True b. False ANSWER: True 38. Firms that practice sole sourcing tend to order from a large pool of suppliers to hedge the risk of failure of one supplier.

a. True b. False ANSWER: False 39. Manufacturing the products in-house is always the best way for companies to acquire needed products. a. True b. False ANSWER: False 40. India is the most preferred destination for production offshoring. a. True b. False ANSWER: False 41. For U.S. based firms, Mexico is an attractive location for nearshoring operations. a. True b. False ANSWER: True 42. Turning to outside vendors to provide goods or services that were formerly produced in-house is referred to as outsourcing.

a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 43. If a company wants to concentrate its resources on its core business, it may be wise to outsource support functions. a. True b. False ANSWER: True 44. In some cases, outsourcing and offshoring can reduce a company’s ability to respond quickly to the marketplace. a. True b. False ANSWER: True 45. Outsourcing and offshoring have the potential to slow a company’s efforts in bringing new products to market. a. True b. False ANSWER: True 46. Centralized buying tends to emphasize short-term results rather than focusing on long-term relationships. a. True b. False ANSWER: False 47. Technological change is an environmental factor influencing business buying decisions. a. True b. False ANSWER: True 48. Personal selling skills and user preferences carry more weight in decentralized purchasing situations than in centralized buying.

a. True b. False ANSWER: True 49. Aitzen Systems sources all the required components and raw materials necessary for making a computer system from various suppliers in the country and assembles them to create a final product. Aitzen is engaging in multiple sourcing.

a. True b. False ANSWER: True

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Chapter 07: Business-to-Business (B2B) Marketing 50. Sales personnel must be well versed in the technical features of their products, to effectively address the concerns of all people involved in the buying decision.

a. True b. False ANSWER: True 51. Merchandisers are trade sector buyers who secure needed products at the best possible prices. a. True b. False ANSWER: True 52. Organizational purchasing decisions tend to be standardized, resulting in the same procedures being used for both capital and expense items.

a. True b. False ANSWER: False 53. Both consumer and business purchase decisions begin when the recognition of problems, needs, or opportunities triggers the buying process.

a. True b. False ANSWER: True 54. A firm deciding to purchase more energy-efficient machines in response to rising fuel prices illustrates the first step in the business buying process.

a. True b. False ANSWER: True 55. Competitive bidding is more common in the business sector compared to consumer markets. a. True b. False ANSWER: False 56. A straight rebuy is the business market equivalent of extended problem solving in the consumer market. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 57. A straight rebuy is a recurring purchase decision in which a customer reorders a product that has satisfied its needs in the past.

a. True b. False ANSWER: True 58. Poor service or poor delivery performance by a current supplier can provoke a modified rebuy decision from the customer.

a. True b. False ANSWER: True 59. Modified rebuys resemble routinized response behavior in consumer markets. a. True b. False ANSWER: False 60. New-task buying situations require considerable effort by the decision makers. a. True b. False ANSWER: True 61. The consumer market equivalent of new-task buying is limited problem solving. a. True b. False ANSWER: False 62. Reciprocity tends to simplify B2B buying behavior for new suppliers who are trying to compete with preferred vendors.

a. True b. False ANSWER: False 63. Reciprocal arrangements traditionally have been common in industries featuring heterogeneous products. a. True b. False ANSWER: False

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Chapter 07: Business-to-Business (B2B) Marketing 64. The Federal Trade Commission in the United States views reciprocal arrangements as attempts to reduce competition.

a. True b. False ANSWER: True 65. Sole sourcing refers to the systematic study of the components of a purchase to determine the most cost-effective approach.

a. True b. False ANSWER: False 66. A firm evaluating a supplier’s performance in categories such as EDI capability, delivery time, and attention to special requests is carrying out vendor analysis.

a. True b. False ANSWER: True 67. A company’s buying center encompasses everyone who is involved in any aspect of its buying activity. a. True b. False ANSWER: True 68. A buying center is a basic component of a firm's formal organizational structure. a. True b. False ANSWER: False 69. The buying center is an informal group whose size and composition varies among purchase situations and firms. a. True b. False ANSWER: True 70. Gatekeepers in the buying center affect the buying decision by determining which individuals within the organization will be part of the buying process.

a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 71. The buyer has the formal authority to select a supplier and to implement the procedures for securing the good or service.

a. True b. False ANSWER: True 72. International buying centers often involve more participants than U.S. companies involve. a. True b. False ANSWER: True 73. Social goals influence governments to purchase goods and services from small firms and companies owned by minorities and women.

a. True b. False ANSWER: True 74. Purchases made under cost-reimbursement contracts offer more profit potential to the government than the fixed price contracts.

a. True b. False ANSWER: False 75. General Services Administration is responsible for procuring goods and services for the U.S. government’s Department of Defense.

a. True b. False ANSWER: False 76. By law, most federal purchases must be awarded on the basis of bids, or written sales proposals, from vendors. a. True b. False ANSWER: True 77. Institutional markets are characterized by widely diverse buying practices. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 78. Buying practices can differ among institutions of the same type. a. True b. False ANSWER: True 79. Group purchasing is an important factor in institutional markets as institutions often join cooperative associations to pool purchases for quantity discounts.

a. True b. False ANSWER: True 80. In business markets, discounts and distribution functions have proven to be ineffective in obtaining or keeping institutions as customers.

a. True b. False ANSWER: False 81. Which of the following statements is true regarding the nature of the business market? a. Distribution channels for business products are significantly longer than those for consumer products. b. As compared to business markets, customer relationships in consumer markets tend to last for longer duration.

c. Personal selling plays a bigger role in business markets than in consumer markets. d. As compared to consumer markets, purchase decisions in business markets are relatively simple because of relatively less number of decision makers.

ANSWER: c 82. Business markets differ from consumer markets in that, in business markets: a. the products sold are mostly standardized and fit broader market segments compared to consumer products. b. the distribution channels are longer as the product passes through a number of intermediate links. c. the buying process is less complex and involves fewer decision makers. d. advertising plays a much smaller role when compared to the consumer market. ANSWER: d

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Chapter 07: Business-to-Business (B2B) Marketing 83. The organizational buying process has more steps than the consumer buying process, which can be attributed to: a. shorter durations of customer relationships formed in business markets. b. less standardized products sold in consumer markets. c. lack of interpersonal and environmental influences on consumer buying decisions. d. relatively complex buying process with greater number of decision makers in business markets. ANSWER: d 84. Which of the following is one of the four major categories that define the business market? a. Stock exchanges b. Governmental organizations c. Labor unions d. Lobbying groups ANSWER: b 85. Which of the following components of B2B market includes all individuals and firms that acquire goods and services to support production of other goods and services? a. Stock exchanges

b. Commercial markets c. Governmental organizations d. Financial institutions ANSWER: b 86. Which of the following is the largest segment of the business market? a. Trade industries, which include retailers, wholesalers, and resellers b. The commercial market, which includes anyone who acquires products to support production of other goods and services

c. Government organizations, including the military, state, and federal governments d. Institutions such as hospitals and churches ANSWER: b

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Chapter 07: Business-to-Business (B2B) Marketing 87. Praga is an automobile manufacturing company that makes cars. Praga buys steel, aluminum, paints, car engines and other necessary components from various suppliers around the world and assembles them together to make a final product. Praga belongs to the _____ component of the business-to-business market. a. commercial market

b. trade industries c. institutions d. governmental organizations ANSWER: a 88. Trade industries are a component of business markets that include: a. manufacturers. b. resellers. c. end users. d. services providers. ANSWER: b 89. The government category of the B2B market primarily buys products: a. to sell it to the final consumers. b. to provide some form of public benefit. c. to export them to other countries. d. to improve its resale value. ANSWER: b 90. Institutions are a major component of the business market that: a. tend to have greater financial resources than industrial customers. b. consist of wholesalers and retailers, who sell the products they buy to final consumers. c. include wide variety of organizations that often have diverse buying practices. d. acquire products mainly to indirectly support the production of other goods and services. ANSWER: c 91. When firms in business markets are grouped based on their sales revenues, they are said to be segmented by: a. customer type. b. purchase category. c. end-use application. d. demographic characteristics. ANSWER: d

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Chapter 07: Business-to-Business (B2B) Marketing 92. Abel building solutions, a steel manufacturing company that supplies steel to various construction companies, segments its customers based on the number of employees in the company and the sales revenue generated by it. This strategy is used by Abel to develop specific marketing plans for their customers. Abel is segmenting its customers on the basis of: a. demographic characteristics.

b. service provided. c. buyer specifications. d. end-use application. ANSWER: a 93. Zardo, Inc. divides its customers into the following categories: manufacturers, retailers, government agencies, and not-for-profit institutions. Which of the following type of segmentations is being used by Zardo? a. Segmentation by end-use application

b. Segmentation by customer type c. Segmentation by demographic characteristics d. Segmentation by purchase categories ANSWER: b 94. When the B2B market is segmented on the basis of product specifications issued by buyers, it is known as _____ segmentation. a. customer-based

b. end-use application c. demographic d. purchase category ANSWER: a 95. Delhaise, a leading service provider in hospitality industry, segments its business clients based on the services required by them, in order to meet their specific requirements. They modify their services based on the needs of the clients. Which of the following segmentation approach is being employed by Delhaise? a. End-use application segmentation

b. Customer-based segmentation c. Geographic segmentation d. Demographic segmentation ANSWER: b

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Chapter 07: Business-to-Business (B2B) Marketing 96. Which of the following is one of the industry categories created by the Standard Industrial Classification system? a. Health care and social assistance b. Professional, scientific, and technical services c. Information services d. Public administration ANSWER: d 97. The system for grouping businesses that grew out of the NAFTA accord is known as the: a. Standard Industrial Classification System. b. Industrial Data Records System. c. International Organization for Standardization of Business. d. North American Industry Classification System. ANSWER: d 98. Which of the following service sectors was newly created by the NAICS to better reflect the economy of the 21st century? a. Healthcare and social assistance

b. Finance, insurance, and real-estate services c. Public administration d. Wholesale and retail trade ANSWER: a 99. The segmentation of B2B marketplace based on how business purchasers will use the product is called: a. segmentation by purchasing category. b. segmentation by customer type. c. segmentation by end-use application. d. segmentation by demographic characteristics. ANSWER: c 100. Texas Instruments produces electronic chips used in a variety of devices, from cell phones to hand calculators. The specifications of the chips change depending on the final product in which they are utilized. The company is most likely to segment its customers based on: a. end-use application.

b. purchase category. c. psychographic characteristics. d. demographic characteristics. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 101. A manufacturer who produces glass for microwave oven doors, shower enclosures, and patio tabletops is likely to segment his business customers on the basis of: a. geographic locations.

b. end-use application. c. demographic characteristics. d. psychographic characteristics. ANSWER: b 102. Horch is the biggest manufacturer of consumer goods in Germany. The company segments its business customers into new and existing customer groups based on the stage of relationship between the company and the customer. This helps the company develop different strategies for newly acquired customers and existing customers, who are interested in making repeat purchases. Which of the following segmentation approaches is being used by Horch in the above scenario? a. Segmentation by customer type

b. Segmentation by purchase categories c. Segmentation by end-use application d. Segmentation by demographic characteristics ANSWER: b 103. Which of the following is most likely to help marketers to segment organizational buyers by purchase categories? a. Business process reengineering b. Value engineering c. Management by objectives d. Customer relationship management ANSWER: d 104. Which of the following factors is considered by marketers while segmenting business markets by purchase categories? a. The precise way a business purchaser will use a product

b. The complexity and precision of the requirements for goods and services c. The customer’s transaction history d. The sales revenues of the customer’s firm ANSWER: c

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Chapter 07: Business-to-Business (B2B) Marketing 105. _____ is a combination of strategies and tools that drives relationship programs, reorienting the entire organization to a concentrated focus on satisfying buyers. a. Data warehousing

b. Business process reengineering c. Value engineering d. Customer relationship management ANSWER: d 106. The organizational buying process differs from the consumer purchase process as the organizational buying process: a. involves few decision makers in making purchase decisions. b. is informal and less professional. c. requires a longer time frame because of complexity of the decisions. d. generally involves purchase of highly standardized products. ANSWER: c 107. Which is the largest single source of statistical information on the sizes and characteristics of business markets? a. The North American Industry Classification System b. Business publications c. Auditing firms such as PricewaterhouseCoopers d. Federal government ANSWER: d 108. Dell Computer purchases parts and resources for its computers from multiple suppliers that are spread across the world. This practice is known as: a. offshoring.

b. global sourcing. c. outsourcing. d. reciprocity. ANSWER: b 109. The linkage between demand for a company’s output and its purchases of resources such as machinery, components, supplies, and raw materials is referred to as a(n) _____. a. joint demand

b. versatile demand c. inelastic demand d. derived demand ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 110. The demand for computer microprocessor chips depends on the demand for personal computers. This is an example of a(n): a. joint demand.

b. derived demand. c. volatile demand. d. inelastic demand. ANSWER: b 111. Which of the following can be categorized as a capital item purchased by organizational buyers? a. Office supplies b. Copy papers c. Production plant d. Machine lubricants ANSWER: c 112. Which of the following is true of expense items purchased by organizational buyers? a. The cost of these products is charged against the income of the company in the year of purchase. b. The net income of these products is determined by charging a portion of their cost against the company’s annual revenue.

c. These items are long lived business assets that must be depreciated over time. d. All major expenses such as setting up new plants, equipments and machinery are included in this category. ANSWER: a 113. _____ is an accounting term that refers to charging a portion of a capital item’s cost as a deduction against the company’s annual revenue for purposes of determining its net income. a. Valuation

b. Depreciation c. Accretion d. Depletion ANSWER: b

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Chapter 07: Business-to-Business (B2B) Marketing 114. Cotton and polyester are used in the production of permanent press clothing. If the supply of cotton is reduced, there will be an immediate effect on the demand for polyester. This relationship represents a(n): a. derived demand.

b. elastic demand. c. volatile demand. d. joint demand. ANSWER: d 115. If the demand for a product stays almost constant throughout an industry regardless of the change in the price of the product, it can be said that the product is experiencing a(n) _____ demand. a. derived

b. joint c. volatile d. inelastic ANSWER: d 116. The demand for gold has remained the same in the market regardless of the rise in its price, because there is no other replacement for the product. This type of demand experienced by gold is referred to as a(n) _____. a. joint demand

b. inelastic demand c. versatile demand d. derived demand ANSWER: b 117. Which of the following inventory practices seeks to boost efficiency by cutting inventories to absolute minimum levels? a. Inventory bounce

b. Just-in-time policy c. Stock obsolescence d. Perpetual inventory management ANSWER: b

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Chapter 07: Business-to-Business (B2B) Marketing 118. Purchasing a firm’s entire stock of an item from just one vendor is termed as: a. multiple sourcing. b. sole sourcing. c. outsourcing. d. inverted sourcing. ANSWER: b 119. Which of the following is true regarding leasing needed products from other organizations? a. It requires a high level of capital commitment. b. It increases the sunk costs incurred by a firm. c. It provides flexibility for a growing business allowing it to easily upgrade when needed. d. It makes it difficult for a firm to customize the product according to their needs. ANSWER: c 120. When a business pays for the use of an equipment owned by an outside supplier for a specified period of time, the process is known as: a. outsourcing.

b. supply inversion. c. leasing. d. nearshoring. ANSWER: c 121. _____ involves movement of high-wage jobs from one country to lower-cost overseas locations. a. Insourcing b. Value engineering c. Offshoring d. Leasing ANSWER: c 122. DigiSmart, a manufacturer of electronic goods in Canada, has moved its manufacturing operations to Costa Rica. This move has helped the company to reduce its production costs and also allowed it to focus on the product design and research activities that lead to new products. The movement of business in this case is an example of _____. a. leasing

b. offshoring c. inshoring d. global integration ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 123. Menhir Systems, an information technology company in Germany has moved its customer service and accounting operations to Austria to take advantage of the low labor costs. Also the closeness in geography and cultural values is an added advantage in choosing Austria for these operations. Menhir Systems is engaging in _____. a. nearshoring

b. inshoring c. leasing d. sole sourcing ANSWER: a 124. The practice of using outside vendors to provide goods and services that were formerly produced in-house is known as _____. a. outsourcing

b. sole sourcing c. supply chain inversion d. leasing ANSWER: a 125. Businesses choose outsourcing as an alternative to making goods in-house or providing in-house services when: a. they want to reduce the amount of depreciation indicated on their books of account. b. proprietary technology has the potential to raise security concerns. c. conflicts arise between nonunion outside workers and in-house union employees. d. the company needs to reduce costs to remain competitive. ANSWER: d 126. Employee unions generally view outsourcing as a: a. way to stay competitive and preserve jobs. b. bargaining tool for higher wages. c. threat to their jobs and means of livelihood. d. means of reducing the overhead costs on production processes. ANSWER: c 127. Which of the following is a possible disadvantage of outsourcing? a. It increases the expenses incurred by the company to remain competitive in the market. b. It compromises on the quality and speed of production. c. It slows down the company’s efforts in bringing new products to market. d. It is not suitable for jobs such as human resources and accounting. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 128. Which of the following locations would be ideal for a U.S. firm hoping to nearshore its operations? a. Poland b. China c. India d. Mexico ANSWER: d 129. Which of the following statements is true regarding the influence of organizational factors on purchasing decisions? a. Centralized buying tends to emphasize short-term results. b. Personal selling skills and user preferences carry more weight in decentralized purchasing situations. c. Consolidating vendor relationships increases the company’s overall expenses. d. Decentralized buying focuses more on long-term relationships with suppliers. ANSWER: b 130. Organizational buyers engage in multiple sourcing to: a. counter the possibility of increased buying power. b. reduce the time taken to process purchasing decisions. c. ensure that a single vendor’s failure to deliver does not cause a shortage. d. bring down costs related to transportation and warehousing. ANSWER: c 131. The centralization of the procurement function within an internal division or as a service of an external supplier is known as: a. supply chain inversion.

b. inventory perpetuation. c. systems integration. d. merchandising. ANSWER: c 132. _____ are trade sector buyers employed by organizations to secure needed products at the best possible prices. a. Resellers b. Merchandisers c. Category advisors d. Influencers ANSWER: b

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Chapter 07: Business-to-Business (B2B) Marketing 133. A _____ is a trade industry vendor who develops a comprehensive procurement plan for a retail buyer. a. category captain b. merchandiser c. boundary spanner d. gatekeeper ANSWER: a 134. The first stage in the eight-stage model of an organizational buying process involves: a. determining the characteristics and quantity of a needed good or service. b. searching for and qualifying potential sources. c. anticipating a problem, need, or opportunity and a general solution. d. establishing specifications for a needed good or service. ANSWER: c 135. A firm has decided to purchase hybrid delivery vehicles in response to rising gasoline prices. Which step in the business buying process does this illustrate? a. Determining the characteristics of the needed product

b. Recognizing a problem or opportunity c. Searching for qualified sources d. Evaluating proposals and selecting suppliers ANSWER: b 136. Which stage of the organizational buying process involves establishing specifications for a needed product? a. Recognizing a need b. Describing characteristics of a needed product c. Qualifying potential vendors d. Selecting an order routine ANSWER: b 137. Adam, a purchasing agent for an automobile manufacturer, is making a list of payroll services suppliers available in the market. In which stage of the organizational buying process is Adam? a. Recognizing a problem or opportunity

b. Determining the characteristics and quantity of the needed service c. Describing the characteristics of the needed service d. Searching for and qualifying potential sources ANSWER: d

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Chapter 07: Business-to-Business (B2B) Marketing 138. A negotiation process wherein each marketer develops its offer, including a price that will satisfy the criteria determined by the customer’s problem, need, or opportunity, is known as: a. competitive bidding.

b. decentralized buying. c. collective underwriting. d. systems integration. ANSWER: a 139. Once a search for suppliers is completed and the company makes the suppliers aware of its needs, the company will begin: a. obtaining feedback from its customers.

b. notifying the distribution channels of the new product introduction. c. acquiring and analyzing proposals. d. selecting an order routine. ANSWER: c 140. Which of the following stages of the organizational buying process involves comparing vendors’ proposals? a. Searching for potential sources b. Acquiring and analyzing proposals c. Recognizing and determining the characteristics of a need d. Evaluating proposals and selecting suppliers ANSWER: d 141. Which of the following is the final step in the business buying process? a. Selecting an order routine b. Evaluating proposals and selecting suppliers c. Obtaining feedback and evaluating performance d. Acquiring and analyzing proposals ANSWER: c 142. When a business purchaser reorders a product that has performed satisfactorily in the past without assessing competing options, the buying situation is called: a. a straight rebuy.

b. new-task buying. c. value engineering. d. a modified rebuy. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 143. Which of the following is most likely to be the reason behind why business purchasers shift from straight rebuy to modified rebuy? a. To comply with the Sarbanes-Oxley Act

b. To purchase a new product for the first time c. To address a change in the organizational hierarchy d. To address deterioration in supplier service or delivery ANSWER: d 144. A buying situation in which business purchasers are willing to reevaluate their available options is known as: a. a straight rebuy. b. a modified rebuy. c. new-task buying. d. value engineering. ANSWER: b 145. _____ refers to a first-time or unique purchase situation that requires considerable effort by decision makers. a. Straight rebuying b. New-task buying c. Primary buying d. Modified rebuying ANSWER: b 146. Which of the following buying behaviors in the consumer markets is similar to new-task buying in business markets? a. Impulsive buying behavior b. Limited problem solving c. Extended problem solving d. Routinized response behavior ANSWER: c

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Chapter 07: Business-to-Business (B2B) Marketing 147. LifeCare, a small chain of hospitals, is looking to buy new medical equipment for its hospitals. The company decides to look for various options available in the market rather than buying from their usual supplier, as they want new, sophisticated features in the products. This buying situation in which the purchaser is willing to reevaluate its available options is an example of _____. a. straight rebuy

b. business process reengineering c. modified rebuy d. cross-docking ANSWER: c 148. Evaluating a supplier's performance in categories such as price, EDI capability, delivery times, and attention to special requests is known as: a. value analysis.

b. customer relationship management. c. vendor analysis. d. task-based evaluation. ANSWER: c 149. Modified rebuys resemble _____ in consumer markets. a. impulsive buying behavior b. limited problem solving c. extended problem solving d. routinized response behavior ANSWER: b 150. Which of the following is true of a buying center in an organization? a. The buying center is an integral part of a firm’s formal organizational structure. b. The composition of the buying center remains the same for all purchase situations. c. The buying center includes everyone involved in any aspect of the buying process. d. It is a group of people in an organization who are responsible for developing new product concepts. ANSWER: c

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Chapter 07: Business-to-Business (B2B) Marketing 151. The function performed by the gatekeeper in the company buying center is to: a. inform potential suppliers about the required specifications of the product. b. select a supplier and implement the procedures for securing the goods and services. c. choose which goods and services will actually be bought. d. control the information that all buying center members will review. ANSWER: d 152. The role of an influencer in a buying center is to: a. inform potential suppliers about the required specifications of the product. b. select the supplier and implement the procedures for securing the good. c. supply information to guide the evaluation of alternatives. d. make the actual buying decision. ANSWER: c 153. Which of the following buying center participants chooses a good or service, although another person may have the formal authority to complete the sale? a. Decider

b. Gatekeeper c. Boundary spanner d. Influencer ANSWER: a 154. Janelle works in the purchasing department of an apparel manufacturing company and has the formal authority to select a supplier. Janelle is a(n): a. buyer.

b. influencer. c. gatekeeper. d. decider. ANSWER: a 155. The identity of the _____ is the most difficult role for salespeople to pinpoint. a. user b. decider c. gatekeeper d. influencer ANSWER: b

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Chapter 07: Business-to-Business (B2B) Marketing 156. Which of the following is one of the distinct characteristics that differentiates buying centers in foreign companies from those in the U.S. companies? a. In U.S. companies, the participants in the buying centers have more trouble identifying deciders than foreign marketers do.

b. Foreign buying centers often include more participants than those involved in U.S. buying centers. c. U.S. buying centers have a more streamlined approach to organizational buying than foreign buying centers. d. Foreign buying centers usually involve separate individuals as gatekeeper and influencer, while U.S. firms usually have the same person performing the roles of influencer and gatekeeper.

ANSWER: b 157. The General Services Administration (GSA) is a central management agency of the U.S. federal government that: a. validates the laws and regulations governing business sales transactions in the United States. b. regulates purchases taking place in the mining industry. c. procures goods and services and is responsible for property management and information resources management.

d. regulates purchases taking place in the healthcare industry. ANSWER: c 158. Which of the following will be considered an institutional buyer? a. The Federal Government b. Wholesalers c. Hospitals d. Department of Defense ANSWER: c 159. In order to receive quantity discounts on needed purchases, many institutions: a. tend to hoard products which are resold at lower prices. b. insist on equal treatment under the Robinson-Patman Act. c. join cooperative associations to pool purchases. d. implement customer relationship management. ANSWER: c

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Chapter 07: Business-to-Business (B2B) Marketing 160. Efforts to restore worn-out products to like-new condition is called _____. a. reverse engineering b. merchandising c. remanufacturing d. over-engineering ANSWER: c 161. Differentiate between B2B marketing and consumer product marketing. ANSWER: The various differences between B2B marketing and consumer product marketing are: a) b) c) d)

e) f)

Business products tend to be more technical and require a higher level of customer service than consumer products. They may also have to conform to strict specifications. Business-to-business marketing emphasizes on personal selling whereas in consumer marketing the emphasis is on advertising. Business channels are usually short and direct. Customer service is extremely important to B2B buyers because of the complexity of the purchases. Advertising plays a much smaller role in the business market than in the consumer market, although advertisements placed in business magazines or trade publications are common. Consumer channels tend to be longer but less technical. Consumer purchase decisions are usually made by one person. Organizational purchases often take longer, have more decision makers involved, and can follow rigid purchasing procedures. Business marketing involves competitive bidding for unique items and list prices for standard items. Consumer marketing lists prices for all products.

162. Explain the four components of business-to-business markets. ANSWER: The four components of business-to-business markets are:

Commercial market: It is the largest segment of the business market that includes all individuals and firms that acquire products to support, directly or indirectly, production of other goods and services. The commercial market includes manufacturers, farmers, and other members of resource-producing industries; construction contractors; and providers of such services as transportation, public utilities, financing, insurance, and real-estate brokerage. Trade industries: It includes retailers and wholesalers, known as resellers, who buy finished goods to sell it to final consumers. In addition to resale products, trade industries also buy products that are needed to operate their businesses, maintenance items, and specialized services which are regarded as organizational purchases. Government organizations: The government category of the business market includes domestic units of government, federal, state, and local, as well as foreign governments. This important market segment makes a wide variety of purchases, ranging from highways to military uniforms to Internet services. Institutions: This category includes a wide range of both public and private organizations such as hospitals, churches, skilled care and rehabilitation centers, colleges and universities, museums, and not-for-profit agencies.

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Chapter 07: Business-to-Business (B2B) Marketing 163. Describe the role of the Internet in business-to-business markets. ANSWER: Business-to-business transactions form a majority of all Internet sales. Many business-to-business marketers have set up private portals that allow their customers to buy needed items. Service and customized pages are accessed through passwords provided by B2B marketers. Online auctions and virtual marketplaces offer other ways for buyers and vendors to connect with each other over the Internet. Although most start-up companies failed during the early Internet boom due to lack of focus on basic marketing skills such as targeting customers and fulfilling customer needs, the later companies have established a much stronger marketing presence. Business marketers can also connect with each other online through affiliate marketing. The Internet also opens up foreign markets for sellers.

164. Describe the major approaches used by marketers to segment business-to-business markets. ANSWER: The four most commonly used approaches to segment business-to-business market are: a)

Segmentation by demographic characteristics which groups potential customers based on organization size, sales revenues, or number of employees. Segmentation by customer type which groups customers by broad categories such as manufacturer, service provider, government agency, not-for-profit organization, wholesaler, or retailer, and by industry. Customer-based segmentation is a similar approach used to divide the business market into homogeneous groups based on buyers’ product specifications. Segmentation by end-use application, which focuses on the precise way in which a business buyer will use the product. Segmentation by purchasing categories in which the market is broken down on the basis of how firms structure their purchasing functions, or alternatively on the basis of the buying situation for a specific purchase. Businesses that have developed customer relationship management systems segment their customers in terms of the stage of relationship between the business and the customer.

165. Describe the NAICS system. Bring out the differences between the older SIC system and the NAICS system. ANSWER: The NAICS (North American Industry Classification System) is used by NAFTA countries to categorize the business marketplace into detailed market segments. The Standard Industrial Classification (SIC) system standardized efforts to collect and report information on U.S. industrial activity and used codes that divided firms into broad industry categories: agriculture, forestry, and fishing; mining and construction; manufacturing; transportation, communication, electric, gas, and sanitary services; wholesale trade; retail trade; finance, insurance, and real-estate services; public administration; and nonclassifiable establishments. The system assigned each major category within these classifications its own two-digit number. Three-digit and four-digit numbers further subdivided each industry into smaller segments. The SIC system was replaced by the NAICS after the implementation of NAFTA, as the NAFTA required a joint classification system that would allow marketers to compare business sectors among the member nations. In effect, marketers required a segmentation tool they could use across borders. The North American Industry Classification System (NAICS) replaced the SIC and it provides more detail than previously available. The NAICS created new service sectors to better reflect the economy of the 21st century. They include information; health care and social assistance; and professional, scientific, and technical services. The NAICS uses six digit group codes of which the first five digits are fixed among the members of the NAFTA, and the sixth digit accounts for specific data needs of each member nation. Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 166. Discuss the major categories of business market demand.

ANSWER: b) c) d)

Derived demand is a demand for a resource that results from demand for the goods and services produced by that resource. It refers to the linkage between demand for a company’s output and its purchases of resources such as machinery, components, supplies, and raw materials. Volatile demand: Derived demand creates volatility in business market demand. Small changes in consumer demand can create large shifts in demand for business products associated with it. Joint demand is the demand for a product that depends on the demand for another product used in combination with it. Inelastic demand means that demand throughout an industry will not change significantly due to a price change. Inventory adjustments: Adjustments in inventory and inventory policies can impact business demand. The just-in-time inventory policies seek to boost efficiency by cutting inventories to absolute minimum levels and by requiring vendors to deliver inputs as the production process needs them. JIT allows companies to better predict which supplies they will require and the timing for when they will need them, markedly reducing their costs for production and storage.

167. How do just-in-time policies influence business demand? ANSWER: Just-in-time (JIT) inventory policies seek to boost efficiency by cutting inventories to absolute minimum levels and by requiring vendors to deliver inputs as the production process needs them. JIT allows companies to better predict which supplies they will require and the timing for when they will need them, markedly reducing their costs for production and storage. Widespread implementation of JIT has had a substantial impact on organizations’ purchasing behavior. Firms that practice JIT tend to order from relatively few suppliers. In some cases, JIT may lead to sole sourcing for some items, that is, buying a firm’s entire stock of a product from just one supplier. JIT II, leads suppliers to place representatives at the customer’s facility to work as part of an integrated, on-site customer–supplier team. Suppliers plan and order in consultation with the customer. This streamlining of the inventory process improves control of the flow of goods.

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Chapter 07: Business-to-Business (B2B) Marketing 168. Discuss the various factors that an organization should consider while taking the make, buy, or lease decision. ANSWER: Before a company can decide what to buy, it should decide whether to buy at all. Organizational buyers must figure out the best way to acquire needed products. In fact, a firm considering the acquisition of a finished good, component part, or service has three basic options: a) Make the good or provide the service in-house. b) Purchase it from another organization. c) Lease it from another organization. If the company has the capability to do so, manufacturing the product itself may be the best route. It may save a great deal of money if its own manufacturing division does not incur costs for overhead that an outside vendor would otherwise charge. On the other hand, most firms cannot make all the business goods they need. Often it would be too costly to maintain the necessary equipment, staff, and supplies. As a result, purchasing from an outside vendor is the most common choice. Companies can also look outside their own plants for goods and services formerly produced in-house, a practice called outsourcing. In some cases, however, a company may choose to lease inputs. This option spreads out costs compared with lump-sum costs for up-front purchases. The company pays for the use of equipment for a certain time period. This option can provide useful flexibility for a growing business, allowing it to easily upgrade as its needs change.

169. Differentiate between offshoring and nearshoring. Which countries are preferred for these operations? ANSWER: Offshoring is the practice of moving high-wage jobs from one country to lower-cost overseas locations. This relocation of business processes to a lower-cost location can involve production offshoring or services offshoring. China has emerged as the preferred destination for production offshoring, while India has emerged as the dominant player in services offshoring. Nearshoring refers to the practice of moving jobs to vendors in countries close to the business’s home country. For example, for U.S. based firms that want to remain closer to home but take advantage of the benefits of locating some of their operations overseas, Mexico and Canada are attractive options for their nearshoring operations. Firms look outside the United States to improve efficiency and cut costs on just about everything including customer service, human resources, accounting, information technology, manufacturing, and distribution to survive in a competitive marketplace.

170. What is outsourcing? Why do firms outsource production of goods and services? ANSWER: Outsourcing is the use of outside vendors to produce goods and services formally produced in-house. Businesses outsource for several reasons: (1) they need to reduce costs to remain competitive (2) they need to improve the quality and speed of software maintenance and development, and (3) outsourcing has begun to offer greater value than ever before.

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Chapter 07: Business-to-Business (B2B) Marketing 171. What are the potential problems associated with offshoring and outsourcing? ANSWER: The potential problems associated with offshoring and outsourcing are: 1) Companies practicing offshoring and outsourcing may sometimes find that their cost savings are less than the amount promised by vendors. Also, companies that sign multiyear contracts may find their savings drop after a year or two. 2) When proprietary technology is an issue, outsourcing raises security concerns. Companies that are protective of customer data and relationships are hesitant in entrusting functions such as customer service to outside sources. 3) Outsourcing and offshoring can sometimes reduce a company’s ability to respond quickly to the marketplace, or they can slow efforts in bringing new products to market. Suppliers that fail to deliver goods promptly or provide required services can adversely affect a company’s reputation with its customers. 4) Outsourcing and offshoring are controversial topics with unions as they can create conflicts between nonunion outside workers and in-house union employees, who fear job loss. Management initiatives to outsource jobs can lead to strikes and plant shutdowns. They can also have a negative impact on employee morale and loyalty.

172. What distinguishes the business buying process from the consumer buying process? What do B2B marketers need to understand about organizational buying behavior?

ANSWER: The business buying process is more complex than the consumer decision process. Business buying takes place within a formal organization’s budget, cost, and profit considerations. Furthermore, B2B and institutional buying decisions usually involve many people with complex interactions among individuals and organizational goals. To understand organizational buying behavior, business marketers require knowledge of influences on the purchase decision process, the stages in the organizational buying model, types of business buying situations, and techniques for purchase decision analysis.

173. Describe the influence of organizational factors on business buying behavior. ANSWER: Business-to-business marketers need to understand their customers’ organizational structures, policies, and purchasing systems. A company with a centralized procurement function operates differently from one that delegates purchasing decisions to divisional or geographic units. Trying to sell to the local store when head office merchandisers make all the decisions would clearly waste salespeople’s time. Buying behavior also differs among firms. Centralized buying tends to emphasize long-term relationships, whereas decentralized buying focuses more on short-term results. Personal selling skills and user preferences carry more weight in decentralized purchasing situations than in centralized buying.

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Chapter 07: Business-to-Business (B2B) Marketing 174. Discuss the role of merchandisers and category advisors in the business buying process. Give examples. ANSWER: Merchandisers are trade sector buyers employed by organizations, who secure needed products at the best possible prices. A firm’s purchasing or merchandising unit devotes all of its time and effort in determining needs, locating and evaluating alternative suppliers, and making purchase decisions. Example: Ford has buyers for components that will be incorporated into its trucks and cars. Category advisors are trade industry vendors who develop a comprehensive procurement plan for a retail buyer. Firms may attempt to streamline the buying process through systems integration or centralization of the procurement function. Companies may designate a lead division to handle all purchasing or may choose to designate a major supplier as the systems integrator. Example: A clothing company designates its textile supplier as the systems integrator. This vendor is then responsible for dealing with all other suppliers who supply products that are required in the manufacture of clothing and present the entire package to the company.

175. What are the stages involved in a business buying process? ANSWER: The stages involved in a business buying process are: a) b) c) d) e) f) g) h)

Anticipating or recognizing a problem/need/opportunity and a general solution Determining the characteristics and quantity of the needed good or service Describing the characteristics and quantity of the needed good or service Searching for and qualifying potential sources Acquiring and analyzing proposals Evaluating proposals and selecting supplier(s) Selecting an order routine Obtaining feedback and evaluating performance

176. What are the different criteria involved in the selection of a vendor in a business buying process? ANSWER: Price is the main but not the only criterion for the selection of a vendor. Relationship factors such as communication and trust may also be important to the buyer. Other issues include reliability, delivery record, time from order to delivery, quality, and order accuracy. These are particularly important in the package delivery business. Buyers compare vendors’ proposals and choose the one that seems best suited to their needs.

177. Describe the three organizational buying situations. How do they correlate to the purchasing decisions of consumers?

ANSWER: B2B buying situation can be classified into three general categories:

b) c)

Straight rebuy: It is a recurring purchase decision in which a customer reorders a product that has satisfied its needs in the past. The buyer already likes the product and terms of sale, so the purchase requires no new information. The buyer sees little reason to assess competing options and so follows a routine repurchase format. This buying situation is similar to routinized response behavior in the consumer market. Modified rebuy is a situation in which a purchaser is willing to reevaluate the available options. Modified rebuys resemble limited problem solving in consumer markets. New-task buying is a first-time or a unique purchase situation that requires considerable effort by the decision makers. This buying situation resembles extended-problem solving in the consumer market.

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Chapter 07: Business-to-Business (B2B) Marketing 178. Differentiate between value analysis and vendor analysis. Give an example for each. ANSWER: Value analysis examines each component of a purchase in an attempt to either delete the item or replace it with a more cost-effective substitute. Example: Airplane designers have long recognized the need to make planes as light as possible. Value analysis supports using composite materials such as Kevlar in airplane construction because it weighs less than the metals it replaces. The resulting fuel savings are significant for buyers in this marketplace. Vendor analysis carries out an ongoing evaluation of a supplier’s performance in categories such as price, EDI capability, back orders, delivery times, liability insurance, and attention to special requests. In some cases, vendor analysis is a formal process. Some buyers use a checklist to assess a vendor’s performance. A checklist quickly highlights vendors and potential vendors that do not satisfy the purchaser’s buying requirements. Example: Vendor analysis helps the airlines to evaluate the proposals of vendors supplying materials to check if they suit their needs.

179. Explain the different roles played by business center participants in the purchasing decision process. ANSWER: Buying center participants play different roles in the purchasing decision process. a)

c) d) e)

Users are the people who will actually use the purchased product or service. Their influence on the purchase decision may range from negligible to extremely important. Users sometimes initiate purchase actions by requesting products, and they may also help develop product specifications. Gatekeepers control the information that all buying center members will review. They may exert this control by distributing printed product data or advertisements or by deciding which salespeople may speak to which individuals in the buying center. Influencers affect the buying decision by supplying information to guide evaluation of alternatives or by setting buying specifications. Influencers typically are technical staff such as engineers or quality-control specialists. Deciders choose a good or service, although another person may have the formal authority to do so. The identity of the decider is the most difficult role for salespeople to pinpoint. Buyers have the formal authority to choose the supplier and implement the buying procedures to obtain the product or service though they often surrender this power to more influential members of the organization.

180. Describe the unique challenges of selling to government markets. 1)

ANSWER: 2)

Government purchases usually involve dozens of interested parties who specify, evaluate, or use the purchased goods and services. These parties may or may not work within the government agency that officially handles a purchase. Government purchases are influenced by social goals, such as buying from local vendors and minority subcontracting programs. Contractual guidelines also create an important challenge in selling to government markets. The government buys products under two basic types of contracts: fixed-price contracts, in which seller and buyer agree to a set price before finalizing the contract, and costreimbursement contracts, in which the government pays the vendor for allowable costs, including profits, incurred during performance of the contract.

Match each item with the correct statement below. a. merchandisers Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing b. trade industries c. remanufacturing d. nearshoring e. end-use application segmentation f. global sourcing g. joint demand h. inelastic demand i. outsourcing j. value analysis k. gatekeeper l. commercial market m. reciprocity n. vendor analysis o. category advisor p. modified rebuy q. demographic characteristics based segmentation r. influencers s. buyer t. customer-based segmentation 181. The _____ is the largest segment of the business market that includes all individuals and firms that acquire products to support the production of other goods and services.

ANSWER: l 182. _____ is a segment of organizational market that consists of retailers and wholesalers who purchase products for resale to others.

ANSWER: b 183. _____ is the process of dividing a B2B market into groups on the basis of their size, sales revenues, or number of employees.

ANSWER: q 184. _____ is the process of dividing a B2B market into homogeneous groups based on buyers’ products specifications. ANSWER: t 185. The process of dividing a B2B market based on how a business purchaser will use a product is called _____. ANSWER: e 186. The practice of purchasing goods and services from suppliers worldwide is known as _____. ANSWER: f Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 187. _____ results when the demand for a product depends on the demand for another product used in combination with it.

ANSWER: g 188. If the demand for a product remains constant, regardless of the change in price, then the product is said to exhibit _____.

ANSWER: h 189. The practice of moving jobs to vendors in countries close to the business’s home country is referred to as _____. ANSWER: d 190. The term _____ refers to the use of outside vendors to produce goods and services that were formerly produced inhouse.

ANSWER: i 191. _____ are trade sector buyers who secure needed products at the best possible prices. ANSWER: a 192. A(n) _____ is a trade industry vendor who develops a comprehensive procurement plan for a retail buyer. ANSWER: o 193. A(n) _____ occurs when a purchaser is willing to reevaluate available options for repurchasing a good or service. ANSWER: p 194. _____ is the practice of buying from suppliers who are also customers. ANSWER: m 195. _____ is the systematic study of the components of a purchase to determine the most cost-effective approach. ANSWER: j 196. The assessment of supplier performance in categories such as price, back orders, timely delivery, and attention to special requests is called _____.

ANSWER: n 197. A person who controls the information that all members of a buying center will review is referred to as a(n) _____. ANSWER: k 198. The term “_____” is used to refer to the technical staff such as engineers who affect the buying decision by supplying information to guide evaluation of alternatives or by setting buying specifications.

ANSWER: r

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Chapter 07: Business-to-Business (B2B) Marketing 199. A(n) _____ is a buying center participant who has the formal authority to select a supplier and to implement the procedures for securing a good or service.

ANSWER: s 200. The term _____ refers to the efforts to restore older products to like-new condition. ANSWER: c 201. Y ou are the manager of a clothing manufacturing firm with operations in different countries. Your Vietnamese manufacturing facility is dedicated solely to producing elementary school uniforms for the U.S. market. Most of your product output is sold to a larger school uniform company in the United States called School Uniforms, Inc. School Uniforms, Inc. has major contracts with (and sells its uniforms to) school districts like the San Diego Unified School District. In this scenario, the San Diego Unified School District is part of which of the following business markets? a. r eseller market

b. g overnment market c. i nstitutional market d. d istributor market e. w holesaler market ANSWER: c 202. Resellers are marketing intermediaries who mostly buy finished goods and resell them for a profit. Their business structure means that they must consider several factors when deciding which products to buy. Which of the following factors is a reseller least likely to consider? a. t he level of demand for the product

b. s torage space required for the product c. t he sales tax that must be charged on the product d. h ow the product fits within the product mix of the reseller’s other products e. t he availability of technical assistance and training programs related to the product ANSWER: c 203. The North American Industry Classification System (NAICS) uses __________ digits. The first ________ digits are fixed among the members of the North American Free Trade Agreement (NAFTA). a. f our; three

b. s ix; four c. f ive; two d. s ix; five e. t hree; two ANSWER: d

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Chapter 07: Business-to-Business (B2B) Marketing 204. When the buying situation is important to marketers, they typically consider whether the customer has made previous purchases or this is the customer’s first order, offering special rates or programs for valued clients. You work for a cell phone company that provides the employees at its partner firms with discounts on monthly bills and new products. The longer your partners’ employees have used your company’s services, the greater their discounts. Which of the following systems can help your firm manage purchasing relationships? a. e nd-use application systems

b. s egmentation of customers by type c. T he Standard Industrial Classification d. c ustomer relations management tools e. T he North American Industry Classification System ANSWER: d 205. You recently raised your prices on the products you sell to your business customers. To your surprise, your customers did not change the number of units they purchase from you. It was as if the price increase did not matter to your customers. Which of the following types of business demand most accurately describes this situation? a. c onstant demand

b. i nelastic demand c. j oint demand d. e lastic demand e. d erived demand ANSWER: b 206. Your firm manufactures motorcycles for the consumer market. You purchase raw materials to build the motorcycles from a variety of suppliers in the United States and abroad. The volume of your raw materials purchases is a function of the customer demand for your firm’s motorcycles. Which of the following best describes the type of demand your firm has for these raw materials? a. f orecasted demand

b. v olatile demand c. c ustomer-driven demand d. j oint demand e. d erived demand ANSWER: e

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Chapter 07: Business-to-Business (B2B) Marketing 207. When an organization desires to purchase a finished product, a product part, or service, there are three basic options from which the company can choose. They are: a. b uying; leasing; offshoring

b. m aking; buying; leasing c. m aking; buying; nearshoring d. l easing; offshoring; buying e. n earshoring; making; leasing ANSWER: b 208. A company decides to ____________ a good or service it formerly made internally so that it can reduce its costs and provide higher-value items to its consumers. a. o utsource

b. e xport c. o ffshore d. n earshore e. lease ANSWER: a 209. An organization’s purchasing decisions can be influenced by such ______________ as a tornado destroying a factory that produces supplies necessary for the organization’s operations. a. e nvironmental factors

b. i nterpersonal influences c. o rganizational factors d. m erchandisers and category advisors e. i mpulse factors ANSWER: a 210. In an effort to better structure the purchasing process, a company may use _____________ to standardize buying decisions. A skilled marketer understands the client’s ____________ and realizes that many companies purchase from several vendors, so this pattern is taken into account when the marketer formulates a marketing proposal. a. s ystems integration; interpersonal influences

b. o rganizational factors; systems integrations c. s ystems integration; organizational factors d. m erchandisers; environmental factors e. i nterpersonal influences; organizational factors ANSWER: c

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Chapter 07: Business-to-Business (B2B) Marketing 211. Businesses follow a defined buying decision process in order to ensure the goods and services they purchase will meet their organization’s needs. The process has multiple stages; in one of the stages the business will consider a proposal usually given to them in writing by a supplier. This stage may include competitive bidding depending on the company. This proposal consideration takes place in which of the following stages of the business buying decision process? a. f irst stage

b. s eventh stage c. t hird stage d. s ixth stage e. f ifth stage ANSWER: e 212. You work for an airline company that has been leasing planes from two competing vendors. When a new vice president (VP) of communications joins your company, he asks for a performance review on the two vendors. You realize that your team has failed to keep thorough evaluations of the two companies, so you provide them with a formal evaluation tool and ask them to obtain feedback from the two companies. A few weeks later you obtain an evaluation letter from one of the vendors highlighting the following:

The employees at our Cambodian site believe in our company’s overall mission and are committed to employing cost cutting practices that do not forego our products’ value. Through minimizing time spent per product and by ensuring that all staff attend mandatory trainings, we have been able to cut costs by 30%, streamline internal business systems, increase customer loyalty, and increase customer satisfaction. Which of the following items is missing from the performance evaluation? a. p roduct quality

b. b udget and time c. e ffectiveness and efficiency d. r elationships with internal staff e. w hether companies use outsourcing ANSWER: d 213. When a consumer purchases an item that she previously bought and found acceptable, it would be considered an example of _____________. a. m odified rebuying

b. s traight rebuying c. n ew-task buying d. r eciprocity e. v endor analysis ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 214. You work for a clothing merchandiser that has been using the same fabric manufacturer for the last decade. When a new designer joins the team, he asks the team if they have considered using an alternative fabric manufacturer whose prices are more affordable. The team is mainly concerned about sacrificing quality and style for cheaper prices, but the new designer assures everyone that there are companies out there that produce high quality goods at reasonable rates. The team decides to research possible alternatives. Required: Which of the following purchase behaviors is represented in the business buying situation described above? a. e xtended problem solving

b. l imited problem solving c. i mpulse buying behavior d. l ow-involvement decisions e. r outinized response behavior ANSWER: b 215. Amy Lou works for a small business firm that specializes in the home furnishing design business. Amy Lou is the head of the textiles department and coordinates with twenty-five textile manufacturers around the world to ensure that her firm has the best supplies on the market. Each quarter, Amy Lou meets with each of the manufacturers and then brings back her top picks to share with the rest of her team at her company. The company’s owner values Amy Lou’s opinions, especially since the company’s profits have continually increased for ten years. This year; however, the company’s overhead costs have increased, and Amy Lou and her team need to figure out why. Required: Which of the following can be said is a drawback of having Amy Lou serve in the role described above? a. A my Lou controls all of the information about which types of textiles the firm should purchase.

b. A my Lou lacks formal authority when it comes to making decisions about the company’s budget. c. A my Lou is inexperienced and makes poor choices that impact the firm’s bottom line negatively. d. A my Lou’s decision to work with international buying centers has led to an increase in the firm’s overhead costs.

e. A my Lou has to surrender her power to more influential team members when it comes to making purchase decisions.

ANSWER: a

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Chapter 07: Business-to-Business (B2B) Marketing 216. You are a sales representative for a major computer products company in Nashville, Tennessee. Lowe’s Home Improvement is one of your major clients and you like to entertain the company’s employees regularly to maintain good business relationships. Because you do not have an unlimited entertainment budget, you must be selective in regard to the company employees whom you entertain. You want to make sure you are getting the greatest benefit for your entertainment dollars. You have found that the most influential people in the company are those who control the flow of information to everyone else in the organization. These are the people you want to spend your time and money entertaining. Based on this finding, you should: a. s pend your money and time entertaining the users in the company

b. s pend your money and time entertaining the influencers in the company c. s pend your money and time entertaining the buyers in the company d. s pend your money and time entertaining the gatekeepers in the company e. s pend your money and time entertaining the deciders in the company ANSWER: d 217. You work for the Department of Education (DOE) in your county, which is responsible for ten elementary schools, fifteen middle schools, and twelve high schools. At the beginning of each school year, the purchasing department at the DOE must buy new textbooks and technological supplies, including tablets and computer software for student personalized study plans. Which of the following challenges might one infer from the scenario described above? a. B ecause the DOE has a diverse population, it should only work with businesses that value diversity.

b. V endors have a difficult time following the contractual obligations and guidelines that governmental firms provide.

c. G overnmental businesses like the Department of Education have a hard time managing all of the purchases they must make annually.

d. S ince the product end users typically work outside of the DOE, vendors need to understand the unique challenges associated with working with governmental businesses.

e. B ecause governmental entities hoard much of their funding until the fourth quarter, the business firms from which they buy don’t make money until the fiscal year is coming to a close.

ANSWER: d

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Chapter 07: Business-to-Business (B2B) Marketing 218. Institutions constitute another important market. Institutional buyers include a wide variety of organizations, such as schools, hospitals, libraries, foundations, clinics, churches, and not-for-profit agencies. A small software company develops computer programs for different business institutions. Which of the following challenges can this company anticipate? a. I nstitutions do not have buying centers.

b. D ifferent institutions have varying buying practices. c. S ome institutions employ a purchasing manager to make decisions. d. S ocial media and marketing make institutional buying more complex. e. I nstitutional businesses sometimes join cooperative associations to pool their purchases. ANSWER: b 219. Susan works for Fashion Supply, a women's clothing wholesaler. Her husband is employed by Target, the popular retailer. Their older son has a job with a gourmet butcher, which supplies top-quality cuts of meat to fancy restaurants. Their younger son was just hired by Lumber Liquidators, the discount flooring seller. Despite the diversity of their employers, all of Sue's family members work in the ____ segment of the business market. a. commercial

b. institutions c. consumer d. trade e. regional ANSWER: d 220. You work for a uniform manufacturer that sells to police departments, supermarkets, and airlines. For segmentation purposes, its customers are grouped into three categories: government agencies (police), retailers (supermarkets), and service providers (airlines). This is segmentation by _______: a. end-use application

b. purchase categories c. customer type d. North American Industry Classification e. geographic characteristics ANSWER: c

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Chapter 07: Business-to-Business (B2B) Marketing 221. You were hired by an office design firm largely on the strength of your success in relationship marketing. To make sure customers are satisfied and make repeat purchases, which of the following relationships will be important? a. Relationships with vendors, like fabric suppliers

b. Relationships with customers' purchase decision makers c. Relationships with distributors of items like lamps and silk plants d. Relationships with contractual partners e. Relationships with government officials ANSWER: a, b, c, d 222. Choose the scenario(s) that illustrate(s) derived demand. a. If restaurant customers order more sandwiches, commercial bakeries sell the restaurants more bread. b. If fewer people buy cars, auto makers reduce their purchases from suppliers of windshield glass. c. If children lose interest in playing video games, fewer parents buy the XBox. d. If airline travel increases, suppliers of packaged meals sell the airlines more food. ANSWER: a, b, d 223. Now that you've rented a larger office space, you've decided to outsource the cleaning task instead of hiring more janitors. Which of the following would not be a potential advantage of this decision? a. It may help reduce your costs.

b. It may help improve the quality of the cleaning. c. It may help you concentrate your resources on your core business. d. You may be able to obtain a performance guarantee. e. It may eliminate the challenges involved in managing contracts and relationships. ANSWER: e 224. Your Pies Inc. supplies desserts to restaurants. Its purchasing decision makers are subject to many influences; among the most important are the state of the economy, the cost of flour, food safety regulations, and competition. All of these influences have certain characteristics in common. They are: a. internal

b. external c. environmental d. interpersonal e. organizational ANSWER: b, c

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Chapter 07: Business-to-Business (B2B) Marketing 225. A new employee in your company is confused. She was hired to help with purchasing, but she's been told that she will be busiest after purchases have been concluded -- in other words, after vendors have been chosen and their goods have been supplied. Will this employee be involved in the organizational buying process? a. Yes, by obtaining feedback and evaluating performance.

b. Yes, by evaluating proposals. c. Yes, by qualifying vendors. d. No, because the process will be over when she gets involved. e. No, because she will not have a say in vendor selection. ANSWER: a 226. After buying sterile gloves from one vendor for many years, Mercy Hospital has now decided to search for a lowercost supplier. Which of the following is an accurate classification of Mercy's buying situation? a. It is moving from straight rebuying to modified rebuying.

b. It is moving from a repurchase to a reevaluation. c. It will engage in reciprocity. d. It will be involved in new-task buying. e. It is moving from standard buying to custom buying. ANSWER: a 227. Paul is the quality-control specialist for a furniture manufacturer. His job is to develop specifications for every potential purchase of wood and fabric. Within the buying center, Paul plays the role of a(n): a. Gatekeeper

b. Decider c. Influencer d. Specialist e. Spec supervisor ANSWER: c 228. During a long career in selling to different business markets, June felt most challenged when she was dealing with the federal government. Unlike most of her commercial customers, government purchase agents typically: a. Make most purchases during three months of the year.

b. May be influenced by dozens of interested parties. c. Require bids or written sales proposals. d. Must comply with SR (social responsibility) standards e. Must use fixed-price contracts ANSWER: a, b, c

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Chapter 07: Business-to-Business (B2B) Marketing 229. Which of the following is a distinction between business (B2B) and consumer (B2C) markets? a. b usiness markets are more complex b. c onsumer markets involve more decision makers c. c ustomer service is more important for B2C purchasers d. a dvertising plays a larger role in business markets ANSWER: a 230. Connor is an account manager or sales representative with Sherwin Williams. He typically calls on facility managers in hospitals, office buildings, apartment complexes and schools to discuss their paint and specialty coating needs. He's talking with his aunt at Thanksgiving and trying to explain the difference between his role as a sales representative and the counter or inside sales representative that his aunt might encounter within the Sherwin Williams retail store. Which of the following characteristics might be true for Connor in his role as a B2B sales representative with Sherwin Williams?

a. C onnor's relationships with customers would last longer b. C onnor's customers can quickly make decisions c. T he purchasing decision for Connor's customers is very simple d. C onnor typically works with only one person or decision-maker withing the buying organization ANSWER: a 231. Chris works for Aon, a large commercial brokerage company who serves as the intermediary between customers who need risk or insurance coverage and firms who provide the coverage - insurance carriers. Since Aon is one of the largest brokerage firms in the world, they utilize ______ segmentation where they divide the business buyers into groups according to their needs. For example, manufacturing firms would have specific requirements for insurance that might be distinct from a public school or university. A municipality such as the city of Chicago would also have a different set of needs that would result in a different mix of insurance coverage.

a. c ustomer-based b. d emographic c. e nd-use application d. p urchasing function ANSWER: a

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Chapter 07: Business-to-Business (B2B) Marketing 232. Carlita works for Dell Computers in their outbound call center as an inside sales representative. She primarily focuses on small businesses - those with fewer than 10 employees. Based on Carlita's customers, what type of segmentation is Dell using?

a. d emographic b. c ustomer-based c. e nd-use application d. p urchase category ANSWER: a 233. In recent years, large equipment manufacturers such as Caterpillar and Komatsu have focused on the mining industry as a major growth area. However, in recent months the mining industry is showing signs of a recession and mines around the world are reducing their output and laying off workers. Due to the decline in sales of raw materials coming from the mine, Caterpillar has experienced a decline in sales of mining equipment. Which of the following best describes the demand for Caterpillar equipment in the mining industry?

a. d erived b. v olatile c. j oint d. i nelastic ANSWER: a 234. Toyota uses steel in the manufacturing process of automobiles in factories around the world. The price of steel may vary at different times throughout the year but Toyota only purchases the amount of steel needed to maintain their output goals at each facility. Thus, if the price increases, Toyota continues to purchase the amount of steel needed to build the number of cars they have determined to build. For Toyota, the demand for steel is most likely:

a. i nelastic b. e lastic c. d erived d. j oint ANSWER: a 235. Jamie owns an engineering firm that provides engineering and design services to Fortune 500 firms. Jamie has several offices in the United States and also employs engineers in India so his firm can provide services to his customers 24 hours each day. Jamie is using _______ by employing engineers in India.

a. o ffshoring b. n earshoring c. o utsourcing d. w ebsourcing ANSWER: a

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Chapter 07: Business-to-Business (B2B) Marketing 236. Jayden is a computer programmer who is employed for TekSystems. TekSystems recruits programmers and other IT specialists to its company so they can fulfill needs on a contract basis with Fortune 500 companies such as Allstate and Procter and Gamble. TekSystems is utilizing _____ to place it's IT professionals within Fortune 500 firms for a limited time to provide agreed-upon work products.

a. o utsourcing b. o ffshoring c. n earshoring d. j ob placement ANSWER: a 237. Zach is employed by Scott Paper Company and is a key account manager on the WalMart team based in Bentonville, AR so he can be near the corporate headquarters of WalMart. Zach was selected to lead the WalMart purchasing team for paper towels, toilet tissue and other paper products. He coordinates vendors, analyzes sales data, assists with plan-a-gram layouts, and is responsible for interacting with other suppliers in addition to the purchasing and logistics teams at WalMart. Zach's role at WalMart is known as a(n):

a. c ategory captain b. l ead merchandiser advisor c. c ategory killer merchandiser d. c hannel captain ANSWER: a 238. Multiple sourcing is defined as purchasing from several vendors. Which of the following is an advantage of multiple sourcing?

a. p rotects a firm from shortages b. i nteracting with multiple vendors is more efficient c. e nables a firm to use a centralized purchasing strategy d. p urchasing agents can save time ANSWER: a 239. Kobe is an account executive with Stryker, a medical device company. He and his team have prepared a document to submit to a regional hospital to become their primary vendor for medical devices within the hospital system. The document will be reviewed by the hospital purchasing department and Stryker will be compared to other suppliers vying for the opportunity to assist with the hospital with their medical device needs. What stage in the buying process does this reflect?

a. a cquire and analyze proposals b. r ecognize problem and general solution c. d escribe characteristics and quantity d. s elect order routine ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 07: Business-to-Business (B2B) Marketing 240. Tiffany is the purchasing manager for electronic components that are kept in inventory for a large electrical contracting company. Tiffany sources most of these items from Fastenal and is thrilled with their ability to help her maintain the appropriate level of inventory for the various items. Fastenal has a computer system to assist Tiffany with her forecasting and can identify items that are "slow moving" or "fast moving"meaning that there are some items that are used more frequently than others. Fastenal has also helped Tiffany to identify the inventory levels when reorders should be placed so that she's never out-of-stock in any items. Which stage of the purchasing process is Fastenal providing assistance?

a. s elect an order routine b. o btain feedback and evaluate performance c. e valuate proposals and select suppliers d. d escribe characteristics and the quantity of a needed good or service ANSWER: a 241. Santiago is the manager of a Jimmy John's franchise and is responsible for placing orders for all products and services the restaurant utilizes. He has a great relationship with Cintas to provide cleaning equipment to sanitize the bathrooms and kitchen/prep areas. Since Santiago is pleased with the items he purchases from Cintas, he simply continues to order and is fairly loyal to his Cintas sales representative. What type of buying situation does Santiago utilize when purchasing cleaning supplies from Cintas?

a. s traight rebuy b. m odified rebuy c. n ew-task d. r outinized response behavior ANSWER: a 242. Adam Brooke is the superintendent for a school district and is responsible for making purchasing decisions for the district. He has met with the technology staff and is reviewing proposals from vendors to replace the computers in the labs. The district has purchased computers in the past and has considerable knowledge about buying computers. However, the technology continues to evolve and Adam is willing to devote time to the decision so he and the staff can make the best decision on behalf of the district, teachers and students. What type of buying decision does this situation describe?

a. m odified rebuy b. n ew-task c. s traight rebuy d. l imited reorder ANSWER: a

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Chapter 07: Business-to-Business (B2B) Marketing 243. Kendra is the office manager for a large legal firm and performs a variety of functions for the office. She manages purchases of copying machines and printers and is responsible for placing orders for supplies such as toner cartridges and paper. In general, Kendra is solely responsible for making decisions about the brand of paper and toner used in printers and copying machines. What is her role as part of the buying center? a. b uyer b. gatekeeper c. u ser d. i nfluencer ANSWER: a 244. Brooke is a pastry chef in a fine dining restaurant and enjoys creating one-of-a-kind desserts for the customers. She recently graduated from pastry school and this is her first full-time job in a restaurant. Brooke reports to the head chef, Brandon who oversees the kitchen and is responsible for creating the menu, managing and hiring staff, and placing orders for supplies. Brooke mentioned to Brandon that she would like to have gluten free flour on stock so she can create desserts that would meet the dietary needs of customers who have gluten allergies. Brandon thought that was a great idea and appreciated Brooke's recommendation. What role in the buying center did Brooke play regarding her discussion with Brandon about flour?

a. i nfluencer b. d ecider c. g atekeeper d. b uyer ANSWER: a 245. Vendors who would like to provide products or services to the federal government may need to work through the GSA which is an abbreviation for _______, a central management agency involved in areas such as procurement, property management, and information resources management.

a. G eneral Services Administration b. G overnment Supplies Authority c. G eneral Supplies Administration d. G reat Services Authority ANSWER: a

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Chapter 07: Business-to-Business (B2B) Marketing 246. Nadine is an account manager with an insurance brokerage company who provides specialized services to K-12 public and private schools as well as churches and non-profit organizations. Which term best describes Nadine's target market?

a. i nstitutional market b. g overnment market c. c harity market d. c ommerce market ANSWER: a

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Chapter 08: Global Marketing 1. Global marketing is rapidly becoming a necessity for most U.S. companies. a. True b. False ANSWER: True 2. The United States is the world’s largest exporter of goods and services followed by China. a. True b. False ANSWER: False 3. Walmart is the world’s largest private employer and the largest retailer. a. True b. False ANSWER: True 4. U.S. imports mainly include crude oil, machines, consumer electronics, and passenger cars. a. True b. False ANSWER: True 5. Manufactured goods account for the lion’s share of U.S. production output today. a. True b. False ANSWER: False 6. Nearly 80 percent of Americans today work in the service sector. a. True b. False ANSWER: True 7. Nearly four of every five dollars in the United State’s gross domestic product comes from services such as banking, entertainment, business and technical services, retailing, and communications. a. True b. False ANSWER: True

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Chapter 08: Global Marketing 8. The ability to adapt products to local preferences and culture is the key to success in foreign markets. a. True b. False ANSWER: True 9. The United States leads the world in retailing and service exports. a. True b. False ANSWER: True 10. Globalization helps firms to gain benefits such as new insights into consumer behavior and alternative distribution strategies. a. True b. False ANSWER: True 11. A nation’s basic system of transportation networks, communication systems, and energy facilities is referred to as its infrastructure. a. True b. False ANSWER: True 12. A nation’s size, per capita income, and stage of economic development determine its prospects as a host for international business expansion. a. True b. False ANSWER: True 13. The term “exchange rate” refers to the price of one nation’s currency in terms of another country’s currency. a. True b. False ANSWER: True 14. Currencies that are considered to be soft currencies can be readily converted to other currencies such as the dollar, euro, or yen. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 15. The Russian currency is considered a hard currency. a. True b. False ANSWER: False 16. In the United States it is mandatory for firms to inform the customers if the food is grown using genetically modified organisms. a. True b. False ANSWER: False 17. The labor conditions in a country are part of its political environment. a. True b. False ANSWER: True 18. The ISO 9000 series sets standards for operations that minimize harm to the environment. a. True b. False ANSWER: False 19. The Export Trading Company Act of 1982 seeks to make it easier for foreign buyers to connect with U.S. exporters. a. True b. False ANSWER: True 20. The Foreign Corrupt Practices Act makes it illegal to bribe a foreign official in an attempt to solicit new or repeat sales abroad. a. True b. False ANSWER: True 21. Administrative barriers are more subtle than tariffs. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 22. Quotas on imports and export subsidies are different forms of tariffs. a. True b. False ANSWER: False 23. Revenue tariffs are usually higher than protective tariffs. a. True b. False ANSWER: False 24. Revenue tariffs are designed to raise funds for the importing government. a. True b. False ANSWER: True 25. Governments use import quotas to protect domestic industry and employment and preserve foreign exchange. a. True b. False ANSWER: True 26. Embargoes impose a complete ban on the import of specific products from a particular country. a. True b. False ANSWER: True 27. Exchange control regulates international trade by controlling access to foreign currencies. a. True b. False ANSWER: True 28. Dumping is the practice of selling a large volume of product into a foreign market at prices lower than its own domestic market. a. True b. False ANSWER: True

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Chapter 08: Global Marketing 29. A noticeable trend toward multinational economic integration has developed since the end of World War II. a. True b. False ANSWER: True 30. Establishing a free trade area is the simplest way to achieve multinational economic integration. a. True b. False ANSWER: True 31. A customs union seeks to reconcile all government regulations affecting trade. a. True b. False ANSWER: False 32. The General Agreement on Tariffs and Trade included services under international trading rules. a. True b. False ANSWER: True 33. The World Trade Organization oversees GATT agreements, serves as a forum for trade negotiations, and mediates trade disputes. a. True b. False ANSWER: True 34. The WTO makes binding decisions in mediating disputes and reduces trade barriers. a. True b. False ANSWER: True 35. The NAFTA has succeeded in achieving political integration among its member nations: the United States, Canada, and Mexico. a. True b. False ANSWER: False

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Chapter 08: Global Marketing 36. The largest operating multinational economic community in the world is the FTAA, linking 34 countries and 800 million people in the Western Hemisphere. a. True b. False ANSWER: False 37. Experts are of the opinion that CAFTA’s economic impact is likely to be relatively large compared with NAFTA. a. True b. False ANSWER: False 38. The CAFTA-DR is a trade agreement among the United States, Central American nations, and the Dominican Republic. a. True b. False ANSWER: True 39. The two largest trading partners of the United States are Canada and Mexico. a. True b. False ANSWER: True 40. The recently ratified Treaty of Lisbon enables the EU to enter into international agreements as a political entity. a. True b. False ANSWER: True 41. The customs taxes are uniform among all member nations of the European Union. a. True b. False ANSWER: False 42. The most common reasons cited by marketers for going global include new customers in emerging markets and reduced trade barriers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 43. The three basic strategies for entering foreign markets are import/export, contractual agreements, and international direct investment. a. True b. False ANSWER: True 44. Firms often use more than one strategy to enter into foreign markets. a. True b. False ANSWER: True 45. An importer is a firm that sells goods manufactured domestically in foreign markets. a. True b. False ANSWER: False 46. Manufacturers control marketing and distribution of their products while selling them through an export-trading company. a. True b. False ANSWER: False 47. A simple and inexpensive way for first-time exporters to reach foreign customers is to sell their products to an export trading company. a. True b. False ANSWER: True 48. An export trading company provides the first-time exporter with expertise in locating foreign buyers and ensuring that its goods meet local labeling and testing laws. a. True b. False ANSWER: False

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Chapter 08: Global Marketing 49. A manufacturing firm retains more control over the export process when it deals with an export trading company rather than dealing with an export management company. a. True b. False ANSWER: False 50. An offset agreement combines a small firm with a major international company where the small firm essentially serves as a subcontractor on a large foreign project. a. True b. False ANSWER: True 51. Contractual agreements are less flexible compared to exporting strategies. a. True b. False ANSWER: False 52. A franchisee receives the right to sell the franchiser’s products and to use the franchiser’s name as well as a variety of marketing, management, and other services. a. True b. False ANSWER: True 53. Franchising is a low risk way to enter a foreign market as it offers a proven concept. a. True b. False ANSWER: True 54. Foreign licensing agreements are valid for a specified time period after which they need to be revised or renewed. a. True b. False ANSWER: True 55. Licensing is advantageous compared to exporting as it provides access to local partner’s distribution channels and also protection from legal barriers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 56. Licensing is an attractive entry strategy for small firms as it does not involve capital outlays. a. True b. False ANSWER: True 57. Subcontracting is a type of contractual agreement that assigns the production of goods or services to local or smaller firms. a. True b. False ANSWER: True 58. Subcontracting with a local company provides protection from import duties. a. True b. False ANSWER: True 59. International direct investment does not provide a competitive advantage because of its high risk potential and high involvement characteristics. a. True b. False ANSWER: False 60. Acquiring an existing firm in a country where the company wants to do business is a form of international direct investment. a. True b. False ANSWER: True 61. Forming a joint venture is the best way to enter into foreign markets that are regarded as developing economies. a. True b. False ANSWER: False 62. Multinationals often employ huge foreign workforces relative to their American staffs. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 63. A multinational corporation is a firm with significant operations and marketing activities outside its home country. a. True b. False ANSWER: True 64. A global marketing strategy works well for products with strong, universal appeal and for high-tech brands and luxury products. a. True b. False ANSWER: True 65. A multidomestic marketing approach brings the advantage of economies of scale to production and marketing activities. a. True b. False ANSWER: False 66. A major drawback to a global marketing strategy is its high cost of implementation. a. True b. False ANSWER: False 67. A multidomestic marketing strategy can be used by a firm in all of its domestic and foreign markets without any modifications. a. True b. False ANSWER: False 68. Many marketing experts believe that most products require multidomestic marketing strategies to give them a realistic global marketing appeal. a. True b. False ANSWER: True

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Chapter 08: Global Marketing 69. Use of straight extension strategy as part of global marketing strategy permits economies of scale in production and marketing. a. True b. False ANSWER: True 70. A successful implementation of a straight extension strategy creates universal recognition of a product for consumers from country to country. a. True b. False ANSWER: True 71. The product invention strategy helps a firm take advantage of unique foreign market opportunities. a. True b. False ANSWER: True 72. A company that changes its product’s package size, price, and promotional message to meet the local market’s taste is using a straight extension marketing strategy. a. True b. False ANSWER: False 73. Pizza Hut franchises stores in areas with Arab and Indian populations. To accommodate dietary differences, the traditional American recipes are modified. Consequently, the advertising, packaging, and promotional message will change. Marketers refer to these changes as dual adaptation. a. True b. False ANSWER: True 74. Outboard motors that are sold in the United States primarily as recreational products may be sold in a foreign country as basic transportation equipment. Such a practice is an example of product adaptation. a. True b. False ANSWER: False

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Chapter 08: Global Marketing 75. Modifying the control panel of a washing machine to accommodate for those cultures that read from right to left would be considered a form of product invention. a. True b. False ANSWER: False 76. The Organization of Petroleum Exporting Countries (OPEC) is a collective export organization. a. True b. False ANSWER: True 77. Companies often adapt their pricing strategy from one foreign market to another and modify pricing when market conditions change. a. True b. False ANSWER: True 78. In a countertrade, products of one country are exchanged for products of another instead of cash. a. True b. False ANSWER: True 79. Countertrading can be utilized by a country as a way to control its balance-of-trade problems. a. True b. False ANSWER: True 80. Foreign marketers regard America as an inviting market because of its large population and high levels of discretionary income. a. True b. False ANSWER: True 81. The United States is an attractive market to foreign marketers as it does not require foreign companies to pay corporate taxes. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 82. Some of the largest direct investments by foreign companies in the United States have occurred in the automobile industry. a. True b. False ANSWER: True 83. Related party trade is defined as the trade relationship between: a. countries with free trade agreements. b. member countries of a customs union. c. two companies in the same industry. d. a corporation and its overseas subsidiaries. ANSWER: d 84. Trade between U.S. companies and their subsidiaries or between U.S. subsidiaries of foreign-owned firms is referred to as: a. multilateral trade. b. mutual trade. c. related party trade. d. bilateral trade. ANSWER: c 85. Which of the following firms is ranked as the world’s largest marketer in terms of annual sales? a. General Electric b. ExxonMobil c. Walmart d. Royal Dutch Shell ANSWER: c 86. Which of the following industries makes the largest contribution to the United State’s gross domestic product? a. Automobile industry b. Service industry c. Oil industry d. Manufacturing industry ANSWER: b

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Chapter 08: Global Marketing 87. Which of the following industries has seen a steady growth in the United States in the recent years with nearly 80 percent of Americans now working in it? a. Agriculture b. Manufacturing c. Service d. Automobile ANSWER: c 88. Which of the following products forms a major part of U.S imports? a. Agricultural products b. Iron ore c. Medical equipments d. Crude oil ANSWER: d 89. The United States is the world’s largest exporter of _____. a. services b. crude oil c. consumer electronics d. passenger cars ANSWER: a 90. Which of the following actions generally helps marketers encounter new products, new approaches to distribution, or clever new promotional ideas? a. Globalization b. Developing core values c. Market penetration d. Product standardization ANSWER: a 91. In addition to agricultural products and manufactured goods, the United States is also the world’s largest exporter of: a. computers and its accessories. b. crude oil. c. consumer electronics. d. retailing. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 92. In the 1800s, more than 90 percent of Americans worked in _____ industry. a. shipping b. automobile c. service d. farming ANSWER: d 93. Nations with low per-capita incomes are usually good markets for: a. automobiles and electronics. b. expensive industrial machinery. c. agricultural hand tools. d. luxury goods. ANSWER: c 94. A nation’s size, per-capita income, and stage of economic development determine its prospects as a host for _____. a. regional economic integration b. international business expansion c. free trade association d. public private partnership ANSWER: b 95. The fluctuation in exchange rates results in: a. a country employing additional tariffs and quotas on imports to manage fluctuations. b. a nation’s currency becoming more or less valuable compared with those of other nations. c. the possibility of an economy reaching short-run equilibrium at levels below or above full employment. d. a relatively rapid economic growth and periods of relative stagnation or decline. ANSWER: b 96. Many of the eastern European currencies are considered as soft currencies because: a. they do not depreciate against other currencies. b. they cannot be readily converted into euros or dollars. c. they provide long-term stability in terms of its purchasing power. d. they serve as a reliable store of value. ANSWER: b

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Chapter 08: Global Marketing 97. A nation’s basic system of transportation networks, communication systems, and energy facilities form a part of its _____ environment. a. social b. political c. legal d. economic ANSWER: d 98. _____ is the most frequently spoken language in the world. a. English b. Spanish c. Mandarin d. Hindi ANSWER: c 99. Which of the following factors is most likely to be included in political environment? a. Inflation levels in different countries b. Labor conditions in different countries c. Exchange rate fluctuations in a country d. Level of natural resources in a country ANSWER: b 100. The agreements that set terms for various aspects of commercial relations with other countries such as the right to conduct business in the treaty partner’s domestic market are called _____. a. treaty of establishment, commerce and navigation b. free trade agreements c. trade and investment framework agreements d. friendship, commerce, and navigation treaties ANSWER: d 101. Technology presents challenges for global marketers that extend beyond the Internet and other telecommunications innovations. A major technological issue involving food marketers is _____. a. value engineering b. reverse engineering c. genetic reengineering d. business process reengineering ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 102. The ISO certification ensures that a company’s goods, services, and operations meet established quality levels. Here ISO stands for _____. a. Industrial Specifications Organization b. International Organization for Standardization c. Intermediary Services Organization d. Industrial Organization for Services ANSWER: b 103. ISO 9000 standards of the International Organization for Standardization sets requirements for: a. quality in goods and services. b. production operations. c. worker compensation. d. operations that minimize harm to the environment. ANSWER: a 104. Which of the following internationally recognized standards sets requirements for operations that minimize harm to the environment? a. ISO 9000 series b. ISO 8000 series c. ISO 10000 series d. ISO 14000 series ANSWER: d 105. The _____ is a major player in the international legal environment, which lends foreign exchange to nations that require it to conduct international trade. a. Collective Security Treaty Organization (CSTO) b. International Monetary Fund (IMF) c. International Monetary Fund (IMF) d. World Trade Organization (WTO) ANSWER: b

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Chapter 08: Global Marketing 106. Which of the following U.S. laws makes it illegal to bribe a foreign official in an attempt to solicit new or repeat sales abroad? a. The Securities Exchange Act b. The Foreign Corrupt Practices Act c. The Export Trading Company Act d. The North American Free Trade Agreement ANSWER: b 107. _____ are the taxes levied on imported goods. a. Excise duties b. Import quotas c. Subsidies d. Tariffs ANSWER: d 108. The basic purpose of revenue tariffs is to: a. stabilize the prices of imported goods. b. raise the retail price of imported products to match or exceed those of similar domestic products. c. counter the effects of protective tariffs on the domestic market. d. raise funds for the importing government. ANSWER: d 109. The Republic of Eastern Africa imposes a duty on imported goods to pay for government expenditure. This is best described as a(n) _____. a. protective tariff b. revenue tariff c. import quota d. subsidy ANSWER: b 110. _____ are trade barriers designed to raise the retail price of an imported product to match or exceed that of a similar domestic product. a. Subsidies b. Revenue tariffs c. Protective tariffs d. Import quotas ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 111. The Italian government imposed duties on products imported from Canada such as automobiles and consumer electronics to raise their prices in the local market and to protect the local companies from competition. This type of trade barrier being used by the Italian government is an example of a(n) _____. a. embargo b. protective tariff c. import quota d. revenue tariff ANSWER: b 112. _____ are trade restrictions that limit the number of units of products in certain categories that can cross a country’s boundary for resale. a. Protective tariffs b. Embargoes c. Import quotas d. Subsidies ANSWER: c 113. Vietnam has restricted the amount of cement, fertilizer, and fuel that can enter its borders from outside countries to protect its domestic industries and also to protect workers from being laid-off. This form of trade restriction is an example of a(n) _____. a. embargo b. protective tariff c. subsidy d. import quota ANSWER: d 114. Which of the following trade barriers puts a complete ban on the import of specified products? a. Import quota b. Embargo c. Revenue tariff d. Subsidy ANSWER: b

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Chapter 08: Global Marketing 115. The Russian government imposed a ban on the wines imported from Georgia, claiming that heavy metals and pesticides were found in their products. The government also claimed that the wine samples did not comply with their sanitary standards. This is an example of a(n) _____. a. revenue tariff b. embargo c. import quota d. exchange control ANSWER: b 116. Governments try to protect the private domestic industries by providing them financial support. Which of the following trade barriers refers to such financial support? a. Embargo b. Protective tariff c. Subsidy d. Import quota ANSWER: c 117. Exchange control is an administrative barrier to international trade that: a. puts a complete ban on the import of specified products. b. supports domestic industry through grants of money or research support. c. requires companies that export to sell foreign currencies to the central bank or other foreign agency, and importers to buy foreign currencies from the same organization. d. limits the number of units of products in certain categories that can cross a country’s border for resale. ANSWER: c 118. The practice of selling a product in a foreign market at a price lower than it commands in the producer’s domestic market is called _____. a. global sourcing b. dumping c. sole sourcing d. value engineering ANSWER: b

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Chapter 08: Global Marketing 119. Which of the following methods is most likely to counter for the negative effects of dumping? a. Controlling access to foreign currencies b. Imposing protective tariffs c. Imposing excise duty d. Appealing to the BIS ANSWER: b 120. U.S. firms claiming that dumping threatens to hurt their business can file a complaint with the: a. United States Commercial Service. b. U.S. International Trade Commission (ITC). c. Office of the United States Trade Representative. d. United States Agency for International Development. ANSWER: b 121. The _____ is a form of multinational economic integration that seeks to reconcile all government regulations affecting trade. a. common market b. customary union c. free-trade area d. cooperation council ANSWER: a 122. The _____ is a trade bloc that establishes a free-trade area and a uniform tariff for trade with nonmember nations. a. common market b. common area of administration c. customs union d. cooperation council ANSWER: c 123. When a group of nations agree to buy and sell goods among themselves by abolishing tariffs and trade restrictions, the nations have created a _____. a. customary market b. cooperation council c. political union d. free-trade area ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 124. Which of the following organizations was established as an outcome of GATT? a. NAFTA b. EU c. WTO d. FTAA ANSWER: c 125. Which of the following agreements has created opportunities for U.S. financial, legal, and accounting firms by including services under international trading rules and has phased-out import quotas on textiles and clothing from developing nations? a. The Treaty of Commerce and Navigation b. The Central American Free Trade Agreement-DR c. The General Agreement on Tariffs and Trade d. The North American Free Trade Agreement ANSWER: c 126. The _____ serves as a forum for trade negotiations, and mediates trade disputes between countries throughout the world. a. FTAA b. GATT c. EU d. WTO ANSWER: d 127. Which of the following is one of the major policy initiatives of the WTO? a. Increasing the average level of education worldwide b. Liberalizing world financial services c. Promoting and protecting the environment d. Regulating automobile production by less-advanced nations ANSWER: b

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Chapter 08: Global Marketing 128. The activities of the World Trade Organization thus far have focused on dispute resolution rather than reducing trade barriers as: a. the main aim of this organization is to increase the level of production in the developing nations. b. the differences between the developed and developing nations have created a major roadblock to its progress. c. the organization does not have the authority to make binding decisions on trade policies and trade barriers. d. the organization is attempting to increase profit levels for developed nations. ANSWER: b 129. The North American Free Trade Agreement (NAFTA) is a trade accord that removes trade barriers among: a. countries in Western hemisphere and North, Central, and South America. b. Canada, Mexico, and the United States. c. The United States, Dominican Republic, and Central American nations. d. The United States and the European Union. ANSWER: b 130. Which of the following is true regarding the North American Free Trade Agreement (NAFTA)? a. The member nations of the NAFTA have agreed to create a trade bloc similar to that of the European Union. b. The major aim of the NAFTA is to increase the level of literacy among the United States, Mexico, and Canada. c. NAFTA has been successful in creating the Free Trade Area of the Americas, the world’s largest free trade zone. d. The member nations of NAFTA focus mainly on economic cooperation rather than on political integration. ANSWER: d 131. The _____ is a proposed free-trade area stretching the length of the entire Western Hemisphere and designed to extend free trade benefits to additional nations in North, Central, and South America. a. NAFTA b. EU c. FTAA d. CAFTA-DR ANSWER: c

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Chapter 08: Global Marketing 132. The trade agreement among the United States, Central American nations, and the Dominican Republic is called _____. a. NAFTA b. EFTA c. FTAA d. CAFTA-DR ANSWER: d 133. The goal of the EU, a multinational economic community, is to: a. liberalize the world financial services, telecommunications, and maritime markets. b. help American workers, farmers, and small businesses thrive and grow. c. remove all barriers to free trade among its members, and standardization of currencies and regulations. d. extend free trade benefits to most nations around the world. ANSWER: c 134. The European Union’s Treaty of Lisbon is designed to further streamline operations and enable the EU to enter into international agreements as a(n) _____. a. common market b. political entity c. customs union d. economic union ANSWER: b 135. Jason’s Petrochems is a firm that brings in chemical intermediates such as organic fertilizers and organic solvents from different countries and processes them in its labs before selling it in its domestic market. The firm also uses these chemical intermediaries in the production of its various fertilizers and solvents. Jason’s Petrochems can be regarded as a(n) _____. a. EMC contractor b. licensee c. franchisee d. importer ANSWER: d

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Chapter 08: Global Marketing 136. _____ is a form of global marketing that involves a continuous effort in marketing a firm’s merchandise to customers in other countries. a. Business process reengineering b. Exporting c. Sole sourcing d. Social referencing ANSWER: b 137. A(n) _____ buys products from domestic producers and resells them abroad. a. outsourcing firm b. export-trading company c. export-management company d. offset marketer ANSWER: b 138. VB Group, a South African firm, is a leading supplier of African agricultural products to the world. It buys products from the domestic producers and resells them in international markets. The company maintains complete control over the marketing and distribution of the products in the foreign markets. VB Group is an example of a(n) _____. a. subcontractor b. export-trading company c. export-management company d. franchisee ANSWER: b 139. An organization that provides first-time exporters with expertise in locating foreign buyers, handling paperwork, and conforming to local labeling and testing laws is called a(n): a. export facilitator. b. export-trading company. c. trade assistance corporation. d. export-management company. ANSWER: d

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Chapter 08: Global Marketing 140. D. J. International, a firm based in North America, is a leader in international sales and exports. The company is not directly involved in the purchase and selling of goods but helps firms find customers for their products in global markets. It also helps the companies handle all the legal formalities in foreign markets and provides guidance regarding the local labeling and testing laws. D. J. International can be regarded as a(n): a. export-management company. b. export-trading company. c. franchisee. d. subcontractor. ANSWER: a 141. Which of the following terms refers to an arrangement according to which a small firm teams with a major international company and serves as a subcontractor on a foreign project? a. International trade mentorship b. Trade facilitation c. An offset agreement d. A mutual trade agreement ANSWER: c 142. _____ is a contractual arrangement in which a wholesaler or retailer agrees to meet the operating requirements of a manufacturer. a. Direct investment b. Franchising c. Value engineering d. Business process reengineering ANSWER: b 143. Tru-Shine is a cleaning company in the United States that offers various cleaning products and services. After gaining popularity in the United States, the company decided to expand its business in other North American nations. The company entered into an agreement with some local cleaning companies in Canada where the local companies would sell its products and services under the same trade name. Tru-Shine also agreed to provide the training and necessary equipments and supplies to the local companies. In this example, the strategy used by TruShine for entering foreign markets is an example of _____. a. sole sourcing b. value engineering c. franchising d. direct investment ANSWER: c

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Chapter 08: Global Marketing 144. _____ is a contractual agreement that grants marketers in other countries the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area. a. Value engineering b. Sole sourcing c. Offset agreement d. Foreign licensing ANSWER: d 145. Little Princess, a California based company, is a creator of dolls and other toys for girls. The company is mainly involved in designing new toys and developing their prototypes. It has signed an agreement with some local toy manufacturers in Europe and North America to manufacture and distribute their toys in the local markets. These contracts are for a specified time period and permit the foreign marketer to distribute goods in a specified geographic area. Which of the following strategies is being used by Little Princess to enter foreign markets? a. Exporting b. Direct Investment c. Foreign licensing d. Sole sourcing ANSWER: c 146. A strategy for going global through contractual agreements in which the production of goods or services is assigned to local companies is termed as _____. a. sole sourcing b. a differentiation strategy c. an offset strategy d. subcontracting ANSWER: d 147. Alumna, a ceramics manufacturing company in Denmark, is trying to market its products in Bulgaria. The company has assigned the production of its goods to a local company in Bulgaria to take advantage of the low labor costs and also to avoid the import duties on the products. In this case, the strategy used by Alumna for entering foreign markets is an example of _____. a. subcontracting b. licensing c. sole sourcing d. exporting ANSWER: a

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Chapter 08: Global Marketing 148. Honda, a Japanese firm, builds a factory in Alabama to make minivans to be marketed in the United States. Which of the following strategies of entering into a foreign market is best represented by this example? a. Subcontracting b. Franchising c. International direct investment d. Licensing ANSWER: c 149. Which of the following international market entry strategies is most likely to offer a competitive advantage to the firms and is characterized by high levels of involvement and high risk potential? a. Franchising b. Sole sourcing c. Foreign licensing d. International direct investment ANSWER: d 150. A firm with significant operations and marketing activities outside its home country is referred to as a(n) _____. a. monopoly b. active exporter c. multinational corporation d. overseas marketer ANSWER: c 151. General Electric, with their business units throughout the world, can best be described as a: a. multidomestic exporter. b. multinational corporation. c. domestic corporation. d. multilateral licenser. ANSWER: b 152. When a firm uses a standardized marketing mix with minimal modifications in all of its domestic and foreign markets, it is known as a _____ marketing strategy. a. lateral entry b. unipolar c. global d. multidomestic ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 153. A global marketing strategy differs from a multidomestic marketing strategy in that the global marketing strategy: a. does not bring the advantage of economies of scale to production and marketing activities. b. is a standardized marketing mix that can be used in all markets with minimal modifications. c. is tailored to meet the specific needs of the target markets in each nation. d. is ideal for highly differentiated products or products that are designed on the basis of local preferences. ANSWER: b 154. A multidomestic marketing strategy indicates that a firm: a. customizes its marketing decisions to effectively reach individual marketplaces. b. disregards the principles of market segmentation. c. considers all foreign countries to have equally competitive situations with respect to its industry. d. employs universal promotional messages for marketing its products. ANSWER: a 155. Despite over a hundred million viewers every year watching the Super Bowl, the NFL worries it is nearing market saturation in the U.S. So the NFL is scheduling regular-season games at London’s storied Wembley Stadium. According to the information given in this case, which of the following marketing strategies is being used by the NFL? a. Multidomestic marketing strategy b. Societal marketing strategy c. Global marketing strategy d. Vertically integrated marketing strategy ANSWER: c 156. Developing a completely new product to take advantage of a unique foreign opportunity is called product: a. prototyping. b. commercialization. c. invention. d. origination. ANSWER: c 157. The Organization of Petroleum Exporting Countries (OPEC) is a marketing organization: a. that seeks to control prices through collective action. b. regulated by NAFTA and the EU. c. that uses countertrade to obtain valuable foreign investments. d. formed to address the growing competition from Venezuela and North Sea crude exploration. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 158. _____ is a form of exporting in which a firm barters products rather than selling them for cash. a. Subcontracting b. Free trade c. Countertrade d. Franchising ANSWER: c 159. Which of the following factors makes United States an attractive market for foreign companies? a. High excise duties and revenue tariffs b. Better profits due to reduced labor costs c. High levels of discretionary income d. Restrictions on international direct investment ANSWER: c 160. Which of the following is one of the reasons that leads to low levels of risk for foreign marketers in the United States? a. Low labor costs b. Membership of NAFTA c. Lack of government regulations d. Political stability ANSWER: d 161. Why is global marketing important for a nation and its marketers? ANSWER: Global marketing and trade is vital to a nation and its marketers for several reasons. It expands markets, makes production and distribution economies possible, allows companies to explore growth opportunities in other nations, and makes them less dependent on economic conditions in their home nations. Many also find that global marketing and trade can help them meet customer demand, reduce costs, and provide valuable information on potential markets around the world. It also builds employment.

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Chapter 08: Global Marketing 162. How has the economy in the United States changed in the recent years? ANSWER: The United States has seen great shifts in the sources of its annual production over the years. In the 1800s, more than 90 percent of Americans worked in farming; today, less than 1.5 percent do. Likewise, manufactured goods no longer account for the lion’s share of U.S. production output; today, only about 10 percent of the workforce works in manufacturing. Despite these shifts in the work population, the United States continues to produce record volumes of agricultural and manufactured goods. The service industry has seen steady growth, with nearly 80 percent of Americans now working in services. Nearly four of every five dollars in the nation’s gross domestic product comes from services such as banking, entertainment, business and technical services, retailing, and communications. These figures represent a profound change from a largely manufacturing economy to a largely service economy. In addition to agricultural products and manufactured goods, the United States is the world’s largest exporter of services and retailing. 163. What are the economic factors that determine a nation’s prospect as a host for international business expansion? ANSWER: A nation’s size, per-capita income, and stage of economic development determine its prospects as a host for international business expansion. Nations with low per-capita incomes may be poor markets for expensive industrial machinery as they cannot afford the technical equipment that powers an industrialized society. Wealthier countries may offer prime markets for many U.S. industries, particularly those producing consumer goods and services and advanced industrial products. Infrastructure is another important economic factor to consider when planning to enter a foreign market. An inadequate infrastructure may constrain marketers’ plans to manufacture, promote, and distribute goods and services in a particular country. Changes in exchange rates can also complicate international marketing. Fluctuations in exchange rates can make a nation’s currency more or less valuable compared with those of other nations. 164. What are FCN treaties? ANSWER: The friendship, commerce, and navigation (FCN) treaties are international agreements that set terms for various aspects of commercial relations among nations such as right to conduct business in the treaty partner’s domestic market. The United States has many FCN treaties with other governments. 165. Discuss the ISO certification. ANSWER: The International Organization for Standardization (ISO) certification is an internationally recognized standard that ensures a company’s goods, services, and operations meet established quality levels. The organization has two sets of standards: the ISO 9000 series of standards sets requirements for quality in goods and services, and the ISO 14000 series sets standards for operations that minimize harm to the environment. Since the 1990s, Europe has pushed for mandatory ISO certification. Most of the U.S. companies today follow these certification standards as well.

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Chapter 08: Global Marketing 166. Differentiate between revenue tariffs and protective tariffs. Give an example for each. ANSWER: Revenue tariffs are designed to raise funds for the importing government. A tariff on coffee imports by a country that does not grow coffee but has a good market can yield good revenues for the government. Protective tariffs are usually higher than revenue tariffs and are designed to raise the retail price of an imported product to match or exceed that of a similar domestic product. Some countries use tariffs in a selective manner to discourage certain consumption practices and thereby reduce access to their local markets. For example, the United States has tariffs on luxury items such as Rolex watches and Russian caviar. 167. What are the different ways to achieve multinational economic integration? Why are some nations not keen on entering into free trade? ANSWER: Multinational economic integration can be set up in several ways. The simplest approach is to establish a free-trade area in which participating nations agree to the free trade of goods among themselves, abolishing tariffs and trade restrictions. A customs union establishes a free-trade area plus a uniform tariff for trade with nonmember nations, and a common market extends a customs union by seeking to reconcile all government regulations affecting trade. Some nations are not enthusiastic about free trade. Americans have lost jobs when employers outsourced their work to countries like Mexico, where wages are lower. Mexico is now facing the same outsourcing threat, as their employers are outsourcing work to China, where the wages are even lower. Although productivity and innovation are said to grow more quickly with free trade, workers often find themselves working longer and for reduced pay as operations move overseas. 168. Describe the World Trade Organization (WTO). Discuss its role and policies in regulating trade barriers. ANSWER: The World Trade Organization (WTO) is a 159-member organization that succeeds GATT. The WTO oversees GATT agreements, serves as a forum for trade negotiations, and mediates trade disputes. It also monitors national trade policies and works to reduce trade barriers throughout the world. Unlike GATT, WTO decisions are binding. Countries that seek to become members of the WTO must participate in rigorous rounds of negotiations that can last several years. The WTO policy initiatives include: liberalizing world financial services, telecommunications, and maritime markets. Trade officials have not agreed on the direction for the WTO. Big differences between developed and developing nations create a major roadblock to its progress, and its activities thus far have focused more on dispute resolution through its Dispute Settlement Body than on reducing trade barriers. But the WTO also provides important technical assistance and training for the governments of developing countries.

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Chapter 08: Global Marketing 169. Discuss the NAFTA, CAFTA-DR, and FTAA. ANSWER: The two main trade agreements in the Western Hemisphere are NAFTA and CAFTA-DR. North American Free Trade Agreement (NAFTA) is an agreement between the United States, Canada, and Mexico that removes trade restrictions among the three nations. The three countries insist that they will not create a trade bloc similar to the European Union, that is, they will not focus on political integration but instead on economic cooperation. NAFTA is particularly important to U.S. marketers because Canada and Mexico are two of its largest trading partners. The United States entered into an agreement with the Dominican Republic and Central American nations known as the Central American Free Trade Agreement-DR (CAFTA-DR). Some of its provisions took effect immediately while others will phase in over the next two decades. Supporters of the agreement say it will help American workers, farmers, and small businesses thrive and grow; critics worry that more American agricultural and manufacturing jobs will be lost. However, both sides agree that CAFTA’s economic impact is likely to be relatively small compared with NAFTA. The Free Trade Area of the Americas (FTAA) is a proposed free-trade area stretching the length of the entire Western Hemisphere and designed to extend free trade benefits to additional nations in North, Central, and South America. The FTAA would be the largest free-trade zone on earth and would offer low or nonexistent tariffs; streamlined customs; and no quotas, subsidies, or other barriers to trade. In addition to the United States, Canada, and Mexico, countries allied with the proposed FTAA include Argentina, Brazil, Chile, Colombia, Ecuador, Guatemala, Jamaica, Peru, Trinidad and Tobago, Uruguay, and Venezuela. 170. What is the European Union? What are its goals? ANSWER: The European Union (EU) is a customs union that is moving in the direction of an economic union by adopting a common currency, removing trade restrictions, and permitting free flow of goods and workers throughout the member nations. The goal of the EU, headquartered in Belgium, is eventually to remove all barriers to free trade among its members, making it as simple and painless to ship products between Finland and Hungary as it is between New Mexico and Ohio. Also involved is the standardization of currencies and regulations that businesses must meet. In addition to simplifying transactions among members, the EU looks to strengthen its position in the world as a political and economic power. Its recently ratified Treaty of Lisbon is designed to further streamline operations and enables the EU to enter into international agreements as a political entity.

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Chapter 08: Global Marketing 171. What is importing? What are the factors that marketers need to consider while making import decisions? ANSWER: Importing is a form of a global marketing in which a firm brings in goods produced abroad to sell domestically or to be used as components in its products. Marketers need to consider the following factors while making import decisions: 1) the ability of the supplier to maintain agreed-to quality levels, 2) flexibility in filling orders that might vary considerably from one order to the next, 3) response time in filling orders, and 4) total costs, including import fees, packaging, and transportation, in comparison with costs of domestic suppliers. 172. What is exporting? List out the various alternatives available for the first-time exporters to enter foreign markets. ANSWER: Exporting is a basic form of global marketing that involves a continuous effort in marketing a firm’s merchandise to customers in other countries. First-time exporters can reach foreign customers through one or more of three alternatives: 1) An export-trading company (ETC) buys products from domestic producers and resells them abroad. While manufacturers lose control over marketing and distribution to an ETC, it helps them export through a relatively simple and inexpensive channel, in the process providing feedback about the overseas market potential of their products. 2) An export-management company (EMC) provides the first-time exporter with expertise in locating foreign buyers, handling necessary paperwork, and ensuring that its goods meet local labeling and testing laws. The manufacturer retains more control over the export process when dealing with an EMC. Smaller firms can get assistance with administrative needs such as financing and preparation of proposals and contracts from large EMC contractors. 3) Exporters can also enter a foreign market through an offset agreement that teams a smaller firm with a major international company. The smaller firm essentially serves as a subcontractor on a large foreign project. This entry strategy provides new exporters with international experience, supported by the assistance of the primary contractor, in such areas as international transaction documentation and financing. 173. What is a franchise? What advantages does this strategy offer to international marketers? ANSWER: A franchise is a contractual agreement in which a wholesaler or retailer agrees to meet the operating requirements of a manufacturer or other franchiser. The franchisee receives the right to sell the products and use the franchiser’s name as well as a variety of marketing, management, and other services. The main advantage of franchising is risk reduction by offering a proven concept. Standardized operations typically reduce costs, increase operating efficiencies, and provide greater international recognizability. However, the success of an international franchise depends on its willingness to balance standard practices with local customer preferences.

