TEST BANK for Marketing An Introduction, 15th edition By Gary Armstrong, Philip Kotler

TEST Bank For Geoff Malleck

Marketing Seventh Canadian Edition Gary Armstrong Philip Kotler Valerie Trifts

Table of Contents CHAPTER 1

Marketing: Creating Customer Value and Engagement ............................

CHAPTER 2

Company and Marketing Strategy: Partnering to Build Customer Engagement, Value, and Relationships .....................................................

CHAPTER 3

Analyzing the Marketing Environment .....................................................

CHAPTER 4

Managing Marketing Information to Gain Customer Insights ..................

CHAPTER 5

Understanding Consumer and Business Buyer Behaviour ........................

CHAPTER 6

Customer Value-Driven Marketing Strategy: Creating Value for Target Customers ..................................................................................................

CHAPTER 7

Products, Services, and Brands: Building Customer Value .......................

CHAPTER 8

Developing New Products and Managing the Product Life Cycle ............

CHAPTER 9

Pricing: Understanding and Capturing Customer Value ...........................

CHAPTER 10 Marketing Channels: Delivering Customer Value .....................................

CHAPTER 11 Retailing and Wholesaling .........................................................................

CHAPTER 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations ..................................................................................

CHAPTER 13 Personal Selling and Sales Promotion .......................................................

CHAPTER 14 Direct, Online, Social Media, and Mobile Marketing ...............................

CHAPTER 15 The Global Marketplace ............................................................................

CHAPTER 16 Sustainable Marketing: Social Responsibility and Ethics .........................

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Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 1 Marketing: Creating Customer Value and Engagement 1) Marketing, more than any other business function, deals with ________.

A) customers B) sales C) advertising D) new products E) brands Answer: A Diff: 1 Type: MC LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Application of knowledge 2) Amazon, like many other successful companies, is driven by one primary objective, namely ________.

A) value creation for the customers.

B) providing shareholders with healthy returns on their investments.

C) acquiring companies in order to add to its many product offerings.

D) fast and reliable delivery.

E) acquiring market share from industry leader, Walmart.

Answer: A Diff: 1 Type: MC LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Application of knowledge 3) According to the five-step model of the marketing process, the first step in marketing is ________.

A) capturing value from customers to create profits and customer equity B) constructing an integrated marketing program that delivers superior value C) engaging customers, building profitable relationships, and creating customer delight D) understanding the marketplace and customer needs and wants E) designing a customer-driven marketing strategy Answer: D Diff: 2 Type: MC LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking

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4) In recent years marketers have leveraged various forms of social media and other technologies to advance their primary goal of ________.

A) gaining favourable media attention B) being better able to reach the customer directly, personally and interactively C) gathering more sales data (big data) D) finding less expensive ways to operate thus driving higher levels of profitability.

E) faster product development Answer: B Diff: 2 Type: MC LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 5) Management guru Peter Drucker stated, "The aim of marketing is to make selling unnecessary."

Answer: TRUE Diff: 1 Type: TF LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 6) What is marketing? Briefly describe the marketing process.

Answer: Marketing can be defined as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The marketing process consists of five steps. In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value. By creating value for consumers, they in turn capture value from consumers in the form of sales, profits, and long-term customer equity.

Diff: 2 Type: ES LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 7) As described in the text, both Airbnb and Target's CEO's share a practice that they believe makes them more capable leaders of their company. This practice involves more frequent ________.

A) interviews with the media (Fortune Magazine, Wall Street Journal) B) blog posts on how to run a company (Jeff Bullas, James Altucher) C) visits to their locations (AirBnb hosts and Target stores) D) personal vacations to ensure they get rested while enjoying time away from their role E) isolation from the market in order to make more refined decisions Answer: C Diff: 2 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking

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8) ________ are defined as states of felt deprivation.

A) Needs B) Ideas C) Demands D) Values E) Exchanges Answer: A Diff: 1 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 9) ________ are the form human needs take as they are shaped by culture and individual personality.

A) Wants B) Necessities C) Services D) Benefits E) Risks Answer: A Diff: 1 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 10) Consumers' needs and wants are fulfilled through ________.

A) value B) demand C) desire D) market offerings E) ideas Answer: D Diff: 1 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking

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11) Abel now has the buying power to purchase the computer that he wanted to buy six months ago. Abel's want has most likely become a ________.

A) need B) value C) demand D) market offering E) desire Answer: C Diff: 3 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 12) Canadian telecommunications giant BELL has committed resources to continue its annual, "Let's Talk" day to promote greater awareness in mental health. This is an example of a marketing offering for a(n) ________.

A) product B) person C) idea D) place E) exchange Answer: C Diff: 2 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 13) Marketers are said to suffer from marketing myopia when they ignore underlying consumer needs and focus excessively on ________.

A) consumers' brand experiences B) competitors' threats C) consumers' existing wants D) competitors' strengths E) consumers' future demands Answer: C Diff: 2 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Application of knowledge

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14) The Walt Disney World Resort doesn't just offer amusement park rides, it uses its famed Disney magic to create carefully orchestrated ________.

A) service offerings B) benefits C) wants D) values E) experiences Answer: E Diff: 2 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 15) When considering the factors that influence the experience of the Walt Disney World Resort, something as simple as how each employee is identified makes a difference. At Disney World, employees are called ________.

A) Superstars B) Mickey's Crew C) Precious Jewels D) Mickey's Mouseketeers E) Cast Members Answer: E Diff: 1 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Application of knowledge 16) ________ is the act of obtaining a desired object from someone by offering something in return.

A) Targeting B) Segmentation C) Differentiation D) Exchange E) Positioning Answer: D Diff: 1 Type: MC LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking

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17) Market offerings are limited to physical products.

Answer: FALSE Diff: 1 Type: TF LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Application of knowledge 18) Market offerings include entities such as people, places, information, and ideas.

Answer: TRUE Diff: 2 Type: TF LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 19) When sellers pay less attention to the specific products they offer and more attention to the benefits and experiences produced by these products, they suffer from marketing myopia.

Answer: FALSE Diff: 2 Type: TF LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Application of knowledge 20) A greater focus on underlying customer needs than on existing customer wants leads to marketing myopia.

Answer: FALSE Diff: 2 Type: TF LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Application of knowledge 21) A market is a segment of potential consumers who share a common need or want.

Answer: TRUE Diff: 1 Type: TF LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking

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22) Describe how the Loblaws clothing brand, Joe Fresh, differentiates itself from other clothing labels.

Answer: By selling Joe Fresh in Loblaw brand stores (Superstore, Zehrs, ValueMart etc), Loblaws took advantage of its strong brand presence and the large number of stores to enable Joe Fresh to be highly accessible and visible. While it may appear a challenge to sell clothing in a grocery store, Loblaw's marketing strategy leveraged location as a key differentiator. People frequent their stores, so Joe Fresh remains front of mind. In order to succeed, Loblaws has to offer frequent product rotations (regular updates of new products on shelves). The company hired famous Canadian fashion designer Joe Mimran to advance the perception that Joe Fresh carries current fashions. Joe Fresh is considered a key part of fashion week activities.

Compared to competing brands, Loblaws offers lower prices for up-to-date fashions.

Diff: 2 Type: ES LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 23) Using suitable examples, briefly compare and contrast the concepts of needs, wants, and demands. Discuss how these concepts relate to marketing practices.

Answer: Human needs are states of felt deprivation. Needs are part of the human make-up; they are not created by external forces. Humans have a basic physical need for food, clothing, warmth, and safety, a basic social need for belonging and affection, and a basic individual need for knowledge and self-expression. Unlike needs, wants are not innate. Instead, wants are needs shaped by culture, society, and individual personality. For example, someone needs food, wants a Big Mac and soft drink, and demands lunch at McDonalds. Wants become demands when they are backed by consumers' buying power. Marketers conduct extensive research to understand customers' needs, wants, and demands. They then attempt to fulfill customers' needs, wants, and demands through their market offerings.

Diff: 3 Type: ES LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking

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24) Explain market offerings and marketing myopia.

Answer: Consumers' needs and wants are fulfilled through market offerings — some combination of products, services, information, or experiences offered to a market to satisfy a need or a want. Market offerings are not limited to physical products. They also include services — activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, airline, hotel, retailing, and home repair services. More broadly, market offerings also include other entities, such as persons, places, organizations, information, and ideas. Many sellers make the mistake of paying more attention to the specific products they offer than to the benefits and experiences produced by these products.

These sellers suffer from marketing myopia. They are so taken with their products that they focus only on existing wants and lose sight of underlying customer needs. They forget that a product is only a tool to solve a consumer problem. A manufacturer of quarter-inch drill bits may think that the customer needs a drill bit but what the customer really needs is a quarter-inch hole.

These sellers will have trouble if a new product comes along that serves the customer's need better or less expensively. The customer will have the same need but will want the new product.

Diff: 2 Type: ES LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Application of knowledge 25) ________ is the art and science of choosing target markets and building profitable relationships with them.

A) Differentiation B) Marketing management C) Positioning D) Segmentation E) Customer-perceived value Answer: B Diff: 1 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 26) Rather than assume that each client has the same needs, a travel agency that understands marketing creates separate departments; one dedicated to retirees, another to the business traveler, a third department concentrates on student travel and the fourth department focusing on families. This is an example of a firm that has considered ________.

A) mass customization B) cost leadership C) positioning D) market Segmentation E) value engineering Answer: D Diff: 1 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 8 © 2021 Pearson Canada Inc.

27) Dollarama profitably appeals to families with more modest means. The retailer's approach is most likely referred to as ________.

A) mass distribution B) cost leadership C) consumer-generated marketing D) target marketing E) undifferentiated marketing Answer: D Diff: 3 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 28) A brand's ________ is the set of benefits that it promises to deliver to consumers to satisfy their needs.

A) dominant effect B) fringe benefit C) perquisite D) value proposition E) dividend yield Answer: D Diff: 1 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 29) British Columbia-based Flair Airlines gives you "Canada's ticket to ultra-low airfares" is their ________.

A) value proposition B) segmentation strategy C) market offering D) selling concept E) production concept Answer: A Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking

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30) Which of the following marketing management orientations may yield the unintended consequence of aggressive selling by creating short term sales transactions rather than on building long-term relationships?

A) marketing concept B) product concept C) selling concept D) direct marketing concept E) production concept Answer: C Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 31) PC manufacturer, Lenovo, focuses on low labour costs and mass distribution to ensure the continuous availability of its products at reasonable prices. Lenovo most likely follows the ________.

A) customer-driving marketing concept B) marketing concept C) societal marketing concept D) production concept E) selling concept Answer: D Diff: 3 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 32) Henry Ford's philosophy was to perfect the Model-T so that its cost could be reduced further for increased consumer affordability. This most likely reflects the ________.

A) customer-driving marketing concept B) marketing concept C) societal marketing concept D) production concept E) selling concept Answer: D Diff: 3 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking

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33) The selling concept holds that ________.

A) consumers will not buy enough of a firm's products unless the firm undertakes large-scale persuasion and promotion efforts B) a company's marketing decisions should consider consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests C) consumers will only favour products that are available and highly affordable D) achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do E) consumers will favour products that offer the most in quality, performance, and innovative features Answer: A Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 34) Which of the following is a difference between the marketing concept and the selling concept?

A) The marketing concept focuses on customer needs, whereas the selling concept focuses on existing products.

B) The marketing concept focuses on customer conquest, whereas the selling concept focuses on targeting the right customers.

C) The marketing concept takes an inside-out perspective, whereas the selling concept takes an outside-in perspective.

D) The marketing concept is product-centered, whereas the selling concept is productioncentered.

E) The marketing concept focuses on short-term sales, whereas the selling concept strives to build long-term customer relationships.

Answer: A Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 35) The ________ concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

A) marketing B) product C) production D) selling E) societal marketing Answer: A Diff: 1 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 11 © 2021 Pearson Canada Inc.

36) Mountain Equipment Co-op (MEC) lives by a long-standing belief in being socially and environmentally accountable. This most likely reflects the ________.

A) Societal Marketing Concept B) Selling Concept C) Marketing Concept D) Product Concept E) Production Concept Answer: A Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Application of knowledge 37) Customer-driven marketing is most effective when ________.

A) a clear need exists among customers, but the need is difficult to identify B) customers do not know what they want but are easily persuaded C) customers seek new products and technological innovations D) clear needs exist and customers know what they want E) customers have wants but cannot afford them Answer: D Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Reflective thinking 38) L.L. Bean, the outdoor apparel retailer was founded on the principle of ________.

A) low cost products B) environmental stewardship C) trend setting outdoor fashion D) customer satisfaction E) customer relationship management Answer: D Diff: 1 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking

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39) The ABC, a leading provider of personal computer systems, began manufacturing tablet devices after predicting a future consumer need for portability. Which of the following was most likely implemented by the ABC company?

A) the selling concept B) customer-driving marketing C) the product concept D) sustainable marketing E) the production concept Answer: B Diff: 3 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 40) The societal marketing concept holds that ________.

A) consumers will not buy enough of a firm's products unless the firm undertakes a large-scale selling and promotion effort B) a company's marketing decisions should focus on creating economic value in a way that also creates value for the surrounding environment C) the society will only favour products that are available and highly affordable D) achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do E) consumers will favour products that offer the most in quality, performance, and innovative features Answer: B Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 41) Many leading business and marketing thinkers are now preaching the concept of "shared value" which recognizes that ________ needs, not just economic needs, define markets.

A) functional B) marketing C) individual D) societal E) physical Answer: D Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking; Ethical understanding and reasoning

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42) Which of the following concepts calls for sustainable marketing?

A) the societal marketing concept B) the marketing concept C) the selling concept D) the production concept E) the product concept Answer: A Diff: 1 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking; Ethical understanding and reasoning 43) Cosmetic retailer Lush knows that doing what's right benefits both customers and the company. Their premium beauty products are made by hand from the freshest possible natural ingredients. This is an example of the ________ concept.

A) marketing B) product C) production D) societal marketing E) selling Answer: D Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking; Ethical understanding and reasoning 44) ________ marketing is defined as socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs.

A) Customer-driven B) Mass C) Sustainable D) Customer-driving E) Ambush Answer: C Diff: 2 Type: MC LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking; Ethical understanding and reasoning 45) The product concept is a customer-centered, sense-and-respond philosophy.

Answer: FALSE Diff: 1 Type: TF LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 14 © 2021 Pearson Canada Inc.

46) A brand's value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs.

Answer: TRUE Diff: 1 Type: TF LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Application of knowledge 47) The selling concept holds that consumers will favour products that offer the most in quality, performance, and innovative features.

Answer: FALSE Diff: 1 Type: TF LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 48) Xenon Corp. releases frequent updates to improve its expensive software products. This marketing approach used by the firm is most likely based on the production concept.

Answer: FALSE Diff: 2 Type: TF LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 49) Organizations that follow the production concept most likely practice socially and environmentally responsible marketing.

Answer: FALSE Diff: 2 Type: TF LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 50) Product, price, place, and promotion make up the elements of a firm's marketing mix.

Answer: TRUE Diff: 1 Type: TF LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking

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51) Why do companies generally divide a market into segments of customers?

Answer: A company decides whom it will serve by dividing the market into segments of customers and selecting which segments it will go after. Some people think of marketing management as finding as many customers as possible and increasing demand. But marketing managers know that they cannot serve all customers in every way. By trying to serve all customers, they may not serve any customer well. Hence, companies usually want to select only customers that they can serve well and profitably. Ultimately, marketing managers must decide which customers they want to target and on the level, timing, and nature of their demand.

Diff: 2 Type: ES LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Application of knowledge 52) Compare and contrast the product and production concepts.

Answer: The production concept holds that consumers will favour products that are available and highly affordable. Therefore, it dictates that management should focus on improving production and distribution efficiency. This concept is one of the oldest orientations that guides sellers. The production concept is still a useful philosophy in some situations. For example, both personal computer maker Lenovo and home appliance maker Haier dominate the highly competitive, price-sensitive Chinese market through low labour costs, high production efficiency, and mass distribution. However, although useful in some situations, the production concept can lead to marketing myopia. Companies adopting this orientation run a major risk of focusing too narrowly on their own operations and losing sight of the real objective — satisfying customer needs and building customer relationships. The product concept holds that consumers will favour products that offer the most in quality, performance, and innovative features. Under this concept, marketing strategy focuses on making continuous product improvements. Product quality and improvement are important parts of most marketing strategies. However, focusing only on products can also lead to marketing myopia. For example, manufacturers of mousetraps might believe that if they can build a better mousetrap, their profits will soar but they are often rudely shocked. Buyers may be looking for a better solution to a mouse problem but not necessarily for a better mousetrap. The better solution might be a chemical spray, an exterminating service, a house cat, or something else that suits their needs even better than a mousetrap. Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages, and prices it attractively, places it in convenient distribution channels, brings it to the attention of people who need it, and convinces buyers that it is a better product.

Diff: 3 Type: ES LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking

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53) Compare the selling and marketing concepts, and list the key components of each concept.

Answer: The selling concept reflects an inside-out perspective, while the marketing concept takes an outside-in perspective. The selling concept is typically practiced when an organization markets products or services that buyers do not normally think of purchasing, such as insurance or blood donation. Aggressive selling focuses on creating sales transaction rather than on building long-term relationships with customers, with the aim of selling what a company makes rather than making what the customer wants. The marketing concept, on the other hand, is based on identifying the needs and wants of target markets and then satisfying those needs and wants better than competitors do. Under the marketing concept, customer focus and value are the paths to sales and profits. Instead of a product-centered make-and-sell philosophy, the marketing concept is a customer-centered sense-and-respond philosophy. The job is not to find the right customers for a product but to find the right products for customers.

Diff: 3 Type: ES LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Analytical thinking 54) Briefly explain the societal marketing concept.

Answer: The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare.

Is a firm that satisfies the immediate needs and wants of target markets always doing what's best for its consumers in the long run? The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer's and society's well-being. It calls for sustainable marketing, socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Companies like GE, Dow, Google, IBM, and Nestle are concerned not just with short-term economic gains, but with the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, and the economic well-being of the communities in which they produce and sell.

Diff: 2 Type: ES LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

AACSB: Ethical understanding and reasoning 55) The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction is referred to as ________.

A) perceived-value management B) societal marketing C) customer relationship management D) partner relationship management E) enterprise resource planning Answer: C Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 17 © 2021 Pearson Canada Inc.

56) Which of the following terms refers to a customer's evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers?

A) customer-perceived value B) customer equity C) share of customer D) customer profitability E) customer lifetime value Answer: A Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 57) A Steinway piano—any Steinway piano—costs a lot. But to those who own one, a Steinway is a great value. This is an example of ________.

A) share of customer B) customer perceived value C) customer share D) customer lifetime value E) customer experience Answer: B Diff: 3 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 58) Ritz-Carlton is fervently dedicated to anticipating customers' slightest needs. Without ever asking, they seem to know when customers want a king-size bed, non-allergenic pillow, extra body gel, or the blinds open upon arrival. An amazing 95 percent of departing guests report that their stay has been a truly memorable experience. This is an example of ________.

A) customer delight B) customer lifetime value C) customer equity D) customer share E) customer-perceived value Answer: A Diff: 3 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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59) Customer evangelists are those who ________.

A) use personal selling methods to market products and services B) spread the word about their good experiences with a brand or product C) use their expertise to influence people about specific products D) work with quality-assurance teams to improve product safety E) evaluate newly launched products in the marketplace Answer: B Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 60) In which of the following circumstances is an organization likely to engage in full partnerships with key consumers?

A) when the market has few customers and high margins B) when the market has a huge number of customers C) when the firm has a frequency marketing program D) when the firm has a large number of low-margin customers E) when the firm has few marketing resources at its disposal Answer: A Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Reflective thinking 61) Procter & Gamble's Tide detergent does not attempt to get to know customers personally.

Instead, Tide creates engagement and relationships through brand-building advertising, websites, and social media presence. Which of the following types of associations would be most profitable for the firm to develop with these customers?

A) full partnerships B) basic relationships C) joint ventures D) strategic alliances E) business partnering Answer: B Diff: 3 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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62) Rather than using hard-sell product pitches, Bark uses social media to share original comedic videos and stories- often without even mentioning their product- BarkBox. This is an example of ________.

A) public relations B) soft-sell marketing C) engagement marketing D) intense social media blitzing E) societal marketing Answer: C Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 63) Which of the following is an example of consumer-generated marketing?

A) Cristal, a jewellery store, uses its page on Facebook to provide information about its upcoming products to its customers.

B) Figa, a leading provider of athletic shoes, helps its customers customize their shoes on its website and choose personalized settings.

C) Fun & Run, a local amusement park, promotes its services by allowing consumers to upload videos and write reviews about the park.

D) Barton's, a local pet supply store, rewards frequent buyers with vouchers and exclusive offers.

E) Energix, a manufacturer of soft drinks, attracts customers through televised advertisements.

Answer: C Diff: 3 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 64) Companies that invite consumers play a role in shaping ads and social media (Tesla) or by offering suggestions for product design (Oreo's, Mountain Dew) are leveraging what increasingly popular marketing approach?

A) direct marketing B) low cost marketing campaign development C) process marketing D) engagement marketing E) consumer-generated marketing Answer: E Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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65) ________ refers to working closely with people inside and outside the company to jointly bring more value to customers.

A) Demand management B) Customer-generated marketing C) Integrated communication D) Partner relationship management E) Channel value proposition Answer: D Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 66) ________ refers to a channel stretching from raw materials to components to final products that are carried to final buyers.

A) A supply chain B) A marketing channel C) A market segment D) A demand chain E) A marketing-mix channel Answer: A Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 67) The final step in the marketing process is ________.

A) capturing value from customers B) constructing an integrated marketing program C) building profitable relationships with the customers D) understanding the marketplace E) designing a customer-driven marketing strategy Answer: A Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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68) Stew Leonard's has created what has been the "Disneyland of Dairy Stores," complete with costumed characters, scheduled entertainment, and a petting zoo. It's built 30 additions onto the original store, which now serves more than 300,000 customers each week. This legion of loyal shoppers is largely a result of the store's passionate approach to customer service. Instead of focusing on individual transactions, Stew and his staff are putting a priority on ________.

A) decreasing customer-perceived value B) managing partner relationships C) attracting "butterflies" D) converting "strangers" into "butterflies" E) capturing customer lifetime value Answer: E Diff: 3 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 69) ________ refers to the portion of the customer's purchase that a company gets in its product categories.

A) Value proposition B) Share of customer C) Brand equity D) Customer lifetime value E) Customer equity Answer: B Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 70) ________ is the total combined customer lifetime values of all the company's current and potential customers.

A) Share of customer B) Value proposition C) Customer equity D) Market share E) Customer-perceived value Answer: C Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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71) The ultimate aim of customer relationship management is to ________.

A) produce high customer equity B) divide markets into distinct segments C) evaluate customer lifetime value D) turn "strangers" into "butterflies" E) evaluate current sales share Answer: A Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 72) In which of the following customer relationship groups do organizations generally avoid investing?

A) barnacles B) strangers C) butterflies D) true believers E) true friends Answer: B Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 73) A consumer who is potentially profitable but not loyal to a firm's offerings is referred to as a ________.

A) true friend B) butterfly C) stranger D) barnacle E) true believer Answer: B Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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74) ________ are customers who show low potential profitability and little projected loyalty.

A) True friends B) Barnacles C) Strangers D) True believers E) Butterflies Answer: C Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 75) A customer who is both loyal and profitable is referred to as a ________.

A) barnacle B) stranger C) true believer D) laggard E) butterfly Answer: C Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 76) Amazon Prime strives to convert casual shoppers into loyal customers. An Amazon Prime customer can be classified as a ________.

A) barnacle B) true believer C) stranger D) laggard E) butterfly Answer: B Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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77) Efforts to convert ________ into loyal customers are rarely successful.

A) barnacles B) strangers C) true believers D) laggards E) butterflies Answer: E Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 78) Customers who are classified as true believers ________.

A) are attracted to a company's competitor's deals and offers B) have needs and wants that do not fit a company's offerings C) are not very profitable for a company D) tell others about their good experiences with a company E) are projected to be less loyal to any brand Answer: D Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 79) Carla, a team leader in charge of customer relationship management, is planning strategies to improve the profitability of her firm's least profitable but loyal customers. She is also examining methods for "firing" customers in this group who cannot be made profitable. To which of the following customer relationship groups do these customers belong?

A) butterflies B) true friends C) strangers D) barnacles E) innovators Answer: D Diff: 3 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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80) Various government agencies have launched campaigns to encourage energy conservation and concern for the environment as well as discourage smoking, illegal drug use, and obesity.

This illustrates ________ marketing.

A) ambush B) social C) for-profit D) consumer-generated E) multi-level Answer: B Diff: 3 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking; Ethical understanding and reasoning 81) ________ marketing is perhaps the fastest-growing marketing platform.

A) Online B) Social media C) Mobile D) Website E) Blog Answer: C Diff: 1 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 82) Which of the following transforms marketing strategies into real values for consumers?

A) share of customer B) customer equity C) the four Ps of marketing D) a firm's value proposition E) customer satisfaction surveys Answer: C Diff: 2 Type: MC LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 83) Companies like Coca-Cola and Facebook deliver customer satisfaction by spreading happiness and connecting individuals through shared experiences.

Answer: TRUE Diff: 1 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge

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84) The more loyal a firm's profitable customers, the lower its customer equity.

Answer: FALSE Diff: 1 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 85) In markets with few customers and high margins, sellers should try to develop basic relationships rather than full partnerships.

Answer: FALSE Diff: 2 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 86) The Internet of Things (IoT) is a global environment where everything and everyone is digitally connected to everything and everyone else.

Answer: TRUE Diff: 2 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 87) Through consumer-generated marketing, consumers themselves are playing a bigger role in shaping their own brand experiences and those of others.

Answer: TRUE Diff: 1 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Application of knowledge 88) Success at delivering customer value rests on how well a company's entire supply chain performs against competitors' supply chains.

Answer: TRUE Diff: 1 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Reflective thinking 89) Customer equity is a measure of the past value of a company's customer base.

Answer: FALSE Diff: 2 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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90) In the final step of a marketing process, a company reaps the rewards of its strong customer relationships by capturing value from customers.

Answer: TRUE Diff: 2 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 91) Customer-perceived value is defined as a customer's evaluation of the perceived difference between all the benefits and all the costs of a market offering relative to those of competing offers.

Answer: TRUE Diff: 2 Type: TF LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 92) The aim of customer relationship management is to create not just customer satisfaction, but customer delight as well. Explain.

Answer: Customer satisfaction cannot be taken for granted. Since brand loyalty is dependent upon strong customer satisfaction, companies strive to retain, satisfy, and even delight current customers. Firms create customer delight by promising only what they can deliver and then delivering more than what they promise. They also create emotional relationships with key customers. Delighted customers make repeated purchases and become customers for life. More importantly, they also essentially become an unpaid sales force for the firm as "customer evangelists" who tell other potential customers about their positive experiences with a product.

Diff: 2 Type: ES LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

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93) Explain, with examples, the different types of relationships that a company can build with its customers.

Answer: At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. For example, Proctor & Gamble's Tide does not phone or call on all of its consumers to get to know them personally. Instead, it creates relationships through brand-building advertising, public relations, and social media presence. At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with key customers. For example, P&G sales representatives work closely with Walmart, Kroger, and other large retailers that sell Tide. In between these two extremes, other levels of customer relationships are appropriate. Beyond offering consistently high value and satisfaction, marketers can use specific marketing tools to develop stronger bonds with customers. For example, many companies offer frequency marketing programs that reward customers who buy frequently or in large amounts. Airlines offer frequent-flyer programs, hotels give room upgrades to their frequent guests, and supermarkets give patronage discounts to "very important customers." Other companies sponsor club marketing programs that offer members special benefits and create member communities.

Diff: 2 Type: ES LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 94) Compare and contrast customer-managed relationships and consumer-generated marketing.

Answer: Today's consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers. Thus, the marketing world is now embracing not only customer relationship management, but also customer-managed relationships. Greater consumer control means that companies can no longer rely on marketing by intrusion. Instead, marketers must practice marketing by attraction — creating market offerings and messages that involve consumers rather than interrupt them.

Hence, most marketers now augment their mass-media marketing efforts with a rich mix of direct marketing approaches that promote brand-consumer interaction. For example, many brands are creating dialogues with consumers via their own or existing online social networks.

A growing part of the new customer dialogue is consumer-generated marketing, by which consumers themselves are playing a bigger role in shaping their own brand experiences and those of others. This might happen through uninvited consumer-to-consumer exchanges in blogs, video-sharing sites, and other digital forums. Increasingly, companies are also inviting consumers to play a more active role in shaping products and brand messages. One drawback of this process is that harnessing consumer-generated content can be time-consuming and expensive.

Diff: 2 Type: ES LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

29 © 2021 Pearson Canada Inc.

95) Define customer equity and explain why it is important to a company.

Answer: Customer equity is the sum of the lifetime values of all the current and potential customers of a company. Customer equity is dependent upon customer loyalty from a firm's profitable customers. Because customer equity is a reflection of a company's future, companies must manage it carefully, viewing customers as assets that need to be maximized. It is important that companies not only acquire customers but also keep and grow them. When companies create profitable customers, they earn a greater share of their purchases, and capture their customer lifetime value.

Diff: 1 Type: ES LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking 96) Describe and compare the four types of customers classified by their potential profitability to an organization. Identify how an organization should manage each type of customer.

Answer: The four types of customers are strangers, butterflies, true friends, and barnacles.

1. "Strangers" have low potential profitability and loyalty. A company's offerings do not fit well with a stranger's wants and demands. Companies should not invest in building a relationship with this type of customers.

2. Another type of customer in which a company should not invest is the "barnacle." Barnacles are highly loyal but not very profitable because there is a limited fit between their needs and the company's offerings. The company might be able to improve barnacles' profitability by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be "fired."

3. Like strangers, "butterflies" are not loyal. However, they are potentially profitable because there is a good fit between the company's offerings and their needs. Like real butterflies, this type of customer will come and go without becoming a permanent, loyal consumer of a company's products. Companies should create satisfying and profitable transactions with them, and then cease investing in them until the next time around.

4. The final type of customers is "true friends." They are both profitable and loyal. There is a strong fit between their needs and the company's offerings, so the company should make continuous relationship investments in an effort to go beyond satisfying and to delight these customers. A company should try to delight true friends so that they will tell others about their good experiences with the company.

Diff: 3 Type: ES LO: 1-4: Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

AACSB: Analytical thinking

30 © 2021 Pearson Canada Inc.

97) Which of the following marketing tools is NOT used for digital and social media marketing?

A) websites B) social media C) mobile ads and apps D) online video E) telemarketing Answer: E Diff: 1 Type: MC LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking 98) Today, almost every company, large or small, is touched in some way by global competition.

Answer: TRUE Diff: 1 Type: TF LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Application of knowledge 99) Discuss the opportunities and challenges that new communication technologies have created for marketers.

Answer: Through the Internet and related technologies, people can now interact in direct and surprisingly personal ways with large groups of others, from neighbours within a local community to people across the world. With communication technologies such as e-mail, blogs, websites, online communities, online social networks, and Twitter, today's marketers incorporate interactive approaches that help build targeted, two-way customer relationships. Marketers can create deeper consumer involvement and a sense of community surrounding a brand, making a brand a meaningful part of consumers' conversations and lives. However, while new communication tools create relationship-building opportunities for marketers, they also create challenges. They give consumers a greater voice, and therefore greater power and control in the marketplace. Today's consumers have more information about brands than ever before, and they have a wealth of platforms for airing and sharing their brand views with other consumers.

Diff: 3 Type: ES LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Information technology

31 © 2021 Pearson Canada Inc.

100) Explain how the Internet has transformed the way in which we do business today.

Answer: The Internet links individuals and businesses of all types to each other. The Internet allows firms access to exciting new market spaces. The consumer love affair with digital and mobile technology makes it fertile ground for marketers trying to engage customers. Digital and social media marketing involves using digital marketing tools such as websites, social media, mobile ads and apps, online video, e-mail, blogs, and other digital platforms that engage consumers anywhere, anytime via their computers, smartphones, tablets, Internet-ready TVs, and other digital devices. At the most basic level, marketers set up company and brand websites that provide information and promote the company's products. Many of these sites also serve as online brand communities, where customers can congregate and exchange brand-related interests and information. The social media provide exciting opportunities to extend customer engagement and get people talking about a brand. Most companies now use social media as part of their marketing mixes. Mobile marketing is perhaps the fastest-growing digital marketing platform.

Smartphones are ever-present, always on, finely targeted, and highly personal. This makes them ideal for engaging customers anytime, anywhere as they move through the buying process. For example, Starbucks customers can use their mobile devices for everything from finding the nearest Starbucks and learning about new products to placing and paying for orders.

Diff: 3 Type: ES LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Information technology

32 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Engagement, Value, and Relationships 1) Which of the following is true of strategic planning in a firm?

A) It deals with maintaining the company's current business ventures.

B) It focuses on the firm's internal environment rather than the external environment.

C) It occurs at the business-unit, product, and market levels rather than at the corporate level.

D) It deals with adapting the firm to take advantage of changing marketing opportunities.

E) It involves preparing short-term investment objectives at the product level.

Answer: D Diff: 2 Type: MC LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Analytical thinking 2) Cosmetics firm SatinSilk is revamping its mission statement and advertising strategy. The CEO stresses that the new mission statement should be market-oriented rather than productoriented. Which of the following mission statements will best suit the company?

A) to create the best possible products and sell them at the best possible prices B) to sell hypoallergenic cosmetics products made only from the finest organic ingredients C) to give customers the complexion they dream about by providing products suited to their needs D) to become a market leader in every cosmetics product category E) to increase our market share in the cosmetics segment and increase profit margins Answer: C Diff: 2 Type: MC LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Analytical thinking 3) A ________ is purposeful, specifying what an organization wants to accomplish in the larger environment.

A) marketing strategy B) marketing objective C) strategic plan D) mission statement E) market portfolio Answer: D Diff: 1 Type: MC LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Analytical thinking

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4) As identified in the text, what is the Starbucks mission statement?

A) Increase sales at every store by offering new products and lower prices to aggressively gain market share B) Growing profits by opening new and different stores in more locations throughout the world.

C) To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.

D) Offering the most delicious, ethically sourced coffee and serve it in with tasty food.

E) Starbucks does not believe in a mission statement as it restricts growth and limits opportunities Answer: C Diff: 2 Type: MC LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Application of knowledge 5) Strategic planning defined: The process of developing and maintaining a strategic fit between the organization's goals and capabilities and its changing marking opportunities.

Answer: TRUE Diff: 2 Type: TF LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Application of knowledge 6) An organization's mission statement should emphasize its intentions toward customers and the customer experience the organization seeks to create.

Answer: TRUE Diff: 2 Type: TF LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Application of knowledge 7) "At Dodson, we sell shoes" is a market-oriented business definition.

Answer: FALSE Diff: 2 Type: TF LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Analytical thinking 8) "At CL Online, we create customer connectivity, anytime, anywhere" is a product-oriented mission statement.

Answer: FALSE Diff: 2 Type: TF LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Analytical thinking

2 © 2021 Pearson Canada Inc.

9) Business portfolio analysis is defined as the process in which management ________.

A) studies the products and strategies of competitors to improve the company's own products B) analyzes consumer feedback in order to better position the company's brand image C) assesses the attractiveness of an SBU's market and the strength of its position in the market D) segments the company's markets to reach target consumers effectively E) conducts marketing research to evaluate the company's marketing strategy Answer: C Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 10) After reviewing the case in the text, the carefully crafted mission statement for Airbnb was presented as ________.

A) belong anywhere.

B) cheap rooms around the world making travel affordable.

C) connecting hosts with guests.

D) travel adventure defined.

E) we are not a hotel.

Answer: A Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 11) The two dimensions the BCG approach uses to evaluate and manage SBUs are ________.

A) market growth rate and relative market share B) market growth rate and market penetration C) market growth rate and market development D) relative market share and product development E) relative market share and market penetration Answer: A Diff: 1 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 12) According to the BCG matrix, products or businesses with a high market share in a highgrowth market are classified as ________.

A) stars B) cash cows C) question marks D) dogs E) heroes Answer: A Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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13) In the BCG growth-share matrix, question marks refer to products or businesses with a ________.

A) low market share in a niche market B) low market share in a market with high growth prospects C) greater market share than all their competitors combined in a saturated market D) high market share in a market with a high growth rate E) low market share in a market that is set to shrink significantly Answer: B Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 14) In the BCG matrix, ________ refer to low-growth, high-share businesses or products.

A) stars B) cash cows C) question marks D) dogs E) heroes Answer: B Diff: 1 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 15) Omni Healthcare's analgesic drug Cetaprin has a 40 percent share in the analgesics market in the country of Terrania. Its closest competitor, Febex, has a 25 percent share in the market, while four other analgesic brands split the remainder. Which statement indicates that Cetaprin is a cash cow according to the BCG matrix?

A) Omni Healthcare often takes money from other strategic business units to support Cetaprin.

B) A customer survey shows that Cetaprin users do not prefer it to other analgesics in the market.

C) The demand for analgesic drugs in the Terrania market is expected to maintain a low-growth, high-share status D) Febex is rapidly gaining market share over Cetaprin due to aggressive marketing efforts.

E) The Terrania market for healthcare products is expanding rapidly.

Answer: C Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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16) Due to the limitations of the BCG and other formal portfolio planning models, many companies are placing responsibility for strategic planning in the hands of cross-functional teams of divisional managers who are close to their markets. In such organizations, strategic planning is ________.

A) centralized B) decentralized C) purposeful D) limited E) informal Answer: B Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 17) When Howard Schultz returned to assume leaderships at Starbucks in 2007, the company's average transactions per store fell and same-store growth slowed. This was happening despite continued strong growth in the industry. According to the BCG model, Starbucks was a ________.

A) question mark B) dog C) cash cow D) star E) hero Answer: A Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 18) Vertigo is an electronics company. According to the BCG matrix, which of the following products of Vertigo would most likely classify as a question mark?

A) Blue–a cell phone that is designed for music lovers and has a very low market share in a market that is growing steadily B) Electra–a home entertainment system that has a strong market share in a market that is likely to expand in the future C) Kindle Fire–a children's iPad that has a high market share in a market that is not expected to grow significantly D) SpinDrive–a car audio system that has a high market share in a market that has been growing constantly E) SoLo–a CD player that has a very low market share in a market that is shrinking rapidly Answer: A Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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19) According to the BCG matrix, products or businesses with a low share of market in a highgrowth industry are considered ________.

A) dogs B) cash cows C) value chains D) stars E) question marks Answer: A Diff: 1 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 20) Which of the following statements is true in the context of the BCG growth-share matrix?

A) Stars often need heavy investment to finance their rapid growth in a market.

B) The positions of SBUs in the growth-share matrix rarely change over time.

C) The income from one SBU cannot be used to support other business units.

D) Dogs promise to be large sources of cash.

E) Cash cows typically turn into stars.

Answer: A Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 21) Most people are aware that Mars Incorporated sells popular candy products under a number of brands including M&M's, Snickers, Starburst, Wrigley, the company generates higher sales in ________ than their candy products.

A) dental care products B) pet care products and services C) Uncle Bens Rice D) Sara Lee cakes and desserts E) coffee and tea products Answer: B Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 22) ________ refers to reducing the business portfolio by abandoning products that no longer fit the company's overall strategy.

A) Market segmentation B) Vertical integration C) Product line extension D) Downsizing E) Diversification Answer: D Diff: 1 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 6 © 2021 Pearson Canada Inc.

23) Which of the following companies is using a divesting strategy?

A) Juggernaut Bikes acquires new businesses in order to increase its market share.

B) To achieve a higher market share, LBD Inc. increases investments in advertising and promotion.

C) When sales of its clothing division decline, Blackstone sells the division to a competitor.

D) Getix Computers increases the price of its products in order to maximize short-term profits.

E) Harlow's market share remains steady over two years, and the firm decides to maintain its share at the current level.

Answer: C Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 24) A strategy for company growth that involves increasing sales to current market segments without changing the product is known as ________.

A) market development B) market differentiation C) market penetration D) product development E) diversification Answer: C Diff: 1 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 25) A firm's decision to identify and develop new markets for existing products is a ________ strategy.

A) market development B) market differentiation C) market penetration D) product development E) diversification Answer: A Diff: 1 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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26) Before being acquired by Restaurant Brands International in 2014, Tim Horton's focused on different approaches to company growth. In the Product/Market Expansion Grid Tim Horton's successfully applied three of the four approaches. The fourth approach, ________, was avoided.

A) market development B) product development C) diversification D) market penetration E) product adaptation Answer: C Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 27) Under Armour increasing its advertising spending and offering an ever-increasing range of styles and colours in its original apparel line is an example of a ________ strategy.

A) market penetration B) market development C) product diversification D) business harvesting E) product development Answer: A Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 28) McDonalds is globally recognized as a restaurant chain offering a consistent experience and similar foods. Which of the following most likely indicates that McDonalds is following a diversification strategy?

A) McDonalds increases its spending on advertising and promotion.

B) McDonalds acquires another chain of fast-food restaurants.

C) McDonalds opens a restaurant in the previously untapped Bora-Bora.

D) McDonalds enters the U.S. market with a line of children's clothing.

E) McDonalds develops a new line of pizzas targeting its current market to be sold from its existing locations.

Answer: D Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

8 © 2021 Pearson Canada Inc.

29) Spin Master is a successful Canadian toy manufacturer. Which of the following indicates that the company is following a market penetration strategy?

A) It introduces a line of children's clothing in the United Kingdom.

B) It acquires toy rights for a popular cartoon character to boost its sales.

C) It introduces toy products in the Indian and Southeast Asian markets.

D) It enters the U.S. market with a line of children's clothing.

E) It develops a new line of educational software targeted at the current market.

Answer: B Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 30) Lululemon Athletic Wear is a Canadian retail success. While Lululemon has implemented several of these initiatives, which of the following initiatives indicates that the company is following a market development strategy?

A) Lululemon introduces a line of children's clothing to its current target market.

B) Lululemon employs a Ryan Reynolds for a Canadian advertising campaign.

C) Lululemon introduces its clothing and retail experience in the Indian and Southeast Asian markets.

D) Lululemon adds a line of leather purses to its offerings in the Canadian market.

E) Lululemon develops a line of athletic shoes for its current target market.

Answer: C Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 31) Starbucks is experimenting with stand-alone boutique Princi bakery stores, taking the company beyond coffee and snack shops. This is an example of ________.

A) market penetration B) market development C) downsizing D) diversification E) product development Answer: D Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge

9 © 2021 Pearson Canada Inc.

32) Both market penetration and market development strategies primarily involve ________.

A) selling the company's current products B) modifying the company's product line C) selling in new as well as existing markets D) developing new products E) leaving the current market Answer: A Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 33) Greyzone, a company that creates customized household furniture, is based in Terrania and is looking to enter other countries as well. The company identifies the country of Nyevka as a good option because the entry barriers for new companies are low in Nyevka. Which statement indicates that Greyzone follows a diversification strategy?

A) Greyzone does not modify its products for the Nyevkan market.

B) Greyzone leaves the Terranian market entirely in order to establish itself in the Nyevkan market with its current products.

C) Noting that Nyevka lacks well-established suppliers of office equipment, Greyzone begins to manufacture and supply office equipment.

D) Greyzone manufactures furniture in Terrania and ships it to Nyevka without setting up outlets in Nyevka.

E) Noting that production costs are lower in Nyevka, Greyzone shifts its production operations entirely to Nyevka.

Answer: C Diff: 3 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 34) Both product development strategies and diversification strategies involve ________.

A) selling a company's current products B) selling in a company's current market C) selling in new as well as existing markets D) developing a new product E) leaving the current market Answer: D Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

10 © 2021 Pearson Canada Inc.

35) A strategy for company growth through starting up or acquiring businesses outside the company's current products and markets is called ________.

A) vertical integration B) market development C) diversification D) market penetration E) product development Answer: C Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 36) Under Armour's recent expansion into the digital personal health and fitness tracking market through acquisitions of three fitness app companies is a ________ strategy.

A) market penetration B) market development C) downsizing D) diversification E) product development Answer: D Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 37) An SBU can be ________.

A) a company division B) a product line within a division C) a single product D) a single brand E) all of the above Answer: E Diff: 2 Type: MC LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 38) When a company chooses to harvest a particular strategic business unit, it increases shortterm cash flow despite the long-term effect.

Answer: TRUE Diff: 2 Type: TF LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

11 © 2021 Pearson Canada Inc.

39) Ford's performance against Toyota depends on the quality of Ford's overall value delivery network versus Toyota's.

Answer: TRUE Diff: 3 Type: TF LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 40) Market penetration means making fewer sales to current customers without changing original products.

Answer: FALSE Diff: 2 Type: TF LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 41) Companies must develop not only strategies for growing their business portfolios but also strategies for downsizing them.

Answer: TRUE Diff: 2 Type: TF LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 42) Marketing needs to identify, evaluate, and select market opportunities and lay down strategies for capturing them.

Answer: TRUE Diff: 2 Type: TF LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Reflective thinking 43) Many companies have dropped formal strategic planning models like the BCG because they can be difficult, time consuming, and costly to implement.

Answer: TRUE Diff: 2 Type: TF LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 44) The product/market expansion grid, like the BCG matrix, is used to identify growth opportunities.

Answer: TRUE Diff: 1 Type: TF LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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45) What is a business portfolio? How does a company typically conduct a portfolio analysis?

Answer: A business portfolio is the collection of businesses and products that make up a company. Business portfolio planning involves two steps. First, the company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment. Second, it must shape the future portfolio by developing strategies for growth and downsizing. The major activity in strategic planning is business portfolio analysis, whereby management evaluates the products and businesses that make up the company. The company will want to put strong resources into its more profitable businesses and phase down or drop its weaker ones. Management's first step is to identify the key businesses that make up the company, called strategic business units (SBUs). An SBU can be a company division, a product line within a division, or sometimes a single product or brand. The company next assesses the attractiveness of its various SBUs and decides how much support each deserves. When designing a business portfolio, it's a good idea to add and support products and businesses that fit closely with the firm's core philosophy and competencies. The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment.

Diff: 2 Type: ES LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 46) According to the Boston Consulting Group approach, how can a company classify its SBUs on a growth-share matrix?

Answer: The growth-share matrix defines four types of SBUs: 1. Stars: Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

2. Cash cows: Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay its bills and support other SBUs that need investment.

3. Question marks: Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars, and which should be phased out.

4. Dogs: Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

Diff: 2 Type: ES LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

13 © 2021 Pearson Canada Inc.

47) Should a company use the BCG matrix to classify its products or brands? Give reasons for your answer.

Answer: (Students' answers may vary. The answer given below is indicative.)

The Boston Consulting Group matrix evaluates SBUs on two important dimensions: the attractiveness of the SBU's market or industry growth rate and the strength of the SBU's position or relative market share in that market or industry. The growth-share matrix defines four types of SBUs: stars, cash cows, question marks, and dogs. Once each SBU has been defined, a company can determine what role each will play in the firm's future, using strategies of building, holding, harvesting, or divesting each SBU. However, the BCG and other portfolio planning approaches can be difficult to execute, time consuming, and also costly to implement. Defining SBUs and measuring relative market share and growth can be difficult tasks as well. A serious flaw with these approaches is that while they are helpful for classifying current businesses, they offer little or no advice for future planning.

Diff: 3 Type: ES LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 48) Differentiate between the BCG matrix and the product/market expansion grid.

Answer: The Boston Consulting Group matrix evaluates SBUs on two important dimensions: the attractiveness of the SBU's market or industry growth rate and the strength of the SBU's position or relative market share in that market or industry. The growth-share matrix defines four types of SBUs: stars, cash cows, question marks, and dogs. Once each SBU has been defined, a company can determine what role each will play in the firm's future, using strategies of building, holding, harvesting, or divesting each SBU. A serious flaw in this approach is that while it is helpful for classifying current businesses, it offers little or no advice for future planning.

On the other hand, the product/market expansion grid is a useful device for identifying growth opportunities in the future. There are four strategies available to companies: market penetration, market development, product development, and diversification. Market penetration entails making more sales to current customers without changing original products. Market development involves identifying and developing new markets for a company's products. New markets include demographic groups and geographic regions, among others. Companies can also consider product development, offering modified or new products to current markets. Companies wishing to diversify might consider acquiring or starting new businesses unrelated to their core competencies. However, diversifying too broadly can be detrimental in the long run.

Diff: 3 Type: ES LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

14 © 2021 Pearson Canada Inc.

49) Explain how a company's value chain works. Provide an example to illustrate your response.

Answer: (Students' answers may vary. The answer given below is indicative.)

A value chain is the series of departments within a firm that carry out value-creating activities to design, produce, market, deliver, and support a firm's products. Each company department can be thought of as a link in a company's internal value chain. The company's success depends not only on how well each department performs its work but also on how well the various departments coordinate their activities. For example, Walmart's goal is to create customer value and satisfaction by providing shoppers with the products they want at the lowest possible prices.

Marketers at Walmart play an important role. They learn what customers need and stock the stores' shelves with the desired products at unbeatable low prices. They prepare advertising and merchandising programs and assist shoppers with customer service. Through these and other activities, Walmart's marketers help deliver value to customers. However, the marketing department needs help from the company's other departments. Walmart's ability to help customers "Save Money. Live Better." depends on the purchasing department's skill in developing the needed suppliers and buying from them at low cost. Walmart's information technology department must provide fast and accurate information about which products are selling in each store. Its operations people must provide effective, low-cost merchandise handling. A company's value chain is only as strong as its weakest link. Success depends on how well each department performs its work of adding customer value and on how the company coordinates the activities of various departments. At Walmart, if purchasing can't obtain the lowest prices from suppliers, or if operations can't distribute merchandise at the lowest costs, then marketing can't deliver on its promise of unbeatable low prices.

Diff: 3 Type: ES LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Analytical thinking 50) Explain the term "value delivery network."

Answer: In its quest to create consumer value, a firm needs to look beyond its own value chain and into the value chains of its suppliers, distributors, and, ultimately, its customers. A value delivery network is the network made up of a company, its suppliers, its distributors, and customers who partner with each other to improve the performance of the entire system. More companies are partnering with other members of the supply chain to improve the performance of the customer value delivery network. In fact, in today's marketplace, competition no longer takes place between individual competitors. It takes place between entire value delivery networks created by these competitors.

Diff: 2 Type: ES LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Reflective thinking

15 © 2021 Pearson Canada Inc.

51) Which of the following best describes the value chain of a company?

A) the collection of businesses and products that make up the company B) profits earned by the cash cows and stars in the company's business portfolio C) touchpoints at which a company or brand interacts with its consumers D) the series of departments that design, produce, market, deliver, and support the company's products E) a network made up of the company, its suppliers, and its distributors working together to deliver customer value Answer: C Diff: 2 Type: MC LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Analytical thinking 52) True Value Hardware relies on its ________ to coordinate and carry out activities that provide shoppers with the hardware and home improvement products they need at affordable prices along with top-notch customer service.

A) suppliers B) internal value chain C) distributors D) portfolio network E) internal supply chain Answer: B Diff: 2 Type: MC LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Application of knowledge 53) Marketing department actions can increase purchasing costs, disrupt production schedules, increase inventories, and create budget headaches. Thus, other departments may ________ the marketing department's efforts.

A) support B) develop C) resist D) encourage E) favour Answer: C Diff: 2 Type: MC LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Application of knowledge

16 © 2021 Pearson Canada Inc.

54) A ________ is made up of a company, its suppliers, its distributors, and its customers who partner with each other to improve the performance of the entire system.

A) value chain B) shareholder network C) business portfolio D) value delivery network E) growth-share matrix Answer: D Diff: 2 Type: MC LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Application of knowledge 55) A firm's marketing department must partner with other company departments to produce superior value for customers.

Answer: TRUE Diff: 1 Type: TF LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Application of knowledge 56) A company's customer value delivery network does not include members external to the organization.

Answer: FALSE Diff: 1 Type: TF LO: 2-3: Explain marketing's role in strategic planning and how marketing works with its partners to create and deliver customer value.

AACSB: Application of knowledge 57) Traxx is a newly emerging shoe manufacturing company. After extensive market research, Traxx divides its market into professional athletes, "hobbyists" or amateur players, and people who wear shoes as part of their casual attire. Each category has its own needs, traits, and marketing goals. In this scenario, Traxx has engaged in market ________.

A) development B) positioning C) diversification D) segmentation E) penetration Answer: D Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking

17 © 2021 Pearson Canada Inc.

58) ________ refers to the process of evaluating each market segment's attractiveness and selecting one or more segments to enter.

A) Market divesting B) Market diversification C) Market targeting D) Market mixing E) Market positioning Answer: C Diff: 1 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 59) Which of the following best describes product positioning?

A) differentiating a market offering to create superior customer value B) arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products C) identifying consumer needs and creating a product to meet those needs D) evaluating each market segment's attractiveness and selecting one or more segments to enter E) dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviours Answer: B Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 60) Ferrari sells only 2,200 of its very high-performance cars in North America each year at very high prices. The company is appealing to a specific ________.

A) value chain B) market segment C) market position D) business portfolio E) value delivery network Answer: B Diff: 1 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Application of knowledge

18 © 2021 Pearson Canada Inc.

61) Which of the following best describes market segmentation?

A) differentiating a market offering to create superior customer value B) identifying consumer needs and creating a product to meet those needs C) arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers D) evaluating each market segment's attractiveness and selecting one or more segments to enter E) dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviours Answer: E Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 62) Which component of the marketing mix refers to the goods-and-services combination a company offers to its target market?

A) promotion B) product C) price D) place E) position Answer: B Diff: 1 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 63) Packaging is an element of the ________ component of a company's marketing mix.

A) product B) price C) promotion D) place E) people Answer: A Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Application of knowledge

19 © 2021 Pearson Canada Inc.

64) Toyota manufacturers and sells cars globally, including manufacturing and assembly plants in Cambridge and Woodstock Ontario. Once assembled at these plants, the cars are transported to Toyota dealerships to be sold. The process of shipping the cars from factory to dealership falls under which of the four P's?

A) Promotion B) Price C) Product D) Passage E) Place Answer: E Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 65) A popular promotion offered by the Ford Motor Company often advertises employee discounts for all purchasers of Ford vehicles. While the activity is related to promotion, the marketing mix being addressed is ________.

A) packaging B) public relations C) place D) product E) price Answer: E Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Application of knowledge 66) When viewing the market from a buyer's point of view, "communication" corresponds to the ________ component of the marketing mix.

A) people B) price C) product D) promotion E) place Answer: D Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking

20 © 2021 Pearson Canada Inc.

67) The four Ps model has been challenged because it omits or underemphasizes important activities such as services. It's also been criticized for taking a seller's, rather than a buyer's, viewpoint. The more recent four As framework complements the traditional model and includes ________.

A) adaptability, affordability, availability, and awareness B) adaptability, affordability, accessibility, and awareness C) acceptability, affordability, accessibility, and awareness D) acceptability, affordability, accessibility, and aptitude E) adaptability, affordability, availability, and aptitude Answer: C Diff: 2 Type: MC LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 68) In the new four As framework, Accessibility replaces Price.

Answer: FALSE Diff: 2 Type: TF LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 69) A company can offer greater customer value by either charging lower prices than competitors or offering more benefits to justify higher prices.

Answer: TRUE Diff: 2 Type: TF LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Application of knowledge 70) After suffering from lower occupancy rates, shrinking market share, and a tired brand, Holiday Inn successfully grew by creating specific brands (Crown Plaza, Intercontinental, Express and more) to serve different customer segments.

Answer: TRUE Diff: 3 Type: TF LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Application of knowledge

21 © 2021 Pearson Canada Inc.

71) In the marketing mix, product refers to activities that communicate the merits of a product and persuade target customers to buy it.

Answer: FALSE Diff: 1 Type: TF LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 72) In the four Ps of the marketing mix, promotion refers solely to advertising.

Answer: FALSE Diff: 2 Type: TF LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 73) Services, such as banking, airline, and retailing services, are products too. We call them service products.

Answer: TRUE Diff: 1 Type: TF LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Application of knowledge 74) Discuss the four Ps of the typical marketing mix. Some people consider that there should be more than four marketing mix elements. Suggest two additional aspects that the marketing mix could include.

Answer: The marketing mix is the set of tactical marketing tools that a firm blends to produce the response it wants in the target market. The marketing mix consists of everything a firm can do to influence the demand for its product. The many possibilities can be collected into four groups of variables–the four Ps. Product means the goods-and-services combination a company offers to the target market. Price is the amount of money customers must pay to obtain the product. Place includes company activities that make the product available to target consumers.

Promotion refers to activities that communicate the merits of the product and persuade target customers to buy it. Additional aspects could include services and packaging. (Students' answers to this part of the question may vary. The answer given here is merely indicative.)

Diff: 3 Type: ES LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Reflective thinking

22 © 2021 Pearson Canada Inc.

75) Managing the marketing function begins with a complete analysis of the company's situation.

A thorough ________ guides decision making.

A) situation analysis B) internal assessment C) industry overview D) SWOT analysis E) portfolio analysis Answer: D Diff: 1 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 76) CVS Pharmacy changed its name to CVS Health, reshaping and broadening its lines of products and services to align more appropriately with its revamped "better health" mission. For example, it stopped selling tobacco products altogether. How would this be classified in a SWOT analysis?

A) strength B) weakness C) resources D) threat E) barrier to entry Answer: A Diff: 3 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking; Ethical understanding and reasoning 77) In a SWOT analysis, which of the following would most likely be considered a strength of a company?

A) a favourable economic climate that encourages consumption B) the exit of a competitor from the market C) higher prices of the company's products resulting from inflation D) an increase in consumer interest in the company's products E) an improvement in the company's production technology Answer: E Diff: 2 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking

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78) In a SWOT analysis, which of the following would be considered a weakness of a company?

A) an unfavourable economic climate that discourages consumption B) the exit of a competitor from the market C) inflation that leads to higher prices of the company's products D) falling consumer interest in its products E) obsolete technologies used by the company Answer: E Diff: 3 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 79) In a SWOT analysis, ________ refer to favourable factors or trends in the external environment that a company may be able to exploit to its advantage.

A) strengths B) strategies C) threats D) opportunities E) controls Answer: D Diff: 1 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 80) A potential trade dispute with the United States where the American government is considering restrictions that will affect your company's products represents which of the SWOT elements?

A) Strengths B) Weaknesses C) Opportunities D) Threats E) Strategies Answer: D Diff: 1 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking

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81) Nike's goal to increase sales of its running shoes by 25 percent during the first six months of the new fiscal year is an example of a ________.