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Chapter 08: Global Marketing 174. What is foreign licensing? What advantages does it offer over exporting and direct investment? ANSWER: Foreign licensing is a contractual agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area. These arrangements usually set certain time limits, after which agreements are revised or renewed. Licensing offers several advantages over exporting, including access to local partners’ marketing information and distribution channels and protection from various legal barriers. Because licensing does not require capital outlays, many firms, both small and large, regard it as an attractive entry strategy. Like franchising, licensing allows a firm to quickly enter a foreign market with a known product. The arrangement may also provide entry into a market where the local government imposes restrictions on imports or international direct investment. 175. What is international direct investment? What are the different forms of direct investment? ANSWER: International direct investment is a strategy for marketers to enter global markets by investing in foreign firms, production, and marketing facilities. Firms choosing this method often have a competitive advantage despite high levels of involvement and high risk potential associated with it. Direct investment can take several forms. A company can acquire an existing firm in a country where it wants to do business, or it can set up an independent division outside its own borders with responsibility for production and marketing in a country or geographic region. Companies may also engage in international marketing by forming joint ventures in which they share the risks, costs, and management of the foreign operation with one or more partners. These partnerships join the investing companies with nationals of the host countries. While some companies choose to open their own facilities overseas, others share with their partners. 176. What is a multinational corporation? How have these organizations evolved? ANSWER: A multinational corporation is a firm with significant operations and marketing activities outside its home country. Since they first became a force in international business in the 1960s, multinationals have evolved in some important ways. First, these companies are no longer exclusively U.S. based. Today, it is as likely for a multinational to be based in Japan, Germany, or Great Britain as in the United States. Second, multinationals no longer think of their foreign operations as mere outsourcing appendages that carry out the design, production, and engineering ideas conceived at home. Instead, they encourage constant exchanges of ideas, capital, and technologies among all the multinational operations. Multinationals often employ huge foreign workforces relative to their American staffs. These workforces are no longer seen merely as sources of cheap labor; on the contrary, many multinationals center technically complex activities in locations throughout the world.

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Chapter 08: Global Marketing 177. Differentiate between a global marketing strategy and a multidomestic marketing strategy. Give examples for each. ANSWER: A global marketing strategy defines a standard marketing mix and implements it with minimal modifications in all foreign markets. This approach brings the advantage of economies of scale to production and marketing activities. It can effectively market some goods and services to segments in many nations that share culture and languages. This approach works especially well for products that have a strong, universal appeal such as Nike, luxury items such as Rolex watches, and high-tech brands such as Microsoft. Example: Procter & Gamble devised a global marketing strategy for Pringles potato chips, a leading export brand. P&G began by selling one product with a consistent formulation in every country and met 80 percent of worldwide demand with only six flavors of Pringles and one package design. A multidomestic marketing strategy is the application of market segmentation to foreign markets by tailoring the firm’s marketing mix to match specific target markets in each nation. Cultural, geographic, language, and other differences simply make it difficult to send the same message to many countries. This strategy is effective for products that are highly differentiated or tailored to meet the requirements of local customers. Example: Philips offers products and services in different markets across Europe, each headed by a country manager who has considerable authority in making independent business decisions. 178. What are the different product and promotion strategies that can be used by global marketers? ANSWER: Global marketers can choose one of the following strategies for selecting the most appropriate product and promotion strategy for a specific foreign market: Straight extension, in which one product will have one marketing message for all markets. a) Successful implementation of this strategy creates universal recognition of a product for consumers from country to country. b) Product adaptation, in which the product is altered to suit local needs and preferences. Promotion adaptation, where the promotional program is changed to meet local c) expectations. d) Dual adaptation, in which both product and promotion are changed to suit local needs. Product invention, in which a completely new product is developed to take advantage of e) unique foreign market opportunities. 179. What is countertrade? Why would a country choose to countertrade? ANSWER: Countertrade is a form of exporting, whereby goods and services are bartered rather than sold for cash. Less-developed nations sometimes impose countertrade requirements when they lack sufficient foreign currency to attain products they want or need from exporting countries. These nations allow sellers to exchange their products only for domestic products as a way to control their balance-oftrade problems.

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Chapter 08: Global Marketing 180. List out the factors that make United States an attractive market for foreign companies. ANSWER: The various factors that make United States an attractive market for foreign companies are: a) Large population b) High level of discretionary income of U.S consumers c) Low risk due to political stability d) Generally favorable attitude toward foreign investment e) Growing economy Match each item with the correct statement below. a. exporting b. WTO c. infrastructure d. exchange rate e. tariff f. import quota g. dumping h. ISO certification i. foreign licensing j. multinational corporation k. global marketing strategy l. multidomestic marketing strategy m. countertrade n. related party trade o. exchange control p. customs union q. CAFTA-DR r. importer s. embargo t. franchise 181. Trade between U.S. subsidiaries of foreign owned firms and their parent companies is referred to as _____. ANSWER: n 182. A nation’s basic system of transportation networks, communications systems, and energy facilities is known as its _____. ANSWER: c 183. A(n) _____ is the price of one nation’s currency in terms of another nation’s currency. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 184. A(n) _____ is an internationally recognized standard that ensures that a company’s goods, services, and operations meet established quality levels. ANSWER: h 185. The tax levied on imported goods is called a(n) _____. ANSWER: e 186. A(n) _____ is a trade restriction that limits the number of goods that can enter a country for resale. ANSWER: f 187. A(n) _____ is a form of trade restriction that imposes a complete ban on the import of specified products. ANSWER: s 188. _____ is a method used to regulate international trade among importing organizations by controlling access to foreign currencies. ANSWER: o 189. The practice of selling a product in a foreign market at a price lower than what it receives in the producer’s domestic market is known as _____. ANSWER: g 190. A(n) _____ establishes a free-trade area plus a uniform tariff for trade with nonmember nations. ANSWER: p 191. The _____ is an organization that makes binding decisions in mediating disputes, and reducing trade barriers. ANSWER: b 192. The _____ is an agreement that includes the United States, the Dominican Republic and the Central American nations. ANSWER: q 193. A firm that brings in goods produced abroad to sell domestically or to be used as components in its products is called a(n) _____. ANSWER: r 194. _____ is a form of global marketing that involves continuous efforts in marketing a firm’s merchandise to customers in other countries. ANSWER: a 195. A(n) _____ is a contractual agreement in which a wholesaler or retailer agrees to meet the operational requirements of a manufacturer. ANSWER: t Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 196. _____ is an agreement that grants foreign marketers the right to distribute a firm’s merchandise, or to use its trademark, patent, or process in a specified geographic area. ANSWER: i 197. A firm which has significant operations and marketing activities outside its home country is referred to as a(n) _____. ANSWER: j 198. A standardized marketing mix with minimal modifications that a firm uses in all of its domestic and foreign markets is called a(n) _____. ANSWER: k 199. A(n) _____ applies market segmentation to foreign markets by tailoring the firm’s marketing mix to match specific target markets in each nation. ANSWER: l 200. _____ is a form of exporting whereby goods and services are bartered rather than sold for cash. ANSWER: m 201. A marketing campaign for a vegetarian restaurant in China uncovers two facts: 1) eating meat is seen as a sign of prosperity in China; 2) only an estimated 5 percent of the Chinese are vegetarians. Which interpretation of these facts should be incorporated into the marketing campaign? a. C ook vegetarian food to look like meat so that customers feel prosperous. b. C alculate that China has over 1.2 billion citizens, so the vegetarian 5 percent yields 60 million potential customers. c. R ecognize that vegetarian customers will not be considered as prosperous as their neighbors. d. P rice vegetarian restaurant food at a discount so that customers feel prosperous. e. I dentify which Chinese communities already have successful vegetarian restaurants. ANSWER: b 202. A child care organization's CEO is looking to use her experience to expand operations into India. Her interest was sparked by Indian parents saying, "We have nothing like this back home." Which action would be a prudent way to enter that global market? a. T alk to more Indian parents about how they see the business opportunity shaping up. b. S hare enthusiasm with investors to get an idea of funding possibilities. c. S et up a website serving the online preschool education market for Indian children. d. I nvest as a partner in a child care facility in India to pilot Western concepts. e. C reate a brand new preschool curriculum that could be exported to other countries. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 08: Global Marketing 203. A company has recently instituted a political risk assessment (PRA) unit that keeps track of situations of international unrest. Which advantage does the new PRA unit offer? a. T he PRA pays attention to international events through following social media. b. T he PRA checks the legal situation to see whether charges can be filed against vandals. c. T he PRA collects statistics about the frequency and severity of ongoing events. d. T he PRA evaluates the specific risks to the company's employees and facilities. e. T he PRA promotes peaceful interventions so that business processes are not interrupted. ANSWER: d 204. At an international company's staff meeting, a division manager introduces employees to the latest update on the friendship, commerce, and navigation treaties (FCN) with other governments. She shows slides of information from the U.S. Department of State's annual publication Treaties in Force. Which fact is evident from the staff meeting information? a. T he details of treaties are subject to change because the updates are published each year. b. T he Department of State provides advice to individual businesses about FCN treaties. c. F CN treaties tell the outside world which countries are favored by the United States. d. T he department that works with the legal environment for foreign divisions is chaotic. e. T he company is looking to avoid being sued by the U.S. government. ANSWER: a 205. A company with a large amount of intellectual property plans to expand into Europe. Their marketing team is working to protect all the company-owned trademarks across many countries. Which benefit of European Union membership will streamline this process? a. T he Treaty of Lisbon allows the EU to enter into international agreements. b. T he common currency (the euro) simplifies payments between member countries. c. T he EU Community Trademark eliminates separate registration with each country. d. T he standardization of eco-labels certifies environmental production friendliness. e. U niform customs taxes and postal systems speed transportation of products. ANSWER: c

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Chapter 08: Global Marketing 206. Thousands of country representatives have attended the Public Forum of the World Trade Organization (WTO) since it was launched in 2001. Which topic would be unlikely to be put on the agenda for the meeting? a. m andatory sustainability standards b. p ublic-private partnerships c. j ob creation d. i nfrastructure development e. r ole of innovation and intellectual property ANSWER: a 207. A publisher of children's picture books is a family business that has decided to export their products to foreign bookstores. The family members expect to be very involved in all the company's decisions. Which model of firsttime exporting would best fit this family business? a. a n offset agreement with a major international company b. a n export-management company c. a n export-trading company d. a subcontractor on a large foreign project e. d irect investing in a bookstore in another country ANSWER: b 208. An investment group has decided to buy an international franchise of a nationally known custom clothing chain. The group members are convinced that the franchise's headquarters has balanced their standard practices with local customer preferences. Which characteristic of the custom clothing operation would be the best evidence of incorporating cultural considerations? a. T he clothing has a range of prices for everyday items and for special occasions. b. C hanging booth arrangements allow for separate accommodations for men and women. c. L ocal stores carry appropriate amounts of body-covering clothing required by different religious beliefs. d. T he ambiance of the store allows for respectful family and group conversations. e. T he staff members can speak many different local languages to serve customers. ANSWER: c

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Chapter 08: Global Marketing 209. An international company chose to go with a global marketing strategy in a new location, planning to exactly duplicate the company’s previous success in its home country. The venture was not a success. While it enjoyed economies of scale, the marketing campaign did not engage new customers. Which information is essential to create a new and successful marketing campaign? a. f actors that led to successful efforts in the company’s home country b. i nput from employees who were laid off due to the business's failure c. n egative comments made on social media by the company’s limited number of visitors d. i nformation from doing a rotating promotional effort that changes with the four seasons e. s pecific details about the unique needs of potential customers in the new location ANSWER: e 210. A group of ceramic artists think that their artwork would be successful in another country. Nothing similar is available in the target country. They have a lot of marketing collateral from their successful efforts in the United States, but most of their home country business comes from word of mouth. Which global strategy is the best pathway for them to adopt? a. m aking a direct investment to collaborate with another art-connected business b. r eusing their current original marketing collateral in the new country c. s tarting the word-of-mouth effort by dedicating a website to their products d. s elling their artwork to an export-trading company in the new country e. s tarting a publicity tour of art and craft galleries in the new country ANSWER: a 211. A n online ice cream confection company planned to introduce their products to an international audience, including developing countries, from the beginning. Their original decision was to use the same products and the same promotion strategy for all countries. Which aspect of establishing the business will cause the most concern in developing countries? a. c alorie counts that change radically from flavor to flavor b. a dvertising tied to increased sales with warmer outdoor temperatures c. p ricing strategy due to differing availability of raw ingredients d. f oolproof physical distribution using unrated transportation systems e. d iffering levels of interest in sweet-tasting desserts in different cultures ANSWER: d

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Chapter 08: Global Marketing 212. A CEO of a family-owned garden equipment company had long championed countertrade as a way to gain access to foreign markets. Starting more than two decades ago, the firm traded its tools for landscape products made in the former Soviet Union. What is likely to be the method of trade used between the company and Russia today? a. c ontinuing to use countertrade with its history of success b. c hanging to normal exporting of the garden tools to Russia c. c hanging to routine importing of the garden tools into the United States d. s ubcontracting production to a Russian-owned facility e. l icensing their garden tools to a Russian manufacturer ANSWER: b 213. The board of directors of a foreign electric automobile manufacturer is deciding if they should establish production facilities in the United States. The directors have data about other car companies' assembly facilities in the United States. Other than having local manufacturing, which benefit would be the most convincing reason for the board to follow the lead of other companies? a. p resence of so many competitors to encourage innovation b. r esilience to deal with the high risk of locating in America c. a bility to control their own distribution channels d. s ome U.S. states do not have car assembly facilities e. a utomobiles can always be exported throughout the world ANSWER: c 214. A business school instructor talks about a "generally favorable attitude toward foreign investment." Which factor is most likely to be an obstacle to the American attitude toward foreign investment’s being totally favorable? a. l ess criticism by regular and social media outlets b. l onger-lasting products with more attractive features c. l arge advertising budgets that attract undue attention d. n eed for bilingual employees to explain the products e. c ompetition from foreign products for U.S. consumers ANSWER: e

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Chapter 08: Global Marketing 215. Global Consultants Inc. offers advice to small businesses considering international expansion. Its experts point out the potential advantages of going global, including a. Gaining new insights into consumer behavior.

b. Accessing alternative distribution strategies. c. Reducing the number of competitors. d. Facing less price competition. ANSWER: a, b 216. Several countries on the African continent are disadvantaged by both low per-capita incomes and substandard communications infrastructures. These countries are likely to be poor markets for _____ but good markets for ____. a. cars, bicycles

b. recreational boats, fishing rods c. cell phones, landline phones d. restaurant supplies, kitchen tools e. currency exchange, currency investment ANSWER: a, b, d 217. As your cheese exporting company expands around the globe, you are prepared to deal with potential revenue tariffs, protective tariffs, and even embargoes. However, an industry colleague reminds you of other potential trade barriers you have overlooked. These include: a. Special permits required to import dairy foods

b. Detailed inspection requirements that could delay your cheese deliveries c. Quotas on American-made cheeses d. Common markets for cheese ANSWER: a, b, c 218. You are nervous about expanding your company into China because of recent trade barriers in that country. Specifically, you worry about: a. Subsidies

b. Complex regulations c. Embargoes on American-made goods d. Currency promotion e. Customs union ANSWER: a, b

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Chapter 08: Global Marketing 219. A regional business association has asked you to participate in a panel discussion about NAFTA. Your company has benefited greatly from this accord, so you plan to strongly defend it. However, you must prepare to counter common criticisms of NAFTA, including: a. It may encourage dumping of United States goods into Canada.

b. It may cause the loss of United States jobs to cheap labor in Mexico. c. It is leading to controversial political integration among the member nations. d. It includes an unwieldy number of member nations. e. It has not been in existence long enough to have an effect. ANSWER: b 220. As the CEO of a corporation with customers in every part of the globe, you hope to see more of the world's nations become members of the WTO. This would benefit firms like yours because the World Trade Organization: a. Serves as a forum for trade negotiations

b. Mediates trade disputes c. Makes non-binding but highly respected decisions d. Provides technical assistance to developing countries e. Monitors national trade policies ANSWER: a, b, d, e 221. You work for an American wine importer. In choosing which brands to import, you consider different vineyards': a. Ability to maintain quality b. Flexibility in filling orders of varying sizes c. Response time in filling orders d. Appeal to American wine drinkers e. Participation in offset agreements ANSWER: a, b, c, d 222. As your women's clothing firm expands abroad, you are arguing for a global marketing strategy. However, a more seasoned coworker easily counters your weakest argument. Which point does he counter? a. It will bring the advantage of economies of scale to our marketing activities.

b. It will reinforce the image of our clothing brand everywhere. c. It will overcome cultural and geographic differences in what women wear. d. It will be cheaper than other approaches to implement. e. It will enable you to define a standard marketing mix. ANSWER: c

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Chapter 08: Global Marketing 223. Many American fast food sellers have engaged in product adaptation, changing their menus to accommodate consumer tastes in countries like India and Japan. Other Western firms doing business abroad have engaged in promotion adaptation. Which of the following factors would most likely prompt a firm to use the latter strategy? a. Varying literacy rates

b. Currency fluctuations c. Poor channels of distribution d. Price competition ANSWER: a 224. You work for a Middle Eastern firm that has just decided to sell jewelry to the United States market. This decision was motivated by several accurate considerations, including: a. Size of the United States market for jewelry

b. High levels of discretionary income in the United States c. Political stability in the United States d. Few foreign competitors ANSWER: a, b, c 225. Cameron is a leather artisan who creates custom satchels, hand bags, and computer briefcases for customers across the globe. He posts photos of his work on Instagram, uses Twitter to share fashion trends, and has virtual store on Etsy. Which factor has made it possible for Cameron to become an international marketer? a. t he Internet b. Cameron's creativity c. C ameron's ability to Tweet catchy posts using Twitter d. C onsumer's desire to purchase custom products ANSWER: a 226. Britney and Sam will be getting married in Bermuda and have started planning their destination wedding. They would like to serve wine and champagne before the wedding in their suite for their friends and family and thought they might bring 4 to 6 bottles of their favorite California wine. However, they were discussing this with the onsite wedding planner and she told them that they were allowed to enter the country with 1 bottle of wine each and any additional bottles would incur a charge of $10.63. What is the term for the additional charge that Bermuda could charge Britney and Sam for the additional bottles of wine? a. t ariff b. i mport quota c. t rade embargo d. e xport quota ANSWER: a

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Chapter 08: Global Marketing 227. China has been scrutinized for exporting shrimp into the United States at extremely low prices. The United States inspectors suspect that China is selling the shrimp at extremely low prices - possibly even lower than what Chinese consumers might pay. This practice is known as _______. a. d umping b. e xchange control c. f looding d. p ushing ANSWER: a 228. Which of the following statements is true about the European Union (EU)? a. T he EU has adopted a common currency. b. T he EU meets to determine trade restrictions. c. T he EU only allows free trade of certain products among member nations. d. T he pound is the currency utilized by members of the EU. ANSWER: a 229. Coca Cola is a worldwide manufacturer and distributor of carbonated beverages. A visit to its museum - the World of Coca Cola in Atlanta, GA features a beverage lounge where visitors can sample beverages from around the world. There are five tasting stations arranged geographically – Africa, Asia, Europe, Latin America, and North America. Each station offers different beverages to sample that are unique to that region. What aspect of achieving global marketing success do the variety of products by geographic region represent? a. t he ability to adapt products to local preferences and culture b. t he importance of packaging and avoiding colors that might have negative meanings c. t he ability to segment the markets by region d. t he importance of hiring local workers ANSWER: a 230. Which agreement was negotiated between the United States and the Dominican Republic and various Central American nations? a. C AFTA-DR b. U nited Central American/Dominican Treaty c. F TAA d. N AFTA ANSWER: a

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Chapter 08: Global Marketing 231. Liberty Production is a small company which produces flags and other patriotic-themed items such as banners. Historically, they have focused on the United States market but recently recognized they could enhance sales by creating patriotic items for other countries. They would like to keep their expenses low as the expand internationally and have reached an agreement with a company who will purchase the merchandise and resell the items to international customers. Liberty Production will not have any control over marketing or distribution activities but they appreciate the simplicity of this business model. Liberty Production is most likely utilizing a(n) ________ to expand their global footprint. a. e xport trading company (ETC) b. e xport-management company (EMC) c. f oreign licencing d. s ubcontracting ANSWER: a 232. Cremant Cellars is a family-owned winery located in the Loire region of France. Cremant is a sparkling wine and the winery owners are interested in gaining access to markets outside of France as a way to generate alternative sources of revenue. The owner, Jacques has met with several firms and decided to work with Export Partners, a firm that has expertise in obtaining business with alcohol distributors across Europe as well as Asia and the Untied States. Export Partners will also provide assistance in managing the necessary paperwork, complying with local laws and regulations regarding proper labeling and food/beverage testing. Export Partners is most likely serving as a(n) ___________ to assist Cremant Cellars with their international expansion. a. e xport management company (EMC) b. e xport trading company (ETC) c. s ubcontractor d. f ranchisor ANSWER: a 233. Jiffy peanut butter is a favorite brand and is owned by the J.M. Smucker Company since 2001 when it was purchased from Procter and Gamble. The J.M. Smucker Company believes that peanut butter is universally enjoyed across the globe and does not make any modifications to its marketing strategy when exporting to international markets. Thus, the Jiffy packaging, product line and commercials are standardized with the exception of providing translation in the local country's dominant dialect. The J.M. Smucker Company is utilizing ________ strategy for Jiffy peanut butter. a. g lobal marketing b. m ultidomestic marketing c. h olistic marketing d. d ominant marketing ANSWER: a

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Chapter 08: Global Marketing 234. Louis Vuitton is a French fashion brand known for creating and marketing high-end hand bags and luggage adorned with its highly recognizable logo. Louis Vuitton products are sold through their exclusive retail stores across the world and they utilize advertising with very little or no copy - featuring their products in fashion magazines. Since their ads focus on the products and only include the brand name, the _________ marketing strategy is applied. a. g lobal b. d irect c. m ultidomestic d. o ne-nation ANSWER: a 235. It was recently announced that Russia wants to buy 80,000 tonnes of natural rubber and an amount of rice, while Thailand is interested in purchasing Russian-made helicopters to be used in fighting bushfires. No cash is expected to be utilized - just the exchange of goods. A working group from both countries will discuss details of the deal, such as the exact amount of products involved. This is an example of _________. a. c ountertrade b. e xport cooperation c. g lobal exchange d. i nternational subsidy trading ANSWER: a 236. Which of the following is an advantage of implementing a one-product, one message approach to international marketing? a. e nhanced recognition of the company's brand b. h igher marketing expenses c. i ncreased adoption of the brand d. reduced competitive threats ANSWER: a 237. A toy company based in India is interested in exporting their products to the United States. Which of the following is a reason why the U.S. is an attractive market for foreign companies? a. U .S. consumers have a high level of discretionary income b. T he U.S. has a shrinking economy c. C onflict between the political parties has led to concerns about political stability d. U .S. consumers prefer purchasing imported products ANSWER: a

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Chapter 08: Global Marketing 238. Which of the following has led to the success of Toyota, Honda and Kia Motors in the United States? a. p roduction facilities in the United States b. l imited access to distribution c. c ontinued ability to import products d. l ow ocean shipping costs ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 1. A market includes any person or entity that has the willingness and the purchasing power to buy a product. a. True b. False ANSWER: True 2. Typically, a single marketing mix strategy attracts all sectors of a market. a. True b. False ANSWER: False 3. The target market for a product is the specific segment of consumers most likely to purchase that particular product. a. True b. False ANSWER: True 4. Raw silk is an example of a consumer product. a. True b. False ANSWER: False 5. Business products contribute directly or indirectly to the production of other goods and services for resale. a. True b. False ANSWER: True 6. Products bought by ultimate customers for personal use are known as consumer products. a. True b. False ANSWER: True 7. A hotel purchases towels for use in its rooms. In this context, these towels will be considered business products. a. True b. False ANSWER: True

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Chapter 09: Market Segmentation, Targeting, and Positioning 8. Items can be classified as business products, not because of what they are, but because of how they will be used. a. True b. False ANSWER: True 9. Since rubber purchased by Goodyear is utilized to manufacture tires that are ultimately used by consumers for their automobiles, rubber is a consumer product for Goodyear. a. True b. False ANSWER: False 10. Detergent packets purchased by a leading laundry service are considered business products. a. True b. False ANSWER: True 11. Firms often purchase legal services from external consultants. However, as this does not directly contribute to the firm’s production activities, legal services cannot be considered a business product. a. True b. False ANSWER: False 12. Division of the total market into smaller, relatively homogeneous groups is known as market optimization. a. True b. False ANSWER: False 13. Firms must attempt to group consumers according to the presence or absence of those factors that affect purchase decisions. a. True b. False ANSWER: True 14. Not-for-profit organizations practice market segmentation. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 15. The number and size of the market segments chosen by a firm must match its marketing capabilities. a. True b. False ANSWER: True 16. Targeting a large number of small markets can produce an expensive, complex, and inefficient marketing strategy. a. True b. False ANSWER: True 17. Market segmentation attempts to isolate traits that distinguish a certain group of consumers from the overall market. a. True b. False ANSWER: True 18. Families, bachelors, and retirees could be considered separate market segments for a company promoting travel packages. a. True b. False ANSWER: True 19. Marketers rarely encounter differences among members of a target group, as they segment potential consumers into homogeneous groups. a. True b. False ANSWER: False 20. Division of an overall market into homogeneous groups based on their locations constitutes socioeconomic segmentation. a. True b. False ANSWER: False

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Chapter 09: Market Segmentation, Targeting, and Positioning 21. Geographic indicators such as job growth give useful guidance to marketers, depending on the type of products they sell. a. True b. False ANSWER: True 22. Automobile manufacturers and food processing companies segment a particular geographic region based on the same factors. a. True b. False ANSWER: False 23. Core based statistical areas (CBSA) are comprised of metropolitan and micropolitan statistical areas. a. True b. False ANSWER: True 24. A metropolitan statistical area (MSA) is a freestanding urban area with a population in the urban center of at least 50,000 and a total MSA population of 100,000 or more. a. True b. False ANSWER: True 25. A micropolitan statistical area will have at least one urbanized area of 50,000 or more inhabitants. a. True b. False ANSWER: False 26. Buyers in metropolitan statistical areas exhibit social and economic homogeneity. a. True b. False ANSWER: True 27. Very few residents of a micropolitan statistical area commute outside the area. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 28. Consolidated metropolitan statistical areas (CMSA) are limited to the same state, making it difficult for marketers to tap into similar product-use patterns among populations in neighboring states. a. True b. False ANSWER: False 29. Primary metropolitan statistical areas (PMSAs) are identified within areas of 1-million-plus populations. a. True b. False ANSWER: True 30. A consolidated metropolitan statistical area comprises of two or more primary metropolitan statistical areas. a. True b. False ANSWER: True 31. Core regions are locations where marketers get majority of their sales. a. True b. False ANSWER: True 32. Home Depot introduced a new line of riding lawn mowers. The company decided to focus more on people living in the suburbs than those in the city because a survey showed the former category to be more inclined toward gardening. This is an example of a demographic segmentation by Home Depot. a. True b. False ANSWER: False 33. Geographic segmentation provides useful distinctions when regional preferences or needs exist. a. True b. False ANSWER: True 34. Geographic information systems (GIS) simplify the job of analyzing marketing information by relating data to their locations. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 35. Geographic information systems help marketers map out most efficient delivery routes. a. True b. False ANSWER: True 36. Psychographic segmentation is the most common method of market segmentation. a. True b. False ANSWER: False 37. Geographic segmentation is also called socioeconomic segmentation. a. True b. False ANSWER: False 38. Dividing an overall market into homogeneous groups based on gender and age would constitute demographic segmentation. a. True b. False ANSWER: True 39. Children exert considerable influence over household food purchases. a. True b. False ANSWER: True 40. Generation X is very family-oriented, well educated, and optimistic. a. True b. False ANSWER: True 41. The group born between 1968 and 1979, now generally in their early 30s to early 40s are referred to as Generation Y. a. True b. False ANSWER: False

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Chapter 09: Market Segmentation, Targeting, and Positioning 42. Baby Boomers are decreasing in popularity as a market segment due to their declining disposable income. a. True b. False ANSWER: False 43. Baby boomers are people born between 1946 and 1964. a. True b. False ANSWER: True 44. Members of Generation Y gravitate to activities that provide constant entertainment and immediate gratification. a. True b. False ANSWER: True 45. The Asian Americans are currently the largest ethnic minority group in the United States. a. True b. False ANSWER: False 46. Majority-minority counties are places where more than half the population is a single racial or ethnic group other than non-Hispanic white. a. True b. False ANSWER: True 47. The Asian American population is more geographically distributed than either Hispanics or African Americans. a. True b. False ANSWER: False 48. Asian Americans are an attractive target to marketers as they have the fastest rising income. a. True b. False ANSWER: True

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Chapter 09: Market Segmentation, Targeting, and Positioning 49. The market segmentation that is based on the stages of the family lifecycle is a form of demographic segmentation. a. True b. False ANSWER: True 50. Married couples enter the “empty nest” stage once their children start living on their own. a. True b. False ANSWER: True 51. According to Engel's laws, the percentage of income spent on food increases with increased income. a. True b. False ANSWER: False 52. Engel observed that the percentage of income spent on household operations and clothing remains constant even when the household income increases. a. True b. False ANSWER: True 53. Psychographic segmentation helps marketers to gain a sharper insight into consumer purchasing behavior. a. True b. False ANSWER: True 54. The revised VALS system categorizes consumers by their occupations. a. True b. False ANSWER: False 55. Psychographic segmentation divides a population into groups with similar values and lifestyles. a. True b. False ANSWER: True

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Chapter 09: Market Segmentation, Targeting, and Positioning 56. Using AIO statements allows marketing researchers to develop lifestyle profiles. a. True b. False ANSWER: True 57. Psychographic segmentation involves segmenting the consumers on the basis of the benefits they seek from a product. a. True b. False ANSWER: False 58. The 80/20 principle, also called Pareto's law, states that 80 percent of a product’s revenues come from 20 percent of its customers. a. True b. False ANSWER: True 59. A management-driven method for identifying market segments involves asking customers for the product attributes important to them. a. True b. False ANSWER: False 60. The first stage in the market segmentation process, after identifying promising segments, is to produce a forecast of market potential within each segment. a. True b. False ANSWER: False 61. Once the total market potential has been estimated by a firm, the next step in the market segmentation process is to forecast the probable market share. a. True b. False ANSWER: True

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Chapter 09: Market Segmentation, Targeting, and Positioning 62. During the process of market segmentation, finalizing the marketing strategy and tactics helps firms to determine the costs of marketing and the expected level of resources it must commit. a. True b. False ANSWER: True 63. Typically, magazines can be successfully marketed to consumers through mass marketing strategies. a. True b. False ANSWER: False 64. A company that practices differentiated marketing can generate more sales compared to those generated by undifferentiated marketing. a. True b. False ANSWER: True 65. Niche marketing is best suited for firms that offer highly specialized goods and services. a. True b. False ANSWER: True 66. Up & Away Flying Corporation recently began manufacturing private helicopters. If they have a limited advertising budget, concentrated marketing would be the ideal marketing strategy for this firm. a. True b. False ANSWER: True 67. Concentrated marketing is also known as niche marketing. a. True b. False ANSWER: True 68. Concentrated marketing strategy ties a firm’s growth to a specific market segment. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 69. If a company markets a consumer product, such as toilet paper, in bulk quantities to the entire market, it is involved in micromarketing. a. True b. False ANSWER: False 70. The marketing strategy that targets potential customers based on specific occupation or lifestyle is called micromarketing. a. True b. False ANSWER: True 71. As compared to undifferentiated marketing, applying a micromarketing strategy allows companies to reach larger markets. a. True b. False ANSWER: False 72. Micromarketing may cause a company to lose sight of other, larger markets. a. True b. False ANSWER: True 73. Micromarketing can target even individuals. a. True b. False ANSWER: True 74. An undifferentiated marketing strategy is more suited for a firm that markets generic products rather than individual brand names. a. True b. False ANSWER: True 75. Competition in the market usually forces firms to adopt a differentiated marketing strategy. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 76. Placing a product at a certain point or location within a market in the minds of prospective buyers is known as market mapping. a. True b. False ANSWER: False 77. "For the same dollars that you spend on a no-frills ticket to Los Angeles, fly Business Class with us!" is the advertising statement issued by FlyHigh Airlines. It represents an attempt by FlyHigh Airlines to position itself with respect to its competitors. a. True b. False ANSWER: True 78. A positioning map provides a valuable tool to help managers position products by graphically illustrating consumers' perceptions of competing products within an industry. a. True b. False ANSWER: True 79. Firms can reposition their already successful products in order to gain a greater market share. a. True b. False ANSWER: True 80. Kim's Egg Rolls were being promoted as a dinner item but after a few years the company decided to change their packaging and advertising to promote the egg rolls as evening snacks. This is an example of repositioning a product. a. True b. False ANSWER: True 81. _____ are goods and services purchased for use either directly or indirectly in the production of other goods and services for resale.

a. Impulse goods b. Shopping goods c. Business products d. Unsought products ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 82. Goods and services purchased by the ultimate consumer for personal use are called _____ products. a. business b. primary c. consumer d. secondary ANSWER: c 83. The determination of whether pencils are consumer products or business products is based on: a. the purpose for which the pencils are purchased. b. the number of pencils purchased. c. the place where the pencils are purchased. d. the total price paid for the pencils. ANSWER: a 84. Kyle plans to buy new tires for a car that his family uses for camping trips. These tires are of the same type like those that are used on General Motors commercial trucks and can be purchased from Industrial Tire Company. The tires that Kyle will buy for his car can be classified as _____ products. a. business b. service c. MRO d. consumer ANSWER: d 85. The lumber that a carpenter purchases to make a table for a customer can be classified as a(n): a. impulse product. b. business product. c. consumer good. d. final product. ANSWER: b 86. Iron ore and raw cotton are examples of: a. personal products. b. shopping products. c. impulse products. d. business products. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 87. When a product is used in the production of another good that is destined for resale, the product is considered as a(n): a. consumer product. b. business product. c. end product. d. used product. ANSWER: b 88. The division of the total market into smaller, homogenous groups is called _____. a. customer aggregation b. market capitalization c. market segmentation d. brand segmentation ANSWER: c 89. Which of the following is a basic requirement for effective market segmentation? a. The firm must avoid focusing on consumer-dependent variable, such as discretionary income, while conducting market segmentation. b. The market segment must present measurable purchasing power and size. c. The company must expand beyond its marketing capabilities to capture those market segments that have reached the maturity stage in the product life cycle. d. The company must target a large number of small market segments so that they can develop effective strategies to appeal to them. ANSWER: b 90. A firm that divides its customers into homogeneous groups based on their locations is said to be practicing _____ segmentation. a. psychographic b. product-based c. geographic d. demographic ANSWER: c

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Chapter 09: Market Segmentation, Targeting, and Positioning 91. _____ is the largest metropolitan area in the world. a. New York b. Tokyo c. Mexico City d. London ANSWER: b 92. The Fayetteville-Springdale-Rogers region of Arkansas has approximately 340,000 people. Fayetteville is an urban center and it alone has a population of 60,000. The Fayetteville-Springdale-Rogers region would be classified as a: a. consolidated metropolitan statistical area (CMSA). b. primary metropolitan region (PMR). c. metropolitan statistical area (MSA). d. micropolitan statistical area (µSA). ANSWER: c 93. A micropolitan statistical area is an area that: a. includes a set a counties within an area of 1-million-plus population. b. has a urban center of 50,000 or more inhabitants. c. includes two or more primary metropolitan statistical areas. d. has at least one town of 10,000 to 49,999 people. ANSWER: d 94. An urban area that includes two or more primary metropolitan statistical areas (PMSA) is called a _____. a. metropolitan statistical area (MSA) b. core based micropolitan region (CBMR) c. micropolitan statistical area (µSA) d. consolidated metropolitan statistical area (CMSA) ANSWER: d 95. A _____ is an urbanized county or set of counties with social and economic ties to nearby areas. a. consolidated micropolitan statistical area b. primary metropolitan statistical area c. core based statistical area d. consolidated metropolitan statistical area ANSWER: b

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Chapter 09: Market Segmentation, Targeting, and Positioning 96. Japanese automaker, Subaru, generates more than half of its sales in just four states (Alaska, Colorado, Maine, and Washington). These states constitute Subaru’s: a. primary market. b. core region. c. secondary market. d. capital region. ANSWER: b 97. _____ are computer systems that help marketers analyze marketing information by assembling, storing, manipulating, and displaying data by their location. a. Core based information systems b. Inertial navigation systems (INS) c. Geographic information systems (GIS) d. Advanced navigation assessment systems ANSWER: c 98. The most common method of market segmentation is: a. product based segmentation. b. demographic segmentation. c. economic segmentation. d. psychographic segmentation. ANSWER: b 99. Socioeconomic market segmentation is another name for _____ segmentation. a. product-related b. demographic c. psychographic d. geographic ANSWER: b 100. _____ defines consumer groups according to variables such as gender, age, income, occupation, education, sexual orientation, household size, and stage in the family lifecycle. a. Geographic segmentation b. End-use segmentation c. Product-based segmentation d. Demographic segmentation ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 101. The cohort effect describes: a. why members of the same psychographic group decide to vote the same way and have a lot of similarities in their choices. b. how Generation X uses its financial power to influence product trends, and gets closely followed by the marketers. c. the effect of demographic characteristics in analyzing purchase habits, product usage rates, and brand preference. d. the tendency of members of a generation to be influenced and bound together by events occurring during their key formative years. ANSWER: d 102. Lululemon Athletica, which specializes in athletic wear for women, recently launched a website featuring Ivivva, a new line of athletic and dance clothing for girls. Based on the information given in this example, Lululemon Athletica is using _____ segmentation to segment its markets. a. geographic b. psychographic c. demographic d. core based ANSWER: c 103. The group born between 1968 and 1979, now generally in their early 30s to early 40s, often are referred to as _____. a. Baby Boomers b. teenagers c. seniors d. Generation X ANSWER: d 104. _____are those born between 1946 and 1964 and are a popular segment to target because of their numbers and income levels. a. Baby Boomers b. Generation X c. Generation Y d. Tweens ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 105. If a company markets its breakfast cereal to children, it is using _____ segmentation to segment its markets. a. psychographic b. demographic c. end-use d. geographic ANSWER: b 106. Ford Motor Company surveyed 10,000 customers to analyze their needs and preferences in automobiles. At the end of the survey, respondents were asked to provide demographic information, including age. Responses concerning preferences were strikingly similar for each group within a specific five-year age range. This result is an example of the _____ effect. a. income b. life cycle c. cohort d. Hafner's ANSWER: c 107. “The Millennial Generation” is also known as _____. a. the Baby Boomers generation b. Generation Next c. Generation X d. the Tweens generation ANSWER: b 108. Places where more than half the population is a single racial or ethnic group other than non-Hispanic white are called as _____. a. minority counties b. majority-minority counties c. majority counties d. native-majority counties ANSWER: b

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Chapter 09: Market Segmentation, Targeting, and Positioning 109. Which of the following is the largest racial/ethnic minority group in the United States? a. African Americans b. Native Americans c. Asian Americans d. Hispanic Americans ANSWER: d 110. Which of the following racial/ethnic minority groups is an attractive target for marketers because of their fastestgrowing income? a. Hispanics b. Native Americans c. African Americans d. Asian Americans ANSWER: d 111. A young single person setting up an apartment for the first time is most likely to be a good prospect for: a. expensive furnishings. b. luxury cars, personalized gifts and power tools. c. small home appliances such as coffee makers and toasters. d. health care products and insurance policies. ANSWER: c 112. The “empty nest” stage in the family lifecycle includes: a. young unmarried people. b. married couples whose children are living on their own. c. married couples with children in their growing years. d. newly married couples without children. ANSWER: b 113. Which of the following changes in the family lifecycle behavior is noted by researchers in the past decade? a. Young unmarried people buying new homes and expensive furnishings b. Newly married people cooking almost every meal at home instead of dining out c. “Boomerang” children returning home, sometimes with their own families d. Parents with a second or subsequent child buying new sets of cribs, changing tables, and so forth ANSWER: c

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Chapter 09: Market Segmentation, Targeting, and Positioning 114. One of the reasons cited by the U.S. Department of Commerce for the trend toward smaller households is: a. young people’s tendency to marry early. b. the increase in the number of same-sex couples. c. the low cost of living. d. the frequency of divorce. ANSWER: d 115. Which of the following changes is seen as a result of a rise in households with only one person? a. Increase in apartment building developments b. Decrease in the average size of new cars c. Decrease in the marketing of vacations d. Increase in single-serve food products ANSWER: d 116. Engel's laws state that, as household income increases: a. the percentage of income spent on items such as recreation and education increases. b. the percentage of income spent for clothing and household operations increases. c. the percentage of income spent on medical and personal-care decreases. d. the percentage of income spent on food remains constant. ANSWER: a 117. Five years ago, Joshua spent 28 percent of his $45,000 yearly income on his bachelor apartment. Today, Joshua is earning $60,000 annually. According to Engel's laws, the percentage of income he will spend on his new apartment will be: a. more than 70 percent. b. the same as it was back then, about 28 percent. c. about 50 percent. d. less than 10 percent. ANSWER: b 118. Psychographic segmentation divides a population into groups based on: a. their use of the product. b. their income and expenditure patterns. c. their geographic location. d. their attitudes, values and lifestyles. ANSWER: d

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Chapter 09: Market Segmentation, Targeting, and Positioning 119. Which of the following segmentation approaches is most likely to help marketers quantify aspects of consumers’ personalities and lifestyles to create goods and services for a target market? a. Psychographic segmentation b. Demographic segmentation c. Geographic segmentation d. Product-based segmentation ANSWER: a 120. The revised VALS segmentation system categorizes consumers based on _____. a. religious affiliations b. political views c. self-motivation d. social values ANSWER: c 121. Which of the following factors falls under the resource dimension of the VALS system? a. Social attitudes b. Primary motivation c. Eagerness to buy d. Political views ANSWER: c 122. In the VALS system, action-motivated consumers are those who: a. have a set of ideas and morals or principles they live by. b. are influenced by symbols of success. c. seek physical activity, variety, and adventure. d. have high energy level and are eager to buy products. ANSWER: c 123. The VALS system will categorize consumers who are influenced by symbols of success as: a. action-motivated consumers. b. achievement-motivated consumers. c. principle-motivated consumers. d. self-expression motivated consumers. ANSWER: b

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Chapter 09: Market Segmentation, Targeting, and Positioning 124. Which of the following is a psychographic category created by the VALS system that categorizes consumers by characteristics that correlate with purchase behavior? a. Altruists b. Achievers c. Intimates d. Devouts ANSWER: b 125. According to the VALS framework, achievement-motivated consumers are influenced by: a. symbols of success. b. energy levels. c. adventure travel. d. fun seekers ANSWER: a 126. The VALS system divides consumers into _____categories. a. five b. six c. seven d. eight ANSWER: d 127. Which of the following is not one of the motivations used to classify consumers in the VALS framework? a. Achievement motivated b. Action motivated c. Gender motivated d. Principle motivated ANSWER: c 128. The revised VALS framework categories consumers by characteristics that correlate with _____. a. age b. socioeconomic level c. purchase behavior d. gender ANSWER: c

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Chapter 09: Market Segmentation, Targeting, and Positioning 129. AIO statements describe which of the following? a. Age, interests, and opinions b. Activities, interests, and opinions c. Activities, interpersonal relationships, and opinions d. Aptitude, intelligence, and opinions ANSWER: b 130. Segmentation by benefits sought is a product-related segmentation approach that: a. determines the marketer's effectiveness in satisfying the consumer. b. measures brand loyalty and consumer perception. c. re-evaluates customer reactions post-consumption. d. focuses on the attributes that people seek in a product. ANSWER: d 131. A technology company that makes computers for professional use is trying to segment its customers. The company asked some professional computer users to evaluate the importance of various computer attributes that influence their purchase decisions and then used this data to segment the consumers based on similar response patterns. This is an example of segmentation by: a. brand loyalty. b. usage rates. c. expenditure pattern. d. benefits sought. ANSWER: d 132. The 80/20 principle states that: a. market segmentation succeeds 80 percent of the time and fails the remaining 20 percent of the time. b. roughly 80 percent of total product sales come from 20 percent of customers. c. nearly 80 percent of the market segment is generally tapped within first 10 years of the introduction of the product, and 20 percent remains unreached. d. 80 percent of the market can be segmented, and 20 percent cannot. ANSWER: b

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Chapter 09: Market Segmentation, Targeting, and Positioning 133. A frequent flyer program used by an airline is an example of _____. a. segmentation by benefits sought b. brand loyalty segmentation c. psychographic segmentation d. socioeconomic segmentation ANSWER: b 134. A consumer goods company segments its markets on the basis of purchase patterns of their customers. The company groups its consumers who regularly buy their product into heavy, moderate, and light users, and nonusers. This segmentation approach is an example of _____. a. segmentation by benefits sought b. geographic segmentation c. segmentation by usage rates d. distributive segmentation ANSWER: c 135. The product-related segmentation of consumers based on the strength of their attachment and allegiance to their preferred products is called _____ segmentation. a. values and lifestyles b. business-to-business c. psychographic d. brand loyalty ANSWER: d 136. Before beginning the market segmentation process, a firm should: a. select target market segments. b. forecast total market potential. c. forecast market share. d. identify bases for segmenting markets. ANSWER: d

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Chapter 09: Market Segmentation, Targeting, and Positioning 137. CoreLogix Inc., has segmented the market as per product usage rates. They have also developed the relevant profile for each of their segments. What would be the next logical step for them in this process of segmentation? a. Commit resources in developing one or more segments b. Forecast market potential c. Forecast probable market share d. Design specific marketing strategy ANSWER: b 138. While researching on the idea of opening his own health club, Tom learned that there are 11 million health club members in the United States, and 90 percent of them are between the ages of 18 and 49. They prefer to exercise with people of their own gender, and the majority of them are urban dwellers. During the process of market segmentation, this information is most likely to be used by Tom for: a. observational analysis. b. marketing research. c. forecasting total market potential. d. developing a market segment profile. ANSWER: d 139. Which of the following factors sets the upper limit on demand generated by a particular market segment? a. Market potential of the segment under analysis b. Psychographic characteristics of the population in the segment c. Geographic dispersion of potential customers in the market segment d. Lifestyle characteristics of the population in the segment ANSWER: a 140. In the process of market segmentation, once the market potential of the segments has been estimated, the next step is to: a. develop a marketing mix. b. develop a relevant profile for each segment. c. forecast probable market share. d. seek strategies to enter the market. ANSWER: c

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Chapter 09: Market Segmentation, Targeting, and Positioning 141. Which of the following products would be the best choice to be marketed using an undifferentiated marketing strategy? a. Luxury automobiles b. Healthy snack foods c. Table salt d. Imported wine ANSWER: c 142. Undifferentiated marketing is also called _____. a. societal marketing b. micro marketing c. concentrated marketing d. mass marketing ANSWER: d 143. An undifferentiated marketing strategy: a. involves developing different marketing mixes for different segments. b. benefits from the control and efficiency of short production runs. c. is also known as a concentrated marketing strategy. d. is efficient from a production point of view. ANSWER: d 144. The marketing strategy that focuses on producing a single product and marketing it to all customers is called: a. concentrated marketing. b. micromarketing. c. mass marketing. d. differentiated marketing. ANSWER: c 145. Oscar Mayer, a maker of various meat products, introduced Lunchables, a product specifically aimed at children. This is an example of: a. undifferentiated marketing. b. differentiated marketing. c. mass marketing. d. micromarketing. ANSWER: b

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Chapter 09: Market Segmentation, Targeting, and Positioning 146. Compared to undifferentiated marketing, the firm that practices differentiated marketing may generally expect: a. less sales by segment. b. lower total production costs. c. greater promotional costs. d. lower inventory costs. ANSWER: c 147. A _____ marketing strategy focuses on producing several products and pricing, promoting, and distributing them with several marketing mixes designed to satisfy smaller segments. a. mass b. differentiated c. societal d. demographic ANSWER: b 148. Which of the following statements is true of differentiated marketing? a. A company practicing differentiated marketing attempts to satisfy everyone in the market with one standard product. b. As compared o undifferentiated marketing, differentiated marketing leads to lower inventory and promotional cost. c. Differentiated marketing approach can appeal to a small company that lacks the financial resources of its competitors. d. Differentiated marketing helps a company to diversify and reach new customers. ANSWER: d 149. A company that chooses to focus its efforts on satisfying only one market segment for profit is using a(n) _____ strategy. a. niche marketing b. societal marketing c. undifferentiated marketing d. mass marketing ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 150. A firm that chooses to target potential customers by zip code, specific occupation, or even lifestyle is said to be practicing: a. mass marketing. b. hypermarketing. c. micromarketing. d. undifferentiated marketing. ANSWER: c 151. Which of the following statements is true regarding micromarketing? a. Micromarketing techniques are mostly used by mass marketers. b. Micromarketing is more narrowly focused than concentrated marketing. c. Micromarketing is also called undifferentiated marketing. d. Micromarketing involves producing a single product and marketing it in the same way to all potential customers. ANSWER: b 152. American Express, a large firm with many financial products, recently introduced two new credit cards designed for very specific markets: The Knot, for engaged couples, and The Nest, for newlyweds. This is an example of _____ marketing. a. undifferentiated b. concentrated c. mass d. societal ANSWER: b 153. The four basic determinants of a market-specific segmentation strategy include company resources, competitors' strategies, stage in the product lifecycle, and: a. product demand. b. product homogeneity. c. environmental constraints. d. organizational efficiencies. ANSWER: b

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Chapter 09: Market Segmentation, Targeting, and Positioning 154. The latest ad of Crest toothpaste says “Crest is a cavity fighter.” This is an example of a positioning strategy based on: a. product price/quality. b. product homogeneity. c. product application. d. product users. ANSWER: c 155. The tagline used by Walmart, “Save money. Live better” is an example of a positioning strategy that is based on _____. a. quality b. attributes c. product users d. competitors ANSWER: d 156. The tagline used by Blue Jet cleaners, “Pay for Performance,” is an example of a positioning strategy that is based on _____. a. product homogeneity b. product users c. price/quality d. competitors ANSWER: c 157. Starbucks marketing itself as “premium coffee” beverage retailer is an example of a positioning strategy based on _____. a. product class b. product users c. product life cycle stage d. product homogeneity ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 158. Placing a product at a certain point or location within a market in the minds of prospective buyers is known as _____. a. positioning b. social referencing c. value engineering d. optimizing ANSWER: a 159. Marketers applying a positioning strategy want to: a. make their product look as much like the market leader as possible. b. emphasize a product’s unique advantages and differentiate it from competitors’ options. c. identify the different product attributes desired by different market segments. d. target only the loyal users of the product. ANSWER: b 160. A positioning map: a. is used primarily by companies utilizing undifferentiated marketing strategies. b. can be used only for already successful products in the market. c. shows how consumers view a product relative to competitive products. d. outlines how to introduce a new product to the marketplace. ANSWER: c 161. Differentiate between a consumer product and a business product. Give examples. ANSWER: Consumer products are products bought by ultimate consumers for personal use. Example: cell phones, fashion magazines Business products are goods and services purchased for use either directly or indirectly in the production of other goods and services for resale. Example: rubber, raw cotton Sometimes a single product can serve different uses. Or a product that was once a business product might be modified for consumer use, and vice versa. For example, a line of professional cookware sold to restaurants is a business product, but the same could be adapted by its manufacturer to become a line of cookware for home use, a consumer product.

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Chapter 09: Market Segmentation, Targeting, and Positioning 162. Explain how each product listed below can be classified as either a consumer and/or business product. 1. Shampoo 2. Steel bars for concrete reinforcement 3. Lawn mower 4. Computer 5. Automobile ANSWER: Shampoo is normally a consumer product unless it is purchased by a hair salon for use in servicing customers. Steel bars would normally be considered a business product unless a consumer purchases them from a home decor store to use in a do-it-yourself project. A lawn mower could be purchased by a homeowner (a consumer product) but could also be purchased by a lawn care company (used in the production of a service). Both computers and automobiles can be consumer purchases or business products when purchased by a company. 163. Define market segmentation. Discuss its role in developing an effective marketing strategy. ANSWER: Market segmentation is the division of the total market into smaller, relatively homogeneous groups. In today’s business world, too many variables exist in consumer needs, preferences, and purchasing power to attract all consumers with a single marketing mix. Firms most often change products to meet the needs of different market segments. They must attempt to identify the factors that affect purchase decisions and then group consumers according to the presence or absence of these factors. This practice of segmenting consumers helps marketers to adjust their marketing strategies to meet the needs of each group. 164. What are the basic requirements or criteria necessary for effective market segmentation? ANSWER: The criteria necessary for effective market segmentation are as follows: a) The market segment must present measurable purchasing power and size. b) Marketers must find a way to promote and serve the market segment effectively. c) The identified segments must be large enough to give the firms a good profit potential. d) The number and size of chosen segments must match the firm's marketing capabilities. 165. What is geographic segmentation? How is it useful for marketers? ANSWER: Geographic segmentation is the practice of dividing an overall market into homogeneous groups based on their locations. Marketers use geographic segmentation to identify general patterns in buying behavior. It can also be used, along with other factors such as climate, location needs, and regional preferences to determine if certain products will sell in certain areas. Geographic indicators such as job growth give useful guidance to marketers depending on the type of products they sell. Demand for some categories of goods and services can vary according to geographic region, and marketers must be aware of how these regions differ. Geographic segmentation provides useful distinctions when regional preferences or needs exist.

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Chapter 09: Market Segmentation, Targeting, and Positioning 166. List out the different categories used by the U.S. government to classify urban data. Give examples. ANSWER: The government classifies urban data using the following categories: 1) A core based statistical area (CBSA) refers collectively to metropolitan and micropolitan statistical areas. Each CBSA must contain at least one urban area with a population of 10,000 or more. 2) A metropolitan statistical area (MSA) is a freestanding urban area with a population in the urban center of at least 50,000 and a total metropolitan statistical area population of 100,000 or more. Buyers in metropolitan statistical areas exhibit social and economic homogeneity and usually border on nonurbanized counties. Examples include Little Rock, Arkansas and Rochester, New York. 3) A micropolitan statistical area has at least one town of 10,000 to 49,999 people. It can have several such towns, and proportionally few of its residents commuting outside the area. Examples include Corning, New York and Key West, Florida. 4) A consolidated metropolitan statistical area (CMSA) is an urban area that includes two or more primary metropolitan statistical areas. Examples include Detroit–Ann Arbor–Flint, Michigan and Los Angeles–Riverside–Orange County, California. 5) A primary metropolitan statistical area (PMSA) is an urbanized county or set of counties with social and economic ties to nearby areas. PMSAs are identified within areas of 1-million-plus populations. Examples include Olympia, Washington, a part of the Seattle–Tacoma–Bremerton PMSA and Bridgeport, Connecticut, a part of the New York–northern New Jersey–Long Island PMSA. 167. What are geographic information systems (GIS)? How do they help marketers in analyzing marketing information? ANSWER: Geographic information systems (GISs) are computer systems that assemble, store, manipulate, and display data by their location. GISs simplify the job of analyzing marketing information by relating data to their locations. The result is a geographic map overlaid with digital data about consumers in a particular area. A growing number of companies benefit from using a GIS to locate new outlets, assign sales territories, plan distribution centers, and map out the most efficient delivery routes. 168. Who are the Baby Boomers? Why do marketers target this segment of the population? ANSWER: Baby Boomers are individuals born between 1946 and 1964. The values of this age group were influenced both by the Vietnam War era and the career-driven era that followed. They also came of age with early television and with TV commercials serving as a backdrop to most of their lives. Baby Boomers are a lucrative segment for marketers because of their numbers and income levels. Baby Boomers wield spending power over $7 trillion, which is why businesses try to woo this group. Boomers tend to value health and quality of life, a fact not lost on marketers for products such as organic foods, financial investments, travel, and fitness. But Boomers are also quick to embrace new technology, even as they age. The motorcycle industry has Baby Boomers clearly in its sight because, as a group, they are significantly more physically active than their counterparts in previous generations.

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Chapter 09: Market Segmentation, Targeting, and Positioning 169. What is cohort effect? What is the current cohort called? ANSWER: The cohort effect is the tendency of members of a generation to be influenced and bound together by significant events occurring during their key formative years, roughly 17 to 22 years old. These events help to define core values of the age group that eventually shape consumer preferences and behavior. The current cohort consists of people born during the late 1970s to the early 1990s. Marketers have called this group by several names: Generation Y, the Millennial Generation, Generation Next, and Echo Boomers. Others called it the 9–11 Generation because its members were in their formative years during the terrorist attacks of September 11, 2001. 170. What is family lifecycle? Why do marketers segment their markets by family lifecycle stages? ANSWER: Family lifecycle is the process of family formation and dissolution. Marketers use family lifecycle as a basis for segmentation as the life stage is the primary determinant of many consumer purchases. As people move from one life stage to another, they become potential consumers for different types of goods and services. For example, an unmarried person setting up an apartment for the first time is a good prospect for inexpensive furniture and small home appliances whereas couples without children are frequent buyers of personalized gifts, power tools, furniture, and homes. 171. State Engel’s laws. How have these laws changed in the recent years? ANSWER: Engel’s laws are three general statements based on Engel’s studies of the impact of household income changes on consumer spending behavior. According to Engel, as household income increases: 1) a smaller percentage of expenditures goes for food. 2) the percentage spent on housing, household operations, and clothing remains constant. 3) the percentage spent on other items such as recreation and education increases. The Engel’s laws are still valid with a few exceptions. Researchers note a steady decline in the percentage of total income spent on food, beverages, and tobacco as income increases. The overall percentage of income spent on food has declined over the last century. The second law remains partly accurate. However, the percentage of fixed expenditures for housing and household operations has increased over the past 30 years and the percentage spent on clothing rises with increased income. The third law remains true, with the exception of medical and personal-care costs, which appear to decline as a percentage of increased income. 172. What is psychographic segmentation? What is the most common method for developing psychographic profiles of a population? ANSWER: Psychographic segmentation is the practice of dividing a population into groups having similar attitudes, values, and lifestyles. Consumers’ lifestyles are composites of their individual psychological profiles, including their needs, motives, perceptions, and attitudes. The most common method for developing psychographic profiles of a population is to conduct a large-scale survey asking consumers to agree or disagree with a collection of several hundred AIO statements. These AIO statements describe various activities, interests, and opinions. The resulting data allow researchers to develop lifestyle profiles. Marketers can then develop a separate marketing strategy that closely fits the psychographic makeup for each lifestyle segment. Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 173. Explain the VALS segmentation system. ANSWER: VALS, an acronym for VAlues and LifeStyles, is a psychographic segmentation system developed by the research and consulting firm SRI International. Initially, VALS categorized consumers by their social values. Today, VALS is owned and managed by SRI Consulting Business Intelligence (SRICBI), an SRI spin-off that has revised the system to link it more closely with consumer buying behavior. The revised VALS system categorizes consumers by characteristics that correlate with purchase behavior. It is based on two key concepts: resources and self-motivation. VALS divides consumers into eight psychographic categories: innovators, thinkers, achievers, experiencers, believers, strivers, makers, and survivors. The resource dimension measures income, education, selfconfidence, health, eagerness to buy, and energy level. Primary motivations divide consumers into three groups: principle-motivated consumers who have a set of ideas and morals or principles, they live by; achievement-motivated consumers, influenced by symbols of success; and action-motivated consumers who seek physical activity, variety, and adventure. 174. Describe how psychographic segmentation is a good supplement to segmentation by demographic or geographic variables. ANSWER: Psychographic segmentation is a good supplement to segmentation by demographic or geographic variables. For example, marketers may have access to each consumer type’s media preferences in network television, cable television, Internet use, radio format, magazines, and newspapers. Psychographic studies may then refine the picture of segment characteristics to give a more elaborate lifestyle profile of the consumers in the firm’s target market. A psychographic study could help marketers of goods and services in Baltimore, Des Moines, or Seattle predict what kinds of products consumers in those cities would be drawn to and eliminate those that are not attractive. 175. What is the use of psychographic segmentation to marketers? ANSWER: Psychographic segmentation divides a population into groups with similar attitudes, values and lifestyles. It helps marketers quantify aspects of consumers’ personalities and lifestyles to create goods and services for a target market. Psychographic profile systems such as those of Roper and SRIC-BI can paint useful pictures of the overall psychological motivations of consumers. These profiles produce much richer descriptions of potential target markets than other techniques can achieve. The enhanced detail aids in matching a company’s image and product offerings with the types of consumers who use its products.

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Chapter 09: Market Segmentation, Targeting, and Positioning 176. Describe the three approaches to product-related segmentation. ANSWER: Product-related segmentation divides a population into homogeneous groups based on their relationships to a product. 1) Segmenting by benefits sought: This approach focuses on attributes people seek and benefits they expect to receive from a good or service. It groups consumers into segments based on what they want a product to do for them. 2) Segmenting by usage rates: Marketers may also segment a total market by grouping people according to the amounts of a product they buy and use. Markets can be divided into heavy-, moderate-, and light-user segments. 3) Segmenting by brand loyalty: This method groups consumers according to the strength of the brand loyalty they feel toward a product. 177. Describe the four stages in the market segmentation process. ANSWER: Firms may use a management-driven method to segment markets, in which segments are predefined by managers based on their observation of the behavioral and demographic characteristics of likely users. Or they may use a market-driven method, in which segments are defined by asking customers for the attributes important to them. Then, marketers follow a four-stage process. 1) Developing a relevant profile for each segment: The task at this stage is to develop a profile of the typical customer in each segment. Such a profile might include information about lifestyle patterns, attitudes toward product attributes and brands, product-use habits, geographic locations, and demographic characteristics. 2) Forecasting market potential: In this stage, market segmentation and market opportunity analysis combine to produce a forecast of market potential within each segment. This step should define a preliminary go or no-go decision from management because the total sales potential in each segment must justify resources devoted to further analysis. 3) Forecasting probable market share: Once market potential has been estimated, a firm must forecast its probable market share. Competitors’ positions in targeted segments must be analyzed, and a specific marketing strategy must be designed to reach these segments. 4) Selecting specific market segments: In this stage the management tries to assess the potential for achieving company goals and try to justify committing resources in developing one or more segments. Firms also try to determine the profits and the return on investment they can expect from each segment.

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Chapter 09: Market Segmentation, Targeting, and Positioning 178. Describe the four basic strategies for reaching target markets. ANSWER: The four basic strategies for reaching target markets are as follows: Undifferentiated marketing, also known as mass marketing, is a strategy that focuses on a) producing a single product and marketing it to all consumers with a single marketing mix. Differentiated marketing is a strategy that focuses on producing several products and b) pricing, promoting and distributing them with different marketing mixes designed to satisfy smaller segments. Concentrated marketing, also known as niche marketing is a strategy of focusing all the c) marketing efforts on satisfying a single market segment. Micromarketing is more narrowly focused than concentrated marketing and involves d) targeting potential customers at a very basic level, such as by zip code, specific occupation, or individual lifestyle, possibly even individual themselves. 179. List out the different positioning approaches followed by marketers. Give an example for each. ANSWER: To achieve the goal of positioning, marketers follow a number of positioning strategies. Possible approaches include positioning a product according to the following categories: a) Attributes: eBay, “Buy it. Sell it. Love it.” Price/quality: Omega watches, “We measure the 100th of a second that separates winning b) from taking part.” c) Competitors: Walmart, “Save money. Live better.” d) Applications: Blue Cross Blue Shield health insurance, “Experience. Wellness. Everywhere.” e) Product users: Crane’s stationery, “for the writer somewhere in each of us.” f) Product class: BMW, the “ultimate driving machine.” 180. What is a positioning map? Why do marketers reposition their products? ANSWER: A positioning map is a tool that helps marketers place products in a market by graphically illustrating consumers’ perceptions of competing products within an industry. A positioning map might present two different characteristics, price and perceived quality, and show how consumers view a product and its major competitors based on these traits. Repositioning means changing the position of a product within the minds of prospective buyers relative to the positions of competing products. Sometimes changes in the competitive environment force marketers to reposition a product. Repositioning may even be necessary for already successful products or firms in order to gain greater market share. Match each item with the correct statement below. a. target market b. market segmentation c. cohort effect d. primary metropolitan statistical area e. differentiated marketing Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning f. concentrated marketing g. micromarketing h. positioning map i. VALS j. AIO statement k. core region l. consumer product m. demographic segmentation n. Pareto’s law o. psychographic segmentation p. geographic information systems q. positioning r. geographic segmentation s. business product t. mass marketing 181. A(n) _____ is a specific segment of consumers a firm believes is most likely to buy its goods and services. ANSWER: a 182. A product that is purchased for personal use by an ultimate consumer is called a(n) _____. ANSWER: l 183. A product that is purchased for use in the production of other goods and services for resale is called a(n) _____. ANSWER: s 184. The division of the total market into smaller, relatively homogeneous groups is called _____. ANSWER: b 185. The practice of dividing an overall market into homogeneous groups based on the location is called _____. ANSWER: r 186. A(n) _____ is an urbanized county or set of counties with social and economic ties to nearby areas. ANSWER: d 187. A geographic area that generates 40 percent to 80 percent of a company’s sales is called a(n) _____. ANSWER: k 188. _____ are computer systems that assemble, store, manipulate, and display data by their location. ANSWER: p

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Chapter 09: Market Segmentation, Targeting, and Positioning 189. _____ defines consumer groups according to variables such as gender, age, income, occupation, and stage in the family lifecycle. ANSWER: m 190. The tendency of members of a generation with common characteristics to be influenced and bound together by significant events occurring during their key formative years is called the _____. ANSWER: c 191. The practice of dividing a population into groups having similar attitudes, values, and lifestyles is called _____. ANSWER: o 192. A(n) _____ describes various activities, interests, and respondent’s opinions that allows researchers to develop lifestyle profiles. ANSWER: j 193. _____ is a psychographic segmentation system that divides consumers into eight psychographic categories based on resources and self-motivation. ANSWER: i 194. The 80/20 principle is sometimes referred to as _____. ANSWER: n 195. _____ is a strategy that focuses on producing a single product and marketing it to all customers. ANSWER: t 196. A firm that promotes numerous products with several marketing mixes designed to satisfy smaller target segments is said to practice _____. ANSWER: e 197. A firm that focuses its efforts on profitably satisfying a single market segment is opting for _____ strategy. ANSWER: f 198. _____ is a targeting strategy that targets potential customers at a very basic level, such as by zip code, specific occupation, or lifestyle. ANSWER: g 199. The concept of _____ refers to placing a product at a certain point or location within a market in the minds of prospective buyers. ANSWER: q 200. A(n) _____ is a tool that helps marketers place products in a market by graphically illustrating consumers’ perceptions of competing products within an industry. ANSWER: h Copyright Cengage Learning. Powered by Cognero.

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201. Marketers adopt different strategies in order to promote their products in the market. But what is a market? Select the best definition of market from the choices below. a. s pecific people and organizations likely to buy certain goods and services b. p eople and organizations who regulate the manufacture of goods and services available for purchase c. s paces or outlets where goods and services can be purchased d. p eople and organizations with purchasing power, authority, and willingness to buy goods and services e. g oods and services that serve both the consumer and business ANSWER: d 202. In your regular goods and services consumption activities, you purchase products from the wholesaler for resale and for use in your store's daily operations. You also purchase products that you will feature in the gift baskets you make. On the basis of this information, which of the following best describes the market component you are part of? a. p rofessional b. b usiness c. c onsumer d. r esale e. m anufacturing ANSWER: b 203. Market segmentation plays a very important role in developing a marketing strategy. Select the best definition of market segmentation from the choices below. a. d ividing the total available market into smaller, similar groups b. d ividing the company profits for distribution among shareholders c. d ividing the marketing budget that will be used in world markets and in the United States d. d ividing the workload among marketing department employees e. d ividing the total market into two distinct groups, the global market and the U.S. market ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 204. Because consumer needs and purchasing power vary widely, marketers try to identify those factors that affect the decision to buy and make a good target market. Which important characteristic of a market segment would make it an attractive target market? a. T he market segment shares the same age range. b. T he market segment shows a pattern of growth. c. T he market segment is employed in the same industry. d. T he market segment has been adversely affected by economic recession. e. T he market segment shows wide diversity. ANSWER: b 205. Market segmentation is a tool for marketers to use, but its effectiveness depends on four basic requirements. Three of the requirements for effective market segmentation are as follows: (1) the segment must have measurable purchasing power and size; (2) marketers must be able to promote and serve the market; (3) the identified segment must be large enough to bring in a profit. Select the fourth requirement for effective market segmentation from the choices below. a. T he marketer must abide by ethical standards. b. T he identified segment must include an equal number of men and women. c. T he marketer must be proficient in the use of modern technology. d. T he identified segment must reflect the company's mission statement. e. T he identified segments must match the company's marketing capabilities. ANSWER: e 206. A present-day marketer is reviewing data attempting to differentiate a target group of consumers that meets the four basic requirements of effective segmentation. One group stands out above the rest, and he will direct his marketing efforts toward that group. Toward what group will he direct his marketing efforts? a. c ollege graduates b. m inorities c. w omen d. p et owners e. w hite males ANSWER: c

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Chapter 09: Market Segmentation, Targeting, and Positioning 207. You have just completed an extensive marketing research project designed to determine the potential of a new service your company is considering launching. Using surveys, polling, face-to-face interviews, and mail-in questionnaires, you have determined that the consumers who are most inclined to use this new service live in densely populated urban areas within certain zip codes. What approach to market segmentation should you use? a. u se psychographic variables to segment the market b. u se demographic variables to segment the market c. u se behavior variables to segment the market d. u se geographic variables to segment the market e. u se sociocultural variables to segment the market ANSWER: d 208. There are many tools available to a savvy marketer who uses geographic segmentation, including national population data published by the U.S. government. This statistical data is classified as core based, metropolitan, micropolitan, primary metropolitan, and consolidated metropolitan. Select the statement below that best reflects population data published by the federal government. a. M ost of the U.S. population lives in urban environments, which is also true worldwide. b. M ost of the U.S. population is evenly distributed over the land surface. c. M ost of the U.S. population lives in suburban environments, which is also true worldwide. d. S tatistical data about population began to be collected by the federal government in response to concerns about overpopulation and damage to the environment. e. S tatistical data about population began to be collected by the federal government in response to the mass migration of citizens following Hurricane Katrina. ANSWER: a 209. Market segmenting by demographics, also called socioeconomic segmentation, is the most common method of defining consumer groups. Select the best definition for market segmentation by demographics from the choices below. a. d efining consumer groups based on variables including income and residence in an urban area b. d efining consumer groups based on variables including brand loyalty, income, and gender c. d efining consumer groups based on variables including income and residence in a suburban area d. d efining consumer groups based on variables including income, age, ethnicity, and occupation e. d efining consumer groups based on variables including age, ethnicity, and brand loyalty ANSWER: d

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Chapter 09: Market Segmentation, Targeting, and Positioning 210. Income is a common demographic variable for segmenting the consumer market, and expenditure patterns vary with income. Engel's laws are three general statements based on Ernst Engel's statistical study of the impact of changes in household income on consumer spending behavior. These statements were valid over 100 years ago and with a few exceptions, still appear to be valid today. Choose the statement below that best summarizes Engel's laws. a. A s income increases: a smaller percentage is spent on food; the percentage spent on housing and clothing increases; the percentage spent on other items like recreation remains constant. b. A s income increases: a larger percentage is spent on food; the percentage spent on housing and clothing remains constant; the percentage spent on other items like recreation increases. c. As income increases: the percentage spent on food remains constant; the percentage spent on housing and clothing decreases; the percentage spent on other items like recreation increases. d. A s income increases: a larger percentage is spent on food; the percentage spent on housing and clothing increases; the percentage spent on other items like recreation remains constant. e. A s income increases: a smaller percentage is spent on food; the percentage spent on housing and clothing remains constant; the percentage spent on other items like recreation increases. ANSWER: e 211. Adrienne has received her first solo assignment since she was hired as a junior marketing researcher for a national food and beverage distributor. She has been asked to formulate some preliminary ideas about new product development for coffee products sold in the distributor’s on-premise consumption outlets. She understands that this assignment is a test to see whether she knows the process. She decides to start with the basics, adding a twenty-first-century twist. How will Adrienne begin the process of formulating ideas about new product development? a. A drienne will include a customer questionnaire in a local bulk mail package asking consumers about their coffee consumption habits and what kind of new coffee products they would like to see. b. A drienne will send online coupons to customers who are Facebook friends or have visited the company's website, and ask them to complete a brief online AIO lifestyle survey that inquires about their activities, interests, and opinions. c. A drienne will telephone retail outlets in the company's core regions to ask whether they have had any feedback from customers about what kinds of new coffee products they would like. d. A drienne will mail a brief printed AIO lifestyle survey to retail outlets in their core regions that inquires about customer activities, interests, and opinions. The survey will be placed in customers’ bags along with their food purchases. e. A drienne will take a "man on the street" poll at the nearest retail outlet and process the feedback from customers about their coffee consumption habits and what kinds of coffee products they would like to see. ANSWER: b

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Chapter 09: Market Segmentation, Targeting, and Positioning 212. Psychographic segmentation is not an exact science. While it helps to paint an overall picture of the psychological motivations of consumers, those motivations are influenced by countless variables, such as family, occupation, and culture. Select the statement below that gives an accurate description of the effective use of psychographic segmenting. a. P sychographic segmenting is most effective when applied to domestic markets because global cultures are so varied. b. P sychographic segmentation is effective when it helps to match a company's product offering with the types of consumers who use its products. c. P sychographic segmenting becomes less effective if it links consumer social values with buying behavior. d. A IO statements are the least popular segmenting tool because they present the consumer with an overwhelming amount of information. e. P sychographic segmenting is less effective when it is combined with such other segmenting approaches as demographic and geographic approaches. ANSWER: b 213. A television commercial shows several enthusiastic teens smiling widely and speaking in turn directly to the camera. Using the featured skincare product has changed their lives! It costs more than what you find in the corner drugstore, but it is worth every penny! After weeks of trying one product after another, embarrassed by acne breakouts and shy about socializing with others, now they have clear faces with a healthy-looking glow! What form of product-related segmentation has driven the development of this marketing campaign? a. s egmenting by geographic location b. s egmenting by benefits sought c. s egmenting by psychographics d. s egmenting by brand loyalty e. s egmenting by demographics ANSWER: b 214. You want to encourage your longtime customers to continue their relationship with the service your company provides, and so you implement an approach commonly used to segment a market by brand loyalty. What approach did you use? a. P raedo's law b. m ultiple segmentation c. b enefits segmentation d. t he 80/20 principle e. f requent purchase program ANSWER: e

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Chapter 09: Market Segmentation, Targeting, and Positioning 215. Developing a relevant user profile is the first step in the market segmentation process. How are segment profiles used to identify the typical customer in each segment? a. S egment profiles are used to describe differences among members of a market segment, and to explain similarities among members in separate market segments. b. S egment profiles are used to describe differences among members of a market segment, and to explain differences among members in separate market segments. c. S egment profiles are used to describe similarities among members of a market segment, and to explain similarities among members in separate market segments. d. S egment profiles are used to describe preferences among members of a market segment, and to explain preferences among members in separate market segments. e. S egment profiles are used to describe similarities among members of a market segment, and to explain differences among members in separate market segments. ANSWER: e 216. Market segmentation can help marketers increase their accuracy in reaching the right markets, but it is best used flexibly with other marketing tools. Choose the statement below that best summarizes the market segmentation process. a. M arket segmentation can be applied in both for-profit and nonprofit organizations to determine a consumer target market. b. M arket segmentation is accomplished in four steps: it employs user profiles; forecasts the overall market; estimates the market share; and selects specific target markets. c. M arket segmentation can be accomplished with many approaches: geographic, demographic; psychographic, and product-related. d. M arket segmentation methods can be management-driven, based on management’s observations, or market-driven, based on customer response. e. M arket segmentation can be used to calculate a lifetime value for each customer in a segment. ANSWER: b 217. You have just been promoted to vice president of marketing for your firm. Unlike your predecessor, you believe the firm can increase its sales in a market by focusing on more than one segment of the market. You recognize that doing this means your firm will incur higher production costs. Based on this information, which of the following targeting strategies are you advocating? a. a concentrated targeting strategy b. a n undifferentiated targeting strategy c. a broad-based targeting strategy d. a differentiated targeting strategy e. a heterogeneous targeting strategy ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 09: Market Segmentation, Targeting, and Positioning 218. Marketers must consider the advantages and disadvantages of each marketing strategy as they choose which one is the best fit for their firm. You have chosen to market your company's product using a differentiated marketing strategy. What disadvantage will you face? a. Y our mass marketing approach may put you out of touch with today's consumer. b. Y our marketing costs will be higher and you will have more production processes. c. Y our direct competition may appeal to your very narrow niche market in a similar manner. d. Y our firm may lose sight of other larger and more profitable markets. e. Y our mass marketing approach may not appeal to smaller market segments. ANSWER: b 219. There are a number of strategies that you can use to position your company's technology product in the mind of the consumer. You decide to focus your advertising campaign on the perception that your product is what the others aspire to be--the best. Which of the common categories for product positioning are you using to develop your marketing campaign? a. a pplication b. u sage rate c. a ttributes d. p roduct class e. p roduct user ANSWER: d 220. To remain competitive, marketers must accurately gauge their customers and adapt to changing consumer sentiment. Sometimes this adaptation calls for repositioning a product or service. Why might a product or service be repositioned? a. T he marketing and research department is reduced by half due to the economic downturn. b. T he product or service is considered the best available in the current market. c. T he company changes its packaging and uses a new slogan. d. T he product is unpopular and the company ceases production of it. e. T he company is aiming for a greater share of the current market. ANSWER: e

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Chapter 09: Market Segmentation, Targeting, and Positioning 221. The Bates Lighting Company has two divisions, business and consumer products. Because of poor profits, it may downsize the consumer division. This could mean loss of jobs for people involved with the marketing of: a. overhead lighting for hospital operating rooms

b. flashlights for buildings that lose power c. designer lighting for furniture showrooms d. desk lamps for offices or college dorms e. street lights ANSWER: b, d 222. Market segmentation has interested you ever since your first marketing course, and you want to work for the type of organization that uses this technique. This means you should avoid pursuing a job with: a. Retail business organizations

b. Wholesale business organizations c. Not-for-profit organizations d. Manufacturing business organizations e. You could pursue a job with any of the above, since all would use market segmentation. ANSWER: e 223. You've started a business on your college campus to sell luxurious blue dorm room rugs with the college logo. You plan to target male freshmen who come from local towns, like the color blue, can afford luxury products, want rugs for their rooms, and are enthusiastic about boosting the school. You can easily and efficiently promote to all freshmen, including this segment, with Facebook and other social media tools. But your marketing professor cautions that you may be unable to meet certain criteria for effective segmentation. Which criteria does she cite? a. The segment must present measurable purchasing power and size.

b. The marketer must be able to promote effectively to the segment. c. The segment must be large enough to offer significant profit potential. d. The segment must be certified. e. Your plan is unlikely to meet any of the criteria for effective segmentation. ANSWER: a, c

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Chapter 09: Market Segmentation, Targeting, and Positioning 224. A marketing consultant just gave a motivational speech to your sales team about the power of geographic segmentation. Quietly, you tell your boss that the consultant failed to cover all of the geographic factors that are important to marketers. You cite the following factor(s) she overlooked: a. Residence location within a statistical area

b. Population migration patterns c. Regional product preferences d. Household income within a statistical area e. Number of statistical reports published on a geographic area ANSWER: a, b, c, d 225. A junior member of your marketing department has recommended demographic segmentation for your fast food brand. In a memo, he wrote: "We should be marketing to females who are Hispanic, low-income, unmarried, and have four or more children." You express at least one strong concern about this recommendation. What concern(s) do you express? a. Gender is not a demographic segmentation variable.

b. Ethnicity is not a demographic segmentation variable. c. Marital status is not a demographic segmentation variable. d. The recommendation could lead to stereotyping and market alienation. e. The recommendation is clearly outdated. ANSWER: d 226. Bill wants to use VALS to segment the market for his firm's costly but cutting-edge gaming software. He knows that his potential customers are likely to be: a. Survivors

b. Gamers c. Innovators d. Techies e. Millennials ANSWER: c

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Chapter 09: Market Segmentation, Targeting, and Positioning 227. June knows that the students who patronize her campus ice cream shop are looking to socialize as much as to consume a treat. In her advertising, she shows images of customers enjoying each other's company. June is segmenting based on: a. Usage

b. Loyalty c. 80/20 principle d. Benefits sought e. Pareto's Law ANSWER: d 228. In the first part of your presentation to potential investors, you covered the first two steps in the market segmentation process. In the second part of your presentation, you will need to discuss: a. Selection of specific market segments

b. Forecast of market potential c. Forecast of probable market share d. Developing relevant profiles for each segment e. Developing income measures for each segment ANSWER: a, c 229. Master Cookie Bakers sells customized cookies to restaurants and standardized cookies to individual buyers. The firm is using: a. Undifferentiated marketing, since it only sells cookies

b. Differentiated marketing, since it sells different products to different markets c. Concentrated marketing, since it concentrates only on restaurants and individuals d. Micromarketing, since cookies are small e. Niche marketing, since cookie buyers are a single niche among buyers of baked goods ANSWER: b 230. Several leading brands of breakfast cereal have changed the basis on which they try to set their products apart from competition, shifting from taste to healthful ingredients. It would be accurate to describe this change as: a. Differentiated positioning

b. Homogeneous positioning c. Dynamic positioning d. Repositioning e. Overpositioning ANSWER: d

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Chapter 09: Market Segmentation, Targeting, and Positioning 231. Jacob is the facility manager for a senior living facility and is responsible for maintaining the facility and ensuring that it looks its best. He likes to repaint all surfaces in the facility every two years and has an exclusive contract with Sherwin Williams who supplies the paint and materials. The paint and materials that Jacob purchases from Sherwin Williams to be utilized in the senior living facility would be classified as _____ products. a. b usiness b. c onsumer c. d urable d. s hopping ANSWER: a 232. Cecile is an avid cook and enjoys spending time in the kitchen as well as watching shows on the Food Network. She recently remodeled her kitchen and purchased new appliances. Since she enjoys cooking so much, Cecile purchased a commercial range from a local restaurant supply store and it features double ovens and 12 burners. Her contractor had to make some modifications to enhance the safety of this stove for use in her home but no other changes were needed. What type of product is the stove in the context of this example? a. c onsumer b. b usiness c. s hopping d. c onvenience ANSWER: a 233. When firms identify the factors that affect consumers' purchase decisions and develop strategies and tactics to appeal to specific types or groups of customers, they are practicing market _________. a. s egmentation b. d ifferentiation c. c omplexity d. u niformity ANSWER: a 234. Dell Computer offers a variety of desk top, tablet and laptop computers. One popular product line is Dell's Alienware - built for gamers with high speed processors, enhanced memory and special graphics cards. What marketing principle is Dell utilizing with its Alienware product line? a. m arket segmentation b. m arketing concept c. g eographic segmentation d. p rofit-oriented segmentation ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 235. The United States population is increasingly diverse and more companies are recognizing the opportunity to target the Hispanic population since they are expected to become the dominant ethnic group in the near future. Which requirement of segmentation does the growing number of Hispanic customers fulfill? a. l arge market segment offering good profit potential b. a segment with measurable purchasing power c. a bility to effectively aim promotional efforts at the segment d. a bility to match the segment with the firm's marketing capabilities ANSWER: a 236. Procter and Gamble is seeking to target women aged 18-to-34 to influence their purchasing of shampoo and bath gels. They selected the television network ABC Family and specifically airs commercials during the "Pretty Little Liars" time slot. Which criteria of effective segmentation is Procter and Gamble utilizing?

a. ability to effectively promote to the market segment b. t he market segment represents measurable purchasing power c. t he segment matches Procter and Gamble's marketing capabilities d. t he segment is sufficiently large to provide good profit potential ANSWER: a 237. North Face is a well known brand affiliated with active lifestyles such as backpacking, snow skiing, and camping. The company's products are available in a wide number of retail outlets as well as their company-owned specialty stores. The mix of products sold in the retail outlets varies widely depending on the market location. For example, stores in Northern California stock technical products suitable for customers who are avid backpackers, hikers and rock climbers while retailers in the Midwest states offer a greater selection of apparel. What type of segmentation is reflected by stores carrying the North Face brand? a. g eographic b. a ge-related c. e thnic-related d. p roduct-related ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 238. Title Nine is a specialty retailer targeting active women with a proprietary mix of apparel designed for active lifestyles and sports. The company began as a direct marketer - using only catalogs and its website to generate sales. However, over the years, Title Nine has opened retail outlets across the country. The company identifies strategic opportunities for new stores based upon the sales generated by current customers in the potential market area. For example, if Title Nine has a significant number of purchasers in the Boston area, they will further analyze the market and select a location for a retail outlet. What type of segmentation strategy is Title Nine utilizing when selecting a market for a new store location? a. g eographic b. d emographic c. l ifestyle d. b enefit ANSWER: a 239. Bobby Flay is a popular celebrity chef who is famous for his use of the grill to create his signature dishes. Recently, Bobby Flay debuted a line of grilling accessories and believes these products will be successful because he has a loyal following among men aged 30 to 60. What type of segmentation is utilized for this new line of grilling accessories? a. d emographic b. p sychographic c. g eographic d. b enefit ANSWER: a 240. Clairol offers a line of hair color called "Nice n Easy" which allows women to touch-up their hair and easily cover their gray hairs conveniently and easily at home. Based on research, Clairol knows that women aged 30 and above are most likely to need some type of color product to hide their gray hair and maintain a youthful appearance. What type of segmentation does Clairol use by targeting women over 30? a. d emographic b. g eographic c. p sychographic d. b enefit ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 241. In recent years, consumers have become increasingly concerned about the use of pesticide and other chemicals in the agricultural industry. Some are worried that the increased use of chemicals has led to higher incidences of disease such as cancer. Consumers who share these opinions will often purchase products labeled "organic" and "natural". Marketers who are utilizing these words on product packaging or in their promotions are implementing _______ segmentation. a. p sychographic b. b enefit c. g eographic d. d emographic ANSWER: a 242. Sustainability has become an important value among individuals in the United States and some believe that manmade factors such as the increased use of diesel and gasoline in cars has led to global warming. Those worried about global warming and seeking ways to reduce their carbon footprint and have invested in products such as solar panels for their homes and electric or hybrid vehicles. What type of segmentation would be most appropriate for Toyota to utilize in marketing its Prius - a hybrid vehicle? a. p sychographic b. d emographic c. g eographic d. b enefit ANSWER: a 243. Starbucks recently faced criticism for changing the way consumers could earn free food and beverage in its loyalty program. Originally, consumers could earn 1 star for each purchase - regardless of dollar value spent. However, the new program ties the star benefit to the dollar amount spent by a customer - rewarding those who spend more with more points. The Star program is frequently utilized by Starbucks to entice its members to return to the outlet. The company utilizes e-mail and in-app promotions to maintain an loyal following. What type of segmentation is Starbucks utilizing with its Star rewards program?

a. p roduct-related b. d emographic c. g eographic d. p sychographic ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 244. T he _____ principle recognizes that a large percentage of a product's revenue stream is generated by a relatively small, loyal portion of total customers. a. 8 0/20 b. P areto c. p arity d. l oyalty ANSWER: a 245. Bose has developed a new high fidelity line of speakers and is attempting to determine the amount of sales that could be generated by target customers in various segments in order to determine whether or not they should proceed with introduction of the new speakers. Which step of the marketing segmentation process best describes this activity? a. f orecast market potential b. f orecast probably market share c. s elect specific segments d. d evelop a profile of each segment ANSWER: a 246. The company, Eco Nuts was featured on Shark Tank and has become one of the show's success stories due to the growing acceptance of their product as an alternative to traditional laundry detergent. T he company typically targets women, aged 40 to 65 who have total annual household income above $60,000 and are concerned about sustainability. What step in the market segmentation process has Eco Nuts utilized with this description? a. d evelop a relevant profile for each segment b. f orecast market potential c. f orecast probably market share d. s elect specific market segments ANSWER: a 247. Progresso Soup has a line of hearty soups that are promoted to all consumers using a single marketing mix. The company is utilizing ______ marketing. a. u ndifferentiated b. d ifferentiated c. c oncentrated d. holistic ANSWER: a

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Chapter 09: Market Segmentation, Targeting, and Positioning 248. B arnes and Noble e ncourages customers to pay $10 annually to become "members" in a loyalty program which rewards them by discounting their purchases. Barnes and Noble utilizes the membership program to analyze customer buying habits and routinely recommends books, magazines or other products which fit their purchasing profile. What type of marketing is Barnes and Nobles using? a. m icromarketing b. u ndifferentiated marketing c. c oncentrated marketing d. d ifferentiated marketing ANSWER: a 249. C adillac has strategically sought to become known as a prestige brand among 30 to 50 year olds and routinely uses television advertising to showcase the high quality and luxury attributes of the new models. It seeks to use _______ to separate the brand from other US brands and be perceived more similarly to European models such as Audi and BMW. a. p ositioning b. s egmentation c. a n undifferentiated marketing approach d. a concentrated strategy ANSWER: a 250. Which of the following is utilized to help managers position products by graphically illustrating consumers' perceptions of competing products within an industry? a. p ositioning map b. d ifferentiating map c. s eparation marketing graph d. r epositioning graph ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 1. Marketing research aids decision makers in analyzing data and in suggesting possible actions. a. True b. False ANSWER: True 2. Prior to the 1930s, most of the marketing research involved gathering written testimonials from purchasers of firms’ products. a. True b. False ANSWER: True 3. The size and organizational form of the marketing research function is usually independent of the structure of the company. a. True b. False ANSWER: False 4. Firms usually decide whether to conduct a marketing research study internally or through an outside organization based on cost, reliability, and accuracy of the data collected by the outside firm. a. True b. False ANSWER: True 5. The information gathered by an outside marketing research firm is often more thorough and accurate than that collected by in-house staff. a. True b. False ANSWER: True 6. A marketing research firm can provide technical assistance and expertise not available within the contracting firm. a. True b. False ANSWER: True

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Chapter 10: Marketing Research in the Era of Big Data 7. A marketing research organization that regularly provides a standardized set of data to all customers is called a full-service research supplier. a. True b. False ANSWER: False 8. A full-service research supplier is a marketing research organization that performs all the steps in the marketing research process for a client. a. True b. False ANSWER: True 9. Antrix Corporation is a marketing research firm that specializes in data collection in shopping malls. This information indicates that Antrix Corporation is a full-service research supplier. a. True b. False ANSWER: False 10. A syndicated service can also be considered a type of limited-service research supplier. a. True b. False ANSWER: True 11. Marketers can gain valuable insights by examining the dissatisfaction of the customers that leads to abandoning certain products for those offered by competitors. a. True b. False ANSWER: True 12. Studying the underlying causes of customer defections, even partial defections, can be useful for identifying problem areas that need attention. a. True b. False ANSWER: True

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Chapter 10: Marketing Research in the Era of Big Data 13. A well-defined problem allows the researcher to focus on securing the exact information needed to solve the problem. a. True b. False ANSWER: True 14. The symptoms of a problem merely alert the marketer that a problem exists. a. True b. False ANSWER: True 15. The first step in the marketing research process is to conduct exploratory research, and then use the information to define the problem. a. True b. False ANSWER: False 16. A marketing-related problem can be identified by evaluating the firm’s marketing mix elements and target market. a. True b. False ANSWER: True 17. After defining the problem, the next step in the marketing research process is to conduct the exploratory research. a. True b. False ANSWER: True 18. The process of discussing a marketing problem with informed sources both within and outside the firm and examining information from secondary sources is known as test marketing. a. True b. False ANSWER: False 19. The interviews conducted during exploratory research with informed people outside the firm are termed as formal investigations. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 20. Typical sources of internal company data are sales records, financial statements, and marketing cost analyses. a. True b. False ANSWER: True 21. Analysis of sales performance records helps marketers to find clues to potential problems. a. True b. False ANSWER: True 22. Marketing cost analysis is most useful when it provides information linked to other forms of marketing research. a. True b. False ANSWER: True 23. A hypothesis sets the stage for more in-depth research by further clarifying what researchers need to test. a. True b. False ANSWER: True 24. A research design is a master plan or model for conducting marketing research. a. True b. False ANSWER: True 25. Secondary data has the advantage of being more completely relevant to the research than primary data. a. True b. False ANSWER: False 26. The choice between secondary and primary data is tied to cost, applicability, and effectiveness. a. True b. False ANSWER: True

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Chapter 10: Marketing Research in the Era of Big Data 27. Researchers usually spend less time and money in gathering primary data compared to secondary data. a. True b. False ANSWER: False 28. Census data is an example of primary data. a. True b. False ANSWER: False 29. Marketing researchers must remember to direct their reports toward management and not to other researchers. a. True b. False ANSWER: True 30. The data obtained from government records and industry publications can be classified as external data. a. True b. False ANSWER: True 31. A well-designed Internet-based marketing research project can cost less than offline research yet yields faster results. a. True b. False ANSWER: True 32. Sampling is the process of selecting survey respondents or research participants. a. True b. False ANSWER: True 33. A population, used for market research purposes, is a subgroup of the total sample selected for analysis. a. True b. False ANSWER: False

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Chapter 10: Marketing Research in the Era of Big Data 34. A small service agency is trying to assess clients’ view of the quality of service over the past year. If the company has had 1000 clients over the past 12 months, then all 1000 clients constitute the population considered for the survey. a. True b. False ANSWER: True 35. Researchers rarely use an entire population for a study, unless the total population is small, because of the high costs associated with it. a. True b. False ANSWER: True 36. A stratified sample is a type of nonprobability sample. a. True b. False ANSWER: False 37. A simple random sample is a nonprobability sample selected from among readily available respondents. a. True b. False ANSWER: False 38. In a stratified sample, each selected subgroup is relatively homogeneous for a certain characteristic. a. True b. False ANSWER: True 39. In a cluster sample, each cluster reflects the diversity of the whole population sampled. a. True b. False ANSWER: True 40. A probability sample relies on personal judgement somewhere in the selection process. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 41. A quota sample is a nonprobability sample divided to maintain the proportion of certain characteristics among different segments or groups seen in the population as a whole. a. True b. False ANSWER: True 42. When H&C Research Corporation wanted to test the popularity of a new flavor of ice cream, they selected a number of U.S. cities as test sites, and then randomly selected supermarkets within those cities as trial vendors. This is an example of quota sampling. a. True b. False ANSWER: False 43. A convenience sample is also called an accidental sample as those included just happen to be in the place where the study is being conducted. a. True b. False ANSWER: True 44. Convenience samples are mostly used in definitive studies. a. True b. False ANSWER: False 45. Fizzy Cola Company created a sample containing 25 of their regular cola drinkers, 25 of their diet cola drinkers, and 25 of their diet caffeine-free drinkers. They created the sample by stopping people on the street and continuing until they had spoken to enough people to meet the requirement. Such a sample is a nonprobability cluster sample. a. True b. False ANSWER: False 46. A quota sample differs from a stratified sample, as in a quota sample, researchers select subsamples by some random process. a. True b. False ANSWER: False

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Chapter 10: Marketing Research in the Era of Big Data 47. Observation is a useful technique to collect primary data for marketers trying to understand how consumers behave in certain situations. a. True b. False ANSWER: True 48. Interpretative research is an observational method that observes consumers in their natural setting. a. True b. False ANSWER: True 49. Observation alone cannot supply all the necessary information as it is difficult to get exact demographic information from observation. a. True b. False ANSWER: True 50. Videotaping consumers in action is gaining acceptance as an observational research technique. a. True b. False ANSWER: True 51. Telephone surveys have relatively high response rates and are effective at drawing appropriate responses. a. True b. False ANSWER: True 52. Personal interviews are usually the best means to obtain detailed information about consumers. a. True b. False ANSWER: True 53. Focus groups elicit information from the customers through a question-and-answer format. a. True b. False ANSWER: False

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Chapter 10: Marketing Research in the Era of Big Data 54. The response rates for mail questionnaires are much higher compared to personal interviews. a. True b. False ANSWER: False 55. Online surveys are less intrusive than telephone surveys and allow participants to respond at their leisure. a. True b. False ANSWER: True 56. The number of “hits” for a web page represents the number of times a visitor accesses the page. a. True b. False ANSWER: True 57. At present, no industry-wide standards define techniques for measuring Web use. a. True b. False ANSWER: True 58. Due to its low cost, the controlled experiment is the most commonly used method of collecting primary data for marketing research. a. True b. False ANSWER: False 59. Test marketing a new product is expensive and communicates company plans to competitors prior to its full-scale introduction. a. True b. False ANSWER: True 60. Firms rarely use test marketing for long lived durable goods. a. True b. False ANSWER: True

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Chapter 10: Marketing Research in the Era of Big Data 61. Businesses may need to adjust their data collection methods for primary research in foreign countries since some methods do not easily transfer across national borders. a. True b. False ANSWER: True 62. Mail surveys and telephonic interviews are the most common methods for conducting primary research in developing countries. a. True b. False ANSWER: False 63. Interpretative research is often used to interpret consumer behavior within a foreign culture where consumer expectations are subject to different cultural influences. a. True b. False ANSWER: True 64. Interpretative research focuses on understanding the meaning of a product or the consumption experience in a consumer’s life. a. True b. False ANSWER: True 65. Which of the following terms refers to the process of collecting and using information for marketing decision making? a. Market engineering b. Marketing research c. Market capitalization d. Marketing sampling ANSWER: b

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Chapter 10: Marketing Research in the Era of Big Data 66. Which of the following is the earliest method used for gathering marketing information? a. Written testimonials received from purchasers of a firm's products b. Email surveys conducted by research professionals c. Telephone surveys conducted to assess household preferences d. Delphi technique ANSWER: a 67. Marketing research is most likely to be outsourced if the: a. outside provider is a government agency. b. firm wishes to integrate its core competency with its supplementary divisions. c. outside provider is likely to collect more reliable and accurate information. d. firm decides to expand its market base by introducing a new product or service. ANSWER: c 68. An organization that regularly provides a standardized set of data on a periodic basis to its subscribers is called a ______. a. full-service research supplier b. syndicated service c. supplier relationship management company d. market simulation firm ANSWER: b 69. A _____ helps the marketers in conducting marketing research by performing all the steps in the marketing research process. a. limited service research supplier b. customer relations managing firm c. full-service research supplier d. syndicated service ANSWER: c 70. Douglas Knowles & Howe, a marketing research firm, contracts with clients to conduct complete marketing research projects, including telephone and online interviews. DK&H is a _____. a. syndicated service b. limited service c. full-service research supplier d. customer relationship management firm ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 71. Entertainment Research Group specializes in rating movie theaters using input from moviegoers. Entertainment Research Group is an example of a: a. contract market research firm. b. computerized data supplier. c. full-service consulting firm. d. limited-service research supplier. ANSWER: d 72. Which of the following is most likely to be a logical starting point in identifying the marketing problem? a. Ascertaining the budget and logistical limits that the problem warrants b. Determining the computational scope of the problem c. Evaluating the firm’s target market and marketing mix elements d. Simulating a market research based on formulated hypotheses ANSWER: c 73. Palmer Inc. recently changed its promotional strategies for marketing the products. The marketing team at Palmer has been asked to evaluate the target market and the marketing mix elements to find ways to improve the effectiveness of the marketing strategies. Since the firm already knows the purpose of its research, the next step in the marketing research process is to: a. create research design. b. collect data. c. formulate a hypothesis. d. conduct exploratory research. ANSWER: d 74. The process of discussing a marketing problem with informed sources both within and outside the firm and examining information from secondary sources is known as _____. a. situation analysis b. informal investigation c. exploratory research d. interpretative research ANSWER: c

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Chapter 10: Marketing Research in the Era of Big Data 75. After defining the problem and conducting an exploratory investigation, the next step in the marketing research process is to: a. create a research design. b. formulate a hypothesis. c. select the respondents for the study. d. gather primary and secondary data. ANSWER: b 76. Walmart is evaluating its performance records of the previous years that are stored in its database. In addition to this, the company is also evaluating its previous year invoices. This evaluation process carried out by firms is called _____. a. sales analysis b. financial iteration c. market capitalization d. interpretative research ANSWER: a 77. Firms conduct marketing cost analysis to determine: a. the appropriate levels of market capitalization. b. the current levels of corporate assets and liabilities. c. the profitability of certain customers, territories, or product lines. d. the marketing strategies of its competitors. ANSWER: c 78. As part of his marketing research duties, Neal evaluates the expenses incurred by his company for selling, warehousing, advertising, and delivering the products. Neal is engaging in: a. exploratory sales review. b. interpretative research. c. business process reengineering. d. marketing cost analysis. ANSWER: d

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Chapter 10: Marketing Research in the Era of Big Data 79. Which of the following serves as a source of internal data for a firm involved in marketing research? a. Syndicated service firm reports b. Marketing cost analysis c. Census data d. Business and trade magazines ANSWER: b 80. A(n) _____ sets the stage for more in-depth research in a marketing research process by further clarifying what researchers need to test. It is a tentative explanation for a specific event. a. sales analysis b. informal investigation c. ethnographic study d. hypothesis ANSWER: d 81. Kate believes the reason the sales of one of her company’s products has fallen is due to a price increase. She cites sales from the previous year to the same customers as evidence of declining sales. Kate is: a. developing a research design. b. formulating a hypothesis. c. identifying a symptom. d. conducting exploratory research. ANSWER: b 82. Jake is determining which customers should be included in a study sample. According to this information, Jake is in which stage of the marketing research process? a. Formulating a hypothesis b. Collecting data c. Creating a research design d. Defining a problem ANSWER: c 83. A _____ is a master plan created by a marketer for conducting market research. a. research cluster b. research hypothesis c. probability sample d. research design ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 84. The information collected for the first time specifically for a marketing research study is called _____ data. a. qualitative b. primary c. processed d. secondary ANSWER: b 85. Penelope is using data collected and published by a trade association in her marketing research study. The data used by Penelope can be regarded as _____. a. secondary data b. primary data c. raw data d. experimental data ANSWER: a 86. Which of the following is true of secondary data used in marketing research? a. It is the data collected for a specific market study. b. It provides richer and more detailed information compared to primary data. c. It is usually collected and compiled by the investigator conducting the study. d. It requires less time and is less expensive to gather. ANSWER: d 87. Which of the following is a limitation of secondary data not found in primary data? a. It is more expensive to collect and analyze than primary data. b. It is not readily accessible for marketers. c. It may not be completely relevant to the specific needs of the marketer. d. It is usually in the form of raw data and hence not reliable. ANSWER: c 88. Which of the following factors is most likely to have an influence on the choice between primary and secondary data? a. Data source b. Substitutability c. Availability d. Applicability ANSWER: d

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Chapter 10: Marketing Research in the Era of Big Data 89. Jack is a research specialist who has spent six months conducting a detailed study of customer attitudes and expectations. In writing the final report, Jack should remember to: a. include only the primary data collected as it is more specific for the current research. b. direct his report toward the management and not other researchers. c. elaborate on the technical details of the research methods in the introduction. d. present the results to all key executives in separate meetings. ANSWER: b 90. Which of the following can be regarded as external data? a. Sales force activity reports compiled by the sales manager b. Accounting data obtained from the financial statements c. Information obtained from a syndicated research service d. Product performance reviews made by the engineering department ANSWER: c 91. A market researcher for a cable company is seeking to determine the number of households in a selected neighborhood that consist of four or more people. The most cost efficient way to collect this information would be to: a. look through the census information available on the Internet. b. use the services of a full service research supplier. c. conduct personal interviews with neighborhood leaders. d. search through the information provided by the local Chamber of Commerce. ANSWER: a 92. Which of the following is the most important source of secondary data in the United States? a. Chamber of Commerce b. Treasury Department c. Federal government d. Bureau of Labor Statistics ANSWER: c

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Chapter 10: Marketing Research in the Era of Big Data 93. The U.S. database that combines features such as railroads, highways, and rivers with census data such as household income is called: a. AEGIS (American Exploratory Geographic Information Systems). b. PoLeCAT (Population Legally Counted and Typologized). c. TIGER (Topographically Integrated Geographic Encoding and Referencing). d. ZEBRA (Zoned Environment Business Report Activities). ANSWER: c 94. A consumer products company is analyzing data collected and published by trade associations and general business magazines. This data is best referred to as _____ data. a. primary b. private c. internal d. census ANSWER: b 95. Which of the following is the reference book that can help marketers track down trade organizations that may have data pertinent to their company? a. The U.S. Government's Survey of Current Business. b. Who's Who in American Industry. c. Thomson Gale's Encyclopedia of Associations. d. Catalog of U.S Government Publications. ANSWER: c 96. A consumer goods company involved in marketing research is trying to obtain information about trade publications that conduct and publish industry-specific research. Which of the following data sources can provide the relevant information to the company? a. the U.S. Governors' Handbook on Effective Buying Income. b. Country and City Data Book published by the federal government c. Thomson Gale's Encyclopedia of Associations. d. Ulrich’s Periodicals Directory ANSWER: d

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Chapter 10: Marketing Research in the Era of Big Data 97. The total group of people that a researcher wants to study is called the: a. universe. b. sample. c. cluster. d. aggregate. ANSWER: a 98. A group of people chosen from a defined population to be survey respondents or research participants is called a: a. population. b. segment. c. sample. d. community. ANSWER: c 99. A(n) _____ is a probability sample in which every individual in the relevant universe has an equal opportunity of being selected. a. accidental sample b. convenience sample c. quota sample d. simple random sample ANSWER: d 100. A probability sample constructed so that randomly selected subsamples of different groups are represented in the total sample is known as a(n) _____ sample. a. stratified b. convenience c. exclusive d. quota ANSWER: a 101. In the context of the sampling process, the universe is also known as the _____. a. stratified group b. population c. cluster d. quota ANSWER: b

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Chapter 10: Marketing Research in the Era of Big Data 102. In which of the following nonprobability samples, the participants that are to be included in the study are handpicked by the researchers? a. Cluster sample b. Quota Sample c. Stratified sample d. Simple random sample ANSWER: b 103. Which of the following is a type of nonprobability sample? a. Convenience sample b. Cluster sample c. Stratified sample d. Simple random sample ANSWER: a 104. Which of the following is a probability sample? a. Stratified sample b. Quota sample c. Convenience sample d. Accidental sample ANSWER: a 105. “On the street” interviews conducted by a broadcaster with anyone who passes by are examples of _____ sampling. a. media b. convenience c. cluster d. stratified ANSWER: b 106. An accidental sample is also known as a _____ sample. a. simple random b. convenience c. stratified d. cluster ANSWER: b

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Chapter 10: Marketing Research in the Era of Big Data 107. A _____ sample is a nonprobability sample divided to maintain the proportion of certain characteristics among different segments or groups seen in the population as a whole. a. simple random b. cluster c. quota d. convenience ANSWER: c 108. A stratified sample differs from a quota sample as in a stratified sample: a. researchers handpick participants from among selected segments or groups with certain characteristics. b. researchers select a sample of subgroups from which they draw respondents. c. researchers select participants from among readily available respondents. d. researchers select subsamples by a random process. ANSWER: d 109. A(n) _____ sample is a nonprobability sample selected from among readily available respondents. a. quota b. stratified c. convenience d. simple random ANSWER: c 110. Erica is a marketing researcher involved in improving retail store layouts. Erica would like to know the order in which various types of products are purchased by customers. Erica also wants to find out what type of assistance is required by the customers while purchasing products. The best method for Erica to collect this data would be by: a. observation. b. telephonic surveys. c. voluntary mail-back questionnaires. d. Delphi technique. ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 111. Survey methods used in marketing research for collecting primary data involve the: a. use of Delphi technique. b. review of sales data on customer purchase rates to estimate the future sales. c. analysis of historical census data. d. use of questionnaires to obtain demographic information of consumers. ANSWER: d 112. Which of the following data collection methods is considered as the best means for obtaining detailed information about consumers? a. Telephone interviews b. Focus groups c. Mail surveys d. Personal interviews ANSWER: d 113. Although cost effective, an online focus group _____. a. does not generate immediate results b. does not allow the moderator to see body language or nonverbal cues c. encourages the testing of sample products d. generates a solid representative sample ANSWER: b 114. Which of the following methods used for conducting primary research gathers information by encouraging the participants to engage in a discussion on a predetermined topic? a. Trend analysis b. Delphi technique c. Focus group d. Interpretative research ANSWER: c 115. Which of the following is true of focus groups used by marketers to gather primary data? a. They elicit information from the customers through a question-and-answer format. b. They allow participants to respond at their leisure. c. They are typically used for measuring the success of a new product introduced in a specific area. d. They are valuable tool for exploratory research and development of new product ideas. ANSWER: d

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Chapter 10: Marketing Research in the Era of Big Data 116. Which of the following statements is true regarding online surveys? a. It allows researchers to establish rapport with the respondents and explain confusing or vague questions. b. It allows participants to respond at their leisure. c. It is a highly time consuming method. d. It is more intrusive than telephone surveys. ANSWER: b 117. _____ is a marketing research technique that involves introducing a new product in a specific area and then measuring its degree of success. a. Trend analysis b. Concept testing c. Test marketing d. Exponential smoothing ANSWER: c 118. A(n) _____ is a scientific investigation in which a researcher manipulates a test group and compares the results with those of another group that did not receive the experimental manipulations. a. focus group b. controlled experiment c. interpretative research d. trend analysis ANSWER: b 119. Which of the following is the least-used method for collecting primary data? a. Focus group b. Telephone survey c. Controlled experiment d. Online survey ANSWER: c

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Chapter 10: Marketing Research in the Era of Big Data 120. McBurgers plans to introduce a new line of fish sandwiches to fifteen stores in eastern United States for a sixmonth period. If the product and promotional efforts behind it are successful, the company may launch them nationwide. What type of research is being conducted to determine potential success? a. Test marketing b. Exploratory research c. Stratified sampling d. Trend analysis ANSWER: a 121. _____ remains the most common method for conducting primary research outside the United States. a. Telephonic interviews b. Face-to-face interviewing c. Controlled experimentation d. Mail surveys ANSWER: b 122. While mail surveys are a common data collection method in developed countries, they are an unreliable means of gathering primary data in many foreign countries because of the: a. opinionated nature of target samples. b. reticence of people in presence of others. c. low literacy rates. d. lack of basic telecommunications infrastructure. ANSWER: c 123. Which of the following methods involves observing a customer or group of customers in their natural settings and then evaluating their behavior based on an understanding of social and cultural characteristics of that setting? a. Test marketing b. Interpretative research c. Controlled experiment d. Focus group ANSWER: b

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Chapter 10: Marketing Research in the Era of Big Data 124. In interpretative research, the researcher first spends an extensive amount of time studying the culture, and for that reason, the studies often are called _____ studies. a. ethnographic b. exploratory research c. anthropological exploration d. socio-lingual ANSWER: a 125. How has the marketing research function developed in the recent years? ANSWER: Most early marketing research gathered little more than written testimonials from purchasers of firms’ products. Research methods became more sophisticated during the 1930s as the development of statistical techniques led to refinements in sampling procedures and greater accuracy in research findings. In recent years, advances in computer technology have significantly changed the complexion of marketing research. Besides accelerating the pace and broadening the base of data collection, computers have aided marketers in making informed decisions about problems and opportunities. Simulations, for example, allow marketers to evaluate alternatives by posing what-if questions. Marketing researchers at many consumer goods firms simulate product introductions through computer programs to determine whether to risk real-world product launches or even to subject products to test marketing. 126. Describe the three types of marketing research companies. Give examples. ANSWER: The three types of marketing research companies are as follows: Syndicated services are organizations that provide standardized data on a periodic basis to its subscribers. Example: Mediamark Research, is an organization that operates a syndicated product 1) research service based on personal interviews with adults regarding their exposure to advertising media. Its clients include advertisers, advertising agencies, magazines, newspapers, and cable TV networks. Full-service research suppliers are organizations that contract with clients to conduct complete marketing research projects. 2) Example: Detroit-based Morspace Inc. provides quantitative and qualitative research to clients in the automotive, financial services, retail, and technology sectors, supporting clients’ strategies in brand management, product development, and customer satisfaction. Limited-service research suppliers are organizations that specialize in a limited number of activities, such as performing data processing or conducting field interviews. 3) Example: Quick Test/Heakin specializes in data collection in shopping malls. The company’s employees conduct more than 2 million interviews a year.