A) differentiation objective B) positioning objective C) marketing objective D) marketing strategy E) target market strategy Answer: C Diff: 2 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Application of knowledge 82) The process that turns marketing plans into marketing actions to accomplish strategic marketing objectives is called marketing ________.

A) analysis B) implementation C) control D) planning E) design Answer: B Diff: 1 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 83) At John Deere, thousands of people both inside and outside the organization make decisions about target segments, branding, product development, pricing, promotion, and distribution.

They talk with engineering about product design, advertising agencies about ad campaigns, and large retailers like Lowe's about quality offerings. This is an example of ________.

A) marketing planning B) marketing standards C) marketing control D) marketing strategy E) marketing implementation Answer: E Diff: 2 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking

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84) Which of the following best describes a marketing department with a functional organization?

A) A company creates large teams, or even whole divisions, to serve domestic and international markets.

B) Marketing managers are responsible for developing marketing strategies and plans for their specific markets or customers, and the company is organized around the needs of specific customer segments.

C) A product manager develops and implements a complete strategy and marketing program for a specific product or brand.

D) Sales and marketing people are assigned to specific countries, regions, and districts.

E) Different marketing activities are headed by specialists such as sales managers, advertising managers, marketing research managers, and customer service managers.

Answer: E Diff: 2 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 85) When considering managing marketing strategies and the marketing mix, the core of this approach is all about creating customer value and profitable customer relationships. Which series of factors are immediately next to the customer (from middle of circle to the outside)?

A) Suppliers, Marketing intermediaries, Competitors, Publics B) Place, Promotion, Price, Product C) Segmentation, Targeting, Differentiation, Positioning D) Marketing: analysis, planning, implementation, control E) Market Penetration, Diversification, Market Growth, Product Growth Answer: C Diff: 1 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 86) Which of the following is true of marketing ROI? A) Marketing ROI uses only those marketing factors that can be measured in dollars.

B) Marketing ROI ignores customer-centred measures of marketing impact, such as customer acquisition and retention.

C) Marketing ROI is easier to calculate than financial ROI. D) Marketing ROI cannot be assessed in terms of standard marketing performance measures, such as brand awareness, sales, or market share.

E) Marketing ROI measures the profits generated by investments in marketing activities.

Answer: E Diff: 2 Type: MC LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking

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87) Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives.

Answer: TRUE Diff: 2 Type: TF LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 88) The most common form of marketing organization is the product management organization.

Answer: FALSE Diff: 1 Type: TF LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Application of knowledge 89) Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary.

Answer: TRUE Diff: 1 Type: TF LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Application of knowledge 90) A company can assess marketing ROI in terms of standard marketing performance measures, such as brand awareness, sales, or market share.

Answer: TRUE Diff: 1 Type: TF LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Application of knowledge 91) Marketing dashboards are used to monitor strategic marketing performance.

Answer: TRUE Diff: 1 Type: TF LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 92) Marketing ROI measures the internal capabilities generated by investments in marketing activities.

Answer: FALSE Diff: 2 Type: TF LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking

27 © 2021 Pearson Canada Inc.

93) What is a SWOT analysis? Why is it useful?

Answer: Managing the marketing function begins with a complete analysis of a company's situation. The marketer should conduct a SWOT analysis, by which it evaluates a company's overall strengths (S), weaknesses (W), opportunities (O), and threats (T). Strengths include internal capabilities, resources, and positive situational factors that may help a company serve its customers and achieve its objectives. Weaknesses include internal limitations and negative situational factors that may interfere with a company's performance. Opportunities are favourable factors or trends in the external environment that a company may be able to exploit to its advantage. And threats are unfavourable external factors or trends that may present challenges to performance. Conducting a SWOT analysis is important because a company should analyze its markets and marketing environment to find attractive opportunities and identify environmental threats. It should analyze company strengths and weaknesses as well as current and possible marketing actions to determine which opportunities it can best pursue. The goal is to match the company's strengths to attractive opportunities in the environment, while simultaneously eliminating or overcoming the weaknesses and minimizing the threats. Marketing analysis provides inputs to each of the other marketing management functions.

Diff: 2 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Application of knowledge 94) Define marketing planning. Briefly outline what a company should cover in its marketing plan.

Answer: Marketing planning involves deciding on marketing strategies that will help a company achieve its overall strategic objectives. A detailed marketing plan is needed for each business, product, or brand. A typical product or brand marketing plan begins with an executive summary that quickly reviews major assessments, goals, and recommendations. The main section of the plan presents a detailed SWOT analysis of the current marketing situation as well as potential threats and opportunities. The plan then states major objectives for the brand and outlines the specifics of a marketing strategy for achieving them. In addition, action programs for implementing the marketing strategy along with the details of a supporting marketing budget are presented. The final section outlines the controls used to monitor progress and corrective action.

Diff: 2 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Application of knowledge

28 © 2021 Pearson Canada Inc.

95) Kawaii Electronics sells air conditioning systems for office buildings. The company's marketing department is currently structured as a functional organization. However, Kawaii is considering changing the structure to either a product management or a customer management organization. In a brief essay, describe each type of organization: functional, product management, and customer management. What are the advantages and/or disadvantages of each structure for Kawaii? Which structure do you recommend for Kawaii? Why? Answer: (Students' answers may vary. The answer given below is indicative.)

Under the functional organization, different marketing activities are headed by a functional specialist–a sales manager, an advertising manager, a marketing research manager, a customer service manager, or a new product manager.

Under a product management organization, a product manager develops and implements a complete strategy and marketing program for a specific product or brand. Unless the company has a few standout products, this system will not benefit it as much as other methods.

Considering that the company sells one basic product type, this system may not be profitable for the company. Under a market or customer management organization, the company is organized around the needs of specific customer segments. In firms that use this organization, one product line is sold to many different types of markets and customers that have different needs and preferences. Though the firm sells a single type of product and product line, all its customers are offices and significant differences will most likely not exist. Though the company may segment its market based on office size, this may be an inefficient use of company resources.

Diff: 3 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Reflective thinking

29 © 2021 Pearson Canada Inc.

96) ToyTrain is a toy company that sells its products in most regions of the United States. It produces a variety of toys for children of every age group, from toddlers to preteens. What are ToyTrain's options for organizing its marketing department? Briefly describe each structure as it would apply to ToyTrain. Which organization do you think would be best for ToyTrain? Why? Answer: (Students' answers may vary. The answer given below is indicative.)

Modern marketing departments can be arranged in several ways. The most common form of marketing organization is the functional organization. Under a functional organization, different marketing activities are headed by a functional specialist–a sales manager, an advertising manager, a marketing research manager, a customer-service manager, or a new product manager.

As ToyTrain is based only in the United States, a functional organization may be appropriate if marketing strategies and messages need to be consistent across the region. Under a geographic organization, sales and marketing people are assigned to specific countries, regions, and districts.

A company that sells across a country could benefit from a geographic organization. As ToyTrain sells products across the country, organizing its sales and marketing personnel by region may also be appropriate. Under a product management organization, a product manager develops and implements a complete strategy and marketing program for a specific product or brand. Unless the company has a few standout brands, this system will not benefit it as much as other methods. Under a market or customer management organization, the company is organized around the needs of specific customer segments. In firms that use this organization, one product line is sold to many different types of markets and customers that have different needs and preferences. ToyTrain could use this method and organize its departments according to the age groups of the children it caters to and the types of toys suitable for each group.

The company could also use some combination of these organizational forms.

Diff: 3 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Reflective thinking 97) RTF Developers is a construction company with a presence in several countries. The company currently organizes its marketing department using a functional system of organization, but this seems inefficient. Explain why a geographic organization would benefit the company more than a functional organization.

Answer: (Students' answers may vary. The answer given below is indicative.)

Under a functional organization, different marketing activities are headed by a functional specialist–a sales manager, an advertising manager, a marketing research manager, a customer service manager, or a new product manager. Under a geographic organization, sales and marketing people are assigned to specific countries, regions, and districts. As RTF has a presence in many countries, a geographic system might benefit it more than a functional system.

Organizing its marketing department by country would allow its marketing plans and messages to be tailored to the culture and customers of that particular country and may produce a better result than centralized planning across countries. A geographic organization also allows salespeople to settle into a territory, get to know their customers, and work with a minimum of travel time and cost.

Diff: 3 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Reflective thinking 30 © 2021 Pearson Canada Inc.

98) How do organizations carry out marketing control?

Answer: Marketing control is the process of evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are attained. As many surprises occur during the implementation of marketing plans, marketers must practice constant marketing control. Marketing control involves four steps. Management first sets specific marketing goals. It then measures its performance in the marketplace and evaluates the causes of any differences between expected and actual performance. Finally, management takes corrective action to close the gaps between goals and performance. This may require changing the action programs or even changing the goals. Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary. Its purpose is to ensure that the company achieves the sales, profits, and other goals set out in its annual plan. It also involves determining the profitability of different products, territories, markets, and channels. Strategic control involves looking at whether the company's basic strategies are well matched to its opportunities.

Marketing strategies and programs can quickly become outdated, and each company should periodically reassess its overall approach to the marketplace.

Diff: 2 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking 99) What is a marketing dashboard? How does it benefit marketers?

Answer: A company can assess marketing ROI in terms of standard marketing performance measures, such as brand awareness, sales, or market share. Many companies are assembling such measures into marketing dashboards — meaningful sets of marketing performance measures in a single display used to monitor strategic marketing performance. Just as automobile dashboards present drivers with details on how their cars are performing, the marketing dashboard gives marketers the detailed measures they need to assess and adjust their marketing strategies.

Diff: 2 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking

31 © 2021 Pearson Canada Inc.

100) Raintree Developers has been measuring its marketing return on investment (or marketing ROI) to assess its marketing performance for the past few years. Explain why this method may not accurately reflect the company's performance and what Raintree can use to better estimate its performance.

Answer: (Students' answers may vary. The answer given below is indicative.)

Marketing ROI is the net return from a marketing investment divided by the costs of the marketing investment. ROI is a measure of the profits generated by investments in marketing activities. Marketing ROI can be difficult to assess because the benefits of marketing are not always easily translated in dollar amounts. For instance, returns such as advertising and brandbuilding impact cannot be easily put into dollar returns. However, marketing ROI can be assessed in terms of more quantifiable standard marketing performance measures such as brand awareness, sales, or market share. Beyond standard performance measures, Raintree can also use customer-centred measures such as customer acquisition, customer engagement, customer retention, customer equity, and customer lifetime value.

Diff: 3 Type: ES LO: 2-5: List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing marketing return on investment.

AACSB: Analytical thinking

32 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 3 Analyzing the Marketing Environment 1) Which of the following is part of the microenvironment of a firm's marketing environment?

A) the political state of the country in which the firm exists B) the cultural forces that exist in a society C) the suppliers who work with the company D) the technological resources available to the company E) the different demographic trends in the market Answer: C Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 2) Demographic, economic, natural, technological, political, and cultural forces form the ________ of an organization.

A) supply chain B) macroenvironment C) marketing intermediary network D) internal environment E) microenvironment Answer: B Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 3) The responsibility for setting a company's mission, objectives, broad strategies, and policies primarily lies with its ________.

A) finance department B) research department C) top management D) marketing managers E) human resource managers Answer: C Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge

1 © 2021 Pearson Canada Inc.

4) Which of the following is part of the microenvironment of a company's marketing environment?

A) building close relationships with its extensive network of suppliers B) a set of laws that require the company to scale down its telemarketing calls to customers C) a changing demographic picture that requires the firm to make product adaptations D) a new technology that would ensure significant cost-cutting if implemented in the firm E) a set of environmental sustainability laws that significantly impact the company's production processes Answer: A Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 5) Which of the following would be placed in the 'Publics' category in the microenvironment?

A) FedEx and UPS delivering packages for Amazon B) banks, investments analysts and stockholders influencing the company's ability to obtain funds C) newly formed companies that become competitors in the industry D) an advertising firm that develops a marketing campaign for a client E) a retailer that agrees to sell the products manufactured by a firm Answer: B Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 6) ________ are distribution channel firms that help a company find customers or make sales to them.

A) Resellers B) Suppliers C) Producers D) Logistics firms E) Credit companies Answer: A Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

2 © 2021 Pearson Canada Inc.

7) Which of the following has the primary function of helping a company target and promote its products to the right markets?

A) marketing services agencies B) resale marketers C) service providers D) physical distribution firms E) credit companies Answer: A Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 8) A marketing intermediary would most likely help a firm by ________.

A) negotiating with labour unions regarding wages, hours, and benefits B) providing technical expertise on the production and design of goods C) competing directly with the firm in a certain product category D) supplying the raw materials needed for manufacturing the firm's products E) moving the firm's goods from production points to distribution centres Answer: E Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 9) Which of the following is most likely a financial public?

A) community organization B) minority group C) corporate attorney D) stockholder E) newspaper Answer: D Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

3 © 2021 Pearson Canada Inc.

10) A consumer advocacy group challenges a firm's decision to build a new warehouse in a small community. The advocacy group is an example of a ________ public.

A) financial B) government C) media D) local E) citizen-action Answer: E Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 11) Monfax Corporation insures manufacturers, distributors, and consumers against the loss or damage of goods during transportation after a purchase or sale. In this case, Monfax is an example of a ________.

A) wholesaler B) retailer C) financial intermediary D) physical distribution firm E) marketing service agency Answer: C Diff: 3 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 12) Which of the following is an example of a media public?

A) community organization B) minority group C) television station D) banking institution E) federal government Answer: C Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

4 © 2021 Pearson Canada Inc.

13) Kelstone Developers is planning to build a new shopping mall that would require the partial acquisition of a nearby public park. Walking Green, an environmental group, challenges the plan citing environmental destruction. In response to the demands of Walking Green, Kelstone Developers promises to build a huge park-like walkway around the mall. Walking Green is an example of a(n) ________ in this scenario.

A) financial public B) government public C) citizen-action public D) internal public E) media public Answer: C Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 14) Volunteers belong to a company's ________ publics.

A) general B) local C) citizen-action D) media E) internal Answer: E Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 15) The town of Genter recently witnessed a devastating hurricane that crippled the town's infrastructure. Q-Mart, a retail chain that plans to open a new retail store in Genter, organizes a program to help the people of Genter. The program consists of providing free meals to those who lost their dwellings in the hurricane. What section of the marketing microenvironment is Q-Mart most likely trying to reach?

A) suppliers B) marketing intermediaries C) local publics D) competitors E) employees Answer: C Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking; Ethical understanding and reasoning

5 © 2021 Pearson Canada Inc.

16) The citizen-action publics in a company's marketing environment include ________.

A) employees and managers of the company B) stockholders and investment analysts C) government trade agencies D) environmental groups E) news channels Answer: D Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 17) Which of the following is an example of a local public?

A) a community organization that addresses welfare issues in its neighbourhood B) a supplier responsible for sourcing most of the raw materials used in production C) a company director who is working to improve the organization's public image D) a bank that helps a company acquire loans E) a federal regulatory agency that monitors business practices Answer: A Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 18) Which of the following are examples of internal publics of a company?

A) newspapers, magazines, television stations, blogs, and other Internet media B) governmental departments and agencies that regulate businesses C) neighbourhood residents and community organizations D) the managers, board of directors, and workers of the company E) the general public that is directly affected by the company Answer: D Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

6 © 2021 Pearson Canada Inc.

19) According to the text, ________ are the most important actors in a company's microenvironment.

A) stockholders B) employees C) suppliers D) resellers E) customers Answer: E Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 20) ________ markets consist of individuals and households that buy goods and services for personal use.

A) Consumer B) Business C) Government D) Wholesaler E) Retailer Answer: A Diff: 1 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 21) Which of the following is most likely categorized as a business market?

A) government agencies that buy goods and services to produce public services B) individuals who buy goods and services for personal consumption C) firms that buy goods and services for further processing D) firms that buy goods and services to resell for profit E) retail outlets that buy goods and services to sell at discounted prices Answer: C Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

7 © 2021 Pearson Canada Inc.

22) Reseller markets consist of ________.

A) government agencies that buy goods and services to produce public services B) individuals who buy goods and services for personal consumption C) firms that buy goods and services to assemble overseas D) firms that buy goods and services to sell at a profit E) firms that buy goods and services for further processing Answer: D Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 23) Linamar, a Guelph Ontario based company, manufactures products that power vehicles and sell to private manufacturers that produce automobiles. Which type of market does Linamar directly target?

A) retail market B) government market C) consumer market D) business market E) reseller market Answer: D Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 24) The Smith Company buys electronic products from manufacturers for wholesale and sells them to various retail outlets. To which of the following markets does The Smith Company directly cater?

A) business markets B) reseller markets C) manufacturer markets D) supplier markets E) consumer markets Answer: B Diff: 2 Type: MC LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

8 © 2021 Pearson Canada Inc.

25) Walmart's microenvironment includes suppliers.

Answer: TRUE Diff: 1 Type: TF LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 26) Marketing intermediaries form an important component of a company's overall value delivery network.

Answer: TRUE Diff: 1 Type: TF LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 27) Suppliers help a company stock and move goods from their points of origin to their destinations.

Answer: FALSE Diff: 2 Type: TF LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 28) A customer buys a can of Pepsi from a Walmart store. In this scenario, Walmart is a supplier in Pepsi's value delivery network.

Answer: FALSE Diff: 2 Type: TF LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 29) A.C. Neilson Company of Canada is a marketing research and polling company that helps client firms acquire important information about the marketplace. This company is an example of a marketing intermediaries.

Answer: TRUE Diff: 1 Type: TF LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 30) Resellers are distribution channel firms that help the company find customers or make sales to them.

Answer: TRUE Diff: 2 Type: TF LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 9 © 2021 Pearson Canada Inc.

31) A public is any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives.

Answer: TRUE Diff: 1 Type: TF LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 32) What are marketing intermediaries? What are the different types of marketing intermediaries? Provide an example of one type of marketing intermediary.

Answer: Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries. Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers that buy and resell merchandise. Physical distribution firms help the company stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the firm target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. Marketing intermediaries form an important component of the company's overall value delivery network. In its quest to create satisfying customer relationships, the company must do more than just optimize its own performance. It must partner effectively with marketing intermediaries to optimize the performance of the entire system.

Diff: 2 Type: ES LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

10 © 2021 Pearson Canada Inc.

33) Markwin Electronics is a company that only sells products online. Orders are taken through an interactive website, and goods are shipped out through a small warehouse the company owns.

Markwin employees also handle the shipment of goods to desired destinations. How could marketing intermediaries help Markwin expand its business?

Answer: Students' answers may vary. The answer given below is indicative.)

Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. Marketing intermediaries already have channels ready that are directly connected to customers. Thus, by utilizing intermediaries, Markwin can tap into a much bigger source of sales. Intermediaries include resellers, physical distribution firms, marketing services agencies, and financial intermediaries. These include wholesalers and retailers who buy and resell merchandise. Physical distribution firms can help Markwin stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that can help finance transactions for Markwin or insure against the risks associated with the buying and selling of goods.

Marketing intermediaries can form an important component of the company's overall value delivery network. Markwin's marketers must recognize the importance of working with their intermediaries as partners rather than simply as channels through which they sell their products.

Diff: 3 Type: ES LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking; Information technology 34) How do the different types of publics influence a company's marketing environment?

Answer: A public is any group that has an actual or potential interest in or impact on an organization's ability to achieve its objectives. Financial publics: This group influences the company's ability to obtain funds. Banks, investment analysts, and stockholders are the major financial publics. Media publics: This group carries news, features, editorial opinions, and other content. It includes newspapers, magazines, television stations, and blogs and other social media.

Government publics: Management must take government developments into account. Marketers must often consult the company's lawyers on issues of product safety, truth in advertising, and other matters. Citizen-action publics: A company's marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups. Local publics: This group includes neighbourhood residents and community organizations. Large companies usually create departments and programs that deal with local community issues and provide community support. General public: A company needs to be concerned about the general public's attitude toward its products and activities. The public's image of the company affects its buying behaviour. Internal publics: This group includes workers, managers, volunteers, and the board of directors.

Diff: 2 Type: ES LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

11 © 2021 Pearson Canada Inc.

35) ________ is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.

A) Sociobiology B) Demography C) Behavioural ecology D) Environmental studies E) Political science Answer: B Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 36) Which of the following generational groups accounts for 25 percent of the Canadian population but still controls the highest spending power of any age cohort?

A) Millennial B) Generation X C) Generation Z D) baby boomer E) Lost Generation Answer: D Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 37) Which of the following is a true statement about baby boomers?

A) They are the first generation to have grown up with computers.

B) They constitute the largest demographic group in Canada.

C) They were born between 1965 and 1976.

D) They are the most educated generation of Canadians.

E) They are the wealthiest generation in Canadian history.

Answer: E Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge

12 © 2021 Pearson Canada Inc.

38) The approximately 8.6 million Canadian ________ make up the important kids, tweens, and teens markets.

A) Millennials B) Generation Xers C) Generation Zers D) Latinos E) baby boomers Answer: C Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 39) Which generational group is characterized as the most educated and the least materialistic?

A) baby boomer B) Generation X C) Millennial D) Generation Z E) Lost Generation Answer: B Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 40) Secure is a financial services and insurance company. The company's most profitable division is one that sells the Secure Future Plan. The Secure Future Plan targets customers who are entering retirement and want long-term savings so they can remain financially independent in the later years of their life. The marketing team at Secure has most likely targeted the plan to ________.

A) Millennials B) baby boomers C) Generation Xers D) Generation Zers E) Lost Generation Answer: B Diff: 3 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking

13 © 2021 Pearson Canada Inc.

41) Which of the following is most likely a characteristic of Generation Xers?

A) They were the first group to grow up in the Internet era.

B) They comprise a considerably larger population than the baby boomers.

C) They prefer quantity over quality of products.

D) They are the least educated generation to date.

E) They are generally unreceptive to ad pitches that make fun of tradition.

Answer: A Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 42) Technology is a way of life for ________, the largest generational group.

A) Generation Z B) Generation X C) baby boomers D) Millennials E) Lost Generation Answer: D Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 43) Which of the following is most likely a characteristic of the millennial generation?

A) They have very little knowledge of using digital media.

B) They are a smaller population than Generation X. C) They are the wealthiest generation in Canada to date.

D) They are more likely to engage with brands using mobile or social media.

E) They typically avoid using technology while buying products.

Answer: D Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 44) Which of the following is the most financially strapped generation in the post-recession era?

A) Millennial B) Generation X C) Generation Z D) Lost Generation E) baby boomers Answer: A Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 14 © 2021 Pearson Canada Inc.

45) Members of which generational group are referred to as echo boomers?

A) Lost Generation B) Generation X C) Generation Z D) baby boomers E) Millennial Answer: E Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 46) Which generational group consists of the kid, teen, and tween markets?

A) Generation Y B) Millennial C) Generation Z D) Generation X E) Lost Generation Answer: C Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 47) Which generational group is most comfortable using digital technologies?

A) Millennial B) Zoomer C) Generation X D) Generation Z E) Lost Generation Answer: D Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Information technology

15 © 2021 Pearson Canada Inc.

48) Which of the following is most likely a true statement about generational groups in Canada?

A) The millennials account for nearly half of all discretionary consumer spending in Canada.

B) Generation Xers are the most educated generation to date.

C) The baby boomers comprise the poorest segment of the population.

D) Generation Xers form the largest segment of the population.

E) The millennials are the most financially secure generation.

Answer: B Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 49) Which of the following is a geographic shift that has been observed in Canada in recent times?

A) The largest growth as a percentage of population came from some of Canada's largest provinces.

B) Central and western Canada experienced growth far short of the national average.

C) Between 2015 and 2017 Alberta experienced a positive interprovincial migration flow.

D) As of July 2018, 5 in 10 Canadians, lived in one of Canada's 36 CMAs. E) More Canadians are moving to micropolitan or suburban areas where they can telecommute.

Answer: E Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 50) Which of the following illustrates the changing composition of the Canadian family?

A) The number of same-sex couples raising children has decreased.

B) The number of married couples with children under 18 is climbing.

C) There are fewer dual-income families as fewer women enter the workforce.

D) There is a growing 'crowded nest' syndrome with about 35% of young Canadians aged 20-34 living with at least one parent.

E) A decrease in the number of same-sex couples.

Answer: D Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments

16 © 2021 Pearson Canada Inc.

51) Which of the following has resulted from the increased educational levels of the Canadian population?

A) lower acceptance of technological changes B) greater number of women in the workforce C) higher number of manufacturing jobs D) lower mobility of the Canadian population E) lower number of women in the workforce Answer: B Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 52) The migration trend towards micropolitan and suburban areas has caused a shift in where people work. This has resulted in a rapid increase in the number of people who ________.

A) commute B) leave the workforce C) telecommute D) work part-time E) purchase second residences Answer: C Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 53) Large companies like P&G, Walmart, and Allstate have designed specialty products and promotions to target a previously untapped market that by 2060, will be about 28 percent of the population. They are appealing to ________.

A) the millennial generation B) the Asian Canadian market C) the African Canadian market D) the LGBTQ2 community E) the French- Canadian market Answer: D Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments

17 © 2021 Pearson Canada Inc.

54) Which of the following is most likely a true statement about diversity in Canada?

A) Most ethnic groups are shedding their ethnic culture and shifting toward a unified Canadian culture.

B) The share of Canadians with French or British Isles origins continue to increase as a share of the total Canadian population.

C) Ethnic and cultural differences exist since different ethnic groups remain isolated from one another.

D) Various ethnic groups mix together but also retain their cultural differences.

E) The nation's ethnic populations are expected to decrease in coming decades.

Answer: D Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments 55) Companies have responded to consumers' back-to-basics sensibility in their lifestyle and spending patterns through ________.

A) frugal marketing B) value marketing C) quality marketing D) diverse marketing E) prestige-oriented marketing Answer: B Diff: 1 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 56) Changes in variables, such as income, cost of living, interest rates, and savings and borrowing patterns most likely reflect changes in the ________ environment of a company.

A) economic B) natural C) demographic D) political E) cultural Answer: A Diff: 2 Type: MC LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking

18 © 2021 Pearson Canada Inc.

57) Marketers now face increasingly diverse markets, both at home and abroad, as their operations become more international in scope.

Answer: TRUE Diff: 1 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 58) Between 2014 and 2024, of 30 occupations projected to have the fastest employment growth, most require some type of postsecondary education.

Answer: TRUE Diff: 3 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 59) Companies are adapting their promotional efforts to reflect the changing dynamics of Canadian families.

Answer: TRUE Diff: 1 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments 60) Consumers have now adopted a back-to-basics sensibility in their lifestyles and spending patterns.

Answer: TRUE Diff: 1 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 61) Many companies have started to target the LGBTQ2 market segment which has significant buying power.

Answer: TRUE Diff: 2 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments 62) The purchasing power of a population is part of the demographic environment of a company's macroenvironment.

Answer: TRUE Diff: 1 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 19 © 2021 Pearson Canada Inc.

63) In adjusting to the economy, companies may be tempted to increase their marketing budgets.

Answer: FALSE Diff: 1 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 64) In the context of income distribution, the middle class in the United States has grown in size over the past several decades.

Answer: FALSE Diff: 1 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 65) As the economy has improved, consumers are again indulging in luxuries and bigger-ticket purchases.

Answer: TRUE Diff: 1 Type: TF LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 66) Discuss how an increased educational level in Canada has affected the Canadian household and how marketers have responded to these changes.

Answer: (Students' answers may vary. The answer given below is indicative.)

The Canadian population is becoming better educated and ranks first among the OECD countries in the proportion of college and university graduates. The rising number of educated professionals will affect not just what people buy but also how they buy. Job growth is now strongest for professional workers and weakest for manufacturing workers. The number of working women has also increased greatly, growing from under 45 percent of the Canadian workforce in 1991 to 48 percent in 2016. Among households made up of married couples with children, there are more dual-income households today. Meanwhile, more men are staying home with their children and managing the household while their wives go to work. The significant number of women in the workforce has spawned the child day-care business and increased the consumption of career-oriented women's clothing, convenience foods, financial services, and time-saving services.

Diff: 2 Type: ES LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking

20 © 2021 Pearson Canada Inc.

67) How do companies use marketing techniques to respond to the changing diversity in the North American population? Provide examples to illustrate your response.

Answer: (Students' answers may vary. The answer given below is indicative.)

Many major companies explicitly target gay and lesbian consumers. The Canadian Community Health Survey suggests that approximately 3% of Canadians aged 18 to 59 consider themselves to be homosexual or bisexual and 0.9% of all couples are same-sex couples in Canada.

Over 250 ethnic origins were reported by the Canadian population. Four in ten Canadians reported more than one ethnic origin. Over 2 million Canadians reported Indigenous ancestry, while three Asian origins (Chinese, East Indian and Filipino) were among the 20 most common ancestries. Over 1 million Canadians also reported African origins.

Marketers now face increasingly diverse markets, both at home and abroad, as their operations become more international in scope.

U.S. Statistics: The U.S. population is about 62.2 percent non-Hispanic white, with Hispanics at 17.4 percent and African Americans at 13.2 percent. The U.S. Asian American population now totals more than 5.4 percent of the total U.S. population, with the remaining groups being Native Hawaiian, Pacific Islander, American Indian, Eskimo, or Aleut. Moreover, one in eight people living in the United States — over 13 percent of the population — was born in another country.

The nation's ethnic populations are expected to explode in coming decades. By 2060, Hispanics will be about 28 percent of the population, African Americans will be about 14 percent, and Asian Americans will increase to 9 percent.

Most large companies, from P&G, Walmart, Allstate, and Wells Fargo to McDonald's and Southwest Airlines, now target specially designed products, ads, and promotions to one or more of these groups. For example, Southwest Airlines' outreach to Asian Americans includes being the title sponsor for the Chinese New Year Festival and Parade in San Francisco, the biggest nighttime parade in the United States and the second biggest in North America after the Macy's Thanksgiving Day parade.

Diff: 3 Type: ES LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments

21 © 2021 Pearson Canada Inc.

68) Diversity goes beyond ethnic heritage. Discuss the factors that have influenced the emergence of the lesbian, gay, bisexual, or transgender (LGBTQ2) community and how marketers have responded. Provide examples to illustrate your response.

Answer: (Students' answers may vary. The answer given below is indicative.)

As a result of TV shows such as Modern Family, movies like Brokeback Mountain and The Perks of Being a Wallflower, and openly gay celebrities and public figures, the LGBTQ2 community has increasingly emerged in the public eye. According to one estimate, the 6 to 7 percent of U.S. adults who identify themselves as lesbian, gay, bisexual, or transgender (LGBTQ2) have buying power of more than $830 billion. Numerous media like Viacom's MTV Networks now provide companies with access to this market. Brands in a wide range of industries are now targeting the LGBTQ2 community with gay-specific ads and marketing efforts — from Amazon, American Airlines, Allstate, and Apple to luxury jewelry retailer Tiffany. For example, Allstate recently ran an "Everyone deserves to be in good hands" campaign with ads featuring same-sex couples and the hashtag #OutHoldingHands. Brands ranging from Axe to Tiffany have sponsored similar ads. American Airlines has a dedicated LGBTQ2 "Rainbow Team," sponsors gay and lesbian community events, and offers a special website (www.aa.com/rainbow), Facebook pages, and Twitter feed featuring LGBTQ2-oriented travel deals, information, and discussion. The airline's focus on gay consumers has earned it double-digit revenue growth from the LGBTQ2 community each year for more than a decade.

Diff: 3 Type: ES LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments 69) Fargo Inc. is a carbonated beverage manufacturer that has many manufacturing plants around the world. It is planning to shift from using thermal power to wind power for its manufacturing plants in the Netherlands to decrease dependency on nonrenewable sources of energy. This scenario depicts Fargo's concern for its ________ environment.

A) economic B) natural C) demographic D) political E) cultural Answer: B Diff: 2 Type: MC LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning

22 © 2021 Pearson Canada Inc.

70) Which of the following represents a change in the technological environment of a marketing firm?

A) increased use of cause-related marketing B) increased use of RFID systems to track products C) increased need to comply with environmental regulations D) increased use of value marketing techniques and promotions E) increased need to engage in mass marketing over market segmentation Answer: B Diff: 2 Type: MC LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Information technology 71) Recyclable or biodegradable packaging, recycled materials and components, and better pollution controls are ways that marketers have responded to the ________.

A) increased need to comply with environmental regulations B) pollution reduction movement C) new recycling laws D) new government intervention program E) environmental sustainability Answer: E Diff: 2 Type: MC LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning 72) The ________ environment is perhaps the most dramatic force shaping the destiny of individuals and offering exciting opportunities for marketers.

A) demographic B) technological C) political D) social E) cultural Answer: B Diff: 1 Type: MC LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Information technology 73) The Consumer Product Safety Commission has created complex regulations for testing new drugs before they are sold to the public.

Answer: FALSE Diff: 2 Type: TF LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge

23 © 2021 Pearson Canada Inc.

74) Stringent product regulations have helped to lower research costs and decrease time between new product ideas and their introduction to the market.

Answer: FALSE Diff: 2 Type: TF LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge 75) What is environmental sustainability? How does it affect the marketing environment?

Provide examples to illustrate your response.

Answer: Concern for the natural environment has spawned the so-called green movement.

Today, enlightened companies go beyond what government regulations dictate. They are developing strategies and practices that support environmental sustainability — an effort to create a world economy that the planet can support indefinitely. Environmental sustainability means meeting present needs without compromising the ability of future generations to meet their needs. Many companies are responding to consumer demands with more environmentally responsible products. Others are developing recyclable or biodegradable packaging, recycled materials and components, better pollution controls, and more energy-efficient operations. For example, Timberland's mission is about more than just making rugged, high-quality boots, shoes, clothes, and other outdoor gear. The brand is about doing everything it can to reduce the environmental footprint of its products and processes. More and more, these companies are recognizing the link between a healthy ecology and a healthy economy. They are learning that environmentally responsible actions also mean good business.

Diff: 2 Type: ES LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning 76) Describe the major trends in the natural environment that marketers need to be aware of.

Answer: Marketers should be aware of several trends in the natural environment. The first involves growing shortages of raw materials. Air and water may seem to be infinite resources, but some groups see long-run dangers. Air pollution chokes many of the world's large cities, and water shortages are already a big problem in some parts of the world. Renewable resources, such as forests and food, also have to be used wisely. Nonrenewable resources, such as oil, coal, and various minerals, pose a serious problem. Firms making products that require these scarce resources face large cost increases, even if the materials remain available. A second environmental trend is increased pollution. Industry will almost always damage the quality of the natural environment. Consider the disposal of chemical and nuclear wastes; the dangerous mercury levels in the ocean; the quantity of chemical pollutants in the soil and food supply; and the littering of the environment with non-biodegradable bottles, plastics, and other packaging materials. A third trend is increased government intervention in natural resource management.

The governments of different countries vary in their concern and efforts to promote a clean environment. The general hope is that companies around the world will accept more social responsibility and that less expensive devices can be found to control and reduce pollution.

Diff: 3 Type: ES LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning

24 © 2021 Pearson Canada Inc.

77) How are Canadian businesses utilizing new technologies to improve their inventory management? Provide examples to illustrate your response.

Answer: (Students' answers may vary. The answer given below is indicative.)

New technologies can offer exciting opportunities for marketers. The technological advancement of radio-frequency identification (RFID) transmitters is rapidly changing the way companies control their inventory. RFIDs can be embedded in the products you buy. Many firms are already using RFID technology to track products and customers at various points in the distribution channel. For example, Walmart has strongly encouraged suppliers shipping products to its distribution centres to apply RFID tags to their pallets. And retailers such as American Apparel, Loblaw's, and Lululemon are now installing item-level RFID systems in their stores. Fashion and accessories maker Burberry even uses chips imbedded in items and linked to smartphones to provide personalized, interactive experiences for customers in its stores and at runway shows.

Diff: 3 Type: ES LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Analytical thinking; Information technology 78) Why is monitoring the technological environment crucial for marketing professionals?

Answer: (Students' answers may vary. The answer given below is indicative.)

The technological environment is perhaps the most dramatic force now shaping our destiny. The technological environment changes rapidly. New technologies create new markets and opportunities. However, every new technology replaces an older technology. Transistors hurt the vacuum-tube industry, digital photography hurt the film business, and MP3 players and digital downloads are hurting the CD business. When old industries fought or ignored new technologies, their businesses declined. Thus, marketers should watch the technological environment closely.

Companies that do not keep up will soon find their products outdated. If that happens, they will miss new product and market opportunities.

Diff: 2 Type: ES LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Analytical thinking 79) In a marketer's macroenvironment, the ________ environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

A) political B) cultural C) technological D) natural E) internal Answer: A Diff: 1 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking

25 © 2021 Pearson Canada Inc.

80) Governments most likely enact business legislation to ________.

A) prevent unfair competition in the market B) allow a single large monopoly in the market C) prevent alternative products from entering the market D) protect the interests of producers rather than society E) dissociate social responsibility from commerce Answer: A Diff: 1 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 81) Which of the following is most likely true about business legislation?

A) Business laws are enforced only in international markets and not in local markets.

B) Business laws fail to prevent unfair competition among the different companies in a market and tend to encourage monopolies.

C) Business laws usually remain constant over time.

D) Local, national, and state business laws rarely overlap with one another.

E) Business laws that are enforced by government agencies have a major impact on a company's marketing performance.

Answer: E Diff: 2 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 82) The boom in online, mobile, and social media has created a new set of social and ethical issues for companies. Their greatest concern involves ________.

A) failure to provide value-priced products for online customers B) protecting the privacy of knowing and unknowing customers C) providing too many alternative products online which confuses customers D) rarely following the marketing orientation when devising promotional offers online E) failing to reach their target customers through online marketing Answer: B Diff: 2 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Information technology 83) P&G "Tide Loads of Hope" program provides mobile laundromats and loads of clean laundry to families in disaster-stricken areas. This is an example of ________ marketing.

A) social B) environmental C) ethical D) cause-related E) charitable Answer: D Diff: 1 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 26 © 2021 Pearson Canada Inc.

84) Ursa Martin, a book publisher, has decided to work with Hope in Children, a charity foundation that helps feed and educate children in poor countries. Ursa Martin has decided that a percentage of revenue from every book it sells will go to the charity. The books are marketed by conveying this message to customers. Which of the following marketing techniques describes Ursa Martin's association with Hope in Children?

A) joint venture marketing B) cause-related marketing C) niche marketing D) green marketing E) test marketing Answer: B Diff: 2 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 85) Which of the following is most likely true about people's beliefs and values?

A) Belief in marriage is a secondary belief for most Canadians.

B) Secondary beliefs and values cannot be changed.

C) Marketers have a high chance of changing core beliefs and values.

D) Secondary beliefs are passed on from parents to children.

E) Core beliefs and values have a high degree of persistence.

Answer: E Diff: 2 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 86) Which of the following is primarily a true statement about people's views of work?

A) Many people view work as a required chore.

B) People don't expect companies to carry out society's work.

C) Confidence in political organizations has increased in recent years.

D) Loyalty towards employers has increased in the past two decades.

E) Many people today see organizations as a source of personal satisfaction.

Answer: A Diff: 2 Type: MC LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 87) Although most Canadians practise religion, religious conviction and practice have been increasing.

Answer: FALSE Diff: 1 Type: TF LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking

27 © 2021 Pearson Canada Inc.

88) Government regulations are intended to protect consumers, companies, and societal interests.

Answer: TRUE Diff: 1 Type: TF LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 89) Cause-related marketing techniques are typically unprofitable for businesses, which is why it is a rarely used form of corporate giving.

Answer: FALSE Diff: 2 Type: TF LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 90) Marketers have a better chance of taking advantage of a person's secondary beliefs than his or her core beliefs.

Answer: TRUE Diff: 1 Type: TF LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 91) Discuss how the political environment affects the marketing environment.

Answer: Marketing decisions are strongly affected by developments in the political environment. The political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

Governments develop public policy to guide commerce–sets of laws and regulations that limit business for the good of society as a whole. Almost every marketing activity is subject to a wide range of laws and regulations. Well-conceived regulation can encourage competition and ensure fair markets for goods and services. In Canada, there are many laws created at the national, provincial, and local levels, and these regulations often overlap. Moreover, regulations are constantly changing; what was allowed last year may now be prohibited, and what was prohibited may now be allowed. Marketers must work hard to keep up with changes in regulations and their interpretations.

Diff: 2 Type: ES LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking

28 © 2021 Pearson Canada Inc.

92) Give an instance where a company exhibits social responsibility through business.

Answer: (Students' answers may vary. The answer given below is indicative.)

To exercise their social responsibility and build a more positive image, many companies are now linking themselves to worthwhile causes. Cause-related marketing has become a primary form of corporate giving. It lets companies "do well by doing good" by linking purchases of the company's products or services with benefiting worthwhile causes or charitable organizations.

For example, the P&G Tide Loads of Hope program provides mobile laundromats and loads of clean laundry to families in disaster-stricken areas–P&G washes, dries, and folds clothes for these families for free. Down the street, needy people will probably find the P&G Duracell Power Relief Trailer, which provides free batteries and flashlights as well as charging stations for phones and laptops.

Diff: 3 Type: ES LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 93) Discuss the social and ethical concerns that the boom in digital technology has created for marketers.

Answer: (Students' answers may vary. The answer given below is indicative.)

The boom in Internet marketing has created a new set of social and ethical issues. Critics worry most about online privacy issues. There has been an explosion in the amount of personal digital data available. Users, themselves, supply some of it. They voluntarily place highly private information on social networking sites, such as Facebook or LinkedIn, or on genealogy sites that are easily searched by anyone with a computer or a smartphone. However, much of the information is systematically developed by businesses seeking to learn more about their customers, often without consumers realizing that they are under the microscope. Legitimate businesses track consumers' Internet browsing and buying behaviour and collect, analyze, and share digital data from every move consumers make at their online sites. Critics worry that these companies may now know too much and might use digital data to take unfair advantage of consumers. Although most companies fully disclose their Internet privacy policies and most try to use data to benefit their customers, abuses do occur.

Diff: 2 Type: ES LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning; Information technology

29 © 2021 Pearson Canada Inc.

94) Discuss with an example how marketers have adapted to people's changing views toward nature.

Answer: (Students' answers may vary. The answer given below is indicative.)

People vary in their attitudes toward the natural world. Recently, however, people have recognized that nature is finite and fragile; it can be destroyed or spoiled by human activities.

This renewed love of things natural has created a 41-million-person "lifestyles of health and sustainability" (LOHAS) market, consumers who seek out everything from natural, organic, and nutritional products to fuel-efficient cars and alternative medicine. For example, Tom's of Maine caters to such consumers with sustainable, all-natural personal care products–toothpaste, deodorant, mouthwash, and soap–made with no artificial colours, flavours, fragrances, or preservatives. The products are also "cruelty-free" (no animal testing or animal ingredients).

Tom's makes sustainable practices a priority in every aspect of its business and strives to maximize the recycled content and recyclability of its packaging. Finally, Tom's donates 10 percent of its pre-tax profits to charitable organizations.

Diff: 3 Type: ES LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 95) Which of the following is most likely a characteristic of firms that adopt a reactive approach toward the marketing environment?

A) They develop strategies to change the marketing environment.

B) They passively accept the marketing environment and do not try to change it.

C) They take aggressive actions to affect the marketing environment.

D) They view the marketing environment as a controllable element.

E) They do not accept the marketing environment as it is.

Answer: B Diff: 2 Type: MC LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 96) Which of the following is most likely true about companies that take a proactive stance toward the marketing environment?

A) They develop strategies to change the marketing environment.

B) They believe that marketing strategies are bound by the current environment.

C) They passively accept the marketing environment in its current state.

D) They view the marketing environment as an uncontrollable element.

E) They design strategies according to environmental forces in the market.

Answer: A Diff: 2 Type: MC LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking

30 © 2021 Pearson Canada Inc.

97) People's orientation to their society does not impact their consumption patterns and attitudes toward the marketplace.

Answer: FALSE Diff: 1 Type: TF LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 98) Firms that develop strategies to change the environment are considered proactive.

Answer: TRUE Diff: 1 Type: TF LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 99) Today's more-empowered consumers use the digital media to share their brand experiences with companies and with each other.

Answer: TRUE Diff: 2 Type: TF LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 100) Draw a comparison between the reactive and proactive approaches a company can take toward a changing marketing environment.

Answer: Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it. They analyze environmental forces and design strategies that will help the company avoid the threats and take advantage of the opportunities the environment provides.

This is a reactive approach. Other companies take a proactive stance toward the marketing environment. Instead of letting the environment define their strategy, they craft a strategy that defines the environment. Rather than assuming that strategic options are bounded by the current environment, these firms develop strategies to change the environment. Proactive firms take aggressive actions to affect the publics and forces in their marketing environment. Such companies hire lobbyists to influence legislation affecting their industries and stage media events to gain favourable press coverage. They run advertorials (ads expressing editorial points of view) and blogs to shape public opinion. They press lawsuits and file complaints with regulators to keep competitors in line, and they form contractual agreements to better control their distribution channels.

Diff: 2 Type: ES LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking

31 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 4 Managing Marketing Information to Gain Customer Insights 1) Which of the following demonstrates the real value of a company's marketing research and information system?

A) the amount of data it generates B) the variety of contact methods it uses C) the tools it uses to gather information D) the customer insights it provides E) the type of sampling plan it follows Answer: D Diff: 2 Type: MC LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Information technology 2) The initial function of a marketing information system is ________.

A) generating insights from market consumption patterns B) analyzing the results of marketing research studies C) evaluating information from internal and external sources D) assessing the information needs of a company E) hiring research firms to conduct market research Answer: D Diff: 1 Type: MC LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Information technology 3) Which of the following is true of a good marketing information system?

A) It focuses solely on maximizing the amount of data generated irrespective of relevance.

B) It typically uses only external sources of data in marketing research.

C) It helps decision makers use the information to generate customer and market insights.

D) It develops a way of offering information about future plans of action that might not be very feasible or cost-effective.

E) It eliminates the time-consuming task of assessing the information needs of a firm.

Answer: C Diff: 2 Type: MC LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Information technology

1 © 2021 Pearson Canada Inc.

4) Marketers don't need ________ information, they need ________ information. And they need to make better ________ of the information they already have.

A) less, more, reports B) sophisticated, simpler, conclusions C) more, better, use D) simpler, more, reports E) complicated, simplified, infographics Answer: C Diff: 3 Type: MC LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Information technology 5) Big data refers to the huge data sets generated by sophisticated information generation, collection, storage, and analysis technologies.

Answer: TRUE Diff: 2 Type: TF LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Information technology 6) Marketing Information Systems (MIS) do not collect and use data from the operations department (production, shipments) as they are not connected to the customer and therefore are not marketing related.

Answer: FALSE Diff: 2 Type: TF LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Information technology 7) Describe the components of a marketing information system (MIS) and list its three main functions.

Answer: A typical MIS consists of people and procedures for assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. A well-designed information system begins and ends with users. There are three main components.

First, it interacts with information users to assess information needs. Next, it develops needed information from internal company databases, marketing intelligence activities, and marketing research. Finally, it helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships.

Diff: 2 Type: ES LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Information technology

2 © 2021 Pearson Canada Inc.

8) Susan Hart, the manager of a children's boutique, collects data from her monthly records of sales, costs, and cash flow. In this case, Susan is making use of ________ databases.

A) external B) secondary C) historical D) internal E) dialog Answer: D Diff: 3 Type: MC LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking; Information technology 9) Which of the following sources constitutes the internal database of a company?

A) commercial online databases B) supplier information C) the company's sales transactions D) reports sold by market research firms E) big data Answer: C Diff: 1 Type: MC LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology 10) Although internal databases can be accessed more quickly and cheaply than other information sources, one of the challenges of internal databases is ________.

A) the inability to access B) maintaining the current database C) the lack of sophisticated equipment and technologies D) decision making about data collection software E) putting the customer at the centre of all decisions Answer: B Diff: 2 Type: MC LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology

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11) Hammond Corp. operates in the highly aggressive electronics market. The firm aims to obtain early warnings of opportunities and threats caused by the actions of other firms that are doing well in the industry. Which of the following sources would best serve Hammond's purpose?

A) sales data from exclusive Hammond retailers B) archival data on company performance C) competitive marketing intelligence D) research on demographics of its existing customers E) internal survey on employee performance Answer: C Diff: 3 Type: MC LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking 12) Which of the following statements regarding marketing intelligence is true?

A) Marketing intelligence typically involves sensitive and confidential information kept out of the public domain.

B) The advantage of using competitive intelligence is negligible as it is based only on internal sources of data.

C) All marketing intelligence inputs are available at no cost to any potential users.

D) Marketing intelligence is the systematic collection, monitoring, and analysis of publicly available information.

E) Marketing intelligence efforts are more focused on gaining insights into a firm's consumers rather than its competitors.

Answer: D Diff: 2 Type: MC LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology 13) Which of the following is true of competitive marketing intelligence?

A) It can predict a firm's future but not the pattern of forces in the market.

B) It cannot be collected from internal sources of a firm such as employees and the sales force.

C) It requires inside information from a competitors' internal database.

D) It can be obtained from information that is available in the public domain.

E) It can be obtained from online databases only through subscription and a fee.

Answer: D Diff: 1 Type: MC LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology

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14) Which of the following is not considered a source of competitive marketing intelligence?

A) observing consumers firsthand B) monitoring social media C) competitors' internal databases D) benchmarking competitors' products E) online research Answer: C Diff: 2 Type: MC LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology 15) Companies have set up social media command centres that monitor real-time brand-related online mobile media activity.

Answer: TRUE Diff: 2 Type: TF LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology 16) The database for documents and information filed by public Canadian companies and for investment funds is known as SEDAR (System for Electronic Document Analysis and Retrieval): Answer: TRUE Diff: 2 Type: TF LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology 17) The information collected for an internal database comes only from the marketing department and the customer service department.

Answer: FALSE Diff: 1 Type: TF LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology 18) Secondary data consist of information collected for the specific purpose at hand.

Answer: FALSE Diff: 1 Type: TF LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Information technology

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19) Marketers can obtain needed information from internal data, marketing intelligence, and marketing research. Describe some common sources of each.

Answer: Internal databases are built upon records of consumer and market information data sources within the company network. For example, the accounting department provides records of sales, costs, and cash flows; operations reports on production-related issues; the sales force provides data on resellers, competitors, buyer behaviour, and the industry; and marketing department provides information on customer transactions, demographics, and buying behaviour.

Internal data are cheaper sources that are easy to access. Marketing intelligence is a collection and analysis of publicly available data about consumers, competitors, and developments in the industry. It can come from quizzing employees, studying competitors' ads and annual reports, analyzing competitors' products, monitoring Internet buzz, and researching the Internet. In addition to internal data and marketing intelligence, marketers often need formal studies of specific situations. To address this need, they conduct marketing research to collect, analyze, and report secondary and primary data to better form decisions.

Diff: 2 Type: ES LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking; Information technology 20) ________ is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.

A) Test marketing B) Marketing research C) Commercialization D) Integrated marketing E) Exclusive distribution Answer: B Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 21) ________ is often the most difficult but most critical step in the research process.

A) Developing the research plan B) Collecting and analyzing the data C) Defining the problem and research objectives D) Interpreting the findings E) Gathering secondary data Answer: C Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge

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22) The marketing manager of Appeal Inc. has noticed a sharp decrease in sales over the last two months. The manager decides to conduct marketing research to identify potential causes for the drop in sales. Which of the following should the manager do first?

A) develop a research plan B) determine a research approach C) define the problem and objectives D) select a research agency to collect data E) conduct exploratory and descriptive research Answer: C Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 23) ________ is the final step in the marketing research process.

A) Developing the research plan B) Determining a research approach C) Interpreting and reporting the findings D) Engaging in secondary research E) Collecting and analyzing the data Answer: C Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 24) The objective of ________ research is to gather preliminary information that will help define the problem and suggest hypotheses.

A) descriptive B) exploratory C) causal D) corrective E) experimental Answer: B Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 25) Causal research is used to ________.

A) test hypotheses about cause-and-effect relationships B) gather preliminary data to define problems and their underlying causes C) collect information on the demographics of customers D) collect information on the attitudes of consumers E) generate hypotheses about the causes of a marketing problem Answer: A Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 7 © 2021 Pearson Canada Inc.

26) Vernon Inc. would like to set the best price for a new product. The firm conducts an experimental study by selling the new product at two different prices in two different locations keeping other factors constant to see if a lower price results in better sales. This is most likely an example of ________ research.

A) exploratory B) descriptive C) causal D) focus group E) ethnographic Answer: C Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 27) Coolers Inc. has decided to launch a new energy drink that will have the fewest calories among its competitors. To understand the market potential for the new drink and the demographics and attitudes of consumers who are likely to buy the product, Coolers should most likely use ________.

A) exploratory research B) archival research C) causal research D) experimental research E) descriptive research Answer: E Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 28) In most marketing research projects, what type of research is conducted first?

A) causal B) descriptive C) remedial D) corrective E) exploratory Answer: E Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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29) Brooke's Boutique plans to launch a new clothing line. For this purpose, the firm first conducts a survey to understand its target audience and identify the demographics of potential buyers. It then conducts experimental research to test whether customers associate discounted prices with lower product quality. Which types of research has the boutique employed in this case?

A) exploratory followed by causal B) exploratory followed by descriptive C) descriptive followed by exploratory D) descriptive followed by causal E) causal followed by descriptive Answer: D Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 30) ________ outline(s) sources of existing data as well as specific research approaches, sampling plans, and measurement instruments.

A) The research plan B) The data collection plan C) The main research objective D) The problem definition E) The research findings Answer: A Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 31) ________ data consist of information collected for the specific purpose at hand.

A) Primary B) Secondary C) Derived D) Archival E) Historical Answer: A Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge

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32) Which of the following is an advantage of primary data?

A) They are less expensive to obtain than secondary data.

B) They can be obtained more quickly than secondary data.

C) They can be accessed from existing information.

D) They are more relevant than secondary data.

E) They are more reflective of past problems.

Answer: D Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 33) Information collected from commercial online databases or through Internet search engines are examples of ________ data.

A) primary B) secondary C) first-hand D) experimental E) ethnographic Answer: B Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 34) Annie Carson, the owner of Annie's Dairy Bar, is considering opening a second location. She evaluates several potential sites by assessing traffic patterns, neighborhood conditions, and the locations of competitors. Annie is engaging in ________.

A) observational research B) focus groups C) personal interviews D) Internet-based surveys E) experimental research Answer: A Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 35) Which of the following is a quantitative approach to research?

A) observational research B) online focus groups C) ethnographic research D) in-depth interviews E) marketing surveys Answer: E Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 10 © 2021 Pearson Canada Inc.

36) Ethnographic research is ________.

A) a standard analysis of publicly available information B) conducted in settings where people live and work C) an approach that provides only secondary data D) most feasible when customers live in distant locations E) used by marketers seeking quantitative data Answer: B Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 37) A company that sells personal care products sends a trained observer to watch potential buyers in their natural environments. This is an example of ________ research.

A) quantitative B) online C) ethnographic D) experimental E) archival Answer: C Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 38) Which of the following is a disadvantage of secondary data?

A) It is collected for another purpose.

B) It can be obtained quickly.

C) It can be obtained at a lower cost than primary data.

D) It is only available through Internet search engines.

E) It must be purchased from commercial online databases.

Answer: B Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 39) ________ is a method of gathering primary data that involves asking people questions about their knowledge, attitudes, preferences, and buying behaviour.

A) Observational research B) Archival research C) Survey research D) Experimental research E) Causal research Answer: C Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge

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40) Which of the following is true of survey research?

A) It is the most widely used method for gathering primary data.

B) It is the most suitable method for establishing causal relationships.

C) It is the best method to use when people are unwilling to answer questions.

D) It is not suitable for collecting data for descriptive research.

E) It is inflexible and cannot be used in many different situations.

Answer: A Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 41) A major advantage of a mail survey is that it ________.

A) provides significant flexibility B) offers strong sample control C) generates high response rates D) eliminates interviewer bias E) can be completed quickly Answer: D Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 42) Mail surveys have many disadvantages so many marketers have switched to ________.

A) telephone surveys B) Internet-based surveys C) group interviews D) personal surveys E) individual interviews Answer: B Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 43) Experimental research is best suited for gathering ________ information.

A) exploratory B) causal C) ethnographic D) interactive E) descriptive Answer: B Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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44) A(n) ________ is best suited for exploratory research.

A) mail survey B) questionnaire C) observation D) online survey E) focus group Answer: C Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 45) ________ is best suited for descriptive research.

A) An online discussion B) Ethnographic research C) Experimental research D) A survey E) A focus group Answer: D Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 46) A market researcher wants to find the cause-and-effect relationship between using organic ingredients in food and the subsequent consumption by customers. He invites ten respondents to his research firm and asks them to taste two identical dishes. The dishes were prepared in a similar manner, but one has natural herbs for flavouring, and the other has artificial flavours.

This is an example of ________.

A) descriptive research B) ethnographic research C) experimental research D) online research E) exploratory research Answer: C Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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47) Burger Town introduced a new hamburger and released it in two different cities at two different prices. Marketers of Burger Town then analyzed the sales records of their outlets at the two cities, determined the price that resulted in better profits, and used the information to set a nationwide price for their new offering. This is an example of ________.

A) exploratory research B) survey research C) focus group research D) experimental research E) descriptive research Answer: D Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 48) Kathy Jenkins is planning to conduct research on consumers' personal care routines. Since the questions are likely to be personal and sensitive, Kathy wants to select a contact method that will encourage respondents to answer honestly. Which of the following contact methods is most likely to best serve Kathy's purpose?

A) mail questionnaires B) telephone interviews C) individual interviews D) focus group interviews E) online discussions Answer: A Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 49) ________ are flexible and allow for explanation of difficult questions as well as demonstrating products.

A) Mail questionnaires B) Telephone interviews C) Individual interviews D) Online questionnaires E) E-mail interviews Answer: C Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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50) Which of the following is true of focus group discussions?

A) They usually employ large samples.

B) Consumers' facial expressions are hidden.

C) Results can be easily generalized to an entire population.

D) The quantitative data can be evaluated quickly and economically.

E) Consumers are not always honest and open about their opinions.

Answer: E Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 51) ________ are small groups of consumers who interact directly and informally with product designers without a moderator.

A) Cross-functional groups B) Ethnographic groups C) Observational groups D) Immersion groups E) Traditional focus groups Answer: D Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 52) Proctor and Gamble (P&G) long ago mastered "Living It" which is more scientifically labelled as ________.