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Chapter 10: Marketing Research in the Era of Big Data 127. What is the significance of marketing research to businesses? What are the stages involved in the marketing research process? ANSWER: Business executives rely on marketing research to provide the information they need to make effective decisions regarding their firm’s current and future activities. The chances of making good decisions improve when the right information is provided at the right time during decision making. To achieve this goal, marketing researchers often follow a six-step process of research. 1) defining the problem, 2) conducting exploratory research, 3) formulating hypotheses, 4) creating a research design, 5) collecting data, and 6) interpreting and presenting the research. 128. Describe the process of exploratory research. ANSWER: Once a firm has defined the question it wants to answer, researchers can begin exploratory research. Exploratory research seeks to discover the cause of a specific problem by discussing the problem with informed sources both within and outside the firm and by examining data from other information sources. Marketers might talk with their customers, suppliers, and retailers. Alternatively, executives might also ask for input from the sales force or look for overall market clues. In addition, exploratory research can include evaluation of company records, such as sales and profit analyses, and available competitive data. Marketing researchers often refer to internal data collection as situation analysis. The term informal investigation is often used for exploratory interviews with informed people outside the researchers’ firms. 129. Describe the different sources of internal data within firms. ANSWER: The sources of internal data within a firm include sales records, financial statements, and marketing cost analyses. Marketers analyze sales performance records to gain an overall view of company efficiency and to find clues to potential problems. Prepared from company invoices or a computer database system, this sales analysis can provide important details to management. The study typically compares actual and expected sales based on a detailed sales forecast by territory, product, customer, and salesperson. Sales analysis is one of the least expensive and most important sources of marketing information available to a firm. Accounting data is another tool for identifying the financial issues that influence marketing. Using ratio analysis, researchers can compare performance in current and previous years against industry benchmarks. These exercises may hint at possible problems, but only more detailed analysis would reveal specific causes of indicated variations. Marketing cost analysis is the third source of internal information that involves evaluation of expenses for tasks such as selling, warehousing, advertising, and delivery to determine the probability of customers, territories, or product lines. Like sales analysis and financial research, marketing cost analysis is most useful when it provides information linked to other forms of marketing research.

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Chapter 10: Marketing Research in the Era of Big Data 130. What is a research design? What are the factors that need to be considered by marketers while creating a research design? ANSWER: A research design is a master plan or model for conducting marketing research, created by marketers to test hypotheses and find solutions to marketing problems. While planning a research project, the marketers: 1) must be sure that the study will measure what they intend to measure, and 2) select the respondents for the study before collecting the data. Marketing researchers use sampling techniques to determine which consumers to include in their studies. 131. List the strengths and limitations of secondary data in comparison with primary data. ANSWER: Secondary data offer two important advantages over primary data: 1) Secondary data are almost always less expensive to gather than the primary data, and 2) researchers usually spend less time to locate and use secondary data. Secondary data have limitations that primary data do not. 1) Published information can quickly become obsolete. 2) Published data collected for an unrelated purpose may not be completely relevant to the marketer’s specific needs. Primary data provides richer, and more detailed information compared to secondary data, even though the costs to collect primary data are high and takes a longer time. 132. Differentiate between a probability sample and a nonprobability sample. List out the different types of probability and nonprobability samples. ANSWER: A probability sample is one that gives every member of the population a chance of being selected. Types of probability samples include simple random samples, stratified samples, and cluster samples. In contrast, a nonprobability sample relies on personal judgment somewhere in the selection process. In other words, researchers decide which particular groups to study. Types of nonprobability samples are convenience samples and quota samples. 133. Explain the different types of probability samples. ANSWER: The different types of probability samples are: 1) Simple random sample: It is a basic type of probability sample in which every individual in the relevant universe has an equal opportunity of being selected. 2) Stratified sample: It is a probability sample constructed to represented randomly selected subsamples of different groups within the total sample; each subgroup is relatively homogeneous for a certain characteristic. 3) Cluster sample: It is a probability sample in which researchers select a sample of subgroups from which they draw respondents; each cluster reflects the diversity of the whole population sampled.

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Chapter 10: Marketing Research in the Era of Big Data 134. What is a quota sample? How is it different from a stratified sample? ANSWER: A quota sample is a nonprobability sample divided to maintain the proportion of certain characteristics among different segments or groups seen in the population as a whole. In other words, each field worker is assigned a quota that specifies the number and characteristics of the people to contact. A quota sample differs from a stratified sample as in a stratified sample, researchers select subsamples by some random process, whereas in a quota sample, researchers handpick participants. 135. Describe the three principal methods used by researchers to collect primary data. ANSWER: The principal methods for collecting primary data are observation, surveys, and controlled experiments. 1) Observation method: In observational studies, researchers view the overt actions of subjects being studied. Marketers trying to understand how consumers behave in certain situations find observation a useful technique. Interpretative research is a type of observational research method in which a researcher observes a group of customers in their natural setting and interprets their behavior based on an understanding of the social and cultural characteristics of that setting. 2) Survey method: Survey methods are used by researchers to get information on attitudes, motives, and opinions, which cannot be obtained through observational methods. Telephone interviews, personal interviews, focus groups, surveys, and other Internet-based methods are used by researchers to collect primary data. 3) Experimental method: A controlled experiment is a scientific investigation in which a researcher manipulates a test group and compares the results with those of a control group that did not receive the experimental controls or manipulations. 136. What is test marketing? What are the challenges associated with test marketing new products? ANSWER: Test marketing is a marketing research technique that involves introducing a new product in a specific area and then measuring its degree of success. Up to this point, a product development team may have gathered feedback from focus groups. Other information may have come from shoppers’ evaluations of competing products. Test marketing is the first stage at which the product performs in a real-life environment. There are three challenges often cited with test marketing: Test marketing is expensive. A firm can spend more than $1 million depending on the size of 1) the test market city and the cost of buying media to advertise the product. Competitors quickly learn about the new product. By studying the test market, competitors 2) can develop alternative strategies. Some products are not well suited to test marketing. Few firms test market long-lived, durable goods such as cars because of the major financial investments required for their 3) development, the need to establish networks of dealers to distribute the products, and requirements for parts and servicing.

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Chapter 10: Marketing Research in the Era of Big Data 137. What are the challenges associated with conducting marketing research in global markets? ANSWER: Although marketing researchers follow the same basic steps for international studies as for domestic ones, they often face some very different challenges. When conducting international studies, companies must be prepared to deal with both language issues, and cultural issues, or capturing local citizens’ interests while avoiding missteps that could unintentionally offend them. Companies also need to take a good look at a country’s business environment, including political and economic conditions, trade regulations affecting research studies and data collection, and the potential for short- and longterm growth. Businesses may need to adjust their data collection methods for primary research in other countries because some methods do not easily transfer across national frontiers. Mail surveys are useless in some nations because of low literacy rates, unreliable mail service, and a lack of address lists. Telephone interviews also may not be suitable in countries where people do not have phones. Focus groups are also difficult to arrange because of social and cultural factors. Face-toface interviews are the most common method for primary data collection outside the United States. Match each item with the correct statement below. a. big data b. exploratory research c. secondary data d. primary data e. sampling f. hypothesis g. simple random sample h. interpretative research i. focus group j. marketing decision support system k. key performance indicator l. predictive analytics m. metrics n. marketing research o. quota sample p. test marketing q. cluster sample r. data mining s. convenience sample t. controlled experiment 138. _____ is the process of collecting and using information for marketing decision making. ANSWER: n Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 139. _____ seeks to discover the cause of a specific problem by discussing the problem with informed sources and by examining data from other information sources. ANSWER: b 140. A(n) _____ is a tentative explanation for a specific event. ANSWER: f 141. _____ refers to the information collected from previously published or compiled sources. ANSWER: c 142. The information collected for a specific investigation is called _____. ANSWER: d 143. A(n) _____ is a nonprobability sample selected from among readily available respondents. ANSWER: s 144. A(n) _____ is a basic type of probability sample in which every individual in the relevant universe has an equal opportunity of being selected. ANSWER: g 145. A(n) _____ is a probability sample in which researchers select a sample of subgroups from which they draw respondents. ANSWER: q 146. _____ is the process of selecting survey respondents or research participants. ANSWER: e 147. _____ is a type of primary research in which a researcher observes a customer or a group of customers in their natural setting and interprets their behavior based on an understanding of the social and cultural characteristics of that setting. ANSWER: h 148. _____ is information that originates in unprecedented volume and speed from the world around us. ANSWER: a 149. A(n) _____ is a small group of individuals brought together to discuss a specific topic. ANSWER: i 150. A(n) _____ is a scientific investigation in which a researcher manipulates a test group and compares the results with those of an other group that did not receive the experimental manipulations. ANSWER: t

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Chapter 10: Marketing Research in the Era of Big Data 151. A(n) _____ is a component of an MIS that links a decision maker with relevant databases and analysis tools. ANSWER: j 152. _____ is the process of searching through customer databases to detect patterns that guide marketing decision making. ANSWER: r 153. A(n) _____ is a quantifiable measurement, articulated in advance, that reflects an organization’s goals and is critical to its success. ANSWER: k 154. _____ refers to the use of marketing intelligence data to model scenarios and create forecasts. ANSWER: l 155. _____ are quantifiable measurements that are compared against organizational objectives to gauge overall performance. ANSWER: m 156. A(n) _____ is a nonprobability sample divided to maintain the proportion of certain characteristics among different segments or groups seen in the population as a whole. ANSWER: o 157. Introducing a new product in a specific area and then observing its degree of success is called _____. ANSWER: p 158. Big data is information that originates in unprecedented volume and speed from the world around us. a. True b. False ANSWER: True 159. The use of big data has brought about little change in the way companies conduct marketing research. a. True b. False ANSWER: False 160. One of the greatest challenges in the use of big data is the ability to manage and analyze all of the information gathered about consumers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 161. Marketing intelligence refers to the sum total of information related to a firm's markets. a. True b. False ANSWER: True 162. Computer technology has had little impact on the marketing research process. a. True b. False ANSWER: False 163. A marketing information system (MIS) is a part of a firm's overall management information system that deals specifically with marketing data and issues. a. True b. False ANSWER: True 164. A marketing information system allows marketers to store data, classify and analyze that data, and retrieve it easily when needed. a. True b. False ANSWER: True 165. A marketing information system (MIS) develops available data into information useful for decision making. a. True b. False ANSWER: False 166. Marketing decision support systems (MDSSs) organize data in ways that allow users to model different scenarios and evaluate them before making marketing decisions. a. True b. False ANSWER: True 167. An MDSS serves as a company’s “nerve center,” monitoring the market environment inside the organization. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 168. The use of big data has created new companies that collect and analyze information and sell their proprietary software to all types of businesses. a. True b. False ANSWER: True 169. Data analysis companies work with other businesses to fine tune marketing strategies in real time. a. True b. False ANSWER: True 170. Data mining focuses on identifying relationships that are not obvious to the marketers. a. True b. False ANSWER: True 171. Online companies need to be careful while using the personal data of consumers as there are various laws imposed to govern the use of personal data by online companies and data aggregators. a. True b. False ANSWER: False 172. Ethnographic studies involve researchers spending time studying culture. a. True b. False ANSWER: True 173. Interpretive research focuses on understanding the meaning of a product in a consumer's everyday life. a. True b. False ANSWER: True

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Chapter 10: Marketing Research in the Era of Big Data 174. What is the term for information that originates in unprecedented volume and speed from the world around us? a. Big data b. Marketing research c. Market sectors d. Digital data ANSWER: a 175. Which of the following is not affected by big data? a. Market share b. Company revenues c. Advertising budgets d. Customer interests ANSWER: d 176. What is the biggest challenge in using big data? a. Ability to manage and analyze all the gathered information b. Ability to change marketing strategies c. Ability to conduct detailed research studies d. Ability to hire experts in marketing research ANSWER: a 177. What is the sum total of information related to a firm’s markets, which a firm gathers to better understand its customers? a. Marketing data b. Marketing research c. Marketing intelligence d. Marketing strategies ANSWER: a 178. What has significantly changed the complexion of marketing research over the past few decades? a. Computer technology b. Security concerns c. Global conflicts d. Fuel prices ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 179. A _____ is a planned, computer-based system designed to provide decision makers with a continuous flow of information relevant to their areas of responsibility. a. business intelligence system b. critical response management system c. competitive intelligence system d. marketing information system ANSWER: d 180. A(n) _____ takes a marketing information system a step further and allows managers to explore and connect such varying information as the state of the market, consumer behavior, sales forecasts, competitors’ actions, and environmental changes. a. marketing segmentation system b. marketing decision support system c. market intelligence system d. exploratory research system ANSWER: b 181. The use of big data has created new companies called data brokers that _____. a. outsource data collection overseas b. help businesses fine tune marketing strategies in real time c. eliminate intermediaries d. provide revised business plans for fledgling firms ANSWER: b 182. What is the term for quantifiable measurements that are compared against organizational objectives to gauge a company’s overall performance? a. Big data b. Competitive intelligence c. Marketing data d. Metrics ANSWER: d

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Chapter 10: Marketing Research in the Era of Big Data 183. _____ is the process of searching through computerized information files to detect patterns that guide decision making. a. Sales forecasting b. Data mining c. Exploratory research d. Ethnographic research ANSWER: b 184. A huge database that contains information used to detect patterns is called a _____. a. Data cloud b. Big data c. Data storage d. Data warehouse ANSWER: d 185. What is the term that refers to the use of marketing intelligence data to model scenarios and create forecasts? a. Exploratory research b. Big data c. Predictive analytics d. Marketing intelligence ANSWER: c 186. Keith is searching through computerized information files of customers to detect patterns in product sales. Keith is engaged in the process of: a. short-run forecasting. b. ethnographic research. c. data mining. d. sales forecasting. ANSWER: c 187. Marketers in many industries use predictive analytics to: a. set strategies. b. poach employees from competitors. c. seek additional revenues. d. Create a more efficient e-business. ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 188. Julia is developing new promotional strategies for the services offered by her firm and is focusing on finding information about her firm’s competitors. She is looking through published sources, as well as reviewing her competitors’ advertising. According to this information, Julia is gathering _____. a. progressive information b. competitive intelligence c. situational data d. competitor forecast ANSWER: b 189. Marketers use key performance indicators to: a. justify an increased marketing budget. b. measure the success of a marketing initiative. c. determine which marketing tasks should be outsourced. d. create a social media campaign. ANSWER: b 190. What has been the impact of big data on gathering information? a. It has increased the cost of data collection. b. It has had little effect on marketing research data. c. It has blurred how data is classified as secondary or primary. d. It has slowed the data collection process. ANSWER: c 191. With the increased use of big data, marketing research reports should be: a. directed to other researchers. b. directed to company management. c. filled with details of research methods. d. written in technical terms. ANSWER: b 192. Whether conducted online or through the mail, what is the most important aspect of a marketing research survey? a. Designing one that yields information marketers can use to make decisions. b. Designing one that motivates respondents to provide information quickly. c. Designing one that keeps costs within the marketing budget. d. Designing one that can be adapted easily to global markets. ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 193. What is a major source of information for U.S. companies that want to research global markets? a. Export.gov b. Amazon.com c. Google.com d. Europa.eu ANSWER: a 194. Explain the origins of the era of big data in marketing research. ANSWER: Increasingly, the technological advances of the last two decades—the Internet, smartphones, social media, and more—have given rise to what’s being called big data: data that originates in unprecedented volume and at unprecedented speed from the world around us. These advances have made it possible for anyone to gather and analyze data from customers, prospects, visitors to a website or social media page, and many other sources. The volume, speed, and sheer variety of big data are bringing about great changes in the way organizations learn about their customers. 195. Define MIS and discuss its importance to marketing managers. ANSWER: A marketing information system (MIS) is a planned, computer-based system designed to provide decision makers with a continuous flow of information relevant to their areas of responsibility. A component of the organization’s overall management information system, a marketing information system deals specifically with marketing data and issues. A well-constructed MIS serves as a company’s nerve center, continually monitoring the market environment—both inside and outside the organization—and providing instantaneous information. Marketers can store data for later use, classify and analyze that data, and retrieve it easily when needed. 196. What is an MDSS? How is it different from an MIS? ANSWER: A marketing decision support system (MDSS) consists of software that helps users quickly obtain and apply information in a way that supports marketing decisions. MDSSs consist of four main characteristics: they are interactive, investigative, flexible, and accessible. An MDSS can create simulations or models to illustrate the likely results of changes in marketing strategies or market conditions. MDSSs take MIS one step further by allowing managers to explore such varying information as the state of the market, consumer behavior, sales forecasts, competitors’ actions, and environmental changes. While an MIS provides raw data, an MDSS develops this data into information useful for decision making. For example, an MIS might provide a list of product sales from the previous day. A manager could use an MDSS to transform this raw data into graphs illustrating sales trends or reports estimating the impact of specific decisions, such as raising prices or expanding into new regions.

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Chapter 10: Marketing Research in the Era of Big Data 197. Describe the new type of company that has evolved as a result of big data. ANSWER: The use of big data has created new companies that collect and analyze data and sell their proprietary software to all types of businesses. Generally called data brokers, data resellers, or data partners, these firms work with other businesses to fine tune marketing strategies in real time. These companies provide software that help firms automatically track and visualize large volumes of sales data, using this information to adjust their marketing strategies to meet customer demand. 198. Explain the concept of marketing intelligence and the use of metrics. ANSWER: Marketing intelligence is the process of gathering information and analyzing it to improve business strategy, tactics, and daily operations. Using advanced software tools, marketers gather information from within and outside the organization. This information is typically expressed as metrics— quantifiable measurements that are compared against organizational objectives to gauge overall performance. This can tell the firm how its own sales operation is doing or how its top competitors are performing. For marketers, common metrics in marketing intelligence could include sales revenues, profitability, customer churn rate, and more. 199. What is data mining? How does it help marketers in decision making? ANSWER: Data mining is a technique in which a user employs special software to search through computerized data files to detect patterns. It focuses on identifying relationships not obvious to marketers—in a sense, answering questions that marketing researchers may not even have thought to ask. Data mining is an efficient way to sort through huge amounts of data and to make sense of that data. It helps marketers create customer profiles, pinpoint reasons for customer loyalty or the lack thereof, analyze potential returns on changes in pricing or promotion, and forecast sales. Data mining offers considerable advantages in retailing, the hotel industry, banking, utilities, and many other areas and holds the promise of providing answers to many specific strategic questions. 200. Describe predictive analytics and how it is used by marketers. ANSWER: Predictive analytics refers to the use of marketing intelligence data to model scenarios and create forecasts. Marketers in many industries use predictive analytics to set strategy and direction. Using data captured through data mining, predictive analytics allows marketers to focus their efforts on customer targets with the greatest likelihood of purchasing the company’s product or service, thereby assuring that the company operates more efficiently and more profitably.

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Chapter 10: Marketing Research in the Era of Big Data 201. It can be said that all marketing and marketing strategies begin with marketing research. There is a strong positive correlation between the quality of a firm’s marketing research and the success of the firm’s marketing strategies. Poor marketing research leads to poorly executed and poorly performing marketing strategies. On the other hand, quality marketing research facilitates a firm’s ability to select the best marketing strategies for a given situation. Marketers understand that marketing research is important because a. i t helps the firm select the appropriate marketing mix b. it helps a company evaluate its sales force’s performance c. i t guarantees the success of the firm’s marketing strategies d. i t is a viable substitute for an organization’s SWOT analysis e. i t ensures that the firm is able to meet the market’s profit expectations ANSWER: a 202. Y ou are watching an episode of a new game show that tests contestants' knowledge by giving them phrases they must respond to with a question. The following phrase comes up: "Its purpose is to inform an organization about customers' needs and desires, marketing opportunities for products, and changing attitudes and purchase patterns of customers." What should be your response to the phrase? a. W hat is marketing research? b. W hat is conclusive research? c. W hat is descriptive research? d. W hat is experimental research? e. W hat is a exploratory research? ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 203. You are watching an episode of a new game show that tests contestants’ knowledge by giving them phrases they must respond to with a question. The following marketing-related phrase comes up in the bonus round of the game: “It’s an informed guess or assumption about a problem or a specific event. It sets the stage for in-depth research and clarifies what the researcher needs to test.” The contestant’s response should be a. W hat is a hypothesis? b. W hat is a plausible conclusion? c. W hat is an objective statement? d. W hat is a qualitative data point? e. W hat is a conclusive research finding? ANSWER: a 204. Emeril works for a local sports bar known for its chicken wings and nachos. For the last five years, the company has continued to grow, and according to a recent trend analysis, sales have risen by increments of about $530,000 annually since the restaurant opened its doors. Surprisingly, however, the restaurant has seen a decline in patronage over the last quarter, and Emeril has been tasked with identifying the root cause of this sudden decline in sales.

Emeril has never conducted exploratory research, so you have decided to help him. One of the first lessons you share with him is to be careful about confusing the symptoms of a problem with the problem itself. After you conduct a series of interviews with waitstaff, customers, distributors, and other stakeholders, you help Emeril come up with possible explanations for the decline in sales. Which of the following is a possible cause of the problem at the restaurant? a. T he restaurant manager laid off five busboys because business is slow. b. T he restaurant’s sales declined from $200,000 a day to $80,000 a day. c. T he restaurant cut back on the number of weekly fresh produce deliveries. d. T he restaurant’s market share decreased from 7% to 4% in a matter of a few months. e. T he restaurant’s marketing team recently released a new billboard that many customers find offensive. ANSWER: e

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Chapter 10: Marketing Research in the Era of Big Data 205. While shopping at the mall, you notice a group of young women asking shoppers whether they can spare five minutes to answer some questions about their shopping experiences at the mall. Given your marketing experience, you immediately recognize that these young women are conducting a marketing research project.

At which step in the marketing research process are the young women? a. i dentifying the problem b. f ormulating a hypothesis c. c reating a research design d. c onducting exploratory research e. c ollecting primary and secondary data ANSWER: e 206. Y ou work for a printing company and have been asked to conduct research on customer reading preferences. You want to answer the following questions: 1) do readers prefer to read electronic books? 2) do they prefer to read paper-based books? or 3) do they not have a preference? You decide that to start off the process, you are going to peruse a series of secondary sources, including published articles, magazine articles, and documents you have purchased from a syndicated service.

Based on what you know about collecting data, you know that there are several benefits of using secondary data. You are not as clear, however, about the disadvantages. Which of the following is a drawback of using secondary data? a. T hey are more expensive than using primary data. b. S econdary data provide very rich, robust data. c. O ne needs at least a few months to conduct secondary research. d. M any researchers use secondary data only when primary research is not an option. e. S econdary data may have been collected for unrelated purposes and may be irrelevant to your needs. ANSWER: e

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Chapter 10: Marketing Research in the Era of Big Data 207. Your marketing team is conducting research to improve your understanding of sampling techniques. You are particularly interested in working with the so-called Millennial Generation and have accumulated the following key data points about the group:

1. They regard themselves as special and need individual attention, which they received throughout their childhood. 2. There are 70 million individuals in this cohort. 3. The total buying power of the group is $100 billion a year. 4. They prefer team-oriented activities, having often taken part in team sports as children. 5. They show conventional preferences for schedules and structure. 6. People in the group range from 20 to 35 years old. 7. They are achievement-oriented, particularly in regard to education, but may also respond negatively to failure. Before you select a sample from the population of Millenials, you want to ensure that you understand the characteristics of this group. Based on the data points listed, what can you conclude about this group? a. T his group has a strong historical perspective. b. T his group is too small to be an attractive target market. c. T his group is very independent; its members tend to “go their own way.” d. T his group does not have the financial resources to be an attractive target market. e. T his group likely has a higher average level of education than the general population. ANSWER: e 208. You work for a local community garden and have been asked to showcase some of the produce from the garden at the local mall. You decide to use nonprobability sampling to identify study participants. As families walk into the mall, you stop them and ask them to try the produce that you have grown in the garden to complete a survey on healthy eating.

Which of the following is a potential drawback of using nonprobability sampling? a. T he sample is random. b. R espondents may self-select into the study. c. N onprobablity sampling relies on objectivity. d. R esearchers find nonprobability sampling inconvenient. e. E ach participant has an equal chance of being selected into the study. ANSWER: b

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Chapter 10: Marketing Research in the Era of Big Data 209. Y ou are the campaign manager for a candidate running for mayor of Hartford, Connecticut. You are running a series of focus group sessions with Hartford residents to get a better idea of their needs and wants.

Your focus group sessions are an example of which of the following types of research? a. m arketing research b. c onclusive research c. d escriptive research d. e xploratory research e. e xperimental research ANSWER: d 210. Kelsey has to design a research study to assess the impact of the Internet and mobile applications on work efficiency among all employees of her company. This study will help Kelsey’s marketing team decide whether to promote new work tools via mobile applications. She uses a simple random sampling technique to identify her research participants. Kelsey uses a computer software program to randomize the names of the 500 employees of the company and selects 300 to participate in the study. Over the course of one month, study participants are asked to complete a concise questionnaire with five questions followed by a personal interview with a company executive.

Which of the following is a drawback of this research design? a. T he sample is too small. b. T he study lacks confidentiality. c. T he questionnaire used is not clear. d. F ocus groups can be time-consuming. e. R esearchers did not have enough time to expedite the study. ANSWER: b

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Chapter 10: Marketing Research in the Era of Big Data 211. Because of a variety of cultural, geographic, regulatory, and social issues, international marketing can pose unique challenges to the marketer. Many of these challenges can be mitigated by an effective internationally oriented marketing research effort. International marketing research can help a company____________________. a. a void product formulation errors b. d evelop the most effective logistics systems c. e liminate product manufacturing inefficiencies d. g uarantee the success of its marketing strategies e. i mprove a company’s labor relations in foreign markets ANSWER: a 212. In the past, surveys have been used as a primary tool to collect data. Marketers thought that if they wanted to know what people want, it was enough to just ask. People do not always answer honestly, however, and sometimes people don't know what they want or why they make the decisions they do. To understand why people do the things they do and the real-life context that surrounds consumer decisions and behaviors, marketing professionals sometimes choose to live the life of their target customers.

Which of the following type of research is described above? a. m arketing research b. d escriptive research c. e xploratory research d. i nterpretive research e. e thnographic research ANSWER: e 213. Michael is a marketer who conducts research for small startups. He has been consulting for an agency that is having trouble managing data about various marketing mix variables, sales, and consumer distribution across the United States. The head of the company wants to be able to access information quickly and easily.

Which of the following should Michael suggest that the startup use to organize its information? a. d ata mining b. b usiness intelligence c. c ompetitive intelligence d. m arketing information system e. m arketing decision support system ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 214. Vanessa owns a music company and has been storing a wealth of information ranging from customer contact information to the names of each record the customers have purchased. In order to stay competitive, she had a tech company build a marketing decision support system (MDSS) for her to enable quick decision making. One of the features Vanessa likes best about her company’s MDSS is the system’s ability to manage and produce information in various formats. Moreover, as the user or decision maker changes topics, the system matches information to the problem that has been introduced.

Which of the following characteristics of a marketing decision support system is represented in the example above? a. f lexibility b. i nteractivity c. a ccessibility d. i nexpensiveness e. i nvestigative properties ANSWER: a 215. You are working with the data scientist from your sales department to develop a regression model for forecasting your company’s sales based on changes in the U.S. economy.

Which of the following types of data do you need the most in order to enhance the accuracy of the model’s forecasts? a. q ualitative data about the department’s sales force b. q ualitative data about your marketing environment c. q uantitative data about your company’s historical sales d. q ualitative data about your company’s historical sales and U.S. economic performance statistics e. q uantitative data about your company’s historical sales and U.S. economic performance statistics ANSWER: e

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Chapter 10: Marketing Research in the Era of Big Data 216. Solaris works for a beverage company in the western part of the United States. Solaris’s superiors ask him to chart the competitive environment as well as market trends on a quarterly basis, and to forecast the company’s sales. Because he produces this information once every few months, Solaris generally considers only short-term future sales. Starting with the employees on the sales floor at the company’s distribution centers, Solaris and his team gather sales projections and then work their way upward to middle and top-level management, asking the respondents to estimate sales. Solaris is then able to determine the sales forecast on the basis of this aggregate information. Which of the following forecasting techniques is Solaris implementing? a. D elphi technique b. s ales force composite c. e xponential smoothing d. j ury of executive opinion e. s urvey of buyer intentions ANSWER: b 217. The head of sales at a publishing firm is seeking better information to make informed marketing decisions. He already gets data about the company's daily flow of business; now he needs tools that will enable him to use the raw numbers in developing models and graphs. He is looking for a _________system. a. Marketing Information

b. Marketing Decision Support c. VALS d. Marketing Intelligence e. Big Data ANSWER: b 218. Your boss believes strongly in the potential of special software that has been developed to search for patterns in computerized data files. This software is used primarily for ____. a. Data warehousing

b. Predictive analytics c. Competitive intelligence d. MIS support e. Data mining ANSWER: e

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Chapter 10: Marketing Research in the Era of Big Data 219. You've noticed a decline in seafood orders at your restaurant, but you're unsure what is causing the problem. So you've begun to talk with customers, monitor the restaurant's Facebook page, and interview seafood suppliers. You are engaged in: a. Informal investigation

b. Exploratory research c. Situation analysis d. Hypothesis formulation e. Sales forecasting ANSWER: a, b, c 220. Sales of your frozen yogurt are down, so you've started a research project aimed at answering the question, "How can we improve the effectiveness of our advertising?" You've also conducted informal interviews with customers, suppliers, and retailers. Which steps in the research process have not yet been tackled? a. Conduct exploratory research

b. Define the problem c. Formulate a hypothesis d. Create a research design e. Mine data ANSWER: c, d 221. To decide where to locate a new shoe store, you need to know the size of the population in different towns. Unfortunately, you have almost no money to spend on data collection. The type(s) of data most accessible to you can be described as: a. Secondary

b. United States government c. Primary d. Repositioned e. Micro ANSWER: a, b 222. A congressional candidate's campaign manager wants to survey all registered voters in the district. Choose the sampling term(s) that would apply to this group of people. a. Population

b. Universe c. Electoral sample d. Campaign sample ANSWER: a, b Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 223. As part of a client project, the team at your market research firm is interviewing shoppers at a local mall. The client wants the interviewers to talk to equal numbers of men and women. Which sampling technique(s) will your team use? a. Nonprobability

b. Probability c. Quota d. Stratified e. Cluster ANSWER: a, c 224. A researcher came up with an unusual way to study the market penetration of Magazine A vs Magazine B in a particular city. At the city's garbage processing center, she obtained a week's sample of discarded magazines and compared the numbers of A to B. This is a(n) _____ research method, used to collect _____ data. a. Interpretive, primary

b. Personal, secondary c. Exploratory, secondary d. Observation, secondary e. Observation, primary ANSWER: e 225. Procter & Gamble sends researchers into the homes of consumers around the world to observe how they use certain products. The researchers seek to understand how different cultures may influence consumer behavior. This is a(n) ____ research method, used to collect ____ data. a. Interpretive, primary

b. Interpretive, secondary c. Exploratory, primary d. Global, primary e. Global, secondary ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 226. Your company is branching out into the developing world for the first time. You know that it could be challenging to use the firm's mail surveys in these countries. Among the relevant challenges, developing countries are commonly known to have: a. Poorly trained translators.

b. Low literacy rates. c. Fluctuating postage. d. Unreliable mail service. e. Poor telecommunications infrastructure. ANSWER: b, d 227. G ennaro Research is a ______ research supplier and recently completed research for Norwalk Chemical. Gennaro Research was considered the "marketing research arm" of Norwalk Chemical and performed all of the steps in the marketing research process. a. f ull-service b. l imited-service c. b outique d. s yndicated ANSWER: a 228. Bridgestone Tire uses _______ indicators as part of its quality program by tracking on-time delivery in addition to customer satisfaction since these measures are critical to their success. a. k ey performance b. c ritical quality c. c ustomer sentiment d. q ualitative ANSWER: a 229. Tiffany is a marketing research consultant and is working with a local community college to determine the primary reasons students select the college. Based on exploratory research, Tiffany believes the main reasons are cost, convenience and value. She plans to conduct additional research to determine whether or not this ______ can be supported. a. h ypothesis b. b elief c. a ttitude d. f eeling ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 230. A major state university has noticed a decline in students selecting philosophy as a major and is interested in learning more about this issue. They hire a marketing research student as an intern who conducts informal interviews with faculty in the philosophy department as well as freshman students living in residence halls to gain insight into this phenomenon. What type of research is the intern engaging in? a. e xploratory b. d escriptive c. a nalysis d. f orecast ANSWER: a 231. Sydney is a marketing researcher for an advertising agency and is gathering _______ data from the Census Bureau to determine the characteristics of people living in a 3-county area within the state of Texas. a. s econdary b. p rimary c. f ederal d. p rivate ANSWER: a 232. Paul Simmons owns a food distribution business and employs approximately 80 people in a variety of positions including executive management, administrative support personnel, sales, distribution, and marketing. He's very interested in maintaining a positive work culture and aspires to being one of the best places to work in his region. He recently hired a marketing consulting firm to complete an employee satisfaction study for him to gain insight into how his workers view their job, benefits, supervisors, and other important elements such as compensation and benefits. What type of data best describes this project? a. p rimary data b. s econdary data c. s yndicated data d. g overnment data ANSWER: a 233. A sampling method that involves first selecting a sample of subgroups from the population and then drawing a sample from each group so that the final sample represents the diversity of the population is called a _______ sample. a. c luster b. n onprobability c. s imple random d. p robability ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 10: Marketing Research in the Era of Big Data 234. Tabitha is a marketing consultant working with an advertising agency who has recently launched a radio and social media campaign for a new beverage product. The advertising agency is interested in determining the percent of people in the target market who have been exposed to the advertising message and can "recall" the message. Tabitha recommends that a phone survey be utilized to contact individuals with mobile phones. Tabitha works with the local mobile phone companies to determine the relevant prefixes or 3-digit numbers for individuals in the area and then instructs the research call center to randomly identify the remaining 4 numbers to ensure that all members of the population who have a mobile phone have an equal opportunity of being selected to participate in the study. Tabitha is using the ______ sample method. a. s imple random b. s tratified c. c luster d. n onprobability ANSWER: a 235. Mitch is a marketing consultant and works with an attorney to provide insight about how potential jurors view his cases. Mitch typically assembles a small group of 8-12 individuals from the county and presents relevant information about the legal case. He then guides them in a discussion to learn about their opinions. The group sessions are typically recorded and last about 2 hours. What type of research method best characterizes this research? a. f ocus group b. o bservation c. t elephone survey d. p ersonal interview ANSWER: a 236. A local restaurant is considering offering breakfast and is interested in determining how many people visit other restaurants in the local area for breakfast. The owner hires a group of marketing students from the local university and their task is to visit the various restaurants and keep a tally of the number of people who dine in the restaurant and/or order from the drive-through window during a 1-week period between the hours of 6 a.m. and 10 a.m. Which method of data collection are the students using? a. o bservation b. i nterpretive research c. s urvey research d. p ersonal interviews ANSWER: a

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Chapter 10: Marketing Research in the Era of Big Data 237. Researchers conducting studies in several different countries should consider cultural differences when designing the research project. a. True b. False ANSWER: True 238. Conducting mail survey research in some parts of Asia can be difficult since a large part of the population is not able to read or write. a. True b. False ANSWER: True

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 1. Companies focus on building loyal relationships with existing customers as retaining customers costs must less than acquiring new ones. a. True b. False ANSWER: True 2. Building and managing long-term relationships between buyers and sellers are the hallmarks of transaction-based marketing. a. True b. False ANSWER: False 3. The sale of a product to a customer via a vending machine is typical of a transaction-based relationship. a. True b. False ANSWER: True 4. The buyer and seller exchanges in transaction-based marketing are characterized by limited communications and little or no ongoing relationships. a. True b. False ANSWER: True 5. Transaction based marketing emphasizes retaining customers over making a sale. a. True b. False ANSWER: False 6. Relationship marketing views customers as equal partners in buyer–seller transactions. a. True b. False ANSWER: True 7. In relationship marketing, the focus is on enticing a buyer to make an immediate purchase based on factors such as low price, convenience, or packaging. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 8. Internal marketing involves selling products to employees of the firm at a discount. a. True b. False ANSWER: False 9. Companies that excel at satisfying customers provide their employees with the necessary tools to address customer requests and problems in a timely manner. a. True b. False ANSWER: True 10. One of the main goals of internal marketing is to keep the employees informed about corporate goals, strategies, and customer needs. a. True b. False ANSWER: True 11. Successful internal marketing efforts create satisfied employees who spread positive word-of-mouth messages to relatives, friends, and acquaintances. a. True b. False ANSWER: True 12. In level 1 of relationship marketing, purchasers on a company’s relationship marketing continuum receive specialized services and value-added benefits that may not be available from another firm. a. True b. False ANSWER: False 13. The interactions at the first level of relationship marketing are most likely to lead to a long-term relationship. a. True b. False ANSWER: False

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 14. First-level relationship marketing programs typically rely on pricing and other financial incentives to motivate the customer into a buying relationship with a vendor. a. True b. False ANSWER: True 15. The service department of an automobile firm calls its customers regularly after service to check the performance of the car. This is an example of the first level of interaction in relationship marketing. a. True b. False ANSWER: False 16. At the second level of relationship marketing, buyers and sellers develop a dependence on one another that continues to grow over time. a. True b. False ANSWER: False 17. At the third level of relationship marketing, buyer-seller relationships are transformed structurally into business partnerships. a. True b. False ANSWER: True 18. The first step in measuring customer satisfaction involves comparing actual sales to forecasted sales. a. True b. False ANSWER: False 19. Customer satisfaction can be measured in terms of the gaps between what customers expect and what they perceive they have received. a. True b. False ANSWER: True

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 20. One of the steps involved in measuring customer satisfaction is compiling feedback from customers regarding present performance. a. True b. False ANSWER: True 21. As compared to happy customers, unhappy customers typically talk less about their buying experiences. a. True b. False ANSWER: False 22. Frequency marketing programs are promotional efforts sponsored by organizations that solicit involvement by individuals who share common interests and activities. a. True b. False ANSWER: False 23. Affinity marketing consists of frequent-buyer or user marketing programs that reward customers with cash, rebates, merchandise, or other premiums. a. True b. False ANSWER: False 24. Affinity marketing programs focus on creating extra value for consumers. a. True b. False ANSWER: True 25. Database marketing involves the use of information technology to analyze data about customers and their transactions. a. True b. False ANSWER: True

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 26. Database marketing is not effective in identifying potential customers as it increases the marketing and promotion costs. a. True b. False ANSWER: False 27. Companies can use database marketing to improve customer retention and referral rates. a. True b. False ANSWER: True 28. Many grocery chains require customers to have a membership card in order to receive sale prices or other discounts. These grocery chains are practicing database marketing. a. True b. False ANSWER: True 29. Companies use knowledge obtained from databases to track customer buying patterns and to customize offerings and sales promotions. a. True b. False ANSWER: True 30. Interactive television delivers valuable data on real consumer behavior and attitudes toward brands. a. True b. False ANSWER: True 31. Advertising via mobile apps helps marketers gain access to users’ personal data. a. True b. False ANSWER: True 32. The grassroots marketing approach relies on conventional and traditional marketing strategies. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 33. Marketers can use grassroots marketing approach to develop long-lasting, individual relationships with loyal customers. a. True b. False ANSWER: True 34. Viral marketing involves efforts that allow satisfied customers to spread the word about products to other customers. a. True b. False ANSWER: True 35. A company that gathers volunteers to try products and then relies on them to share their experiences with friends and colleagues is adopting a frequency marketing approach. a. True b. False ANSWER: False 36. Customer relationship management (CRM) requires a top-down commitment to succeed and must penetrate every aspect of a firm’s business. a. True b. False ANSWER: True 37. The cost of acquiring a new customer is equivalent to that of retaining a loyal customer. a. True b. False ANSWER: False 38. Customer relationship management systems are more beneficial to retailers than to B2B firms. a. True b. False ANSWER: False

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 39. Successful customer relationship management systems reduce costs by empowering customers to find the information they need to manage their own orders. a. True b. False ANSWER: True 40. Customer relationship management systems help firms to simplify complex business processes. a. True b. False ANSWER: True 41. Customer win-back is a customer relationship management strategy that focuses on acquiring new customers. a. True b. False ANSWER: False 42. Firms focus on acquiring new customers rather than retaining existing customers, as new customers account for nearly 70 percent of new business for a firm. a. True b. False ANSWER: False 43. Buyer–seller relationships between companies involve working together to provide advantages that benefit both parties. a. True b. False ANSWER: True 44. A partnership is an affiliation of two or more companies that help each other achieve common goals. a. True b. False ANSWER: True 45. Some of the motives for firms to enter into partnership are warding off threats of future competition, raising or creating barriers to entry, and learning new skills. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 46. Firms with similar skills and resources form a partnership to reduce costs. a. True b. False ANSWER: True 47. Organizations must share similar values and goals for a partnership to succeed in the long run. a. True b. False ANSWER: True 48. Often, the desirability of partnering in the business market is based on the fact that each firm brings to the partnership something the other needs but cannot provide on its own. a. True b. False ANSWER: True 49. In a buyer partnership, the supplier must meet the unique needs of the purchaser in order to make the relationship successful. a. True b. False ANSWER: True 50. An internal partnership consists of a relationship that involves long-term exchanges of goods or services in return for cash. a. True b. False ANSWER: False 51. It is essential for an organization to build and maintain internal partnerships in order to meet the needs of its external partnerships. a. True b. False ANSWER: True

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 52. Lateral partnership is a relationship that involves customers within an organization. a. True b. False ANSWER: False 53. Research alliances between for-profit firms and colleges and universities are examples of lateral partnerships. a. True b. False ANSWER: True 54. A lateral partnership is a strategic relationship that involves direct buyer-seller interactions. a. True b. False ANSWER: False 55. Affinity marketing is a cooperative arrangement in which two or more organizations join to sell their products in an allied marketing campaign. a. True b. False ANSWER: False 56. Cobranding is a cooperative arrangement in which two or more businesses team up to closely link their names on a single product. a. True b. False ANSWER: True 57. The term “buzz marketing” refers to a promotional effort in which a dedicated sales team is assigned to a firm’s major customers to provide sales and service. a. True b. False ANSWER: False 58. National account selling technique is used by marketers to serve their largest and most profitable customers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 59. Alken Technologies has a support team that is dedicated to provide sales and service to its largest customers to pay attention to their special needs. This marketing technique used by Alken to show commitment to its customers, is referred to as internal marketing. a. True b. False ANSWER: False 60. Electronic data interchange (EDI) involves computer-to-computer exchanges of invoices, orders, and other business documents. a. True b. False ANSWER: True 61. Quick-response merchandising is a just-in-time strategy that reduces the time merchandise is held in inventory, resulting in substantial cost savings. a. True b. False ANSWER: True 62. A vendor-managed inventory is an inventory management system in which the seller—in an existing agreement with a buyer—determines how much of a product is needed. a. True b. False ANSWER: True 63. The supply chain management process has no influence on the relationship of the company with the product’s end users. a. True b. False ANSWER: False 64. A strategic alliance is a partnership in which two or more companies combine resources and capital to create competitive advantages in a new market. a. True b. False ANSWER: True

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 65. One of the key criteria considered while forming a strategic alliance is the size and location of the partner firm. a. True b. False ANSWER: False 66. Strategic alliances typically include only the largest firms in any industry because of the amount of capital required to invest in shared facilities. a. True b. False ANSWER: False 67. In a cooperative alliance, the partners establish a new business unit in which each takes an ownership position. a. True b. False ANSWER: False 68. Assume that Ford has established a strategic alliance with Michelin to design an exclusive line of tires for Ford automobiles. The Ford-Michelin strategic alliance would be a horizontal alliance. a. True b. False ANSWER: False 69. A strategic alliance formed between firms at adjacent stages in a supply chain is considered a vertical alliance. a. True b. False ANSWER: True 70. A strategic alliance can be formed only between those firms that serve the same industry. a. True b. False ANSWER: False 71. A firm forming a partnership with another firm at the same level in the supply chain is creating a horizontal alliance. a. True b. False ANSWER: True

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 72. The payback period in a customer relationship is the length of time it takes to break even on customer acquisition costs. a. True b. False ANSWER: True 73. The term “lifetime value of a customer” refers to revenues and intangible benefits such as referrals and customer feedback a customer brings to the seller over an average lifetime of their relationship, less the amount the company must spend to acquire, market to, and service the customer. a. True b. False ANSWER: True 74. Reviewing customer comments and feedback and monitoring the click-through behavior on websites help companies to set appropriate, measurable goals for relationship programs. a. True b. False ANSWER: True 75. _____ marketing is the development, growth, and maintenance of cost-effective, high-value associations with individual customers, suppliers, and other partners over time. a. Relationship b. Transaction-based c. Substitutive d. Associative ANSWER: a 76. Which of the following marketing exchanges is most likely to be transaction-based? a. Golf club membership b. Buying property from a real estate agent c. Medical care for a person with a chronic illness d. Annual service contract with a lawn and garden company ANSWER: b

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 77. Which of the following is a characteristic of transaction-based marketing? a. Frequent customer contact b. Emphasis on long-term relationship c. Customer interactions based on commitment and trust d. Emphasis on individual sales ANSWER: d 78. Which of the following is true of relationship marketing? a. It focuses on short-term, one-time exchanges with limited communications. b. Its only goal is “sell something—now.” c. It views customers as equal partners in buyer-seller transactions. d. It involves little or no ongoing relationship between the buyers and sellers. ANSWER: c 79. Transaction-based marketing differs from relationship marketing as transaction-based marketing: a. ranks customer service as a high priority. b. encourages frequent customer contact. c. emphasizes on individual sales rather than long-term relationships. d. views customers as equal partners in buyer-seller transactions. ANSWER: c 80. Managerial actions that enable all members of an organization to understand, accept, and fulfill their respective roles in implementing marketing strategy are collectively referred to as _____. a. social referencing b. social loafing c. internal marketing d. strategic positioning ANSWER: c 81. The main objective of internal marketing programs is to: a. share resources with business partners. b. encourage employees to view each other as competitors. c. create satisfied employees. d. facilitate a vertical integration. ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 82. Which of the following is an important goal of internal marketing? a. Group polarization b. Vertical integration c. Customer desensitization d. Employee involvement ANSWER: d 83. In the context of the levels of relationship marketing, which of the following is a drawback associated with the efforts that focus on pricing and other financial incentives to attract customers? a. It makes advertising and promotional expenses worthless. b. It leads to hostile relationships with the suppliers. c. It does not encourage creativity in advertising. d. It is least likely to lead to a long-term relationship. ANSWER: d 84. In the context of the levels of relationship marketing, which of the following is an example of a level 1 relationship marketing program? a. An electronics firm setting up a worldwide technical support system to assist customers. b. A cheese shop organizing a cooking contest for customers. c. An automobile company offering a club membership to owners of high-end cars. d. An airline offering special discounts to its customers for early bookings. ANSWER: d 85. A fast food restaurant is offering various meal options at discounted prices to attract new customers. This marketing effort indicates that the company is at the _____ level of relationship marketing. a. third b. first c. fourth d. second ANSWER: b 86. The marketing efforts at the first level of relationship marketing: a. treat the buyers as true business partners while marketing products. b. focus on effective communication and customer service for the products. c. rely on pricing and other financial incentives to motivate consumers to buy products. d. focus on creating long-term buyer relationships. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 87. At the second level of relationship marketing, the focus is on: a. price and other financial incentives. b. reaching out to the customer with social interaction. c. structurally transforming the relationship into an interdependent partnership. d. analyzing data from the initial purchase to determine the chance of a repeat sale. ANSWER: b 88. A company trying to engage in a social interaction with the customers is at the _____ level of relationship marketing. a. first b. third c. second d. fourth ANSWER: c 89. In the context of relationship marketing, the primary bond created by a second-level relationship marketing program is usually _____ in nature. a. social b. financial c. structural d. notional ANSWER: a 90. Cannondale Bicycles has a customers’ group called “The Chain Gang.” Members receive emails listing cyclingrelated tips, as well as access to a special website dedicated to cycling. In the context of the relationship marketing continuum, this is an example of the _____ level of relationship marketing. a. first b. second c. fifth d. fourth ANSWER: b

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 91. Which of the following is a feature of marketing efforts at the third level of relationship marketing? a. They are least likely to lead to a long-term relationship between the buyer and seller. b. They are more likely to be focused on geographic segmentation rather than psychographic segmentation. c. They try to motivate consumers to buy products by offering financial incentives. d. They focus on developing a dependance between buyers and sellers. ANSWER: d 92. The marketing programs at the third level of relationship marketing usually aim to create: a. social interaction. b. financial interaction. c. interdependent partnership. d. viral advertising. ANSWER: c 93. With reference to relationship marketing, which of the following is an example of a typical third-level relationship marketing program? a. A health-awareness campaign organized by a food-supplement manufacturer b. A frequent flyer program introduced by an airline c. A courier company enabling its users to track the status of their deliveries on its website d. A company offering a product at a discounted price ANSWER: c 94. A consumer goods company is trying to develop a relationship with its customers by implementing marketing strategies that focus on developing interdependence between the company and its customers. These marketing strategies indicate that the company is at the _____ level of relationship marketing. a. third b. second c. first d. fourth ANSWER: a 95. The first step in measuring customer satisfaction is: a. testing market response for new products through controlled experiments. b. hiring a first-rate market research firm. c. finding out what customers need, want, and expect. d. searching the blogs and discussion groups on the Internet to obtain customer feedback. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 96. _____ describes the extent to which buyers of a product or a service are content with their purchases. a. Average propensity to consume b. Customer satisfaction c. Customer lifetime value d. Market cognizance ANSWER: b 97. Which of the following statements is true regarding the interaction between a company and its customers? a. Marketers must adhere to traditional performance measures to formulate customer-based missions and goals. b. Customers have greater loyalty to a company after a conflict has been resolved than if they had never complained at all. c. As happy customers typically talk about their buying experiences more than unhappy customers do, the cost of dissatisfaction incurred by a company tends to be low. d. Any method that makes it easier for customers to complain ends up demonstrating the ineptitude of a firm. ANSWER: b 98. Proactive methods a firm might use to assess customer satisfaction would include: a. visiting, calling, or mailing written surveys to clients. b. setting up customer service help lines to receive customer complaints. c. offering gifts and reward points to appease a dissatisfied customer. d. quickly replacing defective products with new products after receiving complaints from customers. ANSWER: a 99. Customers prefer to have continuing relationships with businesses or suppliers because: a. it helps the consumers in the process of benchmarking. b. by nature, customers are resistant to change and prefer preexisting relationships with businesses. c. the decision-making process becomes easier with the reduction in the number of choices. d. most businesses have low switching costs which make them attractive to have continued relationships with. ANSWER: c 100. The term _____ describes the turnover in a company’s customer base. a. customer win-back b. customer lifetime value c. customer distribution pattern d. customer churn ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 101. An Internet service provider (ISP) loses approximately 12 percent of its existing customers every year. According to this information, the ISP is experiencing: a. market reorganization. b. customer churn. c. group polarization. d. social referencing. ANSWER: b 102. _____ marketing programs are designed to reward top customers with cash, rebates, merchandise, or other premiums. a. Frequency b. Social c. Internal d. Affinity ANSWER: a 103. Best Buy Rewards Program tracks customer sales, and periodically issues coupons to customers based on the values of prior purchases. This marketing effort by Best Buy can be regarded as _____ marketing. a. affinity b. database c. frequency d. societal ANSWER: c 104. Which of the following is an example of affinity marketing? a. University of Iowa branded credit card b. Hallmark’s Gold Crown card c. Blockbuster Rewards video card d. United Airlines Mileage Plus program ANSWER: a

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 105. A marketing effort sponsored by an organization that solicits responses from individuals who share common interests and activities is called _____ marketing. a. frequency b. affinity c. internal d. inclusive ANSWER: b 106. In a salute to fans of the Olympic games, Ralph Lauren launched a complete wardrobe, inspired by the Olympics designs, for men, women, children, and infants. This is an example of _____ marketing. a. distributive b. internal c. database d. affinity ANSWER: d 107. The use of information technology to analyze information about customers and their transactions is referred to as _____ marketing. a. frequency b. affinity c. database d. internal ANSWER: c 108. The Nielsen Co. carefully tracks Super Bowl viewership each year to help the network that airs the game and other football broadcasters determine ad rates for the following year. This is an example of: a. frequency marketing. b. buzz marketing. c. database marketing. d. internal marketing. ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 109. A video renting outlet offers free movies for customers, if they rent a certain number of movies within a specified time periods, in order to encourage them to spend more on renting movies from the outlet. This type of marketing strategy is an example of _____. a. frequency marketing b. viral marketing c. internal marketing d. buzz marketing ANSWER: a 110. Mobile apps have become a multi-billion dollar industry because: a. They are easy to use. b. They are free to smartphone and tablet users. c. They provide advertisers with detailed consumer data. d. They keep user information secure. ANSWER: c 111. _____ involves connecting directly with existing and potential customers through nonmainstream channels. a. Viral marketing b. Interactive marketing c. Grassroots marketing d. Buzz marketing ANSWER: c 112. A food manufacturing company that has just entered into the market is trying to attract potential customers through marketing strategies that are unconventional, nontraditional, and extremely flexible. The company has a relatively small budget for marketing its products. Which of the following marketing strategies is most likely being used by this company? a. Affinity marketing b. Frequency marketing c. Grassroots marketing d. Viral marketing ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 113. A marketing program that enables satisfied customers to spread the word about products to other consumers is called _____ marketing. a. grassroots b. viral c. frequency d. affinity ANSWER: b 114. A clothing brand allows its customers to interact with each other on their website so that the customers can share their views and opinions about the company’s products. The company has also created a Web page on a social networking site where the customers can express their opinions. This type of marketing strategy is an example of _____. a. internal marketing b. viral marketing c. societal marketing d. distributive marketing ANSWER: b 115. YouTube offers viewers the option to share a video they have watched by sending it to one or more contacts in their email address books. Which of the following types of marketing is being used this case? a. Frequency marking b. Viral marketing c. Internal marketing d. Lateral marketing ANSWER: b 116. _____ gathers volunteers to try products and then relies on them to talk about their experiences with friends and colleagues. a. Grassroots marketing b. Frequency marketing c. Affinity marketing d. Buzz marketing ANSWER: d

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 117. A electronics company has hired some product experts who have sufficient following on social media sites to spread a word about their products. The company provides the products to these individuals and requests them to post their opinion which helps in promoting the products. This is an example of: a. buzz marketing. b. internal marketing. c. lateral marketing. d. distributive marketing ANSWER: a 118. Which of the following concepts forms the basis of buzz marketing? a. Elasticity of demand b. Word-of-mouth c. Employee empowerment d. Long-term product viability ANSWER: b 119. The grassroots marketing approach relies on marketing strategies that are: a. traditional. b. conventional. c. expensive. d. flexible. ANSWER: d 120. The term customer relationship management refers to a combination of strategies and tools that attempts to: a. create good relationships between all wholesalers and/or retailers in the distribution channel. b. retain customers by offering lower prices on the purchase of specific products or services. c. develop a network of interconnected businesses involved in the ultimate provision of products and services required by end customers. d. reorient an entire organization to a concentrated focus on satisfying customers. ANSWER: d

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 121. A successful customer relationship management system reorganizes the business processes to deliver superior value to the customers by: a. decentralizing the marketing data. b. bringing down a firm’s reliance on expensive word-of-mouth marketing. c. expanding the response time for customer queries to increase their satisfaction. d. empowering customers to find information they need to manage their own orders. ANSWER: d 122. Which of the following is true of customer relationship management systems? a. Purchasing a CRM system allows a firm to expand and customize, whereas hosted systems are more limited. b. Customer relationship management systems tend to complicate simple business processes. c. They focus on decentralizing the marketing data. d. They are more beneficial to the retailers compared to business firms in B2B markets. ANSWER: a 123. A leading detergent brand receives complaints from its customers that the chemicals used are too strong and dangerous, and they do not smell good. To counter this, the company runs a series of ads showing its experts approaching select customers with an improved detergent that addresses the concerns of the customers. The company is engaging in: a. controlled experimentation. b. database marketing. c. internal marketing. d. customer win-back. ANSWER: d 124. _____ is the process of rejuvenating lost relationships with customers. a. Customer polarization b. Customer acquisition c. Customer win-back d. Customer orientation ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 125. A major drawback associated with customer relationship management systems is that: a. they are not effective in reducing the marketing and distribution costs for the products. b. the strategy needs to be thought out in advance, and everyone in the firm must be committed to it. c. they cannot provide a complete picture of the customers in order to understand their needs. d. they complicate simple business processes while trying to reorganize the focus on customer satisfaction. ANSWER: b 126. While forming partnerships in business-to-business markets, organizations primarily look for companies that: a. are focused on product-orientation. b. have shorter distribution channels than their competitors. c. can add value to the relationship. d. differ from them in the core values and goals. ANSWER: c 127. One of the motives that prompt firms to enter into partnerships is: a. creating longer distribution channels. b. raising barriers to entry. c. promoting the use of technology to facilitate customer orientation. d. avoiding vertical and horizontal integration. ANSWER: b 128. A _____ partnership is a relationship in which the firm purchases goods and services from one or more providers who meet the unique needs of the firm. a. lateral b. internal c. seller d. buyer ANSWER: d 129. _____ is a relationship involving long-term exchanges of goods or services in return for cash or other valuable consideration. a. Buyer partnership b. Seller partnership c. Internal partnership d. Lateral partnership ANSWER: b

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 130. The term “internal partnership” refers to the relationship of an organization that involves: a. customers within the organization. b. competitors who form a monopoly. c. partner firms in the supply chain. d. ultimate customers who are the end users of the product. ANSWER: a 131. A _____ is a strategic relationship that extends to external entities but involves no direct buyer-seller interactions. a. network partnership b. buyer partnership c. lateral partnership d. seller partnership ANSWER: c 132. A biotechnology company and a medical school have formed a partnership to develop a new class of cancerfighting drugs. This is an example of a(n) _____ partnership. a. buyer b. seller c. internal d. lateral ANSWER: d 133. _____ is a cooperative arrangement in which two or more businesses team up to closely link their names on a single product. a. Lateral partnership b. Cobranding c. Comarketing d. Symbiotic marketing ANSWER: b 134. The Eddie Bauer, a clothing retail chain, partnered with Ford to produce the Eddie Bauer edition of the Ford Explorer. This is an example of: a. cobranding. b. comarketing. c. lateral partnership. d. internal partnership. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 135. _____ is a cooperative arrangement in which two or more businesses jointly promote each other’s products. a. Internal marketing b. Cobranding c. Comarketing d. Seller lock-in ANSWER: c 136. _____ is a promotional effort that involves assigning a dedicated sales teams to a firm’s major customers to provide sales and service. a. National account selling b. Quick-response merchandising c. Vendor-managed selling d. Collaborative planning ANSWER: a 137. One of the advantages of national account selling is: a. a decrease in the value of risk adjusted return on capital. b. a strengthened buyer-seller relationship through collaboration. c. an increased inventory turnover for the firm. d. lowered switching costs for a firm’s loyal customers. ANSWER: b 138. Clayten Technologies has set up a sales team exclusively to serve one of its clients who account for a major share of its business. This strategy is an example of: a. vertical supply chain integration. b. vendor-managed selling. c. quick-response merchandising. d. national account selling. ANSWER: d 139. Which of the following is a just-in-time strategy that helps in reducing the time a retailer must hold products in the inventory? a. Lateral partnership b. Quick-response merchandising c. Symbiotic merchandising d. Vertical strategic alliance ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 140. G.J Inc., an electronic component manufacturer and supplier, has an inventory management system that stores purchase patterns and requirements of its customers. Through this system the firm decides on the amount of the product required by the buyers and automatically ships the supplies to the buyer based on a preexisting agreement. This type of inventory management system is called _____. a. lateral management system b. vendor-managed inventory c. distributive management system d. symbiotic inventory ANSWER: b 141. Strategic alliances are partnerships formed among firms in B2B markets to: a. decrease the value of debt service coverage ratio. b. avoid problems related to anti-trust legislation. c. create a competitive advantage. d. present a united front to labor unions. ANSWER: c 142. When partners in a strategic alliance form a new business unit in which each takes an ownership position, they have created a: a. joint venture. b. collusion organization. c. development team. d. merged organization. ANSWER: a 143. In the context of strategic alliances, a cooperative relationship formed between businesses: a. typically involves forming a new business unit. b. involves partners taking ownership positions. c. is usually less formal than a joint venture. d. is not flexible or easily adaptable to changing market conditions. ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 144. Which of the following is true of a vertical strategic alliance created by firms in B2B markets? a. It is created among the firms at the same level of the supply chain. b. It can only be formed between companies that serve different industry. c. It is formed when firms that are at adjacent states in the supply chain. d. It cannot be formed between two firms if their annual revenues are significantly different. ANSWER: c 145. Which of the following firms is most likely to enter into a vertical strategic alliance with Boeing? a. Airbus, a European consortium of aircraft manufacturers b. Pratt & Whitney, an aircraft engine manufacturer c. Cessna, an American airplane manufacturer d. Gulfstream Aerospace, a jet aircraft producer ANSWER: b 146. Which of the following is the most important measure of relationship marketing programs in both consumer and business-to-business markets? a. Cost of the marketing program b. Click-through behavior on websites c. Lifetime value of a customer d. Debt to equity ratio ANSWER: c 147. Which of the following is true of long-term customers? a. They are not effective in providing intangible benefits such as feedback and referrals. b. They cost more to serve than new customers. c. They provide a minor share in a company’s new business. d. They are usually more valuable assets than new ones because they buy more. ANSWER: d 148. Revenues and intangible benefits such as referrals and feedback a consumer brings to the seller over an average period of their relationship, less the amount the company must spend to acquire, market to, and service the customer is known as the _____. a. rate of customer coverage b. customer turnover rate c. lifetime value of a customer d. net customer yield ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 149. Differentiate between transaction-based marketing and relationship marketing. ANSWER: In transaction-based marketing, buyer and seller exchanges are characterized by limited communications and little or no ongoing relationships. The primary goal is to entice a buyer to make a purchase through such inducements as low price, convenience, or packaging. In transaction-based marketing, exchanges with customers are generally sporadic and, in some instances, disrupted by conflict. In contrast, building and managing long-term relationships between buyers and sellers are the hallmarks of relationship marketing. Relationship marketing emphasizes cooperation rather than conflict between all of the parties involved. It encourages frequent customer contact and emphasizes retaining customers over making a sale. Relationship marketing commits all employees to provide high-quality products. 150. List out the four basic elements that help firms to build long-term relationships. ANSWER: Firms build long-term relationships with four basic elements. 1) They gather information about their customers. Database technology helps a company identify current and potential customers with selected demographic, purchase, and lifestyle characteristics. 2) They analyze the data collected and use it to modify their marketing mix to deliver differentiated messages and customized marketing programs to individual consumers. 3) Through relationship marketing, they monitor their interactions with customers. They can then assess the customer’s level of satisfaction or dissatisfaction with their service. Marketers can also calculate the cost of attracting one new customer and figure out how much profit that customer will generate during the relationship. Information is fed back, and they then can seek ways to add value to the buyer–seller transaction so the relationship will continue. 4) With customer relationship management (CRM) software, they use intimate knowledge of customers and customer preferences to orient every part of the organization toward building a unique company differentiation based on strong, unbreakable bonds with customers. Sophisticated technology and the Internet help make that happen. 151. What is internal marketing? Why is internal marketing important for a firm? ANSWER: Internal marketing involves managerial actions that enable all members of an organization to understand, accept, and fulfill their respective roles in implementing a marketing strategy. Internal marketing is important for a firm as it emphasizes on employee knowledge, involvement, and satisfaction. In order to satisfy customers, employees must be informed about corporate strategies and customer needs. They must also have the necessary tools to address customer requests and problems in a timely manner. Also, satisfied employees buy their employer’s products, tell friends and families how good the customer service is, and ultimately send a powerful message to customers.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 152. Briefly explain the three levels of relationship marketing. ANSWER: 1) First level: Focus on Price Interactions at the first level of relationship marketing are the most superficial and the least likely to lead to a long-term relationship. The marketing efforts rely on pricing and other financial incentives to motivate customers to enter into buying relationships with a seller. 2) Second level: Social interactions As buyers and sellers reach the second level of relationship marketing, their interactions develop on a social level, one that features deeper and less superficial links than the financially motivated first level. 3) Third level: Interdependent partnership At the third level of relationship marketing, relationships are transformed into structural changes that ensure buyer and seller are true business partners. As buyer and seller work more closely together, they develop a dependence on one another that continues to grow over time. 153. How do marketers measure customer satisfaction? How can they avoid unfavorable service gaps while marketing their products? ANSWER: Customer satisfaction is the extent to which customers are satisfied with their purchases. Satisfaction can be measured in terms of the gaps between what customers expect and what they perceive they have received. Marketers can avoid unfavorable service gaps by keeping in touch with the needs of current and potential customers. They must also look beyond traditional performance measures and explore the factors that determine purchasing behavior to formulate customer-based missions, goals, and performance standards. 154. What are the different methods employed by marketers to obtain customer feedback? ANSWER: Marketers try to compile feedback from customers regarding the present performance to measure customer satisfaction. Marketers try to improve customers’ access to their companies by including toll-free phone numbers or website addresses in their advertising. Most firms rely on reactive methods of collecting feedback. Rather than solicit complaints, they might, for example, monitor Usenet, other online discussion groups, and popular blogs to track customer comments and attitudes about the value received. Some companies hire mystery shoppers who visit or call businesses posing as customers to evaluate the service they receive. In addition to training employees to resolve complaints, firms can benefit from providing several different ways for customers to make their dissatisfaction known, including prepaid mail questionnaires, telephone help lines, comment cards, and face-to-face exit surveys as people leave the premises. Many organizations also use proactive methods to assess customer satisfaction, including visiting, calling, or mailing surveys to customers to gauge their level of satisfaction with the organization’s products or services.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 155. Explain the differences between frequency marketing and affinity marketing programs. Give an example of each. ANSWER: Frequency marketing programs are frequent buyer- or user- marketing programs that reward customers with cash, rebates, merchandise, and other premiums. Buyers who purchase an item more often earn higher rewards. Frequency marketing focuses on a company’s best customers with the goal of increasing their motivation to buy even more of the same or other products from the seller. Airline frequent-flyer programs are an example of frequency marketing programs. Affinity marketing is an effort sponsored by an organization that solicits responses from individuals who share common interests or activities. With affinity programs, organizations create extra value for members and encourage stronger relationships. Affinity credit cards–credit cards with the name of an organization, such as a university or charitable organization–are a popular form of this marketing effort. 156. Discuss the various ways in which database marketing can help a company to build relationships with the customers. ANSWER: Database marketing is a particularly effective tool for building relationships as it allows sellers to: 1) identify their most profitable customers; 2) calculate the lifetime value of each customer’s business; 3) create a meaningful dialogue that builds relationships and encourages genuine brand loyalty; 4) improve customer retention and referral rates; 5) reduce marketing and promotion costs; 6) boost sales volume per customer or targeted customer group; and 7) expand loyalty programs. 157. Explain how interactive television helps marketers collect data required for database marketing. ANSWER: Interactive television, including smart TVs, delivers valuable data—information on real consumer behavior and attitudes toward brands. Linked to digital devices, sophisticated set-top boxes already collect vast amounts of data on television viewer behavior, organized in incredible detail. As Internetconnected TVs make their way into more homes, marketers receive firsthand knowledge of the kind of programming and products their targeted customers want.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 158. Briefly explain the various types of relationship marketing efforts that focus on turning customers from passive partners into active proponents of a product. ANSWER: 1) Grassroots marketing: This strategy involves connecting directly with existing and potential customers through nonmainstream channels. This approach relies on marketing strategies that are unconventional, nontraditional, and extremely flexible. The hallmark of grassroots marketing is its ability to develop long-lasting, individual relationships with loyal customers. 2) Viral marketing: With viral marketing, firms let satisfied customers get the word out about products to other consumers. 3) Buzz marketing: Buzz marketing gathers volunteers to try products and then relies on them to talk about their experiences with friends and colleagues. Influencers or early adopters of products, are ideal carriers of buzz marketing messages because their credibility makes their choices valuable among their peers. 159. What are some of the qualities shared by successful CRM systems? ANSWER: Successful CRM systems share the following qualities: 1) They create partnerships with customers in ways that align with the company’s mission and goals. 2) They reduce costs by empowering customers to find the information they need to manage their own orders. 3) They improve customer service by centralizing data and help sales representatives guide customers to information. 4) They reduce response time and thus increase customer satisfaction. 5) They improve customer retention and loyalty, leading to more repeat business and new business from word of mouth. 6) They can provide a complete picture of customers. 7) Their results are measurable. 160. What are the problems associated with customer relationship management systems? ANSWER: The problems associated with customer relationship management systems are: 1) The CRM strategy needs to be thought out in advance, and everyone in the firm must be committed to it and understand how to use it. If no one can put the system to work, it is an expensive mistake. 2) The failures with CRM often result from failure to organize the company’s people and business processes to take advantage of the benefits the CRM system offers. It is important to clearly communicate the benefits of the CRM and train employees how to use it. 3) Having a clear understanding of what the CRM can accomplish is essential for the success of the CRM systems. It is also important to understand the customers, their needs, and the ways they differ from customers of the past.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 161. How can firms build customer loyalty? ANSWER: Firms can build customer loyalty by: 1) understanding the customers and their needs, 2) making every customer contact a positive one, and anticipating customers’ needs instead of waiting for them to ask, 3) hiring only people who share the firm’s customer-responsive orientation, and motivating them to make customer service their top priority every day, 4) making efforts to know the best customers in order to offer personalized service, 5) avoiding training customers to wait for sales, since bargain hunters are seldom loyal, 6) making sure that the customer loyalty program is easy and rewarding to use, 7) making sure that the customer phone calls and emails are answered right away, 8) resolving customer problems immediately, by apologizing and making it right without trying to close a sale, and learning from customer service mistakes so they don’t happen again. 162. Identify the four types of B2B partnerships. ANSWER: Companies form four key types of partnerships in business-to-business markets: 1) Buyer partnership: In a buyer partnership, a firm purchases goods and services from one or more providers. When a company assumes the buyer position in a relationship, it has a unique set of needs and requirements vendors must meet to make the relationship successful. 2) Seller partnership: Seller partnerships are relationships involving long-term exchange of goods and services in return for cash and other valuable consideration. In these partnerships, the sellers also have specific needs as partners and prefer to develop long-term relationships with their partners. 3) Internal partnership: Internal partnerships involving customers within an organization. Without building and maintaining internal partnerships, an organization will have difficulty meeting the needs of its external partnerships. 4) Lateral partnership: Lateral partnerships include strategic alliances with other companies or with not-for-profit organizations and research alliances between for-profit firms and colleges and universities. The relationship focuses on external entities such as customers of the partner firm, and involves no direct buyer–seller interactions. 163. Explain cobranding and comarketing. Give an example of each. ANSWER: Cobranding joins two strong brand names, perhaps owned by two different companies, to sell a product. Example: More than three decades ago, Nike signed rookie NBA player Michael Jordan to market a line of basketball shoes. Over the years, the relationship has been quite successful, including six championship rings for Jordan and more than 58 percent of the shoe market in the U.S. for Nike. In a comarketing effort, two or more organizations join to sell their products in an allied marketing campaign. Example: ConAgra and Kraft Foods teamed up in a marketing campaign to tout Hunt’s Diced Tomatoes and Kraft’s 100% Grated Parmesan as part of a quick and easy weeknight dinner for busy moms and dads.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 164. Discuss national account selling. List some of its advantages.

ANSWER: National account selling is a promotional effort in which a dedicated sales team is assigned to a firm’s major c service. For example, large manufacturers such as Procter & Gamble and Clorox pay special attention to the n as Walmart and Kohl’s. Advantages of national account selling include: 1)

The buyer-seller relationship is strengthened as both collaborate to find mutually beneficial solutions.

The seller, by assembling a team of individuals to serve the single account, shows its commitment to the

Cooperative buyer-seller efforts can bring about dramatic improvements in both efficiency and effective improvements find their way to the bottom line in the form of decreased costs and increased profits.