A) consumer immersion research B) empathetic data collection C) full time market research D) digital data gathering E) individual big data collection Answer: A Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 53) Sample size and location have little impact on costs for ________.

A) focus group interviews B) personal interviews C) mail surveys D) Internet-based surveys E) telephone surveys Answer: D Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology

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54) Erica Jenson has a limited budget to conduct market research. Which of the following research approaches would provide Erica with the most cost-effective way to reach a large number of respondents in a short period?

A) telephone surveys B) personal interviews C) Internet-based surveys D) mail surveys E) focus group interviews Answer: C Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 55) Simply collecting and storing huge amounts of data is of limited value. As stated by one data expert, "________ data trumps ________ data."

A) big, small B) big, right C) wrong, no D) right, big E) inaccurate, no Answer: D Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 56) Which of the following is a structured method of online research where marketers require direct responses from customers?

A) online behavioural targeting B) social media tracking C) online listening D) online surveys E) blog analysis Answer: D Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology

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57) A practice called ________ allows marketers to use online data to target ads and offers to specific customers.

A) online listening B) behavioural targeting C) social media tracking D) data analytics E) online targeting Answer: B Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 58) Harmon, a nationwide department store, uses checkout scanners to record shoppers' purchases. Which term best describes Harmon's checkout scanners?

A) nonprobability sampling tool B) mechanical instrument C) neuromarketing tool D) touch point device E) CRM system Answer: B Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 59) What are the two main types of research instruments used to collect primary data?

A) observation scales and personal interviews B) questionnaires and mechanical devices C) focus groups and mechanical devices D) focus groups and questionnaires E) personal interviews and online focus groups Answer: B Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 60) The most common research instrument, whether administered in person, by phone, by email, or online, is the ________.

A) mechanical device B) personal interview C) questionnaire D) telephone interview E) focus group Answer: C Diff: 1 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 17 © 2021 Pearson Canada Inc.

61) Which of the following is true of question formats in questionnaires?

A) Closed-ended questions allow respondents to answer in their own words.

B) A scale question is an example of an open-ended question.

C) Open-ended questions allow respondents to choose among the best answer options available.

D) Closed-ended questions are difficult to evaluate when compared to open-end questions.

E) Open-ended questions are useful in exploratory research to find out what people think.

Answer: E Diff: 3 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 62) Data collection, processing, and analysis are undertaken during which stage of the marketing research process?

A) selecting a sampling method B) interpreting the findings C) implementing the research plan D) drawing conclusions from the findings E) selecting a research approach Answer: C Diff: 2 Type: MC LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 63) In this age of big data, one of the larger challenges facing marketing managers is being overwhelmed with large volumes of data.

Answer: TRUE Diff: 1 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 64) A sample is a segment of the population selected for marketing research to represent the population as a whole.

Answer: TRUE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 65) Using nonprobability samples, each population member has a known chance of being included in the sample, and researchers can calculate confidence limits for sampling error.

Answer: FALSE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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66) The primary objective of causal research is to describe things, such as the market potential for a product or the demographics and attitudes of consumers who buy the product.

Answer: FALSE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 67) In a convenience sample, the researcher selects the easiest population members from which to obtain information.

Answer: TRUE Diff: 3 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 68) Primary data can usually be obtained more quickly and at a lower cost than secondary data.

Answer: FALSE Diff: 1 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 69) Exploratory research would be used to gather data about the market potential for a new product.

Answer: FALSE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 70) Observational research is the most widely used method of primary data collection.

Answer: FALSE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 71) The major advantage of survey research is its flexibility.

Answer: TRUE Diff: 1 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 72) Researchers should use simple, direct, and unbiased wording of questions for research.

Answer: TRUE Diff: 1 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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73) Individual interviews cost three to four times as much as telephone interviews.

Answer: TRUE Diff: 1 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 74) Ideally, a sample should be representative so that a researcher can make accurate estimates of the thoughts and behaviours of the larger population.

Answer: TRUE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Reflective thinking 75) Each population member has a known chance of being included when a probability sampling procedure is used.

Answer: TRUE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 76) The questionnaire is the most common research instrument.

Answer: TRUE Diff: 1 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 77) Neuromarketing uses EEG and MRI technologies to track brain electrical activity to learn how consumers feel and respond.

Answer: TRUE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 78) Open-ended questions are especially useful in exploratory research, when the researcher is trying to find out what people think but not measuring how many people think in a certain way.

Answer: TRUE Diff: 1 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 79) Neuromarketing is used in combination with other research approaches to gain a more complete picture of what goes on inside consumers' heads.

Answer: TRUE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 20 © 2021 Pearson Canada Inc.

80) Open-ended questions provide answers that are easier to interpret and tabulate than closedended questions.

Answer: FALSE Diff: 2 Type: TF LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 81) Explain the steps involved in the marketing research process.

Answer: The marketing research process involves four steps: defining the problem and research objectives, developing the plan, implementing the plan, and interpreting and reporting the findings. Managers must know what is wrong in order to define the problem. Research objectives may be reached through exploratory, descriptive, or causal research. Once researchers have defined the research problem and objectives, they must determine the exact information needed and develop a plan for gathering it efficiently. The research plan should be presented in a written proposal and must include the cost for the research. Once this is done, secondary and primary data is collected and compiled. Then, the data is interpreted to draw conclusions, and finally reported to management.

Diff: 2 Type: ES LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 82) Discuss the methods used by marketing researchers to gather secondary data.

Answer: A company's internal database provides a good starting point to gather secondary data.

However, the company can also tap into a wide assortment of external information sources.

Companies can buy secondary data from outside suppliers. For example, Nielsen sells shopper insight data from a consumer panel of more than 250,000 households in 25 countries worldwide, with measures of trial and repeat purchasing, brand loyalty, and buyer demographics. Using commercial online databases, marketing researchers can conduct their own searches of secondary data sources. General database services such as Dialog, ProQuest, and LexisNexis put an incredible wealth of information at the keyboards of marketing decision makers. Beyond commercial websites offering information for a fee, almost every industry association, government agency, business publication, and news medium offers free information to those tenacious enough to find their websites. Internet search engines can also be a big help in locating relevant secondary information sources.

Diff: 2 Type: ES LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology

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83) Marketing research can be collected by mail, telephone, personal interview, or online.

Discuss the advantages of each contact method.

Answer: Mail questionnaires can be used to collect large amounts of information at a low cost per respondent. Respondents give more honest answers to more personal questions on a mail questionnaire, and there is no interviewer involved to potentially bias respondents' answers.

Telephone interviewing helps gather information quickly and provides greater flexibility.

Interviewers can explain difficult questions, as well as skip some questions or probe on others.

Personal interviewing takes two forms: individual interviewing and group interviewing.

Individual interviewing is flexible. Trained interviewers can guide interviews, show subjects actual products, and observe reactions and behaviour. Group interactions help bring out actual feelings and thoughts.

Researchers can quickly and easily distribute Internet surveys to thousands of respondents simultaneously via e-mail or by posting them on selected online sites. Responses can be almost instantaneous, and researchers can tabulate, review, and share research data as the information arrives.

Diff: 2 Type: ES LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Reflective thinking 84) Marketing research can be collected by mail, telephone, personal interview, or online.

Discuss the disadvantages of each contact method.

Answer: Mail questionnaires are not very flexible; all respondents answer the same questions in a fixed order. Mail surveys usually take longer to complete, and the response rate is often very low. The researcher often has little control over the mail questionnaire sample.

With telephone interviewing, the cost per respondent is higher than with mail or online questionnaires. Also, people may not want to discuss personal questions with an interviewer. The method introduces interviewer bias.

Individual personal interviews may cost three to four times as much as telephone interviews.

Group interviews usually employ small samples to keep time and costs down, and it may be hard to generalize from the results. Moreover, consumers in focus groups are not always open and honest about their real feelings, behaviour, and intentions in front of other people.

One major problem with Internet surveys is controlling who's in the online sample. Without seeing respondents, it's difficult to know who they really are.

Diff: 2 Type: ES LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Reflective thinking

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85) Compare and contrast closed-ended questions and open-ended questions for gathering data.

Answer: Closed-ended questions, which include all the possible answers, make it easier for respondents to choose among relevant answers. They are also easier for the researcher to interpret and tabulate. Open-ended questions, on the other hand, allow respondents to answer in their own words and do not limit their choices. Open-ended questions are more difficult to interpret and tabulate, but they are particularly useful in exploratory research.

Diff: 1 Type: ES LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 86) What is neuromarketing? How is neuromarketing used by marketers?

Answer: Neuromarketing involves measuring brain activity to learn how consumers feel and respond. Marketing scientists using MRI scans and EEG devices have learned that tracking brain electrical activity and blood flow can provide companies with insights into what turns consumers on and off regarding their brands and marketing. Companies ranging from PepsiCo and Disney to Google and Microsoft now hire neuromarketing research companies to help figure out what people are really thinking. Although neuromarketing techniques can measure consumer involvement and emotional responses second by second, such brain responses can be difficult to interpret. Thus, neuromarketing is usually used in combination with other research approaches to gain a more complete picture of what goes on inside consumers' heads.

Diff: 1 Type: ES LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Information technology 87) You successfully worked with classmates in a marketing course project where your team created a product that addresses an unmet need. Your professor gave your team a very good score and commented that the idea has 'real world merit.' As you approach graduation and consider career options, the allure of starting your own company is growing increasingly attractive. You speak to your former marketing team members and they want to join you as you consider developing your project idea. You do not know the viability of your product. Describe how you will proceed to build your marketing research initiative (defining the problem and objectives) using Exploratory, Descriptive and Causal research.

Answer: The response should properly order the three approaches in order to first determine what the students need to know and how they can go about acquiring the information. The objective of each level should be clearly stated: Exploratory is early stage and gather preliminary information that will help define the problem and suggest hypothesis.

Descriptive is to describe things, such as the market potential for a product or the demographics and attitudes of consumers who may buy the product.

Causal research is the testing of the hypothesis about cause-and-effect relationships.

The statement of the problem and research objectives guides the entire research process.

Diff: 2 Type: ES LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge

23 © 2021 Pearson Canada Inc.

88) Which of the following is true about customer relationship management (CRM)?

A) It eliminates the need for primary research.

B) It minimizes the need for costly marketing analytics.

C) It relies on the use of exploratory and causal research.

D) It consists of sophisticated software and analytical tools.

E) It excludes data on existing customers to focus on potential customers.

Answer: D Diff: 2 Type: MC LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Information technology 89) Marketers apply ________ to the large and complex sets of data they collect to gain customer insights and gauge performance.

A) CRM software B) predictive analysis software C) marketing analytics D) CRM systems E) intranet capabilities Answer: C Diff: 1 Type: MC LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Information technology 90) Suppliers and resellers can update their accounts, arrange purchases, and check orders against inventories through ________.

A) a company's extranet B) a company's intranet C) marketing intelligence D) electronic mail E) search engines Answer: A Diff: 1 Type: MC LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Information technology 91) At PepsiCo, marketing research departments have evolved from providing data to ________.

A) providing big data B) developing algorithms to interpret the data C) blogging with customers to understand current conditions D) forming customer insights teams E) writing customized CRM software to suit the company's needs Answer: D Diff: 2 Type: MC LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Information technology

24 © 2021 Pearson Canada Inc.

92) CRM analysts use big data and marketing analytics to unearth patterns in customer data.

Answer: TRUE Diff: 2 Type: TF LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Information technology 93) Differentiate between intranets and extranets. How are such systems beneficial to marketing managers?

Answer: Information distribution involves entering information into databases and making it available in a timely, user-friendly way. Many firms use company intranet and internal CRM systems to facilitate this process. These systems provide ready access to research and intelligence information, customer contact information, reports, shared work documents, and more. In addition, companies are increasingly allowing key customers and value-network members to access account, product, and other data on demand through extranets. Suppliers, customers, resellers, and select other network members may access a company's extranet to update their accounts, arrange purchases, and check orders against inventories to improve customer service.

Diff: 2 Type: ES LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Information technology 94) What is marketing analytics? Why has it become so central to gathering data about customers and performance?

Answer: Marketing analytics consists of the analysis tools, technologies, and processes by which marketers dig out meaningful patterns in big data to gain customer insights and gauge marketing performance. Marketers apply marketing analytics to the large and complex sets of data they collect from Web, mobile, and social media tracking; customer transactions and engagements; and other big data sources. For example, Netflix maintains a bulging customer database and uses sophisticated marketing analytics to gain insights, which it then uses to fuel recommendations to subscribers, decide what programming to offer, and even develop its own exclusive content in the quest to serve its customers better. Marketing analytics is necessary to convert the wealth of data into information that is both usable and valuable for marketers.

Gathering and sifting through the big data is essential for uncovering insights about customers and performance that are actionable.

Diff: 2 Type: ES LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Information technology

25 © 2021 Pearson Canada Inc.

95) A not-for-profit firm uses a small convenience sample to gather data on customer reactions.

It invites a small group of customers for lunch and asks them to share what they think about the products they have purchased from the firm. This is an example of ________.

A) informal surveys B) experimental research C) neuromarketing D) direct marketing E) formal surveys Answer: A Diff: 2 Type: MC LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Application of knowledge 96) Which of the following would most likely use informal research methods to obtain marketing insights?

A) multinational firms B) pharmaceutical firms C) brick-and-mortar companies D) not-for-profit organizations E) family-owned businesses Answer: D Diff: 2 Type: MC LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Analytical thinking 97) Vincent Cosmetics decides to launch a cream with a claim that it makes skin "nine times smoother." The claim is based on a study of 30 respondents who used products of other brands as well. However, a second study on a larger sample reveals only a mild correlation between the use of the cream and smoother skin. Describe the most ethical approach that Vincent Cosmetics should follow? Explain your reasoning behind this decision.

Answer: The company should be forthright and immediately announce the newer, more accurate results. Sufficed to say that a sample size of 30 individuals is inappropriate to begin with so accepting this insufficient data was unscrupulous behaviour. The company should be expected to offer remedy for those who purchased under false pretences. The other option is to improve the product to the original claims.

Diff: 3 Type: ES LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Ethical understanding and reasoning

26 © 2021 Pearson Canada Inc.

98) Jimmy's Great Coffee has enjoyed strong national success serving fresh brewed coffee and homestyle baked goods. In the pursuit of sustained growth, the executive committee has determined that Jimmy's will expand internationally in the next two years and attractive foreign markets must be identified. In addition to identifying potential markets and the necessary research that will be conducted in order to make better foreign expansion decisions, the marketing director must consider issues that may arise when developing a market research strategy. What does the marketing director need to consider when contemplating a research strategy abroad?

Answer: Several important factors must be considered. These include language translation, domestic laws associated with conducting marketing research that may differ from the domestic market. Other considerations are different societal norms and standards, levels of economic development, buying patterns that need to be understood before delving into the data collection.

The availability and accessibility of accurate secondary data may also represent a challenge.

Diff: 2 Type: ES LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Application of knowledge 99) Discuss several ways in which small organizations can conduct marketing research at little or no expense.

Answer: Small organizations can use the same marketing research processes used by larger firms, as well as many of the same methods, such as secondary data collection, observation, surveys, and experiments. There are many sources of free secondary data on the Web, and small firms also have access to special help collecting data from chambers of commerce, government agencies, and other organizations. Managers of small organizations can use observation to collect data. For example, they can monitor competitors' advertisements, evaluate their own customer mix, and regularly visit their competitors' places of business. Informal surveys with small convenience samples are another tool that smaller organizations can use. Finally, managers of smaller organizations can conduct simple experiments by altering one aspect of a marketing strategy and analyzing the results. As with larger firms, smaller organizations must conduct research systematically for the results to be valid and useful.

Diff: 2 Type: ES LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Reflective thinking

27 © 2021 Pearson Canada Inc.

100) How has the marketing research industry responded to the intrusion and privacy issues concerning consumer data?

Answer: The marketing research industry is considering several options for responding to intrusion and privacy issues. One example is the Marketing Research Association's "Your Opinion Counts" and "Respondent Bill of Rights" initiatives to educate consumers about the benefits of marketing research and distinguish it from telephone selling and database building.

The industry also has considered adopting broad standards, perhaps based on the International Chamber of Commerce's International Code of Marketing and Social Research Practice. This code outlines researchers' responsibilities to respondents and the general public. For example, it urges that researchers make their names and addresses available to participants and be open about the data they are collecting.

Diff: 2 Type: ES LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Ethical understanding and reasoning

28 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 5 Understanding Consumer and Business Buyer Behaviour 1) A child in Canada is exposed to many values including freedom, the beauty of our natural landscape, our belief in respect, equality, and fair treatment; family life; and being Canadian.

These are symbolic of Canadian ________.

A) subculture B) culture C) society D) perceptions E) expectations Answer: B Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 2) Many marketers now embrace a ________ strategy, integrating ethnic and cross-cultural perspectives within their mainstream marketing.

A) total market B) cultural marketing C) viral marketing D) social marketing E) cause marketing Answer: A Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Diverse and multicultural work environments 3) Subcultures include ________.

A) nationalities.

B) religions.

C) racial groups.

D) geographic regions.

E) All of the above Answer: E Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Diverse and multicultural work environments

1 © 2021 Pearson Canada Inc.

4) Which of the following is most likely a true statement about social class?

A) Members of a social class vary drastically in their values, interests, and behaviours.

B) In Canada, the lines between social classes are fixed and rigid.

C) Social classes show distinct product preferences in areas such as clothing.

D) Wealth is a more important variable than education in measuring social class.

E) Consumers of the same age belong to the same social class.

Answer: C Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 5) Which of the following is a social factor that influences consumer buying behaviour?

A) family B) life-cycle stage C) economic situation D) personality E) occupation Answer: A Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 6) A shoe company's ads feature the members of a popular country music band. Product sales increase significantly among the band's fans. From the fans' viewpoint, the band is a ________.

A) membership group B) reference group C) laggard D) subculture E) late-majority adopter Answer: B Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking

2 © 2021 Pearson Canada Inc.

7) An important social media development that has been adapted by market savvy companies like Disney, Walmart, and McDonalds focuses on this power group as Brand Ambassadors ________.

A) children B) millennials C) moms D) single parents E) teachers Answer: C Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 8) ________ involves enlisting or even creating opinion leaders to serve as brand ambassadors who spread the word about a company's products.

A) Social marketing B) Traditional marketing C) Word-of-Mouth marketing D) Direct marketing E) Values marketing Answer: C Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 9) When marketers want to promote their products and services through word-of-mouth marketing programs, they typically begin by ________.

A) pushing one-way commercials at customers B) identifying and targeting late adopters C) developing print and radio advertisements D) generating person-to-person brand conversations E) withdrawing from online social networks Answer: D Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking

3 © 2021 Pearson Canada Inc.

10) What is the most important consumer buying organization in society?

A) leading adopters B) the family C) membership groups D) reference groups E) aspirational groups Answer: B Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 11) A(n) ________ reflects the general esteem given to the different roles of a person by society.

A) motive B) attitude C) belief D) tradition E) status Answer: E Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 12) Which of the following is a personal factor that influences a consumer's buying behaviour?

A) life-cycle stage B) motivation C) status D) family E) social networks Answer: A Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge

4 © 2021 Pearson Canada Inc.

13) A marketing firm has been assigned the task of watching trends in spending, personal income, savings, and interest rates. The marketing firm is most likely gathering information about consumers' ________.

A) social network usage rates B) economic situations C) occupational needs D) purchasing perceptions E) brand affiliations Answer: B Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 14) Which of the following is a psychographic characteristic of a consumer?

A) gender B) age C) lifestyle D) occupation E) economic status Answer: C Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 15) ________ refers to the unique psychological characteristics that distinguish a person or group.

A) Personality B) Lifestyle C) Status D) Attitude E) Role Answer: A Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking

5 © 2021 Pearson Canada Inc.

16) Which of the following terms is used to describe a specific mix of human traits that may be attributed to a particular brand?

A) brand perception B) brand architecture C) brand personality D) brand loyalty E) brand equity Answer: C Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 17) A baby boomer decides to purchase a BMW to impress others with her success. This illustrates the importance of understanding the role of ________ in the marketing process.

A) personality B) motive C) attitude D) learning E) perception Answer: B Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 18) According to Sigmund Freud's theory, a person's buying decisions are ________.

A) easily revealed through online marketing surveys and questionnaires B) affected by motives that the person is completely aware of C) always driven by the need for status and independence D) motivated by needs that are arranged in a hierarchy E) affected by subconscious, hidden motivations Answer: E Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking

6 © 2021 Pearson Canada Inc.

19) Which of the following needs in Maslow's hierarchy is generally satisfied last?

A) physiological B) social C) esteem D) self-actualization E) safety Answer: D Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 20) According to Maslow's hierarchy of needs, which of the following is most likely an esteem need?

A) love B) security C) hunger D) self-development E) status Answer: E Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 21) Hallmark's classic "When you care enough to send the very best" slogan appeals to which need category in Maslow's hierarchy?

A) physiological B) social C) esteem D) self-actualization E) safety Answer: B Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking

7 © 2021 Pearson Canada Inc.

22) ________ is the process by which people select, organize, and interpret information to form a meaningful picture of the world.

A) Retention B) Motivation C) Selective perception D) Perception E) Learning Answer: D Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 23) ________ means that consumers are likely to remember good points made about a brand they favour and forget the good points made about competing brands.

A) Selective retention B) Selective distortion C) Selective attention D) Restraint bias E) Subliminal perception Answer: A Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 24) A(n) ________ becomes a motive when it is directed toward a particular stimulus object.

A) cue B) drive C) response D) belief E) attitude Answer: B Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge

8 © 2021 Pearson Canada Inc.

25) The McDonald's corporate brand name and golden arches can be classified as ________ that may potentially stimulate an individual's attention and decision about whether or not to dine at the restaurant.

A) cues B) drives C) motives D) needs E) attitudes Answer: A Diff: 2 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 26) A(n) ________ describes a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea.

A) role B) cue C) drive D) attitude E) motive Answer: D Diff: 1 Type: MC LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 27) Social class in Canada is not as well-defined as that of our neighbours to the south (United States) and most Canadians like to define themselves as middle-class.

Answer: TRUE Diff: 1 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 28) Subcultures are groups of people with shared value systems based on common life experiences and situations.

Answer: TRUE Diff: 1 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge

9 © 2021 Pearson Canada Inc.

29) Reference group influence on consumer buying behaviour does not vary across products and brands.

Answer: FALSE Diff: 1 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 30) A role consists of the activities people are expected to perform according to the people around them.

Answer: TRUE Diff: 1 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 31) Learning describes changes in an individual's behaviour arising from experience.

Answer: TRUE Diff: 1 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 32) According to Maslow's theory, safety and social needs must be fulfilled after selfactualization needs.

Answer: FALSE Diff: 2 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 33) A belief is a descriptive thought that a person holds about something. Beliefs may be based on real knowledge, opinion, or faith and may or may not carry an emotional charge.

Answer: TRUE Diff: 1 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Application of knowledge 34) It's advisable for a company to fit its products into existing attitude patterns rather than attempt to change them.

Answer: TRUE Diff: 2 Type: TF LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 10 © 2021 Pearson Canada Inc.

35) Explain the cultural factors that influence consumer behaviour, then distinguish the social class influences in the United States when compared to Canada.

Answer: Culture is the most basic cause of a person's wants and behaviour. Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. Many subcultures make up important market segments. Social classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviours. Unlike nationality or ethnic subculture, social class is determined by a combination of many variables, such as occupation, income, education, and wealth. While social scientists have identified seven social classes within the American culture, ranging from upper class to lower class, Canada is not as well-defined, and most Canadians like to define themselves as middle-class.

Diff: 2 Type: ES LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Diverse and multicultural work environments 36) Describe the buying behaviour, characteristics, and media habits of different subcultures in Canada.

Answer: Many subcultures make up important market segments, and marketers often design products and marketing programs tailored to their needs. Examples of three such important subculture groups in Canada are regional subcultures, founding nations, and ethnic subcultures.

Canada is a regional country, so marketers may develop distinctive programs for the Atlantic provinces, Quebec, Central Canada, the Prairies and BC. Canada has three founding nations: the English, French and Indigenous Peoples. The unique history and language of each of these nations has driven many of the cultural differences that result in different buying behaviours across Canada.

According to the 2016 Census, approximately 21.9 percent of Canada's population is an immigrant to Canada. 70 percent of the visible minority population were born outside Canada.

Canadian companies are realizing the importance of culturally relevant advertising that reaches visible minority populations.

Diff: 3 Type: ES LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Diverse and multicultural work environments

11 © 2021 Pearson Canada Inc.

37) Explain the concepts of word-of-mouth influence, opinion leaders, and buzz marketing.

Answer: Word-of-mouth influence can have a powerful impact on consumer buying behaviour.

The personal words and recommendations of trusted friends, associates, and other consumers tend to be more credible than those coming from commercial sources. Most word-of-mouth influence happens naturally: Consumers start chatting about a brand they use or feel strongly about one way or the other. Often, however, rather than leaving it to chance, marketers can help to create positive conversations about their brands. Marketers of brands subjected to strong group influence must figure out how to reach opinion leaders–people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others. Marketers try to identify opinion leaders for their products and direct marketing efforts toward them. Buzz marketing involves enlisting or even creating opinion leaders to serve as "brand ambassadors" who spread the word about a company's products. For example, MercedesBenz wanted to get more people talking about its all-new, soon-to-be-launched 2014 CLA model, priced at $29,900 and aimed at getting a new generation of younger consumers into the Mercedes brand. So, it challenged five of Instagram's most influential photographers–everyday Gen Y consumers whose stunning imagery had earned them hundreds of thousands of fans–to each spend five days behind the wheel of a CLA, documenting their journeys in photos shared via Instagram. The photographer who got the most "likes" got to keep the CLA. The short campaign really got people buzzing about the car, earning 87 million social media impressions and more than 2 million likes. Ninety percent of the social conversation was positive. And when Mercedes launched the CLA the following month, the CLA broke sales records. Many companies now create brand ambassador programs in an attempt to turn influential but everyday customers into brand evangelists.

Diff: 2 Type: ES LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Reflective thinking

12 © 2021 Pearson Canada Inc.

38) A consumer's behaviour is influenced by social factors, such as the consumer's small groups, family, and social roles and status. Explain the differences among these social factors.

Answer: Many small groups influence a person's behaviour. Groups that have a direct influence and to which a person belongs are called membership groups. Reference groups serve as direct or indirect points of comparison or reference in forming a person's attitudes or behaviours. An aspirational group is one to which the individual wishes to belong. Reference groups expose a person to new behaviours and lifestyles, influence a person's attitudes and self-concept, and create pressures to conform that may affect the person's product and brand choices. Opinion leaders are also included in reference groups. Family members can strongly influence buyer behaviour and are the most important consumer buying organization in society. Marketers are interested in the changing roles and influence of each family member, particularly as male and female purchasing roles evolve and children wield more purchasing influence. Within groups, including families, the position of an individual is defined by role and status. A role consists of the activities people are expected to perform according to the persons around them, while status is the general esteem given to that role. People tend to choose products that fit their roles and status.

Diff: 1 Type: ES LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 39) What are personality traits, and how do they affect purchase behaviour? Explain with an example.

Answer: Personality refers to the unique psychological characteristics that distinguish a person or group. Personality is described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness. Personality can be useful in analyzing consumer behaviour for certain product or brand choices. Consumers are likely to choose brands with personalities that match their own. A brand personality is the specific mix of human traits that may be attributed to a particular brand. One researcher identified five brand personality traits: sincerity (down-to-earth, honest, wholesome, and cheerful), excitement (daring, spirited, imaginative, and up to date), competence (reliable, intelligent, and successful), sophistication (glamorous, upper class, charming), and ruggedness (outdoorsy and tough). Most well-known brands are strongly associated with one particular trait: The Ford F150 with "ruggedness," Apple with "excitement," the Washington Post with "competence," Method with "sincerity," and Gucci with "class" and "sophistication." Hence, these brands will attract persons who are high on the same personality traits.

Diff: 2 Type: ES LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking

13 © 2021 Pearson Canada Inc.

40) Describe the influence of the values of the Indigenous population on Canadians.

Answer: More than 1.67 million people (4.9 percent) of the Canadian population reported Indigenous identities in the 2016 Census. Not only do Indigenous people in Canada have distinct cultures that influence their values and purchasing behaviour, but they have also profoundly influenced the rest of Canada through their art, love of nature, and concern for the environment.

Through effective communications, Canadians have a richer awareness of the history of Indigenous communities. Firms in banking and communications are leading industries developing products and services, but others are following suit by tailoring marketing efforts to Indigenous peoples.

Diff: 2 Type: ES LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behaviour.

AACSB: Analytical thinking 41) Which of the following is the first stage of the buyer decision process?

A) need recognition B) information search C) evaluation of alternatives D) purchase decision E) postpurchase behaviour Answer: A Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 42) Becca wants to buy a new coat. She asks her friends to recommend a store and/or a style of coat. She looks for sale advertisements for coats in newspapers and also visits nearby stores to check if she can find a coat in her budget. In this case, Becca is most likely in the ________ stage of the buyer decision process.

A) product evaluation B) evaluation of alternatives C) need recognition D) information search E) purchase decision Answer: D Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking

14 © 2021 Pearson Canada Inc.

43) Traditionally, consumers have received the most information about a product from ________ sources–those controlled by the marketer.

A) public B) personal C) commercial D) experimental E) experiential Answer: C Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 44) Which of the following is a commercial source of product information?

A) acquaintances B) family and friends C) dealer and manufacturer websites and mobile sites D) consumer rating organizations E) Internet searches Answer: C Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 45) The most effective sources of information about a product are ________.

A) commercial B) public C) experimental D) personal E) paid Answer: D Diff: 1 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 46) Devon is in the market for a new car. She is seriously considering either a Honda Civic or Toyota Corolla because they both have excellent quality and safety ratings and are comparable in price. Devon is in the ________ stage of the buyer decision process.

A) evaluation of alternatives B) need recognition C) information search D) purchase decision E) postpurchase behaviour Answer: A Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 15 © 2021 Pearson Canada Inc.

47) Jeff is in the process of buying a new car. He carefully analyzes the features that he wants in a car, and perceives significant differences in price, quality, and features among three of his favourite models. He rates the models on each factor and ranks them in the order of his preference. To which of the following stages of the buyer decision process will Jeff most likely proceed next?

A) postpurchase behaviour B) evaluation of alternatives C) information search D) need recognition E) purchase decision Answer: E Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 48) Simone bought two bottles of wine from two vineyards in Bordeaux. When asked for an opinion on the quality of the wines, she later mentioned that the Pontet Canet tasted like alcoholic grape juice, but the Chateau Margaux had a crisp taste that she really enjoyed. Which of the following stages of the buyer decision process do Simone's remarks reflect?

A) information search B) situational analysis C) evaluation of alternatives D) purchase decision E) postpurchase behaviour Answer: E Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 49) ________ is a discomfort caused by post-purchase conflict.

A) Selective retention B) Cognitive dissonance C) Selective attention D) Restraint bias E) Subliminal perception Answer: B Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge

16 © 2021 Pearson Canada Inc.

50) Alice is shopping for a new car, and she has narrowed her decision to a Honda Accord and a Toyota Camry. Both sedans have similar features and prices, but Alice decides to purchase the Honda based on her intuition. Which of the following situations would most likely cause Alice to experience post-purchase dissonance?

A) The price of the Honda Accord increases by a huge margin.

B) The price of the Toyota Camry falls due to an increase in demand.

C) The Honda Accord meets all her expectations and satisfies her needs.

D) The Toyota Camry experiences technical failures that lead to a recall.

E) The maintenance costs of the Honda Accord decrease significantly over time.

Answer: B Diff: 3 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 51) Bill thought he had received the best deal on his riding mower. Shortly after the purchase, Bill started to notice certain disadvantages of his new riding mower as he learned more about other riding mowers available in the same price range. Bill is in which of the following stages of the buyer decision process?

A) purchase decision B) need recognition C) post-purchase behaviour D) information search E) alternate evaluation Answer: C Diff: 2 Type: MC LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 52) In Canada and the U.S., kids and tweens influence up to 80 percent of all household purchases.

Answer: TRUE Diff: 1 Type: TF LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 53) Personal sources of information normally inform the buyer, but commercial sources legitimize or evaluate products for the buyer.

Answer: FALSE Diff: 1 Type: TF LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking

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54) If marketers know what evaluative processes go on, they can take steps to influence the buyer's decision.

Answer: TRUE Diff: 1 Type: TF LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 55) Describe the steps of the buyer decision process.

Answer: The buyer decision process consists of five stages: need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behaviour.

1. Need Recognition: The buying process starts with need recognition–the buyer recognizes a problem or need. The need can be triggered by internal stimuli when one of the person's normal needs–for example, hunger or thirst–rises to a level high enough to become a drive. A need can also be triggered by external stimuli.

2. Information Search: An interested consumer may or may not search for more information. If the consumer's drive is strong and a satisfying product is near at hand, he or she is likely to buy it then. If not, the consumer may store the need in memory or undertake an information search related to the need.

3. Evaluation of Alternatives: Marketers need to know about evaluation of alternatives, that is, how the consumer processes information to arrive at brand choices. Unfortunately, consumers do not use a simple and single evaluation process in all buying situations. Instead, several evaluation processes are at work. The consumer arrives at attitudes toward different brands through some evaluation procedure.

4. Purchase Decision: In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. The first factor is the attitudes of others. The second factor is unexpected situational factors. The consumer may form a purchase intention based on factors such as expected income, expected price, and expected product benefits. However, unexpected events may change the purchase intention.

5. Post-purchase Behaviour: After purchasing the product, the consumer will either be satisfied or dissatisfied and will engage in post-purchase behaviour of interest to the marketer. If the product falls short of expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is delighted. The larger the gap between expectations and performance, the greater the consumer's dissatisfaction.

Diff: 2 Type: ES LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking

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56) In which of the following stages of the adoption process does a consumer seek information about a new product?

A) interest B) adoption C) evaluation D) awareness E) trial Answer: A Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 57) In which of the following stages of the adoption process does a consumer consider whether trying a new product makes sense?

A) interest B) adoption C) evaluation D) awareness E) trial Answer: C Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 58) ________ are tradition-bound, suspicious of changes, and adopt an innovation only when it has become something of a tradition itself.

A) Latent innovators B) Early adopters C) Early mainstream adopters D) Lagging adopters E) Late mainstream adopters Answer: D Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge

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59) Fred's faith in Asics, his favourite brand of running shoes, makes him consider other offerings introduced by Asics. Fred is not a risk-taker, and he tends to evaluate each new product carefully before adopting it. Fred is an opinion leader in his social networking community and best described as a(n) ________.

A) lagging adopter B) innovator C) early adopter D) early mainstream adopter E) late mainstream adopter Answer: C Diff: 3 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 60) ________ is the degree to which an innovation appears superior to existing products.

A) Relative advantage B) Compatibility C) Complexity D) Divisibility E) Communicability Answer: A Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 61) ________ is the degree to which an innovation fits the values and experiences of potential consumers.

A) Relative advantage B) Divisibility C) Complexity D) Compatibility E) Communicability Answer: D Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge

20 © 2021 Pearson Canada Inc.

62) Purchasing a Challenger 350 Executive Jet from Canadian manufacturer Bombardier is an example of a purchase that has substantial levels of ________.

A) relative advantage.

B) compatibility and ease of use.

C) complexity and risk.

D) divisibility.

E) communicability.

Answer: C Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 63) ________ is the degree to which an innovation may be tried on a limited basis.

A) Divisibility B) Compatibility C) Communicability D) Relative advantage E) Complexity Answer: A Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 64) ________ is the degree to which the results of using an innovation can be observed or described to others.

A) Relative advantage B) Compatibility C) Complexity D) Divisibility E) Communicability Answer: E Diff: 1 Type: MC LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 65) Adoption is the decision by an individual to try the product.

Answer: FALSE Diff: 2 Type: TF LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 66) Lagging adopters are tradition bound–they are suspicious of changes and adopt the innovation only when it has become something of a tradition itself.

Answer: TRUE Diff: 2 Type: TF LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 21 © 2021 Pearson Canada Inc.

67) Tom usually buys new devices such digital watches only after his friends and family start owning these devices. In this case, Tom is an innovator.

Answer: FALSE Diff: 2 Type: TF LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 68) Identify and describe the stages in the adoption process of a new product.

Answer: Consumers go through five stages in the process of adopting a new product. In the awareness stage, consumers become aware of the new product but lack information about it.

Then, consumers seek information about the new product in the interest stage. In the evaluation stage, consumers consider whether trying the new product makes sense. Consumers try the product on a limited basis in the trial stage. Finally, consumers decide to make full use of the product in the adoption stage.

Diff: 2 Type: ES LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 69) Identify the product characteristics that influence the rate of adoption of a product. Explain how each characteristic affects the rate of adoption.

Answer: The five most important product characteristics that influence the rate of a product's adoption are relative advantage, compatibility, complexity, divisibility, and communicability.

Relative advantage is the degree to which an innovation appears superior to existing products; the greater the perceived relative advantage, the sooner the product will be adopted.

Compatibility is the degree to which the innovation fits the values and experiences of potential consumers; high compatibility leads to quick adoption. Complexity is the degree to which the innovation is difficult to understand or use; the greater the complexity, the slower the adoption rate. Divisibility is the degree to which the innovation may be tried on a limited basis; the higher the divisibility, the slower the rate of adoption. Finally, communicability is the degree to which the results of using the innovation can be observed or described to others; high communicability lends itself to a higher rate of adoption.

Diff: 2 Type: ES LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking

22 © 2021 Pearson Canada Inc.

70) When Goodyear sells replacement tires to final consumers, its potential market includes millions of car owners around the world. But its fate in business markets depends on getting orders from only a handful of large automakers. This represents the difference in ________ between business and consumer markets.

A) types of decisions B) derived demand C) market structure D) the decision process E) nature of the buying unit Answer: C Diff: 2 Type: MC LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 71) Corning produces Gorilla Glass screens that are used in the production of laptops, tablets, and smartphones. Corning promotes its product to final consumers to increase business demand for digital devices made with the specialized, toughened glass. This illustrates ________.

A) types of decisions B) derived demand C) market structure D) the decision process E) nature of the buying unit Answer: B Diff: 2 Type: MC LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 72) In a straight rebuy, a buyer ________.

A) wants to obtain the same product from a lower-priced supplier B) reorders something without any modifications C) considers a product or service for the first time D) needs a modified product to suit new requirements E) finds new ways to add value to the same product Answer: B Diff: 1 Type: MC LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Application of knowledge

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73) A company regularly purchases cleaning supplies from a vendor and orders relatively consistent amounts of the same products on each purchase from the same vendor. This is an example of a(n) ________.

A) modified rebuy B) new task situation C) straight rebuy D) dual distribution system E) exclusive distribution system Answer: C Diff: 1 Type: MC LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 74) A business buyer is considering a change in product specifications, terms, and possibly suppliers. This buying situation is referred to as a(n) ________.

A) modified rebuy B) new-task situation C) straight rebuy D) dual distribution channel E) exclusive distribution channel Answer: A Diff: 2 Type: MC LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 75) The text makes reference to the relationship between IBM and Six Flags Entertainment Corporation. More than just providing a product or service, IBM is an example of ________.

A) modified rebuy B) straight rebuy C) new task buying D) systems selling E) supplier development Answer: D Diff: 1 Type: MC LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Application of knowledge

24 © 2021 Pearson Canada Inc.

76) Which of the following statements about buying centers is true?

A) The buying center is not a fixed and formally identified unit within a buying organization.

B) Roles in the buying center are specified in the organizational chart of a firm.

C) The CEO of an organization is always the decision maker in a buying center.

D) An individual's role in a buying center does not change with time.

E) All buying centers involve formal participants.

Answer: A Diff: 1 Type: MC LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 77) The main differences between the business market and the consumer market are found in market structure and demand, the nature of the buying unit, and the types of decisions and the decision process involved.

Answer: TRUE Diff: 3 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 78) A business marketer normally deals with far fewer buyers than a consumer marketer.

Answer: TRUE Diff: 1 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 79) The total demand for many business products is not much affected by price changes, especially in the short run.

Answer: TRUE Diff: 3 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 80) Interpersonal factors are a major influence on business buyer behaviour.

Answer: TRUE Diff: 1 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Interpersonal relations and teamwork

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81) In a straight rebuy, a buyer reorders something without any modifications.

Answer: TRUE Diff: 1 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Application of knowledge 82) Supplier development refers to systematically developing networks of supplier-partners to ensure a dependable supply of the products and materials.

Answer: TRUE Diff: 2 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Interpersonal relations and teamwork 83) The buying center consists of key decision makers from both the buying organization and the supplier.

Answer: FALSE Diff: 1 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Application of knowledge 84) Business buying is done by newly trained purchasing agents who are learning how to buy better.

Answer: FALSE Diff: 2 Type: TF LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 85) Explain why business demand is considered a derived demand. Provide an example.

Answer: Business demand is a derived demand because it ultimately derives from the demand for consumer goods. If consumer demand for an end product drops, business demand for all of the components used in that product will also drop. Similarly, when consumer demand for a product increases, business demand for all of the components of that product also increases. For example, tires in the original equipment market for automobiles is derived from consumer demand for new cars.

Diff: 2 Type: ES LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking

26 © 2021 Pearson Canada Inc.

86) Explain how the decision process in the business market and consumer market differ.

Answer: Business buyers usually face more complex buying decisions than do consumer buyers. Business purchases often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyer's organization.

Because the purchases are more complex, business buyers may take longer to make their decisions and are likely to use a more formalized buying process. In the business buying decision process, the buyer and seller are often much more dependent on each other.

Diff: 3 Type: ES LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 87) Explain the major types of buying situations.

Answer: There are three major types of buying situations. In a straight rebuy, the buyer reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. In a modified rebuy, the buyer wants to modify product specifications, prices, terms, or suppliers. A company buying a product or service for the first time faces a new task situation.

In such cases, the greater the cost or risk, the larger the number of decision participants and the greater the company's efforts to collect information. The new task situation is the marketer's greatest opportunity and challenge. The marketer not only tries to reach as many key buying influences as possible, but also provides help and information. The buyer makes the fewest decisions in the straight rebuy and the most in the new task decision.

Diff: 2 Type: ES LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Analytical thinking 88) In the context of the business buying decision process, what is a buying center? Explain why it presents a major marketing challenge.

Answer: The buying center is the decision-making unit of a buying organization. The buying center consists of all the individuals and units that play a role in the business purchase decisionmaking process, including the actual users of the product or service, those who make the buying decision, those who influence the buying decision, those who do the actual buying, and those who control buying information. The buying center is not a fixed and formally identified unit within the buying organization. Instead, it is a set of buying roles assumed by different people for different purchases. Within the organization, the size and makeup of the buying center varies for different products and buying situations. The variable nature of the buying center makes it a major marketing challenge. The business marketer must learn who participates in each decision, each participant's relative influence, and what evaluation criteria each decision participant uses.

Sometimes identifying the decision maker is difficult or even impossible, as no one single person may make the purchasing decision.

Diff: 3 Type: ES LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Reflective thinking

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89) Describe the major factors that influence business buyers.

Answer: Business buyers are heavily influenced by factors in the current and expected economic environment, such as levels of primary demand, the economic outlook, and the cost of money. Business buyers are also affected by supply of key materials and technological, political, and competitive developments in the environment. Finally, culture and customs can strongly influence business buyer reactions to the marketer's behaviour and strategies, especially in the international marketing environment. The business buyer must watch these factors, determine how they will affect the buyer, and try to turn environmental challenges into opportunities.

Organizational factors are also important. Each buying organization has its own objectives, strategies, structure, systems, and procedures, and the business marketer must understand these factors well. The buying center usually includes many participants who influence each other, so interpersonal factors also influence the business buying decision process. Each participant in the business buying decision process brings in personal motives, perceptions, and preferences. These individual factors are affected by personal characteristics such as age, income, education, professional identification, personality, and attitudes toward risk.

Diff: 2 Type: ES LO: 5-4: Define the business market and identify the major factors that influence business buyer behaviour.

AACSB: Reflective thinking 90) Harper Farms raises chickens. For years, it has used wooden coops for hauling its poultry to market. When the owner, Jane Harper, went to reuse some of her coops, she noticed many of them could not be sufficiently cleaned for reuse and needed to be replaced. Which stage of the business buying decision process was Harper in when she decided to replace her old coops?

A) problem recognition B) general need description C) product specification D) product value analysis E) performance review Answer: A Diff: 2 Type: MC LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Analytical thinking 91) During which stage of the business buying decision process is a buyer most likely to conduct value analysis by carefully studying components to determine if they can be redesigned, standardized, or made less expensively?

A) general need recognition B) product specification C) proposal solicitation D) order-routine specification E) performance review Answer: B Diff: 2 Type: MC LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge 28 © 2021 Pearson Canada Inc.

92) Which of the following is considered a major influence on business buyer behaviour?

A) general need B) organizational factors C) social forces D) demographic criteria E) performance reviews Answer: B Diff: 1 Type: MC LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge 93) GenX, a manufacturer of sport motorcycles, is seeking a new supplier of motorcycle headlamps and brake lights. After searching trade directories, GenX invites five different suppliers to make formal presentations about how their solutions can create greater value for GenX than competing solutions. GenX is currently in the ________ stage of the business buying decision process.

A) problem recognition B) general need description C) product specification D) supplier search E) proposal solicitation Answer: E Diff: 3 Type: MC LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Analytical thinking 94) Which of the following is most likely the final stage of the business buying decision process?

A) problem recognition B) product specification C) proposal solicitation D) order-routine specification E) supplier performance review Answer: E Diff: 1 Type: MC LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge

29 © 2021 Pearson Canada Inc.

95) Many large buyers now practice ________, in which they turn over ordering responsibilities to their suppliers.

A) proposal solicitation B) performance review C) supplier search D) traditional procurement E) vendor-managed inventory Answer: E Diff: 2 Type: MC LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Interpersonal relations and teamwork 96) GE operates a company trading site where it posts purchasing needs, invites bids, negotiates terms, and places orders. This is an example of a(n) ________.

A) company buying site B) intranet link C) search engine D) trading exchange E) product value analysis Answer: A Diff: 2 Type: MC LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Information technology 97) Purchasing, often called e-procurement, has grown rapidly in recent years.

Answer: TRUE Diff: 1 Type: TF LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Information technology 98) Business-to-business e-procurement lowers purchasing costs and reduces the time between order and delivery.

Answer: TRUE Diff: 1 Type: TF LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Information technology 99) Digital and social media play an important role in engaging always-connected business buyers in a way that personal selling alone cannot.

Answer: TRUE Diff: 1 Type: TF LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Information technology 30 © 2021 Pearson Canada Inc.

100) Discuss the advantages and disadvantages of e-procurement.

Answer: Business-to-business e-procurement yields many benefits. First, it shaves transaction costs and results in more efficient purchasing for both buyers and suppliers. E-procurement reduces the time between order and delivery. And an online-powered purchasing program eliminates the paperwork associated with traditional requisition and ordering procedures and helps an organization keep better track of all purchases. Finally, beyond the cost and time savings, e-procurement frees purchasing people from a lot of drudgery and paperwork. In turn, it frees them to focus on more strategic issues, such as finding better supply sources and working with suppliers to reduce costs and develop new products. The rapidly expanding use of eprocurement, however, also presents some problems. For example, at the same time that the Internet makes it possible for suppliers and customers to share business data and even collaborate on product design, it can also erode decades-old customer-supplier relationships. Many buyers now use the power of the Internet to pit suppliers against one another and search out better deals, products, and turnaround times on a purchase-by-purchase basis.

Diff: 3 Type: ES LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Information technology

31 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 6 Customer Value-Driven Marketing Strategy: Creating Value for Target Customers 1) ________ is the process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviour.

A) Differentiation B) Mass marketing C) Market targeting D) Market segmentation E) Positioning Answer: D Diff: 1 Type: MC LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Application of knowledge 2) Harry's caters to the clothing needs of men, manufacturing two different lines of fashion based on the purchasing power of its customers. One product line caters to the needs of affluent, middle-aged men, and the other line targets younger, up-and-coming professionals. Harry's most likely segments the consumer market based on ________ variables.

A) geographic B) psychographic C) universal D) demographic E) behavioural Answer: D Diff: 3 Type: MC LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical thinking 3) ________ consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

A) Differentiation B) Positioning C) Market targeting D) Market segmentation E) Mass marketing Answer: B Diff: 1 Type: MC LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Application of knowledge

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4) Which of the following is the right order of the steps that companies generally follow in designing a customer-driven marketing strategy?

A) market segmentation, differentiation, positioning, and market targeting B) positioning, market segmentation, mass marketing, and market targeting C) market segmentation, market targeting, differentiation, and positioning D) market alignment, market segmentation, differentiation, and market positioning E) market recognition, market preference, market targeting, and market insistence Answer: C Diff: 1 Type: MC LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical thinking 5) Companies today are moving away from target marketing and toward mass marketing.

Answer: FALSE Diff: 1 Type: TF LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical thinking 6) Creating market offerings that best serve targeted customers is called differentiation.

Answer: TRUE Diff: 1 Type: TF LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Application of knowledge 7) Explain the four major steps in designing a customer-driven marketing strategy.

Answer: The four major steps in designing a customer-driven marketing strategy are market segmentation, market targeting, differentiation, and market positioning.

Market segmentation: Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviours, that might require separate marketing strategies or mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. Market targeting: Evaluating each market segment's attractiveness and selecting one or more of the market segments to enter. Differentiation: Actually differentiating the firm's market offering to create a superior customer value. Market positioning: Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of consumers.

Diff: 2 Type: ES LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical thinking

2 © 2021 Pearson Canada Inc.

8) Lilly's, a furniture retailer, sells low-end furniture and accent pieces that are targeted toward lower-income consumer groups. Lilly's most likely segments the consumer market based on ________ variables.

A) demographic B) psychographic C) universal D) geographic E) behavioural Answer: A Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 9) Atlantic Coast, a wholesale lobster distributor, groups its customers by regions in Canada, such as Central, Atlantic, Pacific and Prairies. For each region, Atlantic Coast tailors a different set of advertisements and promotions. The supplier is segmenting its market according to ________.

A) behavioural factors B) personality characteristics C) geographic location D) benefits sought E) demographics Answer: C Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 10) Pediacertain Pet Supplies, a pet-food company, divides the pet market according to the pet owners' gender, occupation, income, and family life cycle. In this case, which of the following variables has the company used for market segmentation?

A) geographic B) psychographic C) benefit D) demographic E) occasion Answer: D Diff: 3 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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11) One reason demographic variables are the most popular bases for segmenting customer groups is because they ________.

A) create smaller segments B) create more easily accessible segments C) do not involve stereotypes D) are easier to measure than other variables E) involve fewer attributes to consider Answer: D Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 12) Delta, a Canadian video game manufacturer, targets teens between the ages of 13 and 18, providing free game trials and applications. The firm's marketing approach exemplifies ________ segmentation.

A) age and life-cycle B) geographic C) occasion D) gender E) income Answer: A Diff: 3 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 13) ________ segmentation factors divide buyers into different groups based on social class, lifestyle, or personality characteristics.

A) Geographic B) Demographic C) Psychographic D) Behavioural E) User status Answer: C Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge

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14) Unilever's Dove brand, Nivea, Sephora and Canadian clothing brand Lululemon are developing new products in an effort to grow sales in a market they have previously paid little attention to. Lululemon expects to reach $1billion in sales by targeting which previously untapped market?

A) low income B) men C) children D) medical professionals E) senior citizens Answer: B Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 15) Which type of market segmentation is generally used by marketers who sell luxury products targeted to the affluent segments of a population?

A) usage rate B) occasion C) income D) benefits sought E) gender Answer: C Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 16) Bass Pro Shops recognizes that outdoors enthusiasts are a diverse group. Likely segments include hunters, campers, and boaters. What is this segmentation method called?

A) user status B) usage rate C) benefit D) behavioural E) psychographic Answer: E Diff: 3 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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17) Dividing buyers into groups based on their knowledge, attitudes, uses, or responses to a product is called ________ segmentation.

A) behavioural B) psychographic C) age and life-cycle D) user status E) geographic Answer: A Diff: 1 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 18) Bakeries and coffee bistros that offer pumpkin-flavoured items only during the autumn season target their consumers primarily through ________ segmentation.

A) psychographic B) demographic C) income D) occasion E) age and life-cycle Answer: D Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 19) By making health and fitness tracking devices aimed at three segments–Everyday Fitness; Active Fitness and Performance Fitness–Fitbit is segmenting based on which segmentation approach?

A) demographic B) behaviour C) occasion D) income E) benefit Answer: E Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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20) Markets can be segmented into groups of nonusers, ex-users, potential users, first-time users, and regular users of a product. This method of segmentation is called ________.

A) user status segmentation B) usage rate segmentation C) benefit segmentation D) behavioural segmentation E) loyalty status segmentation Answer: A Diff: 1 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 21) Tim Hortons relies heavily on which group of users to sustain its existing sales base?

A) nonusers B) ex-users C) potential users D) regular users E) first-time users Answer: D Diff: 1 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 22) Gold Class Electricals, a consumer-electronics firm, targets market segments based on factors such as country, age, social class, usage rate, and benefits sought. The company divides its markets based on ________.

A) demographic variables B) geographic regions C) multiple segmentation bases D) behavioural variables E) psychographic segmentation bases Answer: C Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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23) Danko International is a multinational company that targets the BRICS countries (Brazil, Russia, India, China, and South Africa) because they're fast-growing developing economies and use ________ to segment its world markets.

A) political factors B) legal factors C) personality factors D) economic factors E) cultural factors Answer: D Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 24) Producers of popular beverages often partner with global music channels to target consumers through a variety of promotional events and advertisements. This approach to marketing is referred to as ________ segmentation.

A) intermarket B) income C) age and life-cycle D) occasions E) gender Answer: A Diff: 3 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 25) Market segments that can be effectively reached and served are said to be ________.

A) measurable B) accessible C) substantial D) actionable E) profitable Answer: B Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge

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26) When the size, purchasing power, and profiles of a market segment can be determined, the market segment is said to be ________.

A) measurable B) accessible C) substantial D) actionable E) observable Answer: A Diff: 1 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 27) When segments are distinguishable and respond differently to different marketing mix elements, they are said to be ________.

A) measurable B) accessible C) substantial D) actionable E) differentiable Answer: E Diff: 1 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 28) When an effective program can be designed for attracting and serving a chosen segment, the segment is best described as ________.

A) accessible B) measurable C) reachable D) actionable E) differentiable Answer: D Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 29) If men and women respond dissimilarly to the marketing efforts for a root beer-flavoured malt beverage, they are considered ________ market segments.

A) accessible B) measurable C) reachable D) differentiable E) observable Answer: D Diff: 2 Type: MC LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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30) Target and Kohl's have opened smaller-format stores designed to fit the needs of densely packed urban neighbourhoods. This is an example of geographic segmentation.

Answer: TRUE Diff: 2 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 31) In cross-market segmentation, marketers form segments of consumers who have similar needs and buying behaviours even though they are located in different countries.

Answer: TRUE Diff: 1 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Diverse and multicultural work environments 32) Demographic factors are the most popular bases for segmenting customer groups.

Answer: TRUE Diff: 1 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 33) Countries can be segmented by cultural factors, grouping markets according to common languages, religions, values and attitudes, customs, and behavioural patterns.

Answer: TRUE Diff: 1 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Diverse and multicultural work environments 34) Not all companies that use income segmentation target the affluent.

Answer: TRUE Diff: 2 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 35) Cupcake Gourmet, a high-end bakery in Manhattan, segments its customers according to those who frequent their store regularly, those who visit infrequently, and those who have never visited. This is an example of usage-rate segmentation.

Answer: FALSE Diff: 2 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge

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36) Marketers typically limit their market segmentation analysis to a single variable in order to simplify the process.

Answer: FALSE Diff: 2 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 37) Geographic segmentation assumes that nations close to one another will have many common traits and behaviours.

Answer: TRUE Diff: 2 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 38) Business and consumer marketers use many of the same variables to segment their markets.

Answer: TRUE Diff: 1 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 39) Light users are often a small percentage of a company's market but account for a high percentage of total consumption.

Answer: FALSE Diff: 2 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 40) New communications technologies like satellite TV and social media are likely to eliminate the need for markets to be geographically segmented as clusters of countries.

Answer: TRUE Diff: 2 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Information technology 41) Business marketers use variables such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Answer: TRUE Diff: 3 Type: TF LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge

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42) Explain the four major segmentation variables for consumer markets.

Answer: For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioural. Geographic segmentation divides the market into different geographic units, such as nations, regions, provinces, countries, cities, or neighbourhoods. Many companies are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions, cities, and neighbourhoods. Demographic segmentation divides the market into groups based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. These are the most popular factors because they are easy to measure, and consumer needs, wants, and usage rates often vary closely with demographic variables. Psychographic segmentation, on the other hand, divides buyers into different groups based on social class, lifestyle, or personality characteristics.

People in the same demographic group can have very different psychographic characteristics.

Behavioural segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product. Many marketers believe that behavioural variables are the best starting point for building market segments.

Diff: 3 Type: ES LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 43) Describe age and life-cycle segmentation with examples. What are the precautions that marketers should take when using age and life-cycle segmentation?

Answer: Consumer needs and wants change with age. Some companies use age and life-cycle segmentation, offering different products or using different marketing approaches for different age and life-cycle groups. For example, Kraft's Oscar Mayer brand markets Lunchables, convenient prepackaged lunches for children. To extend the substantial success of Lunchables, however, Oscar Mayer later introduced Lunchables Uploaded, a version designed to meet the tastes and sensibilities of teenagers. Most recently, the brand launched an adult version, but with the more adult-friendly name P3 (Portable Protein Pack). Other companies focus on the specific age of life-stage groups. For example, whereas most tablet makers have been busy marketing their devices to grown-ups, Amazon has spotted a tinier tablet market. Feedback from parents suggested that they were handing their entertainment-packed Kindle Fire tablet over to their young children for entertainment, education, and babysitting purposes. To tap this young-family market, Amazon introduced FreeTime Unlimited, a multimedia subscription service targeted toward 3- to 8-year-olds. Marketers must be careful to guard against stereotypes when using age and life-cycle segmentation. For example, although consumers in all age segments love Disney cruises, most Disney Cruise Lines destinations and shipboard activities are designed with parents and their children in mind. Marketers must be careful to guard against stereotypes when using age and life-cycle segmentation. Although some 80-year-olds fit the doddering stereotypes, others ski and play tennis. Similarly, whereas some 40-year-old couples are sending their children off to college, others are just beginning new families. Thus, age is often a poor predictor of a person's life cycle, health, work or family status, needs, and buying power. Companies marketing to mature consumers usually employ positive images and appeals.

Diff: 3 Type: ES LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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44) Explain with examples how marketers segment markets based on occasions, benefits sought, and user status.

Answer: Occasions: Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item. Occasion segmentation can help firms build up product usage. For example, most consumers drink orange juice in the morning, but orange growers have promoted drinking orange juice as a cool, healthful refresher at other times of the day.

Benefits sought: A powerful form of segmentation is grouping buyers according to the different benefits that they seek from a product. Benefit segmentation requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit. For example, people buying bikes are looking for any of numerous benefits, from competitive racing and sports performance to recreation, fitness, touring, transportation, and just plain fun. To meet varying benefit preferences, Schwinn makes affordable, quality bikes in seven major benefit groups: cruisers, hybrid, bike path, mountain, road, urban, and kids.

User status: Markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users of a product. Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. Included in the potential user group are consumers facing life-stage changes — such as new parents and newlyweds — who can be turned into heavy users. For example, to get new parents off to the right start, P&G makes certain its Pampers Swaddlers are the diaper provided for newborns at most hospitals in certain markets.

Diff: 3 Type: ES LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 45) Describe how marketers use multiple-segmenting bases to their advantage.

Answer: Marketers rarely limit their segmentation analysis to only one or a few variables.

Instead, they use multiple segmentation bases in an effort to identify smaller, better-defined target groups of consumers. Such segmentation provides a powerful tool for marketers of all kinds. It can help companies identify and better understand key customer segments, reach them more efficiently, and tailor market offerings and messages to their specific needs.

Diff: 2 Type: ES LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 46) How do businesses segment their markets?

Answer: Consumer and business marketers use many of the same variables to segment their markets. Like consumer groups, business buyers can be segmented using geographic, demographic, benefits sought, user status, usage rate, and loyalty status segmentation. Business buyers are also segmented by the variables of operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Diff: 2 Type: ES LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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47) Why do international markets need to be segmented?

Answer: Few companies have either the resources or the will to operate in all, or even most, of the countries that dot the globe. Different countries, even those that are close together, can vary greatly in their economic, cultural, technological, and political makeup. International firms need to group their world markets into segments with distinctive buying needs and behaviours.

Diff: 2 Type: ES LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Diverse and multicultural work environments 48) Briefly describe the characteristics of effective market segments.

Answer: To be useful, market segments must be: Measurable: The size, purchasing power, and profiles of the segments can be measured.

Accessible: The market segments can be effectively reached and served.

Substantial: The market segments are large or profitable enough to serve. It should be the largest possible homogeneous group worth pursuing with a tailored marketing program.

Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.

Actionable: Effective programs can be designed for attracting and serving consumers who make up the segment.

Diff: 2 Type: ES LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 49) A market segment is less attractive when ________.

A) there are few aggressive competitors in the segment B) it is difficult for new entrants to enter the segment C) it contains powerful suppliers who can control prices D) substitute products are unavailable in the segment E) buyers in the market segment have weak bargaining powers Answer: C Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 50) Which of the following is an approach where firms target a whole market based on common consumer needs?

A) demographic segmentation B) undifferentiated marketing C) micromarketing D) concentrated marketing E) geographic segmentation Answer: B Diff: 1 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 14 © 2021 Pearson Canada Inc.

51) Marketing the same product to a huge customer base without any customization is referred to as ________.

A) mass marketing B) differentiated marketing C) niche marketing D) local marketing E) individual marketing Answer: A Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 52) By having over 90 different types of Tide detergent (stain remover, concentrate, scent, and HE liquid are just a few of the choices), Tide is trying to use a ________ strategy.

A) differentiated B) low cost C) confusing D) niche E) concentrated Answer: A Diff: 1 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 53) Although not recommended, some marketers decide to ignore market segmentation and target the whole market with one offer. This is known as ________ marketing.

A) undifferentiated B) differentiated C) niche D) local E) individual Answer: A Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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54) The marketing manager of Refresh Inc., a leading producer of soft drinks, is considering a differentiated marketing strategy. An important consideration is weighing increased sales against ________ before selecting this strategy.

A) decreased production B) increased demand C) increased costs D) decreased prices E) increased profits Answer: C Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 55) Compared with undifferentiated marketing, differentiated marketing is more likely to lead to ________.

A) reduced sales in each market segment B) weaker product position in each market segment C) higher costs of doing business D) redundancy in product design across market segments E) smaller market share in the industry Answer: C Diff: 3 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 56) A successful niche marketing strategy relies on a firm's ________.

A) availability of services B) product positioning C) superior products D) knowledge of customer needs E) affordable pricing Answer: D Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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57) Instead of going after a small share of a large market, Stance socks is an example of a company that is going after a large share of one smaller segment. This is an example of ________.

A) segmented marketing B) concentrated marketing C) differentiated marketing D) local marketing E) extreme marketing Answer: B Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 58) The practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations is referred to as ________.

A) niche marketing B) micromarketing C) segmented marketing D) global marketing E) undifferentiated marketing Answer: B Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 59) The surge in popularity of Canadian Craft Breweries like Beau's All Natural Brewing Co., Coulee Brew Co., Foghorn Brewing Company, and Persephone Brewing Co are primarily designed to meet the needs and wants of specific cities or regions. These are examples of ________ marketing.

A) differentiated B) mass C) niche D) local E) individual Answer: D Diff: 1 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge

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60) Which of the following is true about local marketing?

A) It does not cater to individual stores.

B) It does not support evolving technologies.

C) It increases manufacturing costs.

D) It increases economies of scale.

E) It reduces logistical issues.

Answer: C Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 61) At the extreme, micromarketing becomes ________ insofar as products and marketing programs are tailored to the needs and preferences of customers.

A) differentiated marketing B) multi-segmented marketing C) local marketing D) mass marketing E) individual marketing Answer: E Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 62) When a company interacts one-on-one with large numbers of customers to create customerunique value by designing products and services tailor-made to individual needs, it is engaging in ________.

A) concentrated marketing B) mass marketing C) mass customization D) differentiated marketing E) local marketing Answer: C Diff: 2 Type: MC LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 63) Concentrated marketing can market more effectively by fine-tuning its products, prices, and programs to the needs of carefully defined segments.

Answer: TRUE Diff: 1 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 18 © 2021 Pearson Canada Inc.

64) Developing separate marketing plans for separate segments requires very little marketing research or channel management.

Answer: FALSE Diff: 2 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 65) Micromarketing includes global marketing and standardized marketing.

Answer: FALSE Diff: 1 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 66) Even if a segment has the right size and growth and is structurally attractive, a company must consider its own objectives and resources before targeting that segment.

Answer: TRUE Diff: 2 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 67) Using a differentiated marketing strategy, a company is likely to design a product and a marketing program that will appeal to the largest number of buyers.

Answer: FALSE Diff: 2 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 68) The low cost of setting up shop on the Internet makes it even more profitable to serve seemingly small niches.

Answer: TRUE Diff: 2 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Information technology 69) Niche marketing offers smaller companies an opportunity to compete by focusing their limited resources on serving niches that may be unimportant to or overlooked by larger companies.

Answer: TRUE Diff: 2 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 19 © 2021 Pearson Canada Inc.

70) The full positioning of a brand is called the unique selling proposition.

Answer: FALSE Diff: 2 Type: TF LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 71) Describe the process by which companies identify attractive market segments and choose a target marketing strategy.

Answer: To target the best market segments, a company first evaluates each segment's size and growth characteristics, structural attractiveness, and compatibility with company objectives and resources. It then chooses one of four marketing strategies–ranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly using undifferentiated marketing. This involves mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. The seller can also adopt differentiated marketing–developing different market offers for several segments.

Concentrated marketing involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing. Which targeting strategy is best depends on company resources, product variability, product life-cycle stage, market variability, and competitive marketing strategies.

Diff: 3 Type: ES LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 72) Compare and contrast the four major strategies that are generally used to target market segments. Provide an example for each of the four major strategies.

Answer: Market targeting can be carried out at several different levels. Companies can target very broadly (undifferentiated marketing), very narrowly (micromarketing), or somewhere in between (differentiated or concentrated marketing). An undifferentiated marketing strategy ignores market segment differences and targets the whole market with one offer. This massmarketing strategy focuses on what is common in the needs of consumers rather than on what is different. In contrast, a differentiated strategy targets several market segments and designs separate offers for each. Companies hope for higher sales and a stronger position within each market segment. Concentrated or niche marketing goes after a large share of one or a few segments or niches instead of going after a large share of a large market. These niches may be overlooked or unimportant. Niching offers smaller companies an opportunity to compete by focusing their limited resources more effectively. Finally, using micromarketing, a company can tailor products and marketing programs to suit the tastes of specific individuals and locations. It includes local and individual marketing.

Diff: 3 Type: ES LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 20 © 2021 Pearson Canada Inc.

73) Compare and contrast local and individual marketing.

Answer: Local marketing involves tailoring brands and promotions to the needs and wants of local customer groups–cities, neighbourhoods, and even specific stores. Advances in communications technology have given rise to new high-tech versions of location-based marketing. Local marketing has some drawbacks, however. It can drive up manufacturing and marketing costs by reducing the economies of scale. It can also create logistics problems as companies try to meet the varied requirements of different regional and local markets. Still, local marketing helps a company to market more effectively in the face of pronounced regional and local differences in demographics and lifestyles. In contrast, individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers.

Individual marketing has also been labeled one-to-one marketing, mass customization, and markets-of-one marketing. Today, new technologies are permitting many companies to return to customized marketing. More detailed databases, robotic production and flexible manufacturing, and interactive communication media such as cell phones and the Internet have combined to foster mass customization. Mass customization is the process by which firms interact one-to-one with masses of customers to design products and services tailor-made to individual needs.

Diff: 3 Type: ES LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 74) Describe a few ways in which a marketer can engage in socially responsible target marketing.

Answer: In order to engage in socially responsible target marketing, marketers must avoid purposefully targeting vulnerable or disadvantaged consumers with controversial or potentially harmful products. In addition, marketers should reconsider the marketing of adult products that may spill over into the child segment either intentionally or unintentionally; primary examples include beer, cigarettes, and fast food.

Diff: 2 Type: ES LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Ethical understanding and reasoning 75) Which of the following is true of product positioning?

A) A product's position is defined by the number of competitors in a market.

B) Product positioning has little influence on the design of marketing mixes.

C) Consumers generally reevaluate products every time they make a buying decision.

D) To simplify the buying process, consumers are likely to position products in their minds.

E) Consumers cannot position products with or without the help of marketers.

Answer: D Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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76) Bose promises "better sound through research." This is an example of ________.

A) people differentiation B) channel differentiation C) price differentiation D) services differentiation E) product differentiation Answer: E Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 77) Companies are likely to gain ________ through speedy, convenient, or careful delivery of products.

A) price differentiation B) product differentiation C) channel differentiation D) services differentiation E) people differentiation Answer: D Diff: 1 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 78) Which of the following types of differentiation is used to gain competitive advantage through the way a firm designs its distribution coverage, expertise, and performance?

A) services differentiation B) channel differentiation C) people differentiation D) product differentiation E) price differentiation Answer: B Diff: 1 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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79) Argonaut Food Stores, a retail giant, hires better-skilled employees than its competitors by employing strategic recruitment practices. It also conducts highly specialized training programs for its employees. In this case, Argonaut has focused on gaining a strong competitive advantage through ________ differentiation.

A) image B) people C) services D) product E) channel Answer: B Diff: 3 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 80) The distinctive yellow and blue "hands held high" logo of a local daycare distinguishes it from other establishments. The logo is prominently displayed on its building, t-shirts worn by the children, and at fundraising events. The daycare has differentiated itself through ________.

A) image B) people C) services D) channels E) positioning Answer: A Diff: 3 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 81) When firms use symbols, colours, or characters to convey their personalities, they are using ________ differentiation.

A) image B) people C) usage-rate D) user-status E) channel Answer: A Diff: 1 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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82) Which of the following is true of perceptual positioning maps?

A) They are used by marketers to divide a market into smaller groups with distinct characteristics.

B) They are used by marketers to identify supplier and retailer perceptions of a product.

C) They are used to analyze consumer perceptions of a brand relative to competing products.

D) They are used to divide buyers into groups based on their perceived income and age.

E) They are used to plot the geographic segments that a company needs to target.

Answer: C Diff: 1 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 83) Canadian office furniture manufacturer Krug positions its products as superior in style, aesthetics and functionality. This is an example of ________ differentiation.

A) product B) services C) image D) people E) channels Answer: A Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 84) A brand difference is said to be preemptive if ________.

A) competitors cannot easily copy the difference B) buyers can afford to pay for the difference C) the difference can be introduced profitably D) the difference is communicable E) the difference is beneficial to customers Answer: A Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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85) Canadian retailer Harry Rosen charges a higher price for its products than its competitors.

Despite the high prices, the brand is popular among customers for its quality and exceptional service in comparison to cheaper alternatives available in the market. In this case, Harry Rosen offers a(n) ________ value proposition.

A) more-for-more B) more-for-the-same C) more-for-less D) all-or-nothing E) same-for-less Answer: A Diff: 3 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 86) Using a ________ positioning strategy, companies can attack the more-for-more strategy of another firm by offering a brand of comparable quality at a lower price.

A) more-for-the-same B) more-for-less C) same-for-less D) less-for-much-less E) less-for-more Answer: A Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 87) Which positioning strategy offers value for consumers by providing the same brands as competitors at a lower price?

A) more-for-the-same B) more-for-less C) same-for-less D) less-for-much-less E) more-for-more Answer: C Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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88) The full positioning of a brand is referred to as the ________.

A) differentiated strategy B) concentrated strategy C) unique selling proposition D) value proposition E) undifferentiated strategy Answer: B Diff: 1 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge 89) Stores offering low-quality alternatives to luxury products at low prices most likely follow a ________ positioning strategy.

A) more-for-the-same B) more-for-less C) same-for-less D) less-for-much-less E) more-for-more Answer: D Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 90) Which of the following strategies is most likely to be followed by firms that position themselves as caterers of the best products at economical prices?

A) more-for-the-same B) more-for-less C) same-for-less D) more-for-more E) less-for-much-less Answer: B Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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91) Household Storez, a local retail store, claims to offer better products at lower prices than other retail stores. In this case, the firm's positioning reflects a ________ value proposition.

A) more-for-the same B) more-for-less C) same-for-less D) more-for-more E) same-for-more Answer: B Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 92) Which of the following includes the target segment of a product, the category to which the product belongs, and the product's point of difference from other members in the category?

A) mission statement B) vision statement C) profit statement D) positioning statement E) inventory statement Answer: D Diff: 1 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge 93) Zeal is a popular automobile brand, and its positioning statement is: "For upscale Canadian families who require large vehicles, Zeal is the automobile of choice." Which of the following mandatory elements is missing from the positioning statement?

A) point of difference B) target audience C) brand name D) product category E) need Answer: A Diff: 3 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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94) Company and brand positioning should be summed up in a ________.

A) mission statement B) vision statement C) profit statement D) positioning statement E) corporate statement Answer: D Diff: 2 Type: MC LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge 95) Chosen symbols, characters, and other image elements are communicated through advertising that conveys the company's or brand's personality.

Answer: TRUE Diff: 1 Type: TF LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 96) Companies must do much more than simply shout out their positions with slogans and taglines. They must differentiate their products in the minds of the consumers.

Answer: TRUE Diff: 1 Type: TF LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Reflective thinking 97) Cian, an automobile manufacturer, offers a new car model with features comparable to that of another popular brand. However, the Cian model is priced lower than its competitor and includes a longer warranty. Cian is most likely following a more-for-the-same strategy.

Answer: FALSE Diff: 3 Type: TF LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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98) Explain the concept of positioning for competitive advantage.

Answer: A product's position is the way the product is defined by consumers on important attributes–the place the product occupies in consumers' minds relative to competing products.

Positioning involves implanting the brand's unique benefits and differentiation in customers' minds. To carry out effective positioning, a company must identify a set of possible competitive advantages upon which to build a position, choose the right competitive advantages, and select an overall positioning strategy. The company must then effectively communicate and deliver the chosen position to the market.

Diff: 2 Type: ES LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 99) Brand differences are worth promoting if they satisfy certain criteria. What are these criteria?

Answer: A brand difference is worth establishing to the extent that it satisfies the following criteria: (a) Important: The difference delivers a highly valued benefit to target buyers. (b) Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way. (c) Superior: The difference is superior to other ways that customers might obtain the same benefit. (d) Communicable: The difference is communicable and visible to buyers. (e) Preemptive: Competitors cannot easily copy the difference. (f) Affordable: Buyers can afford to pay for the difference. (g) Profitable: The company can introduce the difference profitably.

Diff: 3 Type: ES LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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100) Describe the different types of value propositions on which a company might position its products.

Answer: Companies can generally choose one of five types of value propositions for their customers: (a) More for more: More-for-more positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. A more-for-more market offering not only offers higher quality, it also gives prestige to the buyer. It symbolizes status and a loftier lifestyle. (b) More for the same: Companies can attack a competitor's more-for-more positioning by introducing a brand offering comparable quality at a lower price. (c) The same for less: Offering the same for less can be a powerful value proposition. Many companies that offer this proposition don't claim to offer different or better products. Instead, they offer many of the same brands as their competitors but at deep discounts based on superior purchasing power and lower-cost operations. Other companies develop imitative but lowerpriced brands in an effort to lure customers away from the market leader. (d) Less for much less: A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford "the very best" in everything they buy. In many cases, consumers will gladly settle for less than optimal performance or give up some of the bells and whistles in exchange for a lower price. Less-for-much-less positioning involves meeting consumers' lower performance or quality requirements at a much lower price. (e) More for less: The winning value proposition would be to offer more for less. Many companies claim to do this. And, in the short run, some companies can actually achieve such lofty positions.

Diff: 2 Type: ES LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 7 Products, Services, and Brands: Building Customer Value 1) ________ refer to a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible.

A) Co-brands B) Line extensions C) Services D) Pure products E) Horizontal extensions Answer: C Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 2) Which of the following is a pure tangible good?

A) shampoo B) a spa treatment C) financial advice D) a meal at a restaurant E) a medical check-up Answer: A Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 3) Harley-Davidson disciples share a common, deeply held attraction to the brand. Harley appeals include: freedom, independence, power, and authenticity. Harley-Davidson doesn't just sell motorcycles. It sells self-expression, lifestyles, aspirations, and dreams. This illustrates ________.

A) an actual product B) core customer values C) simple bundling D) an augmented product E) complex bundling Answer: B Diff: 3 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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4) Silkskin Cosmetics is advertising its newest line of eye makeup. Made from all-natural ingredients, the products are hypoallergenic. Silkskin is selling the products in specially designed tubes that make application easier. Which of the following is a core customer value for Silkskin's line of eye makeup?

A) the natural ingredients B) the Silkskin brand C) the products' revolutionary packaging D) the hypoallergenic properties of the products E) the desire for having beautiful eyes Answer: E Diff: 3 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 5) Susan has been redecorating her new condo for a year. She is carefully selecting every item.

Susan finds an oriental rug that matches her colour scheme and décor perfectly and purchases it immediately without engaging in comparison shopping. This is an example of a(n) ________.

A) shopping product B) convenience product C) specialty product D) industrial product E) capital product Answer: C Diff: 3 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 6) ________ products are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort.

A) Shopping B) Specialty C) Capital D) Convenience E) Unsought Answer: D Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge

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7) Laundry detergent, candy, magazines, and fast food are purchased frequently by customers.

They are examples of ________ products.

A) unsought B) shopping C) convenience D) specialty E) industrial Answer: C Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 8) Which statement about convenience products is most likely true?

A) They are distributed exclusively in only one or a few outlets per market area.

B) They are products that consumers rarely consider buying.

C) Luxury cars and designer clothes are examples of convenience products.

D) Consumers need to make special purchasing efforts to buy such products.

E) They are bought by consumers frequently and with minimal comparison.

Answer: E Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 9) Which of the following is an example of a convenience product?

A) M&M's Candy B) Sklar Peppler furniture C) Sun Life life insurance D) Ford Mustang automobile E) LG refrigerator Answer: A Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 10) ________ products are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style.

A) Convenience B) Capital C) Unsought D) Shopping E) Secondary Answer: D Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge

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11) Kuka Robotics Canada manufactures and sells robots to be used on assembly lines. This is an example of________.

A) unsought products B) industrial products as materials and parts C) industrial products as capital items D) industrial products as supplies E) intangible goods Answer: C Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 12) Which of the following is most likely a true statement about shopping products?

A) Shopping products tend to be less expensive than convenience products.

B) The existence of such products is generally unknown to consumers.

C) Shopping products are purchased less frequently than convenience products.

D) Consumers typically spend very little time comparing shopping products.

E) A life insurance policy is an example of a shopping product.

Answer: C Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 13) Which of the following is an example of a shopping product?

A) Colgate toothpaste B) A&W fast food C) Tide laundry detergent D) Samsung television E) Yummy brand candy Answer: D Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 14) ________ products are consumer products and services with unique characteristics or brand identifications for which a significant group of buyers is willing to make more effort than usual to purchase.

A) Unsought B) Obsolete C) Intangible D) Convenience E) Specialty Answer: E Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 4 © 2021 Pearson Canada Inc.

15) Specialty products are consumer products and services that customers generally buy ________.

A) to conduct business B) frequently and immediately C) based on ready availability D) without making comparisons E) with minimal effort Answer: D Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 16) Product planners must build a(n) ________ product around the core benefit and actual product by offering additional consumer services and benefits.

A) convenience B) augmented C) specialty D) shopping E) industrial Answer: B Diff: 3 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 17) Which of the following is an example of an unsought product?

A) furniture B) laundry detergent C) refrigerator D) toothpaste E) life insurance Answer: E Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 18) Which of the following statements is most likely true about unsought products?

A) Unsought products are consumer products and services that customers buy frequently.

B) Marketers use aggressive advertising to convince consumers to buy unsought products.

C) Unsought products are typically purchased for further processing by industrial manufacturers.

D) Compared to convenience products, unsought products are purchased more frequently.

E) Unsought products offer many unique characteristics to status-conscious consumers.

Answer: B Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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19) Which of the following is an industrial product categorized under materials and parts?

A) factory B) cement C) generator D) drill presses E) coal Answer: B Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 20) Which of the following is an example of an industrial product grouped under capital items?

A) factory B) cement C) crude petroleum D) coal E) paint Answer: A Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 21) Which of the following is an industrial product categorized under supplies and services?

A) coal B) wheat C) lumber D) elevator E) generator Answer: A Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 22) Business advisory services such as legal or advertising are classified under which category of industrial products?

A) supplies and services B) capital items C) raw materials D) materials and parts E) specialty products Answer: A Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

6 © 2021 Pearson Canada Inc.

23) The province of Newfoundland-Labrador has run very successful advertisements which draw attention to the province as a unique and vibrant tourist destination. This is an example of ________.

A) place marketing B) organization marketing C) in person marketing D) ideas marketing E) benefits marketing Answer: A Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 24) A&B's Smarter Planet campaign markets A&B as a company that provides innovative solutions that improve the world's IQ. This activity of A&B is an example of ________ marketing.

A) segmented B) vertical C) organization D) horizontal E) diversified Answer: C Diff: 2 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 25) The use of traditional business marketing concepts and tools to create behaviors that will benefit individual and societal well-being is called ________ marketing.

A) person B) green C) non-profit D) social E) traditional Answer: D Diff: 1 Type: MC LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Ethical understanding and reasoning 26) A product is defined as anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.

Answer: TRUE Diff: 1 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge

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27) Products include only tangible objects.

Answer: FALSE Diff: 1 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 28) Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people.

Answer: TRUE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 29) An augmented product is a product that is built around the core benefit and actual product by offering additional consumer services and benefits.

Answer: TRUE Diff: 1 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 30) The distinction between a consumer product and an industrial product is based on the purpose for which the product is purchased.

Answer: TRUE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 31) Shopping products are purchased more frequently than convenience products.

Answer: FALSE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 32) Life insurance is an example of a convenience product.

Answer: FALSE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 33) When buying unsought products, consumers spend considerable time and effort in gathering information and making comparisons.

Answer: FALSE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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34) Consumers rarely compare shopping products before purchasing them.

Answer: FALSE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 35) Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places.

Answer: TRUE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 36) Consumers are generally willing to make more effort than usual to buy specialty products.

Answer: TRUE Diff: 1 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 37) Unsought products are consumer products that the consumer either does not know about or knows about but does not normally consider buying.

Answer: TRUE Diff: 1 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 38) Ideas can't be marketed.

Answer: FALSE Diff: 1 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 39) Specialty products are primarily purchased for use in conducting a business.

Answer: FALSE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 40) A laptop that is purchased for a graphic design studio is considered an industrial product.

Answer: TRUE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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41) Corporate image marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people.

Answer: FALSE Diff: 2 Type: TF LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 42) What is a product? What are the three levels of a product?

Answer: A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include more than just tangible objects, such as cars, computers, or cell phones. Broadly defined, products also include services, events, persons, places, organizations, and ideas, or a mixture of these. The three product levels are core customer value, actual product, and augmented product.

The most basic level is the core customer value, which addresses the question: What is the buyer really buying? When designing products, marketers must first define the core, problem-solving benefits or services that consumers seek.

At the second level, product planners must turn the core benefit into an actual product. They need to develop product and service features, a design, a quality level, a brand name, and packaging.

Finally, product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits.

Diff: 2 Type: ES LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Reflective thinking 43) Describe the various categories of consumer products with examples.

Answer: Consumer products are products and services bought by final consumers for personal consumption. The various categories of consumer products are: a) Convenience products: These are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort. Examples include laundry detergent, candy, magazines, and fast food. b) Shopping products: These are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. Examples include furniture, clothing, major appliances, and hotel services. c) Specialty products: These are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. Examples include specific brands of cars, high-priced photography equipment, designer clothes, gourmet foods, and the services of medical or legal specialists. d) Unsought products: These are consumer products that the consumer either does not know about or knows about but does not normally consider buying. By their very nature, unsought products require a lot of advertising, personal selling, and other marketing efforts. Classic examples of known but unsought products and services are life insurance, preplanned funeral services, and blood donations to the Red Cross.

Diff: 3 Type: ES LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 10 © 2021 Pearson Canada Inc.

44) Describe the various categories of industrial products with examples.

Answer: Industrial products are those products purchased for further processing or for use in conducting a business. The three groups of industrial products and services are materials and parts, capital items, and supplies and services. a) Materials and parts include raw materials as well as manufactured materials and parts. Raw materials consist of farm products (wheat, cotton) and natural products (lumber, crude petroleum, iron ore). Manufactured materials and parts consist of component materials (iron, yarn, cement, wires) and component parts (small motors, tires, castings). Most manufactured materials and parts are sold directly to industrial users. Price and service are the major marketing factors; branding and advertising tend to be less important. b) Capital items are industrial products that aid in the buyer's production or operations, including installations and accessory equipment. Installations consist of major purchases such as buildings (factories, offices) and fixed equipment (generators, drill presses, large computer systems, elevators). Accessory equipment includes portable factory equipment and tools (hand tools, lift trucks) and office equipment (computers, fax machines, desks). These types of equipment have shorter lives than do installations and simply aid in the production process. c) The final group of industrial products is supplies and services. Supplies include operating supplies (lubricants, coal, paper, pencils) and repair and maintenance items (paint, nails, brooms). Supplies are the convenience products of the industrial field because they are usually purchased with a minimum of effort or comparison. Business services include maintenance and repair services (window cleaning, computer repair) and business advisory services (legal, management consulting, advertising). Such services are usually supplied under contract.

Diff: 2 Type: ES LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 45) What is organization marketing? Explain with the help of an example.

Answer: Organizations often carry out activities to "sell" the organization itself. Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. Both profit and not-for-profit organizations practice organization marketing. Business firms sponsor public relations or corporate image marketing campaigns to market themselves and polish their images. For example, GE's longrunning "Imagination at Work" campaign markets the industrial giant as a company whose imaginative products and technologies are making a difference in the world. Consider one recent award-winning TV spot, called "Childlike Imagination." The whimsical ad brings GE's products–from jet engines and diesel locomotives to giant wind turbines and hospital diagnostics machines–to life through the eyes of an amazed young girl whose mom works at GE. GE is "Building, powering, moving, and curing the world," says the company. "Not just imagining.

Doing. GE works."

Diff: 3 Type: ES LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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46) Many companies are taking a ________ approach, viewing quality as an investment and holding quality efforts accountable for bottom-line results.

A) return-on-quality B) quality level C) performance quality D) conformance quality E) total quality management Answer: A Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 47) A company adding new features to a product will most likely assess each feature's value to customers relative to its ________.

A) cost to the company B) performance in the market C) benefits to the company D) cost to the customers E) benefits to the supplier Answer: A Diff: 1 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 48) A ________ is defined as a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service.

A) prototype B) paradigm C) framework D) patent E) brand Answer: E Diff: 1 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge

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49) Which of the following terms best describes the process of designing and producing a container or wrapper for a product?

A) labeling B) positioning C) licensing D) packaging E) branding Answer: D Diff: 1 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 50) In terms of packaging functions, Tiffany & Co.'s robin egg blue boxes ________.

A) are primarily used to hold and protect products B) have created confusion in the marketplace C) create immediate consumer recognition D) deemphasize the importance of labels E) stifle brand awareness and recognition Answer: C Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 51) A product line is most likely too short if managers can ________.

A) increase profits by dropping items B) decrease costs by adding items C) increase market share by dropping items D) decrease costs by dropping items E) increase profits by adding items Answer: E Diff: 1 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking

13 © 2021 Pearson Canada Inc.

52) In 2020, Tim Horton's announced that it was going back to basics, backing away from an increasingly long menu that confused customers and slowed production and output. This product line reduction is being pursued because managers can ________.

A) decrease costs by adding items B) increase market share by adding items C) increase profits by dropping items D) decrease costs by dropping items E) increase profits by adding items Answer: C Diff: 1 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 53) Denta Clean's decision to add a whitening toothpaste to its current line of toothpastes is an example of product line ________.

A) stretching B) widening C) strengthening D) mixing E) filling Answer: E Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 54) ________ simply describes the appearance of a product.

A) Filling B) Strengthening C) Mixing D) Style E) Widening Answer: D Diff: 1 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge

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55) Marque, a high-end maker of designer watches, has started making inexpensive watches to take advantage of enormous growth rates in low-end market segments. Marque is most likely engaging in ________.

A) franchising B) line filling C) two-way stretching D) upward stretching E) downward stretching Answer: E Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 56) Which of the following is NOT an example of a product line?

A) Lexus models IS 300, ES 350, LC 500 automobiles B) Tide Concentrate, Tide HE, Tide Power pods laundry detergent C) Colgate toothpaste, Irish spring soap, Speed stick deodarant D) McDonalds Big Mac, Quarter Pounder, Fillet-O-Fish E) They are all examples of product lines Answer: C Diff: 1 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 57) Product mix length refers to the ________.

A) number of versions offered for each product in the line B) ways in which the various product lines are related C) number of different product lines the company carries D) total number of items a company carries within its product lines E) total market share captured by the entire product line Answer: D Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge

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58) Product mix width refers to the ________.

A) number of versions offered for each product in the line B) ways in which the various product lines are related C) number of different product lines the company carries D) total number of items a company carries within its product lines E) total market share captured by the entire product line Answer: C Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 59) Product mix depth refers to the ________.

A) number of versions offered for each product in the line B) ways in which the various product lines are related C) number of different product lines the company carries D) total number of items a company carries within its product lines E) total market share captured by the entire product line Answer: A Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 60) Consistency of a product mix refers to the ________.

A) number of versions offered for each product in the line B) ways in which the various product lines are related C) number of different product lines the company carries D) total number of items a company carries within its product lines E) total market share captured by the entire product line Answer: B Diff: 2 Type: MC LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 61) Total quality management is an approach in which all of the company's people are involved in constantly improving the quality of products, services, and business processes.

Answer: TRUE Diff: 1 Type: TF LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge

16 © 2021 Pearson Canada Inc.

62) Consumers view a brand as an important part of a product, and branding can add value to a consumer's purchase.

Answer: TRUE Diff: 1 Type: TF LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 63) Support services are an important part of a customer's overall brand experience.

Answer: TRUE Diff: 2 Type: TF LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 64) A product label gives information about the product but does not can promote the brand and engage customers.

Answer: FALSE Diff: 2 Type: TF LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 65) What are the two dimensions of product quality?

Answer: Product quality is one of the marketer's major positioning tools. Quality affects product or service performance; thus, it is closely linked to customer value and satisfaction.

Product quality has two dimensions: level and consistency. In developing a product, the marketer must first choose a quality level that will support the product's positioning. Here, product quality means performance quality — the product's ability to perform its functions. Beyond quality level, high quality also can mean high levels of quality consistency. Here, product quality means conformance quality — freedom from defects and consistency in delivering a targeted level of performance.

Diff: 2 Type: ES LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking

17 © 2021 Pearson Canada Inc.

66) What is a brand? What are the advantages of branding?

Answer: A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. Consumers view a brand as an important part of a product, and branding can add value to a consumer's purchase. Customers attach meanings to brands and develop brand relationships. As a result, brands have meaning well beyond a product's physical attributes. Branding helps buyers in many ways. Brand names help consumers identify products that might benefit them. Brands also say something about product quality and consistency — buyers who always buy the same brand know that they will get the same features, benefits, and quality each time they buy. Branding also gives the seller several advantages. The seller's brand name and trademark provide legal protection for unique product features that otherwise might be copied by competitors. Branding helps the seller to segment markets.

Diff: 3 Type: ES LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 67) What role does packaging play in the marketing of a product? How can packaging lead to an increase or decrease of sales? Provide examples to illustrate your response.

Answer: Packaging involves designing and producing the container or wrapper for a product.

Traditionally, the primary function of the package was to hold and protect the product.

Information sharing including instructions, best before dates, calories or recipes.

Functional benefits including storage, serving (ketchup squeeze bottles). Safety benefits like child proofing. Packaging also reinforces brand and marketing efforts. Logos, colours and shapes all help the prospective customer connect with the brand advantage. In recent times, however, packaging has become an important marketing tool as well. Increased competition and clutter on retail store shelves means that packages must now perform many sales tasks — from attracting buyers, to communicating brand positioning, to closing the sale. Companies are realizing the power of good packaging to create immediate consumer recognition of a brand. For example, Puma replaced the traditional shoebox with a functional and environmentally friendly bag.

Poorly designed packages, such as those that involve wire twist ties, can cause headaches for consumers and lost sales for the company. For example, an average supermarket stocks about 44,000 items; the average Walmart supercenter carries 142,000 items. The typical shopper makes three out of four purchase decisions in stores and passes by some 300 items per minute. In this highly competitive environment, the package may be the seller's best and last chance to influence buyers. So the package itself has become an important promotional medium.

Diff: 3 Type: ES LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking

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68) What are the functions of product labels? What marketing role do labels play?

Answer: Labels range from simple tags attached to products to complex graphics that are part of the packaging. They perform several functions. At the very least, the label identifies the product or brand. The label might also describe several things about the product — who made it, where it was made, when it was made, its contents, how it is to be used, and how to use it safely.

Finally, the label might help to promote the brand, support its positioning, and connect with customers. For many companies, labels have become an important element in broader marketing campaigns. Labels and brand logos can support the brand's positioning and add personality to the brand.

Diff: 2 Type: ES LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 69) What are the two ways in which a company can extend its product line?

Answer: A product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. A company can expand its product line in two ways: by line filling or line stretching. Product line filling involves adding more items within the present range of the line. There are several reasons for product line filling: reaching for extra profits, satisfying dealers, using excess capacity, being the leading full-line company, and plugging holes to keep out competitors. However, line filling is overdone if it results in cannibalization and customer confusion. The company should ensure that new items are noticeably different from existing ones. Product line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways. Companies located at the upper end of the market can stretch their lines downward. Companies can also stretch their product lines upward. Sometimes, companies stretch upward to add prestige to their current products.

Diff: 2 Type: ES LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 70) What is a product mix? What are the four dimensions of a product mix?

Answer: A product mix (or product portfolio) consists of all the product lines and items that a particular seller offers for sale. A company's product mix has four important dimensions: width, length, depth, and consistency.

Product mix width refers to the number of different product lines the company carries.

Product mix length refers to the total number of items a company carries within its product lines.

Product mix depth refers to the number of versions offered for each product in the line.

The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other aspect.

Diff: 2 Type: ES LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 19 © 2021 Pearson Canada Inc.

71) Which of the following is most likely a true statement about services?

A) Services can be stored for later sale or use.

B) Service quality is not dependent on the provider.

C) Services can be easily separated from their providers.

D) Service industries vary greatly.

E) Demand fluctuation has little to no impact on service providers.

Answer: D Diff: 2 Type: MC LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 72) A doctor performing hip surgery on a patient illustrates how a service can be produced and consumed simultaneously. This is an example of which service characteristic?

A) tangibility B) intangibility C) perishability D) variability E) inseparability Answer: E Diff: 2 Type: MC LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 73) Service variability means that ________.

A) the evaluation of services is subjective and changes from customer to customer B) service quality depends on when, where, and how they are provided C) services cannot be stored for later sale or use D) services cannot be seen, tasted, felt, heard, or smelled before they are bought E) services can be separated from their providers Answer: B Diff: 2 Type: MC LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking

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74) World Skies' Flight 167 takes off at 50 percent capacity. The unoccupied seats cannot be stored for later sale or use. This is an example of which service characteristic?

A) tangibility B) intangibility C) perishability D) variability E) inseparability Answer: C Diff: 3 Type: MC LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 75) At Four Seasons Hotels and Resorts, creating delighted customers involves much more than just crafting a lofty customer-focused marketing strategy. At Four Seasons, it all starts with ________.

A) comfortable beds B) world class restaurants C) easy check in D) satisfied employees E) low prices Answer: D Diff: 1 Type: MC LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 76) Orienting and motivating customer-contact employees and supporting service people to work as a team to provide customer satisfaction is known as ________ marketing.

A) social B) organizational C) differentiated D) internal E) interactive Answer: D Diff: 1 Type: MC LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Interpersonal relations and teamwork

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77) Zappos recognizes the importance of the buyer-seller interaction. They only hire people with an innate "passion to serve" and they go through four weeks of customer loyalty training. This is referred to as ________ marketing.

A) horizontal B) interactive C) advocacy D) social E) internal Answer: B Diff: 2 Type: MC LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 78) Service variability means that the quality of services does not depend on who provides them.

Answer: FALSE Diff: 2 Type: TF LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 79) Orienting and motivating customer-contact employees to work as a team to provide customer satisfaction is known as social marketing.

Answer: FALSE Diff: 2 Type: TF LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Interpersonal relations and teamwork

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80) Explain, with examples, the four characteristics of services that a company must consider when designing marketing programs.

Answer: A company must consider four special service characteristics when designing marketing programs: intangibility, inseparability, variability, and perishability.

Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled before they are bought. For example, people undergoing cosmetic surgery cannot see the result before the purchase. To reduce uncertainty, buyers look for signals of service quality. They draw conclusions about quality from the place, people, price, equipment, and communications that they can see. Service inseparability means that services cannot be separated from their providers, whether the providers are people or machines. If a service employee provides the service, then the employee becomes a part of the service. And customers don't just buy and use a service; they play an active role in its delivery. Customer coproduction makes provider-customer interaction a special feature of services marketing. Both the provider and the customer affect the service outcome. Service variability means that the quality of services depends on who provides them as well as when, where, and how they are provided. For example, some hotels — say, Marriott — have reputations for providing better service than others. Still, within a given Marriott hotel, one registration-counter employee may be cheerful and efficient, whereas another standing just a few feet away may be unpleasant and slow. Service perishability means that services cannot be stored for later sale or use. Some doctors charge patients for missed appointments because the service value existed only at that point and disappeared when the patient did not show up. The perishability of services is not a problem when demand is steady. However, when demand fluctuates, service firms often have difficult problems.

Diff: 3 Type: ES LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 81) Brands vary in the amount of power and value they hold in the marketplace. Iconic brands like Apple, Google, and Harley-Davidson have achieved substantial brand ________.

A) capital B) personality C) perception D) esteem E) equity Answer: E Diff: 1 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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82) Flores Fashions promotes its clothing by emphasizing the durability and quality of the fabrics it uses. The company has positioned its brand based on ________.

A) product benefits B) product attributes C) beliefs and values D) market share E) brand loyalty Answer: B Diff: 3 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 83) Which of the following is a desirable quality for a brand name?

A) The name should be unique and difficult to pronounce to ensure legal protection.

B) The name should be a common word rather than a distinctive one.

C) The name should not suggest anything about the product quality.

D) The name should translate easily into foreign languages.

E) The name should not be extendable.

Answer: D Diff: 2 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 84) Xenon, a leading consumer-electronics manufacturing company, markets its products under the company's own brand name. In this case, Xenon has sponsored its products by promoting them as ________ brands.

A) licensed B) private C) store D) national E) distributor Answer: D Diff: 3 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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85) Loblaws has enjoyed great success with the many PC (President's Choice) products. Such items are considered ________ brands.

A) national B) manufacturer's C) private D) extended E) licensed Answer: C Diff: 2 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 86) Which of the following is an example of licensing?

A) DMX, an electronics manufacturer, acquires Z-Elex, a start-up firm, and sells all Z-Elex's products under the DMX brand name.

B) Berry, a fruit juice company, uses a well-known cartoon character to promote the company's line of children's products and pays the creator of the cartoon character a fee.

C) XLC, a sporting goods firm, sponsors a number of top athletes in various sports and also hosts the XLC Sporting Achievement Awards.

D) ZetaBike, a bicycle manufacturer, teams up with VitaWater, a sports drink producer, to introduce ZetaVita, an energy drink.

E) Mason's, a retail chain, sells a number of different products from different manufacturers under the brand name Mason's.

Answer: B Diff: 3 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 87) For over twenty years Eddie Bauer (the popular outdoor adventure clothing brand) lent its brand clout to several Ford vehicles including the F-Series Eddie Bauer Edition. These upscaled versions represent an example of ________.

A) licensing B) co-branding C) private branding D) franchising E) brand positioning Answer: B Diff: 1 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Application of knowledge

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88) BerryBerry is a fruit juice company that has traditionally sold three varieties of mixed-fruit juices: DazzleBerry, AquaBerry, and GloBerry. The company wants to add more products to its product line. In this case, which of the following is an example of co-branding by BerryBerry?

A) The company introduces BerryBliss, a dried berry snack mix for kids.

B) BerryBerry adds a new fruit juice flavour, TangyBerry.

C) The company introduces a line of flavoured milk and yogurt under a new brand name.

D) The company creates a new brand, NatureFresh, for a line of cosmetics based on fruit flavours and colours.

E) BerryBerry teams up with SFX, a sporting goods company, to introduce a line of energy bars called BerryBerry SFX. Answer: E Diff: 3 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 89) While brand management has been a key competency, ________ has always been a cornerstone of Nike's success.

A) player endorsements B) exceptional advertising C) a strong presence in all sports D) product innovation E) its catchy slogan, "Just Do It" Answer: D Diff: 2 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 90) Non-Dairy Delight, a manufacturer of soy milk, attracts new customers by adding cinnamon, pumpkin, and vanilla flavours to its traditional product. In this case, the company has developed its brand with ________.

A) brand extensions B) line extensions C) multibranding D) new product lines E) co-branding Answer: B Diff: 3 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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91) BerryBerry is a fruit juice company that has traditionally sold three varieties of mixed-fruit juices: DazzleBerry, AquaBerry, and GloBerry. The company wants to add more products to its product line. Which of the following is an example of brand extension for BerryBerry?

A) The company introduces BerryBliss, a dried berry snack mix for kids.

B) BerryBerry adds a new fruit juice flavour, TangyBerry.

C) The company introduces a line of flavoured milk and yogurt under a new brand name.

D) The company creates a new brand, NatureFresh, for a line of cosmetics based on fruit flavours and colours.

E) BerryBerry teams up with SFX, a sporting goods company, to introduce a line of energy bars called BerryBerry SFX. Answer: A Diff: 3 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 92) ________ involves using an existing brand name for a new product category.

A) Line extension B) Co-branding C) New branding D) Brand extension E) Multibranding Answer: D Diff: 1 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Application of knowledge 93) Seattle's Best Coffee was purchased by industry leader Starbucks in 2003. Both brands continue in the market with Seattle's Best and Starbucks locations often in close proximity. The brands are perceived differently. This is an example of ________.

A) brand extensions B) line extensions C) multibrands D) new brands E) brand mixes Answer: C Diff: 3 Type: MC LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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94) A brand can be better positioned by associating its name with a desirable benefit.

Answer: TRUE Diff: 2 Type: TF LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 95) Once known as "generic" or "no-name" brands, today's store brands have shed their image as cheap knockoffs of national brands.

Answer: TRUE Diff: 2 Type: TF LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 96) A brand extension gives a new product instant recognition and faster acceptance.

Answer: TRUE Diff: 2 Type: TF LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 97) What is brand equity? Give an example of a product that has high brand equity and explain why this is so.

Answer: Brand equity is the differential effect that knowing the brand name has on customer response to the product and its marketing. It's a measure of the brand's ability to capture consumer preference and loyalty. A brand has positive brand equity when consumers react more favourably to it than to a generic or unbranded version of the same product. It has negative brand equity if consumers react less favourably than to an unbranded version.

The second part is personal. The value of the answer is the respondant's ability to defend why it has brand equity, which should speak to the higher percieved value of the brand. This can range from ketchup to cars.

Diff: 1 Type: ES LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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98) Discuss the concept of brand positioning.

Answer: Marketers need to position their brands clearly in target customers' minds. At the lowest level, they can position the brand on product attributes. A brand can be better positioned by associating its name with a desirable benefit. The strongest brands go beyond attribute or benefit positioning. They are positioned on strong beliefs and values, engaging customers on a deep, emotional level. Successful brands engage customers on a deep, emotional level. When positioning a brand, the marketer should establish a mission for the brand and a vision of what the brand must be and do. A brand is the company's promise to deliver a specific set of features, benefits, services, and experiences consistently to buyers. The brand promise must be simple and honest.

Diff: 3 Type: ES LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 99) What is co-branding? What are the advantages of co-branding? Provide an example to illustrate your answer.

Answer: (Answers will vary.)

Co-branding occurs when two established brand names of different companies are used on the same product. Co-branding offers many advantages. Because each brand dominates in a different category, the combined brands create broader consumer appeal and greater brand equity. Cobranding can take advantage of the complementary strengths of two brands. For example, Benjamin Moore and Pottery Barn joined forces to create a special collection of Benjamin Moore paint colours designed to perfectly coordinate with Pottery Barn's unique furnishings and accents. Taco Bell and Doritos teamed up to create the Doritos Locos Taco. Taco Bell sold more than 100 million of the tacos in just the first 10 weeks and quickly added Cool Ranch and Fiery versions and has since sold over a billion. Co-branding also allows a company to expand its existing brand into a category it might otherwise have difficulty entering alone. For example, Nike and Apple co-branded the Nike+iPod Sport Kit, which lets runners link their Nike shoes with their iPods to track and enhance running performance in real time.

Diff: 3 Type: ES LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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100) Differentiate between line extensions and brand extensions. Provide an example of each.

Answer: Line extensions occur when a company extends existing brand names to new forms, colours, sizes, ingredients, or flavours of an existing product category. For example, over the years, KFC has extended its "finger lickin' good" chicken lineup well beyond original recipe, bone-in Kentucky fried chicken. It now offers grilled chicken, boneless fried chicken, chicken tenders, hot wings, chicken bites, and, most recently, KFC Go Cups — chicken and potato wedges in a handy car-cup holder that lets customers snack on the go. A brand extension extends a current brand name to new or modified products in a new category. For example, Nest — the maker of stylish, connected, learning thermostats that can be controlled remotely from a phone — extended its line with an equally smart and stylish Nest Protect home smoke and carbon monoxide alarm. It's now extending the Nest line to include "Works with Nest," applications developed with a variety of partners that let its smart devices interact with and control everything from video monitoring devices, smart door locks, and home lighting systems to home appliances and fitness tracking bands.

Diff: 2 Type: ES LO: 7-4: Discuss branding strategy-the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

30 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 8 Developing New Products and Managing the Product Life Cycle 1) Acquisitions do not include ________.

A) purchasing a whole company B) buying a patent C) buying a license D) opening a franchise E) developing a product Answer: E Diff: 2 Type: MC LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 2) By one estimate 60% of all new consumer packaged products introduced by established companies fail.

Answer: TRUE Diff: 1 Type: TF LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 3) List and explain some of the reasons why new products fail.

Answer: There are several reasons why a new product may fail. Although an idea may be good, a company might have overestimated the market size. The actual product itself may have been poorly designed. Another possible reason is that the product may have been incorrectly positioned in the market. It may have been priced too high or advertised poorly. It is also possible that a high-level executive pushed a favourite idea despite poor market research findings. Sometimes, the costs of product development are higher than expected. The product may have been launched at the wrong time, or competitors may have fought back harder than expected.

Diff: 2 Type: ES LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 4) The new product development process usually starts with ________.

A) idea screening B) idea generation C) concept development D) concept testing E) market strategy development Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge

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5) Which of the following statements is most likely true about the new product development process?

A) The first step in developing a new product involves determining any budgetary or distribution limitations.

B) Most firms discourage employees from contributing new product ideas because of legal concerns.

C) In most cases, concept testing is followed by concept development.

D) A product concept should be developed for each idea before it goes through idea screening.

E) Customers, competitors, distributors, and suppliers are major sources of new product ideas.

Answer: E Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 6) Companies like 3M, Google, and Sony have ________ that encourage employees to develop new ideas.

A) trade magazines B) marketing research firms C) government agencies D) competitors' ads E) intrapreneurial programs Answer: E Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 7) The Dairy Bar, a national soft-service ice cream retailer, buys cones from Cones & More.

Cones & More is an important resource for marketplace information. They're considered a(n) ________ source of new product ideas for the Dairy Bar. A) entrepreneurial B) competitive C) external D) internal E) analytical Answer: D Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

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8) Companies like Under Armour sponsor annual crowdsourcing events. In which of the following scenarios is crowdsourcing used for new product development?

A) A company creates a forum where anyone can contribute new product ideas.

B) A company hires a marketing agency to generate new product ideas.

C) A company reviews the sales, costs, and profit projections of an existing product.

D) A company depends on its R&D department to come up with new ideas.

E) A company partners with a design agency to create a few prototypes.

Answer: A Diff: 1 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 9) A company's external sources of new product ideas include its ________.

A) managers B) salespeople C) engineers D) manufacturing staff E) suppliers Answer: E Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 10) Kallton is a multinational communications and information technology corporation. Its principal products are mobile telephones and tablets. It recently announced on its website that customers can suggest ideas for its upcoming product model. Contributors of short-listed ideas will be adequately rewarded. In this case, Kallton is using ________ to generate new product ideas.

A) marketing strategy development B) crowdsourcing C) concept development D) business analysis E) test marketing Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

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11) Which statement is most likely true about idea generation in the new product development process?

A) Idea generation is most effective when it occurs after idea screening.

B) Most companies set a limit for the number of ideas generated to simplify the process.

C) Intrapreneurial programs enable customers to contribute to the idea generation process.

D) Idea generation is usually followed by procedures that reduce the total number of ideas.

E) A company can either develop ideas through internal or external sources but not through both.

Answer: D Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 12) Safari Unlimited recently conducted national research to generate ideas for a new line of fatigues geared to women. The company uncovered a number of ideas about clothing and accessory preferences as well as important benefits such as built-in sunblock and durability. The Safari Unlimited product development team will most likely use ________ next to arrive at a realistic number of products for the new fatigues line.

A) crowdsourcing B) idea screening C) concept testing D) concept development E) business analysis Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking; Interpersonal relations and teamwork 13) Which of the following steps of the new product development process would most likely use an R-W-W framework?

A) idea generation B) idea screening C) concept testing D) test marketing E) commercialization Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

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14) A detailed version of a product idea stated in meaningful consumer terms is a ________.

A) product feature B) product concept C) product idea D) product image E) product framework Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 15) The style, ease of use, and multi-blade technology of Gillette's Fusion razor system is a ________ that has favourably impacted consumer perceptions about other new products sold by the company.

A) product audit B) product feature C) product image D) product framework E) product concept Answer: C Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 16) The stage in which product ideas are presented to groups of target consumers physically or symbolically is referred to as ________.

A) concept testing B) concept development C) test marketing D) marketing strategy development E) crowdsourcing Answer: A Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge

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17) Doggie World tested an idea for a new chew toy that would entertain dogs while simultaneously cleaning their teeth. Dog owners were pleased with the results. The next stage in developing the new product concept is ________.

A) idea screening B) marketing strategy development C) business analysis D) product development E) test marketing Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 18) The first part of a marketing strategy statement describes the ________ of a new product.

A) planned price and distribution B) marketing budget C) marketing mix strategy D) target market, planned value proposition, and sales goals E) planned long-run sales and market share Answer: D Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 19) The second part of the marketing strategy outlines which three parts?

A) planned price; distribution; marketing budget for the next year B) target market; planned value proposition; sales, market-share, and profit goals for two years C) target market; distribution; profit goals for three years D) price only for the next year E) price; marketing budget and profits for the next five years.

Answer: A Diff: 3 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

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20) The third part of a marketing strategy statement describes the ________ of a new product.

A) sales, market, and profit goals B) distribution and pricing C) marketing budget D) planned value proposition E) target market and sales goals Answer: A Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 21) ________ involves a review of the sales, costs, and profit projections for a new product to determine whether they satisfy a company's objectives.

A) Vendor analysis B) Portfolio analysis C) Business analysis D) SWOT analysis E) Concept analysis Answer: C Diff: 1 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 22) Hollingsworth is a retail company that is planning to release a new line of luxury personal care products. Its managers are now reviewing the sales history of similar products and conducting marketing surveys to estimate minimum and maximum sales for the product. In which of the following stages of the new product development process is the product?

A) test marketing B) idea screening C) business analysis D) marketing strategy development E) concept testing Answer: C Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

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23) In a sequential new product development process, which of the following is true of the product development step?

A) Product development is usually followed by a business analysis of the product.

B) Product development involves introducing a product into realistic market settings.

C) Product development avoids testing products on actual customers due to liability concerns.

D) Product development is usually followed by test marketing.

E) Product development helps top management review profit projections.

Answer: D Diff: 1 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 24) Taco Bell test marketed Doritos Locos Tacos for three years and developed 45 prototypes.

Once the decision was made to launch the new taco shell, it moved into the ________ stage of the new product development process.

A) concept development B) product development C) test marketing D) strategy development E) commercialization Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 25) ________ refers to designing a plan for a new product based on the product concept.

A) Business analysis B) Idea generation C) Concept screening D) Marketing strategy development E) Test marketing Answer: D Diff: 1 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge

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26) If a product passes both the concept test and the product test, the next step is most likely to be ________.

A) marketing strategy development B) product development C) test marketing D) business analysis E) concept development Answer: C Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 27) Foods International is developing a new gluten-free, chili-flavoured pretzel. The marketing strategy for the product has already been developed and presented to top management. Several prototypes were also formulated by the company's R&D team. The final prototype is now being tested rigorously to ensure that it passes FDA standards. Once approved, the next step will most likely be ________.

A) test marketing B) portfolio analysis C) commercialization D) internal marketing E) business analysis Answer: A Diff: 3 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 28) In which of the following cases is little or no test marketing most likely recommended for a new product?

A) when the product requires a major investment B) when management is unsure of the projected demand for the product C) when the risks associated with introducing the product are high D) when management is unsure of the marketing program for the product E) when the costs of developing and introducing the product are low Answer: E Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

9 © 2021 Pearson Canada Inc.

29) Evans and Hills, a beverages manufacturing company, has developed a new line of specialty teas and is seeking regular input from the test marketing process. To facilitate this process, the firm uses BuyerScan, a software that generates store-by-store, week-by-week reports on the actual sales of tested products and the impact of in-store and in-home marketing efforts. Which of the following approaches does this scenario illustrate?

A) standard test markets B) inventory tracking C) controlled test markets D) simulated test markets E) direct commercialization Answer: C Diff: 3 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Information technology 30) ________ gives management the information needed to make a final decision about whether to launch the new product.

A) Test marketing B) Product testing C) Product development D) Business analysis E) Research and development Answer: A Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 31) Using ________, researchers measure consumer responses to new products and marketing tactics in laboratory stores or virtual online shopping environments.

A) simulated test markets B) controlled test markets C) business analysis D) standard test markets E) concept development Answer: A Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge

10 © 2021 Pearson Canada Inc.

32) Introducing a new product into the market is called ________.

A) test marketing B) segmentation C) product development D) commercialization E) market penetration Answer: D Diff: 1 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 33) Above all else, new product development must be ________.

A) internally developed B) generated by teams of external consultants C) based on competitive products D) customer centred E) none of the above Answer: D Diff: 1 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 34) A company launching a new product must first decide ________.

A) how to launch the product B) the sample size of the market C) when to launch the product D) the viability of a global launch E) the budget for print advertising Answer: C Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

11 © 2021 Pearson Canada Inc.

35) Under a ________ new product development approach, company departments work closely together in cross-functional groups, overlapping the steps in the product development process to save time and increase effectiveness.

A) cross-sectional B) simultaneous C) sequential D) team-based E) systematic Answer: D Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Interpersonal relations and teamwork 36) Under a ________ product development approach, one company department works to complete its stage of the product development process before passing the new product along to the next department and stage.

A) cross-sectional B) simultaneous C) sequential D) team-based E) systematic Answer: C Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Interpersonal relations and teamwork 37) The team-based new product development approach saves times and increases effectiveness because departments work closely together in ________.

A) divisional teams B) problem-solving teams C) self-managed groups D) cross-functional teams E) independent groups Answer: D Diff: 1 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Interpersonal relations and teamwork

12 © 2021 Pearson Canada Inc.

38) Which of the following is a disadvantage of a team-based approach to new product development?

A) It lengthens the time required to get the right products to market.

B) It involves the use of a rigid, sequential product development approach.

C) A bottleneck at one place can seriously hinder the entire project.

D) Organizational confusion and tension sometimes affect the process.

E) The process is highly ineffective for products with short life cycles.

Answer: D Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Interpersonal relations and teamwork 39) Sleek Designs Inc. is producing its first eReader. The company is striving to overcome some of the issues communicated by customers about competitive products including screen glare and product bulkiness. Sleek Designs Inc. is using a ________ approach in their new product development process.