165. What is electronic data interchange? What are its applications? ANSWER: Electronic data interchange (EDI) involves computer-to-computer exchanges of invoices, orders, and other business documents. It allows firms to reduce costs and improve efficiency and competitiveness. Vendors use EDI as a core quick-response merchandising tool that helps reduce the time merchandise is held in inventory, resulting in substantial cost savings. EDI also opens new channels for gathering marketing information helpful in developing long-term business-to-business relationships. 166. What is a strategic alliance? Explain the two ways in which strategic alliances are structured. ANSWER: A strategic alliance is a partnership in which two or more companies combine resources and capital to create competitive advantages in a new market. Companies can structure strategic alliances in two ways. Alliance partners can establish a new business unit in which each takes an ownership position. In such a joint venture, one partner might own 40 percent, while the other owns 60 percent. Alternatively, the partners may decide to form a less formal cooperative relationship that does not involve ownership, for example, a joint newproduct design team. The cooperative alliance can operate more flexibly and change more easily as market forces or other conditions dictate. In either arrangement, the partners agree in advance on the skills and resources each will bring into the alliance to achieve their mutual objectives and gain a competitive advantage. Alliance partners can contribute marketing skills, such as innovation and product development; manufacturing skills, including low-cost or flexible manufacturing; and planning and research and development expertise.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 167. In addition to examining the lifetime value of a customer and the payback from a customer relationship, what other techniques can a firm use to evaluate its relationship marketing programs? ANSWER: In addition to lifetime value analysis and payback, companies use many other techniques to evaluate relationship programs, including: 1) reviewing customer comments and feedback on social media sites such as Facebook and Twitter; 2) tracking rebate requests, coupon redemption, credit card purchases, and product registrations; 3) monitoring returned merchandise and analyzing why customers leave; 4) reviewing reply cards, comment forms, and surveys; and 5) monitoring click-through behavior on websites to identify why customers stay and why they leave. These tools give the organization information about customer priorities so managers can make changes to their systems, and set appropriate, measurable goals for relationship programs. Match each item with the correct statement below. a. strategic alliance b. relationship marketing c. cobranding d. frequency marketing e. value chain f. database marketing g. exponential smoothing h. customer relationship management i. trend analysis j. internal customers k. comarketing l. quick-response merchandising m. affinity program n. lifetime value of a customer o. Delphi technique p. national account selling q. transaction-based marketing r. customer churn s. buzz marketing t. grassroots marketing 168. _____ involves buyer seller exchanges characterized by limited communications and little or no ongoing relationship between the parties. ANSWER: q Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 169. _____ is the development, growth, and maintenance of cost-effective, high-value relationships with individual customers, suppliers, distributors, retailers, and other partners for mutual benefit over time. ANSWER: b 170. The employees or departments within an organization whose success depends on the work of other employees or departments are referred to as _____. ANSWER: j 171. The term _____ refers to the turnover in a company’s customer base. ANSWER: r 172. _____ focuses on a company’s best customers with the goal of increasing their motivation to buy even more of the same or other products from the seller by rewarding them with cash, rebates, or other premiums. ANSWER: d 173. A(n) _____ is a marketing effort sponsored by an organization that solicits responses from individuals who share common interests and activities. ANSWER: m 174. The use of information technology to analyze data about customers and their transactions, to identify and target messages toward specific group of potential customers is referred to as _____. ANSWER: f 175. _____ is a forecasting technique that assigns weights to historical sales data, giving the greatest weight to the most recent data. ANSWER: g 176. _____ are marketing efforts that connect directly with existing and potential customers through nonmainstream channels. ANSWER: t 177. _____ is a marketing effort that gathers volunteers to try products and then relies on them to talk about their experiences with their friends and colleagues. ANSWER: s 178. _____ is a combination of strategies and tools that drives relationship programs, reorienting the entire organization to a concentrated focus on satisfying consumers. ANSWER: h 179. _____ is a sales forecasting method that gathers and redistributes several rounds of anonymous forecasts until participants reach a consensus. ANSWER: o Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 180. A cooperative arrangement in which two businesses jointly market each other’s products is called _____. ANSWER: k 181. _____ is a cooperative arrangement in which two or more businesses team up to closely link their names on a single product. ANSWER: c 182. _____ is a just-in-time strategy that reduces the time for which products are held in inventory, resulting in substantial cost savings. ANSWER: l 183. _____ is a promotional effort in which a dedicated sales team is assigned to a firm’s major customers to provide sales and service. ANSWER: p 184. _____ is a sales forecasting method that estimates future sales through statistical analyses of historical sales patterns. ANSWER: i 185. The _____ is a sequence of suppliers that contribute to the creation and delivery of a product. ANSWER: e 186. A(n) _____ is a partnership in which two or more companies combine resources and capital to create competitive advantages in a new market. ANSWER: a 187. The _____ is defined as the revenues and intangible benefits that a customer brings to the seller over an average lifetime of their relationship, less the amount the company must spend to acquire, market to, and serve the customer. ANSWER: n 188. A sales forecast is an important tool for marketing control because it sets standards against which actual performance can be measured. a. True b. False ANSWER: True 189. Quantitative forecasting methods rely on subjective data that reports opinions rather than exact historical data. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 190. Planners apply qualitative sales forecasting techniques when they want judgmental or subjective indicators. a. True b. False ANSWER: True 191. The jury of executive opinion not only gathers information from company executives, but also from experts outside the firm such as academic researchers. a. True b. False ANSWER: False 192. The Delphi technique is preferred by marketers because it is quick, inexpensive and works best for short-run forecasting. a. True b. False ANSWER: False 193. A company using exponential smoothing technique for forecasting their sales in 2015 is likely to award a 1.5 weight for sales data of 2015, 2.0 weight for sales data from 2014, and 2.5 weight for the sales data from 2012. a. True b. False ANSWER: False 194. An estimate of a firm’s revenue for a specified future period is known as a _____. a. revenue cluster b. market cap c. sales forecast d. sales boundary ANSWER: c 195. Which of the following qualitative forecasting techniques is useful in predicting short-term and intermediate sales for firms that serve selected customers?. a. Delphi technique b. Survey of buyer intentions c. Trend analysis d. Sales force composite technique ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 196. Carlos, CEO of Fresh Foods, wants a qualitative forecasting technique that is quick, inexpensive, and can be effectively used to forecast sales in the short run and for new product development. Which of the following techniques will best suit his purpose? a. Delphi technique b. Survey of buyer intentions c. Test markets d. Jury of executive opinion ANSWER: d 197. A major benefit of using test markets as a quantitative forecasting method is that: a. they provide realistic information on actual purchases rather than intent to buy. b. they are quick and inexpensive. c. they combine and average the outlooks of top executives from such areas as marketing, finance, and production. d. they solicit opinion from experts outside the firm such as academic researchers. ANSWER: a 198. Which of the following is a limitation of trend analysis? a. It is expensive and time consuming. b. It can communicate marketing plans to the competitors before the firm introduces a product to the total market. c. It is unable to make reliable forecasts during periods of steady growth and stable demand. d. It assumes that the future events will continue in the same manner as the past. ANSWER: d 199. _____ is a quantitative forecasting technique that assigns weights to historical sales data, giving the greatest weight to the most recent data. a. Delphi technique b. Test market c. Exponential smoothing d. Jury of executive opinion ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 200. Explain the differences between qualitative and quantitative forecasting methods and give examples of each. ANSWER: Qualitative forecasting techniques rely on subjective data that reports opinions rather than exact historical data. Quantitative forecasting methods, by contrast, use statistical computations, such as trend extensions based on past data, computer simulations and econometric models. Planners apply qualitative forecasting methods when they want judgmental or subjective indicators. These methods include jury of executive opinion, Delphi technique, sales force composite, and survey of buyer intentions. Quantitative techniques attempt to eliminate the subjectiveness of the qualitative methods and include test markets, trend analysis, and exponential smoothing. 201. You just inherited the family business from your uncle who ran it successfully or over twenty-five years. You worked in the business during those years, and always vowed to change things once you took over ownership. Specifically, you came to realize that your uncle ran the business with a transaction-based mindset that produced good results, but not optimal results. You vowed to shift the business towards a relationship-based approach when you took over. Based on your philosophy, which of the following characteristics do you plan to instill in the company’s new approach to doing business? a. T reat customers as equal partners in the buyer-seller exchange. b. L imit communications with customers. c. F ocus on selling products and selling them quickly. d. H ave a short-term focus in the interactions with customers. e. F ocus on new sales rather than repeat sales. ANSWER: a 202. You are the new head of marketing for a large consumer products company in Texas. You have spent your first two months on the job observing what the company does well and not so well in terms of marketing. One area that you recognize is a major deficiency is the company’s internal marketing approach and emphasis. You are a strong proponent of effective internal marketing and you plan to emphasize it in your new role. You are making a presentation to the executive management team on what internal marketing is and how it will benefit the company. W hich of the following statements are you going to make in your presentation to the executive management team about internal marketing? a. I t is the same as integrated marketing. b. I t emphasizes quick short-term results that investors like. c. I t guarantees a firm’s profitability. d. E mployee knowledge and involvement are important goals. e. I t is a replacement for e-marketing. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 203. Your company is in the midst of implementing a relationship marketing approach across the company. You are leading the project and following the traditional three-level, relationship marketing continuum as your guide. You are in the final level of the continuum. W hich of the following statements is true about what you are doing in the final level of the continuum? a. Y ou are focusing on the pricing element of your relationship with customers. b. Y ou focus on developing a mutually-beneficial dependence between the firm and its customers. c. Y ou introduce a social feature in order to strengthen relationships with customers. d. Y ou place a lot of emphasis on customer service. e. Y ou place a lot of emphasis on communications with your customers. ANSWER: b 204. Which of following statements is true about customer satisfaction? a. C ustomer complaints should be viewed as failures, not opportunities. b. C ustomers have less loyalty after resolving a complaint or problem with the firm. c. A ny method that makes it easier for customers to complain actually benefits the firm. d. A ny method that makes it easier for customers to complain harms the firm. e. F irms should not take proactive steps like mailing customer surveys. ANSWER: c 205. Marketers reward their top customers with cash, rebates, merchandise and premiums in order to keep them. Which of the following best describes this strategy? a. G rassroots marketing b. A ffinity marketing c. D atabase marketing d. C ustomer churn e. F requency marketing ANSWER: e 206. Which of the following statements is true about CRM systems? a. T hey do not allow for centralized data. b. T hey create partnerships with customers. c. C ustomers are not empowered. d. C ustomer retention and loyalty is diminished. e. T hey are usually successful even without sales and service employees input. ANSWER: b

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 207. _________________ are strategic alliances with other companies or with not-for-profit organizations. a. C o-marketing b. I nternal partnerships c. B uyer partnerships d. L ateral partnerships e. C o-branding ANSWER: d 208. Which of the following is true about business-to-business marketing and buyer-seller relationships? a. B uyers and sellers cooperate in business-to-business marketing through Web services. b. M anufacturers use a technique call national account selling to serve their smallest customers. c. E DI does not have non-commercial applications. d. I n order for Web services to work, the firms involved must have the same or compatible software. e. B uyer-managed inventory has replaced vendor-managed inventory in many instances today. ANSWER: a 209. Long-term customers are usually more valuable assets than new ones because ________________. a. t heir lifetime value is less b. c ustomer service is not as important to them c. t hey provide valuable feedback d. t hey complain less e. t hey understand the company’s products better ANSWER: c 210. Relationship marketing focuses on developing long-term, high-value relationships with many different stakeholders including _______________. a. c reditors b. c onsumer advocacy groups c. e nvironmentalists d. d istributors e. r egulators ANSWER: d

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 211. Which of the following statements represents a key consideration in internal marketing? a. I t focuses primarily on customers who also work for the firm. b. E mployee satisfaction is critical. c. C ustomer knowledge and involvement are important goals. d. I nternal customer satisfaction is not related to customer satisfaction. e. R etaining employees in not a focus. ANSWER: b 212. The relationship marketing continuum has three levels. With respect to the different levels, we know that: a. I n the third level, a social feature is introduced. b. I n the second level, the buyer and seller develop a dependency. c. I n the first level, the primary focus is on social interactions. d. I n the second level, the primary focus is on price. e. I n the first level, it is acknowledged that it takes more than a low price to create a long-term relationship. ANSWER: e 213. Firms that value customer satisfaction understand that: a. C ustomer satisfaction can be measured in terms of how much the customer paid for the firms’ products. b. A ny method that makes it easier for customers to complain is counterproductive. c. F irms should only employ reactive methods for collecting customer feedback. d. C ustomer satisfaction must be continually monitored. e. K nowing the customers’ lifetime value is a central concern of building relationships. ANSWER: d 214. With database marketing, firms use technology to analyze data about customers and their transactions. It has many implications for firms including: a. I t helps firms identify their most profitable customers. b. I t eliminates the need for loyalty programs. c. I t leads to 100% customer retention. d. I t gets some of its data from employer records. e. I t increases the lifetime value of each customer’s business. ANSWER: a

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 215. The most successful CRM systems share common qualities including: a. T hey increase response time. b. T hey eliminate the need for customer service by centralizing data. c. T hey lead to 100% customer retention rates. d. T hey reduce costs by empowering customers with information. e. T hey guarantee profitable customer relationships. ANSWER: d 216. Which of the following statements is true about the benefits of buyer-seller relationships in business-to-business marketing? a. T hey increase cash flows for both parties. b. T hey lead to improved quality and reliability. c. T hey reduce inventory management costs. d. T hey eliminate the need for transaction financing for either party. e. T hey guarantee the availability of supplies. ANSWER: b 217. Some of the key elements of business-to-business alliances include: a. T hey are less formal partnership arrangements. b. T hey are best formed between businesses of the same size. c. F or efficiency purposes, the partners should be located near each other. d. T hey are flexible, short-term partnership arrangements. e. T he partners can establish a new business unit in which each takes an ownership interest. ANSWER: e 218. _______________ refers to the revenues and intangible benefits a customer brings to the seller over the longterm. a. C ustomer loyalty b. C ustomer churn c. C ustomer lifetime value d. C ustomer satisfaction e. C ustomer retention ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 219. You and your business partner own a chain of restaurants in the Midwest. You started out with one restaurant over twenty years ago, and thru smart acquisitions, you now own 35 establishments in the area. You are currently in discussions to buy a profitable steakhouse in the Chicago area from an owner who is getting ready to retire. One of the most important things you focus on when considering an acquisition is the customer base of the acquisition target company. You want to make sure that you are buying a business that has a loyal base of customers who have a long-term association with the business. You have instructed your financial advisors to give extra consideration to the quality and quantity of the customer base in their assessment of the business. G iven your acquisition strategy, which of the following metrics should you use to assess the quality of the acquisition target’s customer base? a. T he company’s gross profit margin b. T he company’s return on investment c. T he company’s sales growth percent over the last five years d. T he average customer lifetime value e. T he company’s net income over the last five years ANSWER: d 220. You own a manufacturing business in Texas, and you are concerned because a large percentage of your annual sales are dependent on about five large customers spread out across the country. You know that the life of your business rests on your continued success with these customers. So, you have decided to take a proactive approach to solidifying your relationship with these customers, and their satisfaction with your products and services. You are committed to improving and enhancing your relationships with these key customers. W hich of following actions should you take to solidify your relationship with these key customers? a. E stablish lateral partnerships b. I mplement a national account selling program c. O ffer these key customers more product discounts d. L aunch a grassroots marketing campaign e. L aunch an affinity marketing campaign ANSWER: b

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 221. Your company has experienced quite a bit of volatility in its sales results over the last few years. The head of finance tells you that the volatility is the result of customer churn. You are planning to sell the business in a few years, so you want eliminate the volatility because it makes the business less desirable to a potential buyer. W hich of following should you pursue in order to eliminate some of your sales volatility? a. G rassroots marketing b. C o-marketing c. S eller partnerships d. B uyer partnerships e. A ffinity marketing ANSWER: c 222. You just bought a car dealership that has been in business for many years. The former owner trained his team in transaction-based marketing. But you believe in a relationship marketing approach, so you plan to retrain the salespeople to focus primarily on: a. Creating inducements to close the sale

b. Succeeding in short-term exchanges c. Limiting communication with customers d. Succeeding in one-time exchanges e. Prioritizing customer service ANSWER: e 223. Large United States cities have many dentists who use relationship marketing at different levels to compete for patients. Choose the approach(es) reaching the second level. a. Discounts offered on certain procedures

b. Free services offered in return for patient referrals c. Follow up calls made to patients to ask how they feel d. Small toys given to young patients on their birthdays e. None of these reaches the second level. ANSWER: c, d

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 224. Should your cooks be considered customers of your restaurant? Why or why not? a. No, because they are not allowed to eat what they cook. b. Yes, because their family members get discounts. c. No, because they are employees. d. No, because they eat there for free. e. Yes, because their work impacts the overall value delivered by the restaurant. ANSWER: e 225. Like most companies, yours relies on reactive methods of collecting customer feedback. You hope to change this by introducing the proactive element(s) of: a. Monitoring social media sites

b. Compiling online customer comments c. Answering customer emails d. Emailing satisfaction surveys to customers e. Calling customers after a sale ANSWER: d, e 226. Your marketing assistant has developed recommendations for increasing customer loyalty to your wine bar. You note that most are based on frequency marketing. Choose the recommendation(s) based on affinity marketing. a. Top customers get a free bottle of wine.

b. Customers receive 10 percent off their check when they visit more than twice a week. c. Top customers get flowers on their birthdays. d. Your wine bar becomes a sponsor of the state university's basketball team. e. Your wine bar advertises big discounts in the local newspaper. ANSWER: d 227. You're convinced that it's time for your kitchen appliance store to invest in a CRM system. Your business partner, however, has some concerns. Decide which, if any, are valid. a. CRM results are not measurable.

b. CRM systems are likely to increase the costs of store management. c. CRM will enable you to assess customer satisfaction with your appliances, but not to reduce customer response time if those appliances malfunction.

d. CRM decentralizes data on buyers of particular appliance brands. e. None of the concerns is valid. ANSWER: e

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 228. A popular frozen yogurt chain has agreed to sell your brand of fresh juices. The chain's ads will feature your juices, and your juice bar will promote the yogurt. This type of business marketing arrangement is known as: a. A seller partnership

b. An internal partnership c. Cobranding d. Comarketing e. Long-term marketing ANSWER: d 229. You've been hired to implement a CPFR system for the Core Corporation. While you recognize the benefits of such systems, you informed the CEO not to expect: a. Collaborative forecasting between Core and its vendors

b. Collaborative planning between Core and its vendors c. Collaborative advertising between Core and its vendors d. Any of the above e. All of the above ANSWER: c 230. You can easily identify the long-term customers who bring the most value to your babysitting service. They are the ones who: a. Buy more babysitting hours

b. Cost less in travel time c. Refer other parents d. Do not complain e. Cost less in cancelled bookings ANSWER: a, b, c, e 231. Because you learned so much while studying for your marketing degree, you plan to reach out to former professors to help forecast sales for your company's new product. All of them are recognized experts in the industry. If they participate, you will use the qualitative forecasting approach known as: a. A sales force composite

b. A jury of executive opinion c. The Delphi technique d. Trend analysis e. An external insight composite ANSWER: c

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 232. Which of the following is true regarding relationship marketing compared to transaction marketing? a. i t is based in cooperation and trust between parties b. r anks profitability as a high priority c. i s focused on the short-term d. e mphasizes achieving sales goals ANSWER: a 233. Marketers have discovered that when they implement relationship marketing strategies, it is more expensive to retain satisfied customers than attracting new customers. a. True b. False ANSWER: False 234. Jackie works in the custom lens department of Maui Jim sunglasses and prepares lenses for prescription sunglasses that the company receives from its network of specialty eyeglass retailers. Based on relationship marketing principles, which term best classifies Jackie? a. i nternal customer b. e xternal customer c. i ntegrated customer d. s upport customer ANSWER: a 235. Bill's Restaurant is owned and operated by Chef Bill who oversees all aspects of his business. He opened the restaurant 6 years ago and has been able to retain 90% of his staff. His wait staff and kitchen support staff enjoy their work, are loyal to Bill and believe it's one of the best restaurants in Owensboro, Kentucky. Their enthusiasm is contagious and is one of the many reasons why Bill has continued to see steady increases in sales mostly from repeat customers. This example highlights the importance of _________ to today's businesses. a. e mployee satisfaction b. c ustomer retention c. c ustomer satisfaction d. t ransaction marketing ANSWER: a

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 236. Direct TV and Dish Network often advertise i ntroductory price promotions for new customers providing cost savings on satellite TV and/or Internet bundles. What type of relationship marketing strategy is used in this example? a. l evel one marketing b. l evel two marketing c. l evel three marketing d. l evel zero marketing ANSWER: a 237. The Voice has gained a loyal viewer base as customers enjoy the reality vocal competition show featuring recording artists Blake Shelton, Pharrell Williams, Adam Levine and Christina Aguilera as judges in its 11th season. Viewers were able to vote for their favorite artists using social media such Facebook or Twitter as well as the Voice App available for Android or Apple customers. The ability to vote for a viewer's favorite performer created higher levels of interaction between the audience and the show and led to higher viewership ratings. NBC has demonstrated the successful use of level _____ marketing. a. t wo b. o ne c. z ero d. f our ANSWER: a 238. T he 2016 results of the ACSI for limited service fast-food restaurants show a 2 point increase from 2015 to 2016 - from an average score of 77 to 79. Chick-fil-A scored the highest with an index rating of 87 compared to a 69for McDonald's. The ACSI is a measure of customer _________. a. s atisfaction b. r etention c. l oyalty d. e ngagement ANSWER: a 239. _______ customers are _____ likely to share information about their buying experiences. a. U nhappy; more b. H appy; more c. U nhappy; less d. L oyal; more ANSWER: a

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 240. B radon was a loyal customer of American Eagle but once out of college, started purchasing the majority of his clothes from J Crew preferring to shop online and in their stores which are located in stand-alone shopping centers rather than shopping malls. Customers like Bradon who no longer purchase clothing from American Eagle create _______ for the chain. a. t urnover b. o pportunities c. n ew markets d. l ifetime value ANSWER: a 241. Each month Costco, a warehouse membership club with locations across the United States sends a magazine/catalog with articles about its members as well as featured products. Costco utilizes ________ marketing to create a meaningful dialog which builds relationships and encourages brand loyalty. a. d atabase b. r eciprocal c. a ffinity d. f requency ANSWER: a 242. Which of the following represents a problem associated with the use of customer relationship management (CRM) programs? a. s ome employees such as sales representatives are reluctant to use CRM systems b. i t is difficult to measure the results of a CRM program c. C RM programs rely on decentralized data d. C RM programs reduce the customer's level of empowerment ANSWER: a 243. During the 2016 Grammy music awards program, the technology company Intel partnered with Lady Gaga to enable her to integrate technology into her musical tribute to David Bowie. I ntel brought a series of robots — like the "dancing piano" — and a motion sensory chip that helped the visual effects match Gaga's movements onstage. Matt Kauffman, Intel head of events and experiences stated,“We want to demonstrate how technology transforms people’s lives, and how Intel is the technology behind it.” Which marketing term best applies to the case of Lady Gaga and Intel? a. c omarketing b. c obranding c. t echnology partnership d. i nternal partnership ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 244. Frito Lay and Taco Bell utilize _________, a cooperative arrangement where Taco Bell utilizes the Doritos name and logo for several menu items under the name "Doritos Loco Tacos" including N acho Cheese, Cool Ranch and Fiery. a. c obranding b. c omarketing c. i nternal partnership d. c ocreation ANSWER: a 245. During the 2016 NBA Championship series featuring the Golden State Warriors and Cleveland Cavaliers, Taco Bell utilized a creative promotion strategy by partnering with the NBA for its "Steal a game, steal a taco" campaign whereby "Americans" could get one free taco at Taco Bell the day following a play-off game if the road team won. This partnership which promotes both the NBA Finals and Taco Bell is an example of _________. a. c omarketing b. c obranding c. l ateral partnership d. i nternal partnership ANSWER: a 246. Courtney is an automotive sales representative for Sherwin Williams and works exclusively with Toyota in order to deliver high levels of service and ensure that the products are performing as they should for Toyota. Since Courtney only has one customer account, she is classified as a: a. n ational account representative b. e xclusive account representative c. t erritory account representative d. p referred account representative ANSWER: a

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Chapter 11: Relationship Marketing and Customer Relationship Management (CRM) 247. Mike is a sales representative for Fastenal and c alls on manufacturer accounts in his territory. Most of the manufacturers utilize a just-in-time inventory system whereby they rely on suppliers like Fastenal to maintain appropriate levels of stock so they can minimize their inventory carrying costs and strive to balance the inventory in order to ensure they have the right levels of inventory for their production. Mike provides value-added services to assist these customers in identifying their inventory needs and tracks the inventory levels to ensure the customer's goals are met. This value-added service is known as a(n): a. v endor-managed inventory b. k ey account selling c. q uick-response inventory management d. c ustomer relationship management ANSWER: a

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Chapter 12: Product and Service Strategies 1. The marketing mix is the blending of the four strategy elements—product, price, distribution, and promotion—to satisfy the target market. a. True b. False ANSWER: True 2. Tangible goods and intangible services both intend to satisfy consumer wants and needs, but the marketing efforts supporting them may be vastly different. a. True b. False ANSWER: True 3. A product is a bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs. a. True b. False ANSWER: True 4. Marketers think in terms of a product as a compilation of package design and labeling, brand name, price, availability, warranty, reputation, image, and customer service activities that add value for the customer. a. True b. False ANSWER: True 5. Services are intangible products. a. True b. False ANSWER: True 6. A dinner at an exclusive restaurant is a pure good. a. True b. False ANSWER: False 7. One way to distinguish goods from services is that services are inseparable from their service providers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 8. Providers can maintain inventories of their services. a. True b. False ANSWER: False 9. Buyers rarely play any role in the creation and distribution of services. a. True b. False ANSWER: False 10. A dentist provides pure service. a. True b. False ANSWER: True 11. Internet security software that requires periodic updates and annual product upgrades is considered a pure service on the goods-services continuum. a. True b. False ANSWER: False 12. Restaurant chains often use the same room decor and dining menu at all their locations in an attempt to standardize the services they offer. a. True b. False ANSWER: True 13. Career counseling session is an example of a pure service on the goods-services continuum. a. True b. False ANSWER: True 14. A college education is an example of a pure product on the goods-services continuum. a. True b. False ANSWER: False

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Chapter 12: Product and Service Strategies 15. The U.S. service sector makes up only one-tenth of the nation’s economy. a. True b. False ANSWER: False 16. Although the United States runs a continuing trade deficit in services, it has maintained a trade surplus in goods since 1992. a. True b. False ANSWER: False 17. The trend of backshoring, firms returning their offshore work to the U.S., is growing. a. True b. False ANSWER: True 18. Homeshoring is the practice of hiring workers to do jobs from home. a. True b. False ANSWER: True 19. Firms that practice homeshoring experience the benefit of reduction in the use of energy and other natural resources thereby decreasing their impact on the environment. a. True b. False ANSWER: True 20. Homeshoring enables firms to save on office space, furnishings, and supplies. a. True b. False ANSWER: True 21. Product strategies are essentially the same for consumer and business markets. a. True b. False ANSWER: False

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Chapter 12: Product and Service Strategies 22. Unsought products are marketed to consumers who may not yet recognize any need for them. a. True b. False ANSWER: True 23. An automated teller machine (ATM) is an example of a convenience service. a. True b. False ANSWER: True 24. Milk is an example of a convenience product. a. True b. False ANSWER: True 25. Staples are convenience goods and services that consumers constantly replenish to maintain a ready inventory. a. True b. False ANSWER: True 26. A chocolate bar bought while standing in the checkout line is an example of staples. a. True b. False ANSWER: False 27. As consumers devote little effort to convenience product purchase decisions, marketers must strive to make these exchanges as simple as possible. a. True b. False ANSWER: True 28. Slotting allowances refer to money paid by producers to retailers to guarantee display of their merchandise. a. True b. False ANSWER: True

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Chapter 12: Product and Service Strategies 29. According to retailers, the purpose of slotting allowances is to cover their losses if products don’t sell. a. True b. False ANSWER: True 30. In contrast to the purchase of shopping products, consumers buy convenience products only after comparing competing offerings on such characteristics as price, quality, style, and color. a. True b. False ANSWER: False 31. Shopping products typically cost less than convenience purchases. a. True b. False ANSWER: False 32. The purchaser of a shopping product lacks complete information prior to the buying trip and gathers information during the buying process. a. True b. False ANSWER: True 33. In the case of shopping products, a store’s name and reputation have considerable influence on people’s buying behavior. a. True b. False ANSWER: True 34. As consumers are willing to exert considerable effort to obtain specialty products, producers can promote them through relatively few retail locations. a. True b. False ANSWER: True 35. Marketers classify goods and services by considering the purchase patterns of the majority of buyers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 36. The seller’s image is very important for those marketers who sell convenience products. a. True b. False ANSWER: False 37. Convenience of location is unimportant to a consumer who wants to buy a specialty product. a. True b. False ANSWER: True 38. The classification system for business products emphasizes customer buying behavior rather than product uses. a. True b. False ANSWER: False 39. Installations are major capital investments in the B2B markets and they are often designed specifically for the purchasers. a. True b. False ANSWER: True 40. Installations’ marketers typically focus their promotional efforts on employing highly trained sales representatives, often with technical backgrounds. a. True b. False ANSWER: True 41. If advertisements are used for installations, they emphasize the company's reputation and direct potential buyers to contact local sales representatives. a. True b. False ANSWER: True

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Chapter 12: Product and Service Strategies 42. Marketing accessory equipments requires continuous representation and dealing with the widespread geographic dispersion of purchasers. a. True b. False ANSWER: True 43. Advertising is an important component in the marketing mix for accessory equipments. a. True b. False ANSWER: True 44. Purchasers of component parts and materials need regular, continuous supplies of uniform-quality products. a. True b. False ANSWER: True 45. Price is generally the deciding factor in purchasing raw materials since the costs vary widely across markets. a. True b. False ANSWER: False 46. Supplies are also called MRO items. a. True b. False ANSWER: True 47. Extensive planning time is required for the purchase of supplies. a. True b. False ANSWER: False 48. Managers are responsible for communicating the goals of total quality management to all staff members. a. True b. False ANSWER: True

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Chapter 12: Product and Service Strategies 49. The Malcolm Baldrige National Quality Award is the highest national recognition for quality a U.S. company can receive. a. True b. False ANSWER: True 50. Benchmarking is the method of measuring quality by comparing performance against industry leaders. a. True b. False ANSWER: True 51. Internal analysis involves gathering information about the benchmark partner to find out why the partner is perceived as the industry’s best. a. True b. False ANSWER: False 52. Internal analysis in the benchmarking process establishes a baseline for comparison. a. True b. False ANSWER: True 53. A service encounter is a point at which a consumer interacts with a service provider. a. True b. False ANSWER: True 54. Service quality refers to the expected and perceived quality of a service offering. a. True b. False ANSWER: True 55. The motivations for marketing complete product lines include the desire to grow, enhancing the company’s position in the market, optimal use of company resources, and exploiting the product lifecycle. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 56. A product line is a series of related products offered by one company. a. True b. False ANSWER: True 57. A company limits its growth potential when it concentrates on a single product, even though the company may have started that way. a. True b. False ANSWER: True 58. SUVs produced by different automobile companies constitute a single product line. a. True b. False ANSWER: False 59. The assortment of product lines and individual product offerings that a company sells is known as its product cluster. a. True b. False ANSWER: False 60. The right blend of product lines and individual products allows a firm to maximize sales opportunities within the limitations of its resources. a. True b. False ANSWER: True 61. Marketers typically measure product mixes according to width, length, and depth. a. True b. False ANSWER: True 62. The width of a product mix refers to the number of product lines the firm offers. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 63. The length of a product mix refers to the number of different products a firm sells. a. True b. False ANSWER: True 64. The depth of product mix refers to the variations in each product the firm markets in its mix. a. True b. False ANSWER: True 65. Procter & Gamble manufactures laundry detergents under the brand names of Tide, Cheer, and Gain. These brands represent the width of the product mix that Procter & Gamble offers. a. True b. False ANSWER: False 66. Product line extension refers to the development of items that would expand the width of the product mix a company has to offer. a. True b. False ANSWER: False 67. Hershey’s introduction of a sugar-free version of its candy bar is an example of line extension. a. True b. False ANSWER: True 68. The product lifecycle concept applies to individual brands of a product. a. True b. False ANSWER: False 69. During the introductory stage of the product lifecycle, the public becomes acquainted with the item’s merits and begins to accept it. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 70. During the growth stage of the product lifecycle, available supplies exceed industry demand for the first time. a. True b. False ANSWER: False 71. Sales of a product category continue to grow during the early part of the maturity stage but—eventually reach a plateau as the backlog of potential customers dwindles. a. True b. False ANSWER: True 72. In the maturity stage of a product lifecycle, differences between competing products diminish as competitors discover the product and promotional characteristics most desired by customers. a. True b. False ANSWER: True 73. Fad cycles are examples of traditional product lifecycles. a. True b. False ANSWER: False 74. In the maturity stage, heavy promotional outlays emphasize any differences still separating competing products, and brand competition intensifies. a. True b. False ANSWER: True 75. Most fads experience short-lived popularity and then quickly fade, although some maintain residual markets among certain segments. a. True b. False ANSWER: True

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Chapter 12: Product and Service Strategies 76. Product lifecycles can stretch indefinitely as a result of decisions designed to increase the frequency of use by current customers; increase the number of users for the product or change package sizes, labels, or product quality. a. True b. False ANSWER: True 77. During the maturity stage of the product lifecycle, the industry sales curve for a product reaches a minimum point as competitors exhaust the supply of potential customers. a. True b. False ANSWER: False 78. When a manufacturer of vinegar, ordinarily used as a food ingredient, promotes its use as a metal cleaner, the manufacturer is attempting to extend the product’s lifecycle by changing its package. a. True b. False ANSWER: False 79. The decision about whether to delete products from the product line is usually faced during the late growth and early maturity phases of the product lifecycle. a. True b. False ANSWER: False 80. The products whose lifecycles can be extended or stretched indefinitely are referred to as orphan brands. a. True b. False ANSWER: False 81. Marketers acknowledge a broader conception of product; they realize that people buy want satisfaction. Using this broad concept, a television set is a(n): a. obsolete technology in comparison with the Internet. b. means of providing entertainment. c. lucrative item for appliance stores. d. machine used to receive broadcast signals. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 82. A bundle of physical, service, and symbolic attributes designed to satisfy a customer's wants and needs is referred to as a(n) _____. a. byproduct b. construct c. product d. cluster ANSWER: c 83. Which of the following comes closest to providing a pure good? a. A company that manufactures elevators b. A laundry c. A fitness gym d. An advertising agency ANSWER: a 84. Which of the following comes closest to providing pure service? a. A retail store b. An automobile dealership c. A coffee shop d. A fitness gym ANSWER: d 85. Which of the following is true of services? a. Services are tangible. b. Services are inseparable from service providers. c. Companies can easily standardize services. d. Services are nonperishable. ANSWER: b 86. Motels and luxury hotels cater to the same want satisfaction-a place to stay. However, their respective guests have considerably different expectations of service. Which of the following characteristics of services best represents these different expectations in service? a. Services are intangible. b. Companies cannot easily standardize services. c. Service standards show wide variations. d. Services are perishable. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 87. Gourmet restaurants and fast food chains cater to the same want satisfaction-a place to eat. However, at the gourmet restaurants you experience finely prepared cuisine served by a highly trained wait staff while at the fast food chains you may have to serve yourself. Which of the following characteristics of services best represents this difference? a. Services are intangible. b. Companies cannot easily standardize services. c. Services are perishable. d. Service standards show wide variations. ANSWER: d 88. Christopher who is a hair stylist owns Curlz, the best salon in Los Angeles. The clients swear by Christopher, and brides and bridesmaids flock to him for all weddings in LA. Christopher’s name has become synonymous with the service at Curlz. Which of the following characteristics of services best explains this association? a. Companies cannot easily standardize services. b. Service standards show wide variations. c. Services are inseparable from the service providers. d. Services are perishable and intangible. ANSWER: c 89. Richard generally frequented Brewz, a coffeehouse chain, when he was in Florida. However, when his company transferred him to China, he found that the Brewz in Shanghai does not offer the same quality service as their coffee houses in Florida. Which of the following best explains this differential perception in service quality? a. Companies cannot easily standardize services. b. Buyers often play important roles in the creation and distribution of services. c. Services are perishable and intangible. d. Providers cannot make inventories of their services. ANSWER: a 90. Financial Services Inc. had call centers in Malaysia where employees worked in shifts to cater to American customers at all times. However, after receiving persistent complaints about unsatisfactory service quality and increasing inefficiency, the organization decided to shift the call centers to the United States again. This is an example of: a. outsourcing. b. onshoring. c. backshoring. d. homeshoring. ANSWER: c

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Chapter 12: Product and Service Strategies 91. Which of the following is true of the practice of homeshoring? a. It reduces a company’s spending on health care. b. It increases a company’s spending on supplies. c. It increases the amount of energy consumed by the company. d. It increases a company’s impact on the environment. ANSWER: a 92. Which of the following is most likely to be categorized as a consumer product as well as a business product? a. Natural gas b. Iron ore c. Concrete mixers d. Agriculture produce ANSWER: d 93. Products marketed to consumers who may not yet recognize a need for them are called _____ products. a. unsought b. impulse c. convenience d. specialty ANSWER: a 94. Which of the following is true of convenience products? a. Consumers generally don’t have prior need recognition of convenience products before purchasing them. b. Consumers generally tend to purchase convenience products immediately and with minimal effort. c. Consumers tend to buy convenience products after a long-term evaluation of competing products in the market. d. Consumers tend to buy convenience products because of the prestige associated with their ownership. ANSWER: b 95. Consumer goods such as soap, milk, and deodorants are generally classified as _____ products. a. convenience b. utilitarian c. shopping d. specialty ANSWER: a

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Chapter 12: Product and Service Strategies 96. Supermarkets usually display items such as candies, gums, and magazines near the checkout counter because: a. they tend to be purchased on the spur of the moment. b. they can be replenished easily on short notice. c. of the prestige associated with their ownership. d. they are closely evaluated prior to purchase. ANSWER: a 97. Which of the following products would generally be considered as a staple? a. Lawn mower b. Laptop c. Dishwashing liquid d. Luxury perfume ANSWER: c 98. Convenience products that customers constantly replenish to maintain a ready inventory are categorized as: a. staples. b. impulse goods. c. emergency goods. d. shopping products. ANSWER: a 99. When Sara developed a headache due to stress just before an important sales presentation, she quickly bought a pain reliever from a nearby pharmacy. This is an example of buying a(n) a. shopping product b. emergency good c. staple d. impulse good ANSWER: b 100. A company manufacturing hair care products introduced a new shampoo with keratin to enhance hair quality and reduce hair breakage. To ensure the right spot for the shampoo bottles on the supermarket shelves, the company paid retailers a substantial amount of money. The money paid is called: a. push money. b. rebate. c. premium. d. slotting fees. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 101. Shopping products are: a. products that consumers purchase after comparing competing offers. b. products with unique characteristics that cause buyers to prize those brands. c. products bought in response to unexpected and urgent needs. d. products purchased on the spur of the moment. ANSWER: a 102. When Tom decided to buy a washing machine, he had very little knowledge of competing products in the market. He did research on the Internet, talked to his friends, and compared features of different models. Finally, he decided to buy an LG top load, semi-automatic washing machine. This is an example of buying a(n) _____. a. shopping product b. staple c. convenience product d. specialty product ANSWER: a 103. Specialty products are: a. products marketed to consumers who may not yet recognize a need for them. b. products with unique characteristics that cause buyers to prize those brands. c. products bought in response to unexpected and urgent needs. d. products purchased on the spur of the moment. ANSWER: b 104. Which of the following is true of specialty products? a. Purchasers are usually bargain hunters who are not willing to pay much. b. Purchasers begin shopping with complete information of the desired product. c. Purchasers tend to exert minimal effort to obtain the desired product. d. Purchasers generally accept substitutes if the desired product is unavailable. ANSWER: b 105. Beaux, a clothing boutique store, specializes in high-end evening wear for women. Most of the dresses are custom-made for their elite customers. Beaux is an example of a store offering _____ products. a. impulse b. convenience c. shopping d. specialty ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 106. Using the consumer products classification system, which of the following is true of the marketing mix factors for a convenience product? a. It is generally high priced. b. The seller’s image is very important. c. It has a long distribution channel. d. Its number of sales outlets tends to be very few. ANSWER: c 107. Using the consumer products classification system, which of the following is true of the marketing mix factors for a specialty product? a. It generally has low price. b. The seller’s image is unimportant. c. Its number of sales outlets tends to be very high. d. It relies on personal selling by producers. ANSWER: d 108. Using the consumer products classification system, which of the following is most likely to be true of the consumer factors for convenience products? a. Consumers tend to purchase convenience products frequently. b. Consumers tend to plan extensively before a purchase. c. Consumers tend to regard convenience of location as unimportant. d. Consumers tend to compare price and quality between competing products. ANSWER: a 109. Using the consumer products classification system, which of the following is most likely to be true of the consumer factors for specialty products? a. Consumers tend to purchase specialty products frequently. b. Consumers always compare price and quality between competing products. c. Consumers tend to regard convenience of location as very important. d. Consumers tend to plan extensively before buying them. ANSWER: d

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Chapter 12: Product and Service Strategies 110. Which of the following terms refers to the specialty products of the business market? a. Installations b. Accessory equipments c. Shopping products d. Component parts and materials ANSWER: a 111. Ryan, a successful entrepreneur, is planning to get into the petroleum business. He has bought two jack-up rigs running into millions of dollars to start the business. These rigs are examples of: a. installations. b. accessory equipments. c. supplies. d. component parts. ANSWER: a 112. Which of the following business products would be classified as an installation? a. Paper clips b. Office filing cabinets c. Liquid inkjet printers d. Underground mining loaders ANSWER: d 113. Bubbles, a major player in the beverage industry, is currently negotiating the purchase of a purification plant and a bottling unit. This is an important investment for Bubbles and the products have been designed specifically for them. Which of the following types of products is being purchased by Bubbles? a. Accessory equipments b. Installations c. Component parts and materials d. Supplies ANSWER: b

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Chapter 12: Product and Service Strategies 114. In the context of the business products, capital items that typically cost less and last for shorter periods than installations are called _____. a. shopping products b. accessory equipments c. supplies d. impulse products ANSWER: b 115. Which of the following can be classified as an accessory equipment? a. Natural gas pipelines b. Bottling units c. Desktop computers d. Printer cartridges ANSWER: c 116. Sound systems, batteries, and tires that are included in the manufacturing of a car are examples of: a. installations. b. accessory equipment. c. component parts and materials. d. supplies. ANSWER: c 117. Finished business products of one producer that become part of the final products of another producer are called _____. a. installations b. accessory equipments c. supplies d. component parts and materials ANSWER: d 118. Natural resources, farm produce and lumber constitute _____. a. raw materials b. accessory equipments c. component parts and materials d. installations ANSWER: a

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Chapter 12: Product and Service Strategies 119. _____ constitute the regular expenses a firm incurs in its daily operations. a. Impulse products b. Installations c. Supplies d. Accessory equipments ANSWER: c 120. In the context of business products, office stationery will fall under the category of: a. installations. b. shopping products. c. supplies. d. accessory equipments. ANSWER: c 121. Which of the following consists of intangible products that firms buy to facilitate their production and operating processes? a. Installations b. Accessories c. Business services d. Operating supplies ANSWER: c 122. The management at Bubblez, a beverage manufacturer, is deciding on whether to buy a purification plant and a bottling unit. Using the business products classification system, which of the following is most likely to be true of the management’s decision? a. The price of the product will be the sole deciding factor in the management’s decision. b. The quality of the product will be a very important deciding factor in the management’s decision. c. The decision will involve very little planning or research. d. The decision will be quickly because the purchase frequency of such products is high. ANSWER: b

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Chapter 12: Product and Service Strategies 123. Sam works for a small IT management company. He is responsible for replenishing the supply of office stationery. Every week he makes an inventory of the required items and gets them. Using the business products classification system, which of the following is most likely to be true of Sam’s purchases? a. Sam’s purchases are influenced solely by the quality of the products. b. Sam plans extensively for his purchases. c. Sam’s purchases tend to be infrequent. d. Sam’s purchases are highly influenced by the prices of the products. ANSWER: d 124. With reference to the business products classification system, which of the following group of products typically has a long distribution channel? a. Installations b. Component parts and materials c. Raw materials d. Supplies ANSWER: d 125. In the context of the business products classification system, which of the following group of products is typically promoted through advertisements rather than through personal selling? a. Installations b. Accessory equipments c. Component parts and materials d. Raw materials ANSWER: b 126. Which of the following products is most likely to have a long distribution channel? a. Oil rig b. Jet engine c. Farm produce d. Office stationery ANSWER: d

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Chapter 12: Product and Service Strategies 127. Which of the following products is most likely to be promoted through advertisements rather than through personal selling? a. Oil rigs b. Laptops c. Raw cotton d. Mineral ores ANSWER: b 128. _____ involves measuring quality by comparing performance against industry leaders. a. Benchmarking b. Social referencing c. Satisficing d. Social loafing ANSWER: a 129. Which of the following is the first main activity involved in benchmarking? a. Comparing internal processes to those of industry’s performance leaders b. Identifying the strengths and weaknesses of a firm’s internal processes c. Implementing changes for quality improvement d. Identifying critical market segments ANSWER: b 130. External analysis, conducted during the process of benchmarking, involves: a. establishing a baseline for comparison with industry leaders. b. identifying business processes that need improvement. c. identifying the strengths and weaknesses of the firm’s internal processes. d. gathering information about competing firms perceived as leading performers. ANSWER: d 131. The term service _____ refers to the point at which the customer and service provider interact. a. encounter b. locus c. platform d. zone ANSWER: a

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Chapter 12: Product and Service Strategies 132. Tina is a customer service representative for an Internet service provider. While dealing with elderly customers, Tina takes extra time and effort in explaining to them how to access the Internet, check emails, and browse the Web. She understands their point of view, and realizes that they may need more explanation than the tech-savvy, younger generation. By doing so, which of the following variables of service quality is being demonstrated by Tina? a. Associability b. Tangibles c. Empathy d. Substitutability ANSWER: c 133. Delectable, a fast food chain, emphasizes a lot on things like how the staffs are dressed, how the food is presented, as well as cleanliness of their service area. According to this information, Delectable is focusing on which of the following variables of service quality? a. Assurances b. Responsiveness c. Tangibles d. Empathy ANSWER: c 134. Rangers, a firm that provides a towing service, boasts of a very consistent performance track record and promises a quick and good quality service “anytime, anywhere.” According to this information, Rangers is focusing on which of the following variables of service quality? a. Reliability b. Sympathy c. Empathy d. Substitutability ANSWER: a 135. Which of the following variables of service quality best represents the readiness to serve one’s customers? a. Tangibles b. Assurances c. Responsiveness d. Empathy ANSWER: c

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Chapter 12: Product and Service Strategies 136. Which of the following variables of service quality best represents the service provider’s understanding of the customer’s needs? a. Tangibles b. Assurances c. Empathy d. Reliability ANSWER: c 137. A series of related products offered by one company is called a product _____. a. cluster b. subgroup c. line d. pack ANSWER: c 138. Mommy & Little Tots manufactures products for mothers-to-be as well as newborn infants. Their products include maternity wear, diapers, wipes, burp clothes, and swaddling blankets. These products constitute the “product _____” at Mommy & Little Tots. a. pack b. congregation c. cluster d. line ANSWER: d 139. Which of the following is a single product line? a. Four-door sedans offered by various automobile manufacturers b. Passenger jets manufactured by Airbus and Boeing c. Almond, caramel and dark chocolate flavors of Hershey Kisses d. Different brands of toothpaste for people with sensitive teeth ANSWER: c 140. The assortment of product lines and individual product offerings a company sells is called its product _____. a. mix b. cluster c. pack d. bunch ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 141. The number of product lines a firm offers is referred to as the _____ of its product mix. a. depth b. width c. volume d. length ANSWER: b 142. Fresh, a company that manufactures personal care products such as soaps and shampoos, decides to produce and market dishwashing liquid and cleaners. This decision of the company represents: a. an increase in product mix depth. b. an increase in product mix width. c. an increase in the product mix consistency. d. an increase in the product lifecycle. ANSWER: b 143. The number of different products a firm sells is referred to as the _____ of its product mix. a. width b. depth c. length d. volume ANSWER: c 144. Johnson & Johnson manufactures more than 100 brands in nearly 50 product categories. The total number of products they manufacture represents the _____ of its product mix. a. length b. depth c. consistency d. width ANSWER: a

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Chapter 12: Product and Service Strategies 145. Procter & Gamble has over 50 leadership brands and produces many products that are sold worldwide. Which of the following is most likely to be true in the event of the company adding a new and different product in its household care category? a. It would decrease P&G’s product mix width. b. It would increase P&G’s product mix consistency. c. It would increase P&G’s product mix length. d. It would decrease P&G’s product mix depth. ANSWER: c 146. Variations in each product a firm markets in its mix are referred to as the _____ of its product mix. a. width b. length c. depth d. volume ANSWER: c 147. Which of the following terms refers to the development of individual offerings that appeal to different market segments while remaining closely related to the existing product line? a. Line penetration b. Line innovation c. Line extension d. Line cannibalization ANSWER: c 148. During which stage in a product lifecycle does the public become acquainted with the item’s merits and begins to accept it? a. Introductory stage b. Growth stage c. Maturity stage d. Decline stage ANSWER: a

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Chapter 12: Product and Service Strategies 149. Promotional campaigns conducted by a firm during the introductory stage of a product lifecycle generally focus on: a. informing the market about the product and explaining its features. b. reducing the size of the available market through selective advertising. c. comparing the firm’s product with those of competitors . d. communicating new and alternate uses for the product. ANSWER: a 150. When a firm starts to realize substantial profits from its investment in a product, the product is said to be in the _____ stage of the product lifecycle. a. decline b. introductory c. growth d. maturity ANSWER: c 151. Mobile computer tablets were introduced a few years ago. Due to its increasing popularity and high profit levels, the number of companies making these tablets has increased. At the same time, differentiated products for different market segments have begun to emerge. Mobile computer tablets appear to be in the _____ stage of the product lifecycle. a. growth b. introductory c. maturity d. decline ANSWER: a 152. During which of the following stages in the product lifecycle, do industry sales of the product level out? a. Introductory stage b. Growth stage c. Maturity stage d. Decline stage ANSWER: c

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Chapter 12: Product and Service Strategies 153. When shifts in consumer preferences bring about an absolute slump in industry sales, a product is said to be in the _____ stage of the product lifecycle. a. introductory b. growth c. maturation d. decline ANSWER: d 154. Which of the following statements is true regarding the maturity stage of the product lifecycle? a. It is the second stage of the product lifecycle. b. Since the product is unknown to the public during this stage, the promotional campaigns stress information about its features. c. During this stage differences between competing products diminish. d. It is characterized by rapid growth in the volume of sales. ANSWER: c 155. Doug is a business analyst for a leading manufacturer of sports shoes. A careful analysis of market conditions reveals that there is actually an excess supply in the market for sprinting shoes. Doug infers that the sprinting shoes are in the _____ stage of the product lifecycle. a. introductory b. growth c. maturity d. disseminative ANSWER: c 156. In which of the following stages of the product lifecycle, do market supplies exceed the demand, as a result of which a firm can increase its sales only at the expense of its competitors? a. Introductory stage b. Growth stage c. Maturity stage d. Decline stage ANSWER: c

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Chapter 12: Product and Service Strategies 157. For a past few months H&S Products has been involved in intensive price competition with its competitors for one of its products. A shift in consumer preferences is resulting in a decrease in sales. Profits are low and market researchers are concerned that losses will soon occur due to a decrease in the size of the market for the product. This product appears to have reached the _____ stage of the product lifecycle. a. introductory b. maturity c. decline d. growth ANSWER: c 158. Special Confectioners, a major chocolate company, has recently started promoting its festive packs with the tag line, “making each moment special.” By doing so, the management is trying to make its customers realize the everyday relevance of their festive packs. In doing so, the company is attempting to extend the product lifecycle by: a. increasing the number of users. b. finding new uses for the product. c. changing product quality. d. increasing the frequency of use. ANSWER: d 159. Zara Inc., a well-known cosmetics manufacturer, introduced its anti-wrinkle cream in the Asian market after its sales in the European market leveled out due to stiff competition from rival products. This is an attempt to extend product lifecycle by: a. increasing the frequency of use. b. increasing the number of users. c. finding new uses. d. changing product quality. ANSWER: b 160. Promoting the use of oatmeal as a cholesterol reducer and antacids as a calcium supplement are most likely to be examples of extending the lifecycle of the product by: a. improving product quality. b. changing package sizes. c. increasing the frequency of use. d. finding new uses. ANSWER: d

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Chapter 12: Product and Service Strategies 161. Define product. How do marketers perceive products? ANSWER: A product is a bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs. Marketers perceive a broader conception of product; they realize that people buy want satisfaction rather than objects. Marketers think in terms of a product as a compilation of package design and labeling, brand name, price, availability, warranty, reputation, image, and customer service activities that add value for the customer. 162. How can we distinguish services from goods? Give an example of how buyers can play an important role in the creation of services. ANSWER: Services can be distinguished from goods in several ways: 1) Services are intangible. They do not have physical features buyers can see, hear, smell, taste, or touch prior to purchase. 2) Services are inseparable from the service providers. Consumer perceptions of a service provider become their perceptions of the service itself. 3) Services are perishable. Providers cannot maintain inventories of their services. 4) It is difficult for companies to standardize services. 5) Buyers often play important roles in the creation and distribution of services. 6) Services that cater to the same want satisfaction of consumers show wide variations in service standards. Students’ examples will vary. 163. Explain the importance of the service sector in the U.S. economy. ANSWER: The service sector makes a crucial contribution to the U.S. economy in terms of products and jobs. The U.S. service sector now makes up more than three-fourths of the economy, as the shift from a goods-producing economy to a service-producing economy continues. According to the U.S. Department of Labor, service industries are expected to account for 18 million new jobs by the year 2020. Services also play a crucial role in the international competitiveness of U.S. firms. While the United States runs a continuing trade deficit in goods, it has maintained a trade surplus in services every year since 1992, and the surplus is growing.

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Chapter 12: Product and Service Strategies 164. Define homeshoring. What are its advantages? Give some examples of U.S. companies that practices homeshoring. ANSWER: The practice of hiring workers to do jobs from their homes is called homeshoring. It can have various advantages. Homeshoring enables firms to save on office space, furnishings, and supplies. In addition, most also save on health-care and other benefits. Homeshoring firms experience a reduction in the use of energy and other natural resources, which decreases these firms’ impact on the environment. Students’ examples will vary. 165. Why is marketing perceived as a significant activity by most service firms? ANSWER: Most service firms emphasize marketing as a significant activity for two reasons. First, the growth potential of service transactions represents a vast marketing opportunity. Services involving wireless communications, data backup and storage, and even meal preparation for busy families are on the rise. Consumer desire for speed and convenience and technological advances has increased over the years, allowing firms to fulfill this demand. Second, the environment for services is changing. For instance, increased competition is forcing traditional service industries to differentiate themselves from their competitors. 166. Define consumer products (B2C) and business products (B2B). Explain the different types of consumer products. Give an example of each from your recent purchasing activities. ANSWER: Consumer products (B2C) are products destined for use by ultimate consumers while business products (B2B) are products that contribute directly or indirectly to the output of other products for resale. The different types of consumer products are: 1) Unsought products: Products marketed to consumers who may not yet recognize a need for them. 2) Convenience products: Goods and services consumers want to purchase frequently, immediately, and with minimal effort. 3) Shopping products: Products consumers purchase after comparing competing offerings. 4) Specialty products: Products with unique characteristics that cause buyers to prize those particular brands. Students’ examples will vary.

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Chapter 12: Product and Service Strategies 167. What are the three categories of convenience products? Give examples for each type. ANSWER: The three categories of convenience products are: 1) Impulse goods and services: Products purchased on the spur of the moment. Examples are magazines and candies picked up at the checkout aisles. 2) Staples: Convenience goods and services consumers constantly replenish to maintain a ready inventory. Examples are toiletries, detergents, milk, bread, and gasoline. 3) Emergency goods and services: Products bought in response to unexpected and urgent needs. Examples are a snow blower purchased during a snowstorm and a visit to a hospital emergency room to treat a broken ankle. 168. Discuss the characteristics of shopping products. Do marketers essentially use the same approach to market all shopping products? ANSWER: Shopping products are products that consumers purchase after comparing competing offerings. The purchaser of a shopping product lacks complete information prior to the buying trip and gathers information during the buying process. Several important features distinguish shopping products: physical attributes, service attributes such as warranties and after-sale service terms, prices, styling, and places of purchase. Buyers and marketers treat some shopping products, such as refrigerators and washing machines, as relatively homogeneous products. Other shopping products seem heterogeneous because of basic differences among them. Depending on whether the products are perceived as relatively homogenous or relatively heterogeneous, marketers may use different approaches. Marketers may try to differentiate homogeneous products from competing products in several ways. They may emphasize price and value, or they may attempt to educate buyers about less obvious features that contribute to a product’s quality, appeal, and uniqueness. Examples include furniture, physical-fitness training, vacations, and clothing. Differences in features often separate competing heterogeneous shopping products in the minds of consumers. Perceptions of style, color, and fit can all affect consumer choices. 169. List the five factors that marketers should consider for classifying consumer services. ANSWER: Five factors that marketers should consider to classify consumer services are: 1) The nature of service 2) The relationship of the service organization and its customers 3) Flexibility for customization 4) Fluctuation of supply and demand 5) The way the service is delivered

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Chapter 12: Product and Service Strategies 170. Discuss the problems posed by the application of the three-way classification system of convenience, shopping, and specialty goods and services. ANSWER: The three-way classification system poses a few problems. The major obstacle to implementing this system results from the suggestion that all goods and services must fit within one of the three categories. Some fit neatly into one category, but others share characteristics of more than one category. The purchase of an automobile, for example, has characteristics of both a shopping and specialty product. For some consumers, it may be more of a shopping product, while for others it may be more of a specialty product. A second problem with the classification system emerges because consumers differ in their buying patterns. For instance, one person may make an emergency visit to a dentist because of a toothache, while another may extensively compare prices, office hours, and other factors before selecting a dentist. So it’s a good idea to think of the categorization process in terms of a continuum representing degrees of effort expended by consumers. At one end of the continuum, they casually pick up convenience items; at the other end, they search extensively for specialty products. Shopping products fall between these extremes. 171. Discuss the five different categories of business products. ANSWER: The five categories of business products are: 1) Installations: are the speciality products of the business market and constitute major capital investments in the B2B market. 2) Accessory equipments: are capital items that typically cost less and last for shorter periods than installations. 3) Component parts and materials: are finished business products of one producer that become a part of the final products of another producer. 4) Raw materials: are natural resources such as farm products, coal, copper, or lumber that become a part of the final product. 5) Supplies: are regular expenses a firm incurs in its daily operations. 172. Describe the three categories of supplies. ANSWER: The three categories of supplies are: 1) Maintenance items, such as brooms and filters 2) Repair items, such as nuts and bolts used in repairing equipment 3) Operating supplies, such as printer paper and cartridges

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Chapter 12: Product and Service Strategies 173. Define Total Quality Management (TQM) and ISO 9001:2008. Give examples of some companies that you know of as certified by ISO. ANSWER: Total Quality Management (TQM) refers to continuous effort to improve products and work processes with the goal of achieving customer satisfaction and world-class performance. ISO 9001:2008 refers to standards developed by the International Organization for Standardization in Switzerland to ensure consistent quality management and quality assurance for goods and services throughout the European Union (EU). Students’ examples will vary. 174. Define benchmarking. Describe the benchmarking process. ANSWER: Benchmarking is a method of measuring quality by comparing performance against industry leaders. A typical benchmarking process involves three main activities: identifying manufacturing or business processes that need improvement, comparing internal processes to those of industry leaders, and implementing changes for quality improvement. Benchmarking requires two types of analyses: internal and external. Before a company can compare itself with another, it must first analyze its own activities to determine strengths and weaknesses. This assessment establishes a baseline for comparison. External analysis involves gathering information about the benchmark partner to find out why the partner is perceived as the industry’s best. A comparison of the results of the analysis provides an objective basis for making improvements. 175. Define service quality. Describe its five variables. ANSWER: Service quality refers to the expected and perceived quality of a service offering. Its five variables are: 1) Tangibles, or physical evidence 2) Reliability, or consistency of performance and dependability 3) Responsiveness, or the readiness to serve 4) Assurances, or the confidence communicated by the service provider 5) Empathy, which shows the service provider’s understanding of the customer’s needs and its readiness to fulfill them 176. Define product line. Discuss some of the reasons why firms develop product lines. ANSWER: A product line is a series of related products offered by one company. The text discusses three reasons why firms develop product line: 1) Desire to grow: a company limits its growth potential when it concentrates on a single product. 2) Enhancing the company’s market position: a company with a line of products often makes itself more important to both consumers and marketing intermediaries than a firm with only one product. 3) Optimal use of company’s resources: by spreading the costs of its operations over a series of products, an organization may reduce the average production and marketing costs of each product.

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Chapter 12: Product and Service Strategies 177. What is product mix? How do marketers typically measure product mix? Measure the product mix of a company you know of. ANSWER: Product mix refers to an assortment of product lines and individual product offerings a company sells. Marketers typically measure product mixes according to width, length, and depth. The width of a product mix refers to the number of product lines the firm offers. The length of a product mix refers to the number of different products a firm sells. Depth refers to variations in each product the firm markets in its mix. Students’ application will vary. 178. Define line extension. Give examples ANSWER: Line extension refers to development of individual offerings that appeal to different market segments while remaining closely related to the existing product line. An example of line extension is Home Depot’s recent broadening of its existing Martha Stewart Living product line to include craft furniture—tables, desks and storage units especially suited for pursuing craft hobbies—as well as an expanded line of holiday merchandise. Students’ examples will vary. 179. Define product lifecycle. Describe the various stages of a product lifecycle. ANSWER: Product lifecycle refers to the progression of a product through introduction, growth, maturity, and decline stages. The various stages of a product lifecycle are: 1) Introductory stage: first stage of the product lifecycle, in which a firm works to stimulate sales of a new-market entry. 2) Growth stage: second stage of the product lifecycle that begins when a firm starts to realize substantial profits from its investment in a product. 3) Maturity stage: third stage of the product lifecycle, in which industry sales level out. 4) Decline stage: final stage of the product lifecycle, in which a decline in total industry sales occurs.

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Chapter 12: Product and Service Strategies 180. What are the different ways in which firms can extend a product’s lifecycle? Explain any one of them. ANSWER: Firms can try to extend each stage of the lifecycles for their products through decisions designed to increase the frequency of use by current customers; increase the number of users for the product; find new uses; or change package sizes, labels, or product quality. Increasing the frequency of use by current customers: during the maturity stage, the sales curve for a product category reaches a maximum point if the competitors exhaust the supply of potential customers who previously had not made purchases. However, if current customers buy more frequently than they formerly did, total sales will rise even though no new buyers enter the market. For instance, consumers buy some products during certain seasons of the year. Marketers can boost purchase frequency by persuading these people to try the product year-round. For decades, most people used sunscreen only during warm and sunny seasons of the year. With greater warnings about the risks of sun damage and skin cancer, however, companies now advertise the benefits of using sunscreen year-round. Match each item with the correct statement below. a. marketing mix b. specialty products c. product d. services e. convenience products f. impulse goods g. installations h. wholesalers i. business-to-business (B2B) j. supplies k. emergency goods l. shopping products m. component parts and materials n. staples o. product mix p. product line q. line extension r. total quality management s. product lifecycle t. benchmarking

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Chapter 12: Product and Service Strategies 181. The _____ is the blending of the four strategy elements—product, distribution, promotion, and price—to fit the needs and preferences of a specific target market. ANSWER: a 182. A bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs is called a(n) _____. ANSWER: c 183. Intangible tasks that satisfy the needs of consumer and business users are called _____. ANSWER: d 184. A product that contributes directly or indirectly to the output of other products for resale is also known as a(n) _____ product. ANSWER: i 185. Goods and services consumers want to purchase frequently, immediately, and with minimal effort are called _____. ANSWER: e 186. Products purchased on the spur of the moment are called _____. ANSWER: f 187. The convenience goods and services that consumers constantly replenish to maintain a ready inventory are called _____. ANSWER: n 188. Products bought in response to unexpected and urgent needs are called _____. ANSWER: k 189. Products consumers purchase after comparing competing offerings are called _____. ANSWER: l 190. Products with unique characteristics that cause buyers to prize those particular brands are called _____. ANSWER: b 191. _____ are major capital investments in the B2B market. ANSWER: g 192. Channel intermediaries that take title to goods they handle and then distribute these goods to retailers, or business or B2B customers are known as _____. ANSWER: h

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Chapter 12: Product and Service Strategies 193. Finished business products of one producer that become part of the final products of another producer are called _____. ANSWER: m 194. _____ constitute the regular expenses a firm incurs in its daily operations. ANSWER: j 195. Continuous effort to improve products and work processes with the goal of achieving customer satisfaction and world-class performance is referred to as _____. ANSWER: r 196. The method of measuring quality by comparing performance against industry leaders is known as _____. ANSWER: t 197. A series of related products offered by one company is called a(n) _____. ANSWER: p 198. The assortment of product lines and individual product offerings a company sells is called the _____. ANSWER: o 199. Development of individual offerings that appeal to different market segments while remaining closely related to the existing product line is referred to as _____. ANSWER: q 200. The progression of a product through introduction, growth, maturity, and decline stages is called its _____. ANSWER: s

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Chapter 12: Product and Service Strategies 201. A smeret works as a hotel manager for a popular family resort and casino in Atlantic City, New Jersey. During the summer, hotel managers aim for an occupancy rate of at least 85% to ensure that overhead costs are covered. The resort is known for its quality services; guests generally return an average of three times during the summer and use their rewards and loyalty cards during their stays. On this particular day, Asmeret is quite stressed because the occupancy rate is only 65%. If the hotel fails to sell at least an additional 20% of the available rooms, she might be in some trouble. Required: Which aspect of a service is best illustrated in the scenario? a. S ervices are perishable. b. S ervice standards show wide variation. c. S ervices are inseparable from service providers. d. C ompanies cannot easily standardize the services they provide. e. B uyers play an important role in the creation and distribution of services. ANSWER: a 202. M arketers aim to design an appropriate marketing mix to draw the intended target market. During a meeting with company executives, Roy suggests that one way to engage the target market and ensure that its members continue to be loyal customers is by allowing them to return their gadgets in exchange for workable or new parts when customers file complaints that their products no longer work. Required: In thinking about how to best market new products, which of the following components of the product variable is described above? a. p rice b. l abels c. w arranty d. p ackaging e. r eputation ANSWER: c

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Chapter 12: Product and Service Strategies 203. Y ou are contemplating starting a business in the next few months. You have expertise in both goods-based and services-based businesses, but aren’t sure which route to take. You are, however, determined to develop jobs for the small factory town in which you grew up. Required: Based on what you know about the U.S. business economy, which of the following approaches would you take? a. s tart a goods-based business because the demand is higher b. s tart a goods-based business because it is cheaper to maintain c. s tart a services-based business because demand has increased exponentially d. s tart a services-based business because such businesses are expected to account for 18 million new jobs by 2020 e. s tart a goods-based business because such businesses are expected to account for 35% of new job opportunities in the next 10 years ANSWER: d 204. Kemar owns a small Web-development startup and has experienced a 23% increase in overhead costs over the last three years. To cut costs, Kemar has scaled back the number of employees working in the office on a daily basis and is thinking about homeshoring as a viable option to further trim expenses. Required: Which of the following is a potential drawback of homeshoring? a. i ncreased supervision b. d ecreased service demand c. d ecreased employee productivity d. i ncreased use of energy and resources e. i ncreased expenses for health insurance ANSWER: c

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Chapter 12: Product and Service Strategies 205. You are a rising star in the purchasing department at your company and you have recently been promoted to manager of business services procurement. As your title suggests, you will be responsible for purchasing business services for your firm. Required: Which of the following statements is true regarding your new role? a. Y ou will be purchasing raw materials. b. Y ou will be purchasing MRO supplies. c. Y ou will be purchasing component parts. d. Y ou will be purchasing janitorial services. e. Y ou will be purchasing process materials. ANSWER: d 206. A n electronics company has seen a 35–57% increase during the fourth quarter for the last decade. Company executives attribute this immense increase in profits to the holiday season. Required: Which of the following best explains the company’s fourth-quarter growth? a. T he company employs a short distribution channel. b. T he company has a strong relationship with customers. c. T he company provides flexible and customized goods. d. T he company uses few promotional strategies during the holidays. e. T he demand for the company’s goods fluctuates over the course of the year. ANSWER: e 207. You work for the purchasing department of an up-and-coming eco-friendly fashion manufacturer, and have been asked to ensure that you have ordered enough raw materials for the pieces in the fall collection. The fall collections will feature plant-based T-shirts embellished with fancy stitching. Required: Which of the following combination of items should you order? a. T -shirts, bamboo, and thread b. b uttons, T-shirts, and thread c. b uttons, thread, and bamboo d. b amboo, thread, and sewing machines e. T -shirts, sewing machines, and buttons ANSWER: c

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Chapter 12: Product and Service Strategies 208. The cost of installations for business services is generally high because they tend to be part of a company’s capital investment strategy. Required: Which of the following statements is true of installations? a. Installations require a very long distribution channel. b. I nstallations are the least significant business products. c. The quality of the product is less of an issue for company executives. d. C ompanies promote the sale of installations via extensive advertising campaigns. e. C ompany executives spend a lot of time planning before they purchase installations. ANSWER: e 209. You have been chosen to serve as a member of the committee that will select finalists for the Malcolm Baldrige National Quality Award established by the U.S. Congress. Required: Which of the following companies would you select as one of the finalists for the award? a. a company with high market share b. a company with low employee turnover rates c. a company that ranks high on customer satisfaction d. a company that has received the ISO 9001:2008 certification e. a company that is typically referenced as a benchmark partner ANSWER: e 210. A popular cleaning services business employs the following tagline: “Cleaning up life’s messes so you can take a breather!” Required: Which of the following service quality variables is best illustrated in the tagline presented above? a. e mpathy b. r eliability c. t angibles d. a ssurance e. r esponsiveness ANSWER: a

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Chapter 12: Product and Service Strategies 211. You work for a multinational corporation that manufactures a series of home goods, cosmetics, pet supplies, foods, and beverages. As a newly appointed head of development, you want to familiarize yourself with the company’s product lines. Required: Which of the following combinations of items represents a product line? a. m ascara, lipstick, and plates b. p et food, shampoos, and juices c. e yeliner, dog biscuits, and frozen pizza d. f rozen tacos, salsa, and shredded cheese e. s ausage, dog bacon strips, and lemonade ANSWER: d 212. You are learning about product lines in your marketing class and want to impress your professor with some details you have learned on your own. Required: Which of the following assertions can you make about expanding a company’s product lines? a. P roduct line expansion is a risk not worth the reward. b. P roduct line expansion is a fairly inexpensive process. c. P roduct line expansion increases production costs in the long term. d. P roduct line expansion can help to cut production and marketing costs. e. P roduct line expansion does not affect the cost of a company’s marketing mix variables. ANSWER: d 213. You just finished meeting with your boss, who is very upset about the most recent customer survey results for the firm. A majority of the respondents complained about the limited number of product lines your firm offers. Required: Which of the following recommendations should you make to your boss? a. T he firm needs to shorten its product life cycle. b. T he firm needs to lengthen its product life cycle. c. T he firm needs to expand the depth of its product mix. d. T he firm needs to expand the width of its product mix. e. T he firm needs to expand the length of its product mix. ANSWER: d

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Chapter 12: Product and Service Strategies 214. Casanova Supplies specializes in pharmaceuticals, home and office cleaning supplies, bath essentials, and pet care. The pharmaceutical line, which has five products, is the company’s newest line. The home and office line has 12 unique products; the bath essentials line has 10 products; and the pet care line has seven products. Required: Which of the following statements is true about Casanova Supplies? a. T he company lacks a product mix. b. T he company has a product mix width of 4. c. T he company has four items in its product mix. d. T he company has a narrow product mix length. e. T he company has a product mix depth of 34 items. ANSWER: b 215. In which stage of a product's life cycle is the firm focused on establishing and fortifying the product’s market position by encouraging brand loyalty? a. d ecline stage b. g rowth stage c. r ebirth stage d. m aturity stage e. i ntroduction stage ANSWER: b 216. A tech company is set to release a new watch with a built-in exercise and cholesterol monitor around the holidays. Because the product is new to the market, consumers know very little about it. The company wants to ensure that by the time the holiday season arrives, consumers are well-informed and ready to make major purchases. Required: Which of the following steps should the company take to market its new product efficiently?

a. l imit the number of distribution channels b. d evelop a campaign that focuses on product features c. h ighlight the drawbacks of competing products on the market d. s pend money on fine-tuning the product rather than on marketing e. e stablish a call center so consumers can phone and have their questions answered ANSWER: b

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Chapter 12: Product and Service Strategies 217. You have been assigned the overwhelming task of managing all your firm’s products in the decline stage. Which of the following steps are you least likely to take? a. d evelop strategies to increase how frequently the product is used b. d evelop strategies to identify a new target market and/or new customers c. d evelop an aggressive, resource-intensive marketing mix for products in the decline stage d. d evelop rebranding strategies and identify new ways to make the products more appealing e. d evelop a social media campaign that will excite current customers and induce them to buy more of these products ANSWER: c 218. Which of the following examples illustrates an orphan brand? a. T he line of fur blankets dropped in sales by 65% by the end of the first quarter. b. T he cherry wood dresser line was successful only in the Northeast. c. T hough company executives thought the line of picture frames would be a hit with customers, it did not sell. d. T he shoe line did not do well, but another company decided to purchase the rights to the design and manufacture it. e. T he line of handbags generated a 32% profit within the first quarter but the company ran out of raw materials to make the bags. ANSWER: e 219. Most people don't think of what they purchase from their yoga instructor as a product. But because you're a marketer, you realize that a yoga class is a product because it delivers _____. a. effective positioning

b. consumer want satisfaction c. Maslow's hierarchy of needs d. cost efficiency e. competition ANSWER: b

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Chapter 12: Product and Service Strategies 220. Kiddie Car Inc. offers transportation between home, school, and activities to children whose parents are unavailable to drive them. The company charges much less on weekends than during the week. This reflects the ______ of Kiddie Car's services. a. Intangibility

b. Perishability c. Inseparability d. Standardization e. Positioning ANSWER: b 221. Your insurance firm depends on trained telemarketers to sell its policies. After a bad experience with a call center overseas, the company has set aside a large space in its headquarters which all its callers will use. Your firm is now engaged in: a. Offshoring

b. Homeshoring c. Backshoring d. Tele-design e. Tele-management ANSWER: c 222. Susan has noted the growing popularity of blow-dry-only salons with busy women who need last-minute hair care or touchups. Now she is opening her own. To maximize her opportunity for success, Susan should strive to: a. Locate the salon in a visible location

b. Offer late-night and weekend hours c. Promote the salon in as many media as possible d. Promote the salon in a few prestigious media e. Not require appointments ANSWER: a, b, c, e 223. Dave is a consultant who advises manufacturers on issues related to maintenance, repair, and operations in their factories. Dave supplies a(n): a. MRO product

b. Business service c. Internal service d. Collaborative service e. Component service ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 224. For the first time, your company is implementing the tool called benchmarking to set performance standards. In a memo you received introducing the new effort, you noticed an error. Which of the following statements was (were) wrong? a. Benchmark analyses establish a baseline for comparison.

b. Benchmark analyses can be internal or external. c. This approach provides an objective basis for making improvements. d. Implementing changes for quality improvement is part of the benchmarking process. e. The ultimate goal of benchmarking is to achieve competitive advantage. ANSWER: b 225. Sal's Pizza originally sold nothing but slices of that popular food. A marketing consultant advised the owner to add Sal's Pizza Sauce, Sal's Ready-to-Bake Pizza Crust, and Sal's Pizza Cheese. The consultant told him that by making this move, he would enhance the opportunity for Sal's to: a. Grow

b. Improve its market position c. Better utilize company resources d. Make itself more important to customers e. Charge premium prices ANSWER: a, b, c, d 226. Organic Hair Care Inc. markets a brand of shampoo and a brand of conditioner. The firm is now adding several new sizes of each brand. This means OHC is changing its product mix _____. a. Depth

b. Length c. Width d. Breadth e. Depth and breadth ANSWER: a

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Chapter 12: Product and Service Strategies 227. As head of marketing for Clarity Eyewear, you are focused on developing a promotional campaign that provides information about the product's features. You are also working to induce channel members to stock it. Unfortunately, the company is experiencing some technical problems and financial losses related to the product. Clarity Eyewear is most likely in which stage of the product lifecycle? a. Growth

b. Maturity c. Introductory d. Decline e. Research and Development ANSWER: c 228. A yogurt brand is trying to extend the product's lifecycle by promoting its use as a replacement for mayonnaise. The primary goal of this strategy is to: a. Increase frequency of use

b. Increase the number of users c. Change product design d. Find new uses e. Compete with mayonnaise ANSWER: d 229. A bundle of physical, service, and symbolic attributes designed to satisfy a customer's needs and wants is called a(n): a. p roduct b. m arket offering c. d ifferentiated offer d. t angible offering ANSWER: a 230. P rescott purchased a 5-series BMW sedan and chose the vehicle because he loves the sporty ride and great handling. He usually takes the Interstate to work and lately has become disillusioned with the car and is bored. Which of the following might you recommend to Prescott to enhance his "want satisfaction" related to the vehicle purchase. a. C hange his driving route and get off the Interstate b. T rade-in the BMW 5-series sedan and purchase a sports car c. D rive faster than the speed limit to heighten the thrill of driving d. R ead articles or reviews about the BMW 5-series vehicle ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 12: Product and Service Strategies 231. J essica is planning a vacation and is interested in taking a cruise. She's starting to research cruise lines and prices and had hoped to take a cruise with her husband over the Christmas holidays. She's learning that the prices for a cruise are much higher for cruises that depart between December 22nd and January 3rd. However, she notices that prices are somewhat lower from January 4th through March 1st. Which aspect or characteristics of services does this difference in price reflect? a. s ervices are perishable b. s ervices are intangible c. s ervices are inseparable from the service providers d. c ompanies cannot easily standardize services ANSWER: a 232. M ike doesn't like to shop but when he needs new clothes, he goes to the Buckle because he's learned they have great products, excellent service, and make it easy to get and out of the store quickly. Since he's away from home attending college, he visits the local Buckle store to purchase a new pair of jeans. However, no one greets him when he enters or asks him if he needs help. He can't remember the style of jean he normally buys and becomes so frustrated that he leaves the store without making a purchase. What aspect or characteristic of service best characterizes Mike's experience at the Buckle near his college? a. s ervice standards show wide variations b. s ervices are perishable c. s ervices are inseparable from the service providers d. s ervices are intangible ANSWER: a 233. According to the textbook, the U.S. service sector accounts for nearly _____ percent of the economy as the country shifts from a goods-producing economy to a service-producing economy. a. 80 b. 60 c. 40 d. 90 ANSWER: a 234. Hiring employees to work from home is known as offshoring. a. True b. False ANSWER: False

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Chapter 12: Product and Service Strategies 235. Brandie is a financial services representative and is licensed to sell life, health and investment products. She recently met with a couple in their 50's who have been taking care of their 80-year-old parents who now need some additional attention and care. Brandie begins asking the couple about their financial planning and how well they've saved for retirement as well as the possibility that one or both of them might need nursing assistance or long-term care in a senior facility. What type of product would best describe a long-term care policy? a. u nsought product b. s pecialty product c. c onvenience product d. s hopping product ANSWER: a 236. Justin is a sales representative for Hormel Foods and is meeting with the buyer for a regional grocery store chain. Hormel has recently introduced a new snack product that w ill be merchandised in the deli or meat section of the grocery store. Justin has a marketing allowance that can be utilized to promote the new product and gain acceptance or space in the store. A term for this type of fee is: a. s lotting allowance b. m arketing expense c. r etailer fee d. n ew product fee ANSWER: a 237. Sam is a sales representative with Stepan, a global chemical supplier with manufacturing operations around the globe. Sam is based in the Midwest and Procter and Gamble is one of his accounts. Stepan is known as a quality producer of surfactants which are utilized by companies like Procter and Gamble to make their products work better. For example, Procter and Gamble utilizes surfactants in Tide detergent in order to get clothes cleaner and separate the "cleaning agent" from the water. Stepan produces their surfactant as one of their "finished products" but when added to Tide detergent, the surfactant from Stepan becomes a final product of Procter and Gamble. Which type of business product are Stepan's surfactants? a. c omponent parts and materials b. r aw materials c. s upplies d. a ccessory equipment ANSWER: a

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Chapter 12: Product and Service Strategies 238. D errick is the facility manager for a local school district to manage the physical plant needs of its five elementary, junior high and high school buildings. He has a business account with Menards, Home Depot and Loews to purchase a variety of supplies such as light bulbs, cleaning supplies, and cleaning equipment. These items would be classified as: a. M RO items b. b usiness services c. a ccessory equipment d. c omponent parts and materials ANSWER: a 239. Emily is an inside sales representative for TEKSystems and promises her customer accounts that she will return phone calls or e-mails within three hours during week-day work hours (9 a.m. to 5 p.m.). She says that sometimes it's difficult to keep this promise to her customers but believes its a key to her success and the loyalty she creates among her customers. It's also led to referrals and helped her increase sales. What aspect of service quality is Emily delivering? a. r esponsiveness b. e mpathy c. a ssurances d. t angibles ANSWER: a 240. Stefan is the manager of a Chili's restaurant and requires all employees to either arrive early or stay later to perform a variety of "cleaning" duties around the restaurant. Stefan has a weekly "cleaning schedule" that includes tasks such as dusting the decorations, polishing brass accents, dusting wood surfaces, and cleaning the television screens. Stefan and his employees take pride in the appearance and cleanliness of the restaurant and believes it's a "small" factor that can lead to "big" returns in the way of enhancing their level of service quality. Which service quality variable are Stefan and his staff managing through the implementation of the cleaning schedule? a. t angibles b. r eliability c. r esponsiveness d. a ssurances ANSWER: a

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Chapter 12: Product and Service Strategies 241. P rocter and Gamble markets Tide detergent in a variety of formulations as well as other laundry detergents including Cheer, Gain and Bold. These various brands are part of Procter and Gamble's _________ in the detergent sector. a. p roduct line b. p roduct mix c. m arketing mix d. p roduct life cycle ANSWER: a 242. A company may limit its growth potential when it concentrates on a single product. a. True b. False ANSWER: True 243. T he Nestle Company is celebrating 150 years of success and has evolved from a single product company - sweet condensed milk to over 2000 brands across such categories of baby food, bottled water, pet food, drinks, ice cream, nutritional foods, and chocolate. These various product categories reflect the product ______ of Nestle. a. w idth b. depth c. c omplexity d. e xtension ANSWER: a 244. P rocter and Gamble offers several varieties of Tide liquid detergent for high efficiency washers. It recently added a "Sport" formulation plus Febreeze targeted to active consumers who have noticed that sports apparel such as dri-fit shirts are difficult to clean. The "Sport" formulation represents a(n): a. l ine extension b. p roduct fabrication c. n ovelty product d. e volved product ANSWER: a

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Chapter 12: Product and Service Strategies 245. W hen Apple launched the iPod it quickly became the most popular digital music player on the market and dominated sales. Now, sales of the iPod are lower as more consumers adopt smart phone devices which enable them to store and listen to music. What stage of the product life characterizes the iPod? a. d ecline b. m aturity c. i ntroduction d. g rowth ANSWER: a 246. T echnology is changing consumer behavior in a variety of ways such as the adoption of streaming services such as Netflix. Netflix faces increasing competition from Amazon and Hulu Plus as well as satellite and cable companies who offer video on demand. Netflix has experienced rapid adoption by consumers but the entrance of competition is creating challenges for Netflix to remain dominant. What stage of the product life cycle best describes Netflix? a. g rowth b. i ntroduction c. m aturity d. d ecline ANSWER: a 247. H einz, the maker of various products including vinegar promotes the many uses for vinegar on its website and social media outlets. For example, in addition to being utilized as a food preparation ingredient, vinegar can be used to clean windows, get clothes cleaner, clean carpets, wash fresh produce and dissolve glue. By marketing the various uses of vinegar, Heinz is attempting to: a. f ind new uses for the product b. i ncrease the number of users c. i nfluence consumers to adopt green practices d. enhance its relevance to consumers ANSWER: a 248. C hanges in product packaging such as single-serve containers of Kraft Macaroni and Cheese have no influence on a product's lifecycle. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 1. Branding helps firms build and maintain identity and competitive advantage for their products. a. True b. False ANSWER: True 2. Once consumers have used a product, seen it advertised, or noticed it in a store, it moves from the unknown to the known category, which increases the probability that they will purchase it. a. True b. False ANSWER: True 3. Brand insistence is a company’s first objective for newly introduced products. a. True b. False ANSWER: False 4. Brand preference is the stage of brand loyalty at which consumers rely on previous experience with a branded product when choosing it, if available, over competitors' products. a. True b. False ANSWER: True 5. Brand insistence, the ultimate stage in brand loyalty, leads consumers to refuse alternatives and to search extensively for the desired merchandise. a. True b. False ANSWER: True 6. Karen prefers to buy Chemtec’s cleaning products over other brands if they are easily available in the market. Karen is in the brand insistence stage of brand loyalty. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 7. Josh usually buys one brand of orange juice but, occasionally, will buy a competitive brand if it’s on sale. Josh is exhibiting brand insistence. a. True b. False ANSWER: False 8. A product that has attained a monopoly position with its consumers is in the brand preference stage of brand loyalty. a. True b. False ANSWER: False 9. Jack does not buy his shoes from any company other than Unparalleled, a leading shoe manufacturer, because of the comfort they offer and their unique style features. Jack is in the brand insistence stage of brand loyalty. a. True b. False ANSWER: True 10. Brand recognition is the ultimate stage in brand loyalty that leads consumers to refuse alternatives and search extensively for the desired merchandise. a. True b. False ANSWER: False 11. Companies that offer mass-marketed goods and services are more likely to achieve monopoly position with their customers compared to those companies that manufacture luxury products. a. True b. False ANSWER: False 12. Makers of generic products are dependent on brand loyalty for their marketing success. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 13. The market shares for generic products increase during economic downturns but subside when the economy improves. a. True b. False ANSWER: True 14. Food and household staples are common categories of generic products. a. True b. False ANSWER: True 15. A national brand defines the image most people form when they think of a brand. a. True b. False ANSWER: True 16. Manufacturers’ brands are also called national brands. a. True b. False ANSWER: True 17. Production of private-label goods helps manufacturers reach additional market segments. a. True b. False ANSWER: True 18. National brands sold exclusively by a retail chain are called captive brands. a. True b. False ANSWER: True 19. Private labels typically provide better profit margins than captive brands. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 20. A family brand is a single brand name that identifies several related products. a. True b. False ANSWER: True 21. Family brands cost more than individual brands to market. a. True b. False ANSWER: False 22. Family brands are the most effective aids in implementing market segmentation strategies. a. True b. False ANSWER: False 23. A promotional outlay for a family brand benefits all items in the line. a. True b. False ANSWER: True 24. Marketers opt for family brand names to distinguish dissimilar products. a. True b. False ANSWER: False 25. A strong brand identity can contribute to the consumers’ perceptions of product quality. a. True b. False ANSWER: True 26. Brands with high equity often command comparatively large market shares. a. True b. False ANSWER: True

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Chapter 13: Developing and Managing Brand and Product Categories 27. Tide laundry detergent commands an extremely high market share. Purchasers of the product are extremely less sensitive to price changes. Based on this assessment, it can be said that Tide has high brand equity. a. True b. False ANSWER: True 28. Kroger, a popular milk brand, is a market leader in Denmark. About 30 percent of its sales and earnings take place outside its home country. Kroger can be regarded as a global brand. a. True b. False ANSWER: True 29. The “brand relevance” dimension of the brand personality refers to a brand's ability to stand apart from its competitors. a. True b. False ANSWER: False 30. A brand is said to have high relevance if a large number of consumers feel the need for the benefits offered by the brand. a. True b. False ANSWER: True 31. A rise in perceived quality or public opinion about a brand enhances the brand’s esteem. a. True b. False ANSWER: True 32. Product managers have profit responsibility for their product group and help the retailer’s category buyer maximize sales for the whole category, not just the particular manufacturer’s product. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 33. Small manufacturers usually assign a category manager to each major channel such as grocery stores or drugstores, instead of each retail chain. a. True b. False ANSWER: True 34. Companies that follow category management process define the category based on the target market’s needs. a. True b. False ANSWER: True 35. A brand mark is defined as a part of a brand that can be spoken. a. True b. False ANSWER: False 36. A brand name must qualify for legal protection. a. True b. False ANSWER: True 37. Brand names should contain words or phrases in general use, so that it is easier for the consumers to pronounce, recognize and remember the brand names. a. True b. False ANSWER: False 38. Some firms register a brand name before they have manufactured the product in order to prevent competitors from using the name. a. True b. False ANSWER: True 39. The original owner of a brand name can claim exclusive rights to the name even when the brand name becomes a descriptive generic name for a class of products. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 40. A brand name should give buyers the correct connotation of the product’s image. a. True b. False ANSWER: True 41. A trademark is different from a trade name, which is usually used to identify a company. a. True b. False ANSWER: True 42. Firms can receive trademark protection only for the brand name and brand mark and not for the product features or packaging elements. a. True b. False ANSWER: False 43. A product’s package color, size and label shapes are all part of its trade dress. a. True b. False ANSWER: True 44. Merrill Lynch’s bull logo cannot be considered a part of the product's trade dress. a. True b. False ANSWER: False 45. An excellent brand name or symbol in one country may prove disastrous in another. a. True b. False ANSWER: True 46. The original objective of product packaging was to increase consumer awareness of the product. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 47. Fears of product tampering have forced many firms to improve package designs. a. True b. False ANSWER: True 48. Marketers’ emphasis on targeting smaller market segments has increased the importance of packaging as a promotional tool. a. True b. False ANSWER: True 49. An effective label performs both promotional and informational functions. a. True b. False ANSWER: True 50. Brand extension is the strategy of developing individual offerings that appeal to different market segments while remaining closely related to the existing product line. a. True b. False ANSWER: False 51. Line extension is the strategy of attaching unrelated products to a known brand name to gain instant recognition for the new offerings. a. True b. False ANSWER: False 52. A line extension involves the addition of new sizes, styles, flavors, or related products to an existing group of products. a. True b. False ANSWER: True

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Chapter 13: Developing and Managing Brand and Product Categories 53. When a company authorizes another organization to use its brand name, the company is practicing brand diversification. a. True b. False ANSWER: False 54. The practice of brand licensing expands a company’s exposure in the marketplace. a. True b. False ANSWER: True 55. One of the problems associated with brand licensing is that brand names do not transfer well to all products. a. True b. False ANSWER: True 56. The Columbia Sportswear Company decides to produce a line of jackets embroidered with the names of all of the NFL teams. For doing so, Columbia must first obtain an authorization from the teams and/or the league before using the trademarked names. This is an example of brand licensing. a. True b. False ANSWER: True 57. A market penetration strategy seeks to increase sales of existing products in existing markets. a. True b. False ANSWER: True 58. Product positioning refers to consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages relative to competing brands. a. True b. False ANSWER: True 59. A product development strategy concentrates on finding new markets for existing products. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 60. A market development strategy concentrates on developing new products for existing markets. a. True b. False ANSWER: False 61. A product development strategy might include flanker brands that are introduced into the market to increase the overall market share of the company. a. True b. False ANSWER: True 62. A product diversification strategy focuses on developing entirely new products for new markets. a. True b. False ANSWER: True 63. Cannibalization is the loss of sales of an existing product due to competition from a new product introduced into the market by a competing firm. a. True b. False ANSWER: False 64. The consumer adoption process spans from awareness of a product to its acceptance or rejection after a purchase has been made. a. True b. False ANSWER: True 65. In the awareness phase of the consumer adoption process, consumers make a trial purchase of an item to determine its usefulness. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 66. A company sent free samples of its new shampoo to a researched list of potential customers. This strategy is most likely to accelerate the evaluation and trial stages of the consumer adoption process. a. True b. False ANSWER: True 67. Consumer innovators are individuals who rely on the experiences of initial buyers before making trial purchases. a. True b. False ANSWER: False 68. The diffusion process focuses on the speed at which an innovative product is accepted or rejected by all members of a community or social system. a. True b. False ANSWER: True 69. Compared to first adopters, later adopters rely more heavily on impersonal information sources while purchasing new products. a. True b. False ANSWER: False 70. If potential buyers can observe an innovation’s superiority in a tangible form, the adoption rate increases. a. True b. False ANSWER: True 71. New-product committee members spend less time conceiving and developing their own new-product ideas than reviewing and approving new-product plans that arise elsewhere in the organization. a. True b. False ANSWER: True

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Chapter 13: Developing and Managing Brand and Product Categories 72. A product manager often leads new product development programs, including creation of new product ideas and recommendations for improving existing products. a. True b. False ANSWER: True 73. A venture team functions as an entity separate from the basic organization. a. True b. False ANSWER: True 74. Concept testing is a marketing research project that attempts to measure consumer attitudes and perceptions about the new product idea. a. True b. False ANSWER: True 75. The screening and business analysis stages of new-product development, determine the product’s financial and technical requirements. a. True b. False ANSWER: True 76. Even if a new product tests well in the market and reaches the commercialization stage, it may still take a while to catch on with the general public. a. True b. False ANSWER: True 77. Companies test market their new-product offerings to measure consumer reactions under normal competitive conditions. a. True b. False ANSWER: True

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Chapter 13: Developing and Managing Brand and Product Categories 78. A product can fulfill its mission of satisfying consumer needs only if it ensures safe operation. a. True b. False ANSWER: True 79. The number of product liability lawsuits has fallen in recent years thanks to better designed products and more detailed regulations. a. True b. False ANSWER: False 80. Product liability insurance has become an essential element for any new or existing product strategy. a. True b. False ANSWER: True 81. Patients cannot sue a pharmaceutical company over the alleged defects of its products, if the FDA has approved the use of the medication. a. True b. False ANSWER: False 82. At the _____ stage of brand loyalty, marketers use advertising as a means to increase consumer awareness of a brand. a. brand recognition b. brand preference c. brand insistence d. brand equity ANSWER: a 83. A company has introduced a new product in the market. The company distributes free samples of this product to people so that they can try it. This product is at the _____ stage of brand loyalty. a. brand insistence b. brand association c. brand preference d. brand recognition ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 84. Consumers at the _____ level of brand loyalty, rely on previous experiences with the product when choosing it, if available, over competitors’ products. a. brand awareness b. brand association c. brand preference d. brand recognition ANSWER: c 85. A product is said to have achieved brand preference when: a. the product becomes familiar to the consumer. b. the marketers start selling the product at a discount. c. the consumer sees or recognizes the product and chooses it over its competitors. d. the product has attained monopoly position with its customers. ANSWER: c 86. The _____ stage in brand loyalty leads consumers to refuse alternatives and search extensively for the desired merchandise. a. brand recognition b. brand insistence c. brand awareness d. brand preference ANSWER: b 87. Which of the following products is most likely to achieve the status of brand insistence? a. Cars b. Soaps c. Milk d. Toothpastes ANSWER: a 88. Which of the following is true of generic products? a. They are identified through a brand name owned by a wholesaler or retailer. b. They are identified through a brand name owned by a manufacturer or other producer. c. They are well known national brands sold exclusively through a joint venture between a manufacturer and a retailer. d. They are characterized by plain labels, little or no advertising, and no brand names. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 89. Which of the following is most likely to be the primary factor that attracts a consumer to a generic product? a. Package design b. Brand name c. Low price d. Product quality ANSWER: c 90. The Kirkland brand is owned by Costco, and the products can only be purchased at Costco stores. Costco contracts with manufacturers to produce and package products under the Kirkland name. Kirkland can be regarded as a(n): a. family brand. b. individual brand. c. generic brand. d. private brand. ANSWER: d 91. A _____ brand refers to a brand name owned by a manufacturer or a producer. a. private b. generic c. national d. captive ANSWER: a 92. Liz Lange maternity wear and Shaun White’s apparel for boys are sold exclusively at Target. These brands are examples of _____ brands. a. private b. national c. captive d. exclusive ANSWER: c 93. St. Ives and Dove beauty products, marketed by Unilever, are examples of _____ brands. a. family b. individual c. generic d. captive ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 94. Dell manufactures and markets computers and several related products, such as laptops, desktops, notebooks, and printers, all under the Dell name. These products are examples of _____ brands. a. family b. captive c. individual d. private label ANSWER: a 95. Dawn, Joy, and Ivory are dish liquid brands manufactured by Procter & Gamble. All these brands can be regarded as _____ brands. a. private b. family c. generic d. individual ANSWER: d 96. A company wishing to implement a market segmentation strategy for its products should strongly consider using _____ branding. a. family b. captive c. generic d. individual ANSWER: d 97. A firm is most likely to opt for a family brand to market its products when the products are: a. sold only to a single large retail chain to protect the manufacturer's reputation. b. sufficiently different so as not to compete directly with each other. c. sold in different geographic markets. d. similar in quality and are closely related to one another. ANSWER: d 98. The added value that a certain brand name gives to a product in the marketplace is called _____. a. brand identity b. brand relevance c. brand recognition d. brand equity ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 99. A company’s ability to market a product successfully at a higher price compared to its competitors is directly related to its: a. market capitalization. b. product relevance. c. brand equity. d. market share. ANSWER: c 100. A product is generally regarded as a global brand if: a. it is sold exclusively by a single retail chain worldwide. b. it sells at least 20 percent outside its home country. c. it can market its products with the same brand name in all its international markets. d. it is easily recognized across the world by its unique trademark. ANSWER: b 101. Based on the Young & Rubicam’s BrandAsset Valuator model, _____ is a dimension of brand personality that refers to a brand’s ability to stand apart from competitors. a. knowledge b. differentiation c. relevance d. competence ANSWER: b 102. According to the Young & Rubicam’s BrandAsset Valuator model, the _____ dimension of a brand personality is a combination of perceived quality and consumer perceptions about its growing or declining popularity. a. differentiation b. relevance c. esteem d. knowledge ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 103. According to the Young & Rubicam’s BrandAsset Valuator model, brand relevance is a dimension of brand personality that refers to: a. the extent of consumer awareness of a brand and understanding of what kind of product it stands for. b. the real and perceived appropriateness of a brand to a big consumer segment. c. the way in which brand equity is assigned to the brand by evaluating institutions. d. a brand's ability to stand apart from competitors. ANSWER: b 104. According to the Young & Rubicam’s BrandAsset Valuator model, the _____ is a dimension of brand personality that refers to the extent of consumer awareness of a brand and the understanding of what a good or service represents. a. knowledge b. esteem c. recognition d. differentiation ANSWER: a 105. Which of the following statements is true of category management? a. Category managers are responsible for the profitability of their product groups. b. Category managers help a retailer’s category buyer maximize sales for a particular manufacturer’s product rather than the whole category. c. Category managers are usually assigned to a single brand rather than each retail chains. d. Category managers are oriented toward mass market advertising, not in-store merchandising. ANSWER: a 106. Companies that adopt category management system start the process by: a. setting performance standards and measuring actual results against the standard. b. defining the category based on the target market’s needs. c. staffing the sales force, including the national sales teams assigned to major retailers. d. identifying consumer groups and the store clusters with the greatest sales potential. ANSWER: b

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Chapter 13: Developing and Managing Brand and Product Categories 107. International Business Machines decided to brand its products under its acronym IBM. From a marketing perspective, this was a smart idea because as a brand name, IBM: a. is easy to pronounce, recognize, and remember. b. is easy to translate into any language. c. accurately describes the products it manufactures. d. can easily be expanded to suit innovative advertising campaigns. ANSWER: a 108. A characteristic of a good brand name is that it should: a. avoid giving buyers the correct connotation of the product’s image. b. be easy to recognize and remember. c. always be an acronym. d. be difficult to pronounce. ANSWER: b 109. If Sunbeam were to develop a new coffee machine and brand it as “The Coffee Maker,” the company would not be able to register the term as its trademark because: a. the trademark must contain the company’s name to be registered. b. using “the” in the trademark makes it exclusive to a particular manufacturer. c. the term describes a particular type of product. d. the trademark should always be an acronym. ANSWER: c 110. A _____ is a brand for which the owner claims exclusive legal protection. a. water mark b. field symbol c. trademark d. category code ANSWER: c 111. A _____ is a symbol or a pictorial design that distinguishes a product from its competitors’ offerings. a. brand dress b. water mark c. brand mark d. category tag ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 112. The Federal Trademark Dilution Act of 1995 deals with: a. unregistered trademarks in the marketplace and legal protection for generic names. b. the establishment of procedures for distinguishing generic names from genericized names. c. the regulation of cases of cybersquatting and Internet domain name impingement. d. the rights of a trademark holder to sue for trademark infringement. ANSWER: d 113. The term _____ is used by marketers to refer to the visual components that contribute to the overall look of a brand. a. water mark b. brand token c. service mark d. trade dress ANSWER: d 114. The leaping jaguar symbol, featured on cars of a particular brand, is a part of the brand’s: a. service mark. b. trade dress. c. watermark. d. trade token. ANSWER: b 115. The original objective of packaging was to: a. create a brand image of the product. b. indicate the quality of the product. c. protect products from physical damage. d. comply with government regulations. ANSWER: c 116. Which of the following factors has helped increase the importance of packaging as a marketing tool? a. Marketers’ emphasis on targeting large market segments b. Increased popularity of generic products c. Changes in consumer lifestyles and buying habits d. Global economic recessive trends ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 117. A “_____” carries an item’s brand name or symbol, the name and address of the manufacturer or distributor, information about the product’s composition and size, and recommended uses. a. brand mark b. label c. brand token d. watermark ANSWER: b 118. The numerical bar code system used to record product and price information is called the _____. a. uniform serial number b. unitized product locator c. unique label identifier d. universal product code ANSWER: d 119. The strategy of attaching a popular brand name to a new product in an unrelated product category is known as _____. a. brand licensing b. brand reinforcement c. brand engagement d. brand extension ANSWER: d 120. A popular clothing brand in Switzerland decided to launch a new line of home furniture under the same brand name. This strategy being used by the company to launch its new offerings is called _____. a. line engagement b. brand reinforcement c. line extension d. brand extension ANSWER: d

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Chapter 13: Developing and Managing Brand and Product Categories 121. The strategy of developing individual offerings to appeal to different market segments while remaining closely related to the existing product line is called _____. a. line engagement b. line extension c. brand extension d. brand engagement ANSWER: b 122. Dayer’s, a popular ice cream brand, added new flavors to its existing line of ice creams to attract kids. This is an example of _____. a. brand extension b. line extension c. brand engagement d. line engagement ANSWER: b 123. An apparel manufacturer decides to create a line of t-shirts depicting the most popular soft drinks on the market. The images would include Coke, Pepsi, Sprite, Mountain Dew, and Dr. Pepper. The apparel manufacturer will have to complete which of the following practices before creating this line of t-shirts? a. Line extension b. Brand extension c. Brand licensing d. Brand engagement ANSWER: c 124. The term “product positioning” refers to: a. a low cost market entry strategy in which two or more firms represent one another's complementary yet non-competing products in the markets. b. the process of developing entirely new products for new markets. c. consumers' perceptions of a product's attributes, uses, quality, as well as advantages and disadvantages relative to competing brands. d. the process of developing a trade dress for a new product. ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 125. More than 90 percent of cereal is consumed at breakfast, but ads for Kellogg's Cracklin’ Oat Bran say that it tastes like oatmeal cookies and makes “a great snack anytime.” Kellogg’s is implementing a strategy of _____ with this product. a. market penetration b. market development c. product development d. product diversification ANSWER: a 126. The _____ strategy seeks to increase sales of existing products in existing markets. a. product development b. market innovation c. product diversification d. market penetration ANSWER: d 127. Annie’s Inc., which produces vinegar for cooking purposes, identified new uses for its product and started promoting it as a fabric softener and a cleansing product. The company started selling the same product in different packages modified for different types of uses. This strategy used by Annie’s to increase the sales of its product is an example of a _____ strategy. a. brand extension b. line engagement c. market penetration d. product diversification ANSWER: c 128. A _____ strategy concentrates on finding new markets for existing products. a. market penetration b. market development c. product development d. product diversification ANSWER: b

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Chapter 13: Developing and Managing Brand and Product Categories 129. Dali stationery and office supplies is a market leader in China. The company wants to expand its business and is setting up retail chains in other Asian countries. Which of the following new-product development strategies is being used by the company in the above scenario? a. Market development strategy b. Market penetration strategy c. Product development strategy d. Product diversification strategy ANSWER: a 130. Firms may also choose to introduce new products into markets in which they have already established positions to try to increase overall market share. These new offerings are called _____ brands. a. universal b. flanker c. conjoint d. congruous ANSWER: b 131. The strategy of _____ refers to the introduction of new products into identifiable or established markets. a. market penetration b. product positioning c. market diversification d. product development ANSWER: d 132. A _____ strategy focuses on developing entirely new products for new markets. a. market penetration b. market development c. product development d. product diversification ANSWER: d

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Chapter 13: Developing and Managing Brand and Product Categories 133. Apex Corp. has been manufacturing furniture for past several years. Now in order to grow its business, the company has decided to manufacture curtains and bed sheets. The strategy being used by the company to target new markets is referred to as a _____. a. product association strategy b. market simulation strategy c. market engagement strategy d. product diversification strategy ANSWER: d 134. Responding to moviegoers’ recently renewed interest in the 3D format, Panasonic introduced the world’s first 3D home entertainment system. This strategy used by Panasonic is an example of a _____. a. market engagement strategy b. market simulation strategy c. product development strategy d. product association strategy ANSWER: c 135. The term cannibalization refers to the: a. difference in expected and actual outcome from the implementation of a market penetration strategy. b. shrinking of a firm’s market share due to competition from rivals. c. decline in the brand loyalty for a product due to changing economic conditions. d. decline in the sales of an existing product due to competition from a new product by the same manufacturer. ANSWER: d 136. A company introduced a new low calorie version of one of its popular cold drinks. As a result, the sales of the original cold drink started decreasing because consumers preferred its low calorie version. This situation is known as: a. product encroachment. b. product centralization. c. cannibalization. d. polarization. ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 137. Which of the following terms refers to a series of stages consumers go through in learning about a new product, trying it, and deciding whether to purchase it again? a. Product life cycle b. Adoption process c. Product development process d. Diffusion process ANSWER: b 138. At the _____ stage in the consumer adoption process, potential buyers begin to seek information about the product. a. trial b. evaluation c. interest d. adoption ANSWER: c 139. At the _____ stage in the consumer adoption process, buyers consider the likely benefits of the product. a. awareness b. trial c. interest d. evaluation ANSWER: d 140. Individuals who purchase new products almost as soon as these products reach the market are called _____. a. late adopters b. laggards c. consumer innovators d. hesitant buyers ANSWER: c 141. The process by which new goods or services are accepted in the marketplace is known as the _____ process. a. extension b. referencing c. diffusion d. polarization ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 142. In the context of the consumer diffusion process, “_____” constitute the final group of consumers that make trial purchases of a new product. a. innovators b. late majority c. early purchasers d. laggards ANSWER: d 143. Which of the following is most likely to be true of consumer innovators? a. They are unlikely to display brand loyalty toward products. b. As compared to later adopters, they rely less on impersonal information sources. c. They often act as opinion leaders from whom others seek advice. d. They are less mobile, and do not prefer changing jobs often. ANSWER: c 144. A new product innovation that is consistent with the values and experiences of potential adopters and attracts new buyers at a relatively rapid rate is said to have high _____. a. complexity b. observability c. compatibility d. transparency ANSWER: c 145. When Microsoft introduced the latest edition of Age of Empires III, it provided a free download of one of the game scenarios. Addition of this link is most likely to influence which of the following characteristics of the product innovation? a. Complexity b. Associability c. Possibility of trial use d. Compatibility ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 146. With reference to the five characteristics of a product innovation, a product innovation is said to have a greater _____, if it is superior to previous ideas reflected in terms of lower price, physical improvements, or ease of use. a. associability b. compatibility c. relative advantage d. observability ANSWER: c 147. A new product committee is a group in an organization that: a. helps the organization in identifying a suitable partner for a join venture. b. looks after all the legal aspects of the organization when it launches a new product in the market. c. coordinates and integrates the work of the firm’s functional departments on a specific project. d. reviews and approves new-product plans that arise elsewhere in the organization. ANSWER: d 148. A _____ often leads new-product development programs, including creation of new-product ideas and recommendations for improving existing products. a. product architect b. product manager c. category manager d. product analyst ANSWER: b 149. _____ have profit responsibility for their product group and help retailers in maximizing the sales for the whole group of products not just the particular manufacturer’s product. a. Research analysts b. Early purchasers c. Boundary spanners d. Category managers ANSWER: d

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Chapter 13: Developing and Managing Brand and Product Categories 150. A(n) _____ gathers a group of specialists from different areas in an organization to work together in developing new products. a. quality circle b. venture team c. new-product department d. market development committee ANSWER: b 151. Which of the following statements is true of venture teams? a. A venture team is disbanded after every meeting. b. A venture team functions as an integral part of the basic organization. c. A venture team’s flexible lifespan may extend over a number of years. d. A venture team is responsible for looking after all the legal aspects of introducing a new product in the market. ANSWER: c 152. Which of the following entities is responsible for all phases of a development project, including screening decisions, developing product specifications, and coordinating product testing? a. Brand extension team b. Business analysis task force c. Category management committee d. New-product department ANSWER: d 153. The first step in the new-product development process is: a. screening. b. development. c. idea generation. d. business analysis. ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 154. During which of the following stages of a new-product development process, ideas with commercial potential are separated from those not meeting company objectives? a. Idea generation b. Business analysis c. Screening d. Test marketing ANSWER: c 155. Which of the following is a method for subjecting a product idea to additional study before actual development by involving consumers through focus groups, surveys, in-store polling, and similar strategies? a. Line extension b. Brainstorming c. Sample distribution d. Concept testing ANSWER: d 156. The purpose of test marketing new-product offerings is to: a. separate ideas with commercial potential from those that will not meet company objectives. b. subject the product idea to additional study prior to its actual development. c. verify that the product will perform well in a real-life environment. d. evaluate the compatibility of the product with organizational resources. ANSWER: c 157. The screening and business analysis stages generate extremely important information for new-product development as: a. they collect information from different sources to generate new ideas. b. they turn the original concept into a product. c. they verify if the product will perform well in a real-life environment. d. they define the proposed product’s target market and customers’ needs and wants. ANSWER: d

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Chapter 13: Developing and Managing Brand and Product Categories 158. The Poison Prevention Packaging Act: a. requires firms to mandatorily inform customers regarding the dangers associated with the use of products. b. requires drug manufacturers to place their products in packages that are child resistant yet accessible to all adults. c. bans those products that contain harmful chemicals. d. requires firms to publicize the testing procedures that go into the development of their product packaging. ANSWER: b 159. The ______ is a powerful regulatory agency that has assumed jurisdiction over the safety of every consumer product except food, automobiles, and a few other products regulated by other agencies. a. DHSS b. FDA c. CPSC d. OSHA ANSWER: c 160. Which of the following actions can the CPSC take to ensure product safety? a. Regulating packaging standards for milk products b. Approving safety standards for automobiles c. Inspecting production facilities of food manufacturers d. Ordering product recalls or redesign of faulty products ANSWER: d 161. What is a brand? Why is branding important? ANSWER: A brand is a name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating these products from competitors’ offerings. Branding is the process of creating a strong identity for the product or product line. Marketers recognize the powerful influence products and product lines have on customer behavior, and they work to create strong identities for their products and protect them.

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Chapter 13: Developing and Managing Brand and Product Categories 162. Briefly describe the three stages of brand loyalty. ANSWER: Marketers measure brand loyalty in three stages: brand recognition, brand preference, and brand insistence. 1) Brand recognition: Brand recognition refers to consumer awareness and identification of a brand. Brand recognition is a company’s first objective for newly introduced products. Marketers begin the promotion of new items by trying to make them familiar to the public. Advertising offers one effective way for increasing consumer awareness of a brand. Tactics for creating brand recognition include offering free samples or discount coupons for purchases. Once consumers have used a product, seen it advertised, or noticed it in stores, it moves from the unknown to the known category, increasing the probability that some of those consumers will purchase it. 2) Brand preference: Brand preference refers to the consumer choice of a product on the basis of a previous experience. It is the second level of brand loyalty, in which buyers rely on previous experiences with the product when choosing it, if available, over competitors’ products. 3) Brand insistence: Brand insistence is the ultimate stage in brand loyalty that leads consumers to refuse alternatives and to search extensively for the desired merchandise. A product at this stage has achieved a monopoly position with its consumers. Although many firms try to establish brand insistence with all consumers, few achieve this ambitious goal. Companies that offer specialty or luxury goods and services are more likely to achieve this status than those offering mass-marketed goods and services. 163. What are generic products? Give an example of a generic product. ANSWER: Generic products are products characterized by plain labels, little or no advertising, and the absence of brand names. Common categories of generic products include food and household staples. These products are sold at prices lower than those of branded products. Example: The packets of sugar offered by a supermarket at a lower rate and without any brand names are examples of a generic product. 164. Differentiate between a manufacturer’s brand and a private brand. Give examples for each. ANSWER: A manufacturer’s brand refers to a brand name owned by a manufacturer or other producer. Manufacturer’s brands, also called national brands, define the image most people form when they think of a brand. Examples: Well-known manufacturers’ brands include Hewlett-Packard, Sony, Pepsi-Cola, Dell, and French’s. Private brands, in contrast, are brands offered by a wholesaler or a retailer. Many large wholesalers and retailers place their own brands on the merchandise they market. Example: Supervalu offers many private-label products in its retail grocery stores, including Culinary Circle and Essential Everyday food products, Wild Harvest organic products, and Baby Basic products.

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Chapter 13: Developing and Managing Brand and Product Categories 165. How do family brands differ from individual brands? ANSWER: A family brand is a single brand name that identifies several related products. An individual brand is a single brand that uniquely identifies the item itself. Sometimes manufacturers choose to market a product as an individual brand, rather than promoting it under the name of the company or an umbrella name covering similar items. A family brand should identify products of similar quality, whereas, individual brands should distinguish dissimilar products. Individual brands cost more than family brands to market because the firm must develop a new promotional campaign to introduce each new product. Distinctive brands are extremely effective aids in implementing market segmentation strategies, however. A promotional outlay for a family brand can benefit all items in the line. Family brands also help marketers introduce new products to both customers and retailers. 166. Explain how a strong brand identity benefits firms in marketing their products. ANSWER: A brand can go a long way toward making or breaking a company’s reputation. A strong brand identity backed by superior quality offers important strategic advantages for a firm. First, it increases the likelihood that consumers will recognize the firm’s product or product line when they make purchase decisions. Second, a strong brand identity can contribute to buyers’ perceptions of product quality. Branding can also reinforce customer loyalty and repeat purchases. A consumer who tries a brand and likes it will probably look for that brand on future store visits. 167. Discuss the four dimensions of brand personality as described by the Young & Rubicam Brand Asset Valuator model. ANSWER: The Young & Rubicam model appraises the brand equity of a brand across four dimensions: 1) Differentiation: Differentiation refers to a brand’s ability to stand apart from competitors. Brands such as Porsche and Victoria’s Secret stand out in consumers’ minds as symbols of unique product characteristics. 2) Relevance refers to the real and perceived appropriateness of brand to a big consumer segment. A large number of consumers must feel a need for the benefits offered by the brand. Brands with high relevance include Apple and Hallmark. 3) Esteem is a combination of perceived quality and consumer perceptions about a brand’s growing or declining popularity. A rise in perceived quality or in public opinion about a brand enhances a brand’s esteem. But negative impressions reduce esteem. Brands with high esteem include CocaCola and Honda. 4) Knowledge refers to the extent of customers’ awareness of the brand and understanding of what a good or service stands for. Knowledge implies that customers feel an intimate relationship with a brand. Examples include Kraft Macaroni & Cheese and North Face.

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Chapter 13: Developing and Managing Brand and Product Categories 168. How does a category manager help retailers to maximize the sales of their products? ANSWER: A category manager maximizes sales for the retailer by overseeing an entire product line, often tracking sales history with data from the retail checkout point and aggregating it with sales data for the entire category (obtained from third-party vendors) and qualitative data such as customer surveys. Unlike traditional product managers, category managers have profit responsibility for their product group and help the retailer’s category buyer maximize sales for the whole category, not just the particular manufacturer’s product. 169. List out the steps that companies follow in the category management process. ANSWER: Some of the steps companies follow in the category management process include: 1) defining the category based on the target market’s needs, 2) scoping out a consumer’s decision process when shopping the category, 3) identifying consumer groups and the store clusters with the greatest sales potential, 4) creating a marketing strategy and performance goal for each cluster and using a scorecard to measure progress, 5) defining and executing the tactics, and 6) tracking progress. 170. What are the three main objectives of packaging? ANSWER: A package serves three major objectives: 1) protection against damage, spoilage, and pilferage; 2) assistance in marketing the product; and 3) cost effectiveness. 171. What is a label? How does it assist in the marketing of the product? ANSWER: A label is a branding component that carries an item’s brand name or symbol, the name and address of the manufacturer or distributor, information about the product, and recommended uses. A label performs both promotional and informational functions. The right label can play an important role in attracting consumer attention and encouraging purchases. 172. Differentiate between brand extension and line extension strategies. ANSWER: Brand extension is the strategy of attaching a popular brand name to a new product in an unrelated product category. In establishing brand extensions, marketers hope to gain access to new customers and markets by building on the equity already established in their existing brands. A brand extension carries over only the brand name from one product. A line extension strategy refers to the development of individual offerings that appeal to different market segments while remaining closely related to the existing product line. Line extension refer to new sizes, styles, or related products.

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Chapter 13: Developing and Managing Brand and Product Categories 173. Describe brand licensing. What are the problems associated with licensing? ANSWER: Brand licensing is a practice that expands a firm’s exposure in the marketplace. A growing number of firms authorize other companies to use their brand names. The brand name’s owner also receives an extra source of income in the form of royalties from licensees, typically 10 percent of wholesale revenues. There are several potential problems associated with licensing. Brand names do not transfer well to all products. Also, if a licensee produces a poor-quality product or an item ethically incompatible with the original brand, the arrangement could damage the reputation of the brand. 174. Briefly describe the four new-product development strategies. ANSWER: A firm’s strategy for new-product development varies according to its existing product mix and the match between current offerings and the firm’s overall marketing objectives. The current market positions of products also affect product development strategy. The four alternative development strategies are: 1) Market penetration: A market penetration strategy seeks to increase sales of existing products in existing markets. Firms attempt to extend their penetration of markets either by modifying products, improving product quality, or promoting new and different ways to use products. Product positioning plays a major role in this strategy. 2) Market development: A market development strategy concentrates on finding new markets for existing products. Market segmentation provides useful support for such an effort. 3) Product development: The strategy of product development refers to the introduction of new products into identifiable or established markets. Firms may choose to introduce new products into markets in which they have already established positions to try and increase overall market share. 4) Product diversification: A product diversification strategy focuses on developing entirely new products for new markets. Some firms look for new target markets that complement their existing markets; others look in completely new directions. 175. Describe the stages involved in the consumer adoption process. ANSWER: The adoption process involves consumers going through a series of stages, from learning of a new product, to trying it, and deciding whether to use it regularly or to reject it. These stages in the consumer adoption process can be classified as follows: 1) Awareness: Individuals first learn of the new product, but they lack full information about it. 2) Interest: Potential buyers begin to seek information about it. 3) Evaluation: They consider the likely benefits of the product. 4) Trial: They make trial purchases to determine its usefulness. 5) Adoption/Rejection: If the trial purchase produces satisfactory results, they decide to use the product regularly.

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Chapter 13: Developing and Managing Brand and Product Categories 176. List out the characteristics of product innovation that influence its adoption rate. ANSWER: Five characteristics of a product innovation influence its adoption rate: 1) Relative advantage: An innovation that appears far superior to previous ideas offers a greater relative advantage, reflected in terms of lower price, physical improvements, or ease of use, and increases the product’s adoption rate. 2) Compatibility: An innovation consistent with the values and experiences of potential adopters attracts new buyers at a relatively rapid rate. 3) Complexity: The relative difficulty of understanding the innovation influences the speed of acceptance. In most cases, consumers move slowly in adopting new products they find difficult to understand or use. 4) Possibility of trial use: An initial free or discounted trial of a good or service means adopters can reduce their risk of financial loss when they try the product. A coupon for a free item or a free night’s stay at a hotel can accelerate the rate of adoption. 5) Observability: If potential buyers can observe an innovation’s superiority in a tangible form, the adoption rate increases. In-store demonstrations or even advertisements that focus on the superiority of a product can encourage buyers to adopt a product. 177. Identify and describe the organizational entities used in new product development. ANSWER: A firm needs to be organized in such a way that its personnel can stimulate and coordinate newproduct development. Many firms assign product-innovation functions to one or more of the following entities: 1) New-product committee: A new-product committee typically brings together experts in areas such as marketing, finance, manufacturing, engineering, and research. Committee members spend less time conceiving and developing their own new-product ideas than reviewing and approving new-product plans that arise elsewhere in the organization. 2) New-product department: These are separate organizational departments established by companies to generate and refine new product ideas. The departmental structure overcomes the limitations of the new-product committee system and encourages innovation as a permanent full-time activity. It is responsible for all phases of a development project within the firm, including screening decisions, developing product specifications, and coordinating product testing. 3) Product manager: A product manager supports the marketing strategies of an individual product or product line. Product managers set prices, develop advertising and sales promotion programs, and work with sales representatives in the field. They often lead new product development programs, including creation of new product ideas and recommendations for improving existing products. 4) Venture team: A venture team gathers a group of specialists from different areas of an organization to work together in developing new products.

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Chapter 13: Developing and Managing Brand and Product Categories 178. How does a new-product committee differ from a venture team? ANSWER: Members of a new-product committee spend less-time conceiving and developing their own product ideas than reviewing and approving new product plans that arise elsewhere in the organization. The members hold key positions in the firm’s functional areas. Sometimes the members compromise to return to their original responsibilities. Unlike a new-product committee, a venture team does not disband after every meeting. Team members accept project assignments as major responsibilities, and the team exercises the authority it needs to both plan and implement a course of action. To stimulate product innovation, the venture team typically communicates directly with top management but functions as an entity separate from the basic organization. 179. Discuss the steps involved in the new product development process. ANSWER: A new product is more likely to become successful if the firm follows the six-step development process: 1) Idea generation: New-product development begins with ideas from many sources: suggestions from customers, the sales force, research and development specialists, competing products, suppliers, retailers, and independent inventors. 2) Screening: Screening separates ideas with commercial potential from those that cannot meet company objectives. 3) Business analysis: This stage consists of assessing the new product’s potential market, growth rate, and likely competitive strengths. Marketers must evaluate the compatibility of the proposed product with organizational resources. Marketers willing to spend time and money during screening and business analysis stages tend to be more successful in generating viable ideas and creating successful products. 4) Development: In this stage, the firm converts an idea into a visible product. The prototypes may undergo several changes before it becomes a final product. 5) Test marketing: Firms test market their new product offerings to gauge consumer reaction. Test marketing’s purpose is to verify that the product will perform well in a real-life environment. 6) Commercialization: When a new-product idea reaches the commercialization stage, it is ready for full scale marketing. Companies must establish marketing strategies, fund outlays for production facilities, and acquaint the sales force, marketing intermediaries, and potential customers with the new product.

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Chapter 13: Developing and Managing Brand and Product Categories 180. Discuss the role of federal and state legislation in regulating product safety. ANSWER: Federal and state legislation play a major role in regulating product safety. The Poison Prevention Packaging Act requires drug manufacturers to place their products in packaging that is child resistant yet accessible to all adults, even ones who have difficulty opening containers. The Consumer Product Safety Commission (CPSC) is a powerful regulatory agency created by the Consumer Product Safety Act. This agency has assumed jurisdiction over every consumer product category except food, automobiles, and a few other products already regulated by other agencies. The CPSC has the authority to ban products without court hearings, order recalls or redesigns of products, and inspect production facilities. It can charge managers of negligent companies with criminal offenses. The CPSC is especially watchful of products aimed at infants and young children. The federal Food and Drug Administration must approve food, medications, and health-related devices such as wheelchairs. The Food Allergen Labeling and Consumer Protection Act has increased the requirements for food labeling. The FDA can also take products off the market if concerns arise about the safety of these products. Match each item with the correct statement below. a. trade dress b. brand preference c. brand insistence d. generic product e. family brand f. brand equity g. product diversification h. trademark i. brand extension j. consumer innovator k. brand name l. private brand m. brand manager n. universal product code (UPC) o. cannibalization p. product liability q. captive brand r. brand mark s. line extension t. label

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Chapter 13: Developing and Managing Brand and Product Categories 181. _____ is the second level of brand loyalty at which buyers rely on previous experiences with the product when choosing it, if available, over competitors’ products. ANSWER: b 182. _____ is the ultimate stage in brand loyalty that leads consumers to refuse alternatives and search extensively for the desired merchandise. ANSWER: c 183. A(n) _____ is characterized by plain labels and no advertising. ANSWER: d 184. A brand offered by a wholesaler or a retailer is called a(n) _____. ANSWER: l 185. A(n) _____ is a single brand name that identifies several related products. ANSWER: e 186. A(n) _____ is a national brand sold exclusively by a retail chain. ANSWER: q 187. The term _____ refers to the added value a certain brand name gives to a product in the marketplace. ANSWER: f 188. A(n) _____ consists of words or numbers that can be spoken, and identifies and distinguishes a firm’s offerings from those of its competitors. ANSWER: k 189. A(n) _____ is a symbol or a pictorial design that distinguishes a product. ANSWER: r 190. A(n) _____ is a brand for which the owner claims exclusive legal protection. ANSWER: h 191. The term _____ refers to the visual components that contribute to the overall look of a brand. ANSWER: a 192. A(n) _____ is a branding component that carries an item’s brand name or symbol, the name and address of the manufacturer or distributor, information about the product, and recommended uses. ANSWER: t 193. The _____ is a numerical bar code system used to record product and price information. ANSWER: n Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 194. _____ is the strategy of attaching a popular brand name to a new product in an unrelated product category. ANSWER: i 195. _____ is the practice of developing individual offerings that appeal to different market segments while remaining closely related to the existing product line. ANSWER: s 196. A(n) _____ strategy focuses on developing entirely new products for new markets. ANSWER: g 197. _____ refers to loss of sales of an existing product due to competition from a new product in the same line. ANSWER: o 198. A person who purchases new products as soon as they are available in the market is called a(n) _____. ANSWER: j 199. A marketer responsible for an individual product or product line is called a(n) _____. ANSWER: m 200. _____ refers to the responsibility of manufacturers and marketers for injuries and damages caused by their products. ANSWER: p 201. When people see Coca Cola on the shelves of their local supermarkets, they remember fond childhood memories of drinking Coke and fun Christmas commercials with polar bears and Santa Claus. Though other cola beverages may win blind taste tests over Coca Cola, consumers tend to have an emotional relationship with Coke, which gives the product a competitive edge on the market. W hich of the following aspects of a product is described here? a. b rand b. t rademark c. b rand name d. b rand mark e. p roduct appeal ANSWER: a

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Chapter 13: Developing and Managing Brand and Product Categories 202. Nivea works for Bonbon, a fair-trade chocolate company based in California. In addition to being recognized for the delicious, low fat treats the company manufactures, Bonbon is also known for fair labor practices at its factories. When interviewed, 83% of the company’s loyal customers said when they couldn’t find Bonbon products for purchase in local stores, they ordered them online rather than buy substitute products. W hich type of brand loyalty is illustrated here? a. b rand insistence b. b rand preference c. b rand recognition d. b rand name e. b rand competition ANSWER: a 203. You work for a drug company and have been asked to advise company executives about the manufacturing of generic versus branded pharmaceuticals. Which of the following arguments could you use if you were trying to convince the executives that branded drugs are the way to go? a. G eneric brands are easier to locate. b. B rand-name drugs cost less to manufacture. c. I t costs more to market generic brands. d. B rand-name drugs are chemically identical to generic drugs. e. C ustomers sometimes feel more secure about purchasing brand-name drugs. ANSWER: e 204. Daphne commonly purchases national brands that are sold exclusively by retail chains, and frequently buys these items from Target. What type of brand is Daphne purchasing? a. f amily brand b. c aptive brand c. i ndividual brand d. g eneric brand e. m anufacturer’s brand ANSWER: b

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Chapter 13: Developing and Managing Brand and Product Categories 205. C elwyn works for a cosmetics company known for its anti-animal testing policies. Recently, however, a reputable newspaper reported that the company had tested their newest line of blush on rabbits. Which of the following statements is most likely true about the company? a. T he company’s customers will become even more loyal. b. T he company’s relevance will increase as a result of this news report. c. T he company’s esteem will decrease as a result of this news report. d. T he company will become less differentiated from other cosmetics brands. e. T he company’s esteem will increase as a result of the coverage by a reputable newspaper. ANSWER: c 206. Loyola works for a coffee shop that wants to differentiate itself from local competitors in order to boost its profits. Which of the following differentiation strategies would hurt the company rather than boost sales? a. h ire more staff b. s ell the coffee cups in which the beverages are served c. o ffer a wider selection of international coffees and teas d. p rovide customer incentives, including coupons and points e. r enovate the coffee shop so it has more space than other coffee shops in the area ANSWER: b 207. Your company is looking to hire someone who will oversee a new product line. This individual will be responsible for ensuring that the products are meeting the needs of consumers and will engage in new product planning and development. Which of the following positions is your company hiring? a. a nalyst b. c ategory manager c. b rand manager d. p roduct manager e. b rand manager ANSWER: b 208. Which of the following tasks least describes the role of a brand manager? a. m aking the product relevant to its target market b. p rotecting the company’s trademark and brand c. e nsuring that products are perceived as high in quality d. o ffering opportunities to enhance consumer brand loyalty e. b eing familiar with the kinds of emotions that push consumers to buy ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 209. The Gillette Company is a leader in the market for razors/blades/shaving systems for men and women. Its product development history goes back to the introduction of the first safety razor. Since then, it has regularly led the market in introducing products to meet the needs of its customers. The following list outlines some of its major product introductions: s afety razor twin-bladed razor twin-bladed disposable razor pivoting-head razor pivoting-head disposable razor razor designed specifically for women triple-blade razor battery-powered razor Gillette’s introduction of the twin-bladed disposable razor would be considered which of the following: a. n ew product b. l ine extension c. b rand licensing d. u niversal product code (UPC) e. t rade dress ANSWER: b 210. As a marketer tasked with developing the packaging of the food products your company makes, you are concerned with all of the following except: a. l eakproof seals b. p ackaging to prevent shoplifting c. u tensils used to eat the product d. t amper-resistant packaging e. c ost effectiveness ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 211. Colin owns a dog food business, but wants to develop a canine fashion line as a way of expanding his portfolio and increasing sales and profits. One of the things customers love about Colin’s company is that all of the products are manufactured locally, creating jobs for young people. Though he does not have a lot of money and hopes that he won’t have to hire new staff, he thinks he might have to. Rather than developing a canine fashion line, which of the following alternatives can you suggest to Colin? a. C olin should use cannibalization strategy. b. C olin should use a market penetration strategy. c. C olin should outsource his company’s jobs to cut costs. d. C olin should consider selling his business to a larger pet food company. e. C olin should hire a marketing company to help him promote his products. ANSWER: b 212. Marta’s company wants to revamp its potato chips brand to compete with Lay’s potato chips. She has been researching consumer preferences so that she can market her company’s chips accordingly. What type of strategy is Marta using? a. p roduct diversification strategy b. p roduct development strategy c. m arket development strategy d. p roduct positioning strategy e. m arket penetration strategy ANSWER: d 213. You are the manager for the consumer product adoption strategies department of your firm. Your job requires you to manage the third stage of the five-stage consumer product adoption process. Which of the following statements is true in regard to your job focus? a. Y ou should focus on making sure buyers are aware of your product’s existence. b. Y ou should focus on encouraging the current buyers of your product to become repeat buyers. c. Y ou should focus on making sure buyers clearly understand your product’s benefits. d. Y ou should focus on providing information about your product. e. Y ou should focus on encouraging buyers to just try your product. ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 214. Your company recently released an ad campaign to promote its new tablet. Shortly thereafter, your company publishes a series of blogs and articles about the product and sets up hotlines so people can call in to find out more information about the product and its release date. At which stage of the adoption process are consumers operating? a. t rial b. i nterest c. e valuation d. a wareness e. a doption ANSWER: b 215. The Gillette Company has a long history of developing shaving-related products for men and women. In addition, it continuously produces products that feature improvements to existing technologies, including three-bladed disposable razors and ergonomically superior handle designs. T o maintain its success in new product development, Gillette regularly organizes several small focus groups comprising people who shave in order to gain insights into what these individuals look for in a razor/blades/shaving system. At which step of the new-product development process is Gillette when it conducts these focus groups? a. i dea generation step b. c ommercialization step c. d evelopment step d. b usiness analysis step e. s creening step ANSWER: d 216. Marcia’s company is at the commercialization stage of new product development. Before company executives move forward with this stage, what advice can you give them? a. F ocus on the cannibalization of existing products. b. F ocus on the promotional mix rather than the distribution mix. c. T he marketing mix should be planned before the selection of the target market. d. T he launch date should coincide with a good economic situation to maximize sales. e. T arget only opinion leaders because they are the ones who will spend the most money on the product. ANSWER: d

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Chapter 13: Developing and Managing Brand and Product Categories 217. The ______________ has the authority to recall products or ban products without a court hearing, but doesn’t have jurisdiction over food products. a. C onsumer Product Safety Commission b. F lammable Fabrics Act c. F ood and Drug Administration d. C onsumer Product Safety Act e. F air Packaging and Labeling Act ANSWER: a 218. The truck manufacturer for which Bonita works is being sued because the brakes in several new trucks have failed and the trucks are being recalled. What is the manufacturer responsible for? a. b etter product test marketing b. c oncise screening process c. n ew-product departments d. p roduct liability e. p roduct interest ANSWER: d 219. Through your market research, you know that skiers who buy your brand of ski gloves rely on previous experiences with the product before choosing it over alternatives. Your ski glove has reached the _____ stage of brand loyalty. a. Recognition

b. Preference c. Insistence d. Ski use e. Ski reference ANSWER: b 220. Kenmore is a well-known brand of appliances sold exclusively by Sears. Kenmore is best described as a(n) ____ brand. a. Manufacturer's

b. Generic c. Captive d. Individual e. Equity ANSWER: c

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Chapter 13: Developing and Managing Brand and Product Categories 221. A key element in the success of Google is that the company's search engine is perceived as appropriate to people all over the globe. An enormous number of consumers feel a need for Google's benefits. Based on this information, which dimension of brand personality is best illustrated by Google? a. Differentiation

b. Esteem c. Knowledge d. Relevance e. Commitment ANSWER: d 222. The brand of petroleum marketed by BP took a hit when the firm was implicated in the 2010 Gulf of Mexico oil spill. On which dimension of brand personality was BP primarily affected? a. Relevance

b. Esteem c. Popularity d. Knowledge e. Competitiveness ANSWER: b 223. You work in brand management for a manufacturer of beauty products. It is your responsibility to maximize sales of all of your brands for the national retail chains selling them. Your job title is most likely: a. Category manager

b. Retail manager c. National account manager d. Category analyst e. Brand manager ANSWER: a 224. A memo from your firm's legal counsel reviews the branding elements that can receive trademark protection under United States law. You have just developed a unique shape for the bottle of a new body wash. Can this be trademarked? a. Yes, as long as it incorporates the brand name.

b. Yes, because unique shapes can be trademarked. c. No, because only names and logos can be trademarked. d. No, because packaging elements cannot be trademarked. e. Yes, as long as it is labeled with the brand logo. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 13: Developing and Managing Brand and Product Categories 225. Aldi is a chain of discount supermarkets based in Germany. The company has recently started opening stores across the United States. Based on this information, the product development strategy being pursued by Aldi is known as a _______ strategy. a. Market penetration

b. Market development c. Product penetration d. Product development e. Diversification ANSWER: b 226. You launched the first ad campaign for your new nutrition bar just a few weeks ago, and are pleased to see hundreds of requests for more information about its ingredients on the company's Facebook page and Twitter account. The nutrition bar is most likely in which stage of the consumer adoption process? a. Adoption

b. Evaluation c. Awareness d. Interest e. Accelerated ANSWER: d 227. There are six phases in the new product development process. All of these phases would benefit from planning and scheduling tools like PERT (Program Evaluation and Review Technique) or CPM (Critical Path Method), except: a. Idea Generation

b. Screening c. Business Analysis d. Commercialization e. None of the above. These tools would be helpful in all of the phases. ANSWER: a

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Chapter 13: Developing and Managing Brand and Product Categories 228. Safety standards in the United States toy industry have risen during the years you have worked in the field. A coworker comments that this is entirely because of federal government laws and agencies, but you know differently. Choose the additional reason(s) for increased safety standards. a. Higher standards set voluntarily by manufacturers

b. State government laws and agencies c. More product liability lawsuits d. United States firms hiring more lawyers e. More plentiful raw materials ANSWER: a, b, c 229. Kennedy enjoys shopping at Costco and likes to purchase the Kirkland brand of strawberry preserves. However, on a recent shopping trip, the store did not have the Kirkland brand but a new organic brand, Clover Patch. Kennedy decided to purchase the new brand and give it a try. Which term best describes Kennedy's level of brand loyalty for the Kirkland brand of strawberry preserves? a. b rand preference b. b rand recognition c. b rand insistence d. b rand persistence ANSWER: a 230. Jose is an avid runner and is training for his first marathon. He has several different brands of running shoes but his favorites are Asics because they are lightweight and also support his feet. He's going to purchase another pair for his training and decides that from now on, he will only purchase the Asics brand. Which level of brand loyalty is best described by this example? a. b rand insistence b. b rand recognition c. b rand persistence d. b rand preference ANSWER: a

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Chapter 13: Developing and Managing Brand and Product Categories 231. Tiffany enjoys shopping at Aldi because it's a smaller store that stocks the basic necessities in addition to a great selection of gourmet or specialty items. She has 3 kids who eat cereal almost every morning for breakfast and sometimes as a snack. She's found that the "Millville Fruit Rounds" available only at Aldi's are a great value and her kids prefer them to Froot Loops. What type of brand are the "Millville Fruit Rounds"? a. private brand b. g eneric brand c. i ndividual brand d. m anufacturer's brand ANSWER: a 232. Hormel Foods owns the brand, "Wholly Guacamole" but has chosen NOT to display the Hormel name or logo on the packaging. Which term is most appropriate for the "Wholly Guacamole" brand? a. i ndividual brand b. f amily brand c. c aptive brand d. m anufacturer's brand ANSWER: a 233. Which of the following is a benefit of high levels of brand equity as discussed in the textbook? a. c onsumers are willing to pay more for the company's products b. r educed levels of costs to produce the products c. e asy access to sources of private equity d. r educed levels of government regulation ANSWER: a 234. A global brand is generally defined as one that sells at least 60 percent outside its home country. a. True b. False ANSWER: False

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Chapter 13: Developing and Managing Brand and Product Categories 235. S hawn is a category manager for Hormel Foods' fresh meat division and is based in Bentonville, Arkansas. One of his major responsibilities is to be a resource to Wal-Mart. Which of the following would most likely be part of his responsibility as a category manager? a. t racking sales history for Hormel Food products and other fresh meat brands available from the point-ofsale systems b. c reating or designing point-of-sale displays c. h osting in-store product tastings at local Wal-Marts in the Bentonville area d. w orking with Hormel's food suppliers to ensure fresh taste and high quality ANSWER: a 236. Category managers are usually assisted by associates called a. a nalysts b. p roduct managers c. c ategory specialists d. c ategory killers ANSWER: a 237. J immy Buffet is a popular singer, songwriter, entertainer and business owner of Margaritaville Holdings. The company operates restaurants and hotels and also engages in contracted relationships with other companies who use the Margaritaville name on their products. Margaritaville foods are now available in the local grocery store including items such as trail mix and frozen shrimp. Margaritaville is utilizing ________ to expand their exposure in the marketplace. a. b rand licensing b. m arket penetration c. l ine extensions d. c ategory extensions ANSWER: a 238. W hich of the following is a common complaint among consumers regarding the widespread use of universal product codes (UPC) in retail stores? a. p rices are not displayed on product packaging b. U PC are useful in marketing research and compromise consumer privacy c. u se of UPC codes resulted in layoffs in the retail industry d. U PC scanners are expensive and led to higher prices in grocery stores ANSWER: a

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Chapter 13: Developing and Managing Brand and Product Categories 239. T he Florida Orange Juice Growers and their ad agency utilized the slogan, "It's not just for breakfast anymore" to motivate consumers to drink more orange juice by having current orange juice drinkers enjoy the beverage throughout the day hoping this would increase demand and sales of orange juice. This strategy is called a. m arket penetration b. p roduct development c. m arket development d. p roduct diversification ANSWER: a 240. Tide detergent is available in a variety of formulations but Procter and Gamble should be concerned that any addition to the Tide detergent product line could cannibalize sales of existing products. a. True b. False ANSWER: True 241. On a recent trip to the grocery store, Jackson noticed an in-store tasting event for a new line of yogurt-based dips. The store was providing product sampling and a coupon for .50 off the purchase price. Jackson tried the French Onion flavor and liked it so much he decided to purchase it for an upcoming party at his home. Which characteristic influencing adoption rates does this represent? a. p ossibility of trial use b. c omplexity c. r elative advantage d. o bservability ANSWER: a 242. M arilyn is a grandmother to 3 and lives in Oklahoma City. She still uses her DVD player but her grand kids are wanting to watch shows on Netflix when they visit her house. She does have high speed Internet access but does not yet have a Netflix account. However, she plans to subscribe to Netflix in the next several weeks. Netflix has over 40 million paid subscribers in the United States representing approximately 30% of total United States households. Netflix continues to add several million subscribers every quarter. Which category of "adopter" would best describe Marilyn? a. e arly majority b. c onsumer innovator c. e arly adopter d. l aggard ANSWER: a

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Chapter 13: Developing and Managing Brand and Product Categories 243. A major manufacturer of men's shaving products has developed a prototype of an electric shaver featuring a vacuum attachment to capture virtually all hair. It's targeted to men who have facial hair - beards, mustaches, or goatees who like a trimmed appearance but dislike all the hairs that fall into the sink or bathroom counter top. The engineers create several prototypes and have members of their marketing research team gauge consumer response to the new product by conducting personal interviews with men who have facial hair. The company hopes that if the product is favorably received, the new product will be more successful in the marketplace. This is an example of: a. c oncept testing b. s creening c. t est marketing d. c ommercialization ANSWER: a 244. Ramon is a sales representative for a medical device company and works with orthopedic surgeons. During his discussions with surgeons about their work and the type of tools or devices that would help them perform better, he began to receive several interesting suggestions that Ramon passed along to the new product development team. What stage in the new-product development process does this represent? a. i dea generation b. s creening c. d evelopment d. t est marketing ANSWER: a 245. Which of the following product categories is NOT regulated by the Consumer Product Safety Commission? a. f ood b. b icycles c. f urniture d. w indow blinds ANSWER: a 246. What is the name of the legislative action that requires drug manufacturers to place their products in packaging that is child resistant yet accessible to all adults, even ones who have difficulty opening containers. a. P oison Prevention Packaging Act b. F ederal Drug Packaging Act c. D rug Safety Act d. C onsumer Drug Protection Act ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 1. A marketing channel is an organized system of marketing institutions and their interrelationships that enhances the physical flow and ownership of products from producer to consumer or business user. a. True b. False ANSWER: True 2. Logistics is the process of coordinating the flow of information, goods, and services among members of the distribution channel. a. True b. False ANSWER: True 3. Supply chain management refers to the control of the activities of purchasing, processing, and delivery through which raw materials are transformed into products and made available to final consumers. a. True b. False ANSWER: True 4. The terms “transportation” and “physical distribution” can be used interchangeably because these terms carry the same meaning. a. True b. False ANSWER: False 5. Physical distribution refers to a broad range of activities aimed at efficient movement of finished goods from the end of the production line to the consumer. a. True b. False ANSWER: True 6. Marketing channels increase the number of marketplace contacts necessary to make a sale. a. True b. False ANSWER: False

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Chapter 14: Marketing Channels and Supply Chain Management 7. Distributors adjust for discrepancies in the market’s assortment of goods and services via a process known as suboptimization. a. True b. False ANSWER: False 8. One of the functions of marketing channels is to facilitate searches by both buyers and sellers. a. True b. False ANSWER: True 9. A marketing intermediary is an organization that operates between producers and consumers or business users. a. True b. False ANSWER: True 10. The first thing to do in selecting a marketing channel is to determine which type of channel will best meet both the seller's objectives and the distribution needs of customers. a. True b. False ANSWER: True 11. A wholesaler is an intermediary that takes title to the goods it handles and then distributes these goods to retailers, other distributors, or sometimes end consumers. a. True b. False ANSWER: True 12. Service firms market primarily through long distribution channels. a. True b. False ANSWER: False 13. Not-for-profit organizations tend to distribute their products through long, multi-level channels using wholesalers as intermediaries. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 14. Business products tend to move through longer marketing channels than consumer products. a. True b. False ANSWER: False 15. The simplest and shortest marketing channel is a direct channel. a. True b. False ANSWER: True 16. Direct selling is an important option for goods requiring extensive demonstrations in persuading customers to buy. a. True b. False ANSWER: True 17. The traditional channel for consumer goods proceeds from producer to wholesaler to retailer to user. a. True b. False ANSWER: True 18. The term industrial distributor commonly refers to intermediaries in the business market that take title to the goods. a. True b. False ANSWER: True 19. An agent, who connects small companies with the consumers, always takes possession of the goods as well as the title. a. True b. False ANSWER: False 20. A business product with large unit sales, for which transportation accounts for only a small percentage of the total cost, is usually distributed using the producer-agent-business user channel. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 21. A merchant wholesaler is an independently owned wholesaler that takes title to the goods. a. True b. False ANSWER: True 22. Lands’ End products are sold through catalogs, the Internet, and Sears retail stores. The Lands’ End brand practices dual distribution. a. True b. False ANSWER: True 23. Dual distribution is the movement of products through more than one channel to reach the firm’s target market. a. True b. False ANSWER: True 24. Marketers usually adopt a dual distribution strategy either to maximize their firm’s coverage in the marketplace or to increase the cost effectiveness of the firm’s marketing effort. a. True b. False ANSWER: True 25. Legal provisions against pollution and conservation laws have increased the importance of reverse channels. a. True b. False ANSWER: True 26. Product recalls and repairs are handled through reverse channels. a. True b. False ANSWER: True 27. Relatively standardized items that are also nonperishable and products with low unit costs pass through comparatively long channels of distribution. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 28. High sales volume spreads selling costs over a large number of items, generating adequate returns from direct sales. a. True b. False ANSWER: True 29. Manufacturers of specialty or luxury goods limit the number of retailers that can carry their products. a. True b. False ANSWER: True 30. Changing channel strategies can produce conflicts between established intermediaries and the new channels for the product. a. True b. False ANSWER: True 31. When a producer grants exclusive rights to a wholesaler or retailer to sell its products in a specific geographic region it practices intensive distribution. a. True b. False ANSWER: False 32. Selective distribution helps marketers reduce total marketing costs while establishing strong working relationships within the channel. a. True b. False ANSWER: True 33. The strategy of selective distribution involves distributing a product through a limited number of channels. a. True b. False ANSWER: True 34. NikSnak, a popular potato wafers brand, is most likely to use an exclusive distribution strategy. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 35. Exclusive distribution allows greater market coverage than any other distribution strategy. a. True b. False ANSWER: False 36. In exclusive distribution, producers and retailers cooperate closely in decisions concerning advertising and promotion, inventory carried by the retailers, and prices. a. True b. False ANSWER: True 37. Producers and dealers whose sales volumes represent a substantial percentage of total sales in the market area will be guilty of violating the Clayton Act if they enter into exclusive dealing agreements. a. True b. False ANSWER: True 38. Closed sales territories are exclusive geographic selling region of a distributor. a. True b. False ANSWER: True 39. If producers set up closed sales territories that substantially decrease competition, then it is in violation of the Federal Trade Commission Act and provisions of the Sherman and Clayton Acts. a. True b. False ANSWER: True 40. Horizontal territorial restrictions result from agreements between retailers or wholesalers to avoid competition among sellers of products from the same producer. a. True b. False ANSWER: True

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Chapter 14: Marketing Channels and Supply Chain Management 41. The U.S. Supreme Court has ruled that horizontal territorial restrictions may meet legal criteria in certain cases but it has consistently declared vertical territorial restrictions to be illegal. a. True b. False ANSWER: False 42. The dominant and controlling member of a marketing channel is called the channel captain. a. True b. False ANSWER: True 43. Simple Foods, a breakfast cereal brand, has two wholesalers supplying to almost 100 retailers in California. Conflicts arising between the retailers and wholesalers within California will be referred to as horizontal conflicts. a. True b. False ANSWER: False 44. Horizontal conflict causes problem between different types of marketing intermediaries that handle similar products. a. True b. False ANSWER: True 45. When a producer decides to advertise products on its website and sell them online, while continuing to distribute products to its current retailer customer base, the decision is likely to result in horizontal channel conflict. a. True b. False ANSWER: False 46. An example of vertical conflict within the clothing industry would be when a firm such as Jones, New York decides to sell its line of women's blazers directly to consumers via their website, as opposed to distributing them via its usual wholesale channels. a. True b. False ANSWER: True

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Chapter 14: Marketing Channels and Supply Chain Management 47. Gray goods are products manufactured abroad under license from a U.S. firm and then sold in the U.S. market in competition with that firm’s own domestic output. a. True b. False ANSWER: True 48. Merle Norman, a cosmetics manufacturer, sells its products exclusively through its own retail stores. This is an example of forward integration of distribution channels. a. True b. False ANSWER: True 49. When a beverage company acquires a water purification plant, it is an example of backward integration of distribution channels. a. True b. False ANSWER: True 50. Tandy Corporation has its own distribution network that transports its products to its own retail stores. This is an example of a corporate marketing system. a. True b. False ANSWER: True 51. A wholesaler-sponsored voluntary chain allows retailers to save on advertising costs. a. True b. False ANSWER: True 52. The complete sequence of suppliers and activities that contribute to the creation and delivery of goods and services is known as the supply chain. a. True b. False ANSWER: True

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Chapter 14: Marketing Channels and Supply Chain Management 53. A meat packing unit’s downstream management would oversee storage and warehousing of meat as well as the transportation of the meat to its plant where it is processed and packed. a. True b. False ANSWER: False 54. The supply chain begins with the movement of finished products through the marketing channel to customers. a. True b. False ANSWER: False 55. A value-added service is a basic service that customers normally receive and expect. a. True b. False ANSWER: False 56. An enterprise resource planning (ERP) system is a software system that consolidates data from among a firm’s various business units. a. True b. False ANSWER: True 57. A third-party (contract) logistics firm is a company that specializes in handling logistics activities for other firms. a. True b. False ANSWER: True 58. The biggest advantage of a physical distribution system is that its components are independent and hence, a decision in one area is unlikely to affect the functioning of the other components. a. True b. False ANSWER: False 59. The term “suboptimization” refers to a condition that results when individual operations achieve their objectives but interfere with progress toward broader organizational goals. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 60. Customer service standards state the goals and define acceptable performance for the quality of service that a firm expects to deliver to its customers. a. True b. False ANSWER: True 61. Designers of a physical distribution system begin by establishing acceptable levels of customer service. a. True b. False ANSWER: True 62. In transportation, a class rate is the standard rate for a specific commodity moving between any pair of destinations. a. True b. False ANSWER: True 63. Freight carriers often charge class rates as a reward for either regular business or a large shipment. a. True b. False ANSWER: False 64. Common carriers cannot conduct their operations without permission from the appropriate regulatory authority. a. True b. False ANSWER: True 65. Common carriers move freight via all modes of transport. a. True b. False ANSWER: True 66. Common carriers operate under much looser regulations than contract carriers. a. True b. False ANSWER: False

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Chapter 14: Marketing Channels and Supply Chain Management 67. Railroads control the largest share of the freight business in the United States as measured by ton-miles. a. True b. False ANSWER: True 68. Unit trains run back and forth between single loading points and single destinations to deliver a commodity. a. True b. False ANSWER: True 69. In piggyback operations, highway trailers and containers ride on railroad flatcars, thus combining the long-haul capacity of the train with the door-to-door flexibility of the truck. a. True b. False ANSWER: True 70. Motor carriers concentrate on shipping raw materials while railroads typically haul bulk shipments of manufactured products. a. True b. False ANSWER: False 71. Shippers that transport goods via water carriers incur very low costs compared with the rates for other transportation modes. a. True b. False ANSWER: True 72. Standardized modular shipping containers maximize savings by limiting loading, unloading, and other handling. a. True b. False ANSWER: True 73. Pipelines can accommodate shipments of a large number of products. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 74. Freight forwarders act as transportation intermediaries, consolidating shipments to gain lower rates for their customers. a. True b. False ANSWER: True 75. Piggyback service is the most widely used form of intermodal coordination. a. True b. False ANSWER: True 76. A multimodal firm provides intermodal service through external transportation resources. a. True b. False ANSWER: False 77. A distribution warehouse holds goods for moderate to long periods in an attempt to balance supply and demand for producers and purchasers. a. True b. False ANSWER: False 78. A storage warehouse assembles and redistributes goods, keeping them moving as much as possible. a. True b. False ANSWER: False 79. Large facilities offer economies of scale in facilities and materials handling systems; per-unit costs for these systems decrease as volume increases. a. True b. False ANSWER: True 80. Unitizing combines as many packages as possible into each load that moves within or outside a facility. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 81. The movement of goods and services from producers to customers is called _____. a. distribution b. promotion c. production d. valuation ANSWER: a 82. Which of the following is true of the role of distribution channels in a firm’s marketing strategy? a. They complicate the exchange process by increasing the number of marketplace contacts necessary to make a sale. b. They lead to discrepancies in the market’s assortment of goods and services between the producers and the buyers. c. They standardize exchange transactions by setting expectations for products including the transfer process itself. d. They deter the buyers’ search for specific goods to fill their needs, as well as the sellers’ attempt to learn what buyers want. ANSWER: c 83. Distributors adjust for discrepancies in the market’s assortment of goods and services through a process known as _____. a. benchmarking b. sorting c. diffusing d. social referencing ANSWER: b 84. Which of the following categories of organizations is most likely to have the longest distribution channel? a. Firms producing B2B products b. Not-for-profit organizations c. Firms producing nonperishable consumer goods d. Service firms ANSWER: c

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Chapter 14: Marketing Channels and Supply Chain Management 85. Direct selling is a marketing channel that moves goods directly from producer to the: a. retail storage warehouse. b. channel captain. c. marketing intermediary. d. ultimate consumer or business purchaser. ANSWER: d 86. ABC Corp., a mining equipment manufacturer, provides loaders and feeder breakers for Ground Works, a mining company. ABC Corp. regularly sends information on new products as well as on upgrades for old products to the management in Ground Works. ABC Corp relies on _____ to sell its products. a. direct channels b. industrial distributors c. manufacturer’s representatives d. franchisers ANSWER: a 87. Peach, a cosmetic company, sells its products only through some independent representatives. To buy a Peach product, customers will have to contact a representative and place an order for the products they need. This information indicates that Peach: a. uses a direct selling strategy. b. relies on channel captains to sell its products. c. employs category managers to sell its products. d. uses truck jobbers to sell its products. ANSWER: a 88. The traditional channel for consumer goods proceeds from producer to: a. the ultimate consumer or user. b. agent to wholesaler to consumer. c. agent to the ultimate user. d. wholesaler to retailer to user. ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 89. A(n) _____ is an intermediary that takes title to the goods it handles and then distributes these goods to retailers, other distributors, or sometimes end consumers. a. agent b. wholesaler c. broker d. drop shipper ANSWER: b 90. Which of the following is a marketing intermediary who may or may not take possession of the goods but never takes title? a. Agent b. Wholesaler c. Retailer d. Industrial distributor ANSWER: a 91. Which of the following functions as a manufacturer’s representative? a. An industrial distributor b. A broker c. A wholesaler d. A retailer ANSWER: b 92. Which of the following marketing intermediaries will most economically cover the markets for products sold in small units? a. A manufacturer’s representative b. A drop shipper c. A merchant wholesaler d. A broker ANSWER: c 93. _____ refers to the movement of products through more than one channel to reach the firm’s target market. a. Direct channeling b. Dual distribution c. Selective channeling d. Exclusive distribution ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 94. In addition to traditional drug stores, Dr Scholl’s foot care company sells its products through convenience stores as well as through telemarketing to podiatrists. Which of the following is being employed by Dr Scholl’s foot care company to sell its products? a. A reverse channel b. Exclusive distribution c. A direct channel d. Dual distribution ANSWER: d 95. Channels designed to return goods to their producers are called _____ channels. a. reserve b. direct c. primary d. reverse ANSWER: d 96. Lush, a cosmetics company that makes handmade beauty products, gives its customers a free item when they return used Lush containers. This offer is aimed at promoting recycling of the containers. The channel used by the consumers to return used containers is referred to as a: a. p rimary channel. b. r everse channel. c. r udimentary channel. d. r eserve channel. ANSWER: b 97. Which of the following products is most likely to have a long distribution channel? a. Mining equipments b. Bars of soap c. Dairy products d. Drinks sold in a vending machine ANSWER: b

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Chapter 14: Marketing Channels and Supply Chain Management 98. _____ typically have a long marketing channel. a. Standardized products b. Perishable products c. Complex products d. Expensive products ANSWER: a 99. Which of the following factors is most likely to be associated with a short marketing channel? a. The products require little or no technical knowledge and servicing. b. Manufacturer lacks adequate resources to perform channel functions. c. The products are perishable. d. Manufacturer serves a geographically dispersed potential trade area. ANSWER: c 100. Which of the following factors is a characteristic of a long marketing channel? a. Manufacturers with broad product lines b. Durable and inexpensive products c. Marketers with a small and concentrated market d. Manufacturers that cater to large orders of their products ANSWER: b 101. The number of intermediaries through which a manufacturer distributes its goods in a particular market is referred to as _____. a. distribution probability b. distribution inertia c. distribution intensity d. distribution utility ANSWER: c 102. Which of the following distribution strategies seeks to distribute a product through all available channels in a trade area? a. Exclusive distribution b. Associative distribution c. Selective distribution d. Intensive distribution ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 103. Bubble, a company that manufactures gums and candies, distributes its products through all possible channels. One can pick up a Bubble’s product from just about anywhere—department stores, general stores, convenience stores, and even local pharmacies. Which of the following distribution strategy is being employed by Bubble? a. Exclusive distribution b. Associative distribution c. Selective distribution d. Intensive distribution ANSWER: d 104. Which of the following distribution strategies seeks to distribute a product through a limited number of channels? a. Discriminative distribution b. Associative distribution c. Selective distribution d. Intensive distribution ANSWER: c 105. Alva, a fashion house specializing in designer bags, sells its products only through a limited number of boutiques worldwide. This is an example of: a. intensive distribution. b. associative distribution. c. selective distribution. d. discriminative distribution. ANSWER: c 106. Advertising in which the manufacturer pays a percentage of the retailer’s advertising expenditures and the retailer prominently displays the firm’s products is known as _____ advertising. a. affinity b. cooperative c. sustainable d. community ANSWER: b

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Chapter 14: Marketing Channels and Supply Chain Management 107. Which of the following distribution strategy seeks to distribute a product through a single wholesaler or retailer in a specific geographic region? a. Exclusive distribution b. Associative distribution c. Selective distribution d. Intensive distribution ANSWER: a 108. The U.S. Supreme Court has ruled that closed sales territories may meet the legal criteria if: a. the restriction agreement is between wholesalers. b. the restriction is a horizontal territorial restriction. c. the restriction decreases competition. d. the restriction is a vertical territorial restriction. ANSWER: d 109. Lakeview Industries contracts with Marine Motor Distributors to sell their newly patented outboard engine. In exchange for exclusive dealership rights, Marine Motor has agreed to carry the full line of boating accessories offered by Lakeview. This arrangement can be described as an example of: a. a tying agreement. b. predatory pricing. c. a closed sales territory. d. mass merchandising. ANSWER: a 110. An arrangement that requires a marketing intermediary to carry items other than those they want to sell is known as a(n) _____. a. contractual collusion b. tying agreement c. closed sales territorial restriction d. exclusive dealership agreement ANSWER: b

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Chapter 14: Marketing Channels and Supply Chain Management 111. Clarke’s, a popular and high-end brand of men’s formalwear, has just five main distributors to cater to the five zones in the country: north, south, east, west, and central. According to the information given in this case, Clarke’s uses: a. closed sales territories. b. contractual collusion. c. tying agreements. d. intensive distribution. ANSWER: a 112. The dominant and controlling member of a marketing channel is known as a: a. vertical lead. b. horizontal lead. c. channel captain. d. channel navigator. ANSWER: c 113. Conflicts resulting from disagreements among channel members at the same level, such as two or more wholesalers or two or more retailers, or among marketing intermediaries of the same type are called _____ conflicts. a. exclusive b. vertical c. horizontal d. cross-channel ANSWER: c 114. When the same branded product is carried in competing retail pharmacies, discount houses, department stores, and convenience stores, the marketing channel conflict that can result is referred to as: a. cross-channel conflict. b. vertical conflict. c. exclusive conflict. d. horizontal conflict. ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 115. KitchenAid has established an electronic storefront so that its customers can purchase mixers and accessories from its website. This establishment of electronic storefront is likely to result in a _____ conflict between KitchenAid and its retailers. a. vertical b. horizontal c. exclusive d. tangential ANSWER: a 116. Products manufactured under license from a U.S. firm and then sold in the U.S. market in competition with that firm’s own domestic output are called _____ goods. a. deficient b. subsidized c. gray d. exempt ANSWER: c 117. The basic antidote to channel conflict is effective cooperation among channel members. Who among the following is primarily responsible for providing the leadership necessary to achieve this kind of cooperation? a. Vertical leader b. Channel captain c. Channel navigator d. Horizontal leader ANSWER: b 118. A planned channel system designed to improve distribution efficiency and cost-effectiveness by integrating various functions throughout the distribution chain is called a(n) _____ marketing system. a. intensive b. associative c. integrative d. vertical ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 119. The process through which a firm attempts to control downstream distribution is called _____ integration. a. balanced b. horizontal c. forward d. associative ANSWER: c 120. The management at Vision, a company that specializes in high-end eyewear, was dissatisfied with the performance of the marketing intermediaries’ in promoting its products. The company decided to sell its products only through standalone, exclusive boutiques owned and maintained by Vision. This is an example of: a. forward integration. b. associative integration. c. balanced integration. d. horizontal integration. ANSWER: a 121. The process through which a manufacturer attempts to gain greater control over inputs in its production process, such as raw materials, is called _____ integration. a. balanced b. horizontal c. synergic d. backward ANSWER: d 122. A fast-food giant invests in potato farms in the Midwest in order to stabilize its raw material prices. This is an example of: a. situational integration. b. backward integration. c. balanced integration. d. horizontal integration. ANSWER: b

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Chapter 14: Marketing Channels and Supply Chain Management 123. A vertical marketing system (VMS) in which a single owner operates the entire marketing channel is called a(n) _____ marketing system. a. corporate b. administered c. contractual d. community ANSWER: a 124. Sherwin-Williams sells the paint it manufactures through its company-owned retail paint stores. The company operates its entire marketing channel. The marketing system used by Sherwin-Williams is a(n) _____ marketing system. a. corporate b. community c. administered d. contractual ANSWER: a 125. A VMS that achieves channel coordination when a dominant channel member exercises its power is called a(n) _____ marketing system. a. corporate b. community c. administered d. contractual ANSWER: c 126. A VMS that coordinates channel activities through formal agreements among participants is called a(n) _____ marketing system. a. corporate b. community c. administered d. contractual ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 127. A franchise is a type of contractual marketing system in which: a. a wholesaler develops a line of private brands to be stocked by the retailers. b. a wholesaler or dealer agrees to meet the operating requirements of a manufacturer. c. a group of retailers establish a shared wholesaling operation to help them compete with chains. d. a dominant channel member exercises its power to achieve channel coordination. ANSWER: b 128. Which of the following best represents the complete sequence of suppliers and activities that contribute to creating and delivery of merchandise? a. Supply chain b. Warehousing c. Direct channeling d. Materials handling system ANSWER: a 129. The supply chain begins with: a. the manufacturing or production activities. b. the manufacturer seeking new markets for their products. c. the movement of finished products through the marketing channel to customers. d. the raw material inputs for the manufacturing process. ANSWER: d 130. Controlling part of the supply chain that involves raw materials, inbound logistics, and warehouse and storage facilities constitutes _____. a. horizontal integration b. upstream management c. forward integration d. reverse management ANSWER: b 131. Controlling part of the supply chain that involves finished product storage, outbound logistics, marketing and sales, and customer service constitutes _____. a. reverse management b. horizontal integration c. downstream management d. backward integration ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 132. Tim works for an ice-cream manufacturer. Tim’s department handles the supplies of dairy, nuts, and sweeteners that go into the daily production. In addition, they make sure that the suppliers give them good quality products at an optimal price as the freshness of these products ensures the quality of the company’s ice cream. Tim is most likely involved with: a. horizontal integration. b. upstream management. c. forward integration. d. reverse management. ANSWER: b 133. John works for an ice-cream manufacturer. His department focuses on keeping the finished products fresh as well as ensuring that they reach the retailers on time as the products are highly perishable. In addition, his department decides on which flavors of ice cream should be sent to which retailers in various trade areas. John is most likely involved with: a. reverse management. b. horizontal integration. c. downstream management. d. backward integration. ANSWER: c 134. How has the general shift from a manufacturing economy to a service economy in the United States affected physical distribution? a. Customers require more flexible—yet reliable—transportation service. b. A very high percentage of the transportation industry’s revenues is represented by the traditional high volume shipments. c. The number of large shipments is growing much faster than the number of smaller shipments. d. The various elements of physical distribution have become independent of decisions made in other areas. ANSWER: a 135. Which of the following is a condition that results when individual operations achieve their objectives but interfere with progress toward broader organizational goals? a. Optimism bias b. Suboptimization c. Framing problem d. Horizontal conflict ANSWER: b

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Chapter 14: Marketing Channels and Supply Chain Management 136. The management at Granger Industries is evaluating their distribution system to determine if cost-cutting measures will impact performance. Ralph, an employee with experience in the implementation of total quality management programs, suggests that the company should consider synergies between elements of the distribution system instead of judging each activity on its own merits. Ralph is trying to avoid: a. polarization. b. suboptimization. c. the optimism bias. d. the framing problem. ANSWER: b 137. A standard rate for a specific commodity moving between any pair of destinations is known as a _____ rate. a. going b. class c. special d. repo ANSWER: b 138. Best Transport Solutions provides trucking services to various furniture manufacturers. The regular rate that Best Transport would charge for moving furniture from a company’s warehouse to a specific retail store is referred to as the _____ rate. a. going b. special c. class d. repo ANSWER: c 139. A&S Corp. regularly ships its products to its warehouses. The company ships three truckloads of merchandise biweekly using the services of the same trucking company. The trucking company on its part provides A&S Corp. a subsidized rate because it gets regular business from A&S Corp. The discounted rate thus charged is called a _____ rate. a. special b. flat c. spot d. class ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 140. Which of the following terms represents businesses that provide transportation services as for-hire carriers to the general public? a. Common carriers b. Contract carriers c. Private carriers d. Independent carriers ANSWER: a 141. Which of the following is true of contract carriers? a. They provide transportation services as for-hire carriers to the general public. b. They operate under much stricter regulations than common carriers. c. They provide transportation services solely for internally generated freight and are privately owned. d. They establish agreements with individual customers and operate exclusively for particular industries. ANSWER: d 142. Which of the following terms represents transporters that provide service solely for internally generated freight? a. Common carriers b. Contract carriers c. Private carriers d. Regional carriers ANSWER: c 143. When a manufacturer of toys uses its own fleet of trucks for transporting its products to retail stores, it is using _____ carriers. a. contract b. common c. regional d. private ANSWER: d 144. Which of the following is true of private carriers? a. They do not offer services for hire. b. The government regulates their rates and services. c. They offer their services to the general public. d. The ICC has banned them from operating as common carriers. ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 145. Which of the following modes of transportation provides the most efficient way for moving bulky commodities over long distances? a. Railroads b. Motor carriers c. Water carriers d. Pipelines ANSWER: a 146. Which of the following modes of transportation controls the largest share of the freight business as measured by ton-miles? a. Railroads b. Water carriers c. Motor carriers d. Pipelines ANSWER: a 147. Which of the following is true of pipelines as a transportation alternative? a. They provide the most efficient way for moving bulky commodities over long distances. b. They control the largest share of the freight business as measured by ton-miles. c. They can accommodate shipments of only a small number of products. d. They represent the fastest method of transportation of products especially crude oil. ANSWER: c 148. Which of the following modes of transportation has the lowest transport cost? a. Railroads b. Water carriers c. Air freight d. Trucks ANSWER: b 149. Slurry pipelines are typically used for the transportation of: a. jet fuel. b. natural gas. c. coal. d. kerosene. ANSWER: c

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Chapter 14: Marketing Channels and Supply Chain Management 150. Which of the following offers the fastest mode of transportation? a. Water freight b. Pipelines c. Air freight d. Railroads ANSWER: c 151. Which of the following modes of transportation is typically associated with high frequency of shipment? a. Pipelines b. Railroads c. Water freight d. Air freight ANSWER: a 152. Which of the following modes of transportation ranks highest in terms of availability in different locations? a. Motor carriers b. Railroads c. Water freight d. Pipelines ANSWER: a 153. Which of the following modes of transportation is the costliest? a. Railroads b. Air freight c. Water freight d. Pipelines ANSWER: b 154. Which of the following modes of transportation offers the most flexibility in handling? a. Pipelines b. Air freight c. Water freight d. Motor carriers ANSWER: c

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Chapter 14: Marketing Channels and Supply Chain Management 155. Which of the following is the most widely used form of intermodal coordination? a. Horseback service b. Fishyback service c. Birdyback service d. Piggyback service ANSWER: d 156. Which of the following types of services involves an intermodal coordination system between motor carriers and water carriers? a. Birdyback service b. Piggyback service c. Fishyback service d. Horseback service ANSWER: c 157. Which of the following is a form of intermodal coordination where motor carriers deliver shipments to air carriers who transport them between airports, and then turn them over to motor carriers for local delivery? a. Fishyback service b. Piggyback service c. Horseback service d. Birdyback service ANSWER: d 158. Intermodal operation in which highway trailers and containers ride on railroad flatcars, thereby combining the long-haul capacity of the train with the door-to-door flexibility of the truck is called a _____ service. a. piggyback b. birdyback c. fishyback d. horseback ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 159. Which of the following best represents a set of activities that move production inputs and other goods within factories, warehouses, and transportation terminals? a. Materials handling system b. Order processing system c. Vendor-managed inventory system d. Package tracking system ANSWER: a 160. When a logistics manager combines several unitized loads into a single, well-protected load for shipment, it is called: a. suboptimization. b. consolidation. c. containerization. d. palletization. ANSWER: c 161. Describe the role of distribution channels in a firm’s marketing strategy. ANSWER: A firm’s distribution channels play a key role in its overall marketing strategy because these channels provide the means by which the firm makes the goods and services available to ultimate users. Channels perform four important functions. First, they facilitate the exchange process by reducing the number of marketplace contacts necessary to make a sale. The second channel function pertains to how distributors adjust for discrepancies in the market’s assortment of goods and services through a process known as sorting. Sorting alleviates such discrepancies by channeling products to suit both the buyer’s and the producer’s needs. The third function of marketing channels involves standardizing exchange transactions by setting expectations for products, and it involves the transfer process itself. The final marketing channel function is to facilitate searches by both buyers and sellers. 162. Define marketing intermediaries. Give two examples. ANSWER: Marketing intermediaries are organizations that operate between producers and consumers or business users. A retail store owned and operated by someone other than the manufacturer of the products it sells is one type of marketing intermediary. A wholesaler is an intermediary that takes title to the goods it handles and then distributes these goods to retailers, other distributors, or sometimes end-consumers. Intermediaries can also include selling agents and brokers who do not take title to goods.

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Chapter 14: Marketing Channels and Supply Chain Management 163. Define direct channel and direct selling. Describe the party plan as a direct selling strategy. Give an example of a firm that sells its products using the party plan. ANSWER: A direct channel is a marketing channel that moves goods directly from a producer to the business purchaser or ultimate user. Direct selling is a strategy designed to establish direct sales contact between producer and final user. The party plan, originally popularized by Tupperware, is a direct selling strategy where independent sales representatives sell the company’s products in private homes essentially through home-based parties or “trunk-shows.” For example Stella & Dot is a jewelry boutique company that uses the party plan. Students can make a list of other firms that employ the party plan. 164. Compare and contrast wholesalers and agents/brokers. ANSWER: Wholesalers are channel intermediaries that take title to the goods it handles and then distributes these goods to retailers, other distributors, or business or B2B customers. In markets served by many small companies, a unique intermediary—the agent—performs the basic function of bringing buyer and seller together. An agent may or may not take possession of the goods but never takes title. Agents and brokers also serve the business market when small producers attempt to market their offerings through large wholesalers. Such intermediaries, often called manufacturers’ representatives, provide an independent sales force to contact wholesale buyers. The term industrial distributor commonly refers to intermediaries in the business market that take title to the goods. In the case of business markets, for products sold in small units, only merchant wholesalers can economically cover the markets through transportation economies owing to regional inventories. For products with large unit sales and for which transportation accounts for a small percentage of the total costs, the agent/broker channel is preferred. 165. Define dual distribution. Why do marketers usually adopt a dual strategy? Give some examples of firms that employ dual distribution. ANSWER: Dual distribution refers to the movement of products through more than one channel to reach the firm’s target market. Marketers usually adopt a dual distribution strategy either to maximize their firm’s coverage in the marketplace or to increase the cost-effectiveness of the firm’s marketing effort. For example Nintendo and Netflix recently partnered to offer entertainment through more than one channel. Traditionally, customers order their favorite movies online and have the DVDs delivered to their mailboxes. Under the new agreement, Netflix subscribers with at least an $7.99 monthly subscription can stream movies and TV programs and view them on their Wii consoles at no extra cost. Students can make a list of similar examples.

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Chapter 14: Marketing Channels and Supply Chain Management 166. Define reverse channels. List some factors that have contributed to the increasing importance of reverse channels. How do firms operate reverse channels? ANSWER: Reverse channels are channels designed to return goods to their producers. Reverse channels have gained increased importance with rising prices for raw materials, increasing availability of recycling facilities, and passage of additional antipollution and conservation laws. Some reverse channels move through the facilities of traditional marketing intermediaries like retailers. For other products, manufacturers establish redemption centers, develop systems for rechanneling products for recycling, and create specialized organizations to handle disposal and recycling. The responsibility of recycling of batteries and tires fall on the manufacturers’ shoulders. Recycling of aluminum, plastic bottles, and other resources are collected and re-used by manufacturers because of the shrinking availability of natural resources. Reverse channels also handle product recalls and repairs. 167. Describe the factors that influence a firm’s choice of a marketing channel strategy. ANSWER: The factors that influence a firm’s choice of a marketing channel strategy are: 1. Market factors: Business purchasers usually prefer to deal directly with manufacturers, but most consumers make their purchases from retailers. Marketers often sell products that serve both business users and consumers through more than one channel. 2. Product factors: Perishable goods, trendy or seasonal fashions, complex products, such as custom-made installations and computer equipment, move through short channels. In general, relatively standardized items that are also nonperishable with low unit cost pass through comparatively long channels. 3. Organizational and competitive factors: Companies with strong financial, management, and marketing resources feel less need for help from intermediaries. A large, financially strong manufacturer can hire its own sales force, warehouse its own goods, and extend credit to retailers or consumers. But a small firm with fewer resources may do better with the aid of intermediaries. The manufacturer’s desire for control over marketing its products also influences channel selection. 168. Define distribution intensity and explain its three levels. ANSWER: Distribution intensity refers to the number of intermediaries through which a manufacturer distributes its goods in a particular market. The three types of distribution intensity are: 1. Intensive distribution: an intensive distribution strategy seeks to distribute a product through all available channels in a trade area. 2. Selective distribution: a selective distribution strategy seeks to distribute a product through a limited number of channels. 3. Exclusive distribution: an exclusive distribution strategy seeks to distribute a product through a single wholesaler or retailer in a specific geographic region.

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Chapter 14: Marketing Channels and Supply Chain Management 169. Discuss the legal problems associated with exclusive distribution. ANSWER: Exclusive distribution presents potential legal problems in three main areas: exclusive dealing agreements, closed sales territories, and tying agreements. Exclusive distribution agreements is legal for companies first entering a market, however, such agreements violate the Clayton Act if used by firms with a sizable market share seeking to bar competitors from the market. A closed sales territory is an exclusive geographic selling region of a distributor. The legality of a system of closed sales territories depends on whether the restriction decreases competition. If so, it violates the Federal Trade Commission Act and provisions of the Sherman and Clayton Acts. The legality of closed sales territories also depends on whether the system imposes horizontal or vertical restrictions. Horizontal territorial restrictions, agreements between retailers or wholesalers to avoid competition among sellers of products from the same producer, have been consistently declared illegal. However, the U.S. Supreme Court has ruled that vertical territorial restrictions—those between producers and wholesalers or retailers—may meet legal criteria. Tying agreement is an arrangement that requires a marketing intermediary to carry items other than those they want to sell. Tying agreements violate the Sherman Act and the Clayton Act when they reduce competition or create monopolies that keep competitors out of major markets. 170. Discuss the two categories of channel conflict. Give an example of each. ANSWER: The two categories of channel conflict are: 1. Horizontal conflict results from disagreements among channel members at the same level. It occurs most often among different types of marketing intermediaries that handle similar products. A horizontal channel conflict would occur when two industrial distributors of the same product servicing separate geographical areas begin to compete head-to-head when one establishes a website that allows customers to order from anywhere in the country. 2. Vertical conflict occurs between marketing channel members at different levels. It occurs frequently and is often more severe than horizontal conflict. Channel members at different levels find many reasons for disputes, as when retailers develop private brands to compete with producers’ brands or when producers establish their own retail stores or create mail-order operations that compete with retailers. Vertical conflict can occur between a producer and its intermediaries. If the producer sets up an electronic storefront for its products, it begins to compete directly with its retail customers. This can occur when a wholesaler, who has access to discounted prices, advertises on the web at lower prices than the retailers they service.

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Chapter 14: Marketing Channels and Supply Chain Management 171. What is a vertical marketing system? Distinguish between forward integration and backward integration. ANSWER: A vertical marketing system is a planned channel system designed to improve distribution efficiency and cost effectiveness by integrating various functions throughout the distribution chain. Forward integration is the process through which a firm attempts to control downstream distribution. An example of forward integration would be a manufacturer setting up a retail outlet to sell its products. Backward integration is the process through which a manufacturer attempts to gain greater control over inputs in its production process. A manufacturer acquiring the raw material supplier is an example of backward integration. 172. Discuss the three types of vertical marketing system. ANSWER: The three types of vertical marketing systems are: 1. Corporate marketing system: It is a VMS in which a single owner operates the entire marketing channel. 2. Administered marketing system: It is a VMS that achieves channel coordination when a dominant channel member exercises its power. 3. Contractual marketing system: It is a VMS that coordinates channel activities through formal agreements among participants. 173. Discuss the three types of contractual marketing systems. ANSWER: The three types of contractual marketing systems are: 1. Wholesaler-sponsored voluntary chains: These chains involve a formal agreement between wholesalers and retailers whereby the retailers agree to use a common name, maintain standardized facilities, and purchase the wholesalers' products. 2. Retail cooperative: In a retail cooperative, a group of retailers establish a shared wholesaling operation to help them compete with chains. 3. Franchise: A franchise involves a contractual agreement in which a wholesaler or retail dealer (franchisee) agrees to meet the operating requirements of a manufacturer or other franchiser.

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Chapter 14: Marketing Channels and Supply Chain Management 174. Define supply chain. Describe a manufacturing supply chain with an example. ANSWER: The supply chain is the complete sequence of suppliers and activities that contribute to the creation and delivery of merchandise. The supply chain begins with the raw material inputs for the manufacturing process of a product and then proceeds to the actual production activities. The final link in the supply chain is the movement of finished products through the marketing channel to customers. The chain encompasses all activities that enhance the value of the finished goods, including design, quality manufacturing, customer service, and delivery. A manufacturer, such as Cannondale Bicycles, builds its own frames, so the supply chain begins with the raw material inputs needed (such as aluminum) to manufacture a frame. The chain then moves to the actual production process. Once the frame is built it proceeds to the next stage in the paint shop. After the paint-job, the supply chain moves to the stage where components (brakes, wheels, etc.) are added to the frame. Most bicycle manufacturers source these parts from external vendors. The final link in the supply chain is the movement of finished products through the marketing channels to customers. The finished bicycle is then packed and shipped to showrooms and bike outlets throughout the world. 175. Discuss RFID and ERP systems as methods for streamlining and managing logistics. ANSWER: RFID or radio-frequency identification is a technology that uses a tiny chip with identification information that can be read by a scanner using radio waves from a distance. These chips are already being widely used in tollway pass transmitters, allowing drivers to zip through tollbooths without stopping. Several credit card companies are experimenting with RFID technology, allowing customers to make credit purchases without having to swipe their credit cards. Led by Walmart, major retailers are pushing their suppliers to install RFID chips on pallets and cases of products, arguing that the technology will vastly improve the retailer’s ability to track inventory and keep the right amount of products in stock. Cost savings could be in the billions of dollars annually. An ERP or enterprise resource planning system is a software system that consolidates data from among a firm’s various business units. Roughly two-thirds of ERP system users are manufacturers concerned with production issues such as sequencing and scheduling. German software giant SAP offers systems that allow businesses to manage their customer relations. Recently, ERP suppliers have begun offering cloud-based technology, with its emphasis on subscription-based solutions.

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Chapter 14: Marketing Channels and Supply Chain Management 176. List the six major elements of the physical distribution system along with the focus area for each. ANSWER: The six major elements of the physical distribution system are: 1. Customer service—level of customer service the distribution activities support. 2. Transportation—how the firm ships its products. 3. Inventory control—quantity of inventory the firm maintains at each location. 4. Protective packaging and materials handling—how the firm packages and efficiently handles goods in the factory, warehouse, and transport terminals. 5. Order processing—how the firm handles orders. 6. Warehousing—the distribution system’s location of stock and the number of warehouses the firm maintains. 177. Discuss the three classes of freight carriers. ANSWER: The three classes of freight carriers are: 1. Common carriers: They are businesses that provide transportation services as for-hire carriers to the general public. Their rates and services are regulated, and they cannot conduct operations without the permission of the appropriate regulatory authority. Common carriers exist for all modes of transport. 2. Contract carriers: They are for-hire transporters that do not offer their services to the general public. They establish specific contracts with certain customers and operate exclusively for a particular industry. They are subject to much less regulation than are common carriers. 3. Private carriers: They are transporters that provide service solely for internally generated freight. These carriers provide transportation services solely for internally generated freight. As a result, they observe no rate or service regulations. The Interstate Commerce Commission (ICC), a federal regulatory agency, permits private carriers to operate as common or contract carriers as well. 178. What is the advantage of intermodal transportation? Give examples of intermodal coordination. ANSWER: Intermodal transportation is a combination of transport modes, such as rail and highway carriers, air and highway carriers, and water and air carriers, to improve customer service and achieve cost advantages. It generally provides shippers faster service and lower rates than either mode could match individually because each method carries freight in its most efficient way. Examples include piggybacks (truck and railroad), fishyback (water carrier and truck), and birdyback (motor carrier and air carrier). In piggyback operations, highway trailers and containers ride on railroad flatcars, thus combining the long-haul capacity of the train with the door-to-door flexibility of the truck. Birdyback service sends motor carriers to pick up a shipment locally and deliver that shipment to local destinations; an air carrier takes it between airports near those locations. Fishyback service sets up a similar intermodal coordination system between motor carriers and water carriers.

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Chapter 14: Marketing Channels and Supply Chain Management 179. Discuss the five major transportation alternatives. ANSWER: The five major transportation alternatives are: 1. Railroads: They are the most frequently used method of transportation and are most efficient for the movement of bulk commodities. Railroads control the largest share of the freight business as measured by ton-mile. They have improved over the years with new services such as the unit train, run-through trains, and other intermodal combinations such as the piggyback. 2. Motor carriers: They are an efficient method of transportation that concentrates on manufactured products. They provide relatively fast and consistent service for both large and small shipments. Satellite technology has improved the tracking of load and communications, which help in last minute re-routing or other changes. 3. Water carriers: They are slow but inexpensive. They include inland or barge lines and deep-water, oceangoing vessels. Standardized shipping modules make loading and unloading easy. Refrigerated products can be easily shipped. Water carriers are well suited to low-cost bulk products such as grain, gravel, sand, lumber, and steel. 4. Pipelines: They are extremely efficient for liquid or liquefiable products. However, they are extremely slow, moving at 3 to 4 miles per hour. They are limited in the products that they can accommodate and are not as available as other means of transportation. 5. Air freight: It is the fastest but the most expensive mode of transportation. 180. Discuss the concept of protective packaging and materials handling. ANSWER: A materials handling system is a set of activities that move production inputs and other goods within factories, warehouses, and transportation terminals. Two important concepts influence many materials handling choices: unitizing and containerization. Protective packaging is needed in order to reduce theft, minimize loss from breakage, enhance product handling, and save time and cost in total product handling. Unitizing is the combining of as many packages as possible into each load that moves within or outside the facility. Palletization is used to increase handling efficiency and easy transporting. Shrink packaging surrounds a batch of materials with a sheet of plastic that shrinks after heating, securely holding pieces together. Containerization is the combining of several unitized loads in a standard shipping box suitable for transport by truck or rail. Match each item with the correct statement below. a. distribution channel b. forward integration c. logistics d. dual distribution e. direct selling f. intensive distribution g. selective distribution h. exclusive distribution i. tying agreement j. backward integration Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management k. administered marketing system l. corporate marketing system m. contractual marketing system n. private carriers o. materials handling system p. franchise q. common carriers r. upstream management s. suboptimization t. downstream management 181. An organized system of marketing institutions that enhances the physical flow of goods and services, along with ownership title, from producer to consumer or business user is called a(n) _____. ANSWER: a 182. The term _____ refers to the process of coordinating the flow of information, goods, and services among members of the marketing channel. ANSWER: c 183. _____ is a marketing strategy in which a producer on its own establishes sales contact with its product’s final users. ANSWER: e 184. _____ refers to the movement of products through more than one channel to reach the firm’s target market. ANSWER: d 185. Distribution of a product through all available channels is called _____. ANSWER: f 186. Distribution of a product through a limited number of channels is called _____. ANSWER: g 187. Distribution of a product through a single wholesaler or retailer in a specific geographic region is called _____. ANSWER: h 188. An arrangement that requires a marketing intermediary to carry items other than those they want to sell is called a(n) _____. ANSWER: i 189. The process through which a firm attempts to control downstream distribution is called _____. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 190. The process through which a manufacturer attempts to gain greater control over inputs in its production process is called _____. ANSWER: j 191. A VMS in which a single owner operates the entire marketing channel is called a(n) _____. ANSWER: l 192. A VMS that achieves channel coordination when a dominant channel member exercises its power is called a(n) _____. ANSWER: k 193. A VMS that coordinates channel activities through formal agreements among participants is called a(n) _____. ANSWER: m 194. A contractual arrangement in which a wholesaler or retailer agrees to meet the operating requirements of a manufacturer is called a(n) _____. ANSWER: p 195. Controlling part of the supply chain that involves raw materials, inbound logistics, and warehouse and storage facilities is called _____. ANSWER: r 196. Controlling part of the supply chain that involves finished product storage, outbound logistics, marketing and sales, and customer service is called _____. ANSWER: t 197. A condition that results when individual operations achieve their objectives but interfere with progress toward broader organizational goals is referred to as _____. ANSWER: s 198. Businesses that provide transportation services as for-hire carriers to the general public are called _____. ANSWER: q 199. Transporters that provide service solely for internally generated freight are called _____. ANSWER: n 200. The set of activities that move production inputs and other goods within factories, warehouses, and transportation terminals is called the _____. ANSWER: o

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Chapter 14: Marketing Channels and Supply Chain Management 201. Your company's leathergoods are very well received in the marketplace. But you still have not been able to resolve the issue of packaging. These bags and briefcases have to be packaged substantially so your customer receives a flawless product, but you have to come up with a solution that will allow the consumer to recycle all that packaging in some way. You decide to solicit suggestions from the staff on how to either implement a recycling program or devise some other packaging methodology that is environmentally friendly. What marketing channel are you managing? Select the best answer from the choices below. a. r everse channel b. d ual channel c. l ogistic channel d. d istribution channel e. d irect channel ANSWER: a 202. A direct channel is the simplest and shortest marketing channel, but most channels involve at least one intermediary. Which statement below describes a marketing intermediary? a. I ntermediaries develop networks of independent representatives who sell directly to consumers. b. W holesalers and retailers are both marketing intermediaries. c. M arketing intermediaries do not take title to the goods they handle. d. S ervice firms market primarily through long intermediary channels. e. M arketing through an intermediary is usually inefficient, expensive, and time-consuming. ANSWER: b 203. Sales of Kathleen's baked goods have begun to increase dramatically. She is selling online, but many customers in her core region are asking about local outlets where they can make immediate purchases. Kathleen has no desire to open and operate a retail outlet herself, but she also does not want her product sold beside a generic cookie in a supermarket. What type of distribution will Kathleen investigate for her premium baked goods? a. i ntensive distribution b. e xtensive distribution c. d irect distribution d. s elective distribution e. e xclusive distribution ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 204. Most consumers purchase products from retailers, but a marketer considers many factors when deciding which marketing channel to use. Which statement below identifies the four major factors in selecting a marketing channel? a. P roduct marketing decisions are based on the combined income level of the targeted consumer household. b. P roduct marketing decisions are based on the competition's incursion into an organization's market share. c. P roduct marketing decisions are based on the marketplace, the product, the organization itself, and the competition. d. P roduct marketing decisions are based on the type of product offered. e. P roduct marketing decisions are based on whether an organization operates domestically or internationally. ANSWER: c 205. When choosing a distribution strategy, manufacturers also focus on developing and maintaining relationships with those in their marketing channels. What is this concept called? Select the best answer from the choices below. a. c hannel management b. c hannel coordination c. c hannel commitment d. c hannel conflict e. c hannel cooperation ANSWER: a 206. Jesse would never have thought that his own trademarked children's toys would be flooding a parallel market and competing against him. Now he needs to contact his attorney to see what remedy he has in order to mitigate his damages. What kind of marketing channel conflict is Jesse experiencing? Select the best answer from the choices below. a. h orizontal conflict b. d ual conflict c. m arketing channel conflict d. g ray market conflict e. v ertical conflict ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 207. You are conducting a business startup workshop sponsored by the Small Business Administration. The workshop attendees are all aspiring business owners who are excited yet fearful about the prospect of starting their own businesses. Earlier in the workshop, you asked the attendees to complete a questionnaire about their major concerns in starting a new business. The majority of the respondents indicated their biggest concern is lack of business experience. Based on this concern, which of the following business strategies is most appropriate for these workshop attendees?

a. s tart their business as a full-service wholesaler b. s tart their business as a franchisee c. s tart their business as a mail-order wholesaler d. s tart their business as a merchant wholesaler e. s tart their business as a franchiser ANSWER: b 208. Your small retail outlet prides itself on selling environment-friendly premium coffee products. You purchase your beans from roasters who sell only fair trade-certified, Rainforest Alliance-certified, and organic-certified coffees. In fact, you are part of a co-op that assists small farmers through the certification process with grants and education. What vertical marketing process are you employing in distributing your products to your customers? a. v ertical conflict b. f orward integration c. h orizontal conflict d. b ackward integration e. f unctional integration ANSWER: d

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Chapter 14: Marketing Channels and Supply Chain Management 209. Delacruz Trade Bindery is a family-owned business with two locations—one in the Mid-Atlantic and one in the southern United States. Delacruz has been in business now for ten years, and the business has grown to include clients all along the East Coast. For the last five years, Dave Delacruz, Jr. has been in charge of purchasing, inventory control, and shipping, all of which have gotten complex beyond Pop Delacruz's ability. But this fall, however, Dave Jr. is headed to graduate school out of state. What resource may be available to Pop Delacruz to help him manage his supply chain? Select the best answer from the choices below. a. t hird-party logistics (3PL) firm b. o ffice manager c. R FID technology d. m arketing representative e. c ustomer service representative ANSWER: a 210. Businesses must manage logistics in order to maximize customer value. What are three methods for managing logistics? a. m anage raw materials; inbound logistics; warehousing b. u pstream management; RFID technology; warehousing c. l ogistical cost control; third-party logistics firms; enterprise resource planning (ERP) systems d. l ogistical cost control; RFID technology; enterprise resource planning (ERP) systems e. d ownstream management; upstream management; logistical cost control ANSWER: d 211. The logistics manager of a major manufacturer is aware that there is a lack of communication and coordination among the physical distribution departments that he is overseeing. Specifically, the materials handlers are lobbying upper management for a packaging system that would make their department more efficient; but it would increase costs for other departments exponentially because of the adjustments they would need to make to accommodate the new packaging system. There is certainly room for discussion on the matter for the future but, for now, the manager has to ward off a problem that threatens to be serious. What is the manager's concern? a. l ogistics b. c ost control c. u nderachievement d. i nventory control e. s uboptimization ANSWER: e

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Chapter 14: Marketing Channels and Supply Chain Management 212. Freight carriers are classified as common carriers, contract carriers, and private carriers. Which of the transactions below was completed using a contract carrier? a. A n artisan sells her wares online and ships them via a for-hire carrier. b. A food manufacturing company ships snacks, soft drinks, and bottled water to convenience stores. c. A company ships merchandise from its warehouses to its retail outlets nationwide in its own fleet of trucks. d. A motor carrier transports automobiles in intrastate, interstate, and foreign commerce. e. A major appliance retailer delivers a refrigerator, range, and microwave oven suite to a customer's home. ANSWER: d 213. International water carriers operate with oceangoing, deep-water ships. How will this mode of freight transportation be affected by expansion of the Panama Canal? a. S hippers will incur lower costs compared with the rates for other transportation modes. b. L arger-sized ships will be able to pass through the all-water route from Asia to the Atlantic Coast of the United States. c. S hips that operate on the Great Lakes transporting iron ore from Minnesota will be able to use this route. d. L arge ships that carry "reefers" will come under closer scrutiny by foreign officials unfamiliar with this term. e. C ompetition will be created in port cities along the Atlantic Coast since the amount of freight coming through the canal will be limited. ANSWER: b 214. Each mode of transportation has its own unique characteristics, and logistics managers select the best options for their specific transportation needs. For this particular job, you decide that your products should be transported via a combination of the three major modes of transportation that control the largest share of the freight business. How will you be transporting your products? a. R ail carriers; motor carriers; water carriers b. W ater carriers; motor carriers; pipelines c. A ir carriers; rail carriers; motor carriers d. M otor carriers; pipelines; air carriers e. R ail carriers; motor carriers; pipelines ANSWER: e

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Chapter 14: Marketing Channels and Supply Chain Management 215. Order processing is an important component of the physical distribution system. What are four major activities involved in order processing? a. c redit check; replenish inventory; report a stockout; make accounting entries b. l ocate the order; unitize the order; containerize the order; ship the order c. b reak-bulk the order; record the sale; ship the order; adjust inventory records d. m ake accounting entries; ship the order; report a stockout; break-bulk the order e. c redit check; record the sale; make accounting entries; ship order and adjust inventory records ANSWER: e 216. When a major distributor of beauty supplies went out of business, you were able to acquire large amounts of combs, brushes, hairpins, and other accessories that you sell in your small chain of four stores. You will be restocking your stores with this merchandise for the next nine months. What kind of warehouse facility will you use for your inventory? a. c old-storage warehouse b. d istribution warehouse c. a utomated warehouse d. s torage warehouse e. c onsolidation warehouse ANSWER: d 217. Your first job was with a business supplier. Then you moved to a not-for-profit organization. In terms of channel lengths, you've worked primarily with ____ channels. a. Long

b. Short c. Intermediary d. Retail e. Wholesale ANSWER: b 218. Deborah relies on direct selling to market her jewelry designs. She uses all of the following approaches and tools except: a. The Internet

b. Direct mail c. Independent representatives d. Retailers e. Party plans ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 14: Marketing Channels and Supply Chain Management 219. There are many clothing retailers in Ida's city, but she sells her line of sweaters in only about a dozen boutiques. Ida's approach to distribution intensity yields the following benefit(s): a. Cooperative advertising opportunities

b. Exclusivity c. Compliance with Ida's rules for displaying her sweaters d. Maximum convenience for Ida's customers e. All of the above ANSWER: a, c 220. Your first exposure to channel conflict came when you decided to offer your handmade soap through your own website in addition to the skin care boutiques that carry it. The retailers lost no time complaining to your sales representatives. You were involved in ________conflict. a. Vertical

b. Horizontal c. Gray market d. Legal e. Positioning ANSWER: a 221. The owners of an organic restaurant have purchased the farm that supplies their fresh herbs and vegetables. This is an example of which type of vertical marketing system or process? a. A contractual marketing system

b. Backward integration c. Forward integration d. Cooperative integration e. A purchase-based marketing system ANSWER: b 222. You are considering the purchase of a McDonald's franchise. If the sale goes through, you will be involved in a marketing system known as a: a. Contractual VMS

b. Franchisor-sponsored VMS c. Voluntary chain d. Corporate marketing system e. None of the above ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 223. In your new job, you will be responsible for upstream management of the firm's supply chain. This means you will be managing all of the following except: a. Outbound logistics

b. Inbound logistics c. Raw materials d. Warehouse facilities e. Storage facilities ANSWER: a 224. Now that you're working in a physical distribution capacity, you need to understand the differences among freight carriers. Primarily, your company delivers its goods via FedEx, UPS, and the United States Postal Service. These carriers have the following properties in common: a. They are government-owned.

b. They are common carriers. c. They are private carriers. d. They are contract carriers. e. They observe no rate or service regulations. ANSWER: b 225. Dan must choose how many warehouses to use and where to locate them for his automotive supply firm. His decision will be influenced by all of the following considerations except: a. How customer service will be affected

b. Intermodal operations c. Materials handling costs d. Delivery costs e. Intermodal coordination ANSWER: b, e 226. You handle transportation issues for a chain of department stores selling clothing, furniture, and home lighting fixtures. The primary mode of transport you rely on is: a. Railroads

b. Motor carriers c. Water carriers d. Air freight e. Common carriers ANSWER: b

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Chapter 14: Marketing Channels and Supply Chain Management 227. AAA Insurance Company specializes in property and casualty insurance for individuals such as automobile and home insurance. The company has their own branch offices across the United States with representatives who only market AAA insurance policies. In addition, consumers can get quotes and purchase via the AAA web portal. AAA Insurance also works with independent insurance agents as a way to maximize their coverage in the marketplace. AAA insurance is utilizing ______. a. d ual distribution b. r everse channels c. c aptive channel system d. d irect channel ANSWER: a 228. Sysco Foods provides thousands of food service products to restaurants, hotels, hospitals, and schools. Sysco purchases their products from manufacturers such as Hormel and then markets them to their business customers. Sysco Foods is known as a(n): a. w holesaler b. r etailer c. p roducer d. l ogistics specialist ANSWER: a 229. Bremer Jewelry has two locations in Illinois within 60 miles of each other and is the only jewelry store to carry the Hearts on Fire diamond jewelry line. Bremer has negotiated with Hearts on Fire to be the only retailer within a 150-mile radius of both store locations and believes that this arrangement provides a competitive advantage to the store. What type of distribution does Bremer Jewelry have with Hearts on Fire? a. e xclusive distribution b. c losed territory c. s elective distribution d. i ntensive distribution ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 230. Frito Lay is owned by Pepsi and has a variety of billion dollar brands such as Doritos, Cheetos, Lays, and Ruffles. These famous snack brands are available in a wide variety of sizes at almost every store location and vending center - from gas stations, to dollar stores, grocery stores, drug stores and super centers. Which level of distribution intensity does Frito Lay utilize? a. i ntensive b. e xclusive c. s elective d. c ooperative ANSWER: a 231. W almart is the largest retailer in the world and is known for being very demanding with its suppliers. Walmart exerts control over its suppliers due to its large size and buying capacity and manufacturers often acquiesce to the demands made by Walmart. Walmart is an example of a channel _______. a. c aptain b. i ntermediary c. s ponsor d. l eader ANSWER: a 232. T he channel captain is the key channel member to create cooperative relationships among members of the channel and avoid channel conflict. a. True b. False ANSWER: True 233. W hich of the following is true regarding franchises? a. f ranchise owners are typically required to pay a royalty on sales b. a franchise owner is not affected by poor strategic decisions of the franchise brand c. a franchise is a type of administered marketing system d. f ranchising is declining in popularity ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 234. Brighton J ewelry is a manufacturer of fashionable jewelry and accessories for women such as wallets, purses, and belts. Their products are sold in specialty retail outlets as well as Brighton's own specialty stores which feature all of its products. By operating and managing their own retail outlets, Brighton is using _____ integration. a. f orward b. b ackward c. h orizontal d. multi-channel ANSWER: a 235. N ew technology is being utilized by retail operations to reduce the amount of time to track inventory and record shipments. Companies such as Target and Walmart now require suppliers to attach a tiny chip with identification information to pallets and cases of products. This technology is called: a. R FID b. E RP c. 3 PL d. P CHIP ANSWER: a 236. D HL is one of the top companies specializing in handling logistics activities to other firms especially in the international sector. For example, DHL was under contract to assist Prestige Distributors to transport a container ship of French wine to the United States and provided its expertise to ensure transportation from each wine maker to the port as well as managed all export duties. In this case, DHL is operating as a(n): a. t hird-party logistics firm b. u pstream management contractor c. d ownstream management contractor d. a dministered logistics provider ANSWER: a 237. Transportation and delivery expenses typically account for 25 percent of the cost of a product. a. True b. False ANSWER: False

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Chapter 14: Marketing Channels and Supply Chain Management 238. Birky Trucking is a family-owned trucking company serving the agriculture industry in the Midwest. They have a fleet of 8 trucks and establish contracts with individual farmers or manufacturing companies who contract with farmers such as Libby's and DelMonte. Birky Trucking does not offer their services to the general public and are classified as _____ carriers. a. c ontract b. p rivate c. c ommon d. o ver-the-road ANSWER: a 239. Water carriers continue to control the largest share of the freight business as measured by ton-miles. a. True b. False ANSWER: False 240. Which mode of transportation is very slow in speed, is low cost and offers very high levels of flexibility in handling? a. w ater b. p ipeline c. a ir d. t ruck ANSWER: a 241. A type of intermodal service where motor carriers pick-up local shipments and deliver them to local destinations where they are then transported to airports near these locations is known as a. b irdyback service b. f ishyback service c. p iggyback service d. h orseeyback service ANSWER: a

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Chapter 14: Marketing Channels and Supply Chain Management 242. An intermodal coordination system between motor carriers and water carriers is known as a. f ishyback service b. p iggyback service c. b irdyback service d. h orseyback service ANSWER: a

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 1. Retail outlets are the contact points between the channel members and ultimate consumers. a. True b. False ANSWER: True 2. Vending machines and convenience food stores are not affected by the wheel of retailing because their strategy for customer satisfaction is based on location and convenience, not pricing. a. True b. False ANSWER: True 3. The wheel of retailing attempts to explain the patterns of change in retailing. a. True b. False ANSWER: True 4. A retailer starts to define its marketing strategy by selecting its inventory management strategy. a. True b. False ANSWER: False 5. The level of competition for business in the market is an important criteria considered by retailers while selecting the target market. a. True b. False ANSWER: True 6. Retailers must consider the overall profitability of each product line and product category to develop a successful merchandise mix. a. True b. False ANSWER: True 7. A retailer’s merchandising strategy guides decisions regarding the items it will offer. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 8. Both vendors and retailers use the strategy of category management. a. True b. False ANSWER: True 9. While implementing the strategy of category management, a category manager oversees an entire product line and is responsible for the profitability of the product group. a. True b. False ANSWER: True 10. A retailer’s customer service strategy can support the efforts of the retailer in building demand for a line of merchandise. a. True b. False ANSWER: True 11. The pricing strategies seldom influence consumer perceptions of a retailer. a. True b. False ANSWER: False 12. Markup can be expressed as a percentage of the total cost of the product or the selling price. a. True b. False ANSWER: True 13. The main factors involved in determining a product’s markup are the inventory turnover rate and the services performed by the retailer. a. True b. False ANSWER: True 14. Markups are determined partly on the basis of marketers’ judgments of the amounts that consumers will pay for a product. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 15. Other things being equal, stores with a higher inventory turnover rate can cover their costs and earn a profit while charging a smaller markup. a. True b. False ANSWER: True 16. Other things being equal, stores that offer more services charge smaller markups to cover their costs. a. True b. False ANSWER: False 17. The retail stores in a planned shopping center maintain uniform hours of operation, including evening and weekend hours. a. True b. False ANSWER: True 18. A neighborhood shopping center consists of large stores featuring shopping goods, professional offices, a branch bank, and also a movie theatre or a supermarket. a. True b. False ANSWER: False 19. Rising in popularity during the 1990s, power centers offered value because they underpriced department stores while providing a huge selection of specialty merchandise. a. True b. False ANSWER: True 20. Lifestyle centers seek to offer the intimacy and easy access of neighborhood village retailing with a fashionable cachet. a. True b. False ANSWER: True

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 21. If merchandise selection changes frequently to follow fashion trends, advertising is typically used to promote current styles effectively. a. True b. False ANSWER: True 22. Selling up is a retailing practice in which salespeople try to persuade customers to buy higher-priced items than originally intended. a. True b. False ANSWER: True 23. Salespeople involved in suggestive selling try to help customers recognize true needs rather than unwanted merchandise. a. True b. False ANSWER: True 24. Beauty consultants at cosmetics counters in department stores often give customers makeovers. In addition to the makeup, the consultants discuss skin care products to improve skin texture so the makeup looks better. This type of interaction is called suggestive selling. a. True b. False ANSWER: True 25. The term “atmospherics” exclusively refers to the interior décor of a store. a. True b. False ANSWER: False 26. One of the main objectives of the interior décor of a store is to induce shoppers to buy. a. True b. False ANSWER: True

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 27. Many consumers shop for reasons other than just purchasing needed products. a. True b. False ANSWER: True 28. Chain stores are groups of retail outlets that operate under central ownership and management and handle the same product lines. a. True b. False ANSWER: True 29. Chain stores usually obtain merchandise at lower prices from manufacturers compared to their independent rivals. a. True b. False ANSWER: True 30. Cooperatives help independent retailers to compete with chains by providing volume buying power. a. True b. False ANSWER: True 31. In the case of convenience stores, customers usually compare prices, assortments, and quality levels at competing outlets before making purchase decisions. a. True b. False ANSWER: False 32. A local food store can be regarded as a convenience retailer. a. True b. False ANSWER: True 33. Convenience retail stores attract consumers by providing easy access, extended store hours, and adequate parking facilities. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 34. Specialty retailers typically attract customers by offering the products at the lowest possible prices. a. True b. False ANSWER: False 35. Nordstrom carefully combines defined product lines and services in an attempt to convince consumers to expend considerable effort shopping at their stores. Nordstrom can be regarded as a specialty retailer. a. True b. False ANSWER: True 36. A full-service retailer usually sells convenience products that people can purchase without any assistance. a. True b. False ANSWER: False 37. Macy’s is a retail store that focuses on fashion-oriented merchandise, backed by a complete array of customer services. It can be considered as a self-service store. a. True b. False ANSWER: False 38. Specialty stores typically carry convenience and shopping goods. a. True b. False ANSWER: True 39. Most of the specialty stores are chain outlets with large-scale operations. a. True b. False ANSWER: False 40. Limited-line retailers cater to the needs of people who want to select from complete lines in purchasing particular products. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 41. Category killers are a type of limited-line retailer that offer huge selections and low prices in single product lines. a. True b. False ANSWER: True 42. Category killers are invulnerable to competition because of the huge selections they offer in different product lines. a. True b. False ANSWER: False 43. General merchandise retailers distinguish themselves from specialty and limited-line retailers by the large number of product lines they carry. a. True b. False ANSWER: True 44. Variety stores offer an extensive range and assortment of low-price merchandise. a. True b. False ANSWER: True 45. In essence, a department store is a series of limited-line and specialty stores under one roof. a. True b. False ANSWER: True 46. Mass merchandisers usually provide the same depth of assortment as a department store within each product line. a. True b. False ANSWER: False 47. A discount house offers fewer services to its customers. a. True b. False ANSWER: True

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 48. Inventory at off-price stores changes frequently as buyers take advantage of special price offers from manufacturers selling excess merchandise. a. True b. False ANSWER: True 49. A supercenter is usually larger than a hypermarket. a. True b. False ANSWER: False 50. Retail convergence results in blurring of distinctions between types of retailers and the merchandise mix they offer. a. True b. False ANSWER: True 51. Retailers practice scrambled merchandising to boost sales volume. a. True b. False ANSWER: True 52. Agents and brokers perform wholesaling activities without taking title to the goods. a. True b. False ANSWER: True 53. O&S Ticket Brokers, a Broadway theater ticket agency, sells tickets in bulk to corporate clients. It would be considered a wholesaling intermediary even though the firm does not take title to the tickets it sells. a. True b. False ANSWER: True 54. Wholesaling intermediaries are specialists in production or manufacturing functions. a. True b. False ANSWER: False

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 55. Wholesaling intermediaries create utility in the form of time, place, and ownership. a. True b. False ANSWER: True 56. Wholesaling intermediaries tend to reduce the number of transactions between buyers and sellers. a. True b. False ANSWER: True 57. Sales offices carry inventory and process orders for customers from available stock. a. True b. False ANSWER: False 58. Manufacturer-owned facilities are beneficial when products are perishable and need rigid control of distribution to avoid spoilage. a. True b. False ANSWER: True 59. Sales offices located closer to the firm’s customers help limit selling costs and support effective customer service. a. True b. False ANSWER: True 60. A trade fair is a periodic show at which manufacturers in a particular industry display their wares for visiting retail and wholesale buyers. a. True b. False ANSWER: True 61. Merchant wholesalers are a class of wholesaling intermediaries who do not take title to the goods they handle. a. True b. False ANSWER: False

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 62. Rack jobbers are full-function merchant wholesalers that market specialized lines of merchandise to retailers. a. True b. False ANSWER: True 63. In the United States, cash-and-carry operations typically function as departments within regular full-service wholesale operations. a. True b. False ANSWER: True 64. A cash-and-carry wholesaler performs most wholesaling functions including financing and delivery. a. True b. False ANSWER: False 65. Truck wholesalers make regular deliveries to retailers and perform collection and promotion functions. a. True b. False ANSWER: True 66. Drop shippers take title to the goods but never physically handle or even see the merchandise. a. True b. False ANSWER: True 67. Spiegel is a mail-order wholesaler that relies on catalogs to contact its customers. It would be considered a limited-function merchant wholesaler. a. True b. False ANSWER: True 68. Compared to mail-order wholesalers, truck wholesalers tend to provide fewer services and set lower prices because they incur lower operating costs. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 69. Marc is a wholesaling intermediary who brings buyers and sellers together, sometimes representing buyers and sometimes representing sellers, but never both in the same transaction. This information indicates that Marc is a commission merchant. a. True b. False ANSWER: False 70. A selling agent is an ideal marketing channel for weakly financed, production-oriented firms. a. True b. False ANSWER: True 71. A manufacturer’s representative can work only for a single manufacturer. a. True b. False ANSWER: False 72. Direct-mail marketing relies heavily on database technology to manage lists of names and segment them according to the objectives of the promotional campaign. a. True b. False ANSWER: True 73. The response rates for direct-mail marketing are measurable and higher compared to other types of advertising. a. True b. False ANSWER: True 74. Through direct selling, manufacturers completely bypass retailers and wholesalers and set up their own channels to sell their products directly to consumers. a. True b. False ANSWER: True 75. Direct-response retailing does not include home shopping that sells merchandise through telephone orders. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 76. Infomercials are a form of telemarketing. a. True b. False ANSWER: False 77. Telemarketing is the most frequently used form of direct marketing and provides high returns to the marketers on their expenditures. a. True b. False ANSWER: True 78. Internet-based retailers usually maintain little or no inventory and order directly from vendors to fill customer orders received via their websites. a. True b. False ANSWER: True 79. Vending machines are classified as a form of automatic merchandising. a. True b. False ANSWER: True 80. Fitness Zone is a gym that offers its customers a chance to buy health drinks through a vending machine. This type of service is called automatic merchandising. a. True b. False ANSWER: True 81. _____ represent the distribution channel to most consumers because of their direct contact with the ultimate consumers. a. Wholesalers b. Retailers c. Manufacturers d. Selling agents ANSWER: b