A) customer-centred B) team-based C) sequential D) supply/demand E) systematic Answer: A Diff: 3 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 40) At Fantastic Flavours, a large regional chain of candy stores, employees from marketing, design, production, and finance departments work in cross-functional groups to save time and money in the new product development process. From this description, it can be inferred that Fantastic Flavours uses a(n) ________ approach.

A) intradepartmental new product development B) sequential new product development C) team-based new product development D) simulated test market E) controlled test market Answer: C Diff: 3 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking; Interpersonal relations and teamwork

13 © 2021 Pearson Canada Inc.

41) An innovation management system would most likely be used by ________.

A) managers to update details about customer information B) brand managers to collect, review, and evaluate new product ideas C) suppliers to access inventory information D) product managers to track logistics of a new product E) human resource managers to update information on employee incentives Answer: B Diff: 2 Type: MC LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 42) In the team-based approach, if one area hits snags, it works to resolve them while the team moves on.

Answer: TRUE Diff: 1 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 43) Crowdsourcing refers to inviting broad communities of people–customers, employees, independent scientists and researchers, and even the public at large–into the new product innovation process.

Answer: TRUE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 44) Commercialization focuses on finding new ways to solve customer problems and create more customer satisfying experiences.

Answer: FALSE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 45) Under the innovative management system approach, one company department works individually to complete its stage of the process before passing the new product along to the next department and stage.

Answer: FALSE Diff: 3 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

14 © 2021 Pearson Canada Inc.

46) During concept testing, a product is evaluated by management without any input from external sources.

Answer: FALSE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 47) Companies often sponsor employee 'hackathons' or encourage employees to develop new product ideas. When companies promote innovation from within its ranks (employees) they are really promoting intrapreneurship.

Answer: TRUE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 48) The innovation management system approach shows that shareholders support, encourage, and reward innovation.

Answer: FALSE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 49) Customer involvement has a positive effect on the new product development process and product success.

Answer: TRUE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 50) The business analysis stage is the final step in the new product development process.

Answer: FALSE Diff: 1 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Application of knowledge 51) Product development usually costs the least among all the steps of the new product development process.

Answer: FALSE Diff: 1 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 15 © 2021 Pearson Canada Inc.

52) Salon Finish is test marketing its new smoothing shampoo by assessing consumer satisfaction in laboratory stores where hair is washed and blown dry. Salon Finish is using controlled test marketing in this scenario.

Answer: FALSE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 53) A sequential product development approach is team-oriented, enabling firms to bring products to market very quickly.

Answer: FALSE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Interpersonal relations and teamwork 54) Under a team-based new product development approach, company departments work closely together in cross-functional teams. Overlapping the steps in the product development process saves time and increases effectiveness.

Answer: TRUE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Interpersonal relations and teamwork 55) A new product must have the required functional features and also convey the intended psychological characteristics.

Answer: TRUE Diff: 3 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 56) Companies that combine a customer-centred approach with team-based new product development gain a big competitive edge by getting the right new products to market faster.

Answer: TRUE Diff: 1 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Interpersonal relations and teamwork

16 © 2021 Pearson Canada Inc.

57) It's important for a market pioneer to choose a launch strategy that is consistent with competitive positioning strategies.

Answer: FALSE Diff: 2 Type: TF LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 58) Briefly describe the steps in the new product development process.

Answer: The new product development process generally consists of eight sequential stages.

The process starts with idea generation. Idea generation can be done through internal or external sources. Next comes idea screening, which reduces the number of ideas based on the company's own criteria. Ideas that pass the screening stage continue through product concept development, in which a detailed version of the new product idea is stated in meaningful consumer terms. This stage includes concept testing, in which new product concepts are tested with a group of target consumers to determine whether the concepts have strong consumer appeal. Strong concepts proceed to marketing strategy development, in which an initial marketing strategy for the new product is developed from the product concept. In the business-analysis stage, a review of the sales, costs, and profit projections for a new product is conducted to determine whether the new product is likely to satisfy the company's objectives. With positive results here, the ideas become more concrete through product development, where the product concept is developed into a physical product and test marketing, where the product and its proposed marketing program are introduced into realistic market settings. If all goes well, the product gets launched during commercialization. New product development involves more than just going through a set of steps. Companies must take a systematic, holistic approach to managing this process. Successful new product development requires a customer-centred, team-based, systematic effort.

Diff: 2 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

17 © 2021 Pearson Canada Inc.

59) What are the major external sources of new product ideas? What type of information can be gathered from each of these sources? How do firms benefit from such information?

Answer: The major external sources of new product ideas include customers, suppliers, distributors, competitors, and research firms. These sources are close to the market and tend to reflect current tastes and preferences. Perhaps the most important sources of new product ideas are customers themselves. Companies observe customers, invite them to submit their ideas and suggestions, or even involve customers in the new product development process. Many companies are now developing crowdsourcing or open-innovation new product idea programs, which invite broad communities of people–customers, employees, independent scientists and researchers, and even the general public–into the new product innovation process. Distributors are also linked to the market and can pass along information about consumer problems and new product possibilities. Suppliers can tell a company about new concepts, techniques, and materials that can be used to develop new products. Consumers often create new products and services on their own. The company can analyze customer questions and complaints to find new products that better solve consumer problems. Or it can invite customers to share suggestions and ideas.

Companies can also directly involve customers in the innovation process through customer cocreation. Other idea sources include trade magazines, shows, websites, and seminars; government agencies; advertising agencies; marketing research firms; university and commercial laboratories; and inventors. Companies can also watch competitors' ads to get clues about their new products. They buy competing new products, take them apart to see how they work, analyze their sales, and decide whether they should bring out a new product of their own. Companies can better match their product offerings to customer needs and wants when these sources are involved in the new product development process.

Diff: 3 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 60) What is crowdsourcing? How is crowdsourcing useful in new product development?

Answer: Crowdsourcing refers to throwing the innovation doors wide open and inviting broad communities of people–customers, employees, independent scientists and researchers, and even the public at large–into the new product innovation process. Many companies are now developing crowdsourcing or open-innovation new product idea programs. Rather than creating and managing their own crowdsourcing platforms, companies can use third-party crowdsourcing networks, such as InnoCentive, TopCoder, and jovoto. For example, organizations ranging from Audi, Microsoft, and Nestlé to Swiss Army Knife maker Victorinox have tapped into jovoto's network of 50,000 creative professionals for ideas and solutions, offering prizes of $100 to $100,000. Crowdsourcing can produce a flood of innovative ideas. It enables companies to rely not only on one source or another but on extensive innovation networks that capture ideas and inspirations from multiple sources.

Diff: 2 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

18 © 2021 Pearson Canada Inc.

61) Distinguish between a product idea, a product concept, and a product image.

Answer: A product idea is an idea for a possible product that a company can see itself offering to the market. A product concept is a detailed version of the product idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product.

Diff: 2 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 62) Explain what happens during the concept testing stage of new product development.

Answer: Concept testing refers to testing new product concepts with groups of target consumers. The concepts may be presented to consumers symbolically or physically. For some concept tests, a word or picture description might be sufficient. However, concrete and physical presentations usually increase the reliability of the concept test. After being exposed to the concept, consumers are asked questions about it. Their answers will help the company decide which concept has the strongest appeal.

Diff: 2 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 63) Explain what happens during the business analysis stage of new product development.

Answer: Business analysis involves a review of the sales, costs, and profit projections for a new product to find out whether they satisfy a company's objectives. If they do, the product can move to the product development stage. To estimate sales, the company might look at the sales history of similar products and conduct market surveys. It can then estimate minimum and maximum sales to assess the range of risk. After preparing the sales forecast, management can estimate the expected costs and profits for the product, including marketing, R&D, operations, accounting, and finance costs. The company then uses the sales and costs figures to analyze the new product's financial attractiveness.

Diff: 2 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking

19 © 2021 Pearson Canada Inc.

64) What is test marketing? What role does it play in new product development? What factors do firms consider when determining whether or not to conduct test marketing?

Answer: Test marketing is the stage at which a product and its proposed marketing program are introduced into realistic market settings. A product reaches this stage only after it passes the concept test and product test stage. Test marketing gives the marketer experience with marketing a product before going to the great expense of full introduction. It lets a company test the product and its entire marketing program–targeting and positioning strategy, advertising, distribution, pricing, branding and packaging, and budget levels. The amount of test marketing needed varies with each new product. Test marketing costs can be high, and testing takes time that may allow market opportunities to slip by or competitors to gain advantages. A company may do little or no test marketing when the costs of developing and introducing a new product are low, or when management is already confident about the new product.

Diff: 3 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 65) Define commercialization. Explain the two important issues that a company must decide during this stage.

Answer: Introducing a new product into a market is called commercialization. A company launching a new product must first decide on introduction timing. If the new product will eat into the sales of other company products, the introduction may be delayed. If the product can be improved further, or if the economy is down, the company may wait until the following year to launch it. However, if competitors are ready to introduce their own competing products, the company may push to introduce its new product sooner. Next, the company must decide where to launch the new product–in a single location, a region, the national market, or the international market. Some companies may quickly introduce new models into the full national market.

Companies with international distribution systems may introduce new products through swift global rollouts.

Diff: 2 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 66) Discuss macro-environmental factors that may impact the release of a new product into the market.

Answer: Many factors can impact even the best campaigns. The response should include variables that cannot be controled by the company but may have a profound impact on the new product. New luxury product items that received very favourable market feedback may still have failed if introduced during the 2008 recession. Macroenvironmental factors are key to this answer. Social change, economic conditions (recession), environment (preference to greener products), political (trade wars) are some of the uncontrollable influencers on new product success.

Diff: 2 Type: ES LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

AACSB: Analytical thinking 20 © 2021 Pearson Canada Inc.

67) ________ can describe a product class, a product form, or a brand.

A) The product development process B) The product life cycle concept C) Business analysis theory D) Vendor analysis theory E) Portfolio analysis Answer: B Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Application of knowledge 68) Which of the following statements is most likely true about the product life cycle?

A) Throughout the product introduction stage, sales are zero.

B) The growth stage is the longest stage of the product life cycle.

C) Profits are nonexistent in the growth stage.

D) Growth is a period of rapid market acceptance and increasing profits.

E) Maturity is the period when sales fall off but profits continue to rise.

Answer: D Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 69) A product life cycle has five distinct stages: product development, introduction, growth, maturity, and ________.

A) stabilization B) rebranding C) decline D) progression E) segmentation Answer: C Diff: 1 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Application of knowledge

21 © 2021 Pearson Canada Inc.

70) Which of the following is true of the product life cycle (PLC)?

A) All products generally go through all five stages of the PLC. B) All products pass through the stages of PLC in the same order.

C) It is generally difficult to forecast the sales level at each PLC stage.

D) The PLC concept can be applied to styles but not to fashions and fads.

E) Product forms have longer life cycles than product classes.

Answer: C Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 71) Appliances Galore is continually updating its line of refrigerators to reflect market trends and customer needs. Although the product class is in the maturity stage of the product life cycle, they maintain healthy sales of their line of refrigerators by continually ________.

A) concept testing B) modifying the marketing mix C) rebranding D) modifying the product E) modifying the market Answer: D Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 72) Fad products like 'Heely's' (Shoes with wheels in the heels), Fidget Spinners, Slinkys, and Hoola Hoops are characterized by their ________.

A) enduring nature that spans several generations B) low rates of adoption by consumers C) unusually high sales and rapid decline D) basic and distinctive modes of expression that seldom become unpopular E) non-attainment of the last two stages of the product life cycle Answer: C Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking

22 © 2021 Pearson Canada Inc.

73) Colonial furniture has been in existence since the 1600s and continues to adorn homes today.

According to the product life cycle concept, it would be described as a ________.

A) style B) fashion C) fad D) trend E) drift Answer: A Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 74) A currently accepted or popular style (for example, 'Business casual') represents an example of a ________.

A) form B) fashion C) fad D) style E) drift Answer: B Diff: 1 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 75) When a product is in the ________ stage, profits level off or decline because of increased marketing outlays to defend the product against competition.

A) production B) decline C) maturity D) test marketing E) conception Answer: C Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking

23 © 2021 Pearson Canada Inc.

76) In which stage of the product life cycle will promotional expenditures be significantly high in an attempt to create consumer awareness of a product and its features?

A) product development B) introduction C) growth D) maturity E) adoption Answer: B Diff: 1 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Application of knowledge 77) Which of the following is true about the introduction stage of a new product?

A) Profits are typically high.

B) Promotion spending is relatively low.

C) Less money is needed to attract distributors.

D) Companies tend to avoid basic versions of the product.

E) Sales growth tends to be slow.

Answer: E Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 78) In the ________ stage, a firm most likely faces a trade-off between high market share and high current profit.

A) growth B) decline C) maturity D) introduction E) commercialization Answer: A Diff: 1 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Application of knowledge

24 © 2021 Pearson Canada Inc.

79) Which of the following is true of the growth stage of the product life cycle?

A) New competitors avoid the market.

B) Prices tend to increase significantly.

C) Early adopters stop buying the product.

D) Profits are nonexistent at this stage.

E) Sales start climbing quickly.

Answer: E Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 80) Craft Inc.'s Krayons is a multi-colour chalk material that was released in the market over a century ago. Since the release, the company has had remarkable sales and Krayons has remained unchanged. However, over the last few years, sales of Krayons have been stagnant. Competitors have begun marking prices down and increasing their advertising and sales promotions. Craft's Krayons is most likely in the ________ stage of the product life cycle.

A) introduction B) maturity C) growth D) decline E) incubation Answer: B Diff: 3 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 81) Electronics International has experienced a significant decline in sales for SweetTunes, its MP3 player, during the past two years. In response, the company has reduced its advertising and sales expenditures for SweetTunes in an attempt to improve short-run profits. Which term best describes Electronics International's strategy for SweetTunes?

A) sales outsourcing B) product modification C) industry repositioning D) product harvesting E) marketing mix modification Answer: D Diff: 3 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking

25 © 2021 Pearson Canada Inc.

82) Parvon, a cleaning product, is in the maturity stage of the product life cycle, and Parvon managers have decided to modify the market. Which of the following steps should Parvon managers most likely take to achieve this goal?

A) find new market segments for the brand B) improve the overall quality of the product C) reduce mass media advertising expenses D) offer improved services to new buyers E) conduct controlled test marketing activities Answer: A Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 83) Compact Discs (CDs) replaced vinyl records (LPs) and pushed vinyl records into the ________ stage for many years. Recently, however, playing music on vinyl has regained popularity. This has led to repositioning of vinyl records into the ________ product life cycle.

A) growth, maturity B) decline, growth C) introduction, decline D) maturity, decline E) maturity, maturity Answer: B Diff: 1 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 84) A product is in the maturity stage of the product life cycle, and the company decides to modify the marketing mix. Which of the following steps is the company most likely to take?

A) use aggressive sales promotions B) change features of the product C) improve product quality D) find new uses for the product E) explore new market segments Answer: A Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking

26 © 2021 Pearson Canada Inc.

85) Which of the following is most likely true of a product in the maturity stage of the product life cycle?

A) Sales are zero, and the company's investment costs mount.

B) New competitors enter the market.

C) A slowdown occurs in sales growth.

D) Sales increase with decreasing competition.

E) New distribution channels are acquired.

Answer: C Diff: 2 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 86) Sales of Liquid Paper and other products to cover errors made while using a typewriter have been in the ________ stage of the product life cycle. In this stage, product sales may plunge to zero, or drop to a low level where they continue for many years.

A) decline B) growth C) maturity D) ideation E) analysis Answer: A Diff: 1 Type: MC LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Application of knowledge 87) Fashions are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.

Answer: FALSE Diff: 1 Type: TF LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Application of knowledge 88) Modifying a product is an ineffective strategy in the maturity period of the product life cycle because the product's decline is irreversible at this stage.

Answer: FALSE Diff: 2 Type: TF LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking

27 © 2021 Pearson Canada Inc.

89) During the decline stage of the product life cycle, product sales may plunge to zero, or they may drop to a low level where they continue for many years.

Answer: TRUE Diff: 1 Type: TF LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Application of knowledge 90) The moral of the product life cycle is that companies must continually innovate; otherwise, they risk extinction.

Answer: TRUE Diff: 2 Type: TF LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 91) Briefly explain each step in a typical product life cycle.

Answer: Product development begins when a company finds and develops a new product idea.

During this stage, sales are zero and the company's investment costs mount. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. Growth is a period of rapid market acceptance and increasing profits. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition.

Decline is the period when sales fall off and profits drop. At this stage, a company may decide to maintain, harvest, or drop a product.

Diff: 2 Type: ES LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking

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92) Differentiate between styles, fashions, and fads. Illustrate your response with examples of each.

Answer: A style is a basic and distinctive mode of expression. For example, styles appear in homes (colonial, ranch, transitional), clothing (formal, casual), and art (realist, surrealist, abstract). Once a style is invented, it may last for generations, passing in and out of vogue. A style has a cycle showing several periods of renewed interest.

A fashion is a currently accepted or popular style in a given field. For example, the more formal "business attire" look of corporate dress of the 1980s and 1990s gave way to the "business casual" look of the 2000s and 2010s. Fashions tend to grow slowly, remain popular for a while, and then decline slowly.

Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. A fad may be part of an otherwise normal life cycle, as in the case of recent surges in the sales of poker chips and accessories. Or the fad may comprise a brand or product's entire life cycle.

Diff: 3 Type: ES LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 93) Briefly describe the maturity stage of the product life cycle.

Answer: At some point, a product's sales growth will slow down, and it will enter the maturity stage. This maturity stage normally lasts longer than the previous stages, and it poses strong challenges to marketing management. Most products are in the maturity stage of the life cycle, and therefore most of marketing management deals with the mature product. The slowdown in sales growth results in many producers with many products to sell. In turn, this overcapacity leads to greater competition. Competitors begin marking down prices, increasing their advertising and sales promotions, and upping their product development budgets to find better versions of the product. These steps lead to a drop-in profit. Some of the weaker competitors start dropping out, and the industry eventually contains only well-established competitors.

Although many products in the mature stage appear to remain unchanged for long periods, most successful ones are actually evolving to meet changing consumer needs. Product managers should do more than simply ride along with or defend their mature products — a good offense is the best defense. They should consider modifying the market, product offering, and marketing mix.

Diff: 2 Type: ES LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking

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94) What options are available to a firm that has a product in the decline stage of the product life cycle? Briefly discuss each option.

Answer: A firm has many options with regard to a failing product. It may decide to maintain its brand, repositioning or reinvigorating it in hopes of moving it back into the growth stage of the product life cycle. Management may decide to harvest the product, which means reducing various costs (plant and equipment, maintenance, R&D, advertising, sales force), hoping that sales hold up. If successful, harvesting will increase the company's profits in the short run.

Finally, management may decide to drop the product from its line. The company can sell the product to another firm or simply liquidate it at salvage value. If the company plans to find a buyer, it will not want to run down the product through harvesting.

Diff: 2 Type: ES LO: 8-3: Describe the stages of the product life cycle and how marketing strategies change during a product's life cycle.

AACSB: Analytical thinking 95) As a result of ________, a company cannot make its product illegally similar to a competitor's already established product.

A) anti-monopoly laws B) patent laws C) antitrust laws D) product warranties E) product liability Answer: B Diff: 2 Type: MC LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 96) Some companies are now appointing ________, whose job is to protect consumers from harm and the company from liability by proactively ferreting out potential product problems.

A) intradepartmental teams B) idea generation teams C) product audit committees D) product stewards E) listening officers Answer: D Diff: 1 Type: MC LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning

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97) The federal government has the legal authority to prevent a company from adding products through acquisitions if the acquisition threatens to lessen competition.

Answer: TRUE Diff: 1 Type: TF LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 98) Standardization helps a company develop a consistent worldwide image, and lowers the product design, manufacturing, and marketing costs.

Answer: TRUE Diff: 1 Type: TF LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Diverse and multicultural work environments 99) When a company decides to go international with a product, it must first figure out what products and services to introduce and in which countries.

Answer: TRUE Diff: 1 Type: TF LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Diverse and multicultural work environments 100) Discuss public policy issues, government regulations, and laws that affect new product development.

Answer: Marketers should carefully consider public policy issues and regulations regarding acquiring or dropping products, patent protection, product quality and safety, and product warranties. Regarding new products, the government may prevent companies from adding products through acquisitions if the effect threatens to lessen competition. Companies dropping products must be aware that they have legal obligations, written or implied, to their suppliers, dealers, and customers who have a stake in the dropped product. Companies must also obey U.S. patent laws when developing new products. A company cannot make its product illegally similar to another company's established product.

Manufacturers must comply with specific laws regarding product quality and safety. The Federal Food, Drug, and Cosmetic Act protects consumers from unsafe and adulterated food, drugs, and cosmetics. Various acts provide for the inspection of sanitary conditions in the meat- and poultry-processing industries. Safety legislation has been passed to regulate fabrics, chemical substances, automobiles, toys, and drugs and poisons. The Consumer Product Safety Act of 1972 established the Consumer Product Safety Commission, which has the authority to ban or seize potentially harmful products and set severe penalties for violation of the law.

Diff: 2 Type: ES LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning

31 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 9 Pricing: Understanding and Capturing Customer Value 1) ________ is the sum of all the values that customers exchange for the benefits of having or using a product or service.

A) Payroll B) Profit C) Price D) Cost E) Salary Answer: C Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge 2) ________ is the only element in the marketing mix that produces revenue.

A) Price B) Place C) Promotion D) Product E) Profit Answer: A Diff: 1 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 3) Which of the following sets the price ceiling for a product's pricing?

A) profits B) product costs C) consumer perceptions of value D) elements of the product mix E) competition Answer: C Diff: 1 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking

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4) Which of the following sets the price floor lower limit for a product's pricing?

A) product costs B) profits C) competition D) elements of the product mix E) consumer perceptions of value Answer: A Diff: 1 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 5) ________ uses buyers' perceptions of what a product is worth as the key to pricing.

A) Customer value-based pricing B) Target return pricing C) Cost-plus pricing D) Psychological pricing E) Competition-based pricing Answer: A Diff: 1 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge 6) A ________ pricing strategy for an offering begins with an assessment of customer needs and perceptions. Then a target price is set based on customer perceptions of worth.

A) cost-based B) target costing C) value-based D) value-added E) competition-based Answer: C Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking

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7) When establishing prices, it's important for a manager to understand that "good value" is not the same as ________.

A) "low price" B) "high price" C) "bargain basement" D) "perceived value" E) "everyday value" Answer: A Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 8) Retailers like Winners and Marshalls carry less-expensive versions of established brand name products or new lower-price lines. They have adopted a ________ pricing strategy.

A) high-low B) target return C) cost-plus D) good-value E) market-skimming Answer: D Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 9) Providing extra amenities to differentiate and support high-priced products is referred to as ________ pricing.

A) high-low B) value-added C) target return D) everyday low E) cost-plus Answer: B Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge

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10) ________ pricing involves setting prices based on the expenses involved in producing, distributing, and selling a product plus a fair rate of return for a company's effort and risk.

A) Competition-based B) Value-added C) Cost-based D) Good-value E) Demand-based Answer: C Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge 11) Rent, electricity, and executive salaries that do not vary with production or sales level are referred to as ________ costs.

A) fixed B) variable C) break-even D) target E) promotional Answer: A Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge 12) Costs that change directly with the level of production are referred to as ________ costs.

A) fixed B) variable C) target D) capital E) payroll Answer: B Diff: 1 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge

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13) ________ costs refer to the sum of the fixed and variable costs for any given level of production.

A) Target B) Marginal C) Value-based D) Total E) Break-even Answer: D Diff: 1 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge 14) Lovely Skin is establishing a pricing strategy for a new moisturizer. The total cost to produce each unit is $3.50. The company has decided to add a $1.50 markup, so the unit price to distributors will be $5. Lovely Skin is using a ________ approach to price the new moisturizer.

A) value-added B) good-value C) cost-plus D) competitor-based E) break-even Answer: C Diff: 3 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 15) ________ pricing is an approach whereby a firm tries to determine the price at which it will break even or earn the profit it is seeking.

A) Competition-based B) Target return C) Cost-plus D) Good-value E) Value-added Answer: B Diff: 1 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge

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16) The Fashion Store, a new startup, sets product prices so that revenues will equal manufacturing and marketing costs. The pricing strategy used by the company is referred to as ________ pricing.

A) good-value B) value-added C) cost-plus D) competition-based E) target return Answer: E Diff: 3 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 17) Which of the following statements about break-even analysis is most likely true?

A) It determines how customer-perceived value changes with value-added pricing.

B) It is a tool used to calculate fixed costs.

C) It is used to determine the maximum price that can be set on a product.

D) It is a tool marketers use to examine the relationship between supply and demand.

E) It fails to consider customer value and the relationship between price and demand.

Answer: E Diff: 2 Type: MC LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 18) Unlike the other marketing mix elements, price plays a minor role in creating customer value and building customer relationships.

Answer: FALSE Diff: 1 Type: TF LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 19) Break-even pricing involves setting prices based on competitors' strategies, costs, prices, and market offerings.

Answer: FALSE Diff: 1 Type: TF LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge

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20) If consumers perceive less value relative to competing products, a company should attempt to change customer perceptions to justify a higher price.

Answer: TRUE Diff: 2 Type: TF LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 21) An airline runs a 6-month promotional program where all baggage fees are waived. It is using a cost-based pricing strategy.

Answer: FALSE Diff: 3 Type: TF LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 22) A break-even chart shows the total cost and total revenue expected at various sales volume levels of a product.

Answer: TRUE Diff: 2 Type: TF LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge 23) Competitive pricing is a variation of break-even pricing.

Answer: FALSE Diff: 2 Type: TF LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Application of knowledge

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24) What is customer value-based pricing? Describe the two types of value-based pricing.

Answer: Customer value-based pricing uses buyers' perceptions of value as the key to pricing.

Value-based pricing means that the marketer cannot design a product and marketing program and then set the price. Price is considered along with all other marketing mix variables before the marketing program is set. The company first assesses customer needs and value perceptions. It then sets its target price based on customer perceptions of value. The targeted value and price drive decisions about what costs can be incurred and the resulting product design. As a result, pricing begins with analyzing consumer needs and value perceptions, and the price is set to match perceived value. It is important to remember that "good value" is not the same as "low price." The two types of value-based pricing are good-value pricing and value-added pricing.

More and more, marketers have adopted the strategy of good-value pricing–offering the right combination of quality and good service at a fair price. In many cases, this has involved introducing less-expensive versions of established, brand name products. Many companies also adopt value-added pricing strategies. Rather than cutting prices to match competitors, they attach value-added features and services to differentiate their offers and thus support their higher prices.

Diff: 3 Type: ES LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 25) What are the two different types of costs a company incurs? Explain with examples.

Answer: A company's costs take two forms: fixed and variable. Fixed costs (also known as overhead) are costs that do not vary with production or sales level. For example, a company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. Variable costs vary directly with the level of production. Each PC produced by HP involves a cost of computer chips, wires, plastic, packaging, and other inputs. Although these costs tend to be the same for each unit produced, they are called variable costs because the total varies with the number of units produced. Total costs are the sum of the fixed and variable costs for any given level of production. Management wants to charge a price that will at least cover the total production costs at a given level of production.

Diff: 2 Type: ES LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking

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26) Explain competition-based pricing.

Answer: Competition-based pricing involves setting prices based on competitors' strategies, costs, prices, and market offerings. Consumers will base their judgments of a product's value on the prices that competitors charge for similar products. In assessing competitors' pricing strategies, a company should consider several factors. First, it must find how the company's market offering compares with competitors' offerings in terms of customer value. If consumers perceive that the company's product or service provides greater value, the company can charge a higher price. If consumers perceive less value relative to competing products, the company must either charge a lower price or change customer perceptions to justify a higher price. Next, the company should determine the strength of its current competitors and their current pricing strategies. If the company faces a host of smaller competitors charging high prices relative to the value they deliver, it might charge lower prices to drive weaker competitors from the market. If the market is dominated by larger, lower-price competitors, the company may decide to target unserved market niches with value-added products and services at higher prices. Finally, no matter what price the company charges–high, low, or in between–it must try to give customers superior value for that price.

Diff: 3 Type: ES LO: 9-1: Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices.

AACSB: Analytical thinking 27) Each PC produced by HP involves a cost of computer chips, wires, plastic, packaging, and other inputs. Although these costs tend to be the same for each unit produced, they are called ________ costs because the total changes based on the number of units produced.

A) fixed B) variable C) target D) capital E) payroll Answer: B Diff: 2 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 28) Los Amigos, a new Mexican restaurant, has set up shop across the street from Hot Tamales and More. Which of the following pricing strategies will Los Amigos likely use?

A) cost-plus B) competition-based C) break-even D) good-value E) target costing Answer: B Diff: 2 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 9 © 2021 Pearson Canada Inc.

29) Radox, a luxury watch brand, identifies a market segment that is willing to pay premium prices for its watches, and Radox managers select an ideal selling price. Managers then determine the costs to create watches that meet the ideal selling price. The company's pricing approach is referred to as ________.

A) mass production B) cost-plus pricing C) target costing D) value-added pricing E) target return pricing Answer: C Diff: 3 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 30) In ________, the market consists of many buyers and sellers trading in a uniform commodity, such as wheat, copper, or financial securities.

A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) a pure monopsony Answer: A Diff: 2 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 31) There are more than 200 wild blueberry producers in Nova Scotia. An individual farmer cannot charge more than the going market price per unit without the risk of losing business to the other farmers. This is an example of ________.

A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) a black market Answer: A Diff: 3 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking

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32) Under ________, the market consists of many buyers and sellers trading over a range of prices rather than a single market price.

A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) a pure monopsony Answer: B Diff: 2 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 33) Under ________, the market consists of a few large sellers who are highly sensitive to each other's pricing and marketing strategies.

A) pure competition B) monopolistic competition C) oligopolistic competition D) a pure monopoly E) pure monopsony Answer: C Diff: 2 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 34) The relationship between the price charged for a product and the resulting demand level can be shown in a(n) ________.

A) demand curve B) supply curve C) elastic demand slope D) break-even chart E) inelastic demand slope Answer: A Diff: 1 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking

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35) When demand hardly changes with a small change in the price of a product, the demand for the product is best described as ________.

A) elastic B) flexible C) inelastic D) variable E) cyclical Answer: C Diff: 1 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 36) Which of the following is an economic factor that affects the pricing decisions of a company?

A) market-penetration practices B) top management decisions C) promotional activities D) reseller policies E) interest rates Answer: E Diff: 1 Type: MC LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 37) Price elasticity is a measure of the sensitivity of demand to changes in price.

Answer: TRUE Diff: 2 Type: TF LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 38) In monopolistic competition, the market is dominated by one seller.

Answer: FALSE Diff: 2 Type: TF LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 39) Under oligopolistic competition, the market consists of only a few large sellers.

Answer: TRUE Diff: 1 Type: TF LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 12 © 2021 Pearson Canada Inc.

40) The demand curve shows the number of units the market will buy in a given time period at similar prices.

Answer: FALSE Diff: 2 Type: TF LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 41) There is no true substitute for coffee. If the price goes from $8 to $12 for a package of k-cups due to a coffee bean shortage, demand will remain relatively unchanged. This is an example of demand elasticity.

Answer: FALSE Diff: 3 Type: TF LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 42) The St. Jacobs Farmers' Market in Woolwich Ontario features many vendors often selling the same produce. On any Saturday in the early autumn, 20 or more apple vendors are present. This is an example of an oligopoly.

Answer: FALSE Diff: 1 Type: TF LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 43) Pricing strategies usually remain the same as a product passes through its life cycle.

Answer: FALSE Diff: 2 Type: TF LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 44) With reference to the different types of markets, compare pure competition with monopolistic competition. Provide an example for each.

Answer: Under pure competition, the market consists of many buyers and sellers trading in a uniform commodity. No single buyer or seller has much effect on the going market price. Under monopolistic competition, the market consists of many buyers and sellers trading over a range of prices rather than a single market price. A range of prices occurs because sellers can differentiate their offerings to buyers.

Diff: 2 Type: ES LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking

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45) With reference to pricing in different types of markets, compare oligopolistic competition with a pure monopoly.

Answer: Under oligopolistic competition, the market consists of only a few large sellers. As there are few sellers, each seller is alert and responsive to competitors' pricing strategies and marketing moves. In a pure monopoly, the market is dominated by one seller. The seller may be a government monopoly, a private regulated monopoly, or a private unregulated monopoly.

Pricing is handled differently in each case.

Diff: 2 Type: ES LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 46) What is a demand curve? Why is it useful to marketers?

Answer: Each price a company might charge will lead to a different level of demand. The relationship between the price charged and the resulting demand level is illustrated in a demand curve. The demand curve shows the number of units the market will buy in a given time period at different prices that might be charged. In the normal case, demand and price are inversely related — that is, the higher the price, the lower the demand. Understanding a demand curve is crucial to good pricing decisions. In a monopoly, the demand curve shows the total market demand resulting from different prices. If a company faces competition, its demand at different prices will depend on whether competitors' prices stay constant or change with the company's own prices.

Diff: 2 Type: ES LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 47) Explain the concept of price elasticity.

Answer: Price elasticity refers to how responsive demand will be to a change in price. If demand hardly changes with a small change in price, the demand is inelastic. If demand changes greatly, the demand is elastic. If demand is elastic rather than inelastic, sellers will consider lowering their prices. A lower price will produce more total revenue. This practice makes sense as long as the extra costs of producing and selling more do not exceed the extra revenue. At the same time, most firms want to avoid pricing that turns their products into commodities.

Diff: 2 Type: ES LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking

14 © 2021 Pearson Canada Inc.

48) What external factors affect the pricing decisions made by organizations?

Answer: External factors that affect pricing decisions include the nature of market and demand, competitors' strategies, and competitors' prices. Economic conditions can also have a strong impact on the firm's pricing strategies. Economic factors such as a boom or recession, inflation, and interest rates affect pricing decisions because they affect consumer spending, consumer perceptions of the product's price and value, and the company's costs of producing and selling a product. Beyond the market and the economy, a company must consider several other factors in its external environment when setting prices. It must know what impact its prices will have on other parties in its environment, such as resellers' reactions to prices. The company should set prices that give resellers a fair profit, encourage their support, and help them to sell the product effectively. The government is another important external influence on pricing decisions. Finally, social concerns may need to be taken into account. In setting prices, a company's short-term sales, market share, and profit goals may need to be tempered by broader societal considerations.

Diff: 3 Type: ES LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 49) With each new generation of Apple iPhone, iPad, or Mac computer, new models start at a high price then work their way down as newer models are introduced. Apple initially uses a ________ strategy.

A) market-skimming B) target costing C) deceptive D) market-penetration E) predatory Answer: A Diff: 3 Type: MC LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 50) The first Canadian Tire store opened in 1922. Since the early 21st century, its strategy has been updated to capture a larger market share by offering lower everyday prices to attract a large number of buyers and win a large market share. This is referred to as ________.

A) market-skimming pricing B) market-penetration pricing C) value-added pricing D) target costing E) deceptive pricing Answer: B Diff: 2 Type: MC LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking

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51) Which of the following conditions is most likely essential for implementing a successful market-skimming pricing strategy for a product?

A) The product's quality and image must support its high price.

B) Lower-priced alternatives can enter the market easily.

C) Low prices promote more market growth than high prices.

D) The product's price matches its manufacturing costs.

E) A low-price position of the product is maintained.

Answer: A Diff: 1 Type: MC LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Reflective thinking 52) Which of the following conditions is most likely essential for implementing a successful market-penetration pricing strategy for a product?

A) The product's quality supports its high price.

B) Alternative products can enter the market easily.

C) The market for the product is highly price sensitive.

D) Prices increase incrementally as sales volume increases.

E) Production costs rise with an increase in marketing efforts.

Answer: C Diff: 1 Type: MC LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 53) Posh Collections introduced a new watch to appeal to upscale consumers. The company will most likely use a(n) ________ strategy.

A) market-skimming pricing B) market-penetration pricing C) optional-product pricing D) by-product pricing E) allowance pricing Answer: A Diff: 3 Type: MC LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 54) Market penetration makes sense when a product's quality and image must support its higher price.

Answer: FALSE Diff: 2 Type: TF LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking

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55) Distinguish between market-skimming pricing and market-penetration pricing.

Answer: Many companies that invent new products set high initial prices to skim revenues layer by layer from the market. This is known as market-skimming pricing. For this strategy to work, the product's quality and image must support its higher price, and enough buyers must want the product at that price. The costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Competitors should not be able to enter the market easily and undercut the high price. Market-penetration pricing is used to penetrate the market quickly to attract a large number of buyers in a short period and win a large market share by setting a low initial price. For this strategy to work, the market must be highly price sensitive so that a low price produces more market growth. Production and distribution costs must fall as sales volume increases. Also, the low price must help keep out competition and be maintained over time.

Diff: 3 Type: ES LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 56) NerdHerd Electronics sells three different sizes of televisions at three different prices. In this case, the company's pricing strategy is referred to as ________ pricing.

A) product line B) optional-product C) by-product D) product bundle E) captive-product Answer: A Diff: 3 Type: MC LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 57) Computer World sells laptops separately from accessory products like docking stations, antivirus software, and external hard drives. This is referred to as ________ pricing.

A) product bundle B) optional-product C) market-penetration D) by-product E) product line Answer: B Diff: 3 Type: MC LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking

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58) Establishing prices for razor blades that must be used with a razor blade system is known as ________ pricing.

A) by-product B) market-penetration C) product line D) product bundle E) captive-product Answer: E Diff: 2 Type: MC LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 59) How do firms that use captive-product pricing make up for the low prices of their main products?

A) They reduce the cost of the captive products.

B) They provide the captive products as freebies.

C) They set high markups on the captive products.

D) They increase the price of the main products.

E) They offer the captive products and main products together at a reasonable price.

Answer: C Diff: 2 Type: MC LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 60) Netcorp, an Internet service provider, charges its users a fixed rental fee for its basic package, which has a download limit. If a user exceeds this download limit, an additional fee is charged for every download. In this case, the firm's pricing strategy is referred to as ________ pricing.

A) by-product B) two-part C) optional-product D) segmented E) promotional Answer: B Diff: 3 Type: MC LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking

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61) Salon Du Jour offers special combination packages at a reduced price. Separately, a haircut is $30 and a conditioning treatment is $35. But the combo price is $50. This is referred to as ________ pricing.

A) by-product B) product bundle C) captive-product D) optional-product E) product line Answer: B Diff: 2 Type: MC LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 62) Captive-product pricing refers to setting prices across an entire product line.

Answer: FALSE Diff: 2 Type: TF LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Application of knowledge 63) Universal Appliance prices its refrigerators at five distinct price levels based on finish, style, capacity, and features. They range from $799 to $9,500. This is an illustration of price steps.

Answer: TRUE Diff: 3 Type: TF LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 64) Dynamic pricing is particularly suitable for Internet-based companies like Amazon who want to be responsive to shoppers' desires and marketplace changes.

Answer: TRUE Diff: 3 Type: TF LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 65) When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.

Answer: TRUE Diff: 2 Type: TF LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking

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66) Price bundling promotes the sales of products consumers might not otherwise buy, but the combined price must be low enough to get them to buy the bundle.

Answer: TRUE Diff: 2 Type: TF LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 67) Explain product line pricing. Provide an example.

Answer: In product line pricing, management must decide on the price steps to set between the various products in a line. The price steps should take into account cost differences between products in a line. More important, they should account for differences in customer perceptions of the value of different features.

For example, at a Mr. Clean car wash, you can choose from any of six wash packages, ranging from a basic exterior-clean-only "Bronze" wash for $5; to an exterior clean, shine, and protect "Gold" package for $12; to an interior-exterior "Signature Shine" package for $27 that includes the works, from a thorough cleaning inside and out to a tire shine, underbody rust inhibitor, surface protectant, and even air freshener. The car wash's task is to establish perceived value differences that support the price differences.

Diff: 2 Type: ES LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 68) Which pricing mix strategy should be used in relation to saleable scrap materials? How does this strategy function?

Answer: Producing products and services often generates by-products. If the by-products have no value and if getting rid of them is costly, this will affect the pricing of the main product.

When using by-product pricing, a manufacturer can seek a market for scraps or by-products and accept any price that covers more than the cost of disposing of or storing and delivering the byproducts. By-product pricing allows the seller to reduce the main product's price to make it more competitive.

Diff: 3 Type: ES LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Application of knowledge

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69) Which group is most likely offered functional discounts by manufacturers?

A) trade-channel members that perform sales tasks B) consumers who buy products in large quantities C) buyers who pay their bills before the due date D) buyers who purchase merchandise out of season E) retailers that participate in advertising programs Answer: A Diff: 2 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 70) The National Tree Company offers resellers half-price reductions on artificial Christmas trees if they purchase them in July. This is an example of a ________.

A) functional discount B) seasonal discount C) promotional allowance D) trade-in allowance E) quantity discount Answer: B Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 71) Vac "N" Sew, a consumer electronics outlet, offers a price reduction of $100 when customers bring in a used vacuum cleaner and exchange it for a new vacuum cleaner or sewing machine.

This is an example of a ________.

A) functional discount B) cash discount C) seasonal discount D) trade-in allowance E) by-product allowance Answer: D Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking

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72) When Nabisco offers to cover half the cost of all local advertising for supermarkets that sell Oreo Cookies, the company is granting ________.

A) cash discounts B) seasonal discounts C) quantity discounts D) promotional allowances E) trade-in allowances Answer: D Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 73) The Royal Ontario Museum has different admission prices for students, adults, and seniors.

All three groups are entitled to the same services. This form of pricing is called ________ pricing.

A) time-based B) location-based C) customer-segment D) by-product E) product form Answer: C Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 74) BC Place, home of the Vancouver Whitecaps FC charges different prices for seats in different areas of the stadium, even though each seat costs the same for the owners of the stadium. What is this form of pricing called?

A) location-based pricing B) market-skimming pricing C) product-form pricing D) time-based pricing E) market-penetration pricing Answer: A Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking

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75) Movie theaters charge matinee pricing during the daytime, and resorts give weekend and seasonal discounts. This is illustrative of a ________ pricing strategy.

A) product form B) market-penetration C) market-skimming D) time-based E) value-added Answer: D Diff: 2 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 76) Pricing a product based on consumers' reference prices is referred to as ________ pricing.

A) geographical B) psychological C) allowance D) by-product E) captive-product Answer: B Diff: 1 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Application of knowledge 77) Consumers rely less on price to judge the quality of a product when they ________.

A) lack information about the product B) are unable to research the product C) have prior experience with the product D) are unable to judge the quality of the product E) rely on cues from sellers to differentiate a high or low price Answer: C Diff: 2 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking

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78) ________ prices are carried in buyers' minds and used when looking at a given product.

A) Captive-product B) Reference C) Promotional D) Geographical E) Dynamic Answer: B Diff: 1 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Application of knowledge 79) What type of pricing is being used when a company temporarily prices its products below the list price to create buying excitement and urgency?

A) segmented pricing B) psychological pricing C) geographical pricing D) promotional pricing E) dynamic pricing Answer: D Diff: 1 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Application of knowledge 80) Rakuten is an example of an e-commerce platform. They refer you to a particular store and the company receives commission if you purchase through their website, which they pass on to you. This is a newer example of a company offering a ________.

A) cash rebate B) quantity discount C) promotional allowance D) flash sale E) functional discount Answer: A Diff: 1 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Application of knowledge

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81) Which of the following pricing strategies charges the same price plus freight to all customers, regardless of their location?

A) basing-point pricing B) freight-absorption pricing C) FOB-origin pricing D) zone pricing E) uniform-delivered pricing Answer: E Diff: 2 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Application of knowledge 82) Which of the following pricing strategies is the opposite of FOB-origin pricing?

A) basing-point pricing B) dynamic pricing C) uniform-delivered pricing D) freight-absorption pricing E) zone pricing Answer: C Diff: 2 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 83) Wilkinson & Company sells plumbing supplies across Canada. Wilkinson uses Winnipeg as its central location for determining freight costs regardless of the city from which products are actually shipped. For example, a Vancouver customer pays the freight cost from Winnipeg to Vancouver even if the goods are shipped from Calgary. Wilkinson most likely uses ________ pricing.

A) basing-point B) FOB-origin C) freight-absorption D) zone E) reference Answer: A Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking

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84) Computer Works is a computer accessories manufacturer based in Brazil. All customers in South America pay the same freight charge, $20, when they order products from the company.

All customers in North America pay a freight charge of $50. The company's pricing strategy is referred to as ________ pricing.

A) basing-point B) FOB-origin C) freight-absorption D) zone E) uniform-delivered Answer: D Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 85) The Vitamin Shoppe sells natural vitamins and supplements. Product prices are adjusted frequently to meet the needs of individual customers. For example, long-time customers receive discounts. This strategy is most likely an example of ________ pricing.

A) zone B) competition-based C) dynamic D) basing-point E) penetration Answer: C Diff: 3 Type: MC LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 86) A firm considering a price change must worry about the reactions of its competitors as well as those of its customers.

Answer: TRUE Diff: 2 Type: TF LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 87) Freight-absorption pricing is used for market skimming and holding on to monopolistic markets.

Answer: FALSE Diff: 2 Type: TF LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Application of knowledge

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88) An important consideration when determining what price to charge in a specific country is the nature of the wholesaling and retailing system in that country.

Answer: TRUE Diff: 2 Type: TF LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Diverse and multicultural work environments 89) What is segmented pricing? Briefly describe the different types of segmented pricing.

Answer: In segmented pricing, the company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs. Segmented pricing takes several forms. Under customer-segment pricing, different customers pay different prices for the same product or service. Under product-form pricing, different versions of the product are priced differently but not according to differences in their costs. Using location-based pricing, a company charges different prices for different locations, even though the cost of offering each location is the same. Finally, using time-based pricing, a firm varies its price by the season, the month, the day, and even the hour.

Diff: 2 Type: ES LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 90) Explain how companies that market their products internationally decide what prices to charge in different countries.

Answer: Companies that market their products internationally must decide what prices to charge in different countries. In some cases, a company can set a uniform worldwide price.

However, most companies adjust their prices to reflect local market conditions and cost considerations. A firm must consider economic conditions, competitive situations, laws and regulations, and development of the wholesale and retail system. Consumer perceptions and preferences also may vary from country to country, calling for different prices. The company may have different marketing objectives in various world markets. Costs play an important role in setting international prices. In some cases, price escalation may result from differences in selling strategies or market conditions. In most instances, however, it is simply a result of the higher costs of selling in another country–the additional costs of operations, product modifications, shipping and insurance, import tariffs and taxes, exchange-rate fluctuations, and physical distribution.

Diff: 3 Type: ES LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Diverse and multicultural work environments

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91) Which of the following would most likely trigger a price increase?

A) cost inflation B) reduced demand C) cheaper alternatives D) reduced expenses E) overproduction Answer: A Diff: 2 Type: MC LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Analytical thinking 92) In Canada, the Competition Act is a federal law that was created to curb the formation of ________.

A) monopolies B) oligopolies C) competitive markets D) international markets E) limited partnerships Answer: A Diff: 2 Type: MC LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 93) ________ pricing refers to selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.

A) Oligopolistic B) Captive C) Dynamic D) Zone E) Predatory Answer: E Diff: 1 Type: MC LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning

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94) Penny Bank, a discount store, is highly competitive. When entering a new market, Penny Bank often cuts prices so deeply that it sells below costs, effectively pushing smaller retail stores with less purchasing power out of the market. In this case, Penny Bank is using ________.

A) market skimming B) psychological pricing C) predatory pricing D) deceptive pricing E) cost-plus pricing Answer: C Diff: 3 Type: MC LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 95) ________ pricing occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers.

A) Predatory B) Psychological C) Deceptive D) Cost-plus E) Allowance Answer: C Diff: 2 Type: MC LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 96) The Competition Act seeks to prevent unfair price discrimination by ensuring that sellers offer the same price terms to customers at a given level of trade.

Answer: TRUE Diff: 2 Type: TF LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 97) Federal legislation on price-fixing states that sellers must set prices after talking to customers and competitors.

Answer: FALSE Diff: 2 Type: TF LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning

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98) Sellers are prohibited from using predatory pricing.

Answer: TRUE Diff: 1 Type: TF LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 99) Identify a few situations in which price cuts or price increases might be necessary.

Answer: Several situations may lead a firm to consider cutting its price. Price cuts may be necessary when there is excess capacity. Another is falling demand in the face of strong price competition or a weakened economy. In such cases, a firm may aggressively cut prices to boost sales and market share. A company may also cut prices in a drive to dominate the market through lower costs. A major factor in price increases is cost inflation. Rising costs squeeze profit margins and lead companies to pass cost increases along to customers. Another factor leading to price increases is over-demand. When a company cannot supply all that its customers need, it may raise its prices, ration products to customers, or both.

Diff: 3 Type: ES LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Analytical thinking 100) What is the difference between price-fixing and predatory pricing? How do governments discourage firms from engaging in such practices?

Answer: Federal legislation on price-fixing states that sellers must set prices without talking to competitors. Otherwise, price collusion is suspected. Price-fixing is illegal per se–that is, the government does not accept any excuses for price-fixing. As such, companies found guilty of these practices can receive heavy fines. Recently, governments at the state and national levels have been aggressively enforcing price-fixing regulations in industries ranging from gasoline, insurance, and concrete to credit cards, CDs, computer chips, and e-books. Price-fixing is also prohibited in many international markets.

Sellers are also prohibited from using predatory pricing–selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.

This protects small sellers from larger ones that might sell items below cost temporarily or in a specific locale to drive them out of business.

Diff: 3 Type: ES LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning

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Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 10 Marketing Channels: Delivering Customer Value 1) Which of the following would be considered an upstream partner in a company's supply chain?

A) a firm that resells a finished product and shares the net sales with the producer B) a firm that provides technical expertise in the production of a product C) a firm that markets a product to consumers through social media D) a firm that buys products at wholesale cost from the company E) a firm that exclusively markets a product to other businesses Answer: B Diff: 2 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 2) The authors suggest that the term "supply chain" may be too limited because it takes a "makeand-sell" view of the business. They believe the term ________ is more appropriate because it suggests a "sense-and-respond" view of the market.

A) "upstream chain" B) "downstream chain" C) "market chain" D) "production chain" E) "demand chain" Answer: E Diff: 3 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 3) A ________ is made up of a company, its suppliers, distributors, and, ultimately, customers who "partner" with each other to improve the performance of the entire system.

A) manufacturing chain B) distribution centre C) marketing intermediary D) value delivery network E) disintermediation system Answer: D Diff: 2 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge

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4) ________ is a set of interdependent organizations that help make a product or service of a company available for use by consumers or business users.

A) A research and development channel B) An upstream channel C) A marketing channel D) A raw materials supplier E) A backward integration chain Answer: C Diff: 1 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 5) Producers use marketing intermediaries because they ________.

A) create greater efficiency in making goods available to target markets B) supply inexpensive raw materials for manufacturing products C) provide technical expertise for faster production D) monitor day-to-day activities during production E) form a part of the company's direct channel Answer: A Diff: 1 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 6) Which of the following applies to a marketing intermediary who buys brand name toothpaste from 10 different manufacturers, consolidates offerings, and then resells the various brands to 500 supermarkets throughout Canada?

A) facilitate the production of products without direct customer feedback B) help a company develop a direct channel selling system C) buy small quantities of products from producers and break them down into narrow assortments for customers D) increase the amount of work that must be done by producers and consumers E) transform the assortments of products made by producers into the assortments wanted by consumers Answer: E Diff: 3 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking

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7) Mary Kay Cosmetics and The Pampered Chef sell their products through home and office sales parties, online websites, and social media. Both companies use a(n) ________ channel to distribute their offerings.

A) functional B) indirect C) direct D) layered E) behavioural Answer: C Diff: 2 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 8) All the institutions in a channel are connected by several types of flows. Canadian retailers like Sobey's and Loblaws provide key sales information to their wholesalers. This is an example of ________.

A) payment flow B) flow of ownership C) physical flow D) information flow E) promotion flow Answer: D Diff: 2 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 9) In which of the following situations is a producer guaranteed full control over product sales?

A) a corporate marketing channel B) a direct marketing channel C) a contractual distribution channel D) a horizontal marketing system E) an administered marketing system Answer: B Diff: 1 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking

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10) A firm that uses direct marketing would sell its products through ________.

A) one marketing intermediary B) big box retailers C) large wholesalers D) multiple intermediaries E) the company website Answer: E Diff: 2 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 11) Using ________, a company uses one or more levels of intermediaries to help bring its products to final buyers. Examples: most of the things you buy—everything from toothpaste to cameras to cars.

A) retailer marketing systems B) indirect marketing channels C) wholesaler marketing channels D) direct marketing channels E) social media Answer: B Diff: 2 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 12) A(n) ________ is considered a marketing intermediary.

A) customer B) producer C) manufacturer D) wholesaler E) advertiser Answer: D Diff: 2 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge

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13) Kevin Pinker is a freelance computer programmer who writes computer algorithms for companies such as SoftStar and BlueHill. SoftStar and BlueHill use these algorithms to make specific programs based on online market research. These programs are then sold to the online retailer, Abundon, which then sells them to individual consumers and businesses. Which of the following is a marketing intermediary in this chain?

A) SoftStar B) BlueHill C) the consumer D) Abundon E) Kevin Pinker Answer: D Diff: 3 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 14) Canadian dairy production operates under a national supply management system, which controls the output of the thousands of Canadian dairy farmers. The purpose is to ensure a fair return for the farmers by controlling the output of dairy products to meet demand, thus avoiding any potential surpluses or shortages. This ensures stable and higher prices for the producer. This system also places restrictions on imports. The consequence of this is that ________.

A) consumers pay a higher price for dairy products at the store B) consumers pay a lower price for dairy products at the store C) dairy farmers prefer to produce non-dairy products and convert their farms to other types of farming (wheat, corn, pork) D) more dairy farmers have lower incomes E) none of the above Answer: A Diff: 3 Type: MC LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 15) Introducing intermediaries into a distribution chain increases the number of direct channel transactions between a manufacturer and its customers.

Answer: FALSE Diff: 1 Type: TF LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking

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16) Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who use them.

Answer: TRUE Diff: 2 Type: TF LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Reflective thinking 17) Direct marketing is the longest distribution channel between a producer and consumer.

Answer: FALSE Diff: 1 Type: TF LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 18) Intermediaries play a minimal role in matching supply and demand.

Answer: FALSE Diff: 1 Type: TF LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 19) What are the different functions of the members of a marketing channel?

Answer: Members of a marketing channel perform many key functions. Some help to complete transactions, which include: Information: Gathering and distributing information about consumers, producers, and other actors and forces in the marketing environment needed for planning and aiding exchange.

Promotion: Developing and spreading persuasive communications about an offer.

Contact: Finding and communicating with prospective buyers.

Matching: Shaping offers to meet the buyer's needs, including activities such as manufacturing, grading, assembling, and packaging.

Negotiation: Reaching an agreement on price and other terms so that ownership or possession can be transferred.

Others help to fulfill the completed transactions, such as: Physical distribution: Transporting and storing goods.

Financing: Acquiring and using funds to cover the costs of the channel work.

Risk taking: Assuming the risks of carrying out the channel work.

Diff: 2 Type: ES LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking

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20) Which of the following is an example of a horizontal conflict in a distribution channel?

A) a Nike shoe dealer complaining that the shoes provided to the dealer are defective B) a Ford car dealer complaining that another Ford dealer is underpricing the same models C) a FedEx agent complaining that a DHL agent is cutting off his business D) a Walmart executive complaining to a Pepsi executive for not replenishing stocks on time E) a Gucci executive complaining to Gucci's suppliers of delays in shipping consignments Answer: B Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 21) When Dairy Queen entered the Canadian market in 1953 the company sold license agreements to individuals that covered a specific geographic area. The franchisee (the individual who purchased the franchise from Dairy Queen), was given exclusive rights to open Dairy Queen locations in that area. The company could not sell new franchises within that area. As the company sought to grow sales it could not increase market penetration because the franchisee alone could decide to add locations in that territory. Many of the franchisees were satisfied with just one location in a territory that could easily have supported three or more locations (compare this with Tim Hortons who only offer franchises for a specific location and not a territory).

Because Dairy Queen wanted to grow the number of locations and the franchisees were satisfied with one in their area, ________ resulted.

A) horizontal conflict B) same level conflict C) customer conflict D) vertical conflict E) wholesale conflict Answer: D Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge

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22) Performance Inc. sells its newest athletic shoe styles to The Sneaker Store and distributes dated or slightly defective merchandise through Sports Discounters. Performance Inc.'s main competitor is Topnotch Manufacturers. Performance Inc. also markets its products through the company website. They decide to offer a short-term online promotion to encourage consumers to buy their newest athletic shoes, promoting a 20 percent discount off current retail prices. In such a distribution channel, which of the following would be considered a vertical conflict?

A) a conflict between Performance Inc. and The Sneaker Store B) a conflict among Performance Inc., The Sneaker Store, and Sports Discounters C) a conflict between The Sneaker Store and Sports Discounters D) a conflict between Performance Inc. and Sports Discounters E) a conflict between Performance Inc. and Topnotch Manufacturers Answer: A Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 23) Jupiter Steel is the chief provider of metals to Greystone Motors. Greystone Motors has two models of cars–one for commercial and regular consumers and another for professional car racing teams. Greystone Motors has designated dealers to sell its commercial cars to consumers, while racing cars are sold directly to the racing teams. In such a distribution channel, which of the following would be considered a horizontal conflict?

A) a conflict between Jupiter Steel and Greystone Motors B) a conflict between Jupiter Steel and Greystone dealers C) a conflict between two Greystone Motors car dealerships D) a conflict between a Greystone Motors car dealership and a racing team E) a conflict between Greystone Motors and its car dealerships Answer: C Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 24) Which of the following is true of a conventional distribution channel?

A) It has each channel member acting as a separate business unit trying to maximize its own profits.

B) It consists of producers selling their products directly to customers without the use of intermediaries.

C) It has one channel member owning the other channel members.

D) It is a distribution channel where a producer is owner of all the other channel members.

E) It has all members of the channel working together as a single organization.

Answer: A Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 8 © 2021 Pearson Canada Inc.

25) A ________ consists of producers, wholesalers, and retailers acting as a unified system. The system can be dominated by any one of the interdependent members.

A) direct marketing system B) horizontal distribution channel C) lateral marketing system D) conventional distribution channel E) vertical marketing system Answer: E Diff: 1 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 26) Which of the following is true of a vertical marketing system?