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 82. The concept of the wheel of retailing attempts to explain: a. the process by which retailers decide the amount and types of products to be sold in the retail stores. b. the chain of distribution that is followed by a product before it reaches a retail store. c. the process by which prices are set in retailing. d. the patterns of change in retailing. ANSWER: d 83. Which of the following is one of the fundamental steps in the marketing strategy process on which a retailer bases its key decisions? a. Selecting a target market b. Stipulating a minimum profit margin c. Determining the store location and atmosphere d. Determining the method of inventory management ANSWER: a 84. After identifying a target market, a retailer must: a. concentrate on determining the ideal levels of inventory to be maintained. b. devise marketing plans to expand their target market. c. develop marketing strategies to attract chosen customers to its stores or websites. d. segment the market based on factors such as family income and customer lifetime value. ANSWER: c 85. General product categories, specific product lines, specific products within lines, and the depth and width of its assortment are factors considered by retailers while developing their: a. product liability strategy. b. interactive marketing policy. c. customer service program. d. merchandising strategy. ANSWER: d 86. The strategy of category management is used by retailers to: a. seek pricing and promotional concessions from manufacturers as conditions for selling their products. b. improve their product group performance through coordinated buying, merchandising, and pricing. c. attract consumers by making shopping easier, faster, and enjoyable. d. decrease its rate of inventory turnover. ANSWER: b

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 87. _____ are increasingly taking on the role of channel captain within many distribution networks. a. Manufacturers b. Large-scale retailers c. Consumers d. Suppliers ANSWER: b 88. An offering within a product line, such as a specific size of liquid detergent, is known as a(n) _____. a. product array element b. price look-up factor c. stock-keeping unit d. unique article number ANSWER: c 89. _____ represent nonrefundable fees grocery retailers receive from manufacturers to secure shelf space for new products. a. Switching costs b. Franchise fees c. Carrying costs d. Slotting allowances ANSWER: d 90. When buyers refuse to pay a product’s stated price or when improvements in other items or fashion changes reduce the appeal of the current merchandise, a retailer must take a _____. a. slotting allowance b. switching fee c. rebate d. markdown ANSWER: d 91. _____ refers to the amount a retailer adds to the cost of a product to determine its selling price. a. Allowance b. Discount c. Rebate d. Markup ANSWER: d

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 92. Which of the following terms refers to the amount by which a retailer reduces the original selling price of a product? a. Depreciation b. Switching cost c. Underwriting d. Markdown ANSWER: d 93. A _____ contains around 10 to 30 retail stores with a branch of a local department store or some other large store as a primary tenant, and it serves 20,000 to 100,000 people in a trading area extending a few miles from its location. a. power center b. regional shopping center c. lifestyle center d. community shopping center ANSWER: d 94. Sunway Megamall is a planned shopping center in Hanover, Maryland with nearly 400,000 square feet of shopping space, and it serves around 300,000 people who stay within 30 minutes driving time from the shopping center. It contains many department stores that provide a wide assortment of convenience, shopping, and specialty goods, plus many personal service facilities. Sunway Megamall is most likely to be an example of a: a. neighborhood shopping center. b. lifestyle center. c. regional shopping center. d. community shopping center. ANSWER: c 95. A lifestyle center is a type of planned shopping center that: a. provides a wide assortment of convenience, shopping, and specialty goods, plus many service facilities. b. is usually located near a regional or superregional mall and brings together several huge specialty stores as standalone stores in a single trading area. c. offers a combination of shopping, live entertainment, movie theatres, restaurants, decorative fountains, and much more in an attractive outdoor environment. d. offers a product mix that is usually confined to convenience items and some limited shopping goods. ANSWER: c

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 96. A _____ is usually located near a regional or superregional mall, and brings together several huge specialty stores as standalone stores in a single trading area. a. lifestyle center b. power center c. community shopping center d. regional shopping center ANSWER: b 97. The strategy of convincing a customer to buy a higher-priced item than he or she had originally intended is called: a. cross-selling. b. value-added selling. c. selling up. d. bait-and-switch selling. ANSWER: c 98. Reminding a customer that the flashlight he just purchased requires batteries (which are available for sale) would be an example of: a. cross selling. b. bait-and-switch selling. c. selling up. d. suggestive selling. ANSWER: d 99. Which of the following terms refers to the combination of physical characteristics and amenities that contribute to a store’s image? a. Atmospherics b. Simulation c. Tableaux d. Logistics ANSWER: a 100. A store's exterior appearance, including architectural design, window displays, signs, and entryways: a. exerts no influence on the retailer's image. b. exerts a major influence on the pricing of the goods sold by the store. c. helps identify the retailer and attract its target market. d. indicates the range and assortment of product lines it offers. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 101. Retailers, when classified on the basis of form of ownership, are grouped as: a. wholesalers and service providers. b. convenience, shopping, and specialty retailers. c. chain stores and independent retailers. d. limited-line and general merchandise retailers. ANSWER: c 102. _____ are groups of retail outlets that operate under central ownership and management and handle the same product lines. a. Specialty stores b. Chain stores c. Variety stores d. Department stores ANSWER: b 103. Which of the following statements is most likely to be true about a convenience retailer? a. It offers huge selections and low prices in single product lines. b. It appeals to customers by having an accessible location, rapid checkout, extended store hours, and adequate parking. c. It combines carefully defined product lines, services, and reputations in attempts to persuade consumers to expend considerable effort to shop at their stores. d. It offers a complete array of services to its customers. ANSWER: b 104. Which of the following is an example of a specialty store? a. A discount house b. A hypermarket c. A men’s shoe store d. An off-price retailer ANSWER: c 105. Limited-line retailers that offer huge selections and low prices in single product lines are called _____. a. specialty stores b. predatory retailers c. category killers d. convenience retailers ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 106. Macy’s focuses on fashion-oriented merchandise, backed by a complete array of customer services. Hence, Macy’s can be regarded as a: a. self-selection retailer. b. full-service retailer. c. self-service retailer. d. partial-assistance retailer. ANSWER: b 107. A retailer that offers a large assortment within a single product line or within a few related product lines is known as a(n): a. limited-line store. b. industrial distributor. c. specific-line store. d. rack jobber. ANSWER: a 108. A retail establishment that carries a wide variety of product lines, stocking all of them in some depth is referred to as a _____. a. rack jobber b. category killer c. specialty store d. general merchandise retailer ANSWER: d 109. A wide variety of services such as charge accounts, delivery, gift wrapping, and liberal return privileges are most likely to be associated with _____. a. department stores b. clearing houses c. merchandise mart d. industrial distribution stores ANSWER: a

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 110. A department store is a: a. retail outlet offering huge selections and low prices in a single product line. b. retail store that handles only some part of a single product line. c. retailing format that offers movie theatres and restaurants along with live entertainment in an attractive outdoor environment. d. series of limited-line and specialty stores gathered under one roof. ANSWER: d 111. _____ are the retail stores that incur relatively high operating costs because of the wide range of services they offer. a. Department stores b. Industrial distributing shops c. Merchandise marts d. Warehouses ANSWER: a 112. A _____ charges low prices and offers fewer services. a. full-service retailer b. department store c. discount house d. convenience store ANSWER: c 113. Which of the following is most likely to be an example of a mass merchandiser? a. A trade fair owner b. A catalog retailer c. A rack jobber d. A convenience retailer ANSWER: b 114. A(n) _____ stocks only designer labels or well-known brand name clothing at prices equal to or below regular wholesale prices. a. discount store b. hypermarket c. supercenter d. off-price retailer ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 115. In a(n) _____, inventory changes frequently as customers take advantage of special price offers from manufacturers selling excess merchandise. a. lifestyle center b. off-price retail store c. full-service distribution center d. merchandise mart ANSWER: b 116. _____ are shopping centers that house only off-price retailers. a. Warehouse clubs b. Supercenters c. Regional shopping centers d. Outlet malls ANSWER: d 117. Which of the following is most likely to be true of hypermarkets? a. They are somewhat smaller than the similar supercenters, averaging 180,000 square feet to the supercenters’ 245,000 square feet. b. They initially started as stores selling mostly electronic appliances but now sell soft goods, foods, and furniture. c. They are giant one-stop shopping facilities that offer wide selections of grocery and general merchandise products at discount prices. d. They carry out promotion to their customers using direct mail and sell from showrooms that display samples. ANSWER: c 118. Which of the following statements is true of warehouse retailers? a. They incur high operation costs because of the wide range of services they offer. b. They offer more services than department stores in return for higher priced goods. c. They send direct mail to their customers and sell the advertised goods from showrooms that display samples. d. They offer huge selection at lower prices in single product lines. ANSWER: c

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 119. The situation in retailing in which similar merchandise is available from multiple retail outlets distinguished by price more than any other factor is known as: a. scrambled merchandising. b. wholesale concentration. c. mail-order proliferation. d. retail convergence. ANSWER: d 120. The distinctions between the types of retailers and the merchandise they offer are getting blurred because of: a. direct selling. b. mass merchandising. c. retail convergence. d. home selling. ANSWER: c 121. Scrambled merchandising is a retailing practice of: a. offering similar merchandise across multiple retail outlets at the same price. b. providing different hours of operation at different outlets. c. combining dissimilar product lines to boost sales volume. d. offering similar merchandise at different prices at different outlets. ANSWER: c 122. Which of the following is an example of scrambled merchandising? a. A supermarket carrying canned goods, fresh fish, tropical fruits, and bulk grains b. A jewelry store carrying rings, watches, TVs, electronic games, and DVDs c. A drug store carrying prescription drugs, over-the-counter medications, and health care items d. A shoe store carrying shoes, shoe polish, socks, and leather bags ANSWER: b 123. A _____ is a channel intermediary that takes title to goods it handles and then distributes those goods to retailers, other distributors, or B2B customers. a. category killer b. merchandiser c. department store owner d. wholesaler ANSWER: d

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 124. Wholesaling intermediaries create place utility by: a. extending credit to product manufacturers. b. helping deliver goods and services for purchase at convenient locations. c. providing a sales force to call upon potential suppliers. d. offering a round-the-clock customer helpline. ANSWER: b 125. Possession utility can occur even if the actual title is not transferred, as in the case of: a. vending machine transactions. b. beauty salon services. c. car rentals. d. college education. ANSWER: c 126. What types of utility are created by wholesaling intermediaries when they make a product available at a convenient location at the moment it is needed by the customer? a. Possession and location b. Ownership and form c. Place and time d. Time and possession ANSWER: c 127. Customers who cannot afford to pay cash for purchases made directly from the manufacturer can buy those products from a wholesale intermediary who grants them credit for the purchase. Which of the following marketing functions is being performed by the wholesaler in this situation by granting credit? a. Production b. Transporting c. Risk taking d. Financing ANSWER: d

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 128. When wholesalers transport and stock products in inventory, they accept the possibility of spoilage, theft, or obsolescence. This function performed by the wholesaling intermediary is referred to as _____. a. selling b. analyzing c. risk taking d. financing ANSWER: c 129. Wholesaling intermediaries help producers in transporting by: a. reporting on competitors’ activities and industry trends. b. purchasing in economical truck load lots and then reselling in smaller quantities. c. offering research inputs through regular contacts with retail and business buyers. d. reducing their inventory turnover rates. ANSWER: b 130. The sales branch is a manufacturer-owned facility that: a. provides space for permanent showrooms and exhibits which is used by manufactures to market their goods. b. does not carry inventory but serves as a regional office for a manufacturer's sales personnel. c. manufactures and packages goods to the order of its customers. d. carries inventory and processes orders for customers from available stock. ANSWER: d 131. The basic distinction between a company's sales branches and its sales offices is that: a. sales branches carry inventory whereas sales offices do not. b. sales branches are manufacturer-owned, whereas sales offices are not. c. sales branches are always national, whereas sales offices are always local. d. sales branches are used only for services, whereas sales offices are used only for physical goods. ANSWER: a 132. The two broad categories of independent wholesaling intermediaries include agents and brokers, and _____. a. contract agents b. full-function intermediaries c. exclusive-function intermediaries d. merchant wholesalers ANSWER: d

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 133. A _____ provides space for permanent showrooms and exhibits, which manufacturers rent to market their goods. a. discount house b. trade fair c. merchandise mart d. clearing house ANSWER: c 134. _____ are independent wholesaling intermediaries that take title to the goods they handle. a. Commission merchants b. Merchant wholesalers c. Selling agents d. Broker wholesalers ANSWER: b 135. Full-function merchant wholesalers include: a. sales branches and mail-order wholesalers. b. industrial distributors and rack jobbers. c. truck jobbers and drop shippers. d. cash-and-carry wholesalers and auction houses. ANSWER: b 136. A _____ is a full-function merchant wholesaler that markets specialized lines of merchandise to retail stores. a. drop shipper b. truck wholesaler c. rack jobber d. commission merchant ANSWER: c 137. In the business-goods market, full-function merchant wholesalers are also known as _____. a. drop shippers b. mail-order wholesalers c. cash-and-carry wholesalers d. industrial distributors ANSWER: d

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 138. Which of the following industries is most likely to be served by a limited-function wholesaler? a. Oil industry b. Petrochemical industry c. Sporting goods industry d. Aviation industry ANSWER: c 139. A _____ is a limited-function wholesaler that markets perishable food items. a. cash-and-carry wholesaler b. truck jobber c. mail-order wholesaler d. drop shipper ANSWER: b 140. _____ make regular deliveries to retailers, perform sales and collection functions, and promote product lines. a. Clearing agents b. Boundary spanners c. Truck jobbers d. Drop shippers ANSWER: c 141. A _____ accepts orders from customers and forwards these orders to producers, which then deliver the desired products directly to customers. a. merchant wholesaler b. drop shipper c. rack jobber d. truck jobber ANSWER: b

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 142. A mail-order wholesaler is a limited-function merchant wholesaler that: a. distributes catalogs instead of sending sales representatives to contact customers. b. exerts full authority over pricing decisions and promotional outlays, and even provides financial assistance for the manufacturer. c. conducts its business by sending sales representatives to contact retail, business, and institutional customers. d. accepts orders from customers and forwards these to manufacturers who ship the products direct to the customer. ANSWER: a 143. Typically, bread and dairy products are delivered to stores by wholesale intermediaries called: a. drop shippers. b. rack jobbers. c. truck wholesalers. d. clearing agents. ANSWER: c 144. Which of the following is true of mail-order wholesalers? a. Their main aim is to bring buyers and sellers together. b. They carry no inventory, provide no credit, and do not take title to the goods. c. They often serve relatively small customers in outlying areas. d. They comprise a large percentage of full-function merchant wholesalers. ANSWER: c 145. In the context of independent wholesaling intermediaries, which of the following statements is true regarding agents and brokers? a. They provide a production facility to a manufacturer on rent. b. They help a manufacturer in designing a new product. c. They never take title of the goods that they handle. d. They buy products from a truck jobber and sell it through the orders placed on the Internet. ANSWER: c

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 146. Who among the following is an agent who predominates in the markets for agricultural products? a. A drop shipper b. A mass merchandiser c. A manufacturer’s agent d. A commission merchant ANSWER: d 147. Which of the following independent wholesaling intermediaries ranks as a relatively high-cost intermediary because of the number of services it performs? a. Rack jobber b. Drop shipper c. Mail-order wholesaler d. Cash-and-carry wholesaler ANSWER: a 148. A _____ wholesaler performs most wholesaling functions except for financing and delivery. a. commission b. clearing c. brokering d. cash-and-carry ANSWER: d 149. A(n) _____ gathers buyers and sellers in one location and allows potential buyers to inspect merchandise before submitting competing purchase offers. a. truck jobber b. auction house c. commission merchant d. selling agent ANSWER: b 150. A _____ is an agent wholesaling intermediary that does not take title to or possession of goods in the course of its primary function, which is to bring together buyers and sellers. a. truck jobber b. broker c. mass merchandiser d. drop shipper ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 151. Which of the following statements is true of selling agents? a. They do not provide financial assistance for the manufacturer. b. They are ideal marketing channels for large, financially strong, and customer-oriented firms. c. They typically have minimal control over pricing decisions and promotional outlays. d. They mainly operate in the coal, lumber, and textiles industries. ANSWER: d 152. Which of the following statements is true regarding manufacturer’s representatives? a. They typically work for only one firm. b. They contract for exclusive rights to market a product. c. They are paid on a commission basis. d. They take the title of the products from a manufacturer and then sell these products to customers. ANSWER: c 153. The importance of selling agents in many markets has declined because: a. many firms are increasingly turning to financial institutions for financial assistance. b. manufacturers want better control of their marketing programs than selling agents allow. c. profit margins for selling agents have been steadily eroding in perishable foods and processing industries. d. manufacturers prefer to contract out exclusive rights to market a product while selling agents operate in specific territories. ANSWER: b 154. A _____ is an agent wholesaling intermediary that represents manufacturers of related but noncompeting products and receives a commission on each sale. a. manufacturers’ merchant b. selling agent c. manufacturers’ agent d. clearing agent ANSWER: c 155. Which of the following wholesaling intermediaries carries inventory? a. A commission merchant b. A broker c. A manufacturer’s agent d. A selling agent ANSWER: a

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 156. Which of the following wholesaling intermediaries delivers goods to the consumers? a. An auction house b. A commission merchant c. A broker d. A selling agent ANSWER: b 157. Which of the following is a form of marketing that manufacturers use to completely bypass wholesalers and retailers? a. Mass merchandising b. Direct selling c. Mass marketing d. Scrambled merchandising ANSWER: b 158. Direct-response retailing that runs promotions on cable TV networks to sell merchandise through telephone orders is called: a. personal selling. b. telemarketing. c. home shopping. d. automatic merchandising. ANSWER: c 159. Which of the following is the most frequently used form of direct marketing? a. Direct-response retailing b. Online retailing c. Telemarketing d. Direct mail ANSWER: c 160. Vending machines are an example of: a. automatic merchandising. b. Internet retailing. c. telemarketing. d. direct selling. ANSWER: a

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 161. What is retailing? Why is retailing an essential part of the marketing channel? ANSWER: Retailing describes the activities involved in selling merchandise to ultimate consumers. It is an essential marketing channel because retailers are the marketing intermediaries who are in direct contact with ultimate consumers. Retail outlets also serve as contact points between channel members and ultimate consumers. Retailers represent the distribution channel to most consumers since a typical shopper has little contact with manufacturers and virtually no contact with wholesaling intermediaries. Retailers also perform a vital role in obtaining consumer feedback. They obtain information from the customers and transmit the information to manufacturers and other channel members. 162. Discuss the wheel of retailing concept. ANSWER: The wheel of retailing is a key concept that attempts to explain the patterns of change in retailing. According to the wheel of retailing, a new type of retailer gains a competitive foothold by offering customers lower prices than current outlets charge and maintains profits by reducing or eliminating services. Once established, however, the innovator begins to add more services, and its prices gradually rise. It then becomes vulnerable to new low-price retailers that enter with minimum services, and so the wheel turns. The wheel of retailing suggests that retailing is always changing. 163. How do retailers develop a marketing strategy? ANSWER: A retailer develops a marketing strategy based on the firm’s goals and strategic plans. The organization monitors environmental influences and assesses its own strengths and weaknesses in identifying marketing opportunities and constraints. A retailer bases its key decisions on two fundamental steps in the marketing strategy process: 1) selecting a target market; and 2) developing a retailing mix to satisfy the chosen market. The retailing mix specifies merchandise strategy, customer service standards, pricing guidelines, target market analysis, promotion goals, location/distribution decisions, and store atmosphere choices. 164. How do retailers select target markets? ANSWER: A retailer starts to define its marketing strategy by selecting a target market. Factors that influence the retailer’s selection of target market are the size and profit potential of the market and the level of competition for its business. Retailers pore over demographic, geographic, and psychographic profiles to segment markets. In the end, most retailers identify their target markets in terms of certain demographics.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 165. Discuss the pricing strategies used by retailers to attract consumers. ANSWER: Prices reflect a retailer’s marketing objectives and policies. They also play a major role in consumer perceptions of a retailer. Markup: Markup is the amount a retailer adds to a product’s cost to set the final selling price of the product. The amount of the markup typically results from two marketing decisions: 1) Services performed by the retailer. Other things being equal, stores that offer more services charge larger markups to cover their costs. 2) Inventory turnover rate. Other things being equal, stores with a higher turnover rate can cover their costs and earn a profit while charging a smaller markup. A retailer’s markup exerts an important influence on its image among present and potential customers. In addition, the markup affects the retailer’s ability to attract shoppers. An excessive markup may drive away customers; an inadequate markup may not generate sufficient revenue to cover costs and return a profit. Markdown: Marketers determine the markups based partly on their judgments of the amounts that consumers will pay for a given product. When buyers refuse to pay a product’s stated price, however, or when improvements in other items or fashion changes reduce the appeal of current merchandise, a retailer must take a markdown. Markdown is the amount by which a retailer reduces the original selling price of the product. 166. What are the different types of planned shopping centers? ANSWER: There are five main types of planned shopping centers. 1) Neighborhood shopping center: It is likely to consist of a group of smaller stores such as a drugstore, a drycleaner, a gift shop, and perhaps a nail or hair salon. It contains 5 to 20 stores, and the product mix usually is confined to convenience items and some limited shopping goods. 2) Community shopping center: It serves 20,000 to 100,000 people in a trade area extending a few miles from its location. It contains anywhere from 15 to 40 retail stores, with a branch of a local department store or some other large store as the primary tenant. In addition to the stores found in a neighborhood center, a community center probably encompasses more stores featuring shopping goods, some professional offices, a branch bank, and perhaps a movie theater or supermarket. 3) Regional shopping center: It is a large facility with at least 400,000 square feet of shopping space. Its marketing appeal usually emphasizes major department stores with the power to draw customers, supplemented by as many as 200 smaller stores. 4) Power center: A power center is usually located near a regional or superregional mall and brings together several huge specialty stores, such as standalone stores in a single trading area. 5) The lifestyle center: It is a retailing format offering a combination of shopping, movie theaters, stages for concerts and live entertainment, decorative fountains and park benches in greenways, and restaurants and bistros in an attractive outdoor environment.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 167. Explain how store atmospherics help retailers to attract customers. ANSWER: Retail stores project their personalities through atmospherics. Atmospherics refers to the physical characteristics and amenities that attract customers and satisfy their shopping needs. Atmospherics include both a store’s exterior and interior décor. A store’s exterior appearance, including architectural design, window displays, signs, and entryways, helps identify the retailer and attract its target market shoppers. Retailers design eye-catching exterior elements to get customer attention. The interior décor of a store should also complement the retailer’s image, respond to customers’ interests, and, most importantly, induce shoppers to buy. Interior atmospheric elements include store layout, merchandise presentation, lighting, color, sounds, scents, and cleanliness. 168. How are retailers classified on the basis of form of ownership? Explain the advantages of each type of ownership. ANSWER: Retailers are categorized as chain stores and independent retailers based on the form of ownership. In addition, independent retailers may join wholesaler-sponsored voluntary chains, band together to form retail cooperatives, or enter into franchise agreements with manufacturers, wholesalers, or service provider organizations. 1) Chain stores: Chain stores are groups of retail outlets that operate under central ownership and management and handle the same product lines. Chains have an advantage over independent retailers in economies of scale. Volume purchases allow chains to pay lower prices than their independent rivals must pay. Because a chain may have hundreds of retail stores, it can afford extensive advertising, sales training, and computerized systems for merchandise ordering, inventory management, forecasting, and accounting. Also, the large sales volume and wide geographic reach of a chain may enable it to advertise in a variety of media. 2) Independent retailers: The retailing structure supports a large number of small stores, many medium-size stores, and a small number of large stores. Independent retailers compete with chains in a number of ways. The traditional advantage of independent stores is friendly, personalized service. 169. How are retailers classified on the basis of services provided? Give an example for each group. ANSWER: Based on the services they provide, retailers are classified into three groups: 1) Self-service: These sell convenience products that people can purchase frequently with little assistance. The AM PM mini-mart is an example of a self-service store. 2) Self-selection: These stores also sell convenience products like self-service stores and provide little assistance to customers. Albertsons and Kroger grocery stores are examples of self-selection stores. 3) Full-service retailers: These stores offer a complete array of customer services. Macy’s that focuses on fashion-oriented merchandise is an example of a full-service retailer.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 170. Define category killers. Give an example. ANSWER: A category killer is a unique type of limited-line retailer that offers huge selections and low prices in single product lines. The retail stores under this category are highly successful. Initially, they took the business away from general merchandise discounters, which were not able to compete in selection or price. But recently these stores have been facing competition from warehouse clubs that offer great discounts and Internet companies that offer unlimited selection and speedy delivery. Example: Best Buy that offers electronic goods at low prices is an example of a category killer. 171. Explain the concept of retail convergence. Give an example. ANSWER: Retail convergence is a situation in which similar merchandise is available from multiple retail outlets, resulting in the blurring of distinctions between types of retailers and merchandise offered. An example is home appliances (washers, dryers, stoves, etc.). Home appliances are available at retailers as diverse as Best Buy, Sears, Home Depot, and Costco. 172. What is scrambled merchandising? Give an example. ANSWER: Scrambled merchandising is a retailing practice in which a retailer combines dissimilar product lines in an attempt to boost sales volume. Example: Drugstores not only fill prescriptions but also sell cameras, cards, housewares, magazines, and even small appliances. 173. Differentiate between a wholesaler and a wholesaling intermediary. ANSWER: A wholesaler is a marketing intermediary in a distribution channel that takes title to goods it handles and then distributes those goods to retailers, other distributors, or B2B customers. A wholesaling intermediary is a broader term used to describe wholesalers as well as agents and brokers who perform important wholesaling activities without taking title to the goods. Wholesaling intermediaries are specialists in certain marketing functions, as opposed to production or manufacturing functions and can perform these functions more efficiently than producers.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 174. What are the different services provided by wholesaling intermediaries? ANSWER: Wholesaling intermediaries provide a wide range of services. But not all perform all functions. 1) Buying: They anticipate consumer demand, apply knowledge of alternative sources of supply, and act as a purchasing agent for customers. 2) Selling: They provide a sales force to call on customers, creating a low cost method for servicing smaller retailers and business users. 3) Storing: They maintain warehouse facilities at lower costs than most individual producers and retailers could achieve. They reduce risk and cost of maintaining inventory for producers. 4) Transporting: Customers receive prompt delivery in response to their demands, reducing their inventory investments. Wholesalers also break bulk by purchasing in economical carload or truckload lots, then reselling in smaller quantities, thereby reducing overall transportation costs. 5) Providing marketing information: Wholesaling intermediaries offer important marketing research inputs for producers through regular contacts with retail and business buyers. They also provide customers with information about new products, technical information about product lines, reports on competitors’ activities and industry trends, and advisory information concerning pricing changes, legal changes, and so forth. 6) Financing: They grant credit that might be unavailable for purchases directly from manufacturers. They also provide financing assistance to producers by purchasing products in advance of sale by promptly paying bills. 7) Risk taking: They evaluate credit risks of numerous, distant retail customers and small-business users. They also extend credits to customers that qualify. By transporting and stocking products in inventory, the wholesaler assumes risk of spoilage, theft, or obsolescence. 175. Why do some manufacturers directly distribute their goods to the ultimate consumers? List out the different types of company-owned facilities used by manufacturers for this purpose. ANSWER: Several reasons lead manufacturers to distribute their goods directly through company-owned facilities. Some perishable goods need rigid control of distribution to avoid spoilage; other goods require complex installation or servicing. Some goods need aggressive promotion. Goods with high unit values allow profitable sales by manufacturers directly to ultimate purchasers. Manufacturer-owned facilities used for direct selling of goods to the consumers include: 1) Sales branches: A sales branch carries inventory and processes orders for customers from available stock. Branches provide a storage function like independent wholesalers and serve as offices for sales representatives in their territories. They are prevalent in marketing channels for chemicals, commercial machinery and equipment, and petroleum products. 2) Sales offices: A sales office does not carry inventory, but it does serve as a regional office for a manufacturer’s sales personnel. Locations close to the firm’s customers help limit selling costs and support effective customer service. 3) Trade fairs: A trade fair is a periodic show at which manufacturers in a particular industry display their wares for visiting retail and wholesale buyers. 4) Merchandise marts: A merchandise mart provides space for permanent showrooms and exhibits, which manufacturers rent to market their goods. Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 176. Differentiate between a rack jobber and a drop shipper. Give an example for each. ANSWER: A rack jobber is a full-function merchant wholesaler that markets specialized lines of merchandise to retailers. A rack jobber supplies the racks, stocks the merchandise, prices the goods, and makes regular visits to refill shelves. Example: Anderson Merchandisers, a rack jobber in the entertainment sector, supplies to the consumer electronics departments of the Walmart stores. A drop shipper is a limited-function merchant wholesaler that accepts orders from customers and forwards those orders to producers, which then ship directly to the customers who placed the orders. Although they take title to goods, they never physically handle or even see the merchandise. They often operate in industries selling bulky goods that customers buy in large lots like coal and lumber. Example: Tampa’s ONEinc is an example of a drop shipper that provides on-time delivery, competitive pricing, and courteous timely response to all enquiries from the customers. 177. Identify and describe four types of limited-function merchant wholesalers. ANSWER: Limited-function merchant wholesalers fit into four categories: 1) Cash-and-carry wholesaler: A cash-and-carry wholesaler performs most wholesaling functions except for financing and delivery. This kind of wholesaling is unworkable for large-scale grocery stores. Today, they perform typically as departments within regular full-service wholesale operations. 2) Truck wholesaler: A truck wholesaler markets perishable food items such as bread, tobacco, potato chips, candy, and dairy products. Truck wholesalers make regular deliveries to retailers, perform sales and collection functions, and promote product lines. 3) Drop shipper: A drop shipper accepts orders from customers and forwards these orders to producers, which then ship the desired products directly to customers. Although drop shippers take title to goods, they never physically handle or even see the merchandise. These intermediaries often operate in industries selling bulky goods, such as coal and lumber, which customers buy in large lots. 4) Mail-order wholesaler: A mail-order wholesaler is a limited-function merchant wholesaler that distributes physical or online catalogs as opposed to sending sales representatives to contact retail, business, and institutional customers. Customers then make purchases by mail, by phone, or online. Such a wholesaler often serves relatively small customers in outlying areas.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 178. What are the different types of agents and brokers? ANSWER: Brokers and agents are a group of independent wholesaling intermediaries who never take title, but may or may not take possession of the goods they handle. They normally perform fewer services than merchant wholesalers, working mainly to get the buyers and sellers together. Agents and brokers fall into the following five categories: 1) Commission merchants: Commission merchants predominate in the markets for agricultural products. They take possession when producers ship goods such as grain, produce, and livestock to central markets for sale. They act as producers’ agents and receive agreed upon fees when they make sales. They sell the goods at the best possible prices and then deduct their fees from the sales’ proceeds. 2) Auction house: An auction house gathers buyers and sellers in one location and allows potential buyers to inspect merchandise before submitting competing purchase offers. Auction house commissions typically reflect specified percentages of the sales prices of the auctioned items. 3) Brokers: Brokers work mainly to bring together buyers and sellers. A broker represents either the buyer or the seller, but not both, in a given transaction, and the broker receives a fee from the client when the transaction is completed. 4) Selling agents: A selling agent is a wholesaling intermediary for the entire marketing program of a firm’s product line. They exert full authority over pricing decisions and promotional outlays and often provide financial assistance to the manufacturer. 5) Manufacturers’ representative: A manufacturers’ representative is a wholesaling intermediary that represents manufacturers of related but noncompeting products and receives a commission on each sale. Manufacturers often delegate marketing tasks to many of these agents who operate in specific territories.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 179. Discuss the different types of direct marketing. ANSWER: The different types of direct marketing are: 1) Direct mail: It is the use of mail to deliver promotional materials to potential customers and to then take their orders by return mail, phone, or fax. 2) Direct selling: Through direct selling, manufacturers completely bypass retailers and wholesalers. Instead, they set up their own channels to sell their products directly to consumers. 3) Direct-response retailing: In direct-response retailing, customers can order merchandise by mail or telephone, by visiting a mail-order desk in a retail store, or by computer or fax machine. The retailer then ships the merchandise to the customer’s home or to a local retail store for pickup. 4) Telemarketing: Telemarketing refers to direct marketing conducted entirely by telephone. It is the most frequently used form of direct marketing. It provides marketers with a high return on their expenditures, an immediate response, and the opportunity for personalized two-way conversations. 5) Internet Retailing: Internet-based retailers sell directly to customers via virtual storefronts on the Web. They usually maintain little or no inventory, ordering directly from vendors to fill customer orders received via their websites. 6) Automatic merchandising: Automatic merchandising is the use of vending machines to sell products. It is primary used to sell items such as snacks, soft drinks, lottery tickets. But today, most items can be sold through vending machines. The ability to accept credit cards has enabled vending machines to sell high-end items such as iPods, headphones, and Sony PlayStation games. 180. What is Internet retailing? How has the Internet enhanced the functions of the direct marketers? ANSWER: Internet-based retailers sell directly to customers via virtual storefronts on the Web. They usually maintain little or no inventory, ordering directly from vendors to fill customer orders received via their websites. The Internet revolution has transformed the ways in which retailers, wholesalers, and direct marketers connect with their consumers. The Internet has empowered direct marketers by facilitating ever more sophisticated database segmentation. Traditional catalog and direct-mail marketers have integrated Internet sites, Web advertising, and emailing programs into a cohesive targeting, distribution, and repeat-buying strategy. Match each item with the correct statement below. a. stock-keeping unit (SKU) b. markup c. markdown d. retail convergence e. scrambled merchandising f. atmospherics g. broker h. general merchandise retailer i. category killer j. rack jobber Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers k. supercenter l. auction house m. specialty store n. retailers o. mass merchandiser p. truck jobber q. direct marketing r. drop shipper s. planned shopping center t. wheel of retailing 181. _____ are the marketing intermediaries in direct contact with ultimate consumers. ANSWER: n 182. _____ is a hypothesis that attempts to explain the patterns of change in retailing. ANSWER: t 183. To identify varying items within a product line, retailers refer to a specific product offering as a(n) _____. ANSWER: a 184. _____ is the amount a retailer adds to the cost of a product to determine its selling price. ANSWER: b 185. _____ is the amount by which a retailer reduces the original selling price of a product. ANSWER: c 186. A(n) _____ is a group of retail stores designed, coordinated, and marketed to shoppers in a geographic trade area. ANSWER: s 187. The physical characteristics and amenities of a store that attract customers and satisfy their shopping needs are referred to as _____. ANSWER: f 188. A limited-line retail store that offers huge selections and low prices in single product lines is known as a(n) _____. ANSWER: i 189. A(n) _____ typically handles only part of a single product line. ANSWER: m

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 190. A(n) _____ emphasizes lower prices for well-known brand-name products, high product turnover, and limited services. ANSWER: o 191. A(n) _____ carries a wide variety of product lines, stocking all of them in some depth. ANSWER: h 192. A(n) _____ is a large store that combines groceries with discount store merchandise. ANSWER: k 193. _____ describes a situation in which similar merchandise is available from multiple retail outlets distinguished by price more than any other factor. ANSWER: d 194. _____ is a retailing practice of combining dissimilar product lines to boost sales volume. ANSWER: e 195. A(n) _____ is a limited-function merchant wholesaler that markets perishable food items. ANSWER: p 196. A(n) _____ accepts orders from customers and forwards these orders to producers, which then ship the desired products directly to customers. ANSWER: r 197. A(n) _____ is a full-function merchant wholesaler that markets specialized lines of merchandise to retail stores. ANSWER: j 198. A(n) _____ gathers buyers and sellers in one location and allows potential buyers to inspect merchandise before submitting competing purchase offers. ANSWER: l 199. A(n) _____ is an agent wholesaling intermediary whose primary function is to bring together buyers and sellers. ANSWER: g 200. Internet retailing, vending machines, and telemarketing are examples of _____. ANSWER: q

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 201. In order for a new business to be competitive in the market, it must often offer lower prices than its more established rivals. The business may cut services or offer fewer services so that it can offer these reduced prices while maintaining a profit margin. As the business becomes more established and its older rivals are put out of business, it can begin to offer more services and raise its prices. Which of the following concepts does the paragraph best illustrate? a. r etailing strategy b. r etail convergence c. e volution of retail d. w heel of retailing e. t argeted retail ANSWER: d 202. Dmitri recently opened a sporting goods store. There are several other sporting goods stores in his town, all of which have been open for several years. These rival businesses offer reasonably priced goods as well as such “extras” as appointments with equipment consultants, in-house equipment personalization, and special ordering of items not included in the regular store inventory. Dmitri knows that he needs to make his new business stand out if it is going to compete successfully with the established businesses. According to the wheel of retailing, what strategy would help Dmitri gain a foothold for his business in the local sporting goods market? a. o ffer a service that none of his rivals offer b. o ffer limited services and lower prices than his rivals c. o ffer the same services as his rivals and lower his prices d. o ffer exactly the same product prices and services as his rivals e. o ffer products and services that are slightly different from those of his rivals ANSWER: b

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 203. You are in the process of starting your own business, a specialty cupcake store. From your study of marketing, you realize that many of your business decisions, such as where to open the store and how to advertise it, will depend on the segment of the population you want to attract as customers for your product. You start looking at data about the types of stores in different parts of the town and the demographics of the individuals in different neighborhoods. What are you doing in this process? a. e ngaging in category management b. c reating a promotional strategy c. s electing a target market d. a nalyzing the wheel of retailing e. m arketing to the environment ANSWER: c 204. The new CEO of a struggling cell phone service provider is trying to revitalize the company by revamping its business strategy. The CEO surveys the current service provider market and sees that there are a few large companies with similar business models: customers are required to chose from a limited number of plans, and are then locked into those plans for at least two years by contract. In order to even enter into a contract with the service provider, the customer must have proof of a steady income and be able to pass a credit check. The CEO sees that many individuals in the 15 to 24-year-old age bracket cannot meet these standards and are not being served by the larger companies. She decides to make her company unique by offering no-contract, pay-as-yougo cell phone service. Customers do not need to pass a credit check or provide proof of income in order to sign up for service, and can discontinue service at any time. According to this scenario and your knowledge of marketing strategies, which statement best explains the new CEO’s actions? a. T he CEO felt sorry for people with bad credit because other cell phone companies were not meeting their needs, so she decided to create a company that did. b. T he CEO decided to create a unique business plan even though it would not meet the needs of the majority of the population, just so that her company would stand out. c. T he CEO created a business plan that would target the low-income market, knowing she could take advantage of the fact that other companies require proof of income. d. T he CEO wanted to make an alternative cell phone service available for indecisive people who disliked the contracts and plan choices required by other companies. e. T he CEO realized that the youth segment of the market was not being served and decided to fill that niche in the business by creating a business plan that targeted it. ANSWER: e

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 205. Dani works in the fine fragrances sales floor in a major department store. She recently attended a mandatory training seminar in which sales personnel were coached on ways to increase sales through personal interactions with customers. Now Dani is putting what she learned to work. When customers ask her the price of a single bottle of fragrance, Dani gives them the information they want but also lets them know that for a slightly higher cost, they can purchase a gift set. The gift set contains a slightly smaller bottle of the fragrance but includes lotion and shower gel in the same scent. Since Dani started using this technique, the average value of each sale she makes has increased by 15%. Based on Dani’s actions, which component of the department store’s retail strategy did the training seminar focus on? a. p ricing b. p romotion c. m erchandising d. c ustomer service e. s tore atmospherics ANSWER: b 206. Which elements of retail strategy would be most important for a company that has just decided to construct a brick-and-mortar storefront? a. l ocation and customer service b. s tore atmospherics and customer service c. p romotion and store atmospherics d. l ocation and store atmospherics e. p romotion and customer service ANSWER: d 207. Which statement best describes the similarities between retail convergence and scrambled merchandising? a. B oth are frustrating to consumers because they make it difficult to know which stores carry certain items. b. B oth terms describe the contemporary retail market, in which similar items are available from multiple retailers. c. B oth are retail trends that are blurring the lines between different types of retailers, making classification difficult. d. B oth terms describe the practice of offering very dissimilar products at the same location in the hope of increasing overall sales. e. B oth are methods used to classify types of retailers by such characteristics as “form of store ownership” and “services provided.” ANSWER: c

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 208. Tanisha is the manager of a grocery store in a beach town. During the summer, many vacationers visit the store. Although the store experiences an increase in total revenue during these months, Tanisha believes that she can boost sales further by expanding the grocery store’s offerings to include nonfood items that vacationers might need. Tanisha is going to start stocking sunscreen, sand toys, postcards and travel guides, and even some inexpensive beach wear. What marketing strategy does Tanisha’s decision best demonstrate? a. r etail convergence b. s crambled merchandising c. t argeted marketing d. m ass merchandising e. s pecialty retailing ANSWER: b 209. Which of the following services provided by a wholesaling intermediary would be an example of the intermediary’s creating place utility for consumers? a. s elling b. b uying c. f inancing d. t ransporting e. r isk taking ANSWER: d 210. One of the main ways in which a wholesaling intermediary can cut the costs of buying and selling between manufacturers and customers is by __________________. a. t aking on the risk of merchandise spoilage, theft, or obsolescence b. p roviding marketing information to manufacturers and customers c. r epresenting multiple producers and reducing the number of transactions d. f acilitating the exchange of merchandise titles from producers to customers e. u sing agents and brokers who do not actually take title to merchandise ANSWER: c

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 211. An independent wholesaling intermediary who brings together buyers and sellers but represents only one of the parties and receives a fee when the transaction is completed is a ______________. a. m anufacturers' representative b. c ommission merchant c. s elling agent d. r ack jobber e. b roker ANSWER: e 212. drop shipperAlejandro is the manager of a combination gas station and convenience store located at the intersection of two busy highways. Recently he was approached by the owner of a new company, Fro2Go, about the possibility of placing their product in his store. Fro2Go places its frozen yogurt dispensers in convenience stores throughout the state. Every week, a company representative visits each location to check on status of the dispensers, deliver fresh frozen yogurt supplies, and remove any old or expired product. What kind of independently owned wholesaling intermediary is Fro2Go? a. r ack jobber b. d rop shipper c. t ruck wholesaler d. industrial distributor e. c ash-and-carry wholesaler ANSWER: c 213. Which type of non-store retailing both allows products to be easily demonstrated and allows time for prospective customers to become well informed about the product? a. t elevision home shopping b. a utomatic merchandising c. m ail-order wholesaling d. c atalog marketing e. t elemarketing ANSWER: a

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 214. You represent a group of investors who are interested in entering the retail business. Many of these investors have significant past experience working with retailers, and they realize that the retail world is very competitive. They are also aware of the high failure rate for startups in this industry, so they ask you to recommend a retail strategy that could minimize potential losses by meeting the following criteria:

Overall operating expenses would be low. No traditional storefront or personal selling would be necessary. Minimal customer service would have to be provided. Customers would be able to place orders via the Internet, telephone, or mail. Based on the investors’ preferences, which retail strategy would you recommend? a. d irect selling b. t elemarketing c. c atalog marketing d. a utomatic merchandising e. t elevision home shopping ANSWER: c 215. Which of the following statements best describes the impact of Internet technology on the retail sector? a. I nternet-based retailers with virtual storefronts have started to replace traditional retailers. b. T raditional brick-and-mortar retailers have expanded and thrived by incorporating Internet retail. c. I nternet technology has led to better communication between manufacturers and retailers, making wholesalers less relevant. d. T raditional brick-and-mortar and direct retailers have suffered declines because Internet retail is friendlier to the environment. e. I nternet technology has allowed retailers to offer many products at lower prices, but has also had negative effects on the development of retailer-customer relationships. ANSWER: b

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 216. Volkswagen recently launched an ad campaign designed to market its Crafter model vans to wholesalers. In the televised version of the ad, viewers see a giant QR code being constructed out of packing crates. A passing individual with a smart phone scans the “code” from a distance and is taken to a video which shows the same QR code being disassembled and all of the packing crates being placed inside a Volkswagen Crafter van. The final seconds of the ad reemphasize the carrying capacity of the van and how ideal it is for businesses that need delivery vehicles.

Which of the following concepts does the ad campaign demonstrate? a. B usiness-to-business (B2B) marketing is currently the fastest-growing marketing segment. b. N ewer forms of advertisement and marketing can now be used to target the wholesale market. c. T he Internet and associated technologies are used to support new and innovative marketing strategies. d. T he Internet allows manufacturers to advertise directly to regular consumers, reducing the importance of the wholesale sector. e. B usinesses that specialize in the development of marketing strategies face increased competition from the free marketing provided by social media users. ANSWER: c 217. Getting ready to open Jim's Juice Bar, the owner has identified a target market: Jim will market to young professionals aged 18–34 who live within a certain distance of the store. In the next step of his marketing strategy process, Jim must specify elements of the retailing mix. These include all of the following except: a. Merchandise strategy

b. Promotion goals c. Store atmosphere d. Market research plan e. Employment plan ANSWER: d, e 218. In selecting the target market for your gourmet tea store, you were influenced by multiple factors. These included: a. The number of people who appreciate and will go out of their way to buy gourmet tea. b. How much profit you can make by selling to gourmet tea enthusiasts. c. How stiff the competition will be from other tea merchants or sellers of substitute products. d. FDA standards for tea safety. e. All of the above ANSWER: a, b, c

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 219. You are worried about adding too high a markup to the watches you sell at your jewelry store. To reduce this markup and still cover costs, you will focus on: a. Increasing inventory turnover rate

b. Decreasing inventory turnover rate c. Reducing the number of retail services you perform d. Increasing the number of retail services you perform e. Carefully judging the price that consumers are willing to pay for your jewelry. ANSWER: a, c, e 220. Developing a customer service strategy for your sporting goods store, you know that services can add value to the shopping experience. Your business partner agrees, but makes a comment that shows he doesn't really understand this type of strategy. Identify his comment. a. At this point, we should agree to offer gift wrapping.

b. At this point, we should specify our return privileges. c. At this point, we should agree to provide home delivery. d. We don't need to decide whether to charge customers for gift wrapping. e. Our basic objective is to attract and retain customers. ANSWER: d 221. Some supermarkets now offer in-store bank branches, photography studios, and Starbucks or Dunkin’ Donuts outlets. This is an example of: a. Retail convergence

b. Scrambled merchandising c. Hypermarkets d. Supercenters e. Direct marketing ANSWER: b 222. Garden Wholesalers is a wholesaling intermediary representing manufacturers of home gardening tools. Choose the example(s) of utility this firm creates for consumers. a. Makes spades, pots, and other items available during prime planting seasons

b. Helps deliver young trees to local nurseries c. Invents better seeds d. Improves the efficacy of pesticides e. Participates in cooperative advertising ANSWER: a, b

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 223. You have been asked to evaluate the services provided to your book publishing firm by its wholesaling intermediaries. To begin, you create a table listing the types of services your firm expects to receive from each of these specialists. The table includes all of the following except: a. Providing a sales force to call on bookstores

b. Maintaining book warehouses c. Providing prompt delivery of new books d. Evaluating the credit risk of small or independent book shops e. Repairing damaged books ANSWER: e 224. You have always been interested in wholesaling operations, and would like to get a job with a merchant wholesaler. Choose the type(s) of employers you will seek interviews with. a. Rack jobbers

b. Truck wholesalers c. Drop shippers d. Brokers e. Selling agents ANSWER: a, b, c 225. After studying the success of direct marketers like Amway and Tupperware, you've decided to build a skin care business based on this nonstore retailing approach. Choose the direct marketing tools you could use. a. Direct mail

b. Telemarketing c. Mail-order catalogs d. Personal salespeople in cosmetics stores e. Direct shopping via cable TV ANSWER: a, b, c, e 226. You face a key decision for your swimwear store: whether or not to add an e-commerce site where consumers can directly purchase your products. You should weigh all of the following characteristics of e-commerce selling except: a. E-commerce selling is rarely used in conjunction with selling at brick-and-mortar stores.

b. E-commerce selling can help keep your costs down. c. E-commerce sites can help personalize the selling of consumer products like swimwear. d. E-commerce sites always depersonalize the selling of consumer products like swimwear. e. E-commerce sites cannot reduce retailing costs. ANSWER: b, c

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 227. Dollar General is one of the fastest growing retail store chains in the United States and typically establishes store locations in under-served or rural towns. In the early days, the stores were small with limited product lines but as Dollar General has seen its revenues grow, it's built new stores, added product lines, and has become a major grocery and household item competitor. What concept explains the patterns of change over time for the Dollar General company? a. w heel of retailing b. l aw of retail metamorphosis c. e volution of retail d. r etail growth theorem ANSWER: a 228. The combination of the retailing mix - merchandise strategy, customer service standards, pricing guidelines, target market analysis, promotion goals, location/distribution decisions and store atmosphere create a retailer's ________. a. i mage b. b rand c. c ompetitive position d. d ifferential advantage ANSWER: a 229. A new specialty retail store, Threads is making decisions about its target market and access the US Census Bureau website to identify the characteristics of individuals living within its market area. It's specifically interested in the distribution based on income, education, and age of residents. This information helps Threads understand the ______ profile of the market area. a. d emographic b. g eographic c. p sychographic d. p urchasing ANSWER: a 230. The profit potential of a market area is an important factor influencing retail stores' decisions regarding their target markets. a. True b. False ANSWER: True

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 231. Casey's General Store is a popular ______-type retailer offering gasoline, snacks, extended store hours, and rapid checkout service. a. c onvenience b. g rocery c. d iscount d. s pecialty ANSWER: a 232. Wendy has a membership at Sam's Club and Costco and enjoys purchasing items in bulk to save money for her family. The stores are huge and are distinct in their appearance since they feature large aisles and commercial shelving. It's more like shopping in a working warehouse but Wendy loves searching for bargains and e veryday staples such as paper towels and cleaning supplies. Sam's Club and Costco are examples of _____ retailers. a. d iscount b. category killer c. s pecialty d. d epartment store ANSWER: a 233. M enards is known primarily as a home improvement store with lumber, plumbing, paint, electrical, and tools as their most sought-after products. However, the store also features a "grocery" section with milk, break, cereal, and other staple items in its store. This is an example of __________, the practice of combining dissimilar product lines to boost sales volume. a. s crambled merchandising b. r etail convergence c. r etail confusion d. d iverse merchandising ANSWER: a 234. Carson cares deeply about the environment and strives to eat clean by choosing foods that are natural and contain no artificial ingredients. When buying fresh produce, he's willing to pay more for organic and loves that organic produce is more widely available - from Fresh Market, Whole Foods, Meijer, Kroger and even Aldi's. He especially likes shopping at Aldi's where he can save money when buying fresh, organic produce. This is an example of: a. r etail convergence b. s crambled merchandising c. l ocal sourcing d. p roduce preferences ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 235. G rainger is a wholesaler who specializes in fasteners and tools for manufacturing and commercial customers. They produce a large catalog of their products and business customers may place orders by phone or via the Internet through their web store. Customers enjoy the flexibility of shopping at their convenience and purchasing items when they have a need rather than keeping their own inventory of these products. Grainger is creating _____ utility for their customers. a. t ime b. p lace c. p ossession d. f inancial ANSWER: a 236. W hen purchasing a new home, Tim and Brenda were represented by their realtor and met at their attorney's office to authorize the paperwork transferring the home from the sellers to them. The attorney provided _____ utility as part of the purchase of the home. a. p ossession b. p lace c. t ime d. l egal ANSWER: a 237. M arco is a representative for Nationwide Magazines and serves the central southwest region. He provides inventory for a variety of retail stores such as grocery, drug, and convenience stores and is responsible for maintaining the stock and appearance of magazines in the stores. He and his company are known as: a. r ack jobbers b. t ruck jobber c. m erchant wholesaler d. d rop shipper ANSWER: a 238. Capodice Foods is wholesaler specializing in fresh produce and m akes regular, daily deliveries to grocery stores and restaurants. Capodice Foods is an example of a _____ wholesaler. a. t ruck b. r ack jobber c. m erchant d. c ommission ANSWER: a

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Chapter 15: Retailers, Wholesalers, and Direct Marketers 239. Catalog retailing is growing at a slower rate than brick-and-mortar retailers. a. True b. False ANSWER: False 240. David is recently divorced and his ex-wife took most of their kitchen equipment when she relocated. He's decided to host a Pampered Chef party and invite friends who enjoy cooking. He knows that they will enjoy sampling various dips and dishes and will likely buy an item or two. He can purchase Pampered Chef items at a discount and may even earn free items as a benefit of hosting the party. Pampered Chef is classified as a(n): a. d irect sales retailer b. m ass merchandiser c. s pecialty retailer d. r etail cooperative ANSWER: a 241. Traditional brick-and-mortar stores such as Macy's have recently closed stores due to the growing trend of Internet shopping and changing consumer behavior who visit malls on a less frequent basis. a. True b. False ANSWER: True 242. F astenal was one of the first business-to-business suppliers to offer vending machines or kiosks in manufacturing facilities to enable their customers' employees to "purchase" supplies such as gloves and safety equipment including goggles, ear protection, and masks. This innovation enabled the customers to track their purchases and hold employees accountable for using supplies. This is an example of: a. a utomatic merchandising b. t elemarketing c. d irect-response retailing d. d irect mail ANSWER: a

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 1. An IMC strategy begins with the organization’s goods and services and then works its way toward consumer wants. a. True b. False ANSWER: False 2. An IMC strategy sends product-focused messages. a. True b. False ANSWER: False 3. IMC must not only deliver messages to intended audiences but also gather responses from them. a. True b. False ANSWER: True 4. An IMC strategy separates the promotional mix into parts and views them as isolated components. a. True b. False ANSWER: False 5. IMC broadens the concept of promotion to include all the ways a customer has contact with the organization, adding packaging, store displays, and online advertising to traditional media. a. True b. False ANSWER: True 6. An IMC strategy helps marketers create a unified personality for the product or brand by choosing the right elements from the promotional mix to send the message. a. True b. False ANSWER: True 7. When an organization employs an integrated approach to marketing, it risks sending conflicting information that confuses consumers. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 8. The success of any IMC program depends on identifying the members of an audience and understanding what they want. a. True b. False ANSWER: True 9. Databases and interactive marketing are important IMC tools that help marketers collect information from customers and then segment markets according to demographics and preferences. a. True b. False ANSWER: True 10. The function of an IMC strategy ends with delivering promotional messages to intended audiences. a. True b. False ANSWER: False 11. Mass media such as TV ads, while still useful, are no longer the mainstay of marketing campaigns. a. True b. False ANSWER: True 12. An IMC strategy helps marketers create a unified personality for the product by choosing the right elements from the promotional mix to send the message. a. True b. False ANSWER: True 13. Successful implementation of IMC requires that everyone involved in every aspect of promotion function as a team, presenting a consistent, coordinated effort at every point of customer contact. a. True b. False ANSWER: True

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 14. Although the types of promotion may vary from a highly personalized sales presentation to such nonpersonal promotions as television advertising and dollar-off coupons, each goes through every stage in the communications process. a. True b. False ANSWER: True 15. The first step in the AIDA concept involves convincing the would-be buyer of the product’s ability to satisfy his or her needs. a. True b. False ANSWER: False 16. The process of communicating promotional messages begins with encoding. a. True b. False ANSWER: True 17. Feedback lets marketers evaluate the effectiveness of the message and tailor their responses accordingly. a. True b. False ANSWER: True 18. A nonpurchase is an example of a receiver’s feedback. a. True b. False ANSWER: True 19. Noise can also result from distractions within an advertising message itself. a. True b. False ANSWER: True 20. Nonverbal cues like body language and tone of voice are important to the communication process. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 21. The promotional mix requires a carefully designed blend of variables to satisfy the needs of a company’s customers and achieve organizational objectives. a. True b. False ANSWER: True 22. Personal selling is the most novel form of promotion. a. True b. False ANSWER: False 23. Mass consumption and geographically dispersed markets make advertising particularly appropriate for marketing goods and services aimed at large audiences likely to respond to the same promotional messages. a. True b. False ANSWER: True 24. Sales promotion provides a long-term incentive to emphasize, assist, supplement, or otherwise support the objectives of the promotional program. a. True b. False ANSWER: False 25. Direct communications, other than personal sales contacts, between buyer and seller, designed to generate sales, information requests, or store or website visits is referred to as direct marketing. a. True b. False ANSWER: True 26. Publicity is the marketing-oriented aspect of public relations. a. True b. False ANSWER: True

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 27. Compared with personal selling, advertising, and sales promotion, expenditures for public relations usually are high in most firms. a. True b. False ANSWER: False 28. Guerilla marketing is an expensive marketing technique. a. True b. False ANSWER: False 29. One of the advantages of guerrilla marketing is its ability to reach a wide audience. a. True b. False ANSWER: False 30. Public relations efforts such as publicity frequently offer lesser credibility than other promotional techniques. a. True b. False ANSWER: False 31. A major advantage of advertising is the ease of measuring advertising effectiveness. a. True b. False ANSWER: False 32. A sponsor purchases access to the sponsored activity’s audience and the image associated with the activity. a. True b. False ANSWER: True 33. In sponsored events, event organizers control the coverage, which typically focuses on the sponsor. a. True b. False ANSWER: False

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 34. Institutional advertising is limited to advertising sponsored by a specific profit-seeking group. a. True b. False ANSWER: False 35. Maria sees an ad for a new service offered by the U.S. Postal Service to make shipping packages easier during the holidays. This ad is an example of institutional advertising. a. True b. False ANSWER: False 36. A tourism ad promoting Vermont as a winter holiday destination is an example of product advertising. a. True b. False ANSWER: False 37. Sam watches an ad on TV for a new laptop from Sony. This ad is an example of product advertising. a. True b. False ANSWER: True 38. Persuasive advertising is typically used in the latter part of the maturity stage and throughout the decline stage of the product lifecycle. a. True b. False ANSWER: False 39. Reminder advertising is typically used during the growth stage and the early part of the maturity stage of the product lifecycle. a. True b. False ANSWER: False 40. Advertising attempts to condition consumers to adopt favorable viewpoints toward a promotional message. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 41. The goal of an ad is to improve the likelihood that a customer will buy a particular good or service. a. True b. False ANSWER: True 42. Consumer perceptions of superiority pay off in the firm’s ability to raise prices without losing market share. a. True b. False ANSWER: True 43. The secret to choosing the best advertising strategy is developing a message that best positions a firm’s product in the audience’s mind. a. True b. False ANSWER: True 44. Market leaders are more likely to engage in comparative advertising than new entrants. a. True b. False ANSWER: False 45. An advantage of celebrity testimonials is improved product recognition in a promotional environment filled with hundreds of competing 15- and 30-second commercials. a. True b. False ANSWER: True 46. The most effective testimonial ads link the celebrity and the advertised good or service. a. True b. False ANSWER: True 47. Cooperative advertising campaigns originated to take advantage of the media’s practice of offering lower rates to local advertisers than to national ones. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 48. Interactive advertising creates dialogue between marketers and individual shoppers, providing more materials at the user’s request. a. True b. False ANSWER: True 49. The advertiser’s challenge in interactive advertising is to gain and hold consumer interest in an environment where these individuals control what they want to see. a. True b. False ANSWER: True 50. Successful interactive advertising adds value by offering the viewer more than just product-related information. a. True b. False ANSWER: True 51. An advertising campaign is a series of different and unrelated ads that use multiple themes and appear in different media over a long period of time. a. True b. False ANSWER: False 52. Viewers are likely to practice selective perception and tune out statements they perceive as too strong or not credible. a. True b. False ANSWER: True 53. The headlines and illustrations in the print ad typically include the company name, address, phone number, Web address, slogan, trademark, or simply a product photo. a. True b. False ANSWER: False

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 54. Advergames are either online games created by marketers to promote their products to targeted audiences in an interactive way or ads or product placements inserted into online video games. a. True b. False ANSWER: True 55. Banner advertisements on a Web page that link to an advertiser’s site are the least common type of advertising on the web. a. True b. False ANSWER: False 56. Banners have evolved into a more target-specific technique for Internet advertising with the advent of missiles. a. True b. False ANSWER: True 57. The objective of media selection is to achieve adequate media coverage without advertising beyond the identifiable limits of the potential market. a. True b. False ANSWER: True 58. The greatest share of television advertising revenues comes from local advertisers, while most newspaper advertising revenues come from organizations that advertise nationally. a. True b. False ANSWER: False 59. Cable advertising offers marketers access to more narrowly defined target audiences than other broadcast media can provide. a. True b. False ANSWER: True

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 60. Some types of products like cigarettes and smokeless tobacco are banned from television advertising. a. True b. False ANSWER: True 61. Advertisers like radio for its ability to reach people while they drive because they are a captive audience. a. True b. False ANSWER: True 62. The primary disadvantage of magazine advertising is that magazines lack the flexibility of newspaper, radio, and TV. a. True b. False ANSWER: True 63. Legislation regulates the placement of outdoor advertising near interstate highways. a. True b. False ANSWER: True 64. Setting the timing and sequence for a series of advertisements is called media scheduling. a. True b. False ANSWER: True 65. Nonmarketing public relations refer to a company’s messages about general management issues. a. True b. False ANSWER: True 66. Marketing public relations (MPR) refers to focused PR activities that directly support marketing goals. a. True b. False ANSWER: True

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 67. Proactive MPR responds to an external situation that has potential negative consequences for an organization. a. True b. False ANSWER: False 68. The aspect of public relations most directly related to promoting a firm’s products is publicity. a. True b. False ANSWER: True 69. When a fast food restaurant chain joins with a movie studio to promote a new film, it is an example of crosspromotion. a. True b. False ANSWER: True 70. According to the Uniform Commercial Code, puffery is a quantifiable statement about product quality or performance that constitutes an “express warranty,” which obligates the company to stand behind its claim. a. True b. False ANSWER: False 71. An ethical issue surrounding online advertising is the use of cookies, small text files automatically downloaded to a user’s computer or mobile device when a site is visited. a. True b. False ANSWER: True 72. Advertising permits a low promotional expenditure per sales unit because it reaches mass audiences. a. True b. False ANSWER: True 73. An assumption behind the task-objective approach is that marketers can measure the productivity of each promotional dollar. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 74. Brand-building efforts to generate or enhance consumers’ perceptions of value in a product, brand, or organization can be measured over the short term. a. True b. False ANSWER: False 75. Message research assesses how well a particular medium delivers the advertiser’s message, where and when to place the advertisement, and the size of the audience. a. True b. False ANSWER: True 76. A blind product test is a method of posttesting the effectiveness of advertisements and during this method respondents do not see copies of the magazine after their initial reading but are asked to recall the ads from memory. a. True b. False ANSWER: False 77. The assumption behind recognition tests is that future sales are related to advertising readership. a. True b. False ANSWER: True 78. In the context of Web communication, the term “hits” represents the number of user requests for a file. a. True b. False ANSWER: True 79. In the context of Internet advertising, cost per response is a measurement technique that relates the cost of an ad to every thousand people who view it. a. True b. False ANSWER: False

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 80. In the context of Internet advertising, click-through is a direct marketing technique that relates the cost of an ad to the number of people who click it. a. True b. False ANSWER: True 81. Which of the following is true of an IMC strategy? a. It begins with the organization’s goods and services. b. It sends product-focused messages. c. It views the parts of a promotional mix as isolated components. d. It begins with consumer wants or needs. ANSWER: d 82. Which of the following would be an example of niche marketing? a. Frito-Lay introducing a commercial for its new flavor “Cream-n-Onion” in India b. Standard Chartered bank advertising its newly devised investment solution options in The Economist c. A firm hiring people to hand out flyers about its new product at a shopping mall d. A firm advertising a new brand of biscuits on hoardings ANSWER: b 83. Delite, a food and beverage company, is launching a new line of frozen food. The marketing department at Delite wants to develop an IMC strategy for the product launch. Which of the following should be the first step taken by the marketing department in order to develop an effective IMC strategy? a. Design ads for the print and electronic media for maximum reach b. Identify wants and needs of consumers c. Establish the product as a superior addition to the existing product range d. Isolate parts of the promotional mix and allocate them to appropriate departments ANSWER: b 84. The _____ is at the heart of integrated marketing communications. a. product b. brand c. organization d. customer ANSWER: d

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 85. When Sara went to a convenience store to get her weekly grocery shopping done, she got a free sample of a new cereal that had just been introduced in the market. This information indicates that the cereal manufacturer is using _____ to promote its product. a. survey sampling b. direct sampling c. panel sampling d. quota sampling ANSWER: b 86. Which of the following acts as the source of the message communicated to the receiver in the communication process? a. Decoder b. Sender c. Messenger d. Sponsor ANSWER: b 87. The AIDA concept refers to the steps in: a. the development of an IMC program. b. the consumer purchase decision process. c. the distribution of a product. d. the production of a product. ANSWER: b 88. According to the AIDA concept, which of the following is the first function of a promotional message? a. Arousing interest in the good or service b. Gaining the potential consumer’s attention c. Stimulating desire by convincing the potential buyer of the product’s ability to satisfy his or her needs d. Producing an action in the form of a purchase or a more favorable attitude that may lead to a future purchase ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 89. Brad is a pharmaceutical representative for Merck. He attends a medical conference where he gives a presentation about a new drug that is being manufactured by his company. Brad’s presentation is a part of Merck’s IMC effort and it represents: a. encoding of the product message. b. decoding of the product message. c. feedback for the promotional message. d. noise generated by the promotional message. ANSWER: a 90. The communication process begins with: a. noise. b. channeling. c. encoding. d. decoding. ANSWER: c 91. In communicating a promotional message, decoding refers to the: a. translation of the message into understandable terms and transmitting it through the communication channel. b. receiver’s interpretation of the message transmitted through the communication channel. c. receiver’s response to the message transmitted through the communication channel. d. noise that interferes with the transmission of the message through the communication channel. ANSWER: b 92. When potential buyers call up to place their orders after seeing a telemarketing promotional message for a product, it is an example of: a. encoding. b. decoding. c. noise. d. feedback. ANSWER: d

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 93. When a major pharmaceutical scandal shook people’s belief in the Federal Drug Administration, the public relations department devised an IMC strategy to positively influence public perception. An evaluation of the effectiveness of the IMC strategy reported a positive change in the public perception of the government agency. In the context of the communication process, this change in perception represents _____. a. encoding b. channeling c. feedback d. noise ANSWER: c 94. In the context of the communication process, translating a message into understandable terms and transmitting it through a communications channel is known as _____. a. decoding b. referencing c. polarizing d. encoding ANSWER: d 95. The receiver’s response, known as _____, completes the communication process. a. epistle b. encoded message c. feedback d. channeled data ANSWER: c 96. Which of the following is the oldest form of promotion? a. Product placement b. Personal selling c. Guerrilla marketing d. Ambush marketing ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 97. Which of the following is an example of personal selling? a. Banners on websites b. Videoconferencing c. Print ads d. Direct mailers ANSWER: b 98. Which of the following terms best represents an interpersonal influence process that involves a seller’s promotional presentation conducted on a face-to-face basis with the buyer? a. Social referencing b. Personal selling c. Mass marketing d. Advertising ANSWER: b 99. Paid, nonpersonal communication through various media about a business firm, not-for-profit organization, product, or idea by a sponsor identified in a message intended to inform or persuade members of a particular audience is called _____. a. sales promotion b. advertising c. product placement d. direct marketing ANSWER: b 100. Which of the following constitutes nonpersonal selling? a. Product placement in a TV show b. Face-to-face interaction between a buyer and a seller c. Telephonic conversation between a buyer and a seller d. A videoconference between a marketer and a customer ANSWER: a 101. Which of the following is an example of advertising? a. A billboard with the image of a celebrity endorsing a product b. Conspicuous placing of a product in a popular TV show c. Giving away free sample of a product d. Holding a contest to promote a product ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 102. Which of the following methods of promotion is most likely to be used for promoting a consumer product targeted at a geographically dispersed market if the audiences are likely to respond to the same promotional messages? a. Trade promotion b. Advertising c. Trade shows d. Personal selling ANSWER: b 103. Product placement is a form of non-personal selling where: a. a company pays a fee to have its products displayed prominently at department stores. b. a company pays a fee to have its products displayed prominently in a film or TV show. c. a company engages in promotional tie-ins with other firms through co-branding. d. a company positions its TV commercials during prime hours for its target market. ANSWER: b 104. A popular morning TV program shows its host and guests drinking beverages from mugs that have been engraved with the logo of a popular coffee chain. This is an example of: a. personal selling. b. trade promotion. c. product placement. d. sales promotion. ANSWER: c 105. A jewelry store organizes a jewelry design contest to promote the launch of its new line of charm bracelets. This is an example of: a. advertising. b. sales promotion. c. direct marketing. d. personal selling. ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 106. A manufacturer of a well-known brand of cosmetics offering buyback allowances to its retailers for a new line of lip color is an example of: a. guerrilla marketing. b. product placement. c. trade promotion. d. personal selling. ANSWER: c 107. Global Solutions Inc., an IT firm, regularly organizes meetings for its stockholders to update them on the firm’s performance and achievements. This is an example of: a. guerrilla marketing. b. sales promotion. c. a product placement program. d. a public relations program. ANSWER: d 108. Which of the following terms refers to the nonpersonal stimulation of demand for a good, service, person, cause, or organization through unpaid placement of significant news about it in a published medium or through a favorable presentation of it on the radio or television? a. Publicity b. Advertising c. Product placement d. Sponsoring ANSWER: a 109. Which of the following is true of using publicity as a promotional strategy? a. Companies have to spend more for publicity than advertising or personal selling. b. Companies have less control over whether the press publishes good or bad news. c. Consumers tend to believe more in company-disseminated information than in publicity-generated news. d. Companies tend to view all kinds of publicity—good or bad—as profitable for the company’s reputation and its brand equity. ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 110. The use of unconventional, innovative, and low-cost marketing techniques designed to get consumers’ attention in unusual ways is called _____. a. guerrilla marketing b. cause marketing c. mass marketing d. cloud marketing ANSWER: a 111. In an attempt to expand viewership of the television show Mystery Science Theater 3000 in its early days, the producers encouraged viewers to make copies of the show on videotapes and give them to friends. The closing credits included the words "Keep circulating the tapes!" This is an example of: a. guerrilla marketing. b. cause marketing. c. ambush marketing. d. cloud marketing. ANSWER: a 112. Which of the following is a disadvantage of personal selling as a promotional strategy? a. It elicits a delayed response from targeted consumers. b. It is difficult to measure its promotional effectiveness. c. It cannot mold the message to fit the customer need. d. It is expensive and involves high cost per contact. ANSWER: d 113. Which of the following is a disadvantage of advertising as a promotional strategy? a. It is expensive due to high cost per contact. b. It allows very little control over the final promotional message. c. It does not permit totally accurate measurements of results. d. It cannot be adapted to either mass audience or specific audience segments. ANSWER: c 114. Which of the following is a disadvantage of sales promotion as a promotional strategy? a. It elicits a delayed consumer response. b. It does not provide short-term increase in sales. c. It is difficult to measure its promotional effectiveness. d. It is difficult to differentiate from competitors’ efforts. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 115. Which of the following is a disadvantage of using direct marketing as a promotional strategy? a. It generates a delayed consumer response. b. It is expensive as it involves high cost per reader. c. It does not allow the use of customized, personal messages. d. It covers a small audience with targeted advertising. ANSWER: b 116. Which of the following is a disadvantage of using public relations as a promotional strategy? a. It involves much effort directed towards non-marketing oriented goals. b. It creates a negative attitude toward a product or company. c. It damages the credibility of a product or company. d. It is a highly expensive method of promotion. ANSWER: a 117. Which of the following is a disadvantage of guerrilla marketing? a. Customers don’t pay attention to it as it is a very traditional form of marketing. b. Marketers have to invest a lot of money for the innovation involved in guerrilla marketing. c. Competitors can easily imitate the techniques used in guerrilla marketing. d. Marketers run the risk of reaching a limited number of potential consumers. ANSWER: d 118. The Tostitos BCS National Championship game features the top two college football teams competing for the national title. The Tostitos brand name is included in the event’s name because Frito-Lay, the manufacturer, paid for: a. sponsorship. b. co-branding rights. c. direct marketing privileges. d. cooperative advertising. ANSWER: a 119. Nonpersonal selling of a particular good or service is called _____ advertising. a. institutional b. product c. corporate d. retail ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 120. A newly opened spa uses a print ad to promote the service packages it offers to customers. This is an example of _____ advertising. a. retail b. product c. institutional d. corporate ANSWER: b 121. Promotion of a concept, an idea, a philosophy, or the goodwill of an industry, company, organization, person, geographic location, or government agency is called _____ advertising. a. institutional b. product c. retail d. cooperative ANSWER: a 122. Think Green, a not-for-profit organization, promotes its “go vegan” lifestyle by publishing advertisements in the print media as well as electronic media. This is an example of _____ advertising. a. product b. institutional c. retail d. cooperative ANSWER: b 123. The American Heart Association runs ads in major magazines promoting its mission and successes. These ads are examples of _____ advertising. a. cooperative b. institutional c. ambush d. persuasive ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 124. Promotion that seeks to develop initial demand for a good, service, organization, person, place, idea, or cause is called _____ advertising. a. informative b. persuasive c. reminder d. evaluative ANSWER: a 125. Samsung is set to launch a new model of smartphones. Which of the following types of promotion should the company use to drive initial sales for its new model? a. Reminder advertising b. Informative advertising c. Persuasive advertising d. Evaluative advertising ANSWER: b 126. Promotion that attempts to increase demand for an existing good, service, organization, person, place, idea, or cause is called _____ advertising. a. informative b. persuasive c. ambush d. evaluative ANSWER: b 127. Advertising that reinforces previous promotional activity by keeping the name of a good, service, organization, person, place, idea, or cause before the public is called _____ advertising. a. ambush b. reminder c. informative d. guerrilla ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 128. When Think Green, a not-for-profit organization, realizes that its campaign for a “go vegan” lifestyle has lost its steam, it decides to renew the campaign by holding an international culinary contest for the best vegan recipe. This is an example of _____ advertising. a. informative b. reminder c. evaluative d. retentive ANSWER: b 129. Which of the following types of advertising is most likely to be used during the growth stage and the early part of the maturity stage of the product lifecycle? a. Persuasive advertising b. Reminder advertising c. Evaluative advertising d. Retentive advertising ANSWER: a 130. Which of the following types of advertising is most likely to be used in the latter part of the maturity stage and throughout the decline stage of the product lifecycle? a. Informative advertising b. Reminder advertising c. Associative advertising d. Persuasive advertising ANSWER: b 131. When a pharmaceutical company advertises that its product has a greater pain-relieving effect than Tylenol, it is using _____ advertising. a. cooperative b. comparative c. retail d. institutional ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 132. Which of the following is true of celebrity testimonials? a. The most effective celebrity testimonial ads use the most popular celebrity regardless of his/her credibility as a message source. b. The most effective celebrity testimonial ads link the celebrity and the advertised good or service. c. The most effective celebrity testimonial ads feature those celebrities who endorse the most number of products. d. The celebrity testimonial ads tend to be effective only when they are displayed in print media. ANSWER: b 133. Which of the following terms do advertisers use to describe a promotional environment that is filled with hundreds of competing 15- and 30-second commercials? a. Noise b. Click-through c. Split run d. Clutter ANSWER: d 134. _____ advertising includes advertising by stores that sell goods or services directly to the consuming public. a. Evaluative b. Referenced c. Associative d. Retail ANSWER: d 135. Gold Star, a supermarket chain, runs print advertisements promoting best deals for different products every week. This is an example of _____ advertising. a. retail b. associative c. referenced d. corporate ANSWER: a

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 136. Which of the following is a strategy in which a retailer shares advertising costs with a manufacturer or a wholesaler? a. Cooperative advertising b. Corporate advertising c. Institutional advertising d. Community advertising ANSWER: a 137. _____ advertising includes two-way promotional messages transmitted through communication channels that induce message recipients to participate actively in the promotional effort. a. Comparative b. Retail c. Interactive d. Cooperative ANSWER: c 138. An apparel marketer pays a percentage of the cost of a retail store’s newspaper advertisement featuring its product lines. This is an example of: a. comparative advertising. b. cost-effective advertising. c. budget advertising. d. cooperative advertising. ANSWER: d 139. Oriental Insurance promotes identity theft insurance with an advertisement that warns viewers about stolen credit cards and fake Social Security numbers. Which appeal is being used in this commercial to motivate the viewers to act? a. Fact b. Humor c. Cooperation d. Fear ANSWER: d

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 140. Which of the following elements of a print advertisement focuses on informing, persuading, and stimulating buying action? a. Body copy b. Headline c. Illustration d. Signature ANSWER: a 141. Which of the following elements of a print advertisement contains the company name, address, web address, slogan, trademark, logo, or names the sponsoring organization? a. Slogan b. Headline c. Illustration d. Signature ANSWER: d 142. Which of the following is the most common type of advertising on the web? a. Banner advertisements b. Pop-ups c. Interstitials d. Advergames ANSWER: a 143. Banners have evolved into a more target-specific technique for Internet advertising with the advent of: a. pop-ups. b. interstitials. c. missiles. d. advergames. ANSWER: c 144. _____ are an outcropping of banner ads that appear on the results page of a search and are specific to the searched term. a. Pop-ups b. Interstitials c. Advergames d. Keyword ads ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 145. Which of the following is a disadvantage of using television as an advertising medium? a. Ineffective impact of the promotional message on viewers b. Loss of control of the promotional message to the telecaster c. Inability to attain mass coverage d. Inability to repeat messages ANSWER: b 146. A disadvantage of using radio as an advertising medium is that: a. it has a highly segmented audience. b. the message cannot be tailored easily to adapt to local preferences. c. it is expensive. d. it lacks flexibility. ANSWER: a 147. Which of the following types of advertising media dominates local markets? a. Radio b. Network television c. Cable television d. Newspapers ANSWER: d 148. Setting the timing and sequence for a series of advertisements is known as: a. media sourcing. b. media scheduling. c. media polarizing. d. media programming. ANSWER: b 149. Compared to other broadcast media, cable advertising is more likely to attract specialized audiences and encourage niche marketing. This characteristic of cable advertising is known as _____. a. narrowcasting b. personalcasting c. crowdcasting d. datacasting ANSWER: a

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 150. _____ refers to a company’s messages about general management issues. a. Nonmarketing public relations b. Corporate advertising c. Institutional advertising d. Cooperative public relations ANSWER: a 151. A local newspaper is planning to come up with a special series on the growth of entrepreneurship within the community. Each week an article featuring a different business owner and his or her success story will be published. For the featured business owners, this type of promotion would constitute _____. a. sales promotion b. publicity c. trade promotion d. direct selling ANSWER: b 152. In which of the following types of MPR, the marketer takes the initiative and seeks out opportunities for promoting the firm’s products? a. Active MPR b. Proactive MPR c. Passive MPR d. Retroactive MPR ANSWER: b 153. Which of the following types of MPR responds to an external situation that has potential negative consequences for an organization? a. Active MPR b. Passive MPR c. Proactive MPR d. Reactive MPR ANSWER: d

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 154. When marketing partners share the cost of a promotional campaign that meets their mutual needs, they are said to be engaged in: a. ambush marketing. b. cross-promotion. c. guerrilla promotion. d. personal selling. ANSWER: b 155. _____ refers to exaggerated claims of a product’s superiority or the use of subjective or vague statements that may not be literally true. a. Infiltrating b. Puffery c. Boosterism d. Crowdsourcing ANSWER: b 156. People are asked to select unidentified products on the basis of available advertising copy in a(n): a. blind product test. b. recognition test. c. unaided recall test. d. inquiry test. ANSWER: a 157. Which of the following is a method of testing alternate ads by dividing a cable TV audience or a publication’s subscribers in two, using two different ads, and then evaluating the relative effectiveness of each? a. Zapping b. Split run c. Crowdsourcing d. Unaided recall test ANSWER: b

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 158. Which of the following methods of creating a promotional budget allocates a predetermined amount to each sales or production unit? a. The fixed-sum-per-unit method b. The meeting competition method c. The percentage-of-sales method d. The task-objective method ANSWER: a 159. Which of the following is a posttest that assesses advertising effectiveness after it has appeared in a print or broadcast medium? a. Miller test b. Unaided recall test c. Risk-utility test d. Oakes test ANSWER: b 160. Which of the following methods develops a promotional budget based on a sound evaluation of the firm’s promotional goals? a. The fixed-sum-per-unit method b. The meeting competition method c. The percentage-of-sales method d. The task-objective method ANSWER: d 161. Discuss the role that integrated marketing communications (IMC) plays in the development of a promotional mix. ANSWER: IMC (Integrated Marketing Communications) is a new approach to developing an optimal promotional mix. It requires that all promotional activities—media advertising, direct mail, personal selling, sales promotion, and public relations—are coordinated to produce a unified promotional message that is customer focused. Such cooperation frequently results in a competitive advantage for its users in their efforts to reach and serve their target market. Successful implementation of IMC depends on the people involved in the various elements of the promotional mix functioning as a team. They must present a consistent, coordinated promotional effort at every point of customer contact with the organization. Finally, IMC utilizes database technology to more fully understand the wants and needs of the target audience. Utilizing this level of detail can help a company find new opportunities to increase sales and profits by analyzing the characteristics of each prospective buyer. Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 162. Explain the communication process. What are the three tasks that an effective message should accomplish? ANSWER: In the communication process, the sender acts as the source in the communication system as he or she seeks to convey a message (a communication of information, advice, or a request) to a receiver. The communication process begins with encoding the message—that is, translating it into understandable terms and transmitting it through a communications channel. Decoding is the receiver’s interpretation of the message. The receiver’s response, known as feedback, completes the system. Throughout the process, noise can interfere with the transmission of the message and reduce its effectiveness. An effective message accomplishes three tasks: 1. It gains the receiver’s attention. 2. It achieves understanding by both receiver and sender. 3. It stimulates the receiver’s needs and suggests an appropriate method of satisfying them. 163. Explain the AIDA concept. ANSWER: The AIDA concept represents the steps through which an individual reaches a purchase decision: attention, interest, desire, and action. First, the promotional message must gain the potential consumer’s attention. It then seeks to arouse interest in the good or service. At the next stage, it stimulates desire by convincing the would-be buyer of the product’s ability to satisfy his or her needs. Finally, the sales presentation, advertisement, or sales promotion technique attempts to produce action in the form of a purchase or a more favorable attitude that may lead to future purchases. 164. Discuss the importance of feedback in the communication process in the context of promotional messages. ANSWER: The receiver’s response to a promotional message is known as feedback. It completes the communication process. Feedback lets marketers evaluate the effectiveness of the message and tailor their responses accordingly. It may take the form of attitude change, a purchase, or a nonpurchase. Even a nonpurchase is a feedback because failure to purchase may result from ineffective communication. 165. Explain how noise interferes with the effective transmission of a promotional message. ANSWER: Noise represents interference at some stage in the communication process. It may result from disruptions such as transmissions of competing promotional messages over the same communications channel, misinterpretation of a sales presentation or advertising message, receipt of the promotional message by the wrong person, or random events such as people conversing or leaving the room during a television commercial. Noise can also result from distractions within an advertising message itself. Buzzwords and jargon can create a linguistic jungle for consumers who are just trying to find out more about a product. Noise can be especially problematic in international communications. One problem is that there may be too many competing messages, or technology may be poor, and language translations inaccurate. Nonverbal cues like body language and tone of voice are important to the communication process, and cultural differences may lead to noise and misunderstandings.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 166. Define promotional mix. Discuss personal selling as a component of promotional mix. ANSWER: Promotional mix is defined as a subset of the marketing mix in which marketers attempt to achieve the optimal blending of the elements of personal and nonpersonal selling to achieve promotional objectives. Personal selling may be defined as a seller’s promotional presentation conducted person-to-person with the buyer. It may take place face-to-face, over the telephone, through videoconferencing, or by computer links between buyer and seller. It is the oldest form of promotion and dates back to the beginning of trading and commerce. 167. Define nonpersonal selling. Discuss advertising as a type of nonpersonal selling. ANSWER: Nonpersonal selling is defined as promotion that includes advertising, product placement, sales promotion, direct marketing, public relations, and guerilla marketing—all conducted without being face-to-face with the buyer. Advertising is any paid, nonpersonal communication through various media about a business firm, not-for-profit organization, product, or idea by a sponsor identified in a message intended to inform, persuade, or remind members of a particular audience. Mass consumption and geographically dispersed markets make advertising particularly appropriate for marketing goods and services aimed at large audiences likely to respond to the same promotional messages. Advertising primarily involves the mass media, such as newspapers, television, radio, magazines, movie screens, and billboards, but it also includes electronic and computerized forms of promotion such as Web commercials, streaming videos, and TV monitors at supermarkets. 168. Why do marketers sometimes use guerrilla marketing? What are some of the drawbacks of using a guerrilla marketing strategy? ANSWER: Guerrilla marketing is used by firms that lack the necessary funds for a traditional promotional campaign. Often, these firms cannot afford the huge costs of print and broadcasting, so they try to find an innovative, low-cost way of reaching their market. Guerrilla marketing may not reach as many people as other forms of promotion, such as direct marketing or advertising. Further, if the tactics used are too outrageous, some potential customers may be offended. 169. Discuss product advertising, institutional advertising, and corporate advertising. ANSWER: 1. Product advertising is nonpersonal selling of a particular good or service. This is the type of advertising the average person usually thinks of when talking about most promotional activities. 2. Institutional advertising promotes a concept, idea, philosophy, or goodwill of an industry, company, organization, person, geographic location, or government agency. This definition is much broader than that of product advertising. 3. Corporate advertising is narrower than institutional advertising, referring to non-product advertising by a profit-seeking firm. Thus, it may include many of the concepts promoted by institutional advertising, but the source must be profit-seeking.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 170. Discuss the three primary objectives of advertising. ANSWER: Marketers use advertising messages to accomplish three primary objectives: to inform, to persuade, and to remind. These objectives may be used individually or, more typically, in conjunction with each other. Informative advertising is promotion that seeks to develop initial demand for a good, service, organization, person, place, idea, or cause. The success of a new market entry often depends simply on announcing its availability or explaining its benefits. Persuasive advertising is promotion that attempts to increase demand for an existing good, service, organization, person, place, idea, or cause. Reminder advertising is advertising that reinforces previous promotional activity by keeping the name of a good, service, organization, person, place, idea, or cause before the public. Informative advertising tends to work best during the early stages, while reminder advertising is effective later on. Persuasive advertising, if done well, can be effective through the entire lifecycle. 171. What is comparative advertising and who are its users? How do federal regulators view comparative advertising? ANSWER: Comparative advertising is an advertising strategy that emphasizes messages with direct or indirect promotional comparisons between competing brands. Comparative advertising is generally used by companies not selling the dominant brand in the industry or firms whose products are not the leaders in their markets. By contrast, advertising by market leaders seldom acknowledges that competing products even exist, and when they do, they do not point out any benefits of the competing brands. Federal regulators, such as the FTC, encourage such ads. They believe such ads keep marketers competitive and consumers better informed about their choices. Generally speaking, when competition through advertising exists, prices tend to go down because people can shop around. 172. Define retail advertising. Discuss how cooperative advertising benefits the parties involved in it? ANSWER: Advertising by stores that sell goods or services directly to the consuming public is called retail advertising. Cooperative advertising is a retail advertising strategy where the manufacturer shares the advertisement cost with the retailer in return for product displays over and above the stocked shelf, or more importantly, for joint promotion of the manufacturer’s product in the retailer’s circular, newspaper ad, or TV commercials. It benefits both the retailer and the manufacturer. Retailers who might not otherwise afford frequent print media or TV advertising now have an opportunity when expenses are pooled with that of the manufacturers’. Through this interaction between manufacturers and intermediaries, vertical relationships are strengthened. 173. What is an advertising campaign? How do you think current technology might help a marketer with the success of an advertising campaign? ANSWER: An advertising campaign is a series of different but related ads that use a single theme and appear in different media within a specific time period. The ads can include TV, radio, magazine, newspaper, and electronic media. Current Internet technology allows consumers to capture and transmit catchy advertisements informally. The advantage of this is no cost to the marketer for the extra exposure that the commercial is receiving. YouTube alone can provide tens of thousands of additional exposures.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 174. Discuss fear and humor as types of advertising appeal. Give examples of advertisements that make use of either or both types of appeals. ANSWER: Selecting the tone of an advertisement is a critical decision in the creation of memorable ads that possess the strengths needed to accomplish promotional objectives. In recent years, marketers have relied increasingly on fear appeals. Ads for insurance, autos, and even batteries imply that the wrong buying decision could lead to property loss, injury, or other bad outcomes. Fear appeals can backfire, however. Viewers are likely to practice selective perception and tune out statements they perceive as too strong or not credible. Some consumer researchers believe viewer or reader backlash will eventually occur due to the amount of prescription drug advertising based on fear appeals. A humorous ad seeks to create a positive mood related to a firm’s goods or services, but advertising professionals differ in their opinions of the ads’ effectiveness. Some believe humor distracts attention from brand and product features; consumers remember the humor but not the product. Humorous ads, because they are so memorable, may lose their effectiveness sooner than ads with other kinds of appeals. In addition, humor can be tricky because what one group of consumers finds funny may not be funny at all to another group. Students’ examples will vary. 175. Discuss the major types of advertising media. ANSWER: The major types of advertising media are: 1. Television: It offers mass coverage and flexibility, but at a high cost for a temporary message. 2. Radio: It gives immediacy at a low cost, but for a temporary message. 3. Newspapers: They are flexible, offer community prestige and intensive coverage, but have a short life span and relatively poor reproduction quality. 4. Magazines: They are selective, target well-defined segments, have a long life, and offer many extra services to their advertisers, but at the expense of flexibility. 5. Outdoor advertising: It conveys quick and simple ideas through brevity of message and repetition. 6. Direct mail: It offers selectivity, intensive coverage, speed, flexibility, and personalization. 7. Interactive: It is the new medium offering audience involvement, creativity, and the ability to deliver lengthy messages. 176. Compare and contrast marketing public relations with nonmarketing public relations. ANSWER: Nonmarketing public relations refers to a company’s messages about general management issues. When a company makes a decision that affects any of its publics, input from PR specialists can help smooth its dealings with those publics. Companies that have a plan of action and can effectively handle a crisis by generating positive public relations generally can survive these types of crises. In contrast, marketing public relations (MPR) refers to focused PR activities that directly support marketing goals. MPR involves an organization’s relationships with consumers or other groups about marketing concerns and can be either proactive or reactive.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 177. Define publicity. Explain its role in a firm’s promotional strategy. ANSWER: Publicity is defined as the nonpersonal stimulation of demand for a good, service, place, idea, person, or organization by unpaid placement of significant news regarding the product in a print or broadcast medium. It creates credibility for the advertising to follow. Firms generate publicity by creating special events, holding press conferences, and preparing news releases and media kits. Firms often pursue publicity to promote their images or viewpoints. Other publicity efforts involve organizational activities such as plant expansions, mergers and acquisitions, management changes, and research breakthroughs. A significant amount of publicity, however, provides information about goods and services, particularly new products. Because many consumers consider news stories to be more credible than advertisements as sources of information, publicity releases often are sent to media editors for possible inclusion in news stories. The media audiences perceive the news as coming from the communications media, not the sponsors. The information in a publicity release about a new good or service can provide valuable assistance for a television, newspaper, or magazine writer, leading to eventual broadcast or publication. However, not all publicity is positive for a firm. Because companies cannot control the news that surrounds their decisions and actions, negative publicity can create a poor image in consumers’ minds. 178. Define cross-promotion. Explain why is it used. Give examples of cross-promotion. ANSWER: Cross-promotion is a promotional technique in which marketing partners share the cost of a promotional campaign that meets their mutual needs. It helps build relationships and is also a response to the rising cost of media campaigns. Marketers realize these joint efforts between established brands provide greater benefits in return for both organizations; investments of time and money on such promotions will become increasingly important to many partners’ growth prospects. Two types of cross promotion are cobranding and comarketing. Students’ examples will vary. 179. What is puffery? How does the Uniform Commercial Code make a distinction between puffery and any specific or quantifiable statement about product quality or performance? ANSWER: Puffery refers to exaggerated claims of a product’s superiority or the use of subjective or vague statements that may not be literally true, but aren’t technically false advertising (which is illegal). A company might advertise the “most advanced system” or claim that its product is the “most effective” in accomplishing its purpose. The Uniform Commercial Code standardizes sales and business practices throughout the United States. It makes a distinction between puffery and any specific or quantifiable statement about product quality or performance that constitutes an “express warranty,” which obligates the company to stand behind its claim. Boasts of product superiority and vague claims are puffery, not warranties. They are considered so self-praising or exaggerated that the average consumer would not rely on them to make a buying decision. A quantifiable statement, on the other hand, implies a certain level of performance. Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 180. List and describe the major types of posttests used to evaluate advertising effectiveness. ANSWER: The major types of posttests used to evaluate advertising effectiveness are: 1. Readership tests: Readership tests interview people who have read selected magazines to determine whether or not they have observed various printed ads. The magazine is actually used in the interview process. The assumption is that recognition will lead to future sales. 2. Unaided recall tests: With unaided recall tests, respondents do not see the magazine after the initial read-through. They are asked questions to determine ad recall. 3. Inquiry tests: Inquiry tests are based on actual responses to an ad's offer of a gift. The number of responses is used as a measure of the effectiveness of the advertisement. 4. Split run tests: Split run tests run different versions of ads in the same newspaper or cable program aired or distributed in different markets. The other three methods listed above are then used to evaluate the effectiveness of the different ads. Match each item with the correct statement below. a. noise b. advertising c. promotion d. publicity e. sales promotion f. guerrilla marketing g. posttesting h. split runs i. cooperative advertising j. marketing public relations k. media scheduling l. pretesting m. informative advertising n. persuasive advertising o. retail advertising p. missiles q. cross-promotion r. interactive advertising s. sponsorship t. institutional marketing 181. The function of informing, persuading, and influencing the consumer’s purchase decision is known as _____. ANSWER: c

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 182. Ineffective promotional appeals, inappropriate advertising media, or poor radio or television reception that interferes with the transmission of the message and reduce its effectiveness are examples of _____ in a communication channel. ANSWER: a 183. Paid, nonpersonal communication through various media about a business firm, not-for-profit organization, product, or idea by a sponsor identified in a message intended to inform or persuade members of a particular audience is called _____. ANSWER: b 184. Marketing activity other than personal selling, advertising, guerrilla marketing, and public relations that stimulates consumer purchasing and dealer effectiveness is called _____. ANSWER: e 185. Nonpersonal stimulation of demand for a good, service, person, cause, or organization through unpaid placement of significant news about it in a published or broadcast medium is called _____. ANSWER: d 186. _____ is an unconventional, innovative, and low-cost marketing techniques designed to get consumers’ attention in unusual ways. ANSWER: f 187. Relationship in which an organization provides funds or in-kind resources to an event or activity in exchange for a direct association with that event or activity is called a(n) _____. ANSWER: s 188. Promotion of a concept, an idea, a philosophy, or the goodwill of an industry, company, organization, person, geographic location, or government agency is called _____. ANSWER: t 189. Promotion that seeks to develop initial demand for a good, service, organization, person, place, idea, or cause is called _____. ANSWER: m 190. Promotion that attempts to increase demand for an existing good, service, organization, person, place, idea, or cause is called _____. ANSWER: n 191. Advertising by stores that sell goods or services directly to the consuming public is called _____. ANSWER: o 192. A strategy in which a retailer shares advertising costs with a manufacturer or wholesaler is known as _____. ANSWER: i Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 193. _____ involves two-way promotional messages transmitted through communication channels that induce message recipients to participate actively in the promotional effort. ANSWER: r 194. Banners have evolved into a more target-specific technique for Internet advertising with the advent of _____ which are messages that appear on the screen at exactly the right moment. ANSWER: p 195. Setting the timing and sequence for a series of advertisements is called _____. ANSWER: k 196. Focused public relations activities that directly support marketing goals are called _____. ANSWER: j 197. Promotional technique in which marketing partners share the cost of a promotional campaign that meets their mutual needs is known as _____. ANSWER: q 198. Research that evaluates an ad during its development stage is called _____. ANSWER: l 199. Research that assesses advertising effectiveness after it has appeared in a print or broadcast medium is called _____. ANSWER: g 200. _____ are methods of testing alternate ads by dividing a cable TV audience using two different ads, and then evaluating the relative effectiveness of each. ANSWER: h 201. Successful marketers use the marketing concept of relationship marketing to develop customer-oriented marketing programs. An effective integrated marketing communication (IMC) strategy captures the audience’s attention and promotes a brand or product in a cohesive way. W hich of the following approaches to marketing can be used to avoid marketing myopia a. a void niche marketing b. g ive as much information as possible to the consumer c. w ork with broad target markets rather than segmenting them d. f ocus on delivering information and nothing else to intended audiences e. f irst identify the target market and then develop a marketing mix accordingly ANSWER: e Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 202. Compare and contrast the differences between marketing and integrated marketing communication (IMC). a. M arketing requires the segmentation of the target market while IMC focuses on the product. b. M arketing focuses on the internal aspect of the business while IMC integrates internal marketing with external variables. c. M arketing takes customer needs into consideration while IMC focuses on implementing the appropriate combination of promotional mix variables. d. M arketing is the development of products that fit the needs of a target market while IMC ensures that all facets of marketing work together to produce a cohesive message. e. M arketing focuses on product development and selling products while IMC focuses on the relationships between the business and the marketing firms and public relations agencies that manage their products. ANSWER: d 203. You work for an investment bank that is marketing a new credit card. As part of your company’s marketing strategy, you come up with an animated penguin who is associated with your services, and your company comes up with the slogan, “Shopping with kings.” Your ad campaign is viewed by millions around the country through television commercials, online ads, direct mail, and celebrity sponsors. W hich of the following would be considered feedback? a. c ustomers apply for your bank’s credit card b. c ollege-aged students appreciate the slogan c. Y our target market likes the animated penguin d. y oung adults see the ad on a bus and call to ask questions e. t he media through which potential customers view the ads ANSWER: a 204. Which of the following can the marketing team track through the company’s website? a. a ge b. l ifestyle c. h ow often consumer shops d. n umber of clicks on the site e. n umber of direct sales as a result of ads on site ANSWER: d