A) It is formed when two or more companies at one level join together to follow a new marketing opportunity.

B) It is formed when a single firm sets up two or more marketing channels to reach one or more customer segments.

C) It does not give overall power to any one member in the channel.

D) It has each channel member acting as a separate business unit trying to maximize its own profits.

E) It has one channel member owning all the other channel members or has contracts with all other channel members.

Answer: E Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 27) Integrating the entire distribution chain — from its own design and manufacturing operations to distribution through its own managed stores — has turned Spanish clothing chain Zara into the world's fastest-growing fast-fashion retailer. This is an example of a(n) ________ marketing system.

A) contractual VMS B) corporate vertical C) administered VMS D) horizontal E) direct Answer: B Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking

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28) More than 80 percent of McDonald's restaurants worldwide are owned and operated by franchisees. This illustrates a(n) ________ marketing system.

A) corporate vertical B) horizontal C) contractual VMS D) administered VMS E) direct Answer: C Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 29) Which type of channel arrangement is a retailer like Home Depot likely to follow?

A) administered VMS B) horizontal marketing system C) contractual VMS D) corporate vertical marketing system E) direct marketing system Answer: A Diff: 1 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 30) Rage, a leading motor vehicle manufacturer, introduces a new superbike model. It invites proposals from independent dealers who are willing to set up exclusive showrooms that only sell Rage's superbikes. Chosen dealers will sell and service the superbikes, and Rage will oversee national advertising. This is most likely an example of a(n) ________.

A) administered VMS B) horizontal manufacturing marketing system C) manufacturer-sponsored retailer franchise system D) manufacturer-sponsored wholesaler franchise system E) direct marketing system Answer: C Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking

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31) Founded in 2005, Canadian restaurant Freshii was established to help Canadians eat healthy food. The company has expanded to several hundred stores in North America, Europe, and Australia. Freshii has grown by franchising. This is an example of ________.

A) a horizontal marketing system B) a direct marketing system C) an administered VMS D) a contractual VMS E) a corporate vertical marketing system Answer: D Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 32) In a(n) ________ marketing system, leadership over production and distribution is assumed through the size and power of one or a few dominant channel members.

A) direct B) contractual VMS C) horizontal D) corporate vertical E) administered VMS Answer: E Diff: 1 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 33) Sonic Shack, an audio equipment retailer, signs an agreement with PineWire, a renowned electronics company, to sell PineWire products. The deal requires Sonic Shack to provide PineWire products with superior displays, shelf space, and promotion compared to competing products. Sonic agrees to these terms as PineWire products command a huge share in the market.

Which of the following types of channel arrangements do PineWire and Sonic Shack most likely have?

A) administered VMS B) corporate vertical marketing system C) indirect marketing system D) wholesaler franchise system E) horizontal marketing system Answer: A Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking

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34) Canadian bookselling retailer Indigo partners with Starbucks, to offer a store-within-store coffee shop. This channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity is referred to as a(n) ________.

A) corporate vertical marketing system B) contractual VMS C) direct marketing system D) horizontal marketing system E) administered VMS Answer: D Diff: 1 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 35) Changes in technology and the explosive growth of direct and online marketing are having a profound impact on the nature and design of marketing channels. One major trend is toward ________ insofar as product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones.

A) intermediation B) disintermediation C) vertical marketing systems D) horizontal marketing systems E) corporate vertical marketing systems Answer: B Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Information technology 36) Brandy's, a national candy store chain, decides to open both a coffee house and ice cream shop within their stores to create a multi-faceted experience for shoppers. The company decides to enter into deals with two well-known retailers — The Beanery and Creamy Creations. As stipulated in their respective contracts, The Beanery and Creamy Creations cannot enter into the same type of agreement with any other candy retailers. All three companies will enjoy greater sales, and ultimately profits, from the arrangement. This is most likely an example of a(n) ________ marketing system.

A) direct B) administered VMS C) corporate vertical D) contractual VMS E) horizontal Answer: E Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 12 © 2021 Pearson Canada Inc.

37) Faber Motors manufactures three lines of cars: high-end security cars for government agencies, commercial cars for consumers and individuals, and professional racing cars. The highend security cars are sold directly to government buyers by the company. The consumer cars are sold through dedicated dealers who only sell Faber's lines at their outlets. For its professional racing cars, Faber collaborates with Radium Tires, an innovative and renowned tire manufacturer. Faber provides the engine and body, while Radium provides the tires and its expertise on the racing industry. Which term best describes Faber's channel arrangements?

A) direct distribution system B) horizontal marketing system C) corporate vertical franchise system D) multichannel distribution system E) administered VMS Answer: D Diff: 3 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 38) Olsen Canada is a retailer of international women's clothing and accessories. Olsen sells its products through its online website, boutique stores, factory outlets, and in dedicated areas at many Hudson Bay locations. Which kind of channel arrangement does Olsen employ to distribute its products?

A) horizontal marketing system B) multichannel distribution system C) administered VMS D) contractual VMS E) corporate vertical marketing system Answer: B Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking

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39) For over 10 years, Erudite, a publishing and educational company that produces college textbooks, has been selling its books online through studysmart.com, a popular online retailer that sells textbooks published by different companies. Recently, Erudite stopped selling its books through studysmart.com and set up its own website to sell its books. This change in channel organization is called ________.

A) disintermediation B) intensive distribution C) brokering D) franchising E) selective distribution Answer: A Diff: 2 Type: MC LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 40) Historically, conventional distribution channels have provided channel leadership and have had the power to assign roles and manage conflict.

Answer: FALSE Diff: 2 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 41) In a multichannel distribution system, a single firm sets up two or more marketing channels to reach one or more customer segments.

Answer: TRUE Diff: 2 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 42) An administered VMS integrates successive stages of production and distribution under single ownership.

Answer: FALSE Diff: 1 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 43) Each channel member plays a specialized role in the channel.

Answer: TRUE Diff: 2 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 14 © 2021 Pearson Canada Inc.

44) In an administered VMS, the producer assumes the leadership position in a distribution channel by default.

Answer: FALSE Diff: 2 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 45) A horizontal marketing system can develop between a company and its competitor.

Answer: TRUE Diff: 1 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 46) Horizontal conflict occurs among firms at different levels of the channel.

Answer: FALSE Diff: 1 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 47) Disintermediation occurs when product or service producers cut out intermediaries and sell directly to final buyers.

Answer: TRUE Diff: 1 Type: TF LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 48) Compare a conventional distribution channel and a vertical marketing system.

Answer: A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a whole. No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict. Historically, conventional distribution channels have lacked leadership and power, often resulting in damaging conflict and poor performance. In contrast, a vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system. One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate. The VMS can be dominated by the producer, the wholesaler, or the retailer.

Diff: 2 Type: ES LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking

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49) What is a contractual vertical marketing system? Give an example of a type of business that works as a contractual VMS. Answer: A contractual VMS consists of independent firms at different levels of production and distribution that join together through contracts to obtain more economies or sales impact than each could achieve alone. Channel members coordinate their activities and manage conflict through contractual agreements. The franchise organization is the most common type of contractual relationship. In this system, a channel member called a franchiser links several stages in the production-distribution process. Almost every kind of business has been franchised — from motels and fast-food restaurants to dental centres and dating services, from wedding consultants and handyman services to funeral homes, fitness centres, and moving services. For example, Two Men and a Truck moving services — "Movers Who Care" — grew quickly through franchising. Started 30 years ago by two brothers with a pickup truck looking to make extra money while in high school, Two Men and a Truck now has a national network of 306 independently owned franchise locations with 1,900 trucks, pulling in $350 million in annual revenues.

Diff: 2 Type: ES LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 50) Differentiate between the three types of franchises and provide examples of each type.

Answer: There are three types of franchises. The first type is the manufacturer-sponsored retailer franchise system — for example, Ford and its network of independent franchised dealers.

The second type is the manufacturer-sponsored wholesaler franchise system — Coca-Cola licenses bottlers (wholesalers) in various world markets that buy Coca-Cola syrup concentrate and then bottle and sell the finished product to retailers locally. The third type is the servicefirm-sponsored retailer franchise system — for example, Burger King and its nearly 12,100 franchisee-operated restaurants around the world.

Diff: 2 Type: ES LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 51) Explain multichannel distribution systems with an example.

Answer: Multichannel distribution occurs when a single firm sets up two or more marketing channels to reach one or more customer segments. For example, John Deere, a manufacturer of agricultural machinery, sells its familiar green-and-yellow lawn and garden tractors, mowers, and outdoor power products to consumers and commercial users through several channels, including John Deere retailers, Lowe's home improvement stores, and online. It sells and services its tractors, combines, planters, and other agricultural equipment through its premium John Deere dealer network. It sells large construction and forestry equipment through selected large, fullservice John Deere dealers and their sales forces.

Diff: 2 Type: ES LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 16 © 2021 Pearson Canada Inc.

52) What are the advantages and disadvantages of using a multichannel distribution system?

Answer: Multichannel distribution systems offer many advantages to companies facing large and complex markets. With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products and services to the specific needs of diverse customer segments. But such multichannel systems are harder to control, and they can generate conflict as more channels compete for customers and sales. For example, when John Deere, a manufacturer of agricultural machinery, began selling selected consumer products through Lowe's home improvement stores, many of its dealers complained loudly. To avoid such conflicts in its Internet marketing channels, the company routes all of its website sales to John Deere dealers.

Diff: 2 Type: ES LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Reflective thinking 53) What is disintermediation? With a suitable example, explain the opportunities and problems that disintermediation presents for producers and resellers.

Answer: Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers or when radically new types of channel intermediaries displace traditional ones. Disintermediation presents both opportunities and problems for producers and resellers. Channel innovators who find new ways to add value in the channel can sweep aside traditional resellers and reap the rewards. In turn, traditional intermediaries must continue to innovate to avoid being swept aside. For example, when Netflix pioneered online DVD-by-mail video rentals, it sent traditional brick-and-mortar video stores such as Blockbuster into ruin.

Then, Netflix itself faced disintermediation threats from an even hotter channel — video streaming. But instead of simply watching developments, Netflix has led them. Like resellers, to remain competitive, product and service producers must develop new channel opportunities, such as the Internet and other direct channels. However, developing these new channels often brings them into direct competition with their established channels, resulting in conflict. To ease this problem, companies often look for ways to make going direct a plus for the entire channel.

Diff: 3 Type: ES LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 54) When setting channel objectives, it is important to first consider ________.

A) which is the least expensive B) which is the easiest to pursue C) targeted levels of customer service D) targeted profit levels E) placement near or away from competitor products Answer: C Diff: 3 Type: MC LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking

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55) Which of the following is true of an intensive distribution strategy?

A) It gives sole rights to select dealers in a given area.

B) It strives to make products available where and when consumers want them.

C) Compared with other distribution strategies, it uses the least number of intermediaries to sell products.

D) Compared with other distribution strategies, it provides the best support for dealers of luxury products.

E) It discards traditional intermediaries and uses direct marketing to reach customers.

Answer: B Diff: 2 Type: MC LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 56) High-end luxury brands like Bentley for cars, Louis Vuitton for handbags, and Rolex for watches use ________ distribution, giving a limited number of dealers the sole right to sell products in a specified geographic territory.

A) inclusive B) horizontal C) intensive D) exclusive E) vertical Answer: D Diff: 1 Type: MC LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 57) Selective distribution is a strategy in which ________.

A) more than one, but fewer than all, willing intermediaries are used by a seller B) products are stocked in as many outlets as possible by a seller C) products are not sold through intermediaries but directly to customers from producers D) all willing intermediaries are given rights to sell a product E) common household goods are preferred over luxury products by intermediaries Answer: A Diff: 2 Type: MC LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking

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58) ________ distribution typically allows manufacturers to develop good working relationships with intermediaries and expect a better-than-average selling effort. It also gives producers good market coverage with more control and less cost than intensive distribution.

A) Vertical B) Selective C) Horizontal D) Comprehensive E) Inclusive Answer: B Diff: 2 Type: MC LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 59) When a seller requires that only certain dealers carry its products, its strategy is known as ________.

A) horizontal conflict B) intensive distribution C) vertical distribution D) disintermediation E) exclusive distribution Answer: E Diff: 1 Type: MC LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 60) Global marketers must usually adapt their channel strategies to the existing structures within each country.

Answer: TRUE Diff: 1 Type: TF LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Diverse and multicultural work environments 61) Given Coke's (Coca Cola) availability in many different locations, from restaurants to grocery stores, to vending machines, and the product availability at many major events, it is safe to suggest that Coke uses selective distribution.

Answer: FALSE Diff: 3 Type: TF LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Reflective thinking 62) Selective distribution is a strategy in which producers of convenience goods stock their products in as many outlets as possible.

Answer: FALSE Diff: 2 Type: TF LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 19 © 2021 Pearson Canada Inc.

63) How does a company determine its channel objectives? What factors influence the channel objectives of a company?

Answer: Companies should state their marketing channel objectives in terms of targeted levels of customer service. Usually, a company can identify several segments wanting different levels of service. The company should decide which segments to serve and the best channels to use in each case. In each segment, the company wants to minimize the total channel cost of meeting customer service requirements. The company's channel objectives are also influenced by the nature of the company, its products, its marketing intermediaries, its competitors, and the environment. For example, companies selling perishable products may require more direct marketing to avoid delays and too much handling. In some cases, a company may want to compete in or near the same outlets that carry competitors' products. In other cases, companies may avoid the channels used by competitors. Finally, environmental factors such as economic conditions and legal constraints may affect channel objectives and design. For example, in a depressed economy, producers will want to distribute their goods in the most economical way, using shorter channels and dropping unneeded services that add to the final price of the goods.

Diff: 3 Type: ES LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 64) Differentiate between intensive distribution, exclusive distribution, and selective distribution strategies. Provide examples of products that would be appropriate for each.

Answer: Companies must determine the number of channel members to use at each level of a value network chain. Three strategies are available: intensive distribution, exclusive distribution, and selective distribution. Producers of convenience products and common raw materials typically seek intensive distribution–a strategy in which they stock their products in as many outlets as possible. These products must be available where and when consumers want them. For example, toothpaste, candy, and other similar items are sold in millions of outlets to provide maximum brand exposure and consumer convenience. Kraft, Coca-Cola, Kimberly-Clark, and other consumer goods companies distribute their products in this way. By contrast, some producers purposely limit the number of intermediaries handling their products. The extreme form of this practice is exclusive distribution, in which the producer gives only a limited number of dealers the exclusive right to distribute its products in their territories. Exclusive distribution is often found in the distribution of luxury brands. Between intensive and exclusive distribution lies selective distribution — the use of more than one but fewer than all of the intermediaries who are willing to carry a company's products. Most television, furniture, and home appliance brands are distributed in this manner.

Diff: 3 Type: ES LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking

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65) What are the responsibilities of channel members?

Answer: The producer and the intermediaries need to agree on the terms and responsibilities of each channel member. They should agree on price policies, conditions of sale, territory rights, and the specific services to be performed by each party. The producer should establish a list price and a fair set of discounts for the intermediaries. It must define each channel member's territory, and it should be careful about where it places new resellers. Mutual services and duties need to be spelled out carefully, especially in franchise and exclusive distribution channels. In turn, franchisees must meet company standards for physical facilities and food quality, cooperate with new promotion programs, provide requested information, and buy specified food products.

Diff: 2 Type: ES LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 66) What criteria should a firm consider before choosing a channel alternative?

Answer: If a company has identified several channel alternatives and wants to select the one that will best satisfy its long-run objectives, each alternative should be evaluated against certain economic, control, and adaptability criteria. Using economic criteria, a company compares the likely sales, costs, and profitability of different channel alternatives. The company must also consider control issues. Using intermediaries usually means giving them some control over the marketing of the product, and some intermediaries take more control than others. Other things being equal, the company prefers to keep as much control as possible. Finally, the company must apply adaptability criteria. Channels often involve long-term commitments, yet the company wants to keep the channel flexible so that it can adapt to environmental changes. Thus, to be considered, a channel involving long-term commitments should be greatly superior on economic and control grounds.

Diff: 2 Type: ES LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Reflective thinking 67) Which of the following is an advantage of exclusive dealing between a seller and a dealer?

A) The seller gains more shelf power compared to competitors' products.

B) The seller can avoid using any intermediary and sell the product directly to customers.

C) Customers get more loyal and dependable outlets.

D) The seller's distinctive position is reinforced through customer service and the dealer obtains steady support from the seller.

E) The dealer can freely choose what products to sell without any interference from the seller.

Answer: D Diff: 2 Type: MC LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking

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68) ________ is a practice whereby a producer agrees to sell a brand to a dealer only if the dealer agrees to sell some or all of the rest of the producer's merchandise.

A) Horizontal price fixing B) Horizontal integration C) Full-line forcing D) Direct marketing E) Disintermediation Answer: C Diff: 2 Type: MC LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning 69) Which of the following is true of an exclusive dealing arrangement between a producer and a dealer?

A) It prohibits the producer from selling outside the dealer's territory.

B) It prevents the producer from using any other dealer to sell its products regardless of geographical area.

C) It gives the producer's products more shelf power compared to a competitor's products being sold by the dealer.

D) It can be considered illegal if it increases competition substantially.

E) It does not allow other producers to sell to that dealer.

Answer: E Diff: 2 Type: MC LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning 70) Many athletic stadiums enter into contractual agreements with national beverage companies and food franchises to distribute only their brand-name products at the respective venues. This is an example of ________.

A) horizontal price fixing B) disintermediation C) exclusive dealing D) selective distribution E) horizontal integration Answer: C Diff: 2 Type: MC LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking

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71) Bateman Gray Motors sells the cars it produces using dedicated dealers who only sell Bateman Gray's products at their outlets. What kind of marketing strategy has Bateman Gray adopted with its car dealers?

A) direct marketing B) exclusive dealing C) disintermediation D) horizontal integration E) vertical integration Answer: B Diff: 2 Type: MC LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 72) Many companies are now installing integrated high-tech partnership relationship management (PRM) systems to coordinate their whole-channel marketing efforts.

Answer: TRUE Diff: 1 Type: TF LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Information technology 73) Exclusive dealing that creates a monopoly comes under the scope of the Clayton Act of 1914.

Answer: TRUE Diff: 2 Type: TF LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning 74) Customer relationship management software is used for selecting, managing, and motivating individual channel members and evaluating their performance over time.

Answer: FALSE Diff: 2 Type: TF LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge 75) Full-line forcing is considered an illegal arrangement that violates the Competition Act. Answer: FALSE Diff: 2 Type: TF LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning 76) In exclusive dealing, a producer may agree not to sell to other dealers in a given area.

Answer: TRUE Diff: 1 Type: TF LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge

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77) How do companies generally manage and motivate their channel members? What technological tools are available to help with this task?

Answer: Channel members must be continuously managed and motivated to do their best. The company must sell not only through the intermediaries but also to and with them. Most companies see their intermediaries as first-line customers and partners. They practice strong partner relationship management to forge long-term partnerships with channel members. This creates a value delivery system that meets the needs of both the company and its marketing partners. In managing its channels, a company must convince suppliers and distributors that they can succeed better by working together as a part of a cohesive value delivery system. Many companies are now installing integrated high-tech partnership relationship management (PRM) systems to coordinate their whole-channel marketing efforts. Companies can now use PRM and supply chain management (SCM) software to help recruit, train, organize, manage, motivate, and evaluate relationships with channel partners.

Diff: 2 Type: ES LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Information technology 78) Describe the legal aspects of exclusive arrangements such as exclusive dealing and exclusive distribution.

Answer: When a seller allows only certain outlets to carry its products, this strategy is called exclusive distribution. When the seller requires that these dealers not handle competitors' products, its strategy is called exclusive dealing. Both parties can benefit from exclusive arrangements: the seller obtains more loyal and dependable outlets, and the dealers obtain a steady source of supply and stronger seller support. But exclusive arrangements also exclude other producers from selling to these dealers. This situation brings exclusive dealing contracts under the scope of the Clayton Act of 1914. They are legal as long as they do not substantially lessen competition or tend to create a monopoly and as long as both parties enter into the agreement voluntarily.

Exclusive dealing often includes exclusive territorial agreements. The producer may agree not to sell to other dealers in a given area, or the buyer may agree to sell only in its own territory. The first practice is normal under franchise systems as a way to increase dealer enthusiasm and commitment. It is also perfectly legal–a seller has no legal obligation to sell through more outlets than it wishes. The second practice, whereby the producer tries to keep a dealer from selling outside its territory, has become a major legal issue.

Diff: 3 Type: ES LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking

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79) Moving products and materials from suppliers to the factory is known as ________ logistics.

A) outbound B) reverse C) inbound D) downstream E) inventory Answer: C Diff: 1 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 80) Outbound logistics refers to moving ________.

A) unwanted, excess products from resellers to producers B) raw materials from suppliers to the factory C) excess materials from the factory to suppliers D) products from the factory to resellers and ultimately to customers E) broken, damaged products from customers to producers Answer: D Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 81) When Toyota announces a product recall on its Camry model due to a faulty igniter, they are using ________ to coordinate with dealers and car owners.

A) reverse logistics B) outbound logistics C) inbound logistics D) inventory logistics E) disintermediation Answer: A Diff: 3 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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82) In a logistics system, minimizing distribution costs most likely involves ________.

A) flexible assortments B) large shipping lots C) rapid delivery D) large inventories E) liberal return policies Answer: B Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 83) Which of the following is true of logistics?

A) Companies can gain a powerful competitive advantage by using improved logistics to enhance customer service or lower prices.

B) The cost savings to a company and its customers due to improved logistics is typically nominal.

C) Less than 5 percent of an average product's price is accounted for by shipping and transport.

D) The cost of logistics is considerably less than advertising.

E) Shaving off a small fraction of logistics costs has very little impact on savings.

Answer: A Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 84) Which of the following is a difference between storage warehouses and distribution centres?

A) Storage warehouses are used to store agricultural products, while distribution centres are used to store non-agricultural products.

B) Storage warehouses store goods for moderate to long periods, while distribution centres are used to move goods rather than just store them.

C) Storage warehouses are always owned by a producer, while distribution centres are rented.

D) Storage warehouses are more likely to use newer, computer-controlled systems, while distribution centres generally use outdated materials-handling methods.

E) Storage warehouses are exclusively used by government agencies, while distribution centres are exclusively used by private businesses.

Answer: B Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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85) In a just-in-time logistics system, ________.

A) retailers carry small inventories of merchandise to last for only a few days B) retailers store products for long periods to avoid an interruption in supply C) producers supply products to resellers before customers place their orders D) producers that are geographically far from their retailers use an express-delivery system E) retailers incur high inventory-carrying and inventory-handling costs Answer: A Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 86) Which of the following is true of RFID or "smart tag" technology?

A) "Smart tag" technology eliminates the need for intermediaries and facilitates a direct marketing system.

B) "Smart tag" technology can de-automate the entire supply chain.

C) The use of "smart tag" technology makes it difficult to know where a product is located physically within the supply chain.

D) Retailers and suppliers using "smart technology" have higher risks of shoplifting and robbery.

E) "Smart shelves" can tell when it is time to reorder and can place orders automatically.

Answer: E Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 87) Which of the following is a cost-effective mode for shipping large amounts of bulk products–coal, sand, minerals, and forest products–over long distances?

A) air carriers B) water carriers C) pipelines D) trucks E) railroads Answer: E Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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88) Which of the following is most efficient for short hauls of high-value merchandise and is highly flexible in its routing and time schedules?

A) water carriers B) pipeline C) trucks D) air carriers E) railroads Answer: C Diff: 1 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 89) Which mode of transportation is best for carrying perishable goods to distant markets?

A) railroads B) water carriers C) trucks D) air carriers E) pipelines Answer: D Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 90) ________ involves combining two or more systems of transportation to move products.

A) Vertical transportation B) Disintermediation C) Just-in-time management D) Vertical integration E) Multimodal transportation Answer: E Diff: 1 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge

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91) The use of both rail and trucks for transporting goods is called ________.

A) trainshipping B) fishybacking C) piggybacking D) airtrucking E) autoracking Answer: C Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 92) Under ________, a customer shares real-time data on sales and current inventory levels with a supplier, and the supplier then takes full responsibility for managing inventories and deliveries.

A) periodic inventory systems B) vendor-managed inventory systems C) selective-trading inventory systems D) manual inventory replenishment systems E) customer-managed inventory systems Answer: B Diff: 2 Type: MC LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 93) Customer-centred logistics starts with the marketplace and works backward to the factory.

Answer: TRUE Diff: 1 Type: TF LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 94) Supply chain management involves managing both upstream and downstream value-added flows of materials.

Answer: TRUE Diff: 1 Type: TF LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 95) The goal of any logistics system should be to maximize sales, not profits.

Answer: FALSE Diff: 1 Type: TF LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 29 © 2021 Pearson Canada Inc.

96) Inbound logistics involves managing the flow of products from an intermediary to a customer.

Answer: FALSE Diff: 1 Type: TF LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 97) With a vendor-managed inventory system, the supplier takes full responsibility for managing inventories and deliveries.

Answer: TRUE Diff: 1 Type: TF LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 98) Companies green up their supply chains through greater efficiency, and greater efficiency means lower costs and higher profits. In other words, developing a sustainable supply chain is not only environmentally responsible, it can also be profitable.

Answer: TRUE Diff: 2 Type: TF LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Ethical understanding and reasoning 99) What is marketing logistics? What are the components of marketing logistics?

Answer: Marketing logistics–also called physical distribution–involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption, to meet customer requirements at a profit. Marketing logistics involves (a) outbound logistics, which is moving products from the factory to resellers and ultimately to customers, (b) inbound logistics, which is moving products and materials from suppliers to the factory, and (c) reverse logistics, which is reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products returned by consumers or resellers.

Diff: 2 Type: ES LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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100) Explain integrated logistics management and the different ways through which a company can achieve it.

Answer: The concept of integrated logistics management recognizes that providing better customer service and trimming distribution costs require teamwork, both inside the company and among all the marketing channel organizations. Inside, the company's various departments must work closely together to maximize its own logistics performance. Outside, the company must integrate its logistics system with those of its suppliers and customers to maximize the performance of the entire distribution network. This can be achieved by: 1. Cross-functional teamwork inside the company: This can be achieved by creating close working relationships between departments. Some companies have created permanent logistics committees composed of managers responsible for different physical distribution activities.

Companies can also create supply chain manager positions that link the logistics activities of functional areas. Companies can also employ sophisticated, system-wide supply chain management software, now available from a wide range of software enterprises.

2. Building logistics partnerships: This can be achieved by working with other channel partners to improve the whole-channel distribution. The success of each channel member depends on the performance of the entire supply chain. Smart companies coordinate their logistics strategies and forge strong partnerships with suppliers and customers to improve customer service and reduce channel costs, while other companies partner through shared projects.

3. Outsourcing logistics to third-party logistics (3PL) providers: Companies use third-party logistics providers for several reasons. First, because getting the product to market is their main focus, using these providers makes the most sense, as they can often do it more efficiently and at a lower cost. Outsourcing typically results in a 10 to 25 percent cost savings. Second, outsourcing logistics frees a company to focus more intensely on its core business. Finally, integrated logistics companies understand increasingly complex logistics environments.

Diff: 3 Type: ES LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 11 Retailing and Wholesaling 1) ________ refers to the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use.

A) Sole sourcing B) Retailing C) Manufacturing D) Procurement E) Warehousing Answer: B Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 2) ________ focuses the entire marketing process—from product and brand development to logistics, promotion, and merchandising—toward turning shoppers into buyers as they move along toward the point of sale.

A) Internal marketing B) Sole sourcing C) Warehousing D) Test marketing E) Shopper marketing Answer: E Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 3) ________ creates a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping.

A) Shopper marketing B) Omni-channel retailing C) Test marketing D) Online marketing E) Consolidation marketing Answer: B Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge

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4) Stores that provide moderate sales assistance because they carry shopping goods about which customers need a moderate level of information are called ________ retailers.

A) self-service B) full-service C) off-price D) limited-service E) convenience Answer: D Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 5) Which types of stores are characterized by specialty goods for which customers need assistance and higher operating costs that are passed along to customers as higher prices?

A) self-service stores B) convenience stores C) full-service stores D) discount stores E) off-price stores Answer: C Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 6) Bulk Barn is Canada's largest bulk food distributor with over 275 stores across Canada. The primary role of the staff is to restock shelves and operate cash registers. Customers locate, compare, and select their groceries and other sundry items. Bulk Barn is most likely a ________.

A) self-service retailer B) category killer C) full-service retailer D) supermarket E) pop-up store Answer: A Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking

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7) Customers at Carat, a premium jewellery store, are encouraged to make an appointment before a visit so that a customer service representative is assigned to them. These representatives help every customer make a purchase that meets his or her needs and budget after considering numerous options. The different styles and special features of the jewellery are explained to each customer to aid the purchase decision. In this case, Carat is an example of a(n) ________.

A) self-service retailer B) off-price retailer C) full-service retailer D) supermarket E) convenience store Answer: C Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 8) Which type of retailer typically carries deep product assortments of narrow product lines?

A) self-service retailers B) specialty stores C) warehouse clubs D) discount stores E) factory outlets Answer: B Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 9) Aristocrat Bows N Ties, a Toronto necktie retailer, offers a deep assortment of men's neckties.

This company is best described as a(n) ________.

A) department store B) supermarket C) specialty store D) discount store E) off-price retailer Answer: C Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking

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10) Specialty stores are characterized by ________.

A) the sale of convenience and staple items B) narrow product lines with deep assortments C) a wide range of products and categories D) low prices on a wide range of goods E) routinely purchased food products and services Answer: B Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 11) Department stores are most likely characterized by ________.

A) narrow product lines B) specialty goods and services C) predatory pricing strategies D) deep assortments of luxury brands E) wide varieties of product lines Answer: E Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 12) The Hudson's Bay Company (The Bay), a major retail chain across Canada, offers a wide range of consumer goods such as clothing, furniture, home appliances, cosmetics, and jewellery.

The Bay is best described as a ________.

A) supermarket B) department store C) specialty store D) pop-up store E) category killer Answer: B Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking

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13) A convenience store ________.

A) markets to segments comprised mostly of white-collar workers B) stocks narrow product lines that have wide, deep assortments C) carries a limited line of high-turnover goods for consumer self-service D) involves high operation costs due to full-service customer assistance E) is a multi-channel food and discount retailer that targets niche markets Answer: C Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 14) Which type of retailer is much larger than a regular supermarket and offers a large assortment of routinely purchased food products, nonfood items, and services?

A) discount stores B) specialty stores C) factory outlets D) superstores E) off-price outlets Answer: D Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 15) Which term refers to a giant specialty store with a very deep assortment of a particular product line?

A) category killer B) convenience store C) factory outlet D) department store E) independent store Answer: A Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge

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16) Office Solutions is a large retailer that specializes in office products and services. Their offerings include a wide and deep assortment of computers, desk furniture, printers, office supplies, stationery, and printing. Office Solutions is most likely an example of a ________.

A) convenience store B) pop-up store C) category killer D) lifestyle centre E) supermarket Answer: C Diff: 3 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 17) Which of the following statements is true of retailing?

A) All retail stores are full-service retail stores.

B) A department store has a narrow product line with a deep assortment.

C) The largest type of retail outlet is a supermarket.

D) Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed.

E) A feature common to all types of retail stores is the use of the everyday low pricing strategy.

Answer: D Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 18) Leading "big-box" stores, such as Walmart and Home Depot, now dominate the retail scene.

However, even "small-box" stores like Dollarama, are thriving in the current economic environment. All three retailers are considered ________.

A) convenience stores B) discount stores C) full-service retailers D) designer shops E) specialty stores Answer: B Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking

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19) ________ have filled the ultralow-price, high-volume gap by buying at less-than-regular wholesale prices and charging consumers less than retail.

A) Off-price retailers B) Specialty stores C) Convenience stores D) Designer shops E) Full-service retailers Answer: A Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 20) Which of the following is a type of off-price retailer?

A) specialty store B) full-service retailer C) discount store D) warehouse club E) supermarket Answer: D Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 21) Winners is a retailer that buys clothing and home products from a variety of brand name manufacturers at less-than-regular wholesale prices and then charges customers less than retail.

Winners is an example of a(n) ________.

A) specialty retailer B) independent off-price retailer C) departmental retailer D) full-service retailer E) category killer Answer: B Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking

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22) An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods is called a ________.

A) category killer B) factory outlet C) specialty store D) superstore E) warehouse club Answer: B Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 23) Dina loves branded apparel and accessories but cannot afford to buy them too often.

Fortunately, Dina lives close to an off-price retail store that is owned and operated by a famous brand. The company utilizes this store to sell its surplus, discontinued, or irregular goods at significantly lower costs. The retail store is best referred to as a ________.

A) category killer B) factory outlet C) specialty store D) superstore E) power centre Answer: B Diff: 3 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 24) ________ are off-price retailers that operate in huge facilities offering few frills but ultra-low prices and surprise deals on selected branded merchandise.

A) Warehouse clubs B) Department stores C) Convenience stores D) Specialty stores E) Superstores Answer: A Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge

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25) ________ refer to two or more outlets that are commonly owned and controlled.

A) Corporate chains B) Factory stores C) Specialty stores D) Designer shops E) Warehouse clubs Answer: A Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 26) A group of independent retailers that bands together to set up a jointly owned, central wholesale operation and conduct joint merchandising and promotion efforts is referred to as a ________.

A) factory outlet mall B) retailer cooperative C) corporate chain D) warehouse club E) voluntary chain Answer: B Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 27) Which contractual system is distinguished by the fact that it is normally based on some unique product or service; method of doing business; or trade name, goodwill, or patent that has been developed?

A) voluntary chain B) retailer cooperative C) franchise D) corporate chain E) warehouse club Answer: C Diff: 1 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge

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28) Mind and Body Fitness recently entered into a financial agreement that allows 25 independent business people at select locations across the country to set up establishments that offer its holistic services and programs. They include weight-management, group programming, sport-specific training, yoga, Pilates, and nutrition. Which type of contractual retail association does this represent?

A) corporate chain B) voluntary chain C) franchise organization D) independent retailer E) retailer cooperative Answer: C Diff: 3 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 29) ________ now command about 45 percent of all retail sales in Canada.

A) Franchises B) Factory outlets C) Superstores D) Acquisitions E) Joint agreements Answer: A Diff: 2 Type: MC LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 30) Examples of a service retailer include hotels, airlines, banks, colleges, and many others.

Answer: TRUE Diff: 1 Type: TF LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 31) An off-price retailer buys and sells at lower wholesale prices.

Answer: TRUE Diff: 2 Type: TF LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge

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32) A convenience store is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods.

Answer: FALSE Diff: 2 Type: TF LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 33) Warehouse clubs appeal not only to low-income consumers seeking bargains on bare-bones products but to customers shopping for a wide range of goods, from necessities to extravagances.

Answer: TRUE Diff: 2 Type: TF LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 34) A franchise organization is a group of independent retailers who jointly establish a central buying organization and conduct joint promotion efforts.

Answer: FALSE Diff: 1 Type: TF LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 35) What is retailing? Explain the concept of shopper marketing.

Answer: Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use. Many institutions–manufacturers, wholesalers, and retailers–do retailing. But most retailing is done by retailers, businesses whose sales come primarily from retailing. Retailing plays a very important role in most marketing channels. Last year, retailers accounted for more than $5 trillion of sales to final consumers.

Many marketers are now embracing the concept of shopper marketing, focusing the entire marketing process–from product and brand development to logistics, promotion, and merchandising–toward turning shoppers into buyers as they approach the point of sale. Of course, every well-designed marketing effort focuses on customer buying behaviour. What differentiates the concept of shopper marketing is the suggestion that these efforts should be coordinated around the shopping process itself.

Diff: 2 Type: ES LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking

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36) How are retailers classified based on the amount of service they provide to customers?

Provide examples of each service level to illustrate your response.

Answer: Different types of customers and products require different amounts of service. To meet these varying service needs, retailers may offer one of three service levels: self-service, limited service, and full service. Self-service retailers serve customers who are willing to perform their own locate-compare-select process to save time or money. Self-service is the basis of all discount operations and is typically used by retailers selling convenience goods (such as supermarkets) and nationally branded, fast-moving shopping goods (such as Target or Kohl's).

Limited-service retailers, such as Sears or JCPenney, provide more sales assistance because they carry more shopping goods about which customers need information. Their increased operating costs result in higher prices. Full-service retailers, such as high-end specialty stores (for example, Tiffany or Williams-Sonoma) and first-class department stores (such as Nordstrom or Neiman Marcus) assist customers in every phase of the shopping process. Full-service stores usually carry more specialty goods for which customers need or want assistance or advice. They provide more services, which results in much higher operating costs. These higher costs are passed along to customers as higher prices.

Diff: 2 Type: ES LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 37) Compare and contrast specialty stores and convenience stores.

Answer: Specialty stores carry narrow product lines with deep assortments within those lines.

The increasing use of market segmentation, market targeting, and product specialization has resulted in a greater need for stores that focus on specific products and segments. Convenience stores are small stores that carry a limited line of high-turnover convenience goods. Many convenience store chains have tried to expand beyond their primary market of young, blue-collar men by redesigning their stores to attract female shoppers. They are shedding the image of a "truck stop" where men go to buy gas, beer, cigarettes, or shriveled hotdogs on a roller grill and are instead offering freshly prepared foods and cleaner, safer, more-upscale environments.

Diff: 2 Type: ES LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking

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38) Describe superstores, category killers, and service retailers.

Answer: Superstores are much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services. Walmart, Target, Meijer, and other discount retailers offer supercentres, very large combination food and discount stores.

Recent years have also seen the rapid growth of superstores that are actually giant specialty stores, the so-called category killers (e.g., Best Buy, Home Depot, Petco, and Bed, Bath & Beyond). They feature stores the size of airplane hangars that carry a very deep assortment of a particular line. Category killers are found in a wide range of categories, including electronics, home-improvement products, books, baby gear, toys, home goods, party goods, sporting goods, and even pet supplies. Finally, for many retailers, the product line is actually a service. Service retailers include hotels and motels, banks, airlines, restaurants, colleges, hospitals, movie theaters, tennis clubs, bowling alleys, repair services, hair salons, and dry cleaners.

Diff: 2 Type: ES LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 39) Crunch and Munch is the country's favourite fast-food vendor of fried chicken. Over the years, the company has diversified into providing a larger variety of snacks like hot dogs, burritos, and burgers, but consumers still consider it the best seller of fried chicken. Many potential investors have approached Crunch and Munch with offers to buy the company, but Crunch and Munch continues to operate through its stores. What is franchising? Why would franchising be a good contractual system for Crunch and Munch?

Answer: A franchise is a contractual association between a manufacturer, wholesaler, or service organization and an independent businessperson who buys the right to own and operate one or more units within the franchise system. The main difference between franchise organizations and other contractual systems (voluntary chains and retail cooperatives) is that franchise systems are normally based on some unique product or service; a method of doing business; or the trade name, goodwill, or patent that the franchisor has developed. Franchising has been prominent in fast-food restaurants, motels, health and fitness centres, auto sales and service dealerships, and real estate agencies. Since Crunch and Munch enjoys the position of being a favourite among consumers, franchising is a good tool to capitalize on its reputation without losing its identity.

Diff: 3 Type: ES LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Reflective thinking

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40) Foot Locker has mastered online and mobile efforts that link seamlessly with store operations, offering options such as "buy online, ship from store" and "buy online, reserve in store" for pickup. This is an example of ________.

A) digital retailing B) omni-channel retailing C) web-based retailing D) in-store ordering with a mobile device E) social media Answer: B Diff: 2 Type: MC LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 41) Which of the following plays the most important role in omni-channel retailing?

A) Social media B) Advertising C) Discounts D) Daily alerts E) In-store promotions Answer: A Diff: 1 Type: MC LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 42) Omni-channel retailers are those who ________.

A) expand their businesses internationally B) conduct all business activities online C) sell products through third-party retailers D) use mobile apps to sell their products E) successfully merge the virtual and physical worlds Answer: E Diff: 1 Type: MC LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology

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43) Walmart, Loblaws, Canadian Tire, and other major retailers offer handy ________ that pull customers to both their websites and stores.

A) mobile apps B) in-store shopping experiences C) channels D) platforms E) product information Answer: A Diff: 1 Type: MC LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 44) Omni-channel retailing includes all of the following except ________.

A) cross-shopping on mobile devices B) integrating available shopping channels C) boosting online selling options D) omitting digital selling options E) increasing in-store shopping channels Answer: C Diff: 3 Type: MC LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 45) Beyond direct online sales, retailer online sites, mobile apps, and social media influence a large amount of in-store buying.

Answer: TRUE Diff: 1 Type: TF LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 46) It's estimated that most Canadian retail sales are either transacted directly or influenced by online research.

Answer: FALSE Diff: 2 Type: TF LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology

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47) According to research, nearly 60 percent of shoppers research product information on their smartphone while shopping.

Answer: TRUE Diff: 3 Type: TF LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 48) Many online merchants–including Amazon–have experienced so much online growth that they are now moving into showrooms or their own stores.

Answer: FALSE Diff: 2 Type: TF LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 49) The boundaries between in-store and online retailing are rapidly blurring.

Answer: TRUE Diff: 2 Type: TF LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 50) According to the author, creating a digital-friendly store, high-powered website, and extensive social media presence constitutes good omni-channel retailing.

Answer: FALSE Diff: 1 Type: TF LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 51) What have retailers learned about how customers make purchase decisions?

Answer: Retailers have learned that shoppers with smartphones are doing far more than just checking online prices. More often, they are filling in the information gap. "The consumer has never been more informed, and that information comes from their phone," says a senior marketer at outdoor-gear retailer REI. "We love when someone enters the store holding their phone saying, 'I want this tent. I want this bike. Help me find this.' " This type of activity shows how digital and store retailing can come together to make a sale.

Diff: 2 Type: ES LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology

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52) Describe the growth of online retailing.

Answer: Online retailing is thriving. Although it currently accounts for only about 9 percent of total Canadian retail sales, online buying is growing at a much brisker pace than retail buying as a whole. Last year's Canadian online retail sales grew 7.9 percent over the previous year versus a 3.75 percent increase in overall retail sales. Beyond direct online sales, retailer online sites, mobile apps, and social media also influence a large amount of in-store buying. It's estimated that more than half of total retail sales are either transacted directly or influenced by online research.

Diff: 2 Type: ES LO: 11-2: Discuss how retailers are using omni-channel retailing to meet the cross-channel shopping behaviour of today's digitally connected consumers.

AACSB: Information technology 53) What is most likely the first major marketing decision that a retailer must take?

A) positioning B) targeting C) segmenting the market D) differentiation E) promoting Answer: C Diff: 1 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 54) Retailers must decide on three major product variables: product assortment, services mix, and ________.

A) store location B) store layout C) self-service offerings D) store atmosphere E) store ambience Answer: D Diff: 2 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking

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55) Campbell is one of the oldest retailers in the country. While the service offered at Campbell is fairly mediocre, the retailer is famous for its surprise offerings of seconds, overstocks, and closeouts — occasionally including expensive gadgets and jewellery. Posco, a new chain of retail stores, offers products that are similar to Campbell's offerings; however, Posco is known for encouraging customers to ask questions and for providing service representatives to assist customers in the purchasing decision process. From this scenario, which of the following statements is most likely true?

A) Posco fails to differentiate itself from Campbell through the services mix.

B) Posco's product assortment helps differentiate it from Campbell.

C) Both Campbell and Posco fail to identify the needs and wants of target markets.

D) Campbell has not been able to differentiate itself on the basis of product assortment.

E) Posco better utilizes the services mix to differentiate itself from Campbell.

Answer: E Diff: 3 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Reflective thinking 56) Bikers and non-bikers alike enjoy dining at the Harley Davidson Café in Las Vegas. Several Harley Davidson models are on display as well as a very large, uniquely crafted American flag.

Menu items include the Easy Rider, the Choppers Cobb salad, and the Harley Hog sandwich.

The Harley Davidson Café most likely uses ________.

A) everyday low pricing B) predatory pricing C) self-service retailing D) experiential retailing E) franchising Answer: D Diff: 3 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 57) Compared to companies that employ Every day low pricing (EDLP), the Hudson's Bay Company (The Bay) carries a wide range of product lines, including clothing, jewellery, kitchenware, and home furnishings. The Bay typically charges higher prices on an everyday basis and then holds frequent sales and price promotions to increase store traffic. The Bay most likely uses ________.

A) self-service retailing B) experiential retailing C) high-low pricing D) everyday low pricing E) franchise retailing Answer: C Diff: 3 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking

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58) Charging higher prices on an everyday basis, coupled with frequent sales and other price promotions to increase store traffic, create a low-price image, or attract customers who will buy other goods at full prices is referred to as ________ pricing.

A) category killer B) discount C) high-low D) everyday low E) predatory Answer: C Diff: 3 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 59) A ________ refers to a group of retail businesses built on a site that is planned, developed, owned, and managed as a unit.

A) pop-up store B) shopping centre C) warehouse D) category killer E) convenience store Answer: B Diff: 1 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 60) Which of the following statements is true of shopping centres?

A) Most shopping centres function at the regional level rather than at the neighbourhood level.

B) Shopping centres typically contain only those stores that target a niche market segment of high income groups.

C) Shopping centres are groups of retail businesses built on a site that is planned, developed, owned, and managed as a unit.

D) Shopping centres usually contain exclusive brands and specialty stores rather than convenience stores or department stores.

E) Shopping centres are huge superstores that offer a deep assortment of a particular product line.

Answer: C Diff: 2 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking

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61) A ________ contains between 15 and 50 retail stores, including a department or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.

A) community shopping centre B) warehouse club C) superstore D) neighbourhood shopping centre E) regional shopping mall Answer: A Diff: 1 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 62) Power centres are characterized by the ________.

A) lack of an anchor store B) sale of exclusive brands only C) provision of individual entrances to each store D) provision for nonretail activities, such as playgrounds E) absence of any pricing strategies for differentiation Answer: C Diff: 2 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 63) A ________ is a small open-air mall with upscale stores, convenient locations, and nonretail activities such as a playground, hotel, dining establishments, and a movie theater.

A) regional shopping centre B) lifestyle centre C) community shopping centre D) power centre E) warehouse club Answer: B Diff: 1 Type: MC LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 64) Too many retailers, even big ones, fail to clearly define their target markets and positions.

Answer: TRUE Diff: 1 Type: TF LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 65) The retailer's product assortment should be distinguishable and also match target shoppers' expectations.

Answer: TRUE Diff: 1 Type: TF LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 20 © 2021 Pearson Canada Inc.

66) Pricing decisions of specialty stores are typically based on low markups on a high volume of products.

Answer: FALSE Diff: 2 Type: TF LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 67) Casey's is a large supermarket that practices everyday low pricing. Therefore, consumers should expect few discounts or sales if shopping at Casey's regularly.

Answer: TRUE Diff: 2 Type: TF LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 68) Posco, a limited-service retail chain with 130 stores across the country, is seeking to improve its standing in the market. Since its operations are widespread, altering the store atmosphere significantly is not feasible because of the costs involved. Similarly, upgrading the stores to fullservice retail chains would require a large investment of time, effort, and employee training.

Assuming that many of Posco's private-label brands are bringing in large revenues, what strategy could Posco Retail use to differentiate itself while matching target shoppers' expectations?

Answer: (Students' answers may vary. The answer given below is indicative.)

Posco Retail should use its product assortment to differentiate its stores while matching target shoppers' expectations. One strategy is to offer merchandise that no other competitor carries, such as store brands or national brands on which it holds exclusive rights. Posco Retail has private-label brands that are doing well in the market and the company should capitalize on them. While the services mix and store atmosphere can also help set one retailer apart from another, these measures are not feasible in the current situation for Posco Retail.

Diff: 3 Type: ES LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Reflective thinking 69) Describe the promotion tools used by retailers.

Answer: Retailers use any or all of the five promotion tools — advertising, personal selling, sales promotion, public relations (PR), and direct marketing — to reach consumers. They advertise in newspapers and magazines and on radio, television, and the Internet. Advertising may be supported by newspaper inserts and catalogs. Store salespeople greet customers, meet their needs, and build relationships. Sales promotions may include in-store demonstrations, displays, sales, and loyalty programs. PR activities, such as new-store openings, special events, newsletters and blogs, store magazines, and public service activities, are also available to retailers. Most retailers also interact digitally with customers via websites and digital catalogs, online ads and video, social media, mobile ads and apps, blogs, and e-mail. Almost every retailer, large or small, maintains a full social media presence.

Diff: 2 Type: ES LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 21 © 2021 Pearson Canada Inc.

70) Three types of shopping centres are regional shopping centres, community shopping centres, and neighbourhood shopping centres or strip malls. Describe how they differ from each other.

Answer: Regional shopping centres are the largest and most dramatic shopping centres. They contain from 50 to more than 100 stores. They are like covered mini-downtowns and attract customers from a wide area. Smaller than regional shopping centres, community shopping centres contain between 15 and 50 stores. They normally contain a branch of a department store or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.

Smaller still are neighbourhood shopping centres or strip malls, which generally contain 5 to 15 stores. They are close and convenient for consumers, usually containing a supermarket, a discount store, and several service stores.

Diff: 2 Type: ES LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 71) Which of the following is an impact of the Great Recession on retailing trends?

A) economic shift toward higher prices B) lower costs for retailers C) tighter consumer spending patterns D) longer retail life cycles E) prohibition on new retail forms Answer: C Diff: 2 Type: MC LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 72) Rotanna's, a leading fashion brand, sets up small temporary boutiques across numerous locations during its year-end sale, promoting its outdated products at half the price. These temporary boutiques are referred to as ________.

A) power centres B) franchises C) shopping centres D) pop-up stores E) category killers Answer: D Diff: 3 Type: MC LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking

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73) Retail convergence most likely leads to ________.

A) reduced differentiation B) reduced competition C) increased sales D) increased profit margins E) reduced advertising costs Answer: A Diff: 2 Type: MC LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 74) Grace and her fiancé visit several furniture stores in and around their hometown of Saskatoon. They use their smartphones to capture information about manufacturers and pricing, and ultimately decide to purchase their favourite items online. This is referred to as ________.

A) warehousing B) wholesaling C) retailing D) franchising E) showrooming Answer: E Diff: 1 Type: MC LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 75) According to the text, today's large and progressive wholesalers have successfully reacted to rising costs by ________.

A) relocating to low-rent, low-tax areas B) investing in information technology systems C) eliminating the need for brokers and agents D) increasing customer service responsibilities E) reducing promotional and personal selling activities Answer: B Diff: 2 Type: MC LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Information technology 76) The rise of megaretailers has shifted the balance of power between retailers and producers.

Since megaretailers have access to numerous consumers, they have significant power when dealing with manufacturers.

Answer: TRUE Diff: 2 Type: TF LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking

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77) Retailers are greening up their stores and operations, promoting more environmentally responsible products and working with channel partners to reduce their environmental impact.

Answer: TRUE Diff: 2 Type: TF LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Ethical understanding and reasoning 78) Differentiate between power centres and lifestyle centres.

Answer: Power centres are huge unenclosed shopping centres consisting of a long strip of retail stores, including large, freestanding anchors such as Walmart, Home Depot, Costco, Best Buy, Michaels, PetSmart, and OfficeMax. Each store has its own entrance with parking directly in front for shoppers who wish to visit only one store. In contrast, lifestyle centres are smaller, open-air malls with upscale stores, convenient locations, and nonretail activities, such as a playground, skating rink, hotel, dining establishments, and a movie theater. The most recent lifestyle centres often consist of mixed-use developments, with ground floor retail establishments and apartments or condominiums above, combining shopping convenience with community feel of a neighbourhood centre. Meanwhile, traditional regional shopping malls are adding lifestyle elements — such as fitness centres, common areas, and multiplex theaters — to make themselves more social and welcoming. In all, today's centres are more like places to hang out rather than just places to shop.

Diff: 2 Type: ES LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking

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79) Canadex Retail, the country's largest and oldest retail chain, was recently recognized as one of the most influential companies in Canada. The company aims to capitalize on this opportunity by implementing major marketing activities to capture the attention of consumers, politicians, and environmentalists. The company was one of the first to do away with plastic bags, and the public relations division is contemplating the adoption of additional green retailing practices.

Would this move reflect sound business tactics? What other measures can Canadex Retail take in this direction?

Answer: (Students' answers may vary. The answer given below is indicative.)

Today's retailers are increasingly adopting environmentally sustainable practices. They are greening up their stores and operations, promoting more environmentally responsible products, launching programs to help customers be more responsible, and working with channel partners to reduce their environmental impact. At the most basic level, most large retailers are making their stores more environmentally friendly through sustainable building design, construction, and operations. Retailers are also greening up their product assortments. Many retailers have also launched programs that help consumers make more environmentally responsible decisions.

Finally, many large retailers are joining forces with suppliers and distributors to create more sustainable products, packaging, and distribution systems. Green retailing yields both top- and bottom-line benefits. Sustainable practices lift a retailer's top line by attracting consumers looking to support environmentally friendly sellers and products. They also help the bottom line by reducing costs. Keeping all these benefits and measures in mind, the decision of Amex Retail to go green would make a tremendous positive impact.

Diff: 3 Type: ES LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Ethical understanding and reasoning 80) ________ includes all the activities involved in selling goods and services to those buying them for resale or business use.

A) Wholesaling B) Sole sourcing C) Franchising D) Crowdsourcing E) Showrooming Answer: A Diff: 1 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge

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81) Which wholesaler channel function is demonstrated when a wholesaler's sales force helps a manufacturer reach many small customers at a low cost?

A) bulk breaking B) selling and promoting C) buying and assortment building D) warehousing E) risk bearing Answer: B Diff: 2 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge 82) Electronics Storage is a wholesaler that holds inventories, thereby reducing carrying costs and risks for both suppliers and customers. Which channel function does Electronics Storage primarily provide?

A) showrooming B) assortment building C) warehousing D) financing E) transporting Answer: C Diff: 2 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 83) Which of the following channel functions of wholesalers is demonstrated when a buyer receives quicker delivery because wholesalers are located closer than are producers?

A) buying and assortment building B) financing C) transportation D) risk bearing E) warehousing Answer: C Diff: 1 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge

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84) Wayne Wholesaling fulfills many channel functions for its customers. The company mainly focuses on helping retailers to train their salespeople, improve store layouts, and set up inventory control systems. Based on this description, which channel function is provided by Wayne Wholesaling?

A) buying and assortment building B) selling and promoting C) risk bearing services D) market information services E) management services and advice Answer: E Diff: 3 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 85) ________ are the largest group of wholesalers and can be divided into two broad types of wholesalers: full-service and limited-service.

A) Brokers B) Retailers C) Agent wholesalers D) Merchant wholesalers E) Manufacturers' agents Answer: D Diff: 1 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 86) When compared to merchant wholesalers, brokers and agents ________.

A) perform more extensive functions B) do not take title to goods C) deal only in services and not products D) do not engage in any negotiation of wholesale deals E) rarely specialize in one product category or customer type Answer: B Diff: 2 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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87) Solutions Inc. negotiates the sale of materials between lumberyards and commercial construction companies, receiving a 15 percent commission on all transactions. Solutions Inc. is considered a ________.

A) distributor B) broker C) retailer D) manufacturer E) supplier Answer: B Diff: 2 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 88) ________ represent buyers or sellers on a more permanent basis than brokers.

A) Distributors B) Franchisees C) Agents D) Retailers E) Manufacturers Answer: C Diff: 1 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge 89) C & G Retail, a chain of local supermarkets, procures all its goods directly from the producers' factories. This type of wholesaling is usually done in ________.

A) corporate broker branches B) manufacturers' offices C) value-retail centres D) warehouse clubs E) factory outlet malls Answer: B Diff: 3 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 90) As with other types of marketers, a primary goal in wholesaling is to ________.

A) match competitors' strategies B) establish a greater number of locations C) build value-adding customer relationships D) hold prices constant E) maintain the status quo Answer: C Diff: 3 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 28 © 2021 Pearson Canada Inc.

91) Hamilton Wholesaling, an electronics wholesaling firm, provides many services to customers including buying, storing, and transporting expensive and delicate electronics equipment.

Hamilton takes title of ownership to all goods that the firm handles. Hamilton is most likely a(n) ________.

A) wholesaling broker B) merchant wholesaler C) agent wholesaler D) manufacturer's agent E) manufacturer's representative Answer: B Diff: 3 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 92) Wholesalers most likely discourage less-profitable customers by ________.

A) increasing product promotions B) carrying exclusive product lines C) overseeing inventory control systems D) adding service charges to small purchase orders E) requiring smaller orders to lower transportation costs Answer: D Diff: 2 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 93) Which of the following is true about trends in wholesaling?

A) New laws prevent wholesalers from having their own retailing operations.

B) Value-added customer relationships have been replaced by control systems.

C) Merchant wholesalers are decreasing in number and relevance.

D) The demand for lower prices and higher quality has increased.

E) Bulk breaking is increasingly popular and necessary.

Answer: D Diff: 2 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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94) JP Wholesalers is one of the largest wholesalers of wooden furnishings in the country.

Recently, the company opened a chain of stores called JP Designer Homes that has become popular due to the good reputation the company has as a wholesaler. The company has now started acquiring smaller retail chains and consolidating its position in the market. Which of the following trends is reflected in this scenario?

A) the shift toward self-service retailing B) the decline of superstores and megastores C) the decline of the voluntary chain distribution method D) the rise of franchise organizations and joint partnerships E) the blurring of distinctions between retailers and wholesalers Answer: E Diff: 3 Type: MC LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 95) Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.

Answer: TRUE Diff: 1 Type: TF LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 96) Merchant wholesalers are the largest single group of wholesalers, accounting for roughly 50 percent of all wholesaling.

Answer: TRUE Diff: 1 Type: TF LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 97) Brokers and agents usually take title to goods and perform various functions for retailers.

Answer: FALSE Diff: 2 Type: TF LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 98) The Great Recession put heavy pressure on wholesalers to increase their operation costs and limit warehouse automation systems.

Answer: FALSE Diff: 2 Type: TF LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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99) In an automated warehouse, orders are fed directly from the retailer's information system into the wholesaler's, and the items are picked up by mechanical devices and taken to a shipping platform where they are assembled.

Answer: TRUE Diff: 2 Type: TF LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Information technology 100) Explain how wholesalers add value for a producer.

Answer: Wholesalers add value by performing one or more of the following channel functions: Selling and promoting: Wholesalers' sales forces help manufacturers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer.

Buying and assortment building: Wholesalers can select items and build assortments needed by their customers, thereby saving much work.