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 205. You work for a clothing manufacturer whose executives recently decided they were going to sever their ties with four of their manufacturing partners in Guatemala due to dismal labor conditions. Your superiors believe this is a public relations-worthy topic, and they want your consumers and stakeholders to know about their decision. W hich of the following steps can they take to ensure their various publics are aware of their decision to sever ties with the Guatemalan manufacturers? a. u se direct marketing b. u se guerilla marketing c. p ublish a press release d. p ublicize the news on billboards e. p artner with a magazine to publish the story ANSWER: c 206. You work for an automobile manufacturing company that has received millions of dollars in loans and grants. Your CEO wants the company to invest in marketing strategies that push your company to the forefront in the market. While you think direct marketing may be an efficient way to go, you want the company to leave an indelible mark, so you come up with other ideas. W hich of the following choices would you make about your company’s marketing strategy? a. u se guerilla marketing tactics b. g et a celebrity endorsement c. i nvest in interactive advertising d. s ponsor a recreational car racing event e. i nvest in a new stadium that showcases the company name ANSWER: e 207. You work for a cell phone company, and for the last three years, the Elixir has been performing well. Many times, your marketing team has been able to revive the product and increase consumer demand. This time around, you are hesitant to invest any more resources into marketing the phone; however, you see some value in at least developing a campaign that reflects reminder advertising. A t which stage in the product life cycle is the Elixir? a. d ecline stage b. g rowth stage c. c oncept stage d. m aturity stage e. i ntroductory stage ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 208. You work for the local public health department and want to assure community residents that the recent meningitis outbreak is under control, and that your staff are working diligently to vaccinate children and to ensure that something like this doesn’t occur in the future. W hich type of advertising should the company use? a. p roduct advertising b. r eminder advertising c. i nformative advertising d. p ersuasive advertising e. i nstitutional advertising ANSWER: e 209. Kiera’s dog walking business is booming, and she is interested in expanding. In order to expand, her company needs more customers, and the demand for dog walking in her neighboring communities must increase in order for her to generate a profit. Her best friend, a local celebrity, suggests that she should consider marketing her services. Because Kiera understands that there are specific challenges associated with developing advertising objectives for services, she is very careful about how to advertise her dog walking services. In the end, she decides to develop a logo for her company so customers can associate it with the services she provides. How did Kiera make her intangible services more marketable? a. S he used a slogan. b. S he recruited new customers. c. S he enhanced her brand image. d. S he got a celebrity endorsement. e. S he used a popular logo that people recognized. ANSWER: c 210. You work for a national fast food chain restaurant whose executives want to revamp your marketing strategies. They use a promotional strategy that allows them to showcase their foods and services as better than the myriad fast food restaurants out there. Which type of advertising did the company use? a. r etail advertising b. r eminder advertising c. i nformative advertising d. c ooperative advertising e. c omparative advertising ANSWER: e Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 211. Flora’s Designs is a flower shop that recently relocated and revamped its service offerings. To go along with the new location, the owner, Flora, changed her marketing strategies and enhanced her promotional mix. Here is an example of her newspaper ad, which she placed in a section with at least fifteen other floral shop ads: W ho doesn’t want to create messages of magnificence? Flora’s Designs is here to help you achieve just that. Our flowers are handpicked daily and will put a smile on your face. Come to our location and learn the art of fresher flowers! Which of the following does Flora’s Designs accomplish with their advertising? a. c ut through the clutter b. s timulate buying action c. g ain attention and interest d. i nform the potential customer e. c hange the customer’s perception of the company ANSWER: c 212. The four major elements of a print advertisement are the headline, illustration, body copy, and signature. W hat is the purpose of the signature? a. t o stimulate buying action b. t o draw the customer in c. t o inform the customer d. t o name the sponsoring organization e. t o leave the customer with questions ANSWER: d

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 213. You work for a television network that needs to advertise a new fall season show. Because of the show’s content, you want to market to college students and young professionals. You decide that since the show is going to be introduced in October of the following year, it would be good to start with billboards and ad placements on buses, bus shelters, trains, and in subway stations. You know that new shows typically debut in the fall, so you do some research and notice that your rival network also has a new show lined up for the fall. You want to make sure that you are not targeting the same markets. By the spring of the following year, you are going to introduce television commercials, social marketing, and online ads. By this point, national newspapers are impressed with the show and write op-ed pieces about the new show. W hich of the following aspects of media scheduling is missing from the scenario? a. s ales patterns b. t arget markets c. r epurchase cycles d. p ublic relations e. c ompetitors’ activities ANSWER: c 214. If you were looking for an advertising medium that worked for segmented audiences, had prestige, had a long shelf life, and money was of no object, which of the following would you select? a. i nteractive ads b. t elevision c. m agazines d. d irect mail e. r adio ANSWER: c 215. You work for a national athletic organization whose marketers develop a campaign aimed at promoting the work the organization does in rural communities that lack afterschool and college prep programs. The organization provides resources for programs in these areas so program staff can work closely with students and their families to ensure that they have the support they need to pursue higher education. W hat is the primary goal of this organization’s public relations campaign? a. t o promote the organization’s services b. t o promote the organization’s values and mission c. t o promote the organization’s social responsibility goals d. t o develop an ethics department within the organization e. t o develop a competitive edge over other organizations in the market ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 216. You work for an auto parts manufacturer that has traditionally had an immense marketing budget. Company executives, however, recently reallocated some of the company’s marketing funds to production. Consequently, the company needs to cut marketing costs. You decide to pitch an idea to the automobile manufacturer with whom you work most closely—to use cross-promotion to market both companies’ products. W hich of the following is detrimental to using cross-promotion? a. O ne or both companies lose customers. b. O ne or both companies lose competitive edge. c. O ne company garners all the attention and support. d. T he parties involved must compromise in order to work well together. e. O ne of the companies absorbs most of the costs associated with marketing. ANSWER: d 217. Your company has manufactured a new gadget that can help users track weight loss and create personalized health plans. The product is aimed at middle-class women between the ages of 21 and 40. The product will sell in the $200–250 price range and will be made available in sports retailers as well as online. Because the product is new, your team has been given $250,000 to market the product. W hich of the following factors is missing from the promotional mix in the scenario described above? a. n ature of the product b. n ature of the market c. s tage in the product life cycle d. f unds available for promotion e. e valuation of promotional effectiveness ANSWER: e 218. Which of the following is an example of a good promotional objective? a. i ncrease nonpersonal selling by 5% b. i ncrease sales in the Northeast region by 17% c. d ecrease budgets associated with television ads d. d ecrease promotional costs by the end of the year e. i ncrease the consumer base by 10% as a result of the online-based interactive ad ANSWER: e

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 219. Jill needs to motivate her promotion team to focus not just on individual messages, but on the benefits of integrating all of the firm's marketing communications. Choose the benefits that Jill should discuss. a. Looking at the components of the promotion mix from the customer's point of view

b. Reducing information overload c. Achieving competitive advantage based on synergy d. Creating a unified brand personality e. Reducing interdependence among the elements of the promotion mix ANSWER: a, c, d 220. In designing promotional messages aimed at teens, you realize it is critical to use the language, references, idioms, and even jokes popular among that age group. Otherwise, you are courting trouble primarily related to which element of the communication process? a. Encoding by sender

b. Decoding by receiver c. Response d. Feedback e. Choosing a channel ANSWER: b 221. A firm has contracted with a global advertising agency. In a meeting to discuss ways of promoting the client's products abroad, the agency representatives mentioned the challenges involved in reducing or eliminating noise. Choose the forms of noise they could have talked about. a. Too many competing messages

b. Poor technology c. Inaccurate translation d. Heavy use of buzzwords or jargon e. Only answers c and d, since these relate to language ANSWER: a, b, c, d 222. a. b. c. d. e. ANSWER: a, b, c

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 223. You are eager to attract a tennis star to appear in the ads for your company's rackets. However, your boss reminds you that it can be very expensive to use celebrity testimonials. Which of the following points do you make to convince her to spend the money? a. This approach can improve our racket's brand recognition.

b. This approach can boost the believability of our racket's performance. c. With a well-known star, there is no risk of marketplace confusion. d. With a well-known star, our brand can achieve better recall. e. A tennis star is likely to be a credible source of information for our product. ANSWER: a, b, d, e 224. Downstate Drug Company relies heavily on fear appeals in its advertising for prescription medications. As the new promotions director, you will soon advise the CEO to begin transitioning to different kinds of messages. Choose the argument(s) you are unlikely to make. a. Fear appeals for drug products have been disappearing in recent years.

b. The FDA is about to ban prescription drug advertising on TV. c. Consumers may tune out statements they perceive as too strong. d. There may be a future backlash against fear appeals because so much drug advertising relies on them. e. You would be likely to make all of the above arguments. ANSWER: a 225. As a radio sales professional, you meet frequently with marketers who are skeptical of radio's value in a world with so many new media options. Choose the point(s) you make in your sales pitch. a. Radio is now one of the fastest-growing media options.

b. Radio is relatively low-cost. c. While not yet a global medium, radio is a powerful local medium. d. The diversity of stations allows advertisers to easily target their audiences. e. Stations routinely adapt their programming to local preferences. ANSWER: a, b, d, e

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 226. The image of the petroleum firm BP Global was badly hurt by its involvement in the 2010 Gulf of Mexico oil spill. To help repair the damage, BP has run ads promoting its efforts to clean up the environment. This is the type of advertising known as _____ advertising. a. Institutional

b. Reminder c. Environmental d. Damage control e. Comparative ANSWER: a 227. The delivery service where Debbie works advertises that its vehicles are "the fastest you'll find anywhere in the globe." Debbie does not believe this claim is literally true, so she seeks an opinion from the firm's legal counsel. The lawyer informs her that such "puffery" is: a. Regulated as a form of warranty by the Uniform Commercial Code

b. A new development c. Distinguished from a warranty by the Uniform Commercial Code d. Potentially unethical e. Commonly illegal ANSWER: c, d 228. Ed is a summer intern at a firm that researches how consumers react to advertising messages. To increase his knowledge, Ed prepares a report on the different methods used in such research. Which of the following topics does he include? a. Posttesting

b. Pretesting c. Unaided recall tests d. Inquiry tests e. Nielsen rating points ANSWER: a, b, c, d 229. Which of the following is a benefit of an integrated marketing communications (IMC) program? a. a unified personality for a brand or product can be created b. f irms need only work with one outside vendor c. o nly those working in the communications division assist with IMC programs d. m arketers focus on traditional network TV such as NBC, CBS and ABC ANSWER: a

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 230. Integrated marketing communications (IMC) broadens promotion to include all the ways a customer has contact with an organization. a. True b. False ANSWER: True 231. Jesse often watches TV late at night and notices that many television commercials are louder than the regular programming. He mentions this to a friend who's taking a marketing class and she believes this phenomenon can be explained by the AIDA concept. Which specific aspect of the AIDA concept is at work? a. a ttention b. i nterest c. d esire d. a ction ANSWER: a 232. Bethany is 7 years old and loves watching the Disney channel. Recently, she saw a television advertisement for My Little Pony toys and told her parents that she wanted one for her birthday. Which step in the AIDA model does Bethany's request for a My Little Pony toy reflect? a. d esire b. a ttention c. i nterest d. a ction ANSWER: a 233. In 2012, James Bond played by actor Daniel Craig in the film Skyfall ordered a Heineken instead of his traditional "shaken, not stirred martini." The US division of Heineken reportedly paid $45 million to have the product featured in the movie. This is an example of a(n): a. p roduct placement b. a dvertising c. p ublic relations d. s ponsorship ANSWER: a

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 234. American Siding and Windows uses a team of inside sales representatives to contact homeowners by telephone and schedule appointments to provide free estimates on home improvement projects such as new windows, sun rooms, siding and awnings. The company's promotional efforts can be classified as: a. d irect marketing b. p ublic relations c. s ponsorship d. n onpersonal selling ANSWER: a 235. Advertising that promotes a concept, idea, philosophy or the goodwill of an industry, company, organization, person, or government agency is known as: a. i nstitutional advertising b. r eminder advertising c. p ersuasive advertising d. i nformative advertising ANSWER: a 236. A 30-second television advertisement for Allstate uses the popular "Mayhem" character as "the world's worst cleaning lady." The ad is an example of _______ advertising and strives to encourage customers to talk to an Allstate Agent to make sure they have the right home protection: Good Hands. Good Home. a. r eminder b. p ersuasive c. i nformative d. i nstitutional ANSWER: a 237. Samsung has utilized _____ advertising to persuade smartphone buyers to choose Samsung instead of Apple's iPhone. a. c omparative b. c elebrity c. r eminder d. i nstitutional ANSWER: a

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 238. Costco utilizes a bi-weekly mailing to communicate with its members about special purchases and featured products. Recently, its mailer featured an HP printer with a coupon to receive a $50 rebate. HP negotiated a special discount on the printers with Costco and also paid a portion of the mailing cost which featured the printer. This is an example of _____ advertising. a. c ooperative b. c elebrity c. i nstitutional d. p ioneer ANSWER: a 239. The use of humor in advertising is common since most people agree on what types of messages are funny. a. True b. False ANSWER: False 240. The organization, Mothers Against Drunk Driving sponsored an advertising campaign showing actual photos of automobiles that had been involved in accidents related to drunk driving and encouraged consumers to use a designated driver so they could avoid a similar accident. This type of campaign is known as a(n) _____ appeal. a. f ear b. h umorous c. s ex-based d. n on-profit ANSWER: a 241. Which of the following is an advantage of newspaper advertising? a. o ffers high levels of flexibility b. h igh reproduction quality c. l ow circulation d. h ighly segmented audience ANSWER: a 242. A dvertisers like radio for its ability to reach people while they drive because they are a captive audience. a. True b. False ANSWER: True

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Chapter 16: Integrated Marketing Communications, Advertising, and Public Relations 243. Southwest Airlines and Carnival Cruises collaborated to market "fly and cruise" specials from major cities to Carnival's ports in New Orleans, Galveston and Miami. The collaboration enabled both firms to share the cost of the campaign. This strategy is known as: a. c ross-promotion b. c ooperative advertising c. c omparative advertising d. i nteractive advertising ANSWER: a 244. Companies who use exaggerated claims of a product's superiority or the use of subjective or vague statements that may not be literally true are using _____. a. p uffery b. c andor c. d eception d. p oetic license ANSWER: a 245. Which of the following is TRUE regarding the use of advertising when products are in the maturity phase of the product lifecycle? a. f irms typically reduce advertising and sales promotion expenditures b. f irms typically increase advertising and promotion expenditures c. f irms focus efforts by utilizing personal selling to expand distribution d. f irms promote their products at trade shows to inform and educate consumers ANSWER: a 246. Cost per impression is a direct marketing technique that relates the cost of an ad to the number of people who click it. a. True b. False ANSWER: False

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Chapter 17: Personal Selling and Sales Promotion 1. Personal selling is more costly and time consuming compared to other types of promotion. a. True b. False ANSWER: True 2. Personal selling is a less important component in the promotional mix when individual orders account for large amounts of revenue. a. True b. False ANSWER: False 3. Personal selling is an important component of the promotional mix for a firm that markets to relatively few potential customers. a. True b. False ANSWER: True 4. If a product or service being sold requires relatively little special handling, marketers typically emphasize personal selling in their promotional mix. a. True b. False ANSWER: False 5. Over-the-counter selling is a lower-cost alternative compared to telemarketing or online selling. a. True b. False ANSWER: False 6. Over-the-counter selling usually requires the customer to take the initiative and travel to the seller's place of business. a. True b. False ANSWER: True

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Chapter 17: Personal Selling and Sales Promotion 7. Over-the-counter personal selling efforts are frequently supplemented with other promotions such as special sales events, new product introductions, and direct-mail appeals. a. True b. False ANSWER: True 8. Field selling is more expensive than other selling options and often requires considerable technical expertise. a. True b. False ANSWER: True 9. Network marketing is a form of field selling in customers’ homes. a. True b. False ANSWER: True 10. A Frito-Lay driver who covers a geographic route of grocery stores taking orders, restocking shelves, and removing products past the expiration date is classified as a field salesperson. a. True b. False ANSWER: False 11. A salesperson assigned to answer the telephone and take orders or answer customers’ questions is involved in outbound telemarketing. a. True b. False ANSWER: False 12. A firm that has an existing relationship with a customer is allowed to call that customer even if the customer has signed up for the national Do Not Call Registry. a. True b. False ANSWER: True

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Chapter 17: Personal Selling and Sales Promotion 13. A hotel provides a toll-free number to its customers which they can use to obtain information and make reservations. This is an example of inbound telemarketing. a. True b. False ANSWER: True 14. A customer shopping at Sports Authority for new running gear is assisted by a salesperson in the shoe department. This is an example of inside selling. a. True b. False ANSWER: False 15. Inside sales reps support field representatives in building strong customer relationships. a. True b. False ANSWER: True 16. Existing customers of a firm whose business problems require complex solutions are likely to be best served by telemarketers in the firm. a. True b. False ANSWER: False 17. Relationship selling involves regular contacts between sales representatives and customers over an extended period. a. True b. False ANSWER: True 18. To create strong, long-lasting relationships with customers, salespeople must demonstrate high ethical standards and communicate honestly at all times. a. True b. False ANSWER: True

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Chapter 17: Personal Selling and Sales Promotion 19. Listening to customers and using problem-solving skills to meet customer needs is called advisory selling. a. True b. False ANSWER: False 20. Online sellers can quickly communicate the benefits and features of their products to customers through consultative selling. a. True b. False ANSWER: True 21. Consultative selling involves offering multiple goods or services to the same customer. a. True b. False ANSWER: False 22. Cross-selling services and products to existing customers is less expensive than trying to find new customers for the same services. a. True b. False ANSWER: True 23. Team selling creates relationships between companies rather than between individuals. a. True b. False ANSWER: True 24. Team selling offers a distinct competitive advantage in sales situations that call for detailed knowledge of new, complex, or rapidly changing technologies. a. True b. False ANSWER: True 25. Team selling is usually a temporary arrangement intended to serve the customer from the initial contact through the initial sale. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 26. Most of today’s salespeople are limited to performing tasks in a single category. a. True b. False ANSWER: False 27. Order processing becomes the primary task in situations in which needs are readily identified and are acknowledged by the customer. a. True b. False ANSWER: True 28. Salespeople involved order-processing tasks persuade their wholesale or retail customers to carry more complete inventories of their firm’s merchandise. a. True b. False ANSWER: True 29. An effective salesperson uses order-processing techniques to expand an existing business relationship. a. True b. False ANSWER: False 30. Creative selling mainly deals with maintaining existing business with customers. a. True b. False ANSWER: False 31. Salespeople involved in creative selling use well-planned strategies to seek new customers by proposing innovative solutions to customer’s needs. a. True b. False ANSWER: True 32. Creative selling can generate buzz for a product. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 33. Providing technical and operational assistance is a significant part of missionary selling. a. True b. False ANSWER: True 34. Missionary selling is an indirect sales approach that focuses on promoting goodwill for the firm. a. True b. False ANSWER: True 35. The steps in a sales process follow the AIDA (attention, interest, desire, action) concept. a. True b. False ANSWER: True 36. Direct mail and advertising campaigns are effective in identifying prospective customers. a. True b. False ANSWER: True 37. A firm must define its product in terms of what it can do for a customer before beginning its prospecting effort. a. True b. False ANSWER: True 38. To be identified as a qualified prospect, a customer must have both the resources and the authority to make purchase decisions. a. True b. False ANSWER: True 39. Taking steps to determine that a potential customer has the need, financial capability, and authority to make a purchase is called canvassing. a. True b. False ANSWER: False

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Chapter 17: Personal Selling and Sales Promotion 40. An approach is a salesperson’s initial contact with the customer. a. True b. False ANSWER: True 41. Precall planning involves making unsolicited sales calls on randomly selected prospects. a. True b. False ANSWER: False 42. Firms engage in precall planning to understand the needs and preferences of the customer before making a presentation. a. True b. False ANSWER: True 43. A sales talk that presents a product or service in terms that are meaningful to the buyer is referred to as a “features-benefits” presentation. a. True b. False ANSWER: True 44. The first presentation being made to a potential customer is likely to be more detailed than that used for an existing customer. a. True b. False ANSWER: True 45. In a cold calling situation, the approach and presentation often take place at the same time. a. True b. False ANSWER: True 46. Girl Scouts selling cookies door-to-door exemplify cold-call selling. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 47. An important advantage of personal selling is that it gives the customer the opportunity to try a product before making a purchase. a. True b. False ANSWER: True 48. Closing, in which the salesperson asks the customer for a buying commitment, is the last step in the sales process. a. True b. False ANSWER: False 49. The follow-up step in the sales process allows the salesperson to psychologically reinforce the customer’s original decision to buy. a. True b. False ANSWER: True 50. The follow-up step in the sales process often determines whether an individual who has made a recent purchase will become a repeat customer. a. True b. False ANSWER: True 51. Recruiting and selecting successful salespeople are among the greatest challenges faced by a sales manager. a. True b. False ANSWER: True 52. An assessment center is a testing approach used by sales managers to measure a candidate’s skills, knowledge, and ability. a. True b. False ANSWER: True

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Chapter 17: Personal Selling and Sales Promotion 53. Business firms that market highly technical and complex products will have a specialized sales force for each major category of the firm’s products. a. True b. False ANSWER: True 54. The concept of span of control refers to the number of sales representatives who report to first-level sales managers. a. True b. False ANSWER: True 55. A salary is a payment tied directly to the sales or profits that a salesperson generates. a. True b. False ANSWER: False 56. A straight salary plan could reduce the incentive to find new markets and land new accounts. a. True b. False ANSWER: True 57. A straight salary plan for sales representatives gives management more control over how sales personnel allocate their efforts. a. True b. False ANSWER: True 58. Sales quotas are specified sales or profit targets that salespeople are expected to achieve. a. True b. False ANSWER: True 59. A sales quota is often tied to the compensation system. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 60. The effectiveness of a salesperson is measured entirely on the basis of the sales volume and profitability. a. True b. False ANSWER: False 61. A salesperson should be judged on the basis of potential ability rather than the actual sales performance. a. True b. False ANSWER: False 62. An expensive gift could be interpreted as a bribe if given in anticipation of doing business with a buyer or company. a. True b. False ANSWER: True 63. In creating an ethical environment, employees prefer a complete list of “do’s and don’ts” over an open environment where they can approach management with ethics questions. a. True b. False ANSWER: False 64. Instituting a companywide code of ethics helps guide salespeople to ethical behavior in personal selling. a. True b. False ANSWER: True 65. Personal selling and advertising are part of the marketing activities involved in a sales promotion. a. True b. False ANSWER: False 66. Due to intense competition in the market, present-day sales promotion techniques mainly focus on providing short-term incentives to customers in order to obtain a purchase. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 67. Sales promotions encourage immediate action as they impose limited time frames. a. True b. False ANSWER: True 68. Sales promotions often lead to sales and profit growth in the long run. a. True b. False ANSWER: False 69. Manufacturers pay a handling fee to retailers to help consumers redeem coupons at their outlets. a. True b. False ANSWER: True 70. Coupons are the most widely used forms of consumer-oriented sales promotion. a. True b. False ANSWER: True 71. Sampling produces a higher response rate compared to other forms of promotions. a. True b. False ANSWER: True 72. A bonus pack is an item given free or at a reduced cost with purchases of other products. a. True b. False ANSWER: False 73. A sweepstakes chooses winners from a group of people who have purchased the product. a. True b. False ANSWER: False

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Chapter 17: Personal Selling and Sales Promotion 74. Kelly is a dentist who knows that her patients are more likely to take home pens inscribed with her name and phone number instead of an ordinary business card. The inscribed pens distributed by Kelly for her practice represent specialty advertising. a. True b. False ANSWER: True 75. Advertising specialties help reinforce previous or future advertising and sales messages. a. True b. False ANSWER: True 76. A national grocery store runs an advertisement offering “buy one get one free” on packages of Thomas’ English muffins to consumers. This is an example of a trade promotion. a. True b. False ANSWER: False 77. Firms spend more on consumer-oriented sales promotions than on trade promotions. a. True b. False ANSWER: False 78. Point-of-purchase advertising encourages retailers to improve on-site merchandising. a. True b. False ANSWER: True 79. Trade shows provide an effective opportunity to introduce a new product and to generate sales leads. a. True b. False ANSWER: True 80. Push money refers to cash incentives paid by manufacturers to wholesalers to stock new products. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 81. Personal selling is likely to be the primary component of a firm’s promotional mix when: a. the firm markets inexpensive products that require no special handling. b. the transactions frequently involve trade-ins. c. the price of the products is relatively low. d. the firm markets to a large number of customers in various locations. ANSWER: b 82. Which of the following is true of personal selling? a. It is less time consuming compared to other types of promotions. b. It is an ineffective promotional strategy for firms that market to relatively few potential customers. c. It accounts for a small share of the marketing budget in a firm. d. It is interpersonal and basic to any enterprise. ANSWER: d 83. A cosmetics manufacturer decides to educate its customers about its new product during commercial breaks in a popular TV reality show. This represents which of the following forms of marketing? a. Personal selling b. Network marketing c. Publicity d. Advertising ANSWER: d 84. Which of the following is the most effective method to promote products when the customers of a firm are geographically concentrated? a. Advertising b. Publicity c. Public relations d. Personal selling ANSWER: d 85. The role of a sales representative in the promotion process has changed from that of persuader to that of a: a. technician and expert on product repair. b. process designer. c. problem solver. d. confidant. ANSWER: c

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Chapter 17: Personal Selling and Sales Promotion 86. Which of the following factors will increase the importance of personal selling in the promotional mix? a. Increasing emphasis on productivity b. Lower priced products c. Standardized products that are easy to understand d. Transactions that seldom involve trade-ins ANSWER: a 87. A customer-focused firm wants its sales representatives to: a. work on commission because it motivates them to engage in quick sales. b. form long-lasting relationships with buyers by providing high levels of customer service. c. focus on persuading customers to buy products rather than solving issues. d. work as separate entities independent of the sales team. ANSWER: b 88. _____ refers to a personal selling approach in which customers comes to the seller's place of business to buy products largely on their own initiative. a. Order processing b. Outbound telemarketing c. Over-the-counter selling d. Relationship selling ANSWER: c 89. Which of the following can be classified as a creative approach to over-the-counter selling? a. Clothing retailer Lord and Taylor expanding the capabilities of the fitting rooms in its stores b. Gap stores providing virtual gift cards to customers c. Lord and Taylor promising its online customers product delivery in five business days d. Gap making its web portal highly efficient to save its customers search time ANSWER: a 90. When products require creative efforts on the part of the salesperson such as extensive explanation and interaction, the best sales method is usually: a. telemarketing. b. field selling. c. over-the-counter selling. d. indirect selling. ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 91. The most expensive sales method overall is: a. over-the-counter sales, largely because of the high overhead in retail operations. b. inbound telemarketing because of the technology costs. c. outbound telemarketing because of the high rejection rate from customers who avoid telemarketers. d. field selling, largely because of the travel costs of sales personnel. ANSWER: d 92. Bits Inc., a manufacturer of server processors, sends out its trained salespeople to inform prospective and existing customers about its latest range of processors and provide demonstrations. The promotional effort adopted by this company is an example of: a. push-cash selling. b. field selling. c. networking. d. over-the-counter selling. ANSWER: b 93. Which of the following types of personal selling relies on lists of family members and friends of the salesperson who organizes a gathering of potential customers for an in-home demonstration of products? a. Missionary selling b. Cross-selling c. Network marketing d. Inbound marketing ANSWER: c 94. Megan sells a high-end line of cosmetics. All of her customers are family members and friends. She sells these products through an informal gathering at her home, where she demonstrates the products and explains how to use them. Some of her existing customers share their experiences and list the benefits of the product. This type of personal selling is known as: a. indirect selling. b. network marketing. c. inside selling. d. over-the-counter marketing. ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 95. When personal selling efforts use telephone technology in a sales approach where the sales representative initiates the calls, it is known as _____ telemarketing. a. inbound b. proactive c. network d. outbound ANSWER: d 96. The Lands’ End catalog provides a toll-free number for customers to call and place orders. The staff is pleasant and knowledgeable and will place orders and answer questions. This is an example of a(n): a. marketing communications element. b. promotional mix component. c. inbound telemarketing effort. d. customer-driven technology. ANSWER: c 97. A2Z Microchips depends largely on outbound telemarketing for product promotion. Recently the organization was able to weed out busy signals and voice mail systems of its customers which doubled the number of calls made by its sales personnel. Which of the following technologies is A2Z using? a. Predictive dialers b. Autodialers c. Random-digit-dialers d. Toll-free dialers ANSWER: a 98. Although research shows that most consumers dislike the practice of telemarketing and more than 220 million have signed up for the national Do Not Call Registry, organizations still use telemarketing because: a. it provides employment to a large number of people. b. it guarantees a sales order with every call. c. it is cost effective; the average call costs are low. d. it does not require experienced and trained sales personnel. ANSWER: c

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Chapter 17: Personal Selling and Sales Promotion 99. Cleveland Solvents has field sales staff, a customer service department, and two individuals who manage the “tech hotline.” These individuals not only answer technical questions from customers, they also identify customer needs and recommend products that can fill those needs. They have the ability to initiate and close sales on the spot. These individuals are essentially participating in: a. market analysis. b. inside selling. c. network marketing. d. outside sales. ANSWER: b 100. Telemarketers who combine field selling with a strong customer orientation using both inbound and outbound communications are engaging in: a. customer sampling. b. inside selling. c. relationship marketing. d. over-the-counter selling. ANSWER: b 101. _____ is a personal selling approach that focuses on establishing a sustained buyer-seller relationship with customers through regular contacts over an extended period. a. Telemarketing b. Team selling c. Inside selling d. Relationship selling ANSWER: d 102. Meeting customer needs by listening to them, understanding their problems, paying attention to details, and following through after the sale is called _____ selling. a. consultative b. transaction c. missionary d. cross ANSWER: a

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Chapter 17: Personal Selling and Sales Promotion 103. Which of the following is a part of the consultative selling process? a. Salespeople and specialists working together to promote products b. Offering multiple goods or services to the same customer c. Understanding customer problems d. Concentrating mostly on short-term or quick sales ANSWER: c 104. Jamie works for a local bank. Whenever a new customer opens a checking account, Jamie makes sure to mention some of the other financial services the bank offers. Jamie is engaged in: a. cross-selling. b. team selling. c. transaction selling. d. virtual selling. ANSWER: a 105. When visiting one of his major accounts, Matt is accompanied by finance and product specialists. These specialists are able to answer specific questions so that a customer can make a purchase decision. This is an example of _____. a. transaction selling b. team selling c. cross-selling d. missionary selling ANSWER: b 106. The business department in Skandsoft Technologies, a computer software company, consists of technically trained, nonmarketing experts such as engineers or programmers. A salesperson continues to play the lead role in most sales situations while technical experts add value to the sales process. Which form of personal selling is being used by this organization? a. Consultative selling b. Team selling c. Cross-selling d. Inside selling ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 107. A salesperson of a beer company determines that a retail store has only 10 cases of beer left in stock when it normally carries an inventory of 60. The salesperson informs the store manager of the inventory situation. Which of the following sales tasks is being performed by this salesperson? a. Order processing b. Creative selling c. Missionary selling d. Planning ANSWER: a 108. The use of technology in order-processing tasks can lead to an increase in: a. the accuracy of processing an order. b. the demand for the number of salespeople. c. the time required to process an order accurately. d. the sales quota to be fulfilled by each salesperson. ANSWER: a 109. Which of the following products requires a high degree of creative selling? a. Flat screen TVs b. Gasoline c. Laundry detergent d. Ballpoint pens ANSWER: a 110. _____ is a sales task in which salespeople use well-planned strategies to seek new customers by proposing innovative solutions to customers’ needs. a. Consultative selling b. Creative selling c. Missionary selling d. Order processing ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 111. When a considerable amount of analytical decision making by the customer is involved in purchasing a product or service, the salesperson will probably use: a. missionary selling. b. telemarketing. c. creative selling. d. inside selling. ANSWER: c 112. A salesperson from Healthcare Pharmaceuticals provided free samples of the company’s latest line of pain relievers to retailers in an effort to promote the firm’s goodwill during a sales approach. Later, a wholesaler took orders and delivered the merchandise. Which of the following sales tasks had been performed by the salesperson? a. Order processing b. Creative selling c. Missionary selling d. Networking ANSWER: c 113. In the context of the analysis of sales tasks, when technical support personnel help to install, set up, and maintain equipment for one of their customers, they are: a. conducting the activity of qualifying prospects. b. engaging in missionary sales activities. c. undertaking the activity of order processing. d. involved in creative selling. ANSWER: b 114. Which of the following is true of missionary selling? a. It is mainly used to persuade wholesalers and retailers to carry complete inventories of the firm’s merchandise. b. It is used by salespeople to offer low value sales incentives to their customers for superior performance. c. It is mostly used by nonprofit-making organizations for educating people about their cause. d. It is a form of direct marketing. ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 115. The first step in the sales process is to: a. determine the potential customers. b. identify the prospective customers. c. advertise the product. d. approach the potential customer. ANSWER: b 116. _____ is a personal selling function that involves identifying potential customers. a. Screening b. Prospecting c. Approaching d. Processing ANSWER: b 117. New sales personnel often find prospecting frustrating because it: a. can only be accomplished during certain times of the year. b. can be done in a variety of ways. c. is subject to a number of laws and regulations. d. usually offers no immediate payback. ANSWER: d 118. Alpha Trendz, a clothing and apparel manufacturer, carefully studies information available on the Internet. It also checks computerized databases and trade show exhibits before launching its latest line of designer clothes. The company is in the _____ stage of the sales process. a. order processing b. missionary selling c. planning d. prospecting ANSWER: d 119. The process of qualifying a sales prospect involves: a. gathering information about the prospect to make initial contact go more smoothly. b. determining a potential customer’s needs, income, and purchase authority. c. defining the company’s product in terms of what it can do for the customer. d. making the initial contact with the prospect. ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 120. In the sales process, a person who not only needs a product, but has the resources and authority to purchase it, is a(n): a. existing customer. b. innovator. c. potential customer. d. interested customer. ANSWER: c 121. In the _____ stage of the sales process, the salesperson contacts the potential customer for the first time. a. precall planning b. prospecting c. approach d. qualifying ANSWER: c 122. Prior to making the approach to a potential customer, the salesperson should: a. outline objections and effective responses. b. break down product features and benefits by category. c. understand the way in which the industry operates. d. collect and analyze information about the potential customer. ANSWER: d 123. After determining that a prospective customer is a good candidate to actually make a purchase, the salesperson will want to gather as much information about the customer as possible. This step in the sales process is known as: a. presales research. b. prospecting. c. precall planning. d. qualifying. ANSWER: c

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Chapter 17: Personal Selling and Sales Promotion 124. In the _____ stage of the sales process, a salesperson describes a product’s features and relates them to the customer’s needs. a. approach b. recall c. closure d. presentation ANSWER: d 125. Since each purchase decision possesses unique circumstances, presentations are: a. usually flexible and can be modified to suit customer needs. b. often prepared in detail ahead of time. c. generally somewhat negative and disorganized to many potential clients. d. usually short on detail, lacking current price quotes and specifications. ANSWER: a 126. Zero Tech, a provider of game programming, directed its highly skilled and technically sound salespeople to visit customers without prior appointment and make a sales pitch on the spot. Which of the following techniques was used by the sales staff? a. Creative selling b. Inbound telemarketing c. Cold calling d. Missionary selling ANSWER: c 127. Which of the following will improve the quality of the presentation used for approaching a prospective customer? a. Using complex graphics to explain product features b. Making the presentation precise without going into product price details c. Focusing on educating the prospective customer about the firm’s goodwill rather than on product features d. Using precollected information for tailoring the presentation to match the customer’s needs ANSWER: d 128. One important advantage of personal selling over most advertising is: a. the cost factor; personal selling is much cheaper. b. the ability to actually demonstrate the good or service. c. the minimal dependence on technology. d. the low requirement for skilled salespeople. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 129. Salespeople usually face difficulties in: a. approaching potential buyers. b. precall planning. c. closing the sale. d. following up after the sale. ANSWER: c 130. _____ refers to the postsale activities employed by salespeople that determine whether an individual who made a recent purchase will become a repeat customer. a. sales maintenance b. post-closing c. dissonance reduction d. follow-up ANSWER: d 131. The overall direction and control of the personal selling effort is in the hands of a firm’s: a. board of directors. b. sales analysts. c. existing customers. d. sales managers. ANSWER: d 132. First-line sales managers need very strong sales skills, while sales managers at higher organizational levels need more _____ skills. a. training b. interactive c. managerial d. technical ANSWER: c 133. Which of the following functions poses a great challenge to sales managers? a. Training b. Recruitment and selection c. Supervision d. Organization ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 134. Which of the following is a principal method used in sales training? a. In-house classes b. Application screening c. Aptitude tests d. Assessment center ANSWER: a 135. Firms that market similar products throughout large areas often organize their sales forces: a. geographically. b. on a product basis. c. by types of customers. d. by specific accounts. ANSWER: a 136. Most firms that use a customer-oriented organizational structure to strengthen their relationship with the largest customers adopt: a. geographic organization. b. decentralization. c. a vertical structure. d. a national accounts organization. ANSWER: d 137. The number of sales representatives who report to a first-level sales manager is referred to as: a. span of control. b. locus of control. c. sphere of influence. d. hierarchy. ANSWER: a 138. Which of the following is the most effective way for a sales manager to motivate salespeople to give their best? a. Setting annual goals for individuals instead of quarterly or monthly goals b. Setting extremely high targets c. Recognizing their efforts and offering simple incentives d. Creating expensive incentive programs ANSWER: c

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Chapter 17: Personal Selling and Sales Promotion 139. _____ explains that motivation depends on the aspirations people have of their ability to perform a job, and how performance relates to attaining rewards they desire. a. Marketing research b. Maslow's hierarchy of needs c. Performance theory d. Expectancy theory ANSWER: d 140. A _____ is a payment tied directly to the sales or profits a salesperson achieves. a. fixed pay b. commission c. salary d. periodic payment ANSWER: b 141. The compensation package for sales personnel that gives management more control over how sales personnel allocate their efforts, but may reduce the incentive to expand sales, is the: a. pure commission program. b. salary plus bonus system. c. straight salary plan. d. salary plus commission system. ANSWER: c 142. The criteria for sales evaluations have changed to include customer satisfaction, profit contribution, and customer retention as measures of success. This change was motivated by: a. complaints from upper-level management about the cost of commission-based compensation programs. b. difficulty in recruiting competent employees because of the variability of sales personnel's compensation. c. reluctance to encourage sales personnel to develop new accounts. d. an increasingly long-term orientation that results from greater quality management and customer relationship building efforts. ANSWER: d

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Chapter 17: Personal Selling and Sales Promotion 143. Sales managers can best foster an ethical work environment by: a. closely monitoring sales representatives by recording their phone calls. b. sending salespeople to sensitivity training. c. letting employees know what is expected of them. d. taking strict action against employees who are unethical in their behavior. ANSWER: c 144. Which of the following is a characteristic of a corporate culture that encourages ethical behavior? a. Salespeople focus on short-term or quick sales. b. Management focuses only on sales and profits. c. Open communication exists between employees and managers. d. Management announces discounts on bulk sales to wholesalers. ANSWER: c 145. Sales promotion techniques were originally intended: a. to promote the company’s goodwill. b. as short-term incentives aimed at producing immediate buying responses. c. as international promotions designed to replace advertising. d. to build long-lasting customer relationships. ANSWER: b 146. Which of the following is the most important reason for manufacturers to use sales promotion? a. To appeal to marketing intermediaries than final consumers b. To offer extra incentives to customers to buy products c. To overcome poor brand images and product deficiencies d. To create awareness of their products among consumers ANSWER: b 147. Which of the following is a customer-oriented sales promotion technique? a. Point-of-purchase advertising b. Dealer incentives c. Trade shows d. Specialty advertising ANSWER: d

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Chapter 17: Personal Selling and Sales Promotion 148. With regard to sales promotion, magazines, newspapers, and package inserts are the standard methods of distributing: a. coupons. b. samples. c. premiums. d. specialty items. ANSWER: a 149. Which of the following sales promotion techniques produces a higher response rate than most other promotions? a. Sweepstakes b. Rebates c. Sampling d. Coupons ANSWER: d 150. A _____ is a specially packaged item that gives the purchaser a larger quantity at regular price. a. rebate b. premium c. sample d. bonus pack ANSWER: d 151. The sales promotion technique that rewards consumers with an item either for free or at a reduced cost when they purchase another product is called: a. sampling. b. a prize. c. a premium. d. specialty advertising. ANSWER: c 152. Julia noticed that her favorite shampoo is being packaged in a slightly larger bottle for the same price as the standard size bottle. This is an example of a: a. bonus pack. b. premium. c. sample. d. de facto rebate. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 153. Which of the following is a sales promotion technique that places the manufacturer’s name, address, and marketing message on useful articles that are then distributed to target customers? a. Sampling b. Point-of-purchase advertising c. Trade shows d. Specialty advertising ANSWER: d 154. Sales promotion that appeals to marketing intermediaries rather than consumers is called: a. network marketing. b. trade promotion. c. publicity. d. inside selling. ANSWER: b 155. Which of the following financial incentives is designed to give retailers discounts on goods? a. Rebate b. Buying allowance c. Commission d. Promotional allowance ANSWER: b 156. The trade-oriented promotion that consists of a display or other promotion located near the site of the actual buying decision is known as: a. specialty advertising. b. missionary selling. c. push-on-premises display. d. point-of-purchase advertising. ANSWER: d 157. Which type of sales promotion is intended to capture the impulse purchase? a. Trade allowances b. Trade shows c. Point-of-purchase displays d. Push money ANSWER: c

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Chapter 17: Personal Selling and Sales Promotion 158. Which of the following trade promotion techniques give especially effective opportunities to introduce new products and generate sales leads? a. Dealer incentives b. Point-of-purchase advertising c. Trade shows d. Specialty advertising ANSWER: c 159. _____ is a cash reward paid to retail salespeople for every unit of a product they sell. a. Rebate b. Push money c. Handling fee d. Buying allowance ANSWER: b 160. Under what conditions does personal selling typically become a primary component of the firm's promotional mix? ANSWER: Personal selling is a primary component of a firm’s promotional mix when one or more of several well-defined factors are present: 1) customers are geographically concentrated; 2) individual orders account for large amounts of revenue; 3) the firm markets goods and services that are expensive, are technically complex, or require special handling; 4) trade-ins are involved; 5) products move through short channels; or 6) the firm markets to relatively few potential customers.

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Chapter 17: Personal Selling and Sales Promotion 161. How has the role of a salesperson in a firm’s promotional activities changed over the years? ANSWER: Throughout U.S. history, selling has been a major factor in economic growth. Yankee peddlers helped expand trade among the colonies. Today, professional salespeople are problem solvers who focus on satisfying the needs of the customers before, during, and after the sales are made. Armed with knowledge about their firm’s goods and services, those of competitors, and their customers’ business needs, salespeople pursue a common goal of creating mutually beneficial long-term relationships with customers. With increasing competition, personal selling is taking a more prominent role in the marketing mix. Today salespeople must be able to: 1) focus on a customer’s situation and needs and create solutions that meet those needs; 2) follow through and stay in touch before, during, and after sale; 3) know the industry and have a firm grasp, not only of their own firm’s capabilities but also of their competitors’ capabilities; 4) work hard to exceed their customers’ expectations. 162. Describe over-the-counter and field selling. ANSWER: Over-the-counter selling is the most frequently used sales channel that describes selling in retail and some wholesale locations. Customers typically visit the seller’s location on their own initiative to purchase desired items. Most over-the-counter sales are direct-to-customer, although business customers are frequently served by wholesalers with over-the-counter sales reps. Field selling involves making sales calls on prospective and existing customers at their businesses or homes. Some situations in field selling involve creative effort and often require considerable technical expertise. The salesperson must convince the customers first that they need the good or service and then that they need the particular brand the salesperson is selling. Largely because it involves travel, field selling is considerably more expensive than other selling options. 163. What is network marketing? Give an example. ANSWER: Network marketing is a type of personal selling that relies on lists of family members and friends of a salesperson, who organizes gatherings of potential customers for an in-home presentation of selected products. Example: Vault Denim buys previous season’s designer jeans from manufacturers. Its consultants then sell the jeans at home parties for about half the retail price.

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Chapter 17: Personal Selling and Sales Promotion 164. Distinguish between inbound and outbound telemarketing. ANSWER: Outbound telemarketing involves sales personnel who rely on the telephone to contact potential buyers, reducing the substantial costs of personal visits to customers’ homes or businesses. The sales personnel try to conclude the sale over the phone. Inbound telemarketing typically involves a toll-free number that customers can call to obtain information, make reservations, and purchase goods and services. When a customer calls a toll-free number, the caller can be identified and routed to representatives with whom he/she has done business before, creating a human touch. This form of selling provides maximum convenience for customers who initiate the process. 165. How do firms integrate various sales channels to create a cost-effective sales organization? ANSWER: Firms are likely to blend alternative sales channels from over-the-counter selling and field selling to telemarketing and inside selling, to create a successful cost-effective sales organization. Existing customers whose business problems require complex solutions are likely best served by a traditional sales force. Other current customers who need answers but not the same attention as the first group are served by inside sales reps who contact them as needed. Over-the-counter sales reps serve existing customers by supplying information and advice and completing sales transactions. Telemarketers are used to strengthen communication with customers or to reestablish relationships with customers that may have lapsed over a few months. 166. Describe the three major personal selling approaches. ANSWER: 1) Relationship selling: Relationship selling is a technique for building a mutually beneficial partnership with a customer through regular contacts over an extended period. Most firms now emphasize relationship selling as they cut back on the number of suppliers and look for companies that provide high levels of customer service and satisfaction. To create long-lasting relationships with customers, salespeople must meet buyers’ expectations. They must also find ways to distinguish themselves and their products from competitors. Relationship selling is also important in business-to-business sales. 2) Consultative selling: Consultative selling involves meeting customer needs by listening to them, understanding their problems, paying attention to details, and following through after the sale. It works hand in hand with relationship selling in building customer loyalty. An important aspect of consultative selling is being prepared for a sales call, including dressing professionally. 3) Team selling: Team selling is a form of personal selling in which several sales associates or other members of the organization are employed to help the leading sales representative reach all those who influence the purchase decision. Teams can be formal and ongoing or created for a specific, short-term selling situation.

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Chapter 17: Personal Selling and Sales Promotion 167. What do buyers expect from professional salespeople? ANSWER: Buyers prefer to do business with salespeople who: 1) orchestrate events and bring whatever resources are necessary to satisfy the customer; 2) provide counseling to the customer based on in-depth knowledge of the product, the market, and the customer’s needs; 3) solve problems proficiently to ensure satisfactory customer service over extended time periods; 4) demonstrate high ethical standards and communicate honestly at all times; 5) willingly advocate the customer’s cause within the selling organization; 6) create imaginative arrangements to meet buyers’ needs; and 7) arrive well prepared for sales calls. 168. Briefly describe the three basic sales tasks. ANSWER: 1) Order processing: Order processing refers to selling at the wholesale and retail levels, that involves identifying customer needs, pointing them out to the customers, and completing orders. Order processing becomes the primary task in situations in which the needs of can be readily identified and are acknowledged by the customer. 2) Creative selling: Creative selling is a form of personal selling in which salespeople use well-planned strategies to seek new customers by proposing innovative solutions to customer needs. Creative selling techniques are used to solicit an order when a considerable amount of decision making is involved in purchasing a good or service. New products or upgrades to more expensive items often require creative selling. 3) Missionary selling: Missionary selling is an indirect selling method in which salespeople promote goodwill for the firm by educating customers and providing technical or operational assistance.

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Chapter 17: Personal Selling and Sales Promotion 169. Briefly describe the various steps involved in the sales process. ANSWER: Personal selling encompasses the following sequence of activities: 1) Prospecting and qualifying: This step involves identifying potential customers and determining their needs, income, and purchase authority as a potential customer. 2) Approach: After identifying a qualified prospect, the next step is to collect all the relevant information and plan an approach, which is a salesperson’s initial contact with a customer. 3) Presentation: In this step, the salesperson conveys the marketing message to the customer. This involves describing the product’s major features, pointing out its strengths, and citing other customers’ success with the product. 4) Demonstration: In this step, the customer gets a chance to try the product or at least see how it works before the purchase. 5) Handling objections: Objections are expressions of sales resistance by a prospective customer. Potential customers often have legitimate questions and concerns about a good or service and the salespeople need to answer these objections without being rude or aggressive. 6) Closing: At this stage, the salesperson asks the customer to make a purchase decision. 7) Follow-up: It is not enough to close the sale and move on. The salesperson must ensure that the customer service needs are met and that satisfaction results from all of a customer’s dealings with the company. These postsale activities that often determine whether a person will become a repeat customer, constitute the sales follow-up. 170. What is cold calling? How can a salesperson make a successful cold call? ANSWER: Cold calling means phoning or visiting the customer without a prior appointment and making a sales pitch on the spot. In a cold calling situation, the approach and presentation often take place at the same time. A salesperson can make a successful cold call by: 1) thinking of a cold call as a conversation, and not as a sales call. 2) following up the conversation with leading questions that let the customer acknowledge the benefits of purchasing from the company. 3) ensuring that the message on the voicemail is brief but intriguing so that it piques the prospect’s interest without giving away any selling information. 4) trying to get past a gatekeeper by politely asking for help in reaching the decision maker. 5) frequently changing the opening statement and sound fresh and confident during each sales call. 6) focusing on selling the appointment and not the product while calling to make an appointment.

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Chapter 17: Personal Selling and Sales Promotion 171. What are the various methods used by salespeople to close a sales process? ANSWER: Closing is the point at which the salesperson asks the customer to make a purchase decision. Some of the methods used by salespeople for closing include: 1) Addressing the prospect’s major concern about a purchase and then offering a convincing argument. 2) Posing choices for the prospect in which either alternative represents a sale. 3) Advising the buyer that the product is about to be discontinued or will go up in price soon. 4) Remaining silent so the buyer can make a decision on his/her own. 5) Offering an extra inducement designed to motivate a favorable buyer response, such as a quantity discount, an extended service contract, or a low-interest payment plan. 172. What is a follow-up? Why is follow-up an important step in the sales process? ANSWER: The postsale activities, which often determine whether a customer will become a repeat customer constitute the sales follow-up. Sales experts use a wide array of follow-up techniques ranging from holiday cards to online greetings. Some make phone calls at regular intervals. Others prefer automatic email reminders when it is time to renew or reorder. This step is important for a sale as it allows salespeople to psychologically reinforce the customer’s original decision to buy. It also gives them an opportunity to correct any problems and ensure the next sale. Follow-up helps strengthen the bond they are trying to build with customers in relationship selling. 173. What are the basic functions of a sales manager? ANSWER: A sales manager performs seven basic managerial functions: 1) recruitment and selection, 2) training, 3) organization, 4) supervision, 5) motivation, 6) compensation, and 7) evaluation and control.

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Chapter 17: Personal Selling and Sales Promotion 174. State the expectancy theory of motivation. How can sales managers apply this theory to motivate their sales force? ANSWER: Expectancy theory states that motivation depends on the expectations an individual has of his/her ability to perform the job and on how that performance relates to attaining rewards the individual values. Sales managers can apply the expectancy theory of motivation by following a five-step process: 1) Letting each salesperson know in detail what is expected in terms of selling goals, service standards, and other areas of performance. Rather than setting goals just once a year, many firms do so on a semiannual, quarterly, or even monthly basis. 2) Making the work valuable by assessing the needs, values, and abilities of each salesperson and then assigning appropriate tasks. 3) Making the work achievable. As leaders, sales managers must inspire self-confidence in their salespeople and offer training and coaching to reassure them. 4) Provide immediate and specific feedback, guiding those who need improvement and giving positive feedback to those who do well. 5) Offering rewards each salesperson values, whether it is an incentive, opportunity for advancement, or a bonus. 175. What are the three questions a sales manager must address as part of a salesperson’s evaluation? How can a sales manager ensure that all employees are treated equally while completing an evaluation summary? ANSWER: The sales manager must follow a formal system that includes a consistent series of decisions. The system helps the manager to answer three general questions: 1) Where does each salesperson’s performance rank relative to predetermined standards? 2) What are the salesperson’s strong points? 3) What are the salesperson’s weak points? In completing the evaluation summary, the sales manager follows a set procedure so that all employees are treated equally: 1) Each aspect of sales performance for which a standard exists should be measured separately. This helps prevent the so-called halo effect, in which the rating given on one factor influences those on other performance variables. 2) Each salesperson should be judged on the basis of actual sales performance rather than potential ability. 3) Sales managers must judge each salesperson on the basis of sales performance for the entire period under consideration, rather than for a few particular incidents. 4) The evaluation should be reviewed by a third party, such as the manager’s boss or a human resources manager, for completeness and objectivity.

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Chapter 17: Personal Selling and Sales Promotion 176. Give three characteristics of a corporate culture that encourages ethical behavior. Why is it important for salespeople to maintain ethical behavior? ANSWER: The characteristics of a corporate culture that encourages ethical behavior include: 1) employees who understand what is expected of them, 2) open communication, and 3) managers who lead by example. Salespeople need to maintain ethical behavior because it is vital to their firm’s relationships with customers and because they represent their company. A breach of ethics could also be detrimental to an individual’s career. 177. Define sales promotion. How does sales promotion support other promotional activities of a firm? ANSWER: Sales promotion includes marketing activities other than personal selling, advertising, and publicity designed to enhance consumer purchasing and dealer effectiveness. Both retailers and manufacturers use sales promotion to offer consumers extra incentives to buy. These promotions are likely to stress price advantages, giveaways, or special offerings. Firms use sales promotion to speed up the sales process and increase sales volume. It helps build loyalty. Sales promotions can encourage interest in both new and mature products, help introduce new products, encourage trial and repeat purchases, increase usage rates, neutralize competition, and reinforce advertising and personal selling efforts. 178. Discuss the different types of consumer-oriented sales promotions. ANSWER: Consumer-oriented sales promotions include: 1) Coupons: These are the most widely used form of sales promotions that offer discounts on the purchase price of goods and services. 2) Refunds: Refunds or rebates offer cash back to consumers who send in proof of purchasing one or more products. 3) Samples: Sampling refers to free distribution of a product in an attempt to obtain future sales. 4) Bonus packs: A bonus pack is a specially packaged item that gives the purchaser a larger quantity at the regular price. 5) Premiums: Premiums are items given free or at reduced costs with purchases of other products. 6) Contests: Contests require entrants to complete a task such as solving a puzzle or answering questions in a trivia quiz, and they may also require proofs of purchase. 7) Sweepstakes: Sweepstakes choose winners by chance, so no purchase is necessary. 8) Specialty advertising: This is a sales promotion technique that places the advertiser’s name, address, and advertising message on useful articles that are then distributed to target consumers.

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Chapter 17: Personal Selling and Sales Promotion 179. What is trade promotion? What are the different trade promotion methods used by marketers? ANSWER: Trade promotion is a sales promotion that appeals to marketing intermediaries rather than the final consumers. Marketers use trade promotions in push strategies by encouraging resellers to stock new products, continue to carry existing ones, and promote both effectively to consumers. The most common trade promotion methods used by marketers include: 1) Trade allowances: These are special financial incentives offered to wholesalers and retailers that purchase or promote specific products. A trade allowance can be in the form of a buying allowance, an off-invoice allowance, or a promotional allowance. 2) Point-of-purchase advertising: This is a display or other promotion located near the site of the actual buying decision. 3) Trade shows: A trade show is a product exhibition organized by industry trade associations to showcase goods and services. 4) Dealer incentives, contests, and training programs: Manufacturers run dealer incentive programs and contests to reward retailers and their salespeople who increase sales and, more generally, to promote specific products. For more expensive and highly complex products, manufacturers often provide specialized training for retail salespeople. Match each item with the correct statement below. a. span of control b. field selling c. inside selling d. order processing e. virtual sales team f. team selling g. approach h. creative selling i. presentation j. sales promotion k. premium l. coupon m. network marketing n. cold calling o. expectancy theory p. over-the-counter selling q. missionary selling r. relationship selling s. push money t. consultative selling Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 180. _____ is another term for spiffs. ANSWER: s 181. _____ refers to personal selling conducted in retail and some wholesale locations in which customers come to the seller’s place of business. ANSWER: p 182. _____ involves making calls on prospective and existing customers at their businesses or homes. ANSWER: b 183. _____ is a type of personal selling that relies on lists of family members and friends of a salesperson, who organizes gatherings of potential customers for an in-home demonstration of products. ANSWER: m 184. Selling by phone, mail, and electronic commerce is known as _____. ANSWER: c 185. Most firms now emphasize _____, a technique used by firms for building a mutually beneficial partnership with a customer through regular contacts over an extended period. ANSWER: r 186. This personal selling technique works hand in hand with relationship selling _____ and involves meeting customer needs by listening to them, understanding their problems, paying attention to details, and following through after the sale. ANSWER: t 187. _____ is a type of personal selling in which a salesperson joins with specialists from other functional areas of the firm to complete the selling process. ANSWER: f 188. A(n) _____ is a network of strategic partners, suppliers, and others qualified and willing to recommend a firm’s goods and services. ANSWER: e 189. _____ is selling at the wholesale and retail levels that involves identifying customer needs, pointing them out to customers, and completing orders. ANSWER: d 190. _____ is a type of personal selling in which salespeople use well-planned strategies to seek new customers by proposing innovative solutions to customer’s needs. ANSWER: h

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Chapter 17: Personal Selling and Sales Promotion 191. _____ is an indirect selling method in which salespeople promote goodwill for the firm by educating consumers and providing technical and operational assistance. ANSWER: q 192. A(n) _____ is a salesperson’s initial contact with the prospective customer. ANSWER: g 193. _____ is a personal selling function of describing a product’s major features and relating them to a customer’s problems and needs. ANSWER: i 194. Phoning or visiting the customer without a prior appointment and making a sales pitch on the spot is known as _____. ANSWER: n 195. _____ refers to the number of sales representatives who report to first-level sales managers. ANSWER: a 196. _____ states that motivation depends on an individual’s expectations of his/her ability to perform a job and how that performance relates to attaining a desired award. ANSWER: o 197. _____ refers to marketing activities other than personal selling, advertising, and publicity that enhance consumer purchasing and dealer effectiveness. ANSWER: j 198. A(n) _____ is a sales promotion technique that offers a discount on the purchase price of goods or services. ANSWER: l 199. A(n) _____ is an item given free or at a reduced cost with purchases of other products. ANSWER: k 200. What is the major determinant of a successful salesperson? a. H e or she is college-educated. b. H e or she is customer-oriented. c. H e or she is technology-proficient. d. H e or she aspires to higher career goals. e. H e or she has a competitive spirit. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 201. When you choose a career in personal selling, you are promoting your company and the products or services it offers. How do you communicate the advantages of your goods and services over those of the competition? a. B e vibrant and personable; focus on making a profit; direct major resources at advertising; be professional. b. F ocus on efficiency; know the competition and the industry; be professional; follow through with customers. c. K now the industry and the competition; focus on advertising; be vibrant and professional; exceed customer expectations. d. F ocus on the customer; follow through; know the industry and the competition; exceed customer expectations. e. F ollow through with customers; be professional; know the competition; direct major resources to advertising. ANSWER: d 202. Your clients don't need to be sold a product—they have already subscribed to your expensive premium service. But they do need to be able to call on you when they have a problem with the service or when they require special consideration. You provide technical support, solve problems, and make sure the customer is included in special events that your company sponsors. You also make certain that everyone who is a premium subscriber is sent an annual gift, compliments of your company. Because you don't meet your customers face-to-face, you sometimes call yourself an electronic concierge! What kind of sales are you involved in? a. i nbound telemarketing b. f ield selling c. o ver-the-counter selling d. i nside selling e. n etwork selling ANSWER: d 203. You have accepted a new job in personal sales that requires training in the use of technologies like predictive dialers, random-digit dialing, and autodialing. What is the new job that you have accepted? a. i nbound telemarketer b. n etwork marketer c. t eam selling d. i nside selling e. o utbound telemarketer ANSWER: e Copyright Cengage Learning. Powered by Cognero.

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Chapter 17: Personal Selling and Sales Promotion 204. Your company wants to expand the specialized market to which it sells athletic gear. The general public may be drawn to your items because they are attractive and popular, but most people will balk at the high price tag for features they consider superfluous. You decide to contact strategic partners who can recommend your product, and help explain the concept behind workout gear that regulates body temperature, and why that feature is not only valuable but worth the extra cost. What personal selling strategy will be beneficial to you in your upcoming marketing campaign? a. r elationship selling b. virtual sales team selling c. c ross-selling d. c onsultative selling e. p ersonalized selling ANSWER: b 205. Today's salesperson often employs a combination of personal selling approaches in order to provide high levels of customer service and satisfaction. What is one advantage of team selling in business-to-business sales situations? a. T eam selling forms relationships between companies rather than between individuals. b. T eam selling capitalizes on a firm's strengths by selling to existing customers. c. T eam selling emphasizes being well prepared for a sales call and presenting professionally. d. T eam selling builds company loyalty. e. T eam selling helps develop the patience necessary to cooperate with sales team members. ANSWER: a 206. You are conducting interviews for new sales representatives for your electronics firm. You are primarily looking for candidates that you believe can be successful in developing new business and selling to new customers. Your current staff is full of sales representatives who are exceptional at generating repeat sales. You will be looking for personal sales personnel who are proficient in which kind of sales task? a. o rder processing b. s upport personnel c. c reative selling d. m issionary selling e. t echnical sales reps ANSWER: c

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Chapter 17: Personal Selling and Sales Promotion 207. You are conducting interviews for new sales representatives for your manufacturing firm. You are primarily looking for candidates that you think will be resources for your indirect customers, educating them, providing technical assistance, and demonstrating how a new product is used. You will be looking for personal sales personnel who are proficient in which kind of sales task? a. o rder processing b. s upport personnel c. o rder getters d. t echnical sales reps e. m issionary selling ANSWER: e 208. What are the typical first and last steps in the personal selling process? a. p rospecting; closing the sale b. a pproach; closing the sale c. p rospecting; follow-up d. a pproach; follow-up e. p resentation; follow-up ANSWER: c 209. You are the head of sales training for a major financial services firm in New York City. You are conducting a sales training class for a group of new trainees. You are a strong believer in using a structured approach to personal selling. Based on this information, which of the following personal selling process steps are you going to tell the trainees to perform first? a. d evelop a database of potential customers b. d evelop an engaging sales presentation c. p ractice closing the sale d. d evelop a prospect follow-up checklist e. a nalyze information about potential customers’ needs ANSWER: a

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Chapter 17: Personal Selling and Sales Promotion 210. T he top marketing manager of your company has asked you to make recommendations about your sales representatives who make up the sales force for your business-to-business auto parts customers. These territories are geographically structured and the goal is to move away from territory-based sales to customer-oriented sales; as a result, these sales reps may be reassigned. Based on this project request, what element of the sales force management process will you focus on? a. e stablishing expectancy b. o rganizing the sales force c. r ecruiting and selecting salespeople d. e valuating and controlling personnel e. c ompensating salespeople ANSWER: b 211. A sales rep’s actual sales relative to sales potential is relevant to the sales manager in which of the following phases of the sales management process? a. m anaging sales territories b. m otivating salespeople c. c ompensating salespeople d. t raining sales people e. c ontrolling and evaluating sales force performance ANSWER: e 212. You have gotten quite a few complaints recently from unhappy clients, among them the following: One customer feels that the salesperson was not transparent about contractual issues; another client feels like he was taken advantage of because English is his second language; and a third client feels like he was pressured into a purchase without having sufficient time to try out the product. You want to emphasize to your sales team the importance of upholding the ethical business practices that are characteristic of your company. What can you do to encourage honesty and ethical behavior? a. e stablish reasonable customer expectations b. a rrange for an ethics and diversity training workshop c. s creen new applicants for the way in which they deal with ethical issues d. e ncourage salespeople to report ethics violations to you e. s et the proper example of ethical business practices ANSWER: b

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Chapter 17: Personal Selling and Sales Promotion 213. As a new salesperson, you are concerned with how your decisions will affect your customers, your sales team, and your company. You notice that many of your workmates accept gifts and perks from clients, even though that practice is frowned upon by management and discouraged according to what you have read in the handbook. Some colleagues have been reprimanded for accepting gifts from customers just in the short time you have been with the company. What will be your focus regarding ethical business practice? a. u nreported ethics violations b. l ax example of management c. p ersonal ethical behavior d. p ermissive corporate culture e. l ack of a written code of ethics ANSWER: c 214. Which of the following statements is accurate about sales promotion? a. S ales promotion can increase sales by providing extra purchasing incentives. b. S ales promotion encompasses personal selling. c. S ales promotion has increased dramatically, primarily at the expense of personal selling. d. P roduct characteristics are not relevant when deciding on sales promotions. e. S ales promotion encompasses public relations. ANSWER: a 215. A manufacturer wants to increase purchase rates of his product and reward those consumers who make multiple purchases. He decides to use a consumer-oriented sales promotion that has an expiration date and requires the purchaser to submit a proof of purchase. Which sales promotion will the manufacturer use? a. b onus pack b. t rade allowance c. c oupon d. r ebate e. s weepstakes ANSWER: d

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Chapter 17: Personal Selling and Sales Promotion 216. Sue is the daughter of a salesman, but she knows that her job in the same field will be different from her father's. Unlike many sales professionals in the past, Sue is likely to experience: a. Working in a team

b. Prioritizing customer service over quick sales c. Prioritizing quick sales over customer service d. A more dominant role for personal selling in the marketing mix e. A less dominant role for personal selling in the marketing mix ANSWER: a, b, d 217. As Tom begins his new sales job, he is looking forward to interacting with customers. Tom's strengths are in personal, one-to-one communication. Choose the type(s) of sales channels that Tom probably hopes to use. a. Online

b. Field c. Over-the-counter d. Telemarketing e. Promotional ANSWER: b, c 218. Because Signal Sales is losing money, its marketing director has been told to cut selling costs. While she is unenthusiastic, the director knows that her best approach is to shift sales personnel out of the _____ channel into the _____ channel. a. Field selling, online selling

b. Field selling, over-the-counter c. Over-the-counter selling, field selling d. Online selling, field selling e. Online selling, over-the-counter selling ANSWER: a 219. As a field salesperson for a firm that builds custom software for large corporations, Fred relies heavily on consultative selling. His reasons include all of the following except: a. Fred's product is likely to be complicated and high-priced

b. His buyers are likely to be knowledgeable c. His buyers are likely to be cost-conscious d. He wants to create long-term customers e. To meet his quota, he aims to close quick sales ANSWER: e

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Chapter 17: Personal Selling and Sales Promotion 220. The sales manager of your fitness center has convinced several members to buy the center's nutritional counseling service as well as its personal training package. You are pleased at this accomplishment in ____ selling. a. Cross

b. Field c. Upstream d. Downstream e. Inbound ANSWER: a 221. You want to improve your performance in field selling, so you have set out to build your skills in the order processing part of the job. Those skills will be related to several tasks, including: a. Identifying customer needs

b. Pointing out needs to the customer c. Completing orders d. Cross selling e. All of the above ANSWER: a, b, c 222. You sell a leading brand of speedboat. Many visitors to your showroom are enthusiastic young adults who would love to own your product but cannot afford it. When dealing with them, you must pay particular attention to which step in the sales process? a. Prospecting

b. Qualifying c. Approach d. Presentation e. Demonstration ANSWER: b 223. As head of sales for your firm, one of your key supervision-related responsibilities is determining an optimal span of control. You consider all of the following factors except: a. The complexity of your sales team's work activities

b. The interdependence of individual salespeople c. The extent of each salesperson's training d. How much each salesperson is paid e. The ability of individual sales managers ANSWER: d

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Chapter 17: Personal Selling and Sales Promotion 224. In her role as sales manager, Julie tells her team to always behave ethically on the job. However, Barbara sees Julie talk a customer into buying an unneeded product just because the sale will fulfill her quarterly quota. If Julie really wants to create a culture that encourages ethical behavior, she must: a. Lead by example

b. Reduce quotas c. Increase commissions d. Tell her sales team to avoid unethical decision making e. Better understand what products her customers need ANSWER: a 225. As a new employee in the sales promotion department of a hotel chain, you proudly tell a coworker about all the ways you can help the chain grow. Later, you're embarrassed when you realize you misspoke. You mistakenly claimed that sales promotion is especially well suited for: a. Speeding up the sales of hotel rooms

b. Increasing numbers of hotel bookings c. Encouraging tourists to try the hotel d. Building awareness of the hotel brand e. Fostering repeat bookings ANSWER: d 226. Which of the following statements is FALSE concerning personal selling in today's business environment? a. c areer opportunities for recent college graduates pursuing sales is projected to decline in the future b. c omputer technologies are vital tools for sales professionals c. t oday's sales representative focuses on building long-term relationships d. m any salespeople now operate in sales teams ANSWER: a 227. Today's successful sales representative focuses on creating value for their own firm and generating revenue by producing quick sales. a. True b. False ANSWER: False

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Chapter 17: Personal Selling and Sales Promotion 228. Brittany is a sales representative with CDW, an information technology reseller. She is a specialist for the education market and contacts her customers who are typically information technology directors for K-12 schools and higher education. Her territory includes the entire United States and she is able to have flexible hours since some days she may arrive early to contact customers on the East Coast or stay late if she's contacting customers in the Mountain or Pacific time zones. Her company has a proprietary phone technology system which provides names and contact information of leads and current customers so Brittany can make the most of her sales calls and be more productive. She typically makes 20 to 25 dials an hour and on average is able to speak with 2-3 individuals each hour. She was initially surprised at her ability to connect with customers and create relationships through her phone conversations and has created trust-based relationships over time. Her customers value her advice and opinions because she understands their needs, has expertise in the products and services she represents and always seeks to meet their needs. Brittany's position is best categorized as a(n) ________ channel position. a. i nside b. f ield c. o ver-the-counter d. t elemarketing ANSWER: a 229. C arlos has always been interested in the medical profession and took advanced biology and human anatomy courses in college so he could pursue his dream of working in the medical device industry. He's now employed with Stryker who is a leading medical device company offering specialized products such as artificial joints and surgical tools. Carlos works in the orthopedics division and often demonstrates his company's products with surgeons in the operation room at hospitals and enjoys the opportunity to train physicians on new equipment or devices. Carlos has an office in his apartment and works with physicians, hospitals and medical offices in his 2state territory. Stryker provides a company car, computer, and expense account so Carlos can minimize his outof-pocket expenses when traveling to meet with prospects and customers. Which of the following sales channels is most appropriate to describe Carlos' position with Stryker? a. f ield selling b. o ver-the-counter selling c. i nside selling d. o utbound telemarketing ANSWER: a 230. I t's often less expensive to attract new customers than to market different products to existing customers. a. True b. False ANSWER: False

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Chapter 17: Personal Selling and Sales Promotion 231. Brandon is a sales manager and often is involved in recruiting new sales representatives to join the firm. He has been trained in conducting behavioral-based interviews so he can identify whether candidates possess the appropriate characteristics to be successful in a consultative sales position. Which of the following characteristics would MOST LIKELY be important to Brandon during his interviews? a. listening skills b. e ntertaining personality c. m athematical and quantitative skills d. p hysical attractiveness ANSWER: a 232. Draymond worked in the hospitality industry during college and had extensive experience in food service and dining centers. He obtained a sales position with Hormel and was attracted to the position because his job primarily involved promotion of Hormel's various products to restaurants, hospitals and other institutional buyers in cooperation with local distributors such as Sysco Foods. Draymond enjoys the opportunity to work as a team with his Sysco Foods sales representatives who often ask him to join them on their sales calls to customers. Draymond does not take orders from customers for Hormel products but works collaboratively with Sysco Foods whose representatives work directly with customers to identify and fulfill their needs for Hormel products. Draymond's position is best classified as _______ selling. a. m issionary b. c reative c. t elemarketing d. i nside ANSWER: a 233. Creative selling is typically utilized to develop new business by adding new customers or introducing new products or services. a. True b. False ANSWER: True

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Chapter 17: Personal Selling and Sales Promotion 234. Chelsey is an account executive with Enterprise Rent-A-Car and works with body shop and automotive service providers as well as insurance agents. Chelsey knows that many automobile owners have car rental riders as part of their automobile insurance and when their car is damaged from a storm or accident, they could receive a rental car while their vehicle is being repaired. When Chelsey meets with her customers, she typically promotes the features and benefits of Enterprise such as how Enterprise provides exceptional service and goes above and beyond to pick-up customers at their preferred location and give them their rental vehicle. In addition, most of Enterprise's fleet of vehicles are less than 2 years old and are well maintained to provide a comfortable driving experience. Chelsey tells her agent and body shop owner clients that by using Enterprise's services, their customers will have higher levels of customer satisfaction with their repair experience and that translates into loyalty for the insurance agent. During which step in the personal selling process will Chelsey share this information? a. p resentation b. d emonstration c. p rospecting d. c losing ANSWER: a 235. Cutco is a manufacturer of high-end cutlery for the home chef and markets their products through a sister company, Vector Marketing who often contracts with college students who are independent sales representatives for the company. Vector provides free product and sales training to their independent sales representatives and encourages them to take food with them on sales calls such as apples, cucumbers, tomatoes or other fresh produce so that prospective customers can actually u se the knives and experience the Cutco difference. In addition, Cutco is relatively famous for their kitchen shears which can cut through a penny and during training, all Vector Marketing representatives are taught how to show the versatility and value of the shears. Which step in the sales process would a Vector Marketing representative have customers use the knives or kitchen shears? a. d emonstration b. p resentation c. c losing d. f ollow-up ANSWER: a

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Chapter 17: Personal Selling and Sales Promotion 236. Bailee recently joined a direct sales company as an independent contractor and earns 20% on product sales. She's excited about the opportunity to earn additional income by using social media to market her products to friends. Recently, she was a top 10 producer and sold $1000 in product which translates to an extra $200 in income for Bailee. The type of compensation Bailee receives from the company is called: a. c ommission b. s alary c. q uota d. i ncentive ANSWER: a 237. Drew is a sales manager with Fastenal - an industrial distributor of supplies for manufacturing, facility managers, and other industrial customers. He currently supervises 7 people and is wondering the typical or optimal number of first-line sales representatives that he should supervise. Based on the text, what do you recommend as the optimal number for him to supervise? a. 6 b. 5 c. 8 d. 10 ANSWER: a 238. Sales representatives often mimic or imitate the behavior of other sales representatives or managers in their company. If one or more individuals displays unethical behavior and is not reprimanded for their actions, other sales representatives or managers may be tempted to engage in similar unethical actions. a. True b. False ANSWER: True 239. Which of the following might be classified as an unethical sales practice? a. p ersuading a customer to purchase a product or service that does not meet a customer's need b. p roviding only the positive attributes of a product's capabilities c. u sing a customer success story as part of a sales presentation d. a sking customers for referrals to other potential customers who may have a similar need for a product or service ANSWER: a

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Chapter 17: Personal Selling and Sales Promotion 240. Scott has an 8-year-old Labrador Retriever who's starting to suffer from arthritis. On a recent trip to his veterinarian, the doctor recommended that Scott start using a prescription anti-inflammatory and pain medication for his dog. The veterinarian thinks a new drug, Previcox is extremely effective but relatively expensive at $1 per dose which is given daily. The drug sales representative has provided the veterinarian with a promotion opportunity where new customers can receive a VISA gift card of $12 when a new prescription is filled. The drug company is offering the veterinarian and their customers a(n): a. r ebate b. c ontest c. c oupon d. t rade allowance ANSWER: a 241. Brandi is an account executive with Wirtz Beverage, a wine and spirits distributor with an extensive catalog of brands. She typically meets with restaurants, bars and hotels to market her products and assists customers in developing their beverage menu to generate sales revenue and meet customer's needs. Recently, she had the opportunity to offer customers a great deal - if they ordered 5 cases of wine (assorted brands), they could receive the 6th case at 50% off retail. Wirtz Beverage offered this promotion in order to reduce warehouse inventory and shift inventory from their warehouses to the customer's business location. This is an example of a(n): a. t rade allowance b. s pecialty advertising c. s weepstake d. c oupon ANSWER: a

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Chapter 18: Pricing Concepts 1. A price is the exchange value of a good or service. a. True b. False ANSWER: True 2. Pricing can be used to modify consumer behavior. a. True b. False ANSWER: True 3. Pricing decisions are influenced by a variety of legal constraints imposed by federal, state, and local governments. a. True b. False ANSWER: True 4. The price of products only includes the costs incurred by the manufacturer for procuring the raw material and for processing the products. a. True b. False ANSWER: False 5. In the global marketplace, prices are directly affected by special types of taxes called tariffs. a. True b. False ANSWER: True 6. Tariffs make it possible for firms to protect their local markets while still setting prices on domestically produced goods well above world market levels. a. True b. False ANSWER: True 7. The term “tariff” refers to the tax exemption granted to domestic producers in order to increase their competitiveness in the international markets. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 8. Every “regulatory” price increase is a tax. a. True b. False ANSWER: False 9. High-demand sporting or concert events have encountered an expensive, often illegal, form of pricing where tickets are resold at a much higher price than what it was originally bought for. This practice is called ticket scalping. a. True b. False ANSWER: True 10. The ticket reselling market is both highly fragmented and susceptible to fraud and distorted pricing. a. True b. False ANSWER: True 11. The Anti-A&P Act was inspired by price competition triggered by the rise of grocery store chains. a. True b. False ANSWER: True 12. Defense based on cost differentials against charges of price discrimination under the Robinson-Patman Act works only if the price differences exceed the cost differences resulting from selling to various classes of buyers. a. True b. False ANSWER: False 13. Companies can avoid penalties under the Robinson-Patman Act as long as they can demonstrate that their price discounts and promotional allowances restrict competition. a. True b. False ANSWER: False 14. The Robinson-Patman Act was intended primarily to save jobs. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 15. Most states supplement federal legislation with their own unfair-trade laws, which require sellers to maintain minimum prices for comparable merchandise. a. True b. False ANSWER: True 16. Unfair-trade laws were intended to protect small specialty shops, such as dairy stores, from loss-leader pricing tactics. a. True b. False ANSWER: True 17. When a chain store sells certain products below cost to attract customers, it is practicing a loss-leader price tactic. a. True b. False ANSWER: True 18. Fair-trade laws assert the manufacturer’s authority to protect its asset by requiring retailers to maintain a minimum price. a. True b. False ANSWER: True 19. The Miller-Tydings Resale Price Maintenance Act (1937) exempted interstate fair-trade contracts from compliance with antitrust requirements, thus freeing states to keep these laws on their books if they so desired. a. True b. False ANSWER: True 20. State fair-trade laws were made invalid by the enactment of the Consumer Goods Pricing Act of 1975. a. True b. False ANSWER: True

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Chapter 18: Pricing Concepts 21. Overall organizational objectives and more specific marketing objectives guide the development of pricing objectives, which in turn lead to the development and implementation of more specific pricing policies and procedures. a. True b. False ANSWER: True 22. Basic so-called fighting brands are intended to capture market share from lower-priced competitors by offering relatively high quality products at comparatively higher prices. a. True b. False ANSWER: False 23. For consumers to pay prices either above or below what they consider the going rate, they must be convinced they are receiving fair value for their money. a. True b. False ANSWER: True 24. The economic theory assumes that firms behave rationally which in turn results in an effort to maximize gains and minimize losses. a. True b. False ANSWER: True 25. Price setting is based on the marketer’s ability to strike a balance between desired profits, and the customer’s perception of a product’s value. a. True b. False ANSWER: True 26. Total revenue is determined by multiplying the product’s selling price and the number of units sold. a. True b. False ANSWER: True

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Chapter 18: Pricing Concepts 27. A profit-maximizing price rises to the point at which further increases will cause disproportionate decreases in the number of units sold. a. True b. False ANSWER: True 28. Firms that use a volume objective to guide their pricing strategy believe that increased sales are less important in the long-run competitive picture than immediate high profits. a. True b. False ANSWER: False 29. Sales maximization can also result from nonprice factors such as service and quality. a. True b. False ANSWER: True 30. Companies that adopt a volume objective continue to expand sales even when their total profits drop below the minimum return acceptable to management. a. True b. False ANSWER: False 31. The PIMS project discovered a strong negative relationship between a firm’s product quality and its return on investment. a. True b. False ANSWER: False 32. Firms with large shares accumulate greater operating experience and lower overall costs relative to competitors with smaller market shares. a. True b. False ANSWER: True

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Chapter 18: Pricing Concepts 33. Pricing objectives tied directly to meeting prices charged by major competitors emphasize the price element of the marketing mix and focus less strongly on nonprice variables. a. True b. False ANSWER: False 34. Many firms attempt to promote stable prices by meeting competitors’ prices and competing for market share by focusing on the nonprice elements of the marketing mix. a. True b. False ANSWER: True 35. When discounts become normal elements of a competitive marketplace, other marketing mix elements gain importance in purchase decisions. a. True b. False ANSWER: True 36. A value pricing strategy works best for relatively high-priced goods and services. a. True b. False ANSWER: False 37. The challenge for those who compete on value is to convince customers that low-priced brands offer quality comparable to that of a higher-priced product. a. True b. False ANSWER: True 38. Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers. a. True b. False ANSWER: True

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Chapter 18: Pricing Concepts 39. Prestige objectives reflect marketers’ recognition of the role of price in creating an overall image of the firm and its product offerings. a. True b. False ANSWER: True 40. A customary price represents an upper limit on the price of a product imposed by the government in order to control the prices of essential products such as food items. a. True b. False ANSWER: False 41. Marketers determine prices in two basic ways: by applying the theoretical concepts of supply and demand and by completing cost-oriented analyses. a. True b. False ANSWER: True 42. Manufacturers attempt to balance consumer expectations of customary prices with the realities of rising costs by increasing overall product size. a. True b. False ANSWER: False 43. Microeconomics suggests a way of determining prices that assumes a profit-maximization objective. a. True b. False ANSWER: True 44. Economic theory attempts to derive correct equilibrium prices in the marketplace by comparing supply and demand. a. True b. False ANSWER: True

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Chapter 18: Pricing Concepts 45. In an oligopolistic market, a single seller controls the pricing decisions. a. True b. False ANSWER: False 46. In an oligopolistic market, price cutting is likely to increase total industry revenues. a. True b. False ANSWER: False 47. In an oligopolistic market, high start-up costs form significant barriers to entry for new competitors. a. True b. False ANSWER: True 48. Antitrust legislation has eliminated all monopolies including the temporary monopolies, such as those created through patent protection. a. True b. False ANSWER: False 49. The government prohibits regulated monopolies in markets in which competition would lead to an uneconomical duplication of services. a. True b. False ANSWER: False 50. The average total cost is the cost calculated by dividing the sum of the variable and fixed costs by the number of units produced. a. True b. False ANSWER: True 51. The supply side of the pricing equation focuses on revenue curves. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 52. Marginal revenue is the change in total revenue that results from selling an additional unit of output. a. True b. False ANSWER: True 53. A firm minimizes its profits when marginal costs equal marginal revenues. a. True b. False ANSWER: False 54. The price elasticity of demand (or elasticity of demand) is the percentage change in the quantity of a good or service demanded divided by the percentage change in its price. a. True b. False ANSWER: True 55. The price elasticity of supply of a product is the percentage change in the quantity of a good or service supplied divided by the percentage change in its price. a. True b. False ANSWER: True 56. When the elasticity of demand or supply is greater than 1.0, then that demand or supply is said to be inelastic. a. True b. False ANSWER: False 57. If consumers can easily find close substitutes for a good or service, the product’s demand tends to be inelastic. a. True b. False ANSWER: False 58. The increased options available to shoppers combine to create a market characterized by demand elasticity. a. True b. False ANSWER: True

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Chapter 18: Pricing Concepts 59. Demand curves must be based on marketing research estimates that may be less exact than cost figures. a. True b. False ANSWER: True 60. All firms attempt to maximize profits. a. True b. False ANSWER: False 61. Modern accounting procedures provide managers with a clear understanding of cost structures, so managers can readily comprehend the supply side of the pricing equation. a. True b. False ANSWER: True 62. Cost-plus pricing is the least popular method of setting prices. a. True b. False ANSWER: False 63. The only real difference among the multitude of cost-plus pricing techniques is the relative sophistication of the costing procedures employed. a. True b. False ANSWER: True 64. The two most common cost-oriented pricing procedures are the full-cost method and the incremental- cost method. a. True b. False ANSWER: True 65. Full-cost pricing allocates fixed costs that can be directly attributed to the production of the specific priced item. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 66. One of the advantages of the full-cost pricing approach is that it takes into consideration the competition and demand that exists for a product. a. True b. False ANSWER: False 67. Full-cost pricing allows the marketer to recover all costs plus the amount added as a profit margin. a. True b. False ANSWER: True 68. The breakeven point is the point at which total revenue equals total cost. a. True b. False ANSWER: True 69. A shortcoming of the breakeven model is that it assumes that per-unit variable costs change at different levels of operation. a. True b. False ANSWER: False 70. Breakeven analysis is an effective tool for marketers in assessing the sales required for covering costs and achieving specified profit levels. a. True b. False ANSWER: True 71. The basic breakeven model addresses the question of whether customers will actually purchase the product at the specified price in the quantity required to break even or make a profit. a. True b. False ANSWER: False 72. The basic breakeven model considers demand. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 73. Traditional economic theory considers both costs and demand in determining an equilibrium price. a. True b. False ANSWER: True 74. Purely cost-oriented approaches to pricing violate the marketing concept, so modifications that add demand analysis to the pricing decision are required. a. True b. False ANSWER: True 75. Modified breakeven analysis forces the marketer to consider whether the consumer is likely to purchase the number of units of a good or service required for achieving breakeven at a given price. a. True b. False ANSWER: True 76. When most of a firm’s costs are variable over a wide range of outputs, the primary determinant of profitability will be the revenue generated by sales. a. True b. False ANSWER: False 77. Lower off-season prices and higher peak-season prices for lodging at resorts illustrate the use of yield management as a strategy to generate revenues for a largely fixed-cost industry. a. True b. False ANSWER: True 78. Countries that export international commodities, such as wood, chemicals, and agricultural crops, suffer economically when their prices fluctuate. a. True b. False ANSWER: True

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Chapter 18: Pricing Concepts 79. Countries that export value- oriented products, rather than commodities, tend to enjoy more stable prices. a. True b. False ANSWER: True 80. Prices of electronic equipment and automobiles tend to fluctuate far less than prices of crops such as sugarcane and bananas. a. True b. False ANSWER: True 81. The exchange value of a good or service defines its: a. quality. b. price. c. durability. d. production cost. ANSWER: b 82. Which of the following can be categorized as a tariff? a. A tax exemption provided to domestic firms that import goods from foreign countries. b. A tax levied on domestic exporters to maintain product quality. c. A tax levied on foreign producers to prevent dumping of goods. d. A tax exemption on agricultural produce to help domestic farmers. ANSWER: c 83. Which of the following is also known as the Anti-A&P Act? a. The Clayton Act of 1914 b. The Robinson-Patman Act of 1936 c. The Miller-Tydings Resale Price Maintenance Act of 1937 d. The Consumer Goods Pricing Act of 1975 ANSWER: b

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Chapter 18: Pricing Concepts 84. The Robinson-Patman Act specifically prohibits: a. imposing taxes on the products that are being exported to other countries. b. earning excess profits, that is, more than the average for an industry. c. price discrimination in sales to wholesalers, retailers, and other producers. d. charging the same price to everyone for everything you sell. ANSWER: c 85. Which of the following is true of the Robinson-Patman Act? a. It prohibited imposing taxes on the products that are being exported to other countries. b. It was intended primarily to create more jobs in grocery chain stores. c. It prohibited selling at an unreasonably low price to eliminate competition. d. It applies only to price discrimination between geographic areas, injuring local sellers. ANSWER: c 86. The A.G. Harding company has been charged with price discrimination under the federal Robinson-Patman Act. Which of the following would be the best defense against the charge? a. The price differential is justified as they do not exceed the cost differences resulting from selling to various classes of buyers. b. The price differential is justified as it reflects the efficiency of its sales personnel. c. The price differential is justified because the company is a leader in the specific product market. d. The price differential is justified as the company’s products comply with the ISO standards. ANSWER: a 87. State laws requiring sellers to maintain minimum prices for comparable merchandise are called _____ laws. a. tax-exemption b. unfair-trade c. price-discrimination d. loss-leader ANSWER: b 88. Statutes enacted in most states that once permitted manufacturers to stipulate a minimum retail price for their product are called _____. a. fair-trade laws b. tax-exemption laws c. price discrimination laws d. loss-leader laws ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 89. Which of the following is true of fair-trade laws? a. They allow manufacturers to stipulate minimum retail prices for their products. b. They allow retailers to offer discount schemes on specified products. c. They require sellers to maintain maximum prices for comparable merchandise. d. They assert that a product’s image is a property right of the retailer. ANSWER: a 90. Which of the following exempted interstate fair-trade contracts from compliance with antitrust requirements, thus freeing states to keep these laws on their books if they so desired? a. The Clayton Act of 1914 b. The Robinson-Patman Act of 1936 c. The Miller-Tydings Resale Price Maintenance Act of 1937 d. The Consumer Goods Pricing Act of 1975 ANSWER: c 91. Which of the following was rendered invalid by the federal Consumer Goods Pricing Act of 1975? a. The Robinson-Patman Act (1936) b. State unfair-trade laws c. State fair-trade laws d. The Clayton Act (1914) ANSWER: c 92. A major assumption of the economic theory is that, firms will focus on: a. minimizing the inventory turnover ratio. b. maximizing gains and minimizing losses. c. providing a minimum return on investment. d. using selective distribution strategies rather than intensive distribution strategies. ANSWER: b 93. Pricing objectives that focus on attaining a target return on investment are examples of _____ objectives. a. profitability b. volume c. not-for-profit d. prestige ANSWER: a

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Chapter 18: Pricing Concepts 94. In the context of pricing objectives, which of the following is the purpose of adopting a profitability objective? a. Market share b. Image c. Sales maximization d. Target return ANSWER: d 95. The management at Fries, a potato chips manufacturer, is calculating their quarterly profits. According to the official data, the firm has sold 200,000 units of their chips priced at $2 per unit for the quarter. The firm had spent $100,000 on production, processing and other costs. The profit made by Fries for the quarter is: a. $400,000. b. $300,000. c. $200,000. d. $100,000. ANSWER: b 96. A profit-maximizing price rises to the point at which further: a. increases will cause proportionate decreases in the number of units sold. b. decreases will cause disproportionate decreases in the number of units sold. c. increases will cause disproportionate decreases in the number of units sold. d. increases will cause disproportionate increases in the number of units sold. ANSWER: c 97. _____ maximization is identified as the point at which the additional revenue gained by increasing the price of a product equals the increase in total costs. a. Profit b. Volume c. Sales d. Market share ANSWER: a

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Chapter 18: Pricing Concepts 98. Short-run or long-run pricing objectives of achieving a specified return on either sales or investment are known as _____ objectives. a. prestige b. volume c. target-return d. market-share ANSWER: c 99. Firms that adopt volume objectives believe that: a. companies should focus on maximizing profits rather than maximizing sales. b. companies should continue to expand sales as long as their total profits do not drop below a specified minimum return. c. companies should focus on the image and prestige associated with their products. d. companies should offer huge discounts even at the cost of running into losses with their products. ANSWER: b 100. Which of the following is an example of a volume pricing objective? a. A value-pricing objective b. A profit maximization objective c. A market-share objective d. A target-return objective ANSWER: c 101. Volume-related pricing objective with the goal of controlling a portion of the market for a firm’s product is known as a ______ objective. a. prestige b. market-share c. target-return d. meeting competition ANSWER: b

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Chapter 18: Pricing Concepts 102. Pricing objectives that seek sales maximization or achievement of a stated market share are examples of _____ objectives. a. profitability b. volume c. meeting competition d. prestige ANSWER: b 103. The PIMS project revealed that the two most important factors influencing profitability were: a. sales cost and market demand. b. product quality and market share. c. profit margin and product price. d. product price and competition. ANSWER: b 104. According to the PIMS research, firms with market shares above 40% show an average _____ return on investment. a. 55% b. 32% c. 14% d. 60% ANSWER: b 105. Which of the following is the purpose of adopting a meeting-competition pricing objective? a. Market share b. Sales maximization c. Profit maximization d. Value pricing ANSWER: d 106. A pricing strategy that emphasizes benefits of a product in comparison to the price and quality levels of competing offerings is called _____ pricing. a. incremental-cost b. full-cost c. cost-plus d. value ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 107. Which of the following actions is most likely to be taken by a company in order to implement the value pricing objective? a. Distributing free samples of the product to create awareness about the product among the consumers b. Convincing consumers that the quality of their lower-priced product is the same as that of a comparatively higher-priced product sold by a competitor c. Convincing consumers of the prestige associated with the product d. Distributing free gifts along with the product during its introductory stage ANSWER: b 108. Prestige pricing objectives emphasize: a. quality and exclusivity. b. revenue maximization. c. cost minimization. d. sales maximization. ANSWER: a 109. Which of the following pricing objectives reflects marketers’ recognition of the role of price in creating an overall image of the firm and its product offerings? a. A profitability objective b. A volume objective c. A meeting competition objective d. A prestige objective ANSWER: d 110. Analysis has shown that ingredients account for less than 5 percent of a perfume’s cost. So if a perfume costs $135 or more per ounce, it reflects the marketer’s adoption of a pricing objective that focuses on: a. expanding market share. b. creating image or prestige. c. meeting competitors’ prices. d. maximizing sales. ANSWER: b

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Chapter 18: Pricing Concepts 111. When New Orleans’ Holy Cross School organizes a $500-per-person concert to raise funds for the operation of the school, their organizational goal is to: a. maximize their profits. b. implement value pricing. c. suppress the market. d. provide market incentives. ANSWER: a 112. When a state decides to double the tax on alcoholic beverages and consequently, increases their market price, the state is aiming at: a. market suppression. b. profit maximization. c. cost recovery. d. market domination. ANSWER: a 113. Customary prices are: a. prices offered at the wholesale level as an incentive to increase product sales. b. retail prices consumers expect as a result of tradition and social habit. c. prices of products adjusted on the basis of the geographic locations of retail outlets. d. prices designed to constrain the amount of products sold to a level desired by the government. ANSWER: b 114. Sunshine Cereals has been in the market for seven decades. They attribute their success to maintaining an almost stable product price in the face of inflation as well as stiff competition from rival firms. The management at Sunshine Cereals knows that any substantial increase in product price would translate into loss of sales as consumers are used to paying a specific price for their cereals. This specific price is an example of (a): a. customary price. b. value price. c. full-cost price. d. incremental-cost price. ANSWER: a

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Chapter 18: Pricing Concepts 115. Which of the following is true of price determination in economic theory? a. It suggests a way of determining prices that assumes a sales-maximization objective. b. It attempts to derive correct equilibrium prices in the marketplace by comparing supply and demand. c. It attempts to maximize the market share of an organization. d. It suggests a way of determining prices that assumes a market-share expansion objective. ANSWER: b 116. A schedule of the amounts of a good or service that will be offered for sale at different prices during a specified period is referred to as _____. a. demand b. supply c. surplus d. ration ANSWER: b 117. A schedule of the amounts of a firm’s product that consumers will purchase at different prices during a specified time period is referred to as _____. a. demand b. supply c. surplus d. ration ANSWER: a 118. Which of the following is a market structure characterized by homogeneous products in which there are so many buyers and sellers that none has a significant influence on price? a. Pure competition b. Monopolistic competition c. Monopoly d. Oligopoly ANSWER: a

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Chapter 18: Pricing Concepts 119. In which of the following types of market structures would a producer have the least amount of influence in setting prices? a. Pure competition b. Monopolistic competition c. Oligopoly d. Monopoly ANSWER: a 120. Which of the following is true of pure competition? a. It is a market structure with very few sellers. b. It presupposes a market condition where start-up costs are high for sellers. c. It is a market structure with very few buyers. d. It presupposes a market condition where sellers produce homogenous products. ANSWER: d 121. Which of the following market structures involves a heterogeneous product and product differentiation among competing suppliers, allowing the marketer some degree of control over prices? a. Pure competition b. Monopolistic competition c. Complementary monopoly d. Monopoly ANSWER: b 122. Which of the following is a market structure in which relatively few sellers compete and where high start-up costs form barriers to keep out new competitors? a. Pure competition b. Discriminatory competition c. Oligopoly d. Monopoly ANSWER: c

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Chapter 18: Pricing Concepts 123. Which of the following is a market structure in which only one seller of a product exists and for which there are no close substitutes? a. Pure competition b. Monopolistic competition c. Oligopoly d. Monopoly ANSWER: d 124. Which of the following market structure is characterized by the non-existence of direct competitors? a. Pure competition b. Monopolistic competition c. Oligopoly d. Monopoly ANSWER: d 125. In which of the following market structures the entry of new firms into the industry is regulated by the government? a. Pure competition b. Monopolistic competition c. Oligopoly d. Monopoly ANSWER: d 126. In which of the following market structures individual firms have the highest control over product prices? a. Pure competition b. Monopolistic competition c. Oligopoly d. Monopoly ANSWER: d 127. A cost that changes with the level of production is called a(n) _____ cost. a. variable b. fixed c. average total d. marginal ANSWER: a

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Chapter 18: Pricing Concepts 128. A cost that remains stable at any production level within a certain range is called a(n) _____ cost. a. variable b. fixed c. average total d. marginal ANSWER: b 129. _____ cost is the change in total cost that results from producing an additional unit of output. a. Variable b. Fixed c. Additional d. Marginal ANSWER: d 130. The demand side of the pricing equation focuses on: a. revenue curves. b. cost curves. c. price curves. d. value curves. ANSWER: a 131. A firm maximizes its profits when: a. the marginal revenue curve runs much below the marginal cost curve. b. marginal costs are more than marginal revenues. c. the marginal revenue curve runs parallel to the marginal cost curve. d. marginal costs equal marginal revenues. ANSWER: d

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Chapter 18: Pricing Concepts 132. The marginal revenue and marginal cost at various levels of output is listed below: Marginal Revenue Marginal Cost Output ($) ($) 100 16 14 150 15 12 200 12 10 250 9 9 At what level of output is profit maximized? a. 100 units b. 150 units c. 200 units d. 250 units ANSWER: d 133. Which of the following terms represents the measure of responsiveness of purchasers and suppliers to a change in price? a. Selectivity b. Captivity c. Elasticity d. Sensitivity ANSWER: c 134. The _____ of demand is the percentage change in the quantity of a good or service demanded divided by the percentage change in its price. a. volume elasticity b. competition sensitivity c. price elasticity d. volume sensitivity ANSWER: c 135. A 5 percent increase in the price of milk that results in a 2 percent decrease in the quantity of milk demanded yields a price elasticity of demand for milk of: a. 0.5. b. 0.4. c. 1.0. d. 1.4. ANSWER: b

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Chapter 18: Pricing Concepts 136. A 5 percent increase in the price of corn flour that results in a 15 percent increase in the quantity supplied yields a price elasticity of supply for corn flour of: a. 2.0. b. 2.5. c. 3.0. d. 3.5. ANSWER: c 137. When the elasticity of demand or supply is greater than 1.0, that demand or supply is said to be: a. elastic. b. stagnant. c. marginal. d. inelastic. ANSWER: a 138. A demand is said to be inelastic when the: a. demand curve and the supply curve do not intersect. b. total cost and total revenue are equal at all levels of demand. c. elasticity of demand is less than 1. d. elasticity of demand is greater than 1. ANSWER: c 139. Increased options available to shoppers combine to create a market characterized by _____ elasticity. a. supply b. linear c. demand d. constant ANSWER: c 140. Under which of the following conditions is a product most likely to have an elastic demand? a. Consumers can easily find close substitutes for the product. b. The marginal cost of producing the product is equal to its marginal revenue. c. A large portion of a person’s budget is spent on the product. d. The fixed costs associated with producing the product are higher than the variable costs associated with it. ANSWER: a

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Chapter 18: Pricing Concepts 141. Demand often shows: a. more elasticity in the short run than in the long run. b. less elasticity in the long run than in the short run. c. the same elasticity in the short run and in the long run. d. less elasticity in the short run than in the long run. ANSWER: d 142. Which of the following is a practical problem involved in applying price theory concepts to actual pricing decisions? a. All firms attempt to maximize profits. b. It is difficult to estimate demand curves. c. It is difficult to comprehend the supply side of the pricing equation. d. Supply curves must be based on marketing estimates. ANSWER: b 143. The most popular method of pricing is _____ pricing. a. cost-plus b. breakeven c. incremental-cost d. full-cost ANSWER: a 144. The practice of adding a percentage of specified dollar amount—or markup—to the base cost of a product to cover unassigned costs and to provide a profit is called _____ pricing. a. full-cost b. breakeven c. incremental-cost d. cost-plus ANSWER: d 145. A local apparel shop sets prices by adding a 45 percent markup to the invoice price charged by the supplier. This method of pricing is known as _____ pricing. a. cost-plus b. breakeven c. full-cost d. incremental-cost ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 146. Which of the following is a pricing method that attempts to use only those costs that are directly attributable to a specific output in setting prices? a. Cost-plus b. Full-cost c. Incremental-cost d. Breakeven ANSWER: c 147. The pricing technique used to determine the number of products that must be sold at a specified price to generate enough revenue to cover total cost is known as _____ analysis. a. cost-plus b. marginal c. breakeven d. incremental-cost ANSWER: c 148. The breakeven point is the point at which: a. revenue from sales equals the variable cost of the product. b. the supply curve intersects the demand curve. c. total revenue from sales equals total cost. d. marginal cost runs above the marginal revenue curve. ANSWER: c 149. Mignon d’Armitage manufactures jewelry. This firm is planning to introduce a new necklace and is trying to determine how many units it must sell in order to break even. Fixed costs are $100,000 and variable costs for each unit will be $20. At the price of $45 each, the number of units that must be sold in order to break even is: a. 2,500. b. 4,000. c. 5,000. d. 7,500. ANSWER: b

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Chapter 18: Pricing Concepts 150. The Acme Flashlight Company breaks even at 20,000 flashlights at $6 each, with the average variable cost per flashlight of $4. The amount of its fixed costs is: a. $20,000 b. $40,000 c. $60,000 d. $80,000 ANSWER: b 151. A company incurs fixed costs of $35,000 and average variable costs of $7 per item. This company sells 10,000 units and just breaks even. The unit selling price for the product is: a. $10.00 b. $7.35 c. $17.00 d. $10.50 ANSWER: d 152. A five-pound bag of roasted peanuts sells for $8, and the average variable cost is $4 per bag. If the total fixed cost for the roasted peanuts is $80,000, the breakeven point in bags is: a. 20,000 b. 40,000 c. 80,000 d. 120,000 ANSWER: a 153. A product is priced to sell for $12 with average variable costs of $8. The company expects to earn a profit of $400,000 with its total fixed costs of $120,000. The minimum number of units that must be sold in order to reach this target return is: a. 400,000 b. 130,000 c. 120,000 d. 80,000 ANSWER: b

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Chapter 18: Pricing Concepts 154. Which of the following is a pricing technique that is used to evaluate consumer demand by comparing the number of products that must be sold at a variety of prices to cover total cost with estimates of expected sales at the various prices? a. Modified breakeven analysis b. Cost-plus analysis c. Incremental-cost analysis d. Segmentation analysis ANSWER: a 155. Modified breakeven analysis combines the traditional breakeven analysis model with an evaluation of: a. consumer demand. b. marginal cost curves. c. supply cost. d. target return objectives. ANSWER: a 156. When most of a firm's costs are fixed over a wide range of outputs, the primary determinant of profitability will be the: a. control the firm can exercise over costs. b. amount of variable cost that can be recovered with the sale of each unit. c. amount of revenue generated by sales. d. marginal cost incurred in the production of a single unit. ANSWER: c 157. _____ is a pricing strategy that allows marketers to vary prices based on such factors as demand, even though the cost of providing those goods or services remains the same. a. Yield management b. Modified breakeven technique c. Marginal cost pricing d. Incremental revenue pricing ANSWER: a

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Chapter 18: Pricing Concepts 158. Which of the following is employed by theatrical productions when they charge higher prices for their weekend shows than for the shows on weekdays even though the cost of producing the show remains the same on all days? a. Modified breakeven analysis b. Yield management c. Incremental pricing d. Marginal pricing ANSWER: b 159. Which of the following exemplifies a yield management pricing strategy? a. Lowering cab rental rates on weekends compared to weekdays b. Introducing a pack of oatmeal breakfast cereals at a price of $3 which actually cost $5 c. Charging an exorbitant price for a designer outfit to signal quality and exclusiveness d. Selling a brand of soap at 20 percent discount for a limited time period during its introductory stage ANSWER: a 160. In international marketing, which of the following pricing objectives is used when products are associated with intangible benefits, such as high quality, exclusiveness, or attractive design? a. Profitability objective b. Volume objective c. Meeting-competition objective d. Prestige objective ANSWER: d 161. Define price. Explain why setting prices can be a difficult process. ANSWER: Price is the exchange value of a good or service. Price does not necessarily denote money. Prices are both difficult to set and dynamic; they shift in response to a number of variables. A higher-thanaverage price can convey an image of prestige, while a lower-than-average price may connote good value. In other instances, though, a price that is much lower than average may be interpreted as an indicator of inferior quality. Finally, price affects a company’s overall profitability and its market share. 162. Describe the significance of tariffs in the global market place. ANSWER: In the global marketplace, prices are directly affected by special types of taxes called tariffs. These taxes—levied on the sale of imported goods and services—often make it possible for firms to protect their local markets while still setting prices on domestically produced goods well above world market levels. In other instances, tariffs are levied to prevent foreign producers from engaging in a practice called dumping where foreign-produced products are sold in international markets at prices lower than those set in their domestic market. Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 163. Identify and briefly describe the legal constraints placed on pricing. ANSWER: The legal constraints placed on pricing are: 1. The Robinson-Patman Act is a federal law that prohibits price discrimination in sales to wholesalers, retailers, and other producers when it is not based on a cost differential or on meeting price competition in good faith. 2. Unfair-trade laws are state laws requiring sellers to maintain specified minimum prices for comparable merchandise. 3. State fair-trade laws permit manufacturers to stipulate minimum retail prices for their products and require their retail dealers to sign contracts agreeing to abide by these prices. These laws became invalid with the passage of the Consumer Goods Pricing Act. 4. Miller-Tydings Act is a federal law that exempts interstate fair-trade contracts from compliance with antitrust regulation. 5. The Federal Consumer Goods Pricing Act eliminated all interstate use of retail price maintenance. 164. Identify and discuss the major categories of pricing objectives used by for-profit organizations. ANSWER: The four major categories of pricing objectives are: 1. Profitability—pricing objectives that seek profit maximization or to attain a target return on investment. 2. Volume objectives—pricing objectives that seek sales maximization or achievement of a stated market share. 3. Meeting competition—pricing objectives that seek to meet the prices of competing firms. 4. Prestige—pricing objectives reflect marketers’ recognition of the role of price in creating an overall image of the firm and its product offerings. 165. Explain the concept of marginal analysis. ANSWER: Marginal analysis is the method of analyzing the relationship among costs, sales price, and increased sales volume. They identify profit maximization as the point at which the addition to total revenue is just balanced by the increase in total cost. Marketers must resolve a basic problem of how to achieve this delicate balance when they set prices. Relatively few firms actually hit this elusive target. A significantly larger number prefer to direct their effort toward more realistic goals. 166. Explain target-return objectives. ANSWER: Short-run or long-run pricing objectives of achieving a specified return on either sales or investment are referred to as target-return objectives. The practice has become particularly popular among large firms in which other pressures interfere with profit-maximization objectives. In addition to resolving pricing questions, target-return objectives offer several benefits for marketers. For example, these objectives serve as tools for evaluating performance; they also satisfy desires to generate “fair” profits as judged by management, stockholders, and the public.