Bulk breaking: Wholesalers save their customers money by buying in carload lots and breaking bulk (breaking large lots into small quantities).

Warehousing: Wholesalers hold inventories, thereby reducing the inventory costs and risks of suppliers and customers.

Transportation: Wholesalers can provide quicker delivery to buyers because they are closer to buyers than are producers.

Financing: Wholesalers finance their customers by giving credit, and they finance their suppliers by ordering early and paying bills on time.

Risk bearing: Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.

Market information: Wholesalers give information to suppliers and customers about competitors, new products, and price developments.

Management services and advice: Wholesalers often help retailers train their salesclerks, improve store layouts and displays, and set up accounting and inventory control systems.

Diff: 2 Type: ES LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations 1) ________ is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

A) Sales promotion B) Personal selling C) Advertising D) Public relations E) Direct marketing Answer: C Diff: 1 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Application of knowledge 2) TechGreen is launching a line of miniature solar chargers for laptops, cellphones, and other electronic devices. The chargers are compact and affordable, and the green energy technology is a value-added benefit for both the company and consumers. Which of the following would qualify as an advertisement for TechGreen's new solar chargers?

A) a front-page notice of the release of TechGreen's solar chargers in all leading newspapers B) a press conference to discuss the various benefits, including environmental features C) the use of dedicated sales personnel to explain the qualities of the new solar chargers to retailers D) an endorsement by a national environmental organization to tout the benefits of the new solar chargers E) an online lottery where interested buyers have a chance to win a prize Answer: A Diff: 2 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Analytical thinking 3) In a marketing communications mix, ________ refers to any short-term incentive that encourages the purchase or sale of a product or service.

A) advertising B) sales promotion C) personal selling D) crowdsourcing E) public relations Answer: B Diff: 1 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Application of knowledge

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4) Power Pro, a leading manufacturer of lawn and garden equipment, releases a new line of cordless, lightweight, electric weed trimmers. To boost sales, Power Pro issues a 50 percent off coupon to the first 100 buyers at all Home Depot stores in Ontario. Which element of the promotion mix has Power Pro used in this scenario?

A) public relations B) crowdsourcing C) advertising D) sales promotion E) personal selling Answer: D Diff: 2 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Analytical thinking 5) In a promotion mix, ________ performs the functions of building a good rapport with entities outside the company, building up a good corporate image, and handling unfavourable rumors and events.

A) personal selling B) sales promotion C) direct marketing D) advertising E) public relations Answer: E Diff: 1 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Application of knowledge 6) ColaBlue, a soft drink manufacturer, is sued by an environmental group for not meeting certain safety standards in its waste disposal. ColaBlue remedies the problem by adding highergrade filters and purifiers. Which of the following actions by ColaBlue would constitute a public-relations effort to address the effects of the lawsuit and the consequent damage to its brand image?

A) having well-trained personnel at retail outlets to explain the different ranges of products the company provides B) tying in with local restaurants to promote exclusive sales of ColaBlue soft drinks C) lowering prices of ColaBlue's products in the short term D) holding a press conference to explain the remedial steps that ColaBlue has taken E) making new advertisements for ColaBlue products and sponsoring shows on television Answer: D Diff: 2 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Ethical understanding and reasoning

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7) In a promotion mix, ________ occurs when a firm's sales force makes individual presentations to consumers for the purpose of promoting sales and building customer relationships.

A) advertising B) public relations C) crowdsourcing D) merchandising E) personal selling Answer: E Diff: 1 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Application of knowledge 8) Window Concepts has introduced a new line of windows that offer the same benefits as solar panels in reducing heating and cooling costs in homes. The state-of-the-art windows will also contribute to the slowing of global warming while providing energy reliability. The company sends a team of representatives to the National Doors and Windows Trade Show to promote the new line of windows. Which promotion mix tool has Window Concepts used in this scenario?

A) crowdsourcing B) public relations C) advertising D) personal selling E) crowdcasting Answer: D Diff: 2 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Ethical understanding and reasoning 9) Studio 19 is a dance studio geared to adults who want to learn ballroom and Latin dance.

When individuals call the studio, they're encouraged to access the website to receive a $25 ecoupon entitling them to a free half hour of dance instruction. Once they become patrons, text messages are sent to share news about featured dance instructors and upcoming special events.

Which of the following promotion mix tools does Studio 19 employ to reach target customers?

A) public relations B) personal selling C) direct marketing D) crowdsourcing E) retailing Answer: C Diff: 2 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Information technology

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10) In a promotion mix, ________ involve(s) personally connecting with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.

A) direct marketing B) advertising C) public relations D) predictive analyticals E) indirect procurement Answer: A Diff: 1 Type: MC LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Application of knowledge 11) When an Infiniti automotive dealership sends e-mail updates to customers about new products it is engaging in personal selling.

Answer: FALSE Diff: 2 Type: TF LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Information technology 12) What is a promotion mix? Define the major tools used in a promotion mix.

Answer: The specific blend of promotion tools that a company uses to persuasively communicate customer value and build customer relationships is known as promotion mix. A company's total promotion mix–also called its marketing communications mix–consists of the following promotion tools: Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service.

Personal selling: Personal presentation by the firm's sales force for the purpose of making sales and building customer relationships.

Public relations: Building good relations with the company's various publics by obtaining favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumors, stories, and events.

Direct, digital, and social media marketing: Engaging in direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.

Diff: 2 Type: ES LO: 12-1: Define the five promotion mix tools for communicating customer value.

AACSB: Written and oral communication

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13) Which of the following is true of consumers in the new marketing communications model?

A) They are more reliant on traditional methods of marketing for product information.

B) They are less informed than before about companies and product marketing techniques.

C) They are more reliant on mass-media marketing methods for product information.

D) They are less powerful than before in affecting the way a company markets its products.

E) They are better equipped to find product and brand information on their own.

Answer: E Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 14) Which of the following is an effect of the advancement of technology on marketing?

A) Fragmented markets have assimilated into a few mass markets.

B) Marketers go through more intermediaries to connect with consumers.

C) Consumers rely less on marketer-supplied information than in the past.

D) Marketers have increasingly moved toward mass-marketing techniques.

E) Marketers tend to supply less information to consumers than in the past.

Answer: C Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Information technology 15) Rather than just creating and placing "TV ads" or "print ads" or "Snapchat branded stories," many marketers now view themselves more broadly as ________ managers.

A) social media marketing B) content marketing C) integrated marketing communication D) direct marketing E) multi-media marketing Answer: B Diff: 3 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

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16) Lush Lawns, a new landscaping company, uses the same logo and shade of green in all forms of communication including its online ads, truck signage, website, and business cards. Which technique is being used by Lush Lawns to promote its business?

A) logistics information management B) inventory control segmentation C) niche market penetration D) integrated marketing communications E) global marketing management Answer: D Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 17) Which of the following is true of marketing strategies that are being developed in the new marketing communications model?

A) They are more targeted, social, and engaging.

B) They target much larger customer segments.

C) They rely more on mass-media marketing techniques.

D) They use very little alternative media.

E) They include a greater number of print media ads.

Answer: A Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 18) Which of the following is true of advertising in the new marketing communications model?

A) Advertisers are increasingly shifting toward digital media.

B) Advertisers are spending more on broadcast advertising.

C) Advertisers are finding traditional media less expensive.

D) Advertisers are using less targeted media to reach customers.

E) Advertisers have replaced print catalogues with digital versions.

Answer: A Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

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19) Which of the following is a function of an integrated marketing communications system?

A) designing products using environmentally friendly techniques B) allowing suppliers or vendors to manage the inventory of products C) controlling production levels by feedback received from customers D) delivering a clear, consistent, and compelling message on the product to each brand contact E) sharing company forecasting details with shareholders Answer: D Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 20) ________ tends to legitimize products, is very expressive, allows brand or company dramatization, and can build up a long-term image for a product.

A) Direct mailing B) Telephone marketing C) Door-to-door selling D) Television advertising E) Printed-catalog marketing Answer: D Diff: 1 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 21) Which of the following is a disadvantage of advertising?

A) It does not allow dramatization of the brand or company.

B) It only provides one-way communication with customers.

C) It can be too customized and only attracts small, niche markets.

D) It reaches targeted customers too slowly in most cases.

E) It is the most costly promotion tool for companies.

Answer: B Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

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22) Which of the following types of promotion tools requires a considerable degree of personal interaction with a customer?

A) digital advertising B) personal selling C) sales promotion D) public relations E) television advertising Answer: B Diff: 1 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 23) Karen Dodd is employed by Dell and responsible for calling on primary schools in her home province of British Columbia to promote the company's offerings. She demonstrates the Dell line of products including desktop computers, laptops, and tablets and fields questions from teachers and administrators alike. This is an example of which promotion tool?

A) digital advertising B) personal selling C) sales promotion D) public relations E) television advertising Answer: B Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 24) Which of the following is true of personal selling?

A) It is the most effective promotional tool for geographically dispersed buyers.

B) It allows firms to dramatize product offers through arts and visuals.

C) It is the most expensive promotional tool for companies to utilize.

D) It is an ineffective method for building long-term customer relationships.

E) It presents a firm's message as news rather than as a sales-directed communication.

Answer: C Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

8 © 2021 Pearson Canada Inc.

25) Strings, a family-owned musical instrument business, offers three hours of free music lessons with the purchase of any stringed instrument over $500 during the month of May. This is an example of which promotion mix element?

A) direct and digital marketing B) public relations C) advertising D) personal selling E) sales promotion Answer: E Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 26) Which of the following is most likely a difference between advertising and sales promotion?

A) Advertising is a sales-directed form of communication, while sales promotions are endorsed as company news.

B) Advertising can be used to build up a long-term image for a product while sales promotion effects can be short lived.

C) Advertising can be used to dramatize product offers, but sales promotion cannot be used for this purpose.

D) Advertising can trigger quick sales, while sales promotions cannot.

E) Advertising is not as effective in building long-term brand preferences as sales promotions.

Answer: B Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 27) When a company issues a press release to announce a sizable donation to a national charity, it is using ________ to generate goodwill and maintain a positive corporate image.

A) personal selling B) sales promotion C) public relations D) direct and digital marketing E) advertising Answer: C Diff: 1 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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28) Which of the following is true of public relations?

A) It provides quick incentives to make product purchases.

B) It emphasizes news and events rather than sales.

C) It involves training a dedicated sales force to meet customers.

D) It cannot be used to dramatize a product or company.

E) It is the most widely used promotional tool.

Answer: B Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 29) Which of the following is an example of a combination of sales promotions and direct marketing?

A) a company giving discounts on their product prices in order to gain a brand image B) a company releasing a nationwide television ad about every buyer having a chance to win a lottery prize C) a company holding a press conference to talk about their new product D) a company's sales representatives meeting customers directly to present customized offerings E) a company sending an e-mail to a customer about a discount on a product during a holiday season Answer: E Diff: 3 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 30) Which of the following is true of direct and digital marketing?

A) Its marketing message is fixed and does not change according to the customer's requirements.

B) It is suited for highly targeted marketing efforts and for building one-to-one customer relationships.

C) It is presented as company news rather than as a sales-directed communication.

D) It does not involve any interaction between the company and its customers.

E) It is an impersonal promotion tool that hinders two-way communication.

Answer: B Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Information technology

10 © 2021 Pearson Canada Inc.

31) A company that uses telephone marketing to sell its products to customers is most likely using the promotion tool of ________.

A) advertising B) public relations C) direct and digital marketing D) retailing E) merchandising Answer: C Diff: 1 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Information technology 32) Which of the following promotion mix approaches involves a producer promoting a product to different channel members who in turn promote the product to customers?

A) direct marketing B) a push strategy C) the publish-subscribe method D) a pull strategy E) vertical integration Answer: B Diff: 1 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 33) A pharmaceutical manufacturer offers monetary incentives to its sales representatives to promote a new drug to the medical professionals in their respective geographic territories. This is an example of a ________ strategy.

A) push B) direct marketing C) vertical integration D) pull E) publish-subscribe Answer: D Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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34) Chic Eyewear, a producer of designer eyeglass frames, promotes their new line in national fashion magazines. Chic Eyewear lists the select optical retailers that carry their line at the bottom of their ads. This is an example of a ________ strategy.

A) push B) vertical integration C) pull D) publish-subscribe E) direct marketing Answer: C Diff: 2 Type: MC LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 35) In a pull strategy, the producer promotes the product to channel members who in turn promote it to final consumers.

Answer: FALSE Diff: 1 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 36) Content marketing managers create, inspire, share, and curate marketing content—both their own content and that created by consumers and others.

Answer: TRUE Diff: 1 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 37) Despite the shift toward digital media, traditional mass media still capture a sizable share of the promotion budgets of most major marketing firms.

Answer: TRUE Diff: 1 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 38) Mass marketing is the optimal promotion tool for building personal and long-lasting relationships with customers.

Answer: FALSE Diff: 1 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

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39) In an effort to better engage its younger consumers, Adidas relies entirely on digital and social media.

Answer: TRUE Diff: 1 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Information technology 40) Paid media refers to promotional channels owned and controlled by the company, including company websites, corporate blogs, owned social media pages, proprietary brand communities, sales forces, and events.

Answer: FALSE Diff: 3 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 41) A consumer demanding a product from a retailer after watching an ad on television has responded to a pull promotional advertising strategy.

Answer: TRUE Diff: 2 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 42) John Deere's sales force working with Lowe's, Home Depot, Home Hardware, and other independent dealers, and other channel members to promote their products to final consumers is an example of a push promotion strategy.

Answer: TRUE Diff: 2 Type: TF LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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43) How has the new communications model changed the face of today's marketing communications?

Answer: (Students' answers may vary. The answer given below is indicative.)

The new communications model is changing the face of today's marketing communications in several ways. First, consumers are changing. In this digital age, wireless consumers are better informed and more communications empowered. Rather than relying on marketer-supplied information, they can use the Internet, social media, and other technologies to find information on their own. Second, marketing strategies are changing. As mass markets have fragmented, marketers are shifting away from mass marketing. More and more, they are developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micromarkets. Finally, sweeping advances in digital technology are causing remarkable changes in the ways companies and customers communicate with each other. The digital age has spawned a host of new information and communication tools–from smartphones and tablets to satellite and cable television systems to the many faces of the Internet (brand websites, e-mail, blogs, social media and online communities, the mobile Web, and so much more). Just as mass marketing once gave rise to a new generation of mass-media communications, the new digital and social media have given birth to a more targeted, social, and engaging marketing communications model.

Diff: 3 Type: ES LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Information technology 44) Why do today's firms need integrated marketing communications systems? How do firms benefit from such systems?

Answer: (Students' answers may vary. The answer given below is indicative.)

Consumers today are bombarded by commercial messages from a broad range of sources. But consumers don't distinguish between message sources the way marketers do. In the consumer's mind, messages from different media and promotional approaches all become part of a single message about the company. Conflicting messages from these different sources can result in confused company images, brand positions, and customer relationships. An integrated marketing communications system helps to integrate its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands. Integrated marketing communications calls for recognizing all touchpoints where the customer may encounter the company and its brands. Each brand contact will deliver a message–whether good, bad, or indifferent. The company's goal should be to deliver a consistent and positive message to each contact. Integrated marketing communications leads to a total marketing communications strategy aimed at building strong customer relationships by showing how the company and its products can help customers solve their problems. Integrated marketing communications ties together all of the company's messages and images.

Diff: 2 Type: ES LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

14 © 2021 Pearson Canada Inc.

45) Watson Insurance is an insurance company that provides coverage for personal property and bodily injury. The company offers customized policy options for individual customers. High levels of interaction with customers are needed so that the company can provide the best customized service possible. What kind of promotional tool will best help Watson Insurance to sell its policies to its target customers?

Answer: (Students' answers may vary. The answer given below is indicative.)

Since Watson Insurance requires high levels of interactions with its customers, so as to customize its policies, the promotional tool of personal selling will best help Watson Insurance.

Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers' preferences, convictions, and actions. It involves personal interaction between two or more people, so each person can observe the other's needs and characteristics and make quick adjustments. Personal selling also allows all kinds of customer relationships to spring up, ranging from matter-of-fact selling relationships to personal friendships. An effective salesperson keeps the customer's interests in mind to build a long-term relationship.

Diff: 3 Type: ES LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 46) Explain the use of sales promotions as a promotion mix tool.

Answer: Sales promotion includes a wide assortment of tools–coupons, contests, discounts, premiums, and others–all of which have many unique qualities. They attract consumer attention, offer strong incentives to purchase, and can be used to dramatize product offers and boost sagging sales. Sales promotions invite and reward quick response. Whereas advertising says, "Buy our product," sales promotion says, "Buy it now." Sales promotion effects are often short lived, however, and often are not as effective as advertising or personal selling in building longrun brand preference and customer relationships.

Diff: 2 Type: ES LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

15 © 2021 Pearson Canada Inc.

47) Contrast pull and push promotion mix strategies with suitable examples.

Answer: (Students' answers may vary. The answer given below is indicative.)

Marketers can choose from two basic promotion mix strategies: push promotion or pull promotion. A push strategy involves "pushing" the product through marketing channels to final consumers. The producer directs its marketing activities (primarily personal selling and trade promotion) toward channel members to induce them to carry the product and promote it to final consumers. For example, John Deere does very little promoting of its lawn mowers, garden tractors, and other residential consumer products to final consumers. Instead, John Deere's sales force works with Lowe's, Home Depot, independent dealers, and other channel members, who in turn push John Deere products to final consumers. Using a pull strategy, the producer directs its marketing activities (primarily advertising and consumer promotion, and direct and digital media) toward final consumers to induce them to buy the product. For example, Unilever promotes its Axe grooming products directly to its young male target market using TV and print ads, a brand website, its YouTube channel and Facebook page, and other channels. If the pull strategy is effective, consumers will then demand the brand from retailers.

Diff: 3 Type: ES LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 48) Which of the following is the first step in developing an advertising program?

A) setting the advertising budget B) developing an advertising strategy C) developing a brand message D) setting advertising objectives E) evaluating advertising campaigns Answer: D Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 49) The early manufacturers of electric vehicles (EVs) first had to invest in ________ advertising to make the market aware of the economic and performance benefits.

A) reminder B) comparative C) informative D) switching E) persuasive Answer: D Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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50) The objective of ________ advertising is to build primary demand.

A) reminder B) comparative C) personal D) informative E) persuasive Answer: D Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 51) Inglast, a chocolate producer, is faced with a class action suit when customers found pieces of plastic in boxes of cocoa powder. Inglast settles the case and then releases an advertising campaign to show the new and improved safety seals on all containers of cocoa powder. Which kind of advertisement has Inglast most likely used?

A) classified B) informative C) comparative D) personalized E) reminder Answer: B Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking; Ethical understanding and reasoning 52) The primary objective of ________ advertising is to build selective demand.

A) reminder B) classified C) personal D) informative E) persuasive Answer: E Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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53) Pepsi Cola has long used this form of ________ advertising in an attempt to take market share from their primary rival, Coca Cola.

A) reminder B) comparative C) personal D) informative E) classified Answer: B Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 54) ________ advertising primarily maintains brand relationships and is important for mature products.

A) Comparative B) Persuasive C) Personalized D) Reminder E) Classified Answer: D Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 55) Trendy Appliances has introduced a new product, Minute Yogurt, into the yogurt maker appliance market. Minute Yogurt differs from competitive offerings because it takes a minute to blend and a minute to clean. Which type of advertising would be best for promoting Minute Yogurt?

A) informative advertising B) reminder advertising C) classified advertising D) comparative advertising E) personalized advertising Answer: A Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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56) Which statement is most likely true about the affordable method of setting an advertising budget?

A) Spending on advertising is calculated based on the financial objectives a company wishes to accomplish.

B) Spending on advertising is calculated after operating expenses and capital outlays are deducted from total revenues.

C) Spending on advertising is based on a predetermined percentage of current or forecasted sales for the year.

D) Spending on advertising is calculated as a percentage of the unit sales price.

E) Spending on advertising is based on a competitor's advertising outlays.

Answer: B Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 57) The ________ method of setting an advertising budget typically overlooks how promotion affects sales.

A) affordable B) percentage-of-sales C) objective-and-task D) competitive parity E) adaptive-control Answer: A Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 58) Which method of setting advertising budgets best helps management think about the relationship between promotion spending, selling price, and profit per unit?

A) adaptive-control method B) objective-and-task method C) competitive-parity method D) affordable method E) percentage-of-sales method Answer: E Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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59) In the competitive-parity method of setting an advertising budget, the budget is set based on ________.

A) a percentage of future sales B) the total revenues that a company makes C) the amount spent by similar companies in the same industry D) objectives set by the company and the cost required to accomplish them E) a percentage of current sales Answer: C Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 60) According to the text, the most logical budget-setting method in advertising is the ________ method.

A) adaptive-control B) objective-and-task C) competitive-parity D) affordable E) percentage-of-sales Answer: B Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 61) Which of the following best describes the term "Madison and Vine"?

A) utilizing the slice of life style of advertising B) emphasizing reach over impact in advertising C) using social media for advertising a brand D) merging advertising with entertainment E) voicing social concerns through advertising Answer: D Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge

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62) The aim of ________ is to make ads and brand content so engaging or useful that people want to watch them.

A) branded entertainment B) advertainment C) social advertising D) subliminal advertising E) infotainment advertising Answer: B Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 63) Which of the following is an example of branded entertainment?

A) a company placing its product in a movie scene B) a company using a celebrity to endorse a product C) a company airing its advertisements in movie theaters D) a company using an acclaimed movie director to film an advertisement E) a company using a famous song in its advertisement Answer: A Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 64) Starbucks has signed a contract with a television production company to have its brand featured prominently in a new situation comedy about empty nesters. The conditions of the agreement state that the situation comedy will feature only the Starbucks brand of coffee. What kind of advertising technique is being used in this example?

A) geofencing B) advertainment C) product placement D) vertical integration E) subliminal advertising Answer: C Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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65) The ________ style of advertising shows ordinary people clearly using a product in a normal setting.

A) personality symbol B) slice of life C) mood or image D) testimonial evidence E) technical expertise Answer: B Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 66) Trainstar, a sportswear equipment manufacturer, releases a new line of energy drinks called VitaZing. The television ad for the energy drink shows people jogging, working out in a gym, and doing aerobics. The actors then take a break to drink VitaZing, which visibly re-energizes them and leads them to continue exercising. Which advertising methods most likely used in the VitaZing ad?

A) scientific evidence B) technical expertise C) personality symbol D) testimonial evidence E) lifestyle Answer: E Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 67) Which of the following best describes the personality symbol style of advertising?

A) using ordinary people to show how a product affects them in their daily lives B) using scientific evidence to support claims about a product in an advertisement C) using an animated character or mascot to represent a product in an advertisement D) using a technical expert to recommend a product in an advertisement E) using a celebrity to endorse a product in an advertisement Answer: C Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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68) A TV ad promoting how an ordinary person's life has changed due to considerable weight loss is an example of the ________ style of advertising.

A) scientific evidence B) testimonial evidence C) technical expertise D) mood or image E) fantasy Answer: B Diff: 1 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 69) Crest toothpaste has used a ________ style of advertising to convince buyers that Crest is better than other brands at fighting cavities.

A) testimonial evidence B) technical expertise C) scientific evidence D) mood or image E) fantasy Answer: C Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 70) Which of the following media is most suitable for advertising a product that needs to be demonstrated?

A) television B) radio C) newspaper D) magazine E) billboard Answer: A Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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71) Which of the following media is most suitable for having consumers provide input on product design or features?

A) television B) radio C) magazines D) social media E) billboards Answer: D Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Information technology 72) Marketers need to know how customers connect with an ad and brand idea as a part of the broader brand relationship. This can be achieved by measuring ________ levels.

A) media engagement B) reach C) frequency D) listenership E) readership Answer: A Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 73) Which of the following is a disadvantage of using digital, mobile, and social media for advertising?

A) The costs are high.

B) Audience selectivity is low.

C) The audience controls content and ad exposure.

D) The interactive capabilities are low.

E) There is little scope for personalization.

Answer: C Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Information technology

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74) Which of the following is a disadvantage of using a magazine as an advertising medium?

A) It has a poor pass-along readership.

B) It involves high costs.

C) It has low geographic selectivity.

D) It has low credibility and image.

E) It consists of low-quality reproduction.

Answer: B Diff: 2 Type: MC LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 75) The mood or image style shows the company's expertise in making the product.

Answer: FALSE Diff: 2 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 76) Comparative advertising is a type of persuasive advertising.

Answer: TRUE Diff: 1 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 77) Native advertising refers to advertising or other brand-produced online content that looks in form and function like the other natural content surrounding it on a Web or social media platform.

Answer: TRUE Diff: 2 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 78) Traditional mass media still make up a majority of today's media mixes.

Answer: TRUE Diff: 1 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

25 © 2021 Pearson Canada Inc.

79) A promotion strategy consists of two major elements: creating advertising messages and selecting advertising media.

Answer: FALSE Diff: 2 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 80) The competitive-parity method of setting promotion budgets prevents promotion wars between companies.

Answer: FALSE Diff: 2 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 81) Product placement is a form of brand integration.

Answer: TRUE Diff: 1 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 82) The affordable method tends to place promotion last among spending priorities, even in situations in which advertising is critical to the firm's success.

Answer: TRUE Diff: 2 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 83) Advertising's goal is to help move consumers through the buying process.

Answer: TRUE Diff: 2 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 84) In advertising media selection, frequency describes the qualitative value of message exposure through a given medium.

Answer: FALSE Diff: 1 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

26 © 2021 Pearson Canada Inc.

85) In any medium, the relevance of advertising content to an audience is less important than how many people the advertisement reaches.

Answer: FALSE Diff: 1 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 86) Standardization produces many benefits—lower advertising costs, greater global advertising coordination, and a more consistent worldwide image.

Answer: TRUE Diff: 2 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Diverse and multicultural work environments 87) The aim of advertainment is to make ads and brand content so entertaining or so useful that people want to watch them.

Answer: TRUE Diff: 1 Type: TF LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 88) Kronos Inc., a car manufacturer, makes a car called Hover that runs on the force generated by super magnets. Kronos is the first company to use super-magnet technology in automobile manufacturing, aiming to reduce dependency on non-renewable fuels. If Kronos plans to release television advertisements about Hover, what kind of advertising objective should it pursue when introducing the new product into the market?

Answer: (Students' answers may vary. The answer given below is indicative.)

Hover uses a new technology in its production, and its advertisement should reflect that.

Introducing a new product and potentially creating a new market requires an advertising campaign that stresses on its uniqueness and usability. The best advertising model to follow for Hover would be informative advertising. Informative advertising is used heavily when introducing a new product category. In this case, the objective is to build primary demand.

Diff: 3 Type: ES LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

27 © 2021 Pearson Canada Inc.

89) What methods of setting advertising budgets are directly based on company revenues? What are the disadvantages of such methods?

Answer: One of the methods of setting advertising budgets based on company revenues is called the affordable method. The team sets the promotion budget at the level they think the company can afford. Small businesses often use this method, reasoning that a company cannot spend more on advertising than it has. They start with total revenues, deduct operating expenses and capital outlays, and then devote some portion of the remaining funds to advertising. This method of setting budgets completely ignores the effects of promotion on sales. It tends to place promotion last among spending priorities, even in situations in which advertising is critical to the firm's success. It leads to an uncertain annual promotion budget, which makes long-range market planning difficult. Other companies use the percentage-of-sales method, setting their promotion budget at a certain percentage of current or forecasted sales. Or they budget a percentage of the unit sales price. The percentage-of-sales method has advantages. It is simple to use and helps management think about the relationships between promotion spending, selling price, and profit per unit. Despite these claimed advantages, however, the percentage-of-sales method has little to justify it. It wrongly views sales as the cause of promotion rather than as the result.

Diff: 3 Type: ES LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 90) With a suitable example, show how advancements in technology help consumers avoid advertisement cluttering. What implications does this trend hold for advertisers?

Answer: (Students' answers may vary. The answer given below is indicative.)

Until recently, television viewers were pretty much a captive audience for advertisers. But today's digital wizardry has given consumers a rich new set of information and entertainment choices. With the growth in cable and satellite TV, the Internet, video streaming, tablets, and smartphones, today's viewers have many more options. Digital technology has also armed consumers with an arsenal of weapons for choosing what they watch or don't watch.

Increasingly, thanks to the growth of DVR systems, consumers are choosing not to watch ads.

Seventy-six percent of American TV households have a DVR, subscribe to Netflix, or use videoon-demand from a cable or telecommunications provider and two-thirds of DVR owners use the device to skip commercials. Thus, advertisers can no longer force-feed the same old cookiecutter messages and content to captive consumers through traditional media. Simply interrupting or disrupting consumers no longer works. Unless ads provide content that is engaging, useful, or entertaining, many consumers will simply ignore or skip them. To break through the clutter, many marketers have subscribed to a new merging of advertising and entertainment, dubbed "Madison & Vine." It represents the merging of advertising and entertainment in an effort to create new avenues for reaching consumers with more engaging messages. Just to gain and hold attention, today's content must be better planned, more imaginative, more entertaining, and more emotionally engaging. Simply interrupting or disrupting consumers no longer works. Unless ads provide information that is interesting, useful, or entertaining, many consumers will simply skip by them.

Diff: 3 Type: ES LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking; Information technology 28 © 2021 Pearson Canada Inc.

91) Yuran Inc., a designer and seller of lifestyle products and inexpensive furniture, has decided to engage in brand integration to advertise its products. The decision coincides with Yuran's plan to release a new line of coffee tables that fold easily and do not take up much space. What are the different ways in which Yuran can achieve brand integration?

Answer: Yuran can achieve brand integration through product placement. Product placement involves embedding brands as props within other programming like TV shows, either being used in a show, or being scripted into the show. The Yuran coffee table, for example, could be placed in sitcoms which generally have home settings. The product could even be worked into the show's overall storyline, making it an integral part of that episode. It can even have product placement in movies, video games, comic books, and even pop music. Yuran can achieve brand awareness by being part of the entertainment rather than interrupting it.

Diff: 3 Type: ES LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge

29 © 2021 Pearson Canada Inc.

92) Message execution is when the advertiser turns the big idea into an actual ad. The creative team must find the best approach, style, tone, words, and format for executing the message.

Describe the nine types of execution and provide an example for each.

Answer: • Slice of life. This style shows one or more "typical" people using the product in a normal setting. For example, IKEA content–from microsites and Instagram posts to print ads and television commercials–features people living in rooms furnished with IKEA furniture and household goods.

• Lifestyle. This style shows how a product fits in with a particular lifestyle. For example, an ad for Athleta activewear shows a woman in a complex yoga pose and states: "If your body is your temple, build it one piece at a time."

• Fantasy. This style creates a fantasy around the product or its use. For example, an ad for Nestlé Pure Life water shows a young girl diving into a water-filled fantasy land where children blow bubbles high on a gondola lift and paddle a boat through the clouds, suggesting "a future full of possibilities starts by drinking pure bottled water now."

• Mood or image. This style builds a mood or image around the product or service, such as beauty, love, intrigue, serenity, or pride. Few claims are made about the product or service except through suggestion. For example, a warm, soul-stirring three-minute "Little Moments" ad for HP's phone-sized Sprocket printer captures through printed images the evolving relationship between a father and his moody 12-year-old daughter as she starts sixth grade. "Hold onto the ones you love," the ad urges. "Reinvent memories."

• Musical. This style shows characters singing about the product. For example, as part of its "Insure Carefully, Dream Fearlessly" campaign, American Family Insurance sends Grammy Award—winner Jennifer Hudson to the streets of Atlanta to help make a dream come true by singing a surprise duet with an aspiring street performer. "With the right support, any dream is possible," the ad concludes. In another musical ad, Hudson surprises the Morehouse College Glee Club.

• Personality symbol. This style creates a character that represents the product. The character might be animated (Mr. Clean, the GEICO Gecko, or the Travelocity Gnome) or real (perky Progressive Insurance spokeswoman Flo, KFC's Colonel Sanders, or Ronald McDonald).

• Technical expertise. This style shows the company's expertise in making the product. Thus, Jim Koch of the Boston Beer Company tells about his many years of experience in brewing Samuel Adams beer.

• Scientific evidence. This style presents survey or scientific evidence that the brand is better or better liked than one or more other brands. For years, Crest toothpaste has used scientific evidence to convince buyers that Crest is better than other brands at fighting cavities.

• Testimonial evidence or endorsement. This style features a highly believable or likable source endorsing the product. It could be ordinary people saying how much they like a given product.

For example, Whole Foods features a variety of real customers in its Values Matter marketing campaign. Or it might be a celebrity presenting the product, such as Taylor Swift for Diet Coke or NBA star Stephen Curry for Under Armour.

Diff: 3 Type: ES LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

30 © 2021 Pearson Canada Inc.

93) John works as a junior marketing executive at Frontloop Corporation. Frontloop Corporation manufactures guitars and other stringed instruments. It designs a new guitar, the Loneway, customized for the folk music genre. The company plans to attract both folk artists and folk music lovers with its advertising campaigns and decides to exclusively use mass-media marketing techniques to advertise the Loneway guitar. What arguments can John use if he wants to convince Frontloop to adopt digital media instead of television advertising?

Answer: (Students' answers may vary. The answer given below is indicative.)

The Loneway guitars are specifically designed for folk music lovers, who form a niche market in music. Marketing these guitars through mass-media outlets like television will not help the company reach its target customers efficiently. The costs of mass media are rising, and their audiences are reducing in number. Though mass media have good coverage, they provide low audience selectivity. In contrast, the digital media, like the Internet, are relatively inexpensive and highly customer selective. They are also highly interactive. The Loneway guitar ads could be placed at strategic websites that folk music enthusiasts frequently visit. The ads can be uploaded on sites like YouTube, or Facebook, which are very apt at reaching target customers and niche markets. On the other hand, television advertising is highly cluttered and provides fleeting exposure to potential customers. Using the Internet also saves time as compared to television, which may have a higher ad purchase lead time. Hence, advertising the Loneway line of guitars through online advertising is the cheaper, more audience selective, and customer interactive outlet that the Frontloop Corporation can adopt, especially when compared to television advertising.

Diff: 3 Type: ES LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Reflective thinking 94) What is consumer-generated content? Provide an example.

Answer: (Students' answers may vary. The answer given below is indicative.)

Taking advantage of today's digital and social media technologies, many companies are now tapping consumers for marketing content, message ideas, or even actual ads and videos.

Sometimes the results are outstanding; sometimes they are forgettable. If done well, however, user-generated content can incorporate the voice of the customer into brand messages and generate greater customer engagement. Perhaps the best known consumer-generated content effort is the long-running annual "Crash the Super Bowl Challenge" held annually by PepsiCo's Doritos brand. Doritos invites consumers to create their own 30-second video ads, and winners receive large cash awards and have their ads run during the Super Bowl. But brands across a wide range of industries — from automakers and fast-food chains to apparel brands and pet food marketers — are inviting customers to participate in generating marketing content.

Diff: 3 Type: ES LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

31 © 2021 Pearson Canada Inc.

95) Which of the following is an example of a firm utilizing public relations as a promotion tool?

A) a firm using its personal sales force at an expo to sell its products B) a firm sending its catalog directly to customers through e-mail C) a firm informing customers of special discounts on its website D) a firm providing interesting information about a product to the news media E) a firm using a celebrity to endorse a product in a television commercial Answer: D Diff: 2 Type: MC LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 96) A common PR tool is special events, ranging from news conferences and speeches, brand tours, and sponsorships to multimedia presentations or educational programs designed to reach and interest target publics.

Answer: TRUE Diff: 1 Type: TF LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Written and oral communication 97) Usually, when using public relations, a company pays for the space or time in the media.

Answer: FALSE Diff: 1 Type: TF LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Written and oral communication 98) Lobbying refers to a PR department maintaining relationships with shareholders and others in the financial community.

Answer: FALSE Diff: 1 Type: TF LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Application of knowledge 99) What are the different functions of a public relations (PR) department?

Answer: PR departments may perform any or all of the following functions: Press relations or press agency: Creating and placing newsworthy information in the news media to attract attention to a person, product, or service.

Product publicity: Publicizing specific products.

Public affairs: Building and maintaining national or local community relationships.

Lobbying: Building and maintaining relationships with legislators and government officials to influence legislation and regulation.

Investor relations: Maintaining relationships with shareholders and others in the financial community.

Development: Working with donors or members of nonprofit organizations to gain financial or volunteer support.

Diff: 2 Type: ES LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 32 © 2021 Pearson Canada Inc.

100) How does public relations help in creating an integrated marketing communications system?

Answer: An integrated marketing communications system is required to deliver a consistent and positive message of a company's brand to its customers. Public relations is used to promote products, people, places, ideas, activities, organizations, and even nations. Companies use PR to build good relations with consumers, investors, the media, and their communities. Public relations can have a strong impact on public awareness at a much lower cost than advertising can. When using public relations, a company does not pay for the space or time in the media.

Rather, it pays for a staff to develop and circulate information and manage events. If the company develops an interesting story or event, it could be picked up by several different media and have the same effect as advertising that would cost millions of dollars. Moreover, public relations has the power to engage customers and make them a part of the brand story. Although public relations still captures only a small portion of the overall marketing budgets of many firms, PR can be a powerful brand-building tool. Especially in this digital age, the lines between advertising, PR, and other content are becoming more and more blurred. For example, are brand websites, blogs, brand videos, and social media activities advertising, PR, or something else? All are marketing content. And as the use of earned and shared digital content grows rapidly, PR may play a bigger role in marketing content management. More than any other department, PR has always been responsible for creating relevant marketing content that draws consumers to a brand rather than pushing messages out. Hence, public relations works hand-in-hand with advertising within an integrated marketing communications program to help build brands and customer relationships.

Diff: 2 Type: ES LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking

33 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 13 Personal Selling and Sales Promotion 1) Which of the following statements is true of salespeople?

A) They do not work with wholesalers and retailers.

B) They are employed mostly in click-only companies.

C) They do not represent the customers to the company.

D) They represent a company to its customers by communicating and selling.

E) They represent a new class of professionals who have emerged as part of the steep rise in retailing.

Answer: D Diff: 2 Type: MC LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Written and oral communication 2) The concept of ________ lends even more importance to the salesperson's customerrelationship-building abilities.

A) sales force territory B) sales promotion C) sales force management D) salesperson-owned loyalty E) sales force structure Answer: D Diff: 2 Type: MC LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 3) Order getters typically participate in creative selling, social selling, and relationship building.

Answer: TRUE Diff: 1 Type: TF LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Application of knowledge 4) Manufacturers relay customer concerns about company products and actions back inside to those who can handle them.

Answer: FALSE Diff: 2 Type: TF LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Written and oral communication

1 © 2021 Pearson Canada Inc.

5) In consumer product companies such as P&G or Nike, the sales force works directly with customers.

Answer: FALSE Diff: 1 Type: TF LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 6) Personal selling can be very effective in complex selling situations.

Answer: TRUE Diff: 2 Type: TF LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 7) Explain how salespeople link a company with its customers.

Answer: The sales force serves as a critical link between a company and its customers. First, they represent the company to customers. They find and develop new customers and communicate information about the company's products and services. They sell products by approaching customers, presenting their offerings, answering objections, negotiating prices and terms, closing sales, and servicing accounts. At the same time, salespeople represent customers to the company, acting inside the firm as "champions" of customers' interests and managing the buyer-seller relationship. Salespeople relay customer concerns about company products and actions back inside to those who can handle them. They learn about customer needs and work with other marketing and non-marketing people in the company to develop greater customer value.

Diff: 2 Type: ES LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Written and oral communication

2 © 2021 Pearson Canada Inc.

8) Why is it beneficial for a firm to coordinate its marketing and sales efforts? What actions can a company take to bring its marketing and sales functions closer together?

Answer: The sales force and other marketing functions (marketing planners, brand managers, and researchers) should work together closely to jointly create value for customers. A company can take several actions to help bring its marketing and sales functions closer together. At the most basic level, it can increase communications between the two groups by arranging joint meetings and spelling out communications channels. It can create opportunities for salespeople and marketers to work together. Brand managers and researchers can tag along on sales calls or sit in on sales planning sessions. In turn, salespeople can sit in on marketing planning sessions and share their firsthand customer knowledge. A company can also create joint objectives and reward systems for sales and marketing teams or appoint marketing — sales liaisons — people from marketing who "live with the sales force" and help coordinate marketing and sales force programs and efforts. It can appoint a high-level marketing executive to oversee both sales and marketing. Such a person can help infuse marketing and sales with the common goal of creating value for customers to capture value in return.

Diff: 3 Type: ES LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 9) A company that sells only one product line to one industry with customers in many locations would typically use a ________.

A) product sales force structure B) territorial sales force structure C) market sales force structure D) customer sales force structure E) complex sales force structure Answer: B Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 10) Which of the following is true of a territorial sales force structure?

A) It clearly defines each salesperson's job and establishes accountability.

B) It benefits firms with many technological products requiring technically skilled salespeople.

C) It is used by firms that organize their sales forces along customer or industry lines.

D) It requires salespeople to sell a wide variety of products over a broad geographic area.

E) It differentiates the sales force solely on the basis of product expertise.

Answer: A Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

3 © 2021 Pearson Canada Inc.

11) Rug Designs Inc., a manufacturer of large area rugs, markets its products throughout Canada using a network of regional sales offices. They are using a ________ sales force structure.

A) market B) customer C) product D) regional E) territorial Answer: E Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 12) Which of the following statements is true of a product sales force structure?

A) A product sales force structure is characterized by specialization along product lines.

B) A product sales force structure is used when a company has only one product line.

C) A product sales force structure requires every salesperson to be an expert in all the product categories of the company.

D) A product sales force structure organizes the sales force along customer or industry lines.

E) A product sales force structure uses a single sales force across different product lines.

Answer: A Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 13) Loretta Inc., a Canadian-based watch manufacturer, sells its products in the United States, France, China, Russia, and India. To manage sales, Loretta appoints a number of sales representatives to each location. Sales representatives report to area managers, and area managers coordinate sales in their respective areas before reporting to regional managers. Loretta has most likely adopted a ________ sales force structure.

A) customer B) product C) complex D) distributor E) territorial Answer: E Diff: 3 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

4 © 2021 Pearson Canada Inc.

14) GE employs different sales forces within different product and service divisions of its major businesses. For example, within GE Infrastructure, the company has separate sales forces for aviation, energy, transportation, and water processing products and technologies. GE has most likely adopted a ________ sales force structure.

A) market B) product C) customer D) territorial E) complex Answer: B Diff: 3 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 15) Which of the following examples represents a product sales force structure?

A) Venson's produces frozen dinners at its factory in Quebec, and it sells them across the country through a network of sales representatives organized into regional and territorial tiers.

B) AmWeb produces an expensive brand of herbal cosmetics called "Green You" that are sold in select boutiques and beauty parlors by selling teams assigned to serve small groups of key customers.

C) Verra Designers operates from its landmark store in Montreal and customers from all over the world come to this store to buy original merchandise at steep prices.

D) Carlton Computers sells its range of highly specialized computers through special teams, each of which has received training in the configuration, uses, and USPs of a single model in the range.

E) Nutters Inc., producers of cookies and other baked goods, markets its products throughout the country through a network of area and regional sales officers.

Answer: D Diff: 3 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 16) In which of the following structures does a company organize its sales force along customer or industry lines?

A) demographic sales force structure B) service sales force structure C) market sales force structure D) territorial sales force structure E) product sales force structure Answer: C Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

5 © 2021 Pearson Canada Inc.

17) Appliance maker Whirlpool assigns individual teams of salespeople to big retail customers such as Leon's Furniture, the Brick Warehouse, Lowe's, Best Buy, and Home Depot. Each Whirlpool sales team aligns with the large customer's buying team. Whirlpool has most likely adopted a ________ sales force structure.

A) product B) team-based C) territorial D) market E) complex Answer: D Diff: 3 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 18) If a company assigns individual teams of salespeople to big retail customers, it most likely has a(n) ________ sales force structure.

A) undifferentiated B) product C) market D) territorial E) demographic Answer: C Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 19) Companies that organize their sales force by customer and territory; product and territory; product and customer; or territory, product, and customer are using a ________ sales force structure.

A) market B) simple C) product D) territorial E) complex Answer: E Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

6 © 2021 Pearson Canada Inc.

20) Sleek Designs markets a wide range of kitchen cabinets, counter tops, and ceramic tile. Its salespeople are initially divided on the basis of their expertise in a product category. They're then further divided into teams addressing large home improvement retailers, kitchen and bath suppliers, and specialty home improvement stores. Which of the following sales force structures has most likely been combined to form this complex sales force structure?

A) territorial and market B) product and market C) product and territorial D) geographical and product E) market and customer Answer: B Diff: 3 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 21) Lemony Inc. sells its popular bottled lemonade–the company's only product–in various geographic locations through tie-ups and agreements with retailers. Each location is represented by two salespersons, one of whom serves current customers while the other finds new ones.

Which of the following sales force structures has most likely been combined to form the complex sales force structure at Lemony Inc.?

A) market and territorial B) market and customer C) product and territorial D) market and product E) geographical and product Answer: A Diff: 3 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 22) Which of the following is a characteristic of an inside sales force?

A) It travels to make sales calls on customers in the field.

B) It receives administrative backup from outside sales forces.

C) It cannot sell or service accounts directly.

D) It eliminates the need to have an outside sales force.

E) It conducts business from an office via telephone.

Answer: E Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

7 © 2021 Pearson Canada Inc.

23) Which of the following is most likely true about a sales force in the field?

A) They build relationships with customers through face-to-face collaboration.

B) They make most sales from their offices via media interactions.

C) They provide administrative backup for outside salespeople.

D) They rely on telemarketing efforts to gain leads and clients.

E) They are prohibited to sell or service accounts directly.

Answer: A Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 24) ________ use the phone, Internet, and social media to find new leads, learn about customers and their business, or sell and service accounts directly.

A) Outside salespeople B) Sales managers C) Sales assistants D) Technical sales-support people E) Telemarketers and online sellers Answer: E Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Information technology 25) Which of the following statements is most likely true of team selling?

A) It is used most often when the group of target customers is small and homogeneous.

B) It consists of experts from a single area of the selling firm such as marketing or finance.

C) It can unearth problems and provide solutions that no individual salesperson could.

D) It is most often implemented when products are simple and distribution costs are low.

E) It simplifies the process of evaluating the individual contributions of sales team members.

Answer: C Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 26) Which of the following is most likely true of a sales force?

A) The performance difference between an average salesperson and a top salesperson is generally substantial.

B) The cost of replacing a salesperson is usually low because minimal training is necessary.

C) A sales force with many new people is typically more productive than one whose members have been around for a long time.

D) Individuals within a sales force generally perform at the same level of efficiency.

E) On-site sales training is more efficient and less costly than e-learning programs.

Answer: A Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 8 © 2021 Pearson Canada Inc.

27) Rose is a sales representative for Advanced Products Inc. Her remuneration is based entirely on her sales performance. For every $1000 order Rose secures she receives a $150 payment. In this situation a(n) ________ is the variable amount in a salesperson's compensation.

A) bonus B) commission C) salary D) incentive E) profit-sharing plan Answer: B Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 28) Sales managers use a ________ that shows which customers and prospects to pursue and which activities to carry out.

A) call plan B) sales quota C) sales contest D) bonus plan E) straight commission Answer: A Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 29) What is the purpose of a sales manager using a time-and-duty analysis?

A) compensating salespeople B) prospecting customers C) recruiting salespeople D) forming sales teams E) supervising salespeople Answer: E Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 30) ________ are the standards stating the amount salespersons should sell and how sales should be divided among the company's products.

A) Sales promotions B) Sales quotas C) Display allowances D) Time-and-duty analyses E) Sales reports Answer: B Diff: 1 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 9 © 2021 Pearson Canada Inc.

31) Weekly or monthly work plans used by management to get information about salespeople are referred to as ________.

A) sales quotas B) ROI plans C) call objectives D) sales reports E) call plans Answer: D Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 32) Salespeople write up their completed activities in a(n) ________.

A) sales quota report B) profit-sharing plan C) call plan D) call report E) expense report Answer: D Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 33) How have social media tools most likely affected personal selling?

A) reducing the use of person-to-person selling efforts B) increasing the costs of selling products and services C) changing the basic fundamentals of interpersonal selling D) increasing the number of product reports given to customers E) slowing the sales force response rate to customers' problems Answer: A Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Information technology 34) The fastest-growing sales trend is ________ that involves the use of online, mobile, and social media to engage customers, build stronger customer relationships, and augment sales performance.

A) personal selling B) online selling C) social selling D) team selling E) videoconferencing Answer: C Diff: 2 Type: MC LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Information technology 10 © 2021 Pearson Canada Inc.

35) Many large customer companies have implemented team-based purchasing, requiring marketers to employ equivalent team-based selling.

Answer: TRUE Diff: 2 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 36) Great salespeople possess intrinsic motivation, a disciplined work style, the ability to close a sale and most importantly, the ability to build relationships with customers.

Answer: TRUE Diff: 1 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Information technology 37) Using a customer sales force structure, a company organizes its sales force along customer or industry lines required.

Answer: TRUE Diff: 1 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 38) The goal of supervision is to encourage salespeople to "work hard" and energetically toward sales force goals.

Answer: FALSE Diff: 2 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 39) A compensation plan with a larger base-salary component and a smaller commission component is most effective for driving salespersons to acquire new businesses.

Answer: FALSE Diff: 2 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 40) Sales force automation systems enable salespeople to profile prospects, forecast sales, and prepare expense reports.

Answer: TRUE Diff: 1 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Information technology

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41) Many companies motivate their salespeople by setting sales quotas.

Answer: TRUE Diff: 1 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 42) Customer-related selling refers to the use of online, mobile, and social media to engage customers, build stronger customer relationships, and augment sales performance.

Answer: FALSE Diff: 2 Type: TF LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Information technology 43) Fashion Magazine is published in Toronto. The magazine is bought by readers in Canada and the United States. Which type of sales force structure is most appropriate for Fashion Magazine?

Why? Answer: (Students' answers may vary. The answer given below is indicative.)

If the company sells only one product line to one industry with customers in many locations, it should use a territorial sales force structure. In the territorial sales force structure, each salesperson is assigned to an exclusive geographic area and sells the company's full line of products or services to all customers in that territory. This organization clearly defines each salesperson's job and fixes accountability. It also increases the salesperson's desire to build local customer relationships that, in turn, improve selling effectiveness. Because each salesperson travels within a limited geographic area, travel expenses are relatively small.

Diff: 3 Type: ES LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 44) Danby, a Canadian manufacturer, produces a wide range of goods which includes appliances, climate control systems, niche products and entertainment products. The company competes in the commercial, hospitality, residential markets. Considering the range of products Danby sells, which sales force structure would you consider appropriate for the company? Explain the reasons for your answer.

Answer: (Students' answers may vary. The answer given below is indicative.)

If a company has numerous and complex products, it can adopt a product sales force structure, in which the sales force specializes along product lines. Danby should employ different sales forces within different product and service divisions of its major businesses. Within Danby, for instance, the company should have separate sales forces for entertainment, climate control, refrigeration, and niche products and technologies. As no single salesperson can become an expert in all of these product categories managed by Danby, product specialization is required. In all, it is best if a company as large and complex as Danby has numerous separate sales forces serving its diverse product and service portfolio.

Diff: 3 Type: ES LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

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45) How do companies use the workload approach to set sales force size?

Answer: Sales forces may range in size from only a few salespeople to tens of thousands. Many companies use some form of workload approach to set sales force size. Using this approach, a company first groups the accounts into different classes according to size, account status, or other factors related to the amount of effort required to maintain the account. It then determines the number of salespeople needed to call on each class of accounts the desired number of times.

Diff: 2 Type: ES LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 46) Explain how an inside sales force should provide support to an outside sales force.

Answer: A company may have an outside sales force, an inside sales force, or both. Outside salespeople travel to call on customers in the field. In contrast, inside salespeople conduct business from their offices via telephone, online and social media interactions, or visits from buyers. Some inside salespeople provide support for the outside sales force, freeing them to spend more time selling to major accounts and finding new prospects. For example, technical sales-support people provide technical information and answers to customers' questions. Sales assistants provide research and administrative backup for outside salespeople. They track down sales leads, call ahead and confirm appointments, follow up on deliveries, and answer customers' questions when outside salespeople cannot be reached. Using such combinations of inside and outside salespeople can help serve important customers better. The inside rep provides daily access and support, whereas the outside rep provides face-to-face collaboration and relationship building.

Diff: 2 Type: ES LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 47) What are the four elements of salesperson compensation? Give an example to show how these elements motivate salespeople in different situations.

Answer: Compensation consists of four elements: a fixed amount, a variable amount, expenses, and fringe benefits. The fixed amount, usually a salary, gives the salesperson some stable income. The variable amount, which might be commissions or bonuses based on sales performance, rewards the salesperson for greater effort and success. Management must determine what mix of these compensation elements makes the most sense for each sales job. A sales force compensation plan can both motivate salespeople and direct their activities.

Compensation should direct the sales force toward activities that are consistent with the overall sales force and marketing objectives. For example, if the strategy is to acquire new business, grow rapidly, and gain market share, the compensation plan might include a larger commission component, coupled with a new-account bonus to encourage high sales performance and new account development. In contrast, if the goal is to maximize current account profitability, the compensation plan might contain a larger base-salary component with additional incentives for current account sales or customer satisfaction.

Diff: 2 Type: ES LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

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48) Salespeople need to know how to ________ leads, that is identifying good leads and screening out poor ones, at the beginning of the selling process.

A) approach B) qualify C) consolidate D) generate E) manage Answer: B Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 49) In which step of the selling process does a salesperson or company identify qualified potential customers?

A) demonstration B) preapproach C) prospecting D) approach E) presentation Answer: C Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 50) Karen Rogers is a salesperson for Solar Panels Inc. She attends builder trade shows to identify potential customers in an effort to build long-term profitable relationships. Karen Rogers is engaging in which step of the selling process?

A) demonstration B) preapproach C) prospecting D) approach E) presentation Answer: C Diff: 3 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

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51) In which step of the selling process does a salesperson learn as much as possible about a prospective customer before making a sales call?

A) approach B) follow-up C) demonstration D) handling objections E) preapproach Answer: E Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 52) In which step of the selling process does a salesperson set call objectives?

A) preapproach B) approach C) presentation D) qualifying E) prospecting Answer: A Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 53) The salesperson should know how to meet and greet the buyer and get the relationship off to a good start in which step of the selling process?

A) prospecting B) preapproach C) presentation D) qualifying E) approach Answer: E Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork

15 © 2021 Pearson Canada Inc.

54) Harry Potts is a salesperson for a national pet food company. He meets Karen Sharp, a buyer for a large, specialty pet retailer, and speaks to her at length about the product categories and brands of pet food the retailer currently carries as well as future needs. At which step of the selling process is Harry Potts in the above scenario?

A) approach B) preapproach C) qualifying D) prospecting E) closing Answer: A Diff: 3 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 55) The presentation stage of the selling process most likely involves ________.

A) cold calling in the absence of potential leads B) fixing the final meeting with a customer to close a deal C) gathering information about an organization and its buyers D) showing how a company's products can solve a customer's problems E) requesting an order from the customer after handling any minor objections Answer: D Diff: 2 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork 56) Howard Genks works as a sales representative for Med-Tex, a firm that manufactures hospital supplies. Recently, a prospective buyer walked into the Med-Tex store seeking beds for the children's ward in his private clinic. Howard quickly showed the client the range of beds available that were designed specifically for children. In which of the following steps of the selling process was Howard?

A) prospecting B) qualifying C) follow-up D) handling objections E) presentation and demonstration Answer: E Diff: 3 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

16 © 2021 Pearson Canada Inc.

57) In which of the following steps of the selling process does a salesperson seek out, clarify, and overcome any customer disapproval to buying?

A) handling objections B) closing C) follow-up D) prospecting and qualifying E) preapproach Answer: A Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 58) In which of the following steps of the selling process does a salesperson ask a buyer for an order?

A) preapproach B) qualifying C) closing D) prospecting E) approach Answer: C Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 59) What is the last step in the selling process?

A) follow-up B) closing C) handling objections D) presentation E) prospecting Answer: A Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge

17 © 2021 Pearson Canada Inc.

60) The salesperson completes any details on delivery time, purchase terms, and other matters during the ________ step of the selling process.

A) closing B) follow-up C) handling objections D) presentation E) prospecting Answer: B Diff: 1 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 61) Global Insurance sells health and life insurance policies to Fortune 500 companies for its employees. The company's salespeople regularly contact decision makers to ensure that the necessary paperwork has been filed and that contracts are executed. Updates are also provided regularly about premium changes for health insurance. Which of the following steps of the selling process does this scenario depict?

A) approach B) presentation C) closing D) follow-up E) preapproach Answer: D Diff: 3 Type: MC LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 62) Most salespeople spend much of their time maintaining existing accounts and building longterm customer relationships.

Answer: TRUE Diff: 1 Type: TF LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork 63) Prospecting is the sales step in which a salesperson learns as much as possible about a prospective customer before making a sales call.

Answer: FALSE Diff: 1 Type: TF LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge

18 © 2021 Pearson Canada Inc.

64) You have been hired by a national office furniture supply company based in Fredericton, New Brunswick. Your primary responsibility is to grow new revenue by finding new customers.

What are the different ways of finding sales prospects?

Answer: A salesperson must often approach many prospects to get only a few sales. Although the company supplies some leads, salespeople need skill in finding their own. The best source is referrals. Salespeople can ask current customers for referrals and cultivate other referral sources, such as suppliers, dealers, noncompeting salespeople, and Web or other social media contacts.

They can also search for prospects in directories or on the Internet and track down leads using the telephone, e-mail, and social media. Or, as a last resort, they can drop in unannounced on various offices (a practice known as cold calling). Salespeople also need to know how to qualify leads — that is, how to identify the good ones and screen out the poor ones. Prospects can be qualified by looking at their financial ability, volume of business, special needs, location, and possibilities for growth.

Diff: 2 Type: ES LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 65) In the context of the selling process, what is closing? What are the various techniques a salesperson can use?

Answer: Closing is the step of the selling process in which a salesperson asks a customer for an order. Salespeople can use any of several closing techniques. They can ask for the order, review points of agreement, offer to help write up the order, ask whether the buyer wants this model or that one, or note that the buyer will lose out if the order is not placed now. The salesperson may offer the buyer special reasons to close, such as a lower price, an extra quantity at no charge, or additional services.

Diff: 2 Type: ES LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 66) What is value selling? Explain its importance and requirements.

Answer: Value selling is the process of demonstrating and delivering superior customer value and capturing a return on that value that is fair for both the customer and the company.

Successful sales organizations recognize that winning and keeping accounts requires more than making good products and directing the sales force to close lots of sales. It requires engaging the customer over the long haul in a mutually profitable relationship, and value selling helps in this regard. Value selling requires listening to customers, understanding their needs, and carefully coordinating the whole company's efforts to create lasting relationships based on customer value.

Diff: 2 Type: ES LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

19 © 2021 Pearson Canada Inc.

67) A freestanding insert in the Sunday newspaper for a local restaurant that contains a $5 off coupon for any meal over $20 is an example of a promotion targeted at ________.

A) government buyers B) salespeople C) business customers D) final buyers E) retailers and wholesalers Answer: D Diff: 1 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 68) Which of the following statements is true of consumer promotions?

A) Their primary objective is to persuade resellers to carry a brand.

B) They include a wide range of tools like samples, coupons, and refunds.

C) They include the use of display allowances.

D) They are primarily used to generate business leads and reward customers.

E) They include the use of conventions and trade shows.

Answer: B Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Written and oral communication 69) ________ are offers of a trial amount of a product.

A) Cash refunds B) Price packs C) Rebates D) Coupons E) Samples Answer: E Diff: 1 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 70) The manufacturer of Two-In-One, a combination shampoo and conditioner, shrink wraps a 4-ounce foil packet of a smoothing hair pomade to its combo product. Which of the following promotion tools is being used in this case?

A) rebates B) samples C) coupons D) advertising specialties E) price packs Answer: B Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 20 © 2021 Pearson Canada Inc.

71) Canadian Tire has issued Canadian Tire money since 1958. This highly successful program is an example of ________.

A) price packs B) samples C) coupons D) point-of-purchase promotions E) premiums Answer: C Diff: 1 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 72) In which of the following promotion tools does a customer send a proof of purchase to a manufacturer, who then refunds part of the purchase price by mail?

A) rebate B) coupon C) sample D) premium E) price pack Answer: A Diff: 1 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 73) A toothpaste manufacturer that bands two products together, selling two for the price of one, is using which type of consumer promotion tool to build short-term sales?

A) price packs B) coupons C) rebates D) advertising specialties E) samples Answer: A Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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74) Lucky Elephant, a Canadian brand of candy-coated popcorn, has been in existence since the 1950s. The brand became popular due to its free prize inside every box. Which of the following promotion tools does this exemplify?

A) rebate B) coupon C) price pack D) sample E) premium Answer: E Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 75) Koffee, a brand of instant coffee, gives away a free coffee mug with its logo imprinted on it with every purchase of a 500g packet of its instant coffee powder. Which promotion tool is Koffee using?

A) coupons B) price packs C) samples D) advertising specialties E) rebates Answer: D Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 76) Black Diamond Cheddar has introduced a new cheddar taste. Displays are set up at various retail stores across Canada and patrons are offered free samples as well as $2 off coupons. Which promotion tool is Black Diamond Cheddar most likely using?

A) rebates B) price packs C) point-of-purchase promotions D) coupons E) advertising specialties Answer: C Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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77) AirNetwork, a telecommunications company, sponsors a rock concert by a famous band in order to further its brand visibility. This is an example of a(n) ________.

A) event marketing B) premium C) point-of-purchase promotion D) trade promotion E) price pack Answer: A Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 78) In the weeks just prior to the Superbowl broadcast, many grocery stores have special displays in a highly visible area (usually near the entrance), which promote a gameday favourite snack. In addition, the grocery store includes these products in their weekly advertising and promotions.

The grocery store is incentivized to conduct these activities by the brand. This effort to push the product to consumers is called ________ promotions.

A) consumer B) point-of-purchase C) sales force D) trade E) business Answer: D Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 79) What is the primary goal of trade promotions?

A) boosting long-term relationships with final buyers B) motivating salespeople to attend trade shows C) generating qualified business leads and contacts D) rewarding customers for frequent purchases E) persuading resellers to carry a brand Answer: E Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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80) Which of the following is a promotion tool used for trade promotions?

A) sweepstakes B) price packs C) conventions D) rebates E) allowances Answer: E Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 81) Millie Foods, producers of baby food, offers a monetary sum to retailers who agree to feature its new products on their shelves for a considerable time period. In this case, the promotion tool used by the company is referred to as a(n) ________.

A) price pack B) rebate C) sample D) allowance E) discount Answer: D Diff: 2 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 82) Which of the following is most likely an example of a business promotion tool?

A) a free DVD for customers who purchase a new television at a retail store B) a trade fair showcasing a new audio system developed by an electronics firm C) a sweepstakes program inviting customers to enter for the chance to win a new car D) a toaster being sold at half its list price for any buyer who purchases a food processor E) a display allowance for retailers who feature a manufacturer's product in a favourable manner Answer: B Diff: 3 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 83) Conventions, trade shows, and sales contests are types of ________.

A) point-of-purchase promotions B) trade promotions C) advertising specialties D) business promotions E) premiums Answer: D Diff: 1 Type: MC LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge

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84) The Consumer Electronics Show (CES) is the largest trade show in the world. This annual event in Las Vegas is designed to help companies reach many prospects that are not reached through their sales forces.

Answer: TRUE Diff: 1 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Written and oral communication 85) Sales promotion levels represent over half of marketing spending, Answer: TRUE Diff: 1 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 86) Digital coupons are the slowest growing coupon segment because consumers are concerned about privacy issues and spamming.

Answer: FALSE Diff: 2 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Information technology 87) Consumer promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.

Answer: FALSE Diff: 1 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 88) Manufacturers provide allowances to retailers as compensation for advertising or creating special displays for their products.

Answer: TRUE Diff: 1 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 89) The most common evaluation method for sales promotions is to compare sales before, during, and after a promotion.

Answer: TRUE Diff: 2 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 90) Providing samples is the most inexpensive way to introduce a new product.

Answer: FALSE Diff: 1 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 25 © 2021 Pearson Canada Inc.

91) Price reductions from rebates are given to consumers at the point of sale.

Answer: FALSE Diff: 2 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 92) Price packs are goods offered either free or at low cost as an incentive to buy a product, such as toys included with Disney DVDs. Answer: FALSE Diff: 2 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 93) Sweepstakes give consumers a chance to win something, such as cash, trips, or goods, by luck or through extra effort.

Answer: TRUE Diff: 1 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 94) Contests, premiums, and displays are tools solely used for trade promotions.

Answer: FALSE Diff: 2 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 95) Sales promotion does not need to be coordinated with other promotion mix elements within the overall IMC program.

Answer: FALSE Diff: 1 Type: TF LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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96) What is sales promotion? What are the various factors that have contributed to the rapid growth of sales promotion in consumer markets?

Answer: Sales promotion consists of short-term incentives to encourage the purchase or sale of a product or service. Several factors have contributed to the rapid growth of sales promotion, particularly in consumer markets. First, inside the company, product managers face greater pressures to increase current sales, and they view promotion as an effective short-run sales tool.

Second, externally, the company faces more competition, and competing brands are less differentiated. Increasingly, competitors are using sales promotion to help differentiate their offers. Third, advertising efficiency has declined because of rising costs, media clutter, and legal restraints. Finally, consumers have become more deal oriented. In the current economy, consumers are demanding lower prices and better deals. Sales promotions can help attract today's more thrift-oriented customers.

Diff: 2 Type: ES LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Reflective thinking 97) List the various types of sales promotions. What are the objectives of each type?

Answer: The various types of sales promotions are consumer promotions, trade promotions, business promotions, and sales force promotions. Sales promotion objectives vary widely. Sellers may use consumer promotions to urge short-term customer buying or enhance customer brand involvement. Objectives for trade promotions include getting retailers to carry new items and more inventory, buy ahead, or promote the company's products and give them more shelf space.

Business promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople. For the sales force, objectives include getting more sales force support for current or new products and getting salespeople to sign up new accounts.

Diff: 2 Type: ES LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 98) Explain the difference between coupons and rebates using suitable examples.

Answer: Coupons are certificates that save buyers money when they purchase specified products. Coupons can promote early trial of a new brand or stimulate sales of a mature brand.

Digital coupons represent today's fastest-growing coupon segment. Digital coupons can be individually targeted and personalized in ways that print coupons cannot. For example, drugstore chain Walgreens makes coupons available to its customers through several mobile channels.

Cash refunds (or rebates) are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet. The customer sends proof of purchase to the manufacturer, which then refunds part of the purchase price by mail. For example, Toro ran a clever preseason promotion on some of its snow blower models, offering a rebate if the snowfall in the buyer's market area turned out to be below average. Competitors were not able to match this offer on such short notice, and the promotion was very successful.

Diff: 2 Type: ES LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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99) Differentiate between consumer promotions and trade promotions. Explain the various tools used in trade promotions.

Answer: The difference between consumer promotions and trade promotions is that consumer promotions are targeted toward customers, or final buyers, whereas trade promotions aim at resellers, i.e., retailers and wholesalers.

Manufacturers use several trade promotion tools. Many of the tools used for consumer promotions such as contests, premiums, and displays can also be used as trade promotions. A manufacturer may offer a straight discount off the list price on each case purchased during a stated period of time. Manufacturers also may offer an allowance (usually so much off per case) in return for the retailer's agreement to feature the manufacturer's products in some way.

Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who buy a certain quantity or who feature a certain flavour or size. They may also offer push money, which involves cash or gifts to dealers or their sales forces to "push" the manufacturer's goods.

Manufacturers may give retailers free specialty advertising items that carry the company's name, such as pens, calendars, memo pads, flashlights, and tote bags.

Diff: 2 Type: ES LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 100) What are business promotions? Explain any two major business promotion tools and their benefits.

Answer: Business promotions are sales promotion tools used to generate business leads, stimulate purchases, reward customers, and motivate salespeople. Many companies and trade associations organize conventions and trade shows to promote their products. Firms selling to the industry show their products at trade shows. Vendors at these shows receive many benefits, such as opportunities to find new sales leads, contact customers, introduce new products, meet new customers, sell more to present customers, and educate customers with publications and audiovisual materials. Trade shows also help companies reach many prospects that are not reached through their sales forces. Sales contests too serve as business promotion tools. A sales contest is a contest for salespeople or dealers to motivate them to increase their sales performance over a given period. Sales contests motivate and recognize good company performers, who may receive trips, cash prizes, or other gifts. Some companies award points for performance, which the receiver can turn in for any of a variety of prizes. Sales contests work best when they are tied to measurable and achievable sales objectives.

Diff: 2 Type: ES LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 14 Direct, Online, Social Media, and Mobile Marketing 1) ________ marketing involve engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships.

A) Undifferentiated and differentiated B) Mass and targeted C) Direct and digital D) Internal and external E) Standardized and customized Answer: C Diff: 1 Type: MC LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Information technology 2) Which of the following is most likely true about direct and digital marketing?

A) They are used to sell goods to an undifferentiated market segment.

B) They are inconvenient and lengthen the process for most buyers.

C) They remain unaffected by the rapid growth of technologies.

D) They build customer engagement and constitute a complete model for doing business.

E) They are rarely used by companies as supplementary channels.

Answer: D Diff: 2 Type: MC LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Information technology 3) Amazon, GEICO, Netflix, and Expedia are companies invested in which of the following fastest-growing forms of marketing?

A) direct and digital B) undifferentiated and differentiated C) internal and external D) mass and targeted E) standardized and customized Answer: A Diff: 2 Type: MC LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Information technology

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4) How has the Internet most likely affected direct and digital marketing?

A) The time taken by marketers to reach customer segments has increased.

B) The role of technology has become less intense.

C) The expenditures on direct and digital marketing have increased.

D) The growth of digital sales has seen a significant downturn.

E) The number of mass marketing forms has expanded.

Answer: C Diff: 2 Type: MC LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Information technology 5) Which of the following is most likely true about direct and digital marketing?

A) They make it increasingly difficult for sellers to adjust their prices.

B) They provide sellers a high-cost alternative for reaching their markets.

C) They have become less dependent on social media and the Internet.

D) They provide buyers with anytime, anywhere access to products.

E) They reduce the number of interaction options between buyers and sellers.

Answer: D Diff: 2 Type: MC LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Information technology 6) Most companies still use direct marketing as a supplementary channel or medium.

Answer: TRUE Diff: 1 Type: TF LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Written and oral communication 7) As consumers spend more and more time on their tablets and smartphones, ad spending on mobile media is exploding.

Answer: TRUE Diff: 2 Type: TF LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Information technology 8) Digital marketing through online, mobile, and social media provides a sense of brand engagement and community.

Answer: TRUE Diff: 1 Type: TF LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

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9) Explain the major benefits of direct and digital marketing for both customers and sellers. Give a personal example of how you have been advantaged by direct and digital marketing.

Answer: For buyers, direct and digital marketing are convenient, easy, and private. They give buyers anywhere, anytime access to an almost unlimited assortment of goods and a wealth of products and buying information. For example, on its website and mobile app, Amazon.com offers more information than most of us can digest, ranging from top-10 product lists, extensive product descriptions, and expert and user product reviews to recommendations based on customers' previous purchases. Through direct marketing, buyers can interact with sellers by phone or on the seller's website or app to create exactly the configuration of information, products, or services they want and then order them on the spot. Finally, for consumers who want it, digital marketing through online, mobile, and social media provides a sense of brand engagement and community–a place to share brand information and experiences with other brand fans. For sellers, direct marketing often provides a low-cost, efficient, speedy alternative for reaching their markets. Today's direct marketers can target small groups or individual customers. Because of the one-to-one nature of direct marketing, companies can interact with customers by phone or online, learn more about their needs, and personalize products and services to specific customer tastes. In turn, customers can ask questions and volunteer feedback.

Direct and digital marketing also offer sellers greater flexibility. They let marketers make ongoing adjustments to prices and programs, or make immediate, timely, and personal announcements and offers. Especially in today's digital environment, direct marketing is a powerful tool for moving customers through the buying process and for building customer engagement, community, and relationships. The new direct marketing tools provide rich opportunities for building close, personalized, interactive customer relationships.

Diff: 2 Type: ES LO: 14-1: Define direct and digital marketing and discuss their rapid growth and benefits to customers and companies.

AACSB: Analytical thinking; Information technology 10) In addition to advertising, former retail giants like Eaton's and Sears relied on which of the following as their direct marketing tool?

A) catalogue B) email C) blog D) online advertisement E) website Answer: A Diff: 1 Type: MC LO: 14-2: Identify and discuss the major forms of direct and digital marketing.

AACSB: Analytical thinking

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11) Which of the following is a direct digital marketing tool?

A) printed catalogue B) direct mail C) telephone D) television E) blogs Answer: E Diff: 1 Type: MC LO: 14-2: Identify and discuss the major forms of direct and digital marketing.

AACSB: Information technology 12) Social media marketing is a traditional direct marketing tool.

Answer: FALSE Diff: 1 Type: TF LO: 14-2: Identify and discuss the major forms of direct and digital marketing.

AACSB: Information technology 13) What are the main forms of direct and digital marketing?

Answer: The main forms of direct and digital marketing include traditional direct marketing tools and the new direct digital marketing tools. Traditional direct marketing tools include faceto-face selling, direct-mail marketing, catalogue marketing, telemarketing, direct-response television marketing, and kiosk marketing. These traditional tools are still heavily used and very important in most firm's direct marketing efforts. In recent years, however, a dazzling new set of direct digital marketing tools has burst onto the marketing scene, including online marketing (websites, online ads and promotions, email, online videos, and blogs), social media marketing, and mobile marketing.

Diff: 2 Type: ES LO: 14-2: Identify and discuss the major forms of direct and digital marketing.

AACSB: Information technology 14) ________ refers to marketing via the Internet using company websites, online advertising and promotions, email marketing, online video, and blogs.

A) Digital marketing B) Social media marketing C) Direct marketing D) Online marketing E) Multimedia marketing Answer: D Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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15) In which of the following cases is a firm employing omni-channel retailing?

A) E-tailers such as Hammon.com market their products through a strong online presence.

B) Wingate Retail sells its products through e-tailers and hundreds of physical superstores.

C) Russel Stores' sales operations are based on heavy outbound telephone marketing.

D) Lues Wholesalers markets its products to retailers through personal selling.

E) Local convenience stores promote products through word-of-mouth marketing.

Answer: B Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Analytical thinking; Information technology 16) Which of the following is most likely true about the digital age with regards to marketing?

A) The number of businesses connecting people over digital networks is in decline.

B) Digital networks allow marketers many ways to build customer relationships.

C) The Internet has had little impact on the ways consumers purchase products.

D) Most firms are shifting back to traditional marketing forms to build customer value.

E) Online-only marketing is more commonly used by firms than multichannel marketing.

Answer: B Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 17) Amazon.com and Expedia.com are best described as ________ that sell products and services directly to final buyers via the Internet.

A) search engines B) content sites C) transaction sites D) e-tailers E) iTV sites Answer: D Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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18) Which of the following is a transaction site?

A) Wikipedia B) Yahoo C) eBay D) Twitter E) Facebook Answer: C Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 19) The growth of the Internet caused many traditional companies to ________ in response to customer demands and a changing marketplace.

A) use traditional direct marketing forms B) adopt direct-mail marketing C) use omni-channel retailing D) develop retail transaction sites E) expand their outside sales forces Answer: C Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 20) For most companies, the first step in conducting online marketing is to ________.

A) place an ad online B) send emails C) create a website D) create a social networking site E) place search-related ads Answer: C Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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21) Which of the following is an online tool designed to engage customers and move them closer to a direct purchase or other marketing outcome?

A) direct mail B) infomercial C) printed catalogue D) branded community website E) marketing website Answer: E Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 22) Which of the following is the primary purpose of branded community websites?

A) displaying digital catalogues B) providing detailed descriptions of products C) creating customer-product engagement D) selling products and services E) sending direct mails to consumers Answer: C Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 23) Online visitors can't buy anything at TSN.ca or Sportsnet.ca. Instead, the site creates a virtual experience for sports enthusiasts and fans that can be customized to meet their needs. This is most likely an example of a(n) ________.

A) branded community website B) promotional website C) interactive website D) e-tailing website E) direct marketing website Answer: A Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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24) Backpacks Galore has an online tool that offers a wide variety of backpacks for direct purchase. The tool even allows customers to select an option to monogram their backpacks.

Which of the following has Backpacks Galore most likely used?

A) phishing site B) online forum C) blog D) community website E) marketing website Answer: E Diff: 3 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 25) Which of the following is a form of online advertising?

A) direct mail B) rich media ad C) toll-free number D) search-related ad E) printed catalog Answer: D Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 26) Which of the following account for the largest portion of firms' online advertising spending?

A) display and search-related advertisements B) search-related and rich media advertisements C) digital and rich media advertisements D) community websites and blog posts E) blog posts and digital media Answer: A Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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27) ________ might appear anywhere on an Internet user's screen when a user is browsing through an article, and they are often related to the information being viewed.

A) Viral advertisements B) Social media sites C) Online display ads D) Digital catalogs E) Printed catalogs Answer: C Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 28) Every time a search is made on Google, Yahoo, or Bing using keywords related to construction, search engines display text-based advertisements and links to Regan Builders, a construction firm. The marketing tool used by Regan Builders is best referred to as a ________.

A) display advertisement B) contextual advertisement C) digital catalog D) community website E) Web blog Answer: B Diff: 3 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 29) Firms like eyewear brand Warby Parker include emails as part of their marketing strategy.

Which of the following is most likely true about email marketing?

A) It cannot be personalized for individual consumers.

B) It is a traditional form of direct marketing.

C) It is restricted to the use of personal computers.

D) It is used by marketers to send highly targeted messages.

E) It is always non-intrusive in nature due to spam filters.

Answer: D Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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30) Which of the following is most likely a consequence of permission-based email marketing?

A) higher return rates B) excessive spamming C) increased consumer frustration D) lower consumer response rates E) reduced consumer interaction Answer: A Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 31) Posting digital content on brand websites or on social media sites such as YouTube, Facebook, Vine, and others are forms of ________ marketing.

A) corporate intranet B) online video C) viral blog D) media portal E) digital kiosk Answer: B Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 32) A product first introduced in 1937, Old Spice invigorated its brand by taking advantage of a clever marketing campaign to create a lot of brand buzz. Which of the following is true of viral marketing?

A) It is the digital version of word-of-mouth marketing.

B) It refers to online marketing problems caused by technical glitches.

C) It is another term for the unethical invasion of online privacy.

D) It is an automated system that manages digital sales and marketing functions.

E) It is a system that allows a supplier to access a customer's inventory levels online.

Answer: A Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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33) Clenzo is a company that provides house cleaning services in major urban and suburban areas. Marketers at Clenzo developed a short, humorous video promoting the company's services and hope that customers who see the video will be so entertained that they will pass the video on to their friends and colleagues. The marketers at Clenzo are using techniques to facilitate ________.

A) direct-mail marketing B) viral marketing C) catalog marketing D) contextual advertising E) display advertising Answer: B Diff: 3 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 34) Which of the following is a disadvantage of viral marketing?

A) The costs of viral marketing are generally too high for most companies.

B) The brand associated with the viral message is usually forgotten.

C) Marketers have little control over who receives a viral message.

D) Viral messages are less likely to be viewed than other types of online promotions.

E) Viral messages are blocked by most search engines.

Answer: C Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 35) Coca-Cola Unbottled is an online forum where Coke fans and company insiders can "look at what's beyond the bottle," sharing posts on everything from new products and sustainability initiatives to fun and inspiring fan stories. This is an example of a ________.

A) blog B) catalog C) search engine D) spam post E) viral message Answer: A Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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36) Which of the following is a drawback of using blogs as a marketing medium?

A) Advertising on a blog is typically very expensive.

B) It is difficult to use blogs to reach highly targeted audiences.

C) The content of a blog is difficult to control.

D) A company cannot have more than one blog.

E) Blogs do not provide the kind of personalized medium that today's marketers want.

Answer: C Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 37) Which of the following is true of marketing through blogs?

A) Starting and maintaining blogs is expensive.

B) Blogs are a form of traditional direct marketing.

C) Blogs are typically used to provide automated responses to consumer conversations.

D) Companies should not monitor blogs if they want to reach customers effectively.

E) Blogs are an inexpensive yet personal way to connect with consumers.

Answer: E Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 38) Fashionable People, Questionable Things is the virtual home of Halifax-based friends Ally and L-A, who connect with their followers through a strong online presence. The pair discuss the fashions they love and the ones they love to hate. In this case, which of the following marketing forms do Ally and L-A use?

A) direct email B) a catalogue C) a search engine D) a spambot E) a blog Answer: E Diff: 2 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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39) Unsolicited and unwanted commercial email is referred to as ________.

A) an infomercial B) an advertorial C) viral marketing D) social media E) spam Answer: E Diff: 1 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 40) Olivia is searching for natural almond butter on SquirrelsApp, a mobile Web application for nut lovers. While browsing the application, a banner appears on the mobile screen showcasing offers and discounts on jelly and jam products. The banner is best referred to as a(n) ________.

A) online display advertisement B) contextual advertisement C) infomercial D) phishing scam E) advertorial Answer: A Diff: 3 Type: MC LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 41) Some websites are primarily designed to engage customers and move them closer to a direct purchase.

Answer: TRUE Diff: 2 Type: TF LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 42) Omni-channel retailing aims to create a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping.

Answer: TRUE Diff: 2 Type: TF LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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43) Stephanie Archer has been saving her money to buy a BMW convertible. Archer has spent hours on the BMW website choosing the exterior and interior colours and studying the various options and models. In this case, Archer has been using BMW's marketing website.

Answer: TRUE Diff: 2 Type: TF LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Analytical thinking 44) Online advertising involves creating videos, ads, and other marketing events that are so infectious that customers will seek them out or pass them along to others.

Answer: FALSE Diff: 1 Type: TF LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 45) Amazon.com targets opt-in customers with a limited number of helpful "we thought you'd like to know" messages based on their expressed preferences and previous purchases. This is referred to as permission-based email advertising.

Answer: TRUE Diff: 2 Type: TF LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Analytical thinking 46) A form of online marketing is posting digital video content on brand websites or on social media sites such as YouTube, Facebook, Instagram, Twitter, and others.

Answer: TRUE Diff: 2 Type: TF LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 47) The main forms of content sites are display ads and search-related ads. Together, they are the largest portion of firms' digital marketing budgets.

Answer: FALSE Diff: 2 Type: TF LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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48) Differentiate between branded community websites and marketing websites. Provide examples to illustrate your response.

Answer: Websites vary greatly in purpose and content. Some websites are primarily marketing websites, designed to interact with customers to move them closer to a direct purchase or other marketing outcome. For example, GEICO operates a marketing website at www.geico.com.

Once a potential customer clicks in, GEICO wastes no time trying to turn the inquiry into a sale, and then into a long-term relationship. A bold headline urges potential customers to "Get a quote," and the site provides all the information and tools needed to do just that, complete with an auto insurance calculator to help buyers estimate the right insurance coverage, rates, and savings. The straightforward site also makes it easy for current customers to manage their accounts and policies, add or replace vehicles, and make and view claims, all under the watchful eye of the familiar GEICO Gecko. Customers can also use GEICO's mobile app to access the brand's mobile website, where they can pay bills, get account and coverage information, view their ID cards, and even watch the latest GEICO ads and chat with Lily, their GEICO insurance voice assistant. In contrast, branded community websites don't try to sell anything at all. Instead, their primary purpose is to present brand content that engages consumers and creates customerbrand community. Such sites typically offer a rich variety of brand information, videos, blogs, activities, and other features that build closer customer relationships and generate engagement with and between the brand and its customers. For example, one can't buy anything at ESPN.com. Instead, the site creates a vast branded sports community, where sports fans can access an almost overwhelming repository of sports information, statistics, and game updates.

They can customize site content by sport, team, players, and authors to match their own special sports interests and team preferences. The site engages fans in contests and fantasy games.

Diff: 3 Type: ES LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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49) Compare display ads and search-related ads. Provide examples to illustrate your response.

Answer: (Students' answers may vary. The answer given below is indicative.)

The main forms of online advertising are display ads and search-related ads. Online display ads might appear anywhere on an Internet user's screen and are often related to the information being viewed. Such display ads have come a long way in recent years in terms of engaging consumers and moving them along the path to purchase. Today's rich media ads incorporate animation, video, sound, and interactivity. For example, while browsing sports-related content on your laptop, tablet, or phone, you might see a bright blue and green banner ad for Gillette Fusion PROGLIDE razors floating at the bottom of the page, with the provocative headline, "Our Gentlest Shave." A click on the banner expands it into a full interactive display ad, complete with an embedded 15-second demonstration video plus click-throughs to the Gillette Fusion PROGLIDE microsite and a buy-now link. Using search-related ads (or contextual advertising), text- and image-based ads and links appear atop or alongside search engine results on sites such as Google, Yahoo!, and Bing. For example, search Google for "LCD TVs." At the top and side of the resulting search list, you'll see inconspicuous ads for 10 or more advertisers, ranging from Samsung and Panasonic to Best Buy, Amazon.com, Walmart.com, Crutchfield, and CDW. Almost 90 percent of Google's $66 billion in revenues last year came from ad sales. Search is an always-on kind of medium, and the results are easily measured. A search advertiser buys search terms from the search site and pays only if consumers click through to its site. For instance, type "Coke" or "Coca-Cola" or even just "soft drinks" or "rewards" into your search engine and almost without fail "My Coke Rewards" comes up as one of the top options, perhaps along with a display ad and link to Coca-Cola's official Google page. This is no coincidence. Coca-Cola supports its popular online loyalty program largely through search buys. The soft drink giant started first with traditional TV and print advertising but quickly learned that search was the most effective way to bring consumers to its www.mycokerewards.com website to register. Now, any of dozens of purchased search terms will return mycokerewards.com at or near the top of the search list.

Diff: 2 Type: ES LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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50) As the marketing manager at Secure Services, a home security systems company, you have been asked to devise a new sales and marketing strategy for a new line of sophisticated alerting systems called "Imperio." These alerting systems can be programmed to meet individual specifications, have special child lock features, and require the thumb impression of the homeowner(s) for a visitor to be allowed inside the house. The two previous promotional ventures failed to elicit much consumer response because most people were unaware of the benefits of such devices except for those consumers who were specifically looking for them. Can the use of email marketing by Secure services be justified for its current marketing effort? Why or why not?

Answer: (Students' answers may vary. The answer given below is indicative.)

Email marketing remains an important and growing digital marketing tool. "Social media is the hot new thing," says one observer, "but e-mail is still the king." By one estimate, 91 percent of all U.S. consumers use email every day. What's more, email is no longer limited to PCs and workstations; 66 percent of all emails are now opened on mobile devices. Not surprisingly, then, a recent study found that email is 40 times more effective at capturing customers than Facebook and Twitter combined. Secure is selling a product that many families may need but do not have sufficient information about. An email describing the product, its features, benefits, and costs may be one of the best ways to enhance consumer awareness and demand. Few customers may object, but many may actually welcome such promotional messages for such an important product.

Diff: 3 Type: ES LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 51) Describe spam and permission-based email marketing.

Answer: Spam refers to unsolicited, unwanted commercial email messages that clog up our email boxes. It produces consumer irritation and frustration. According to one research company, spam now accounts for 64 percent of the billions of emails sent worldwide each day, almost 2 out of 3 emails. To address these concerns, most legitimate marketers now practice permissionbased email marketing, sending email pitches only to customers who "opt in." Many companies use configurable email systems that let customers choose what they want to get. Amazon.com targets opt-in customers with a limited number of helpful "we thought you'd like to know" messages based on their expressed preferences and previous purchases. Few customers object, and many actually welcome such promotional messages. Amazon.com benefits through higher return rates and by avoiding alienating customers with emails they don't want.

Diff: 2 Type: ES LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology

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52) Explain the concept of viral marketing.

Answer: Viral marketing, the digital version of word-of-mouth marketing, involves creating videos, ads, and other marketing content that are so infectious that customers will seek them out or pass them along to their friends. Because customers find and pass along the message or promotion, viral marketing can be very inexpensive. And when video or other information comes from a friend, the recipient is much more likely to view or read it.

Diff: 2 Type: ES LO: 14-3: Explain how companies have responded to the Internet and the digital age with various online marketing strategies.

AACSB: Information technology 53) Which aspect of social media sites makes the medium most appealing to niche marketers?

A) They help marketers target the best undifferentiated market segment.

B) They are used by a majority of Internet users in Canada, the United States and overseas.

C) They cater to the needs of small communities of like-minded people.

D) They guide organizations on how to set up social media networks.

E) They allow marketers to control the conversations on the network.

Answer: C Diff: 2 Type: MC LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology 54) Which of the following is most likely an advantage of social media marketing?

A) Social media are targeted and personal.

B) Social media campaign results are easily measured.

C) Social networks are largely marketer controlled.

D) Social media allow marketers to engage in multichannel sales.

E) Social media campaigns are simply implemented and rarely backfire.

Answer: A Diff: 2 Type: MC LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology 55) ________ marketing features marketing messages, promotions, and other content delivered to on-the-go consumers through their portable electronic devices.

A) Direct-mail B) Mobile C) Mass D) Viral E) Kiosk Answer: B Diff: 1 Type: MC LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology 18 © 2021 Pearson Canada Inc.

56) ________ can provide on-the-go product information, price comparisons, advice and reviews from other consumers, and access to instant deals and digital coupons.

A) Indirect marketing B) Television marketing C) Mobile marketing D) Inbound telephone marketing E) Direct-mail marketing Answer: C Diff: 1 Type: MC LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology 57) Which of the following is an example of a retailer using mobile marketing to enrich the customer's shopping experience at the same time that they stimulate buying?

A) Lacey's department store uses a virtual tour app of Paris to promote a week-long celebration revolving around French-themed clothing, jewellery, and fragrances in their stores.

B) Sharie's boutique issues mobile coupons to existing customers.

C) Java Lava sends a special email to customers that displays fireworks when it's opened to celebrate the store's 1-year anniversary.

D) Books Abound uses an app to introduce customers to newly released books that are tailored to their reading preferences.

E) The Music Store launches an app that plays 10 seconds of a new song every time users access it.

Answer: A Diff: 3 Type: MC LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology 58) Which of the following is a disadvantage of using social media for marketing?

A) They are impersonal.

B) They primarily provide static content.

C) They do not provide information in a timely manner.

D) They provide lower returns than television.

E) They are largely user controlled.

Answer: E Diff: 2 Type: MC LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology

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59) An issue faced by social media is how to tap the marketing potential of their massive communities and make money without driving off loyal users.

Answer: TRUE Diff: 3 Type: TF LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Reflective thinking 60) Even as social media networks have achieved incredible success in terms of numbers of users and volume, a nagging problem still plagues them. This problem is the ability to generate revenue. This is called monetization.

Answer: TRUE Diff: 2 Type: TF LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology 61) Describe two ways in which marketers can engage in social media. What are the advantages and challenges of social media?

Answer: (Students' answers may vary. The answer given below is indicative.)

Marketers can engage in online communities by using existing social media or setting up their own. Using existing social media seems the easiest. Thus, most brands–large and small–have set up shop on a host of social media sites. Check the websites of brands ranging from Coca-Cola, Nike, and Victoria's Secret to the Chicago Bulls or even the U.S. Forest Service and you'll find links to each brand's Facebook, Google, Twitter, YouTube, Flickr, Instagram, or other social media pages. Such social media can create substantial brand communities. For example, the Bulls have more than 17 million Facebook fans; Coca-Cola has an eye-popping 90 million Facebook fans. Beyond these independent social media, many companies have created their own online brand communities. For example, in Nike's Nike+ running community–consisting of more than 20 million runners who together have logged more than 1 billion running miles worldwide– members join together online to upload, track, and compare their performances. Due to its success, Nike has expanded Nike+ to both basketball and general training, each with its own unique community site, app, and corresponding products.

Using social media presents both advantages and challenges. The advantages are that social media are targeted and personal, interactive, immediate and timely, and cost effective. The biggest advantage of social media is their engagement and social sharing capabilities. Social media marketing also presents challenges that include determining how to use and measure them effectively, and the considerable control consumers have over social media content.

Diff: 2 Type: ES LO: 14-4: Discuss how companies use social media and mobile marketing to engage consumers and create brand community.

AACSB: Information technology

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62) Which kind of marketing involves sending an offer, announcement, reminder, or other item to a person at a particular postal address?

A) kiosk marketing B) direct digital marketing C) mass marketing D) direct-mail marketing E) telephone marketing Answer: D Diff: 1 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 63) The process in which printed catalogues, brochures, samples, and DVDs are distributed to customers using highly selective mailing lists is known as ________.

A) mass marketing B) direct-mail marketing C) telemarketing D) internal marketing E) kiosk marketing Answer: B Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 64) Eric Dylan is the marketing director of a charity that raises funds to help provide educational services to children and families in developing countries. Eric targets a selective market of individuals who have recently donated to international charities by sending letters with charity information and donation instructions. Eric uses ________ in this scenario.

A) direct-mail marketing B) mass marketing C) telephone marketing D) digital marketing E) kiosk marketing Answer: A Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking

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65) The promotion of products and services through printed material with multiple pages that sell multiple products has been traditionally referred to as ________ marketing.

A) catalogue B) viral C) telephone D) television E) email Answer: A Diff: 1 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 66) Bradley Springs, a chain of superstores, promotes its business by handing out printed materials which contain lists and descriptions of an assortment of its products. In this case, the company's promotional strategy is referred to as ________.

A) email marketing B) telemarketing C) catalogue marketing D) kiosk marketing E) viral marketing Answer: C Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 67) An advantage of ________ is that they allow real-time merchandising; products and features can be added or removed as needed, and prices can be adjusted instantly to match demand.

A) digital catalogues B) blogs C) kiosks D) traditional catalogues E) mobile apps Answer: A Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking

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68) What is telemarketing?

A) It is the process of promoting products through 30-minute-long infomercials.

B) It is a form of marketing that uses the telephone to sell directly to businesses and consumers.

C) It is the process of marketing products and services using direct-response television advertising.

D) It is a marketing system where product information is provided through unmanned ordering machines.

E) It is the process of selling products through affiliate networks and social media sites.

Answer: B Diff: 1 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 69) Which of the following is an example of inbound telemarketing?

A) Sterrns Media advertises its services by sending letters to potential customers and prompting them to contact the firm through a toll-free number.

B) Sterrns Media purchases customer information and later cold calls these customers to generate potential leads.

C) Sterrns Media spends a lot of time and effort to train its sales force to call businesses and inform them about its B2B products.

D) Sterrns Media utilizes interactive cable systems to enable customers to obtain product information by using their TV remotes.

E) Sterrns Media airs advertising programs called infomercials to attract viewers and get them to order products from its website.

Answer: A Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 70) Which of the following has been limited in recent years by the implementation of Canada's National Do Not Call List?

A) calls by nonprofit groups B) business-to-business telemarketing C) unsolicited outbound telemarketing by businesses D) inbound telephone marketing E) "opt-in" calling systems Answer: C Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking

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71) Which of the following direct marketing forms includes infomercials?

A) direct-response television marketing B) outbound telephone marketing C) print-catalogue marketing D) direct-mail marketing E) face-to-face marketing Answer: A Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 72) George Foreman Grills represent one of the best known 30-minute ________ advertising programs on television that market a single product. Part of the success of these programs is the ability to invite viewers to "call now" to enjoy special discounts.

A) phishing program B) direct response TV C) podcast D) catalogue E) spambot Answer: B Diff: 1 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 73) Technologies such as interactive cable systems, Internet-ready smart TVs, and smartphones and tablets allow consumers to use their TV remotes, phones, or other devices to obtain more information or make purchases directly from TV ads. This is referred to as ________ advertising.

A) virtual world B) interactive TV C) direct-response TV D) podcast E) e-catalogue Answer: B Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Information technology

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74) M&Ms engages DirecTV or Dish Network viewers in a candy themed video game through the arrow keys on their television remotes. This is an example of ________ advertising.

A) virtual world B) interactive TV C) direct-response TV D) podcast E) e-catalogue Answer: B Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 75) ________ are everywhere these days, from self-service hotel and airline check-in devices to in-store ordering devices that let you order merchandise not carried in the store.

A) Infomercials B) Viral videos C) Kiosks D) Podcasts E) Catalogues Answer: C Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Application of knowledge 76) Green Gardens sells gardening and landscaping goods and equipment. The marketing department places an unmanned machine in the store with touchscreen technology to provide product information. Consumers can use this machine to learn about the company's products and services. The company's marketing form is best referred to as ________ marketing.

A) kiosk B) mobile C) telephone D) interactive E) personalized Answer: A Diff: 3 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking

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77) Which of the following is a type of identity theft that uses deceptive emails and fraudulent websites to fool consumers into revealing their personal data?

A) cold calling B) crowdcasting C) viral marketing D) phishing E) crowdsourcing Answer: D Diff: 1 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning 78) Katherine Scully received an email promoting a new financial services institution that offers surprisingly low mortgage rates. The email asked customers to provide their address, date of birth, Social Insurance number, and current mortgage information in order to receive a free loan quote. Suspicious of the offer, Katherine researched the company and discovered that the email was fraudulent. This is an example of ________.

A) cold calling B) phishing C) crowdsourcing D) data mining E) viral marketing Answer: B Diff: 3 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning 79) Which of the following is generally regarded as the toughest issue of public policy and ethics confronting the direct marketing industry?

A) customization of search results B) unwanted email spam C) invasion of consumer privacy D) increasing costs of browsing E) restrictions on digital offers and discounts Answer: C Diff: 1 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning

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80) In the United States, the Children's Online Privacy Protection Act (COPPA) places legal obligations on online operators. There is in Canada. The Privacy Commissioner has issued guidelines that are similar to COPPA, but they are not enforceable by Canadian law. The U.S. law requires online operators targeting children to ________.

A) educate children about digital technologies B) post privacy policies on their sites C) collect and store the personal information of parents of these children D) collect personal information from children under age 13 for security purposes E) avoid sending emails to the parents of children whom they target Answer: B Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning 81) Which of the following is true of the Privacy Promise launched by the Direct Marketing Association (DMA)?

A) It forbids all DMA members from spending excessively on digital advertising.

B) It requires all DMA members to notify customers when any personal information is rented, sold, or exchanged with others.

C) It recommends that DMA members help each other by sharing customer psychographic data.

D) It forbids DMA members from sending email, mail, or phone offers to any customer.

E) It encourages DMA members to create more digital content that is tailored for children under age 13.

Answer: B Diff: 2 Type: MC LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning 82) Printed catalogues fail to increase in-store, online, and mobile sales.

Answer: FALSE Diff: 2 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 83) An advantage of direct mail marketing over digital forms is that it provides something tangible for people to hold and keep and it can be used to send samples.

Answer: TRUE Diff: 2 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication

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84) Whereas space is limited in an online catalogue, print catalogues can offer an almost unlimited amount of merchandise.

Answer: FALSE Diff: 2 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 85) Using sophisticated big data analytics, direct marketers can mine these databases to "microtarget" their selling efforts.

Answer: TRUE Diff: 1 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning 86) Properly designed and targeted telemarketing provides many benefits, including purchasing convenience and increased product and service information.

Answer: TRUE Diff: 2 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 87) Marketers use inbound telephone marketing to sell to customers directly.

Answer: FALSE Diff: 1 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 88) For inbound telephone marketing, the company provides a toll-free phone number so it can receive orders solicited by television, print ads, direct mail, and catalogues.

Answer: TRUE Diff: 2 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Application of knowledge 89) The National Do Not Call List is managed by the Canadian Radio-Television and Telecommunications Commission (CRTC).

Answer: TRUE Diff: 1 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 28 © 2021 Pearson Canada Inc.

90) Telemarketing is infrequently used as a fundraising tool for nonprofit and political groups.

Answer: FALSE Diff: 2 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Written and oral communication 91) Although do-not-call legislation has hurt parts of the consumer telemarketing industry, inbound and outbound consumer telemarketing remain strong and growing.

Answer: FALSE Diff: 1 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning 92) Direct-response television (DRTV) marketing takes one of two major forms: direct-response television advertising and interactive TV (iTV) advertising.

Answer: TRUE Diff: 2 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Application of knowledge 93) iTV lets viewers interact with television programming and advertising using their remote controls.

Answer: TRUE Diff: 1 Type: TF LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Information technology

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94) Nellie Wills, an emergency medicine professional, is getting married in six months. Since her job is very demanding, Nellie lacks the time to go shopping for all the products and services she requires for the wedding. However, Nellie is a careful shopper and likes to evaluate many alternatives before finalizing a purchase. Explain at least one direct marketing method that may meet the specific needs of Nellie.

Answer: (Students' answers may vary. The answer given below is indicative.)

Since Nellie is a careful shopper who is short of time, printed catalogues would be a good option.

Printed catalogues cover a wide range of products and have many other advantages as well. With the stampede to the Internet and digital marketing, more and more catalogues are going digital.

Digital catalogues eliminate printing and mailing costs. And whereas space is limited in a print catalogue, online catalogues can offer an almost unlimited amount of merchandise. They also offer a broader assortment of presentation formats, including search and video. Finally, online catalogues allow real-time merchandising; products and features can be added or removed as needed, and prices can be adjusted instantly to match demand. Customers can carry digital catalogues anywhere they go, even when shopping at physical stores.

Diff: 3 Type: ES LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 95) How has the implementation of the National Do Not Call List changed telephone marketing?

Answer: The National Do Not Call List was created by legislation passed in 2004; it bans most business telemarketing calls to registered phone numbers. However, people can still receive calls from nonprofit groups, politicians, and companies with which they have recently done business.

Millions of customers have joined the do-not-call list, and businesses that break the law can be fined heavily. The use of unsolicited outbound telemarketing has greatly decreased due to the law, but inbound consumer telemarketing and outbound business-to-business telemarketing remain strong and growing. Telemarketing also remains a major fundraising tool for nonprofit and political groups. Interestingly, do-not-call regulations appear to be helping some direct marketers more than it's hurting them. Rather than making unwanted calls, many of these marketers are developing "opt-in" calling systems, in which they provide useful information and offers to customers who have invited the company to contact them by phone or email. The opt-in model provides better returns for marketers than the formerly invasive one.

Diff: 2 Type: ES LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking

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96) Describe direct-response television (DRTV) marketing.

Answer: Direct-response television (DRTV) marketing takes one of two major forms: directresponse television advertising and interactive TV (iTV) advertising. Using direct-response television advertising, direct marketers air television spots, often 60 or 120 seconds in length, which persuasively describe a product and give customers a toll-free number or an online site for ordering. It also includes full 30-minute or longer advertising programs, called infomercials, for a single product. A more recent form of direct-response television marketing is interactive TV (iTV) marketing. It lets viewers interact with television programming and advertising using their remote controls. Interactive TV gives marketers an opportunity to reach targeted audiences in an interactive, more involved way.

Diff: 2 Type: ES LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking 97) Define telemarketing, and distinguish between outbound and inbound telemarketing.

Answer: Telemarketing involves using the telephone to sell directly to consumers and business customers. U.S. marketers spent an estimated $43 billion on telemarketing last year, almost as much as on direct mail. We're all familiar with telephone marketing directed toward consumers, but business-to-business (B-to-B) marketers also use telemarketing extensively. Marketers use outbound telephone marketing to sell directly to consumers and businesses. They also use inbound toll-free numbers to receive orders from television and print ads, direct mail, or catalogues.

Diff: 2 Type: ES LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Analytical thinking

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98) What are the main privacy concerns and Internet security issues associated with online marketing?

Answer: Some direct marketers have been accused of taking unfair advantage of impulsive or less-sophisticated buyers. Television shopping channels, enticing websites, and program-long infomercials targeting television-addicted shoppers seem to be the worst culprits. They feature smooth-talking hosts, elaborately staged demonstrations, claims of drastic price reductions, "while they last" time limitations, and unequaled ease of purchase to inflame buyers who have low sales resistance. Fraudulent schemes, such as investment scams or phony collections for charity, have also multiplied in recent years. One common form of Internet fraud is phishing, a type of identity theft that uses deceptive emails and fraudulent online sites to fool users into divulging their personal data. Although many consumers are now aware of such schemes, phishing can be extremely costly to those caught in the net. It also damages the brand identities of legitimate online marketers who have worked to build user confidence in Web, email, and other digital transactions. Many consumers also worry about online and digital security. They fear that unscrupulous snoopers will eavesdrop on their online transactions and social media postings, picking up personal information or intercepting credit and debit card numbers. Another Internet marketing concern is that of access by vulnerable or unauthorized groups.

Diff: 2 Type: ES LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning 99) Internet marketing practices have raised a number of ethical and legal questions. Why is invasion of privacy perhaps the number-one online marketing concern?

Answer: Invasion of privacy is perhaps the toughest public policy issue now confronting the direct marketing industry. Consumers often benefit from database marketing; they receive more offers that are closely matched to their interests. However, many critics worry that marketers may know too much about consumers' lives and that they may use this knowledge to take unfair advantage of consumers. At some point, they claim, the extensive use of databases intrudes on consumer privacy. Consumers, too, worry about their privacy. Although they are now much more willing to share personal information and preferences with marketers via digital and social media, they are still nervous about it. In these days of "big data," it seems that almost every time consumers post something on social media or send a tweet, visit a website, enter a sweepstakes, apply for a credit card, or order products by phone or online, their names are entered into some company's already bulging database. Using sophisticated big data analytics, direct marketers can mine these databases to "microtarget" their selling efforts. Most marketers have become highly skilled at collecting and analyzing detailed consumer information both online and offline. Even the experts are sometimes surprised by how much marketers can learn.

Diff: 2 Type: ES LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning

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100) Describe the various legislative actions that have been taken to regulate the manner in which online, social media, and mobile operators obtain and use consumer information.

Answer: To curb direct marketing excesses, various government agencies are investigating not only do-not-call lists but also do-not-mail lists, do-not-track online lists, and Can Spam legislation. In response to online privacy and security concerns, the federal government has considered numerous legislative actions to regulate how online, social media, and mobile operators obtain and use consumer information. For example, the Canadian Government continues to monitor advancing legislation that would give consumers more control over how online information is used.

In Canada, the federal the government passed the Personal Information Protection and Electronic Documents Act (PIPEDA) in 2001. It came into full force in 2004. The act is based on four key principles: • Consumer knowledge and consent. Consumers must know that information about them is being gathered and they must provide consent before firms can collect, use, or disclose consumers' personal information.

• Limitations. Firms can only collect and use information appropriate to the transaction being undertaken. For example, if a firm needs to mail you something, it can ask for your home address, but it may not request additional information unrelated to this task.

• Accuracy. Firms must be sure that the information they gather is recorded accurately. Firms must appoint a privacy officer to be responsible for this task.

• Right to access. Finally, individuals have the right to know what information is being held about them. They can also demand that errors in their personal information be corrected, and they may request that their personal information be withdrawn from a firm's database.

In 2009, the Government of Canada announced that it was delivering on its commitment to protect consumers and businesses from the most dangerous and damaging forms of spam. It proposed the Electronic Commerce Protection Act (ECPA), legislation designed to boost confidence in online commerce by protecting privacy and addressing the personal security concerns that are associated with spam, counterfeit websites, and spyware. The proposed legislation also amended PIPEDA, which covers online privacy in detail and contains many provisions relevant to email marketing.

Much-needed amendments to PIPEDA finally passed in 2015 with the Digital Privacy Act, which includes business transaction exemptions, mandatory breach notification requirements, enhanced powers for Canada's privacy commissioner, and various other updates.50 All of these concerns call for strong actions by marketers to monitor and prevent privacy abuses before legislators step in to do it for them. For example, to head off increased government regulation, six advertiser groups–the American Association of Advertising Agencies, the American Advertising Federation, the Association of National Advertisers, the Data & Marketing Association, the Interactive Advertising Bureau, and the Network Advertising Initiative–issued a set of online advertising principles through the Digital Advertising Alliance.

Among other measures, the self-regulatory principles call for online and mobile marketers to provide transparency and choice to consumers if online data are collected or used for targeting interest-based advertising. The ad industry uses an advertising option icon–a little "i" inside a triangle–that it adds to behaviourally targeted online ads to tell consumers why they are seeing a particular ad and allowing them to opt out.

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The main concern is the amount of data mined by third parties from social media as well as social media's own hazy privacy policies. Many companies have responded to consumer privacy and security concerns with actions of their own. Still others are taking an industry-wide approach. For example, TRUSTe, a nonprofit self-regulatory organization, works with many large corporate sponsors, including Microsoft, Yahoo!, AT&T, Facebook, Disney, and Apple, to audit privacy and security measures and help consumers navigate the Internet safely. According to the company's website, "TRUSTe believes that an environment of mutual trust and openness will help make and keep the Internet a free, comfortable, and richly diverse community for everyone." To reassure consumers, the company lends its TRUSTe privacy seal to websites, mobile apps, email marketing, and other online and social media channels that meet its privacy and security standards. The direct marketing industry as a whole is also addressing public policy issues. For example, in an effort to build consumer confidence in shopping direct, the Direct Marketing Association — the largest association for businesses practicing direct, database, and interactive marketing, including nearly half of the Fortune 100 companies — launched a "Privacy Promise to American Consumers." The Privacy Promise requires that all DMA members adhere to a carefully developed set of consumer privacy rules. Members must agree to notify customers when any personal information is rented, sold, or exchanged with others. They must also honor consumer requests to opt out of receiving further solicitations or having their contact information transferred to other marketers. Finally, they must abide by the DMA's Preference Service by removing the names of consumers who do not wish to receive mail, phone, or email offers.

Diff: 2 Type: ES LO: 14-5: Identify and discuss the traditional direct marketing forms and overview public policy and ethical issues presented by direct marketing.

AACSB: Ethical understanding and reasoning

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Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 15 The Global Marketplace 1) Which of the following is most likely true of a global firm?

A) A global firm typically operates from one country.

B) A global firm engages in joint partnerships overseas.

C) A global firm sees the world as many different markets.

D) A global firm maximizes the importance of national boundaries.

E) A global firm manufactures and markets goods wherever it can do the best job.

Answer: E Diff: 1 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 2) The United States has occasionally placed this tax on certain imported Canadian products including steel and softwood. This action was designed to raise revenue or protect domestic firms and is referred to as a(n) ________.

A) exchange B) excise C) fine D) quota E) tariff Answer: E Diff: 1 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Application of knowledge 3) A country may place a limit on the volume of imported citrus fruit that is allowed. This is an example of a(n) ________.

A) quota B) tariff C) customs duty D) fine E) excise duty Answer: A Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking

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4) Which of the following is an example of a nontariff trade barrier?

A) a sales tax B) customs duty C) a host-country regulation D) excise duty E) an import quota Answer: C Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 5) Walmart's decision to suspend its planned expansion into India's huge but fragmented retail market due to obstacles put in place by the host nation to protect its mom-and-pop retailers is an example of ________.

A) tariffs B) excise duties C) quotas D) nontariff trade barriers E) exchange controls Answer: D Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 6) Which of the following is true of the World Trade Organization (WTO)?

A) It was replaced by the GATT in 1995.

B) It increases tariffs and other international trade barriers.

C) It lacks the power to impose international trade sanctions.

D) It restricts the maximum number of member nations to 100.

E) It mediates global trade disputes.

Answer: E Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments

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7) Which of the following describes the WTO? A) It lacks the capability to mediate global trade disputes.

B) It increased the world's merchandise tariffs by 45 percent.

C) It reduced the influence of the WTO in agriculture.

D) It imposes international trade sanctions.

E) It increased international trade barriers.

Answer: D Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 8) Which of the following is true of economic communities?

A) They are groups of nations organized to work toward common goals.

B) They were formed to increase trade barriers between member nations.

C) They were formed to mediate global trade disputes.

D) They require member countries to establish one currency.

E) They tend to improve imports and hinder exports.

Answer: A Diff: 1 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 9) In 1994, the ________ established a free trade zone among the United States, Mexico, and Canada.

A) Union of South American Nations B) European Union C) North American Free Trade Agreement D) Central American Free Trade Agreement E) Latin American Free Trade Association Answer: C Diff: 1 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments

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10) A country's ________ shapes its product and service needs, income levels, and employment levels.

A) legal system B) political system C) culture D) subsistence economy E) industrial structure Answer: E Diff: 1 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Application of knowledge 11) Which type of economy consumes most of its output and barters the rest for simple goods and services?

A) industrial economy B) developed economy C) subsistence economy D) emerging economy E) service economy Answer: C Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 12) Which of the following is true of industrialized nations?

A) Industrialized nations do not have a growing middle class.

B) Industrialized nations are poor markets for large equipment and trucks.

C) Industrialized nations consist mostly of low-income households.

D) Industrialized nations have low-, medium-, and high-income households.

E) These economies consume most of their output and barter the rest.

Answer: D Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking

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13) Many companies including Gillette and P&G, have shifted their sights to the so-called ________, the vast untapped market consisting of the world's poorest consumers.

A) developing economies B) "bottom of the economic pyramid" C) "emerging economies" D) "developed economies" E) industrial economies Answer: B Diff: 3 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 14) An emerging economy is one which ________.

A) imports large amounts of finished textiles and automobiles B) offers few market opportunities for imported goods C) consumes all or most of its output D) exports major quantities of manufactured goods E) is experiencing rapid economic growth Answer: E Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 15) Germany is an example of a(n) ________ economy which is a major exporter of manufactured goods, services, and investment funds.

A) Industrializing B) Industrial C) Subsistence D) Agricultural E) Emerging Answer: B Diff: 1 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking

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16) Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semi-finished goods. This is an example of a(n) ________ economy.

A) agricultural B) emerging C) industrial D) barter E) subsistence Answer: C Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 17) Which of the following statements is true of industrial economies?

A) They export their goods to other types of economies for raw materials.

B) They have a declining middle-class population.

C) They depend on agriculture as the primary revenue generator.

D) They do not trade goods amongst themselves.

E) They consume most of their output and barter the rest for simple goods and services.

Answer: A Diff: 2 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 18) Which type of economy consists mostly of households with very low family incomes?

A) post-industrial B) developed C) emerging D) industrial E) subsistence Answer: E Diff: 1 Type: MC LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 19) Tariffs and duties are often used to force favourable trade behaviours from other nations.

Answer: TRUE Diff: 2 Type: TF LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments

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20) A multinational company may face nontariff trade barriers that include biases against its bids, restrictive product standards, or excessive host-country regulations.

Answer: TRUE Diff: 1 Type: TF LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 21) Industrial economies offer few market opportunities.

Answer: FALSE Diff: 2 Type: TF LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 22) The two economic factors that reflect a country's attractiveness as a market are its industrial structure and import/export ratio.

Answer: FALSE Diff: 2 Type: TF LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 23) In considering whether to do business in a given country, a company should consider factors such as the country's attitudes toward international buying.

Answer: TRUE Diff: 2 Type: TF LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 24) Operating domestically, managers have to learn another language, deal with unstable currencies, and redesign their products to suit different customer expectations.

Answer: FALSE Diff: 2 Type: TF LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Diverse and multicultural work environments 25) Barter involves the direct exchange of goods and services.

Answer: TRUE Diff: 1 Type: TF LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Application of knowledge

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26) Give an account of the functions of the World Trade Organization (WTO) and the formation of the WTO from GATT. Answer: The General Agreement on Tariffs and Trade (GATT), established in 1947 and modified in 1994, was designed to promote world trade by reducing tariffs and other international trade barriers. It established the World Trade Organization (WTO), which replaced GATT in 1995 and now oversees the original GATT provisions. WTO and GATT member nations have met in eight rounds of negotiations to reassess trade barriers and establish new rules for international trade. The WTO also imposes international trade sanctions and mediates global trade disputes. Its actions have been productive. The first seven rounds of negotiations reduced the average worldwide tariffs on manufactured goods from 45 percent to just 5 percent.

Diff: 2 Type: ES LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 27) What are regional free trade zones? Explain the advantages and disadvantages of the European Union (EU).

Answer: Certain countries have formed free trade zones or economic communities. These are groups of nations organized to work toward common goals in the regulation of international trade. One such community is the European Union (EU). Formed in 1957, the EU set out to create a single European market by reducing barriers to the free flow of products, services, finances, and labour among member countries and developing policies on trade with nonmember nations. Today, the EU represents one of the world's largest single markets. Currently, it has 28 member countries containing more than half a billion consumers and accounts for almost 16 percent of the world's imports and exports. The EU offers tremendous trade opportunities for U.S. and other non-European firms. Over the past decade and a half, 19 EU member nations have taken a significant step toward unification by adopting the euro as a common currency.

Widespread adoption of the euro has decreased much of the currency risk associated with doing business in Europe, making member countries