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Chapter 18: Pricing Concepts 167. Explain market-share objectives. ANSWER: Volume-related pricing objective with the goal of controlling a portion of the market for a firm’s product is referred to as a market-share objective. Market-share objectives may prove critical to the achievement of other organizational objectives. High sales, for example, often mean more profits. The Profit Impact of Market Strategies (PIMS) project, an extensive and now classic study conducted by the Marketing Science Institute, analyzed more than 2,000 firms and revealed that two of the most important factors influencing profitability were product quality and market share. 168. Explain the concept of value pricing. ANSWER: Value pricing is a pricing strategy that emphasizes benefits derived from a product in comparison to the price and quality levels of competing offerings. This strategy typically works best for relatively low-priced goods and services. Value-priced products generally cost less than premium brands, but marketers point out that value does not necessarily mean inexpensive. The challenge for those who compete on value is to convince customers that low-priced brands offer quality comparable to that of a higher-priced product. 169. What are some of the organizational goals that pricing strategies can help not-for-profit organizations achieve? ANSWER: Some of the organizational goals that pricing strategies can help not-for-profit organizations achieve are: 1. Profit maximization—although not-for-profit organizations do not theoretically make profits, they do frequently try to earn revenues over and above costs and, in turn, convert these extra revenues into added benefits or services to groups or members. 2. Cost recovery—some not-for-profit organizations attempt to recover a portion of their actual costs. 3. Providing market incentives—some not-for-profit groups follow lower-than-average pricing policies or offer free services to encourage increased use of their goods or services. 4. Market suppression—high prices are charged to discourage consumption; examples are tobacco and alcohol taxes, parking fines, tolls and gasoline taxes. 170. Explain customary prices. ANSWER: Customary prices are retail prices consumers expect as a result of tradition and social habit. Candy makers have attempted to maintain traditional price levels by greatly reducing overall product size. Similar practices have prevailed in the marketing of soft drinks, chips, mayonnaise, soap, and ice cream as manufacturers attempt to balance consumer expectations of customary prices with the realities of rising costs. Sometimes customary prices hide a real price increase, however, when the quantity of the product has been imperceptibly reduced.

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Chapter 18: Pricing Concepts 171. List the four types of market structures based on the economic theory, and provide an example of an industry or business for each of the four types. ANSWER: The four types of market structures are: 1. Pure competition—It is a market structure characterized by homogeneous products in which there are so many buyers and sellers that none has a significant influence on price. 2. Monopolistic competition—It is a market structure that involves a heterogeneous product and product differentiation among competing suppliers, allowing the marketer some degree of control over prices. 3. Oligopoly—It is a market structure in which relatively few sellers compete and where high start-up costs form barriers to keep out new competitors. 4. Monopoly—It is a market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes. Students’ examples will vary. 172. The following table gives information about the price, number of units sold, and total costs incurred for a product. Use the concept of marginal analysis and find the optimal price for the product. Price ($) Units Sold Total Cost ($) 100 100,000 7,000,000 90 200,000 12,000,000 80 400,000 22,000,000 70 700,000 37,000,000 60 900,000 47,000,000 50 1,000,000 52,000,000 ANSWER: The optimal price is the one where marginal revenue equals marginal cost. The table below shows the necessary calculations. Total Marginal Marginal Cost Total Cost ($) Profit ($) Revenue ($) Revenue ($) ($) 100 100,000 10,000,000 10,000,000 7,000,000 7,000,000 3,000,000 90 200,000 18,000,000 8,000,000 12,000,000 5,000,000 6,000,000 80 400,000 32,000,000 14,000,000 22,000,000 10,000,000 10,000,000 70 700,000 49,000,000 17,000,000 37,000,000 15,000,000 12,000,000 60 900,000 54,000,000 5,000,000 47,000,000 10,000,000 7,000,000 50 1,000,000 50,000,000 (4,000,000) 52,000,000 5,000,000 (2,000,000) The optimal price is $70 per unit. At price marginal revenue is closest to marginal cost (but not less than marginal cost) and profit is maximized. Price ($) Units Sold

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Chapter 18: Pricing Concepts 173. Explain the concept of elasticity of demand. ANSWER: Elasticity is generally defined as the measure of responsiveness of purchasers and suppliers to price changes. The concept of price elasticity of demand is the percentage change in the quantity of a good or service demanded divided by the percentage change in its price. When a 1 percent change in price causes more than 1 percent change in quantity demanded, that demand is said to be elastic. When a 1 percent change in price causes less than 1 percent change in quantity demanded, that demand is said to be inelastic. 174. What are the practical problems involved in applying price theory concepts to actual pricing decision? ANSWER: Marketers may thoroughly understand price theory concepts but still encounter difficulty applying them in practice. First, many firms do not attempt to maximize profits. Economic analysis is subject to the same limitations as the assumptions on which it is based—for example, the proposition that all firms attempt to maximize profits. Second, it is difficult to estimate demand curves. Modern accounting procedures provide managers with a clear understanding of cost structures, so managers can readily comprehend the supply side of the pricing equation. But they find it difficult to estimate demand at various price levels. Demand curves must be based on marketing research estimates that may be less exact than cost figures. Although the demand element can be identified, it is often difficult to measure in real-world settings. 175. Discuss cost-plus pricing. ANSWER: Cost-plus pricing is the practice of adding a percentage of specified dollar amount—or markup—to the base cost of a product to cover unassigned costs and to provide a profit. The only real difference among the multitude of cost-plus techniques is the relative sophistication of the costing procedures employed. Cost-plus pricing often works well for a business that keeps its costs low, allowing it to set its prices lower than those of competitors and still make a profit. 176. Explain the two most common cost-oriented pricing procedures: full-cost and incremental-cost. ANSWER: Full-cost pricing uses all relevant variable costs in setting a product’s price. In addition, it allocates fixed costs that cannot be directly attributed to the production of the specific priced item. This approach allows the marketer to recover all costs plus the amount added as a profit margin. The full-cost approach has two basic deficiencies. First, no consideration of competition or demand exists for the item; perhaps no one wants to pay the price the firm has calculated. Second, any method for allocating overhead (fixed expenses) is arbitrary and may be unrealistic—in manufacturing, overhead allocations often are tied to direct labor hours; in retailing, the square footage of each profit center is sometimes the factor used in computations. Regardless of the technique employed, it is difficult to show a cause–effect relationship between the allocated cost and most products. One way to overcome the arbitrary allocation of fixed expenses is with incremental-cost pricing, which attempts to use only costs directly attributable to a specific output in setting prices.

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Chapter 18: Pricing Concepts 177. Assume that the per unit price of a product is $100, total fixed costs are $50,000, and variable costs are $70 per unit. Find the breakeven point (in both units and dollars). ANSWER:

Breakeven point (units) = $50,000/($100 - $70) = 1,667 (rounded) Breakeven point (dollars) = $50,000/[1- ($70/$100)] =$166,667 (rounded)

178. What are the major weaknesses of traditional breakeven analysis? ANSWER: The major weaknesses of traditional breakeven analysis are: 1. The model assumes costs can be divided into fixed and variable categories. Some costs, such as salaries and advertising outlays, may be either fixed or variable depending on the particular situation. 2. In addition, the model assumes per-unit variable costs do not change at different levels of operation. However, these may vary because of quantity discounts, more efficient use of the workforce, or other economies resulting from increased levels of production and sales. 3. Finally, the basic breakeven model does not consider demand. It is a cost-based model and does not directly address the crucial question of whether consumers will purchase the product at the specified price and in the quantities required for breaking even or generating profits. 179. Discuss the benefits of modified breakeven analysis. ANSWER: The benefits of modified breakeven analysis are: 1. It combines the traditional breakeven analysis model with an evaluation of consumer demand. 2. It forces the marketer to consider whether the consumer is likely to purchase the number of units of an item required for achieving breakeven at a given price. 3. It demonstrates that large numbers of unit sales do not necessarily produce added profits. 180. Describe the significance of yield management. ANSWER: When most of a firm’s costs are fixed over a wide range of outputs, the primary determinant of profitability will be the amount of revenue generated by sales. Yield management strategies allow marketers to vary prices based on such factors as demand, even though the cost of providing those goods or services remains the same. Match each item with the correct statement below. a. breakeven analysis b. tariffs c. unfair-trade laws d. incremental-cost pricing e. profit maximization f. demand g. value pricing h. monopoly i. elasticity j. marginal Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts k. fair-trade laws l. yield management m. oligopoly n. cost-plus pricing o. full-cost pricing p. supply q. marginal analysis r. target-return objectives s. market-share objectives t. pure competition 181. _____ are taxes levied on the sale of imported goods and services. ANSWER: b 182. _____ are state laws requiring sellers to maintain minimum prices for comparable merchandise. ANSWER: c 183. Statutes enacted in most states that once permitted manufacturers to stipulate a minimum retail price for their product are called _____. ANSWER: k 184. The method of analyzing the relationship among costs, sales price, and increased sales volume is called _____. ANSWER: q 185. The point at which the additional revenue gained by increasing the price of a product equals the increase in total costs is called _____. ANSWER: e 186. Short-run or long-run pricing objectives of achieving a specified return on either sales or investment are called _____. ANSWER: r 187. _____ are volume-related pricing objectives that have the goal of controlling a portion of the market for a firm’s product. ANSWER: s 188. The pricing strategy that emphasizes benefits derived from a product in comparison to the price and quality levels of competing offerings is called _____. ANSWER: g

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Chapter 18: Pricing Concepts 189. A schedule of the amounts of a firm’s product that consumers will purchase at different prices during a specified time period is called _____. ANSWER: f 190. A schedule of the amounts of a good or service that firms will offer for sale at different prices during a specified time period is called _____. ANSWER: p 191. A market structure characterized by homogeneous products in which there are so many buyers and sellers that none has a significant influence on price is known as _____. ANSWER: t 192. A market structure in which relatively few sellers compete and where high start-up costs form barriers to keep out new competitors is referred to as a(n) _____. ANSWER: m 193. A market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes is referred to as a(n) _____. ANSWER: h 194. The change in total cost that results from producing an additional unit of output is called _____ cost. ANSWER: j 195. _____ is the measure of the responsiveness of purchasers and suppliers to price changes. ANSWER: i 196. The practice of adding a percentage of specified dollar amount—or markup—to the base cost of a product to cover unassigned costs and to provide a profit is known as _____. ANSWER: n 197. A pricing method, that uses all relevant variable costs in setting a product’s price and allocates those fixed costs that cannot be directly attributed to the production of the priced item, is known as _____. ANSWER: o 198. A pricing method that attempts to use only costs directly attributable to a specific output in setting prices is known as _____. ANSWER: d 199. A pricing technique that is used to determine the number of products that must be sold at a specified price to generate enough revenue to cover total cost is known as _____. ANSWER: a

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Chapter 18: Pricing Concepts 200. A pricing strategy that allows marketers to vary prices based on such factors as demand, even though the cost of providing those goods or services remains the same, is known as _____. ANSWER: l 201. Marco decided to write down all his expenses for one day. He had a lot of errands: he filled his car with gas, and he did his grocery shopping for the week, including items to host a TGIF party with beer, wine, and soda. Even though Marco is trying to cut down on his smoking, he did buy a carton of cigarettes. Every time he paid a tax, he recorded it, so his notes include both the words "sales tax" and "excise tax." R equired: What is the difference between excise taxes and sales taxes? a. S ales taxes are levied only on certain items in specific stores. b. E xcise taxes are calculated as a percentage of the base price. c. E xcise taxes can limit sales and reduce product demand. d. S ales taxes are included in the base price of products. e. S ales taxes and excise taxes are terms for the same levy. ANSWER: c 202. Danielle and her roommate Sile are comparing the charges on their telephone bills. Both women get their Internet service bundled with their mobile phone charges. Danielle has a smartphone and Sile has a device with only basic features, so Danielle pays more for data downloading. Both women were surprised at the significant amount they are each charged annually for "regulatory cost recovery fees." R equired: What service is included in "regulatory cost recovery fees"? a. I mprovement to increase the speed of Internet downloading is included. b. E rection of more rural cell phone relay towers is included. c. O utreach to other telephone providers to share facilities is included. d. N o service is included; fees are additional telephone company revenue. e. C ollaboration with federal, state, and local regulators is included. ANSWER: d

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Chapter 18: Pricing Concepts 203. You are head of sales and marketing for your cowboy boots manufacturing firm. It has been a chaotic product year, with a great deal of input from many stakeholders: consumer advocacy groups, employees, competitors, and shareholders. You are meeting with the CEO to establish pricing objectives for the upcoming product year. R equired: Which of the following factors will you consider as you establish your firm’s pricing objectives? a. c onsumer advocacy groups’ concerns b. s ales reps’ compensation packages c. c ompetitors’ complaints d. t he firm’s survival e. d issident shareholders’ complaints ANSWER: d 204. You are a brand manager for a large chain of grocery stores. You have been working overtime for the last two weeks to prepare for your pricing objectives meeting with the head of sales and marketing. You walk into the meeting with a high degree of confidence in the strategy that you have for setting the pricing objectives for your brand category for the upcoming year. You are speechless when the marketing head tells you that no changes in the pricing objectives will be made for your brand category. He says he believes it is most prudent to leave the existing pricing objectives as they are for the upcoming year. R equired: Which of the following statements is the best explanation for the marketing head’s decision to leave the existing pricing objectives in place with no change? a. A status quo pricing objective can reduce a firm’s risks by helping to stabilize demand for its products. b. T he company intends to focus on product quality instead of pricing to win market share. c. T he company expects its market share to increase if it leaves its pricing objectives the same. d. P rofit maximization is not an objective in the upcoming year. e. T he company is not concerned about cash flow. ANSWER: a

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Chapter 18: Pricing Concepts 205. You are a staunch environmentalist. When hybrid vehicles were introduced, the supply was very limited. Buyers were paying a premium over the listed manufacturer's suggested retail price (MSRP). At that time, your budget could not stretch that far, but you still wanted to own a car that does not depend on petroleum products. By waiting, you find that the automobile dealers have announced that their shipments of new hybrid cars have increased by 10 percent. Meanwhile, the average price of regular gasoline rose from $3.30 to $3.63 per gallon. R equired: If the price elasticity of demand for new hybrid cars is 1.25 and for gasoline is 1.0, what was the effect on the prices of a new hybrid car and on gasoline? a. T he price of the hybrid car fell by 2.5 percent and the price of gasoline increased by 1.1 percent. b. T he price of the hybrid car rose by 12.5 percent and the price of gasoline increased by 11.1 percent. c. T he price of the hybrid car fell by 10 percent as did the price of gasoline. d. T he price of the hybrid car rose by 8 percent, and the price of gasoline increased by 10 percent. e. T he price of the hybrid car fell by 8 percent, and the price of gasoline increased by 10 percent. ANSWER: e 206. Y ou begin every work day by stopping by the local premium coffee shop for a latte. They recognize you when you come in and just hand you your regular order. Recently, a number of events happened at the same time: you got a promotion with a higher salary; your regular coffee shop increased its prices; and a competitor moved into the same shopping center, offering lower prices. Required: During your vacation, you have the luxury of time to reflect on your workday pattern of coffee consumption. Looked at from a marketing perspective, which action could you choose to show that your demand is more elastic? a. s pending some of your higher income after the promotion b. d emonstrating that you are a loyal customer of your current coffee shop c. a sking for a good-customer discount from your regular place d. d iscovering that you enjoy the taste of the competitor's coffee e. r eturning to the comfort of your established routine ANSWER: d

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Chapter 18: Pricing Concepts 207. Y ou are the head of pricing strategy for your firm. You are very excited about a new point-of-sale system that has just been installed in all your firm’s retail outlets. The system is a state-of-the-art real-time information system that captures the details of every sale made in your retail outlets. You have up-to-the-minute data-on-demand elements for your entire product line. Required: In using your new data-on-demand elements to make pricing decisions, how would you handle the limitations of this approach? a. P ost charts of predicted future buying trends in the sales department as motivational incentives. b. T ell decision-making executives that you cannot produce an accurate estimation of current trends. c. B e prepared for unpredictable changes in demand because actual purchase data do not allow estimation of future trends. d. C hange the way that the firm's accounts receivable employees record information. e. C hange the way that the firm's accounts payable employees record information. ANSWER: c 208. You are the marketing manager for a multi-state auto dealership in the Midwest. It is that time of year when your fleet of autos goes through major model year changes. You are putting the final touches on your pricing strategy to facilitate getting your inventory of autos low enough to make room for the new models. W hat is the practical problem involved in using your current sales and commission data to make pricing decisions?What pricing strategy solution would best address that problem? a. P roblem: You are committed to the idea of maximizing profits for last year's models. Solution: Increase the price of last year's models, emphasizing their future unavailability. b. P roblem: You are committed to the idea of maximizing profits for next year's models. Solution: Keep the prices of last year's model the same, so that the new model's prices look more desirable. c. P roblem: Your current sales and commission data are hard to quantify to formulate a pricing strategy. Solution: When a potential customer appears interested, formulate an individualized price for that person. d. P roblem: Your commissions add to the cost of the cars, decreasing their attractiveness as bargains. Solution: Eliminate your commissions to reduce inventory. e. P roblem: You have a clearer knowledge of the supply side of the pricing equation than you do of the demand side. Solution: Periodic discounting to keep pace with demand. ANSWER: e

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Chapter 18: Pricing Concepts 209. As the marketing and sales manager, you are in charge of setting the selling prices of prize-winning music boxes with changeable songs. After you explained two cost-plus approaches to price setting, the CEO chose the straightforward approach of full-cost pricing. The next day, you received an unexpected order for 10,000 units from a Swiss contact with a tight deadline. Required: W hat information do you need immediately to arrive at a selling price that you can justify to the CEO? a. v alue of resources consumed in the production of the music boxes b. o verhead expenses, profit margin, and direct cost per music box c. f ixed costs of production, variable costs, and revenue d. m anufacturing capacity and customer's price point of willingness to pay e. a cceptable loss-leader pricing, prescribed rate of return, and financing ANSWER: b 210. After years of using full-cost pricing in a niche market for luxury watches, you find your competition has slowly increased its market share each year with discounted prices. Focus groups have confirmed that the image of your watches is still one of success and prestige, but more people are willing to consider substitutes. Incremental costpricing could enable you to increase profits and unsettle your competitor's complacency. You know that changing to incremental-cost pricing does have a significant downside problem. But you are also aware that you can prevent that from happening. W hat is the downside problem and which solution can you take to prevent its happening? a. d ownside is running out of product. solution is to ramp up your production capacity to meet the demand of customers wanting lower prices b. d ownside is lack of audience awareness. solution is to create high-energy ads to appeal to young customers c. d ownside is the tax consequences. solution is to tell the CEO that a change in your pricing strategy could lead to an IRS audit d. d ownside is that the whole market could change. solution is to accept the fact that the wholesale and retail prices of used watches could drop markedly e. d ownside is losing your niche market. solution is to take solid measures to isolate your markets for lowerpriced watches from your higher-priced models ANSWER: e

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Chapter 18: Pricing Concepts 211. You are asked by a non-marketing executive of your hip-hop music company to clarify some financial language she heard at a recent annual presentation to investors. She asks you to give her a simple one-sentence definition of "breakeven analysis." R equired: Which of the following definitions meets her request for a simple one-sentence definition of "breakeven analysis"?" a. " We have been cutting records for years, so our customers are used to paying a certain amount for our albums. We keep our price constant to get repeat business." b. " We first do our research to find out what price our competitors are selling their records for. Then we use that number to figure out how many records we need to cut to make a larger profit than our competitors." c. " We first figure out the number of records we need to sell at a set price minus records returned for refunds. That amount of money must be enough to cover the total costs of our producing the records." d. " We use all our information from the previous year's sales, then we add 10 percent to the production and 10 percent to the price." e. " We want to make sure that we sell all the albums that we produce, so we start out at a full price, and make discount adjustments along the way." ANSWER: c 212. Your company specializes in manufacturing oversized spa-type bathtubs for the residential market. You have long been a proponent of using a modified breakeven analysis. You think that this approach is essential to your company's success because you operate in the luxury-item marketplace. R equired: Which of the following situations is the result of a trend that would prompt you to use a modified breakeven analysis rather than the traditional model? a. Y ou find that consumer demand is affected by environmentalists' cautions about water usage. b. Y ou find that the price of advertising has been affected by the move to online publishing. c. Y our employees are due for a significant salary and benefits increase to match those offered by your competitors. d. T he landlord of your manufacturing facility has announced a sizeable rent increase to cover earthquake readiness. e. Y ou have had an increase in the cost of raw materials, which are based on petroleum-derived products. ANSWER: a

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Chapter 18: Pricing Concepts 213. Yield management is strategic control of inventory. It maximizes revenue or profits from fixed perishable resources. W hat are the three rights of yield management? a. r ight revenue at the right point of sale for the right items b. r ight features at the right time for the right cost c. r ight customer at the right time for the right price d. r ight estimated price at the right location for the right time e. r ight person at the right location for the right cost ANSWER: c 214. You own an enchanting Victorian bed-and-breakfast facility in Ashland, Oregon, home of the annual Oregon Shakespeare Festival. The symbol for your in-season rates is $$$$, when the Bard's plays are being enacted on the stages. In season, you have a two-night minimum-stay requirement. When the festival season has ended, however, you have trouble filling your rooms. U sing the tool of yield management, what action will you take to maximize profits? a. c lose down your facility during the off season to minimize expenses b. connect with other hotel/motel owners and set a minimum rental limit c. l ower your rates to $$ and remove the minimum-stay requirement d. k eep your rates and minimum stay the same and increase advertising e. c onsider the off season as vacation time to renew your energy ANSWER: c 215. You are used to working with the usual pricing objectives for domestic health insurance organizations. Finding that work no longer challenging after ten years, you have moved to the marketing department of the international headquarters of a travelers' health insurer. W hich new objective joins the traditional objectives for your new job to set prices in global marketing? a. p rofitability of the premiums charged to customers b. v olume of customers who purchase travelers’ health insurance c. p rice stability worldwide for every traveler d. m eeting competition from other travelers' health insurers e. p restige of offering the best coverage with the access to the best healthcare options ANSWER: c

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Chapter 18: Pricing Concepts 216. You are the marketing manager for a state park conference center. Large conferences are booked more than one year in advance, so you can put together a calendar of scheduled events. Weekends are especially busy times. You have been charged with finding online ways that you can fill the gaps in reservations. Required: How would you use a recently created online method to increase business during known slow visitor times? a. d esign an attractive website that lists the recreational features of the park's facilities b. h ost an online auction to negotiate prices for weekday stays c. s end an e-mail offering discount prices to conference attendees d. w rite a blog that posts interviews with satisfied previous visitors e. c reate a short humorous online video and hope it goes viral ANSWER: b 217. You are reevaluating the pricing policy of Fruit World, a United States restaurant supplier which imports exotic produce from Mexico and Spain. Because of increased competition, you want to promise customers that your prices are the lowest on the market. Which of the following approaches would most likely enable you to fulfill this promise with minimal impact to Fruit World's profits? a. Increase your imports from Spain and reduce those from Mexico.

b. Increase your imports from Mexico and reduce those from Spain. c. Drop prices equally on all your imports from both countries. d. Eliminate imports from countries that belong to NAFTA. e. Improve your overseas supply chain serving both countries. ANSWER: b 218. Jim is the sales manager for a pharmaceutical firm. His boss has decided that Jim's team will need to earn their annual bonuses by achieving a 10 percent return on the company's investment in a blockbuster cold remedy. During a department meeting, Jim explains this target return in terms of the firm's overall pricing objectives. What is he most likely to say? a. Target return is a way to ensure cost recovery.

b. Target return enables the firm to achieve competition objectives. c. Target return enables the firm to achieve profitability objectives. d. Target return is effective as an evaluation tool but is not intended to achieve pricing objectives. e. Target return is a mathematical relationship, not a pricing tool. ANSWER: c

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Chapter 18: Pricing Concepts 219. State University recently announced a plan to increase tuition. As president of the student government, you feel obligated to protest. Luckily, before emailing a statement to the board of trustees, you asked your marketing professor to proofread it. From the sentences below, choose the mistake(s) she caught. a. A tuition increase could harm the university by resulting in market suppression.

b. A tuition increase could harm the university by resulting in cost recovery. c. If the university would reduce tuition instead of increasing it, this would create a market incentive and boost enrollment.

d. We believe the increase is a profit maximization strategy, which is never used by not-for-profit organizations. e. Price changes are never used by not-for-profit organizations to influence their markets. ANSWER: b, d, e 220. Demand for the hiking sandals marketed by the SoftShoe Company is highly elastic. As a pricing strategy consultant, you have been hired to help the firm reduce this elasticity. Choose the recommendation you would be least likely to make. a. Introduce a unique sandal that is custom-made for hikers with significant foot problems, like deformed toes or large bunions.

b. Promise to undercut the price of any comparable brand. c. Market the sandal as a necessity for hikers. d. Market the sandal as a prestigious luxury for hikers. e. Increase the sandal's price. ANSWER: e 221. You've attempted to maximize profits on sales of your bakery's gluten-free bread by taking a number of steps: for example, by responding quickly to competitors' discounts, setting target return objectives, and marketing the product as a necessity for people who are allergic to wheat. Unfortunately, profits still haven't reached your goals. You hope to explain the disappointing results to your partners in a way that won't reflect poorly on your marketing judgment. Which of the following explanations do you choose? a. The cost structure of the business is unclear.

b. The demand curve for the product is unclear. c. The market for gluten-free bread -- people with wheat allergies -- is much smaller than you projected. d. Your advertising budget is inadequate. e. The price of your brand is too high. ANSWER: b

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Chapter 18: Pricing Concepts 222. Janet owns a chain of ice cream shops. Her business has consistently been more profitable than competition -despite her decision to always charge the same prices as other stores, while offering unique flavors and home delivery. Now she plans to sell the firm to an investor who believes that pricing is the key to success. Based on her experience, which of the following pieces of advice would Janet be likely to give him? a. Continue focusing on profitability objectives.

b. Continue using price to create market incentives. c. Continue deemphasizing the price element of the marketing mix. d. Don’t lose focus on product and distribution strategies. e. The most promising way to build market share is to start reducing prices relative to competition. ANSWER: c, d 223. John learned in business school that full-cost pricing is a very common cost-oriented pricing procedure, and he planned to use it in setting price for his firm's new software product. However, his boss is not convinced that fullcost pricing is best, and wants John to list both its pluses and minuses in a memo. Which of the following should be included in John's list? a. Full-cost pricing will enable the firm to recover all the costs it incurred while developing the software, including the overhead of running its research and development lab.

b. Full-cost pricing will take into account the likely competitive moves of other software developers. c. Full-cost pricing is based on a reliable projection of customer demand in the software market. d. Full-cost pricing does not ensure that overhead costs will be allocated appropriately. e. Full-cost pricing can use only those costs that are directly attributable to a specific output, like production of 1000 units of the software.

ANSWER: a, d 224. You would like to apply breakeven analysis to know when your startup tutoring venture will turn a profit. Which of the following considerations must you take into account? a. The hourly wage you pay your tutors.

b. The rent you pay your office landlord. c. The hourly price you intend to charge for tutoring. d. The demand for tutoring services in your market. e. All of the above must be considered. ANSWER: a, b, c

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Chapter 18: Pricing Concepts 225. Your friend works for a hotel in downtown Pittsburgh primarily serving business travelers. Choose all of the following yield management strategies that he is likely to use. a. Higher prices on weekdays.

b. Lower prices on weekends. c. Lower prices for rooms booked after 10:00 P.M. for a stay the same night. d. Lower prices for weekday stays extended through Saturday. e. Prices on all days lower than competition. ANSWER: a, b, c, d 226. You work for an international women's clothing wholesaler. In the past, your firm has marketed mainly in Western Europe, using price to achieve either profitability or prestige objectives. But changing business conditions mean that you now need to focus on other pricing objectives. What conditions are likely to have changed? a. You are expanding into parts of the world where your clothing designs are less sought after than in Western Europe.

b. You are facing increased European competition. c. Your firm has become the lowest-cost supplier to most major customers. d. Your firm has become a price leader, able to establish international prices. e. Currency fluctuations have become a problem in your key markets. ANSWER: a, b, e 227. Brandon recently completed law school, passed the bar exam and began working for a prestigious law firm in Dallas, TX. The firm has a strict dress code and Brandon is required to wear business suits, dress shirts, ties, and dress shoes. He is investing in a new wardrobe and visited Men's Discount Warehouse to purchase new clothes. He shared his situation with Tim, his sales representative and Tim told him that if he bought 2 suits, he would receive 2 dress shirts, 3 ties and 2 pairs of socks for free. Which of the following statements is TRUE regarding this example? a. P romotions such as this are legal when differences in price reflect cost differentials b. T he Robinson-Patman Act prohibits this activity as it would be considered price discrimination c. R etailers are restricted from using bundled pricing d. T his practice would likely drive competitors out of business ANSWER: a 228. Paul and Amanda have 6 season tickets to the St. Louis Cardinals - a major league baseball team. During the season, they often offer their unused tickets to the highest bidder - especially when the Cardinals play the Chicago Cubs. This practice, known as "scalping" is illegal in all US cities. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 18: Pricing Concepts 229. A local eye doctor is seeking to expand its practice and entice new customers to visit for their annual eye exam and purchase glasses or contacts if prescribed. The office is offering 2 pairs of glasses for $69 with the goal of attracting a large number of new patients. What type of pricing objective is utilized by the office? a. v olume b. p rofitability c. p restige d. m eeting competition ANSWER: a 230. Jennifer is looking for a wedding present for her fiance and is considering buying him a watch. She likes luxury items and is willing to spend between $4,000 and $10,000 on the gift. She visits several jewelry stores and realizes that the prices are the same for Rolex and Philippe Patek brand watches and each store tells her these brands are never discounted. What type of pricing objective is utilized by Rolex and Philippe Patek? a. p restige b. p rofit c. v olume d. m eeting competitors ANSWER: a 231. Which of the following is TRUE regarding the concept of elasticity in pricing strategy? a. I f the elasticity of demand is greater than 1.0, that demand is said to be elastic b. I f the elasticity of supply is greater than 1.0, that demand is said to be inelastic c. I f the elasticity of demand is less than 1.0, that demand is said to be elastic d. I f the elasticity of supply equals 1.0, that demand is said to be elastic ANSWER: a 232. Which of the following products would most likely have an inelastic demand curve? a. H P genuine ink for an HP printer b. paper towels c. p hotocopier paper d. p encils ANSWER: a

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Chapter 18: Pricing Concepts 233. Which of the following statements is TRUE regarding issues in pricing? a. i t can be difficult to estimate demand curves b. m arketing research can provide accurate estimates of demand curves c. m ost organizations price in such a way to maximize profitability d. p ricing managers have difficulty obtaining accurate cost information ANSWER: a 234. M anagers often find it difficult to estimate demand at various price levels. a. True b. False ANSWER: True 235. Profits typically are higher when an incremental-cost pricing approach is utilized. a. True b. False ANSWER: True 236. Stefan has worked in the restaurant industry for over 20 years and recently signed a lease and plans to open his own restaurant in the next several months. He's working with his chef and bar manager to determine menu items and pricing. Of course, his pricing must be competitive as well as enable the business to cover costs and earn a profit. He decides that he will utilize a 60% mark-up on costs and informs the chef and bar manager to utilize this basis when determining prices for menu items. What method of pricing is Stefan utilizing? a. c ost-plus pricing b. f ull-cost pricing c. i ncremental-cost pricing d. v alue-add pricing ANSWER: a 237. Which of the following is a limitation of breakeven analysis? a. c onsumer demand for products or services is not considered b. t he analysis fails to separate fixed costs from variable costs c. t he calculations assume that per-unit variable costs will change as different amounts are produced d. i t is difficult to understand and apply ANSWER: a

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Chapter 18: Pricing Concepts 238. Modified breakeven analysis combines the traditional breakeven analysis model with an evaluation of advertising effectiveness to influence consumer purchases. a. True b. False ANSWER: False 239. Disney Cruise Line offers exceptional experiences for their guests and a variety of destinations around the world. They attempt to price their offerings competitively and profitability by varying the listed price of accommodations on a cruise such that different weeks of the year may be less expensive than others. For example, during hurricane season for Atlantic Ocean cruises, prices will be lower than peak times such as Christmas and New Years cruises. Which pricing-related strategy is Disney Cruise Line utilizing? a. y ield management b. d emand forecasting c. s upply analysis d. m odified breakeven analysis ANSWER: a 240. A pricing strategy that allows marketers to vary prices based on such factors as demand, even though the cost of providing those goods or services remains the same is called a. y ield management b. b reak-even point c. s upply analysis d. c ost-plus pricing ANSWER: a 241. Firms who compete internationally face complex decisions regarding pricing decisions. Which method of pricing might be most appropriate for companies who have a reputation as a price leader? a. p rofitability-based pricing b. m eeting competitor pricing c. p restige pricing d. p rice stability ANSWER: a

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Chapter 18: Pricing Concepts 242. The Swim Store is a manufacturer and d istributor of swim-related products for competitive swimming athletes and also offer products for lifeguards. They are expanding their reach to Europe and believe their line of products will be well received however, due to the adoption of the Euro single currency system, competition is strong. Which pricing objective would be most appropriate for the company as they expand to the European Union markets? a. m eeting competition b. p rofitability c. p restige d. s tability ANSWER: a

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Chapter 19: Pricing Strategies 1. Setting prices is a one-time decision for most products in most companies. a. True b. False ANSWER: False 2. Most businesses slowly change the amounts they charge customers, even when they clearly recognize strong demand. a. True b. False ANSWER: True 3. Few businesses want the distinction of being the first to charge higher prices. a. True b. False ANSWER: True 4. A skimming pricing strategy is commonly used as a market entry price for distinctive goods and services with high initial competition. a. True b. False ANSWER: False 5. Step outs occur when a company refuses to participate in price escalation between competitors. a. True b. False ANSWER: False 6. Skimming pricing strategies are also known as “market-plus pricing.” a. True b. False ANSWER: True 7. Skimming is an effective strategy to use when products are distinctive or have little competition. a. True b. False ANSWER: True

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Chapter 19: Pricing Strategies 8. A skimming pricing strategy is ineffective in marketing higher-end goods. a. True b. False ANSWER: False 9. Tiffany, Rolex, Gucci, and Prada represent exclusivity, meaning their prices are mostly inelastic. a. True b. False ANSWER: True 10. Controlling demand for a new product through the skimming strategy could save a company from dissatisfied customers by matching supply to the demand. a. True b. False ANSWER: True 11. Increased competition in the marketplace forces an innovative company to bring down the price of a product even lower than its eventual level under a nonsequential skimming procedure. a. True b. False ANSWER: False 12. Since many firms begin penetration pricing with the intention of increasing prices in the future, success depends on generating numerous trial purchases. a. True b. False ANSWER: True 13. Lysol sanitizing wipes entered the market at a low sales price and was supported by heavy couponing. As the initial trial period passed, the pricing slowly rose and the couponing became more infrequent. This activity is an example of penetration pricing. a. True b. False ANSWER: True

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Chapter 19: Pricing Strategies 14. Citibank offers an opportunity for credit card customers to transfer balances from competitive cards and pay low financing for a six-month period. After the introductory period is over, the rate will increase to the normal interest rate. Citibank’s strategy is to penetrate the market and obtain increased market share. a. True b. False ANSWER: True 15. Penetration pricing is likely to be utilized when demand for a good or service is highly inelastic. a. True b. False ANSWER: False 16. Penetration pricing is often used in a market in which a new product is likely to face strong competition when introduced. a. True b. False ANSWER: True 17. Everyday low pricing is a pricing strategy that relies on short-term cost-cutting tactics such as coupons and rebates. a. True b. False ANSWER: False 18. Retailers such as Walmart achieve everyday low pricing by negotiating better prices from suppliers and by cutting their own costs. a. True b. False ANSWER: True 19. Everyday low pricing strategies are an attempt to remove pricing as a significant part of the marketing mix. a. True b. False ANSWER: False

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Chapter 19: Pricing Strategies 20. A low price is a sure sell because the demand for many goods is highly elastic. a. True b. False ANSWER: False 21. Firms using a competitive pricing strategy try to reduce the emphasis on price competition by matching other firms' prices and concentrating their own marketing efforts on the product, distribution, and promotion elements of the marketing mix. a. True b. False ANSWER: True 22. While price offers a dramatic means of achieving competitive advantage, it is the most difficult marketing variable for competitors to match. a. True b. False ANSWER: False 23. Retailers achieve opening price point by pricing a quality private-label product above those of manufacturer’s brands. a. True b. False ANSWER: False 24. The demand for private-label goods will be low in a tough economy. a. True b. False ANSWER: False 25. Most companies set prices using competitive pricing as their primary pricing strategy. a. True b. False ANSWER: True 26. Most price structures are built around list prices. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 27. A manufacturer’s list price must incorporate the costs incurred by channel members in performing required marketing functions and expected profit margins for each member. a. True b. False ANSWER: True 28. List price is the amount the consumer actually pays for a product. a. True b. False ANSWER: False 29. A grocery store places tags on shelves just below the products that list the product name, UPC number, a store code, and the regular price of the product. This regular price is called the market price. a. True b. False ANSWER: False 30. A negative cash discount is an attempt by sellers to improve their liquidity positions, reduce their bad-debt losses, and cut collection expenses. a. True b. False ANSWER: True 31. A functional discount is a payment to a channel member or a buyer for performing marketing functions. a. True b. False ANSWER: True 32. Cumulative quantity discounts tend to bind customers to a single supply source. a. True b. False ANSWER: True 33. Cumulative quantity discounts are one-time reductions in list prices. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 34. When the list price of a product is discounted by the value of a used product that is turned in at the time of sale, the transaction is called a sale with a trade-in. a. True b. False ANSWER: True 35. Trade-ins are seldom used in sales of durable goods. a. True b. False ANSWER: False 36. Buyers of a particular new car model are being offered zero-percent financing. This is an example of a promotional allowance. a. True b. False ANSWER: True 37. Rebates are usually granted to customers by retailers. a. True b. False ANSWER: False 38. In an FOB pricing policy, the seller pays all freight charges to transport the product from the manufacturer’s loading dock. a. True b. False ANSWER: False 39. In an attempt to simplify pricing structures, sellers will quote uniform prices that, in effect, spread the total shipping costs across all the customers. a. True b. False ANSWER: True 40. Zone pricing completely eliminates phantom freight. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 41. The amount by which the average transportation charge exceeds the actual cost of shipping to a particular destination under postage stamp pricing is called phantom freight. a. True b. False ANSWER: True 42. Zone pricing helps sellers compete in distant markets. a. True b. False ANSWER: True 43. Basing-point pricing policy always calculates the freight charges from the point or location from which the goods are actually shipped. a. True b. False ANSWER: False 44. Most buyers prefer basing-point pricing policies compared to other policies used by sellers to handle transportation costs. a. True b. False ANSWER: False 45. A pricing policy is a general guideline that reflects marketing objectives and influences specific pricing decisions. a. True b. False ANSWER: True 46. A price of $ 9.97 is less likely to appeal to customers than $ 9.95 or $ 9.99. a. True b. False ANSWER: False 47. Odd pricing originated as a way to force clerks to make change, thus serving as a cash-control device. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 48. Unit pricing began to be widely used during the late 1960s to make price comparisons more convenient while comparing the true prices of products packaged in different sizes. a. True b. False ANSWER: True 49. One-price policies are more likely to be applied in marketing programs based on individual bargaining. a. True b. False ANSWER: False 50. Product line pricing is the practice of marketing merchandise at variable prices negotiated between buyer and seller. a. True b. False ANSWER: False 51. Marketers who have adopted a product-line pricing strategy have one major advantage in that they have no difficulty making price changes on individual items. a. True b. False ANSWER: False 52. A leader merchandise is a product offered by retailers to customers at less than cost to attract them to stores. a. True b. False ANSWER: False 53. Marketers implement leader pricing policies to avoid violating maximum-markup regulations and to earn a maximum return on promotional sales. a. True b. False ANSWER: False

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Chapter 19: Pricing Strategies 54. Maintaining an artificially low price for a period of time leads consumers to expect it as a customary feature of the product. a. True b. False ANSWER: True 55. In the absence of other cues, price is an important indicator of a product’s quality to prospective purchasers. a. True b. False ANSWER: True 56. A private-label product priced below the lower limit can be regarded as too cheap by potential customers. a. True b. False ANSWER: True 57. Many government and organizational procurement departments do not pay set prices for their purchases. a. True b. False ANSWER: True 58. Buyers and sellers often set purchase terms through negotiated contracts for projects that require extensive research and development. a. True b. False ANSWER: True 59. Auctions are the most complicated form of negotiated pricing. a. True b. False ANSWER: False 60. Negotiated pricing policies seek to eliminate the economic waste that would result from obtaining and processing bids for relatively minor purchases. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 61. Business and government purchasers often legally enter into contracts with favored suppliers instead of using competitive bidding. a. True b. False ANSWER: False 62. Almost half of all eBay transactions occur at fixed prices. a. True b. False ANSWER: True 63. An internal transfer price is the price for moving goods between profit centers in large-scale organizations. a. True b. False ANSWER: True 64. Large companies set up profit centers as a control device in their newly decentralized operation. a. True b. False ANSWER: True 65. Transfer pricing typically is a simple and standardized process in most organizations. a. True b. False ANSWER: False 66. The government monitors transfer pricing closely because it is an easy way for companies to avoid taxes on profits. a. True b. False ANSWER: True 67. Every online marketer is inherently a global marketer who must understand the internal and external conditions that affect global pricing strategies. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 68. Exporters often set standard worldwide prices, regardless of their target markets. a. True b. False ANSWER: True 69. The global status of an industry will influence a firm’s pricing strategies in international markets. a. True b. False ANSWER: True 70. A standard worldwide pricing policy is more likely to succeed in foreign markets with high marketing costs. a. True b. False ANSWER: False 71. Flexible cost-plus global pricing allows companies to grant discounts or change prices according to shifts in the competitive environment or fluctuations in the international exchange rates. a. True b. False ANSWER: True 72. Exporters who implement dual pricing policies can make profit by selling any product in international markets. a. True b. False ANSWER: True 73. A dual pricing strategy provides more flexibility to set prices with changing market conditions than a marketdifferentiated pricing strategy. a. True b. False ANSWER: False 74. Exporters who adopt market-differentiated pricing seldom change the price of their products. a. True b. False ANSWER: False

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Chapter 19: Pricing Strategies 75. Firms that price their products differently for online purchases face the risk of cannibalization. a. True b. False ANSWER: True 76. Marketers today are more savvy about integrating marketing channels and standardizing pricing across channels. a. True b. False ANSWER: True 77. Bots are search programs that hunt the Web for a specific vendor and then print out a list of products and their prices at that source. a. True b. False ANSWER: False 78. Responding to the weakening of their control over prices brought about by e-commerce, marketers have begun to bundle a host of additional goods and services with the tangible products they offer their customers. a. True b. False ANSWER: True 79. Bundle pricing is more prevalent in the telecommunications industry compared to other industries. a. True b. False ANSWER: True 80. The Internet has provided more power to customers to control the prices of goods and services. a. True b. False ANSWER: True

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Chapter 19: Pricing Strategies 81. Since it involves the use of a high price relative to prices of competing products or services, the skimming pricing strategy is sometimes referred to as _____ pricing. a. penetration b. competitive c. market-plus d. functional ANSWER: c 82. A skimming pricing strategy is more commonly used by firms to: a. reduce the raised prices of products to the original level. b. set a market-entry price for distinctive goods or services with little or no initial competition. c. set a relatively low price for a product when they enter new markets characterized by dozens of competing brands. d. set stable wholesale prices that undercut offers competitors make to retailers. ANSWER: b 83. A _____ pricing strategy helps manufacturers to distinguish their high-end products from similar products of their competitors. a. skimming b. market share c. competitive d. penetration ANSWER: a 84. A _____ pricing strategy permits marketers to control demand in the introductory stages of a product’s life cycle and then adjust productive capacity to match changing demand. a. penetration b. value-added c. skimming d. competitive ANSWER: c

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Chapter 19: Pricing Strategies 85. In order to recover research and development costs rapidly and earn high initial profits, SenseTV is setting a high price for its plasma TVs. The pricing strategy SenseTV is using is called _____ pricing strategy. a. market-minus b. skimming c. penetration d. competitive ANSWER: b 86. Which of the following is a major disadvantage associated with the skimming pricing strategy? a. It is not effective for higher-end goods. b. It is not effective in recovering the high research and development costs. c. It attracts competition as potential competitors enter into the market observing the high financial returns obtained by innovative firms. d. It leads to fulfillment problems if the demand for the product outstrips the firm’s production capacity. ANSWER: c 87. A step out is a pricing practice in which a firm: a. maintains a high price for a product throughout its life cycle. b. offers an extremely low price on a single product purchase to reach the mass market quickly and capture a large market share. c. markets a product at a low price compared to competitive offerings to secure market acceptance. d. raises the price of a product and then waits to see if others follow suit. ANSWER: d 88. A penetration pricing strategy is called _____ pricing when it implements the premise that a lower-than-market price will attract buyers and move a brand from an unknown newcomer to brand-recognition or brandpreference stage. a. market-plus b. market-minus c. EDLP d. FOB ANSWER: b

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Chapter 19: Pricing Strategies 89. Penetration pricing works best for goods or services: a. that offer a unique advantage over competitors’ brands. b. that are characterized by highly elastic demand. c. that face little or no competition in the market place. d. that involve high production and operational costs. ANSWER: b 90. When General Motors introduced the Saturn, it priced the SL sports sedan at $2,000 less than the Toyota Corolla DLX and $1,500 less than comparable Nissan and Honda automobiles. This is an example of the _____ pricing strategy. a. skimming b. penetration c. competitive d. leader ANSWER: b 91. _____ pricing is the pricing strategy of continuously offering low prices rather than relying on short-term pricecutting tactics such as cents-off coupons, rebates, and special sales. a. Minimum advertised b. Skimming c. Everyday low d. Competitive ANSWER: c 92. Everyday low pricing is a strategy devoted to continuous low prices as opposed to: a. seasonal changes in prices based on current demand. b. purely cost-based prices that vary as the manufacturer’s costs vary. c. relying on short-term price-cutting tactics such as cents-off coupons, rebates, and special sales. d. prices that are set on a weekly or monthly basis in reaction to competitors’ actions. ANSWER: c 93. Which of the following pricing strategies tries to reduce the emphasis on price as a competitive weapon? a. Penetration pricing b. Everyday low pricing c. Skimming pricing d. Competitive pricing ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 94. Retailers such as Home Depot and Lowe’s, who offer to meet and beat the best price offered by their competitors, use the strategy of _____ pricing. a. skimming b. penetration c. competitive d. cost-plus ANSWER: c 95. The price normally quoted to potential buyers before any discounts or allowances are allowed is called the _____ price. a. market b. list c. cash d. trade ANSWER: b 96. The price a consumer or marketing intermediary actually pays for a product after subtracting any discounts, allowances, or rebates from the list price is called _____ price. a. retail b. market c. functional d. sticker ANSWER: b 97. The price reduction offered to a customer, business user, or marketing intermediary in return for prompt payment of a bill is called a _____ discount. a. functional b. trade c. quantity d. cash ANSWER: d

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Chapter 19: Pricing Strategies 98. A negative cash discount is used by a seller to: a. reduce prices on a one-time-only basis. b. improve its liquidity position and cut collection expenses. c. return the costs incurred by channel members in performing marketing functions. d. reduce prices in an attempt to integrate promotional strategies within distribution channels. ANSWER: b 99. The payment offered to a channel member for performing marketing functions is called a _____. a. cash discount b. trade discount c. quantity discount d. rebate ANSWER: b 100. If a manufacturer offered an intermediary a percentage discount off the list price of products it handled in exchange for performing certain wholesaling activities, this would be classified as a: a. cash rebate. b. list price. c. cumulative discount. d. trade discount. ANSWER: d 101. ADS stores, a supermarket chain, receives discounts from its suppliers for the bulk purchases of the merchandise at its stores. This is an example of a _____ discount. a. cash b. trade c. quantity d. functional ANSWER: c

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Chapter 19: Pricing Strategies 102. An office supply wholesaler offers a 15 percent discount for retailers who purchase goods worth $ 20,000 over a period of nine months and a 20 percent discount for purchases worth $ 25,000 during the same time period. This is an example of a _____ discount. a. trade b. noncumulative quantity c. cumulative quantity d. recurring ANSWER: c 103. A one-time reduction in list price typically offered at the time of sale is referred to as a(n): a. allowance. b. rebate. c. cumulative discount. d. noncumulative discount. ANSWER: d 104. Which of the following statements best describes allowances? a. Allowances are used in conjunction with quantity and cash discounts. b. Allowances are the same as transfer prices. c. Allowances are offered only to marketing channel members in order to increase sales. d. Allowances result in reduction of the list price quoted on a product. ANSWER: d 105. A promotional allowance is an incentive offered by manufacturers to retailers to: a. reward a retailer for not advertising a product below a certain price. b. provide one-time reductions in the list price of products for purchasers of large quantities. c. refund the shipping costs paid by the retailer for home-delivery of products. d. return a certain amount spent by the retailers on advertising and providing sales support. ANSWER: d 106. A cosmetics company offers incentives to its retailers for advertising its new shampoo by placing it in a special display unit near the billing counters. This incentive offered by the manufacturer is an example of a _____. a. rebate b. promotional allowance c. cash discount d. trade-in ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 107. A credit allowance given for a used item when a customer purchases a new item is known as a _____. a. rebate b. trade-in c. functional discount d. cash discount ANSWER: b 108. In a recent special promotion, any customer who brought in a toaster oven, working or not, was given a $50 credit toward the purchase of a new microwave oven. This is an example of a: a. functional discount. b. promotional allowance. c. cash discount. d. trade-in. ANSWER: d 109. A refund of a portion of the purchase price usually granted by the product’s manufacturer to consumers is known as a _____. a. cash discount b. rebate c. functional discount d. trade-in ANSWER: b 110. Marketers offer rebates in order to: a. cover the costs spent by the retailers on advertising the products. b. reward the retailer for prompt payment of bills. c. reward a retailer who agrees not to advertise products below set prices. d. reduce the price paid for a product by customers. ANSWER: d

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Chapter 19: Pricing Strategies 111. A firm that manufactures TVs sells them at prices of $750, $1,000, and $1,250. The manufacturer will return $75, $100, or $125 respectively, by mail, to those who purchase its brand of TV. This reduction in price is an example of a: a. promotion allowance. b. trade-in. c. rebate. d. quantity discount. ANSWER: c 112. Which of the following is an example of a rebate offered to buyers? a. Getting $25 off a $100 purchase on exchange of a used product. b. Getting $3 off a $100 purchase for paying the bill within 10 days. c. Getting $5 returned by mail after a $100 purchase for making the purchase. d. Getting $100 off a $1,000 purchase for buying in bulk quantities. ANSWER: c 113. Which of the following is true of products priced as “FOB origin”? a. The purchase of these products permits the buyers to subtract transportation expenses from their bills. b. The transportation costs of these products are uniformly distributed among all channel members including the final purchaser. c. The legal title and responsibility of these products lies with the seller until it is delivered to the buyer. d. The buyer pays all the freight charges to transport the product from the manufacturer’s loading dock. ANSWER: d 114. A price quotation system that allows the buyer to deduct shipping expenses from the cost of purchases is known as _____ pricing. a. uniform-delivered b. basing-point c. freight absorption d. FOB plant ANSWER: c

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Chapter 19: Pricing Strategies 115. Firms with high fixed costs often expand their markets, quoting the same prices to all customers regardless of shipping expenses, under the plan called: a. zone pricing. b. freight absorption pricing. c. uniform-delivered pricing. d. the basing-point system. ANSWER: b 116. A _____ is the amount by which the average transportation charge exceeds the actual cost of shipping. a. rebate b. list price c. phantom freight d. transfer price ANSWER: c 117. Which of the following pricing systems is sometimes referred to as postage-stamp pricing since it resembles the pricing structure for mail service? a. Zone pricing b. Freight absorption pricing c. Uniform-delivered pricing d. The basing-point system ANSWER: c 118. When a manufacturer quotes the same price for goods (including freight charges) to a buyer in Miami, another in Los Angeles, and a third in Dallas, the seller is quoting a _____ price. a. uniform-delivered b. destination c. zone d. basing-point ANSWER: a 119. A(n) _____ is a general guideline that reflects marketing objectives and influences specific pricing decisions. a. MAP b. pricing policy c. leader pricing strategy d. EDLP ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 120. Psychological pricing is based on the premise that: a. certain prices or price ranges make products more appealing to buyers than others. b. one-price policies appeal to most people and suit mass-marketing programs. c. setting a limited number of prices for a selection of merchandise has a certain appeal. d. lower-than-normal prices as part of recurring marketing initiatives creates demand. ANSWER: a 121. A pricing policy that assumes that some prices are more appealing than others is known as _____ pricing. a. leader b. product-line c. psychological d. prestige ANSWER: c 122. An example of odd pricing would be: a. a buy-two-get-one-free promotion. b. selling a radar detector for $129.99 instead of $130. c. subtracting trade-ins from the list price. d. rebates that lower total price. ANSWER: b 123. When the price of Cheerios cereal is displayed as 14.7 cents per ounce, this is an example of _____ pricing. a. odd b. commodity c. unit d. penetration ANSWER: c 124. Which of the following pricing policies began to be widely used during the late 1960s to make price comparisons more convenient between products packaged in different sizes? a. Odd pricing b. Promotional pricing c. Unit pricing d. Product-line pricing ANSWER: c

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Chapter 19: Pricing Strategies 125. A firm that permits variable prices for different customers is adopting _____. a. promotional pricing b. price flexibility c. odd pricing d. product-line pricing ANSWER: b 126. Which of the following pricing policies is more likely to be applied in marketing programs based on individual bargaining? a. Product-line pricing b. Promotional pricing c. Price flexibility d. Odd pricing ANSWER: c 127. The practice of marketing merchandise at a limited number of prices is called _____ pricing. a. product-line b. odd c. one-price d. unit ANSWER: a 128. When a men’s clothing store sells suits at four price levels ($295, $455, $525, $650), the store’s retail policy is _____ pricing. a. unit b. promotional c. product-line d. psychological ANSWER: c

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Chapter 19: Pricing Strategies 129. A car manufacturer has developed different models of a car to suit the pricing needs of different classes of customers. It offers a low-end version for price conscious customers and luxury cars for high-end customers. This is an example of _____ pricing. a. promotional b. psychological c. leader d. product-line ANSWER: d 130. Which of the following is a disadvantage associated with product-line pricing? a. It does not provide flexibility for making price changes on individual items. b. It results in consumers having difficulty in making purchase decisions. c. It is ineffective in differentiating between products. d. It does not allow shoppers to choose desired price ranges. ANSWER: a 131. Which of the following is true of promotional pricing? a. It promotes goods and services at specific price ranges based on the belief that certain prices are more appealing to consumers. b. It uses lower-than-normal price as a temporary component in the selling strategy. c. It sets a high price for products that offer unique potential ability. d. It uses extensive promotional allowances to get channel members to promote the product. ANSWER: b 132. A retailer wants to increase the number of customers shopping in her store. Which of the following has the greatest potential for success? a. Promotional pricing b. Price flexibility c. Prestige pricing d. Unit pricing ANSWER: a

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Chapter 19: Pricing Strategies 133. “Buy three shock absorbers and get the fourth free,” as advertised by an auto repair shop, is an example of _____ pricing. a. unit b. variable c. promotional d. product-line ANSWER: c 134. A newly opened seafood restaurant advertises various deals on meal packages and special prices on dinner packages to attract customers. This is an example of _____ pricing. a. leader b. promotional c. competitive d. list ANSWER: b 135. _____ pricing is a pricing policy in which products are offered to consumers at less than cost to attract them to stores in the hope that they will buy other merchandise at regular prices. a. Skimming b. Loss leader c. Odd d. Variable ANSWER: b 136. _____ pricing refers to a pricing strategy in which marketers offer prices slightly above cost to avoid violating minimum-markup regulations and to earn a minimal return on promotional sales. a. Competitive b. Leader c. Penetration d. Psychological ANSWER: b

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Chapter 19: Pricing Strategies 137. In the absence of other cues: a. many buyers interpret low prices as signals of high-quality products. b. price offers no clue of a product's quality to prospective purchasers. c. price is an important indicator of product quality to consumers. d. the relationship between price and quality holds true only in declining economies. ANSWER: c 138. Consumers today perceive that, within price limits, there is: a. a need for discounts and incentives. b. obvious opportunity for psychological pricing. c. a direct relationship between the quality and price of a product. d. no perceivable difference in major product brands. ANSWER: c 139. Consumers have a certain range within which their product-quality perceptions vary directly with price. This range reflects the concept of price: a. limits. b. variations. c. controls. d. resistance. ANSWER: a 140. Many government and organizational procurement departments do not pay set prices for their purchases. Instead, they: a. always negotiate with favored suppliers to get exactly what they want. b. approach the supplying industry and get an average estimate of price from all producers. c. determine the lowest prices available for items that meet specifications through competitive bidding. d. call the federal supply agency and place an order with this government-run factory. ANSWER: c 141. The process by which buyers ask a number of potential suppliers to submit price quotes on a proposed purchase or contract, of which the lowest will be accepted, is called: a. specification. b. competitive bidding. c. noncompetitive bidding. d. competitive pricing. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 142. Which of the following is one of the most important aspects of a government or organizational procurement? a. The bidder’s profit on the product b. The payment schedule for the product c. Provisions for deflation or inflation d. Development of accurate descriptions of products to buy. ANSWER: d 143. Buyers and sellers often set purchase terms using negotiated contracts when: a. only one supplier offers the desired product. b. there are multiple interested parties. c. research and development work is not necessary. d. purchases exceed $5,000. ANSWER: a 144. Large-scale enterprises often have a dilemma with setting the _____ price, which is the price they charge themselves when sending goods from one company profit center to another. a. list b. transfer c. removal d. basing ANSWER: b 145. For the purpose of transfer pricing, any part of the organization to which revenue and controllable costs can be assigned, such as a department, is referred to as a: a. sales department. b. revenue center. c. controllable costs center. d. profit center. ANSWER: d 146. A major problem facing company decision makers when setting transfer prices is: a. how to determine the product-service attributes of the transfer. b. when to complete the transfer. c. how to assign the controllable costs to the profit centers. d. what price to actually charge the receiving profit center. ANSWER: d

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Chapter 19: Pricing Strategies 147. Transfer pricing becomes especially complex when the global market is involved because: a. shipping materials across national lines involves payment of duties and taxes, and these become part of the total price of the goods. b. issues of quality control can be serious, even when divisions of the same firm are involved. c. a firm with activities in several countries can use transfer pricing as a tax-avoidance device and governments frown upon such activities. d. the temperature and humidity differences between origins and destinations often damage the products. ANSWER: c 148. A Swedish telephone maker transfers phones costing $10 to produce to its U.S. subsidiary for a transfer price of $20. The U.S. subsidiary sells the phones to retailers for $25 each and spends $5 per phone in promotion and distribution expense. The U.S. subsidiary: a. makes $10, on which it pays U.S. taxes. b. makes $15, all of which is taxable in the United States. c. breaks even on the deal because it spends all its revenues. d. makes a total of $25 on the deal because the phones are effectively free. ANSWER: c 149. Which of the following pricing approaches is best suited for a company that is expanding into the global market and will be facing rather low foreign marketing costs? a. Standard worldwide price b. Dual pricing c. Market-differentiated pricing d. Transfer pricing ANSWER: a 150. If foreign marketing costs are so low they do not impact overall costs, the pricing strategy to recommend is: a. promotional pricing. b. dual pricing. c. market-differentiated pricing. d. standard worldwide pricing. ANSWER: d

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Chapter 19: Pricing Strategies 151. Makson’s, a manufacturer of agricultural fertilizers and pesticides, modifies the prices of its products exported to foreign markets to include the marketing costs in foreign markets but maintains the same price in all its domestic markets. Its products are more expensive in international markets compared to its domestic market where it is sold at a lower price. This pricing strategy used by Makson’s to differently price its products is known as: a. market-differentiated pricing. b. competitive pricing. c. dual pricing. d. standard worldwide pricing. ANSWER: c 152. Aken Laboratories, a chemical manufacturer, exports its products to various countries in Asia. The company does not alter the prices of its products in these countries. Aken is adopting a _____ pricing strategy. a. market-differentiated b. variable c. standard worldwide d. dual ANSWER: c 153. The global pricing strategy that allows the greatest flexibility in setting prices to reflect local marketplace conditions is: a. standard worldwide pricing. b. dual pricing. c. market-differentiated pricing. d. everyday low pricing. ANSWER: c 154. A _____ pricing strategy makes more flexible arrangements, compared to other strategies, to set prices according to local marketplace conditions. a. standard b. product-line c. market-differentiated d. dual ANSWER: c

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Chapter 19: Pricing Strategies 155. Burlan Paints, manufacturer of paints for both interiors and exteriors, prices its products differently in various international markets to suit the requirements of local customers. Burlan Paints is implementing the _____ pricing strategy for pricing products. a. dual b. standard c. zone d. market-differentiated ANSWER: d 156. Online marketers run the risk of cannibalization when they: a. compete with off-price houses on the Internet. b. differently price the same products sold in their retail outlets to be sold online. c. construct new stores alongside their websites. d. hold on to tradition in the face of new technology. ANSWER: b 157. Charles Schwab, an equity investment company, will face the risk of cannibalization from its e-tail channel, Schwab.com, if: a. it attempts to lure customers within the Schwab database. b. it branches out into mutual funds and tax-deferred investments. c. it makes price cuts and creates competition with the parent company. d. it allots all its best personnel to work at the online firm. ANSWER: c 158. The use of bots to search out price quotes on specified products forces Internet marketers to: a. keep their prices low. b. install “bot-stoppers.” c. use printer-disabling viruses. d. close their websites. ANSWER: a

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Chapter 19: Pricing Strategies 159. _____ pricing occurs when a company offers two or more complementary products and sells them for a single price. a. Psychological b. Bundle c. Protective d. Combination ANSWER: b 160. Perfect Digitals offers a UV lens and a sun protection cover for its camera lens for a wide range of its digital cameras, all at a single price. This strategy used by the company is referred to as: a. unit pricing. b. price flexibility policy. c. bundle pricing. d. competitive pricing. ANSWER: c 161. What is market-plus pricing? Why do companies practice a skimming strategy? ANSWER: Market-plus pricing is the practice of intentionally setting a relatively high price compared with the prices of competing products. It is also known as skimming pricing. A company may practice a skimming strategy in setting a market-entry price when it introduces a distinctive good or service with little or no competition. It may also use this strategy to market higherend goods. 162. Discuss the benefits a company receives when following a skimming pricing strategy. ANSWER: A skimming pricing strategy: 1) allows a manufacturer to quickly recover its research and development costs. 2) permits marketers to control demand in the introductory stages of a product’s life cycle and then adjust productive capacity to match changing demand. 163. Explain everyday low pricing. ANSWER: Everyday low pricing (EDLP) is a pricing strategy related to penetration pricing, that is, devoted to continuous low prices as opposed to relying on short-term price cutting tactics such as cents-off coupons, rebates, and special sales. EDLP can take two forms. In the first, retailers compete by consistently offering consumers low prices on a broad range of items. The second form of EDLP involves its use by the manufacturer in dealing with channel members. Manufacturers may seek to set stable wholesale prices that undercut offers competitors make to retailers, offers that typically rise and fall with the latest trade promotion deals. Many marketers reduce list prices on a number of products while simultaneously reducing promotion allowances to retailers.

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Chapter 19: Pricing Strategies 164. Differentiate between the list price and market price of a product. ANSWER: The list price of a product is the rate normally quoted to potential buyers. The market price is the price a consumer or marketing intermediary actually pays for a product after subtracting any discounts, allowances, or rebates from the list price. The market price may or may not be equal to the list price. A list price often defines a starting point from which discounts set a lower market price. 165. What are allowances? What are the major categories of allowances? ANSWER: Allowances are specified deductions from the list price. The major categories of allowances are trade-ins and promotional allowances. Trade-ins are credit allowances given for used items when a customer purchases new items. Promotional allowances reduce prices as part of an attempt to integrate promotional strategies within distribution channels. Manufacturers often return part of the prices buyers pay in the form of advertising and sales-support allowances for channel members. 166. How do buyers and sellers handle transportation costs? What are the alternative policies that sellers implement for handling transportation costs in their pricing policies? ANSWER: Buyers and sellers can handle transportation costs in several ways: 1) the buyer pays all transportation charges, 2) the seller pays all transportation charges, or 3) the buyer and the seller share the charges. Sellers can implement several alternatives for handling transportation costs in their pricing policies. 1) FOB pricing: In this policy, prices include no shipping charges. The buyer must pay all freight charges to transport the product from the manufacturer’s loading dock. The seller pays only to load the merchandise aboard the carrier selected by the buyer. 2) Uniform-delivered pricing policy: It is a pricing system under which all buyers are quoted the same price, including transportation costs. 3) Zone pricing: It is a pricing system for handling transportation costs under which the market is divided into geographic regions and a different price is set in each region. 4) Basing-point pricing: In this system, the price of the product includes the list price at the factory plus freight charges from the basing-point city nearest the buyer.

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Chapter 19: Pricing Strategies 167. Explain psychological pricing and give three examples of this concept. ANSWER: Psychological pricing is based on the idea that certain prices or price ranges make products more appealing to buyers. There is, however, no consistent research foundation for such thinking, and studies often report mixed findings. Three psychological pricing techniques are prestige pricing, odd pricing, and unit pricing. Prestige pricing is the idea that when some goods are priced higher than other goods, consumers will perceive that the quality is higher and will pay the higher price. Odd pricing involves the belief that when prices are set at odd numbers, just under round numbers, consumers will be more likely to buy, such as $3.97 or $1,299. Unit pricing states prices in terms of a recognized unit of measurement (such as grams or liters) or a standard numerical count, such as a dozen. 168. Discuss the four major types of pricing policies, as well as flexible alternatives. ANSWER: A pricing policy is a general guideline based on pricing objectives that guides specific pricing decisions. Firms implement variations of four basic types of pricing policies: psychological pricing, price flexibility, product-line pricing, and promotional pricing. Psychological pricing is a policy where a belief is held that certain prices or ranges of price make products more appealing to buyers. Odd pricing is a belief that ending prices at odd numbers just under an even dollar figure (e.g., $4.99) will be more appealing than an even dollar figure. Another approach, unit pricing, is the stating of price based on a recognized unit (ounce) or a standard amount (per dozen items). Other pricing policies deal with decisions concerning price flexibility—whether or not there will be just one price for each item or a variable price approach. Product-line pricing is the practice of selling merchandise at a limited number of prices, often in terms of a combination of high, medium, and low price lines. Promotional pricing is a lower-than-normal price used temporarily as a selling stratagem. These often take the form of announced “on-sale” periods in an attempt to draw customers to a product or retail store. One form of promotional pricing is the loss leader, a product priced below cost which is used to draw customers who are expected to buy other products which will generate a profit.

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Chapter 19: Pricing Strategies 169. What are the problems associated with product-line pricing? ANSWER: A potential problem with product-line pricing is that once marketers decide on a limited number of prices to use as their price lines, they may have difficulty making price changes on individual items. Rising costs, therefore, force sellers to either change the entire price-line structure, which results in confusion, or cut costs through production adjustments. The second option opens the firm to customer complaints that its merchandise is not what it used to be. 170. Discuss the practice of promotional pricing and the role played by loss leaders and leader pricing. ANSWER: In promotional pricing, a lower-than-normal price is used as a temporary ingredient in a firm’s selling strategy. In some cases, promotional prices are recurrent, such as an annual “buy one pair, get the second pair free” sale at a shoe store. Another example is an opening special to attract customers to a new store. Most promotional pricing occurs at the retail level. One type is the use of loss leaders: goods priced below cost to attract customers who will then buy other, regularly priced merchandise. However, this practice is not permitted in states with unfair-trade acts, though an alternative called “leader” pricing is used in which products are sold with the lowest markup allowed by the unfair-trade laws. Supermarkets and mass merchandisers often use private-label products (sold under the retailer’s brand name) and sell them below the price of comparable national brands. The lower price is likely to be offset by increased volume which leads to increased revenues for the firm. 171. What are the disadvantages of promotional pricing? ANSWER: Marketers should anticipate two potential pitfalls when making a promotional pricing decision: 1) Some buyers are not attracted by promotional pricing. 2) By maintaining an artificially low price for a period of time, marketers may lead customers to expect it as a customary feature of the product. 172. What is leader pricing? What type of retailers use this strategy? ANSWER: Leader pricing is a variant of loss-leader pricing in which marketers offer prices slightly above cost to avoid violating minimum-markup regulations and earn a minimal return on promotional sales. Among the most frequent practitioners of this combination pricing/promotion strategy are supermarkets and mass merchandisers such as Walmart, Target, and Kmart. 173. Discuss the relationship between price and consumer perceptions of quality. ANSWER: In the absence of other cues, price has an important influence on how the consumer perceives the product’s quality. The concept of price limits, within which the perception of product quality varies directly with price, suggests that extremely low prices may be considered too cheap and thus indicates an inferior quality product. Similarly, prices above a certain limit may make a product appear to be too expensive.

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Chapter 19: Pricing Strategies 174. Compare and contrast competitive bidding and negotiated prices. ANSWER: Consumer product prices are generally set prices, that is, a price is set by the vendor and made known to consumers, who decide whether to purchase the product or not, at the set price. In situations where prices are not set prices, such as many government and business purchases, a competitive bidding process may be used. In this process, the buyer asks for price quotations from potential suppliers based on specifications of the items to be purchased. In the government and business markets, such as when there is only one available supplier or when extensive research and development costs will be incurred, a price is negotiated between the purchaser and supplier. This approach is also common in state and local government procurement procedures for purchases falling below rather low total cost limits. This avoids the economic waste the bidding process would bring to a low-cost purchase. 175. What is the importance of transfer pricing? How does it relate to an organization’s profit center? ANSWER: In large corporations, transfer pricing occurs when a corporation sets prices for transferring goods or services from one company profit center to another. The profit center refers to any part of the organization to which revenue and controllable costs can be assigned. In a large corporation whose profit centers acquire resources from other parts of the organization, the prices charged by one profit center to another have direct impacts on the cost and profitability of the output of both profits and costs. 176. What are the different factors that influence global pricing strategies? ANSWER: A wide variety of internal and external conditions affect global pricing strategies. Internal influences include the firm’s goals and marketing strategies; the costs of developing, producing, and marketing its output; the nature of the products; and the firm’s competitive strengths. External influences include general conditions in international markets, especially those in the firm’s target markets; regulatory limitations; trade restrictions; competitors’ actions; economic events; and the global status of the industry.

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Chapter 19: Pricing Strategies 177. Discuss the three alternative strategies for pricing exports.

1) ANSWER:

Standard worldwide pricing involves charging one price throughout the world, regardless of the target market. This can be an effective strategy if foreign marketing costs are so low they do not impact overall costs or if the price is based on an average unit cost. A company using this approach must make sure that domestic competitors do not undercut its prices. Dual pricing distinguishes between domestic and export price strategies. Some exporters use this method to establish dual prices that fully allocate their true domestic and foreign costs to their product. This approach may lead to final prices that are higher than those of competitors. Other firms use flexible cost-plus pricing, which allows them to grant discounts or change prices according to shifts in the competitive environment or fluctuations in the international exchange rate. Market-differentiated pricing is highly flexible. It allows firms to price their products according to marketplace conditions. This permits exporters to adjust prices frequently. A fundamental requirement for market-differentiated pricing to be effective is for companies to have access to quick, accurate market information.

178. Define cannibalization and give an example. ANSWER: Cannibalization is the loss of sales of an existing product due to competition from a new product in the same line. For example, Canon introduces a new digital camera (more features, higher resolution, etc.). The new product is likely to result in reduced sales of some of the company’s existing digital camera models. 179. What is a bot? How does it influence the online pricing of products? ANSWER: Bots or shopbots are software programs that allow online shoppers to compare prices of a particular product offered by several online retailers. Bots search the Web for a specific product and print a list of sites offering the best prices. In online selling, bots force marketers to keep prices low. 180. What is bundle pricing? Give an example. ANSWER: Bundle pricing involves offering two or more complementary products and selling them for a single price. The most prevalent example is the telecommunications industry. For example, many cable companies now offer cable, Internet, and phone services for one price on one combined bill. Match each item with the correct statement below. a. competitive bidding b. penetration pricing strategy c. list price d. trade discount e. price flexibility f. promotional pricing g. loss leader Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies h. cannibalization i. bundle pricing j. odd pricing k. transfer price l. profit center m. skimming pricing strategy n. competitive pricing strategy o. pricing policy p. market price q. noncumulative quantity discount r. step out s. bot t. cash discount 181. A(n) _____ involves the use of a high price relative to competitive offerings. ANSWER: m 182. A(n) _____ is a pricing practice in which a firm raises prices and then wait to see if others follow suit. ANSWER: r 183. The strategy of using a relative low entry price compared with competitive offerings to secure market acceptance is called a(n) _____. ANSWER: b 184. A(n) _____ is designed to deemphasize price as a competitive variable by pricing a good or service at the level of comparable offerings. ANSWER: n 185. A(n) _____ is a price reduction offered to a consumer or a business buyer in return for prompt payment of a bill. ANSWER: t 186. A(n) _____ is a payment to a channel member or buyer for performing marketing functions. ANSWER: d 187. The price normally quoted to potential buyers is called _____. ANSWER: c 188. The amount a consumer actually pays for a product is called _____. ANSWER: p

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Chapter 19: Pricing Strategies 189. The price reduction granted on a one-time-only basis is called a(n) _____. ANSWER: q 190. A(n) _____ is a general guideline that reflects marketing objectives and influences specific pricing decisions. ANSWER: o 191. _____ is a pricing policy permitting variable services for goods and services. ANSWER: e 192. A price of $9.99 is an example of _____. ANSWER: j 193. The pricing policy in which a lower-than-normal price is used as a temporary ingredient in a firm’s marketing strategy is called _____. ANSWER: f 194. A product offered to consumers at less than cost to attract them to stores in the hope that they will buy other merchandise at regular prices is called a(n) _____. ANSWER: g 195. The process of inviting potential suppliers to quote prices on proposed purchases or contracts is known as _____. ANSWER: a 196. A(n) _____ is a part of an organization to which revenue and controllable costs can be assigned. ANSWER: l 197. The cost assessed when a product is moved from one profit center within a firm to another is called _____. ANSWER: k 198. _____ is the loss of sales of an existing product due to competition from a new product in the same line. ANSWER: h 199. Offering a printer along with a personal computer at a single price is an example of _____. ANSWER: i 200. A(n) _____ is a software program that allows online shoppers to compare prices of a particular product offered by several online retailers. ANSWER: s

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Chapter 19: Pricing Strategies 201. A manufacturer of tablet computers has designed a unique new product that can network with satellites to access streaming video and television channels. This device does not need a Wi-Fi connection and can be accessed anywhere in the world by logging onto the site. Besides serving as a portable computer, this device bypasses the need for a consumer to purchase cable or personal satellite dish access. Which approach to pricing makes the most sense for the company to use first? a. s et the price extremely high until competing products are developed b. s et the price to match the manufacturing of the device under a private label c. s et the price extremely low in order to capture more of the current market share d. s et the price to match other computer and television devices sold by competitors e. s et the price extremely low in order for consumers to purchase it without needing a coupon ANSWER: a 202. A smartphone manufacturer introduced a new device into the marketplace with pricing set according to the skimming approach. The CEO of the company reviews financial reports from the device and notes that the pricing approach used is not cost-effective for the company. How should the CEO adjust the pricing strategy for this device? a. d rop the price b. i ncrease the price c. o ffer an everyday low price option d. r emarket the device under a private label e. m atch the price to the competitions’ price ANSWER: a 203. The customer service department of a vitamin and nutritional supplement company has been receiving an increase in customer complaints since the company changed the shipping and handling charges to be the same amount for every order. Which delivery pricing method is this company using? a. z one b. b asing point c. f ree on board d. u niform delivered e. c umulative quantity ANSWER: d

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Chapter 19: Pricing Strategies 204. A manufacturer is prepared to introduce a new hair care product for exclusive use in hair salons and spas. In determining the discount to apply to the product, which strategy indicates that the manufacturer applied a trade discount legally? a. o wners of female hair salons receive a 10% higher discount b. r etailers of hair care products for men and women receive the same discount c. w holesalers of hair care products for female salons have a 5% cash-back bonus d. r etailers receive an additional case of product for every 100 units purchased the first week e. w holesalers of hair care products for barber shops receive the same discount as retail outlets ANSWER: b 205. The manufacturer of safety wallets is determining the retail price to charge for each unit sold. Which approach should the manufacturer use that supports the psychological pricing strategy? a. s et the price at $24.97 b. s et the price at $25.00 for the first item and $5 for the second c. s et the price according to the number of unrelated products sold d. s et the price according to the number of variations of the wallet style e. s et the first unit sold at full price and the second purchased at half price ANSWER: a 206. While stocking the shelves with a new soup, the store manager notes a difference in price between the 16-ounce can and the 32-ounce can. Which type of pricing strategy is the soup manufacturer using? a. u nit pricing b. o dd pricing c. p rice flexibility d. p romotional pricing e. p roduct-line pricing ANSWER: a

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Chapter 19: Pricing Strategies 207. The owner of an exclusive woman’s clothing and accessory boutique receives a shipment of Dolce & Gabbana chain link and leather belts. Which approach indicates that the owner used consumer price-quality perception when pricing the belts? a. b elts priced at $250 each and draped over slacks b. b elts priced at $25 each and displayed at the cash register c. b elts priced at $100 each and placed next to matching purses d. b elts priced at $1000 each and displayed behind an acrylic glass display case e. b elts priced at $500 each and threaded through slacks with matching jackets ANSWER: c 208. The manager of a retail furniture store desires to increase the number of prestige sales of pieces handcrafted from natural materials. Which strategy should the manager use to meet this sales objective? a. p lace the pieces near the main entrance for customers to see first b. i dentify an area near the cash registers where the pieces are displayed c. s tage an area on the floor in each room highlighting the pieces and their uses d. p lace a sign on the door advertising environmentally friendly furniture for sale e. p rovide customers with a marketing piece explaining the materials used to make the items ANSWER: c 209. A committee of city council members is searching for a new vendor for trash and recyclables removal in the community. Which mechanism provides the committee with information about the prices vendors charge to perform this service? a. l eader bidding b. n egotiated bidding c. p roduct-line bidding d. p romotional bidding e. c ompetitive bidding ANSWER: e

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Chapter 19: Pricing Strategies 210. The manager of the Indianapolis Motor Speedway notices that sales are down for the next upcoming race. Which approach should the manager use to sell the remaining tickets for the next event quickly? a. d rop the price of general admission tickets one week prior to the event b. a dvertise that the Motor Speedway is a green facility and restricts smoking c. o ffer general admission tickets as buy one, get one 50% off the regular price d. p lace the tickets on an auction website and invite individuals to bid on open seats e. b undle open tickets with such incentives as drink tickets or reduced-rate parking ANSWER: d 211. A multi-hospital healthcare system is considering using each facility’s clinical laboratory to run the routine drug screening of new employees instead of outsourcing the laboratory function to an independent vendor. What should the healthcare system’s senior leadership consider before implementing this change? a. t he scope of drug screening each laboratory can perform b. t he amount of time employees will be absent from the work site c. t he fee to charge each profit center for the employees’ laboratory work d. i nviting each laboratory to submit a bid for the cost of the laboratory work e. a warding the work to the laboratory with the highest fee to promote prestige among the employees ANSWER: c 212. Before a multi-state computer company can charge for onsite computer repairs for the business’s computer equipment, the company needs to establish __________. a. c ost centers b. t erms of service c. n egotiated prices d. a uction accounts e. m arket-plus pricing ANSWER: a

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Chapter 19: Pricing Strategies 213. A manufacturer of sports shoes received an order to export 50,000 units to Brazil. Which pricing approach should the manufacturer use so that the cost of exporting is paid by the receiving country? a. s et one worldwide price to charge the receiving country b. d etermine the price minus the cost of shipping to the receiving country c. e stablish the price according to the cost of manufacturing plus shipping d. r ecommend a price that can fluctuate depending upon the receiving country’s market e. n egotiate the price to be a percentage of sales plus the cost of shipping to the receiving country ANSWER: b 214. The chief financial officer (CFO) of an automotive manufacturer is reviewing the revenue earned from the sale of all-terrain vehicles in South America. Because the selling price of the vehicles has been changed frequently, the CFO wanted to analyze the impact of these changes particularly during the rainy season. Which global pricing strategy is being used to price these vehicles? a. d ual b. s tandard c. t ransfer d. c annibalization e. m arket-differentiated ANSWER: e 215. A flooring manufacturer has experienced an increase in sales of laminate flooring in the stores located in the southeastern region of the United States. A recent marketing plan identifies that cork flooring will be introduced in the same stores before rolling out to the rest of the country. What effect is this manufacturer at risk of experiencing with this strategy? a. s hop bot b. b undling c. p rice fixing d. d ual pricing e. c annibalization ANSWER: e

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Chapter 19: Pricing Strategies 216. The manager of an electronics and appliance store is challenged by the corporate office to increase the use of repair and replacement policies for these products. Which approach should the manager consider to meet the corporate office’s expectation? a. i ncrease the price of the policies until the market adjusts b. i nstall shop bots for customers to research product policies c. b undle the repair and replacement policies as part of the sale price of the products d. s trategize for new product policies to be introduced alongside high-volume sale items e. r educe the prices of popularly sold items and charge a higher fee for the repair policies ANSWER: c 217. You just opened a retail pet supply store, and have decided to use a penetration pricing strategy. A potential investor, however, is dismayed by your decision. To win her over, which of the following points should you make? a. Demand for pet supplies is highly elastic.

b. Demand for pet supplies is highly inelastic. c. A new store needs to focus on attracting shoppers. d. Market-minus pricing would be inappropriate in the pet supply market. e. The new store's introductory prices can be changed later in its life cycle. ANSWER: a, c, e 218. The travel agency business is more competitive than ever because of industry consolidation and the growth of online services. Still, Sam believes his cruise booking agency can be profitable if he targets organizations that book tickets for member events -- and if he makes careful use of price discounts. Which of the following steps is Sam likely to take? a. Offer cash discounts to organizations that pay their bills within 30 days.

b. Offer cash discounts to organizations that pay for tickets at any time in cash. c. Offer one-time only cumulative quantity discounts to organizations buying the largest number of tickets for a given cruise.

d. Offer cumulative quantity discounts for organizations making annual bookings over $10,000. e. Eliminate list prices. ANSWER: a, d

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Chapter 19: Pricing Strategies 219. As Chief Marketing Officer for a pharmaceutical company, you’ve chosen to use a skimming pricing strategy when introducing the firm’s breakthrough pain medication. Nervous about charging high prices during an economic downturn, the CEO wants you to explain your choice to the board of directors. What should you say? a. Skimming pricing strategy is generally more successful than market-plus pricing strategy.

b. If other drug companies introduce competitive products, your initial high price will be dropped. c. Skimming allows the firm to quickly recoup its research and development costs. d. Skimming allows the firm to control demand during the medication’s introductory stages. e. Skimming discourages competition. ANSWER: b, c, d 220. Jim plans to rent a car during an upcoming business trip to Dallas. He expects to pay a rental rate similar to what he was charged last year in the same city. However, he could be persuaded to pay more under certain conditions. Which of the following conditions might influence Jim to pay more? a. He is offered an eco-friendly hybrid car.

b. He is offered a Range Rover or other top quality car at only a small premium. c. He is offered the same car he drove last year. d. He is offered the option of paying in installments. ANSWER: a, b 221. Tulip World exports flowers around the globe, using standard worldwide prices. But its marketing director realizes that the success of this pricing strategy could be undermined by certain market changes. Choose the change(s) he has in mind. a. Domestic tulip suppliers undercut Tulip World's prices.

b. New trade restrictions are imposed in some of the countries where the firm does business. c. Foreign marketing costs rise significantly. d. Tulip World's prices no longer reflect its unit export costs. e. Tulip World switches to a new distribution system. ANSWER: a, b, c, d 222. Samantha offers special discounts for customers who order her jewelry online instead of buying it at her shop in the mall. Her business partner, Julie, challenges this approach. What point(s) does Julie make? a. Samantha is creating unhealthy competition among the company's own products.

b. The general trend in marketing is to standardize pricing across channels. c. Online discounts will undermine the brand image more than in-store discounts. d. Few jewelry buyers are multichannel shoppers. e. The most profitable retailers are those that focus on luring buyers to their physical stores. ANSWER: a, b Copyright Cengage Learning. Powered by Cognero.

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Chapter 19: Pricing Strategies 223. Betty is convinced that certain prices will boost sales of her gourmet chocolates more than other prices. Which of the following price policies could she apply? a. Prestige pricing.

b. Elastic pricing. c. Non-behavioral pricing. d. Odd pricing. e. Unit pricing. ANSWER: a, d, e 224. Don intends to use promotional pricing as an ongoing part of the marketing strategy for his automotive supply store. Because you are his friend -- and have years of experience in retail marketing -- you feel obligated to tell Don that he should rethink this plan. What point(s) do you make? a. Overuse of promotional pricing can get customers hooked on lower-than-normal prices.

b. Promotional pricing is intended to be a temporary part of a firm's marketing strategy, not an ongoing element. c. Promotional pricing will require Don to use popular products like motor oil as loss leaders. d. Promotional pricing only works when implemented together with psychological pricing techniques. e. Promotional pricing is seldom used by retailers. ANSWER: a, b 225. You work in the procurement department of a large hospital. While training a new assistant, you realize that he has limited knowledge of competitive bidding, the major purchasing procedure you use. Choose the key point(s) you must convey to him. a. When we need surgical supplies, we advertise the price we want to pay in medical journals.

b. Before soliciting bids for surgical supplies, we develop detailed specifications for the items we want to buy. c. After receiving bids for surgical supplies, we develop detailed specifications of the items that vendors can offer.

d. It is illegal for a hospital to negotiate contracts with favored suppliers. e. It is helpful to develop accurate specifications, but this is not a key procurement task. ANSWER: b

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Chapter 19: Pricing Strategies 226. You are in charge of developing profit centers for a new chain of waterside resorts. These will include restaurants, spas, and marinas. To ensure the proper use of transfer pricing within the organization, the company accountant has provided a list of relevant questions for you to answer. Which of the following questions appear(s) on her list? a. What rate should be charged by restaurant cleaning crews to mop the floors in the spas?

b. Should the spas charge resort employees who use its facilities the same access fee charged to guests? c. When the restaurants rent boats for special dinners, what rental rate should be charged by the marinas? d. When resort employees eat in the restaurants, should they pay the same menu prices as guests? e. Only questions b and d appear on her list. ANSWER: a, b, c, d 227. Lenovo is developing a new tablet computer that they believe will revolutionize mobile computing. Since the company believes there is little direct competition for this new product, they plan to set a high price in comparison to other computer models. Lenovo is using a _____ pricing strategy. a. s kimming b. m arket-minus c. p enetration d. c ompetitive ANSWER: a 228. O scar Mayer has recently developed a new snack product that's targeted to kids and young adults as a healthy, protein-based after-school or pre-dinner snack. They expect the product to complement their Lunchables product line and appeal to teen-age or college-age consumers who think of Lunchables as just for younger kids. In order to promote product trial and subsequent adoption, the company plans to use a relatively low entry price compared to the competition. What type of pricing strategy does Oscar Mayer plan to utilize? a. p enetration b. e veryday low pricing c. s kimming d. c ompetitive pricing ANSWER: a

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Chapter 19: Pricing Strategies 229. Sherwin Williams develops strong relationships with contractors and facility managers to develop loyalty and encourage them to purchase a majority of their paint and supplies from the store. Sherwin Williams provides incentives to contractors and bases prices according to the volume of paint a contractor purchases within a given quarter. Sherwin Williams includes the cumulative volume purchased on each invoice so each contractor can track their purchases and estimate the amount of rebate or refund they could earn at the end of each quarter. Sherwin Williams is utilizing a(n): a. c umulative quantity discounts b. t rade discount c. p romotional allowance d. c ash discount ANSWER: a 230. Paisley Lane Soaps recently contracted with a chain of grocery stores to provide organic bar soap to the chain. These volume orders are the company's first commercial venture as they have primarily sold directly to consumers. Typically, Paisley Lane Soaps charges $6 per bar of soap but has contracted with the grocery store chain for $3.50 per bar. In addition, Paisley Lane Soaps has negotiated a 2% discount on the order if the grocery store chain pays in full within 10 days of product delivery. This practice is called: a. c ash discounts b. p romotional allowances c. n oncumulative quantity discounts d. t rade discounts ANSWER: a 231. Brenda is shopping for mouth wash and is trying to compare prices of the popular Listerine b rand to the Walgreens brand. However, the sizes of the containers are different. The Listerine brand is 48 ounces while the Walgreens brand is 74 ounces. Fortunately, shelf tags under each product display the per-ounce price so that Brenda can easily determine which product is less expensive. What type of pricing is included on the shelf tag? a. u nit pricing b. o dd pricing c. e ven pricing d. p enetration pricing ANSWER: a

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Chapter 19: Pricing Strategies 232. Dish Network has recently advertised a bundled package of 50 channels plus Internet for $59.99 per month but in the fine print, the advertisement notes that this offer is applicable for new subscribers only. What type of pricing policy is Dish Network using with this promotion? a. p romotional pricing b. o dd pricing c. p enetration pricing d. f lexible pricing ANSWER: a 233. Price is an important indicator of quality for many consumers. a. True b. False ANSWER: True 234. Brands which are seeking to be associated with prestige and exclusivity often set higher prices. a. True b. False ANSWER: True 235. The United States Internal Revenue Service is seeking to purchase new desk-top computers for their offices in Washington, DC. They publish a request for proposals which includes the specifications they are seeking regarding the number of units, processing speed, size of hard drive space and monitor size and invite companies to submit proposals. The company with the lowest price will be awarded the contract. This is an example of a. c ompetitive bidding b. n egotiated procurement c. b lind purchasing d. g overnment bidding ANSWER: a 236. Auctions such as eBay are considered the purest form of negotiating prices. a. True b. False ANSWER: True

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Chapter 19: Pricing Strategies 237. Any part of an organization to which revenue and controllable costs can be assigned is termed a(n): a. p rofit center b. b usiness entity c. s mall business unit d. d ivision ANSWER: a 238. Companies are prohibited from charging a transfer price when moving goods between profit centers. a. True b. False ANSWER: False 239. Komatsu is a global firm known for its earth moving equipment utilized in construction. Since its products are sold around the globe, Komatsu has developed a unique approach to pricing where prices are set according to the market conditions within each geographic region. For example, an excavator might be significantly less expensive in India than in the United States in order to reflect the local marketplace conditions. What type of pricing strategy is Komatsu utilizing? a. m arket-differentiated pricing b. s tandard worldwide pricing c. d ual pricing d. c ompetitive pricing ANSWER: a 240. Every online marketer is inherently a global marketer. a. True b. False ANSWER: True 241. Kelly is planning a spring break trip and checking the prices of hotels in Daytona, Florida. She visits the website Hotels.com to do a search and is also shown prices from several other travel websites. Hotels.com is utilizing ________ to allow its online shoppers to compare prices. a. s hopbots b. r obots c. w eb crawlers d. c ookies ANSWER: a

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Chapter 19: Pricing Strategies 242. Cannibalization occurs when companies offer their products in multiple retail channels such as drug stores, convenience stores, grocery stores and discount stores. a. True b. False ANSWER: False

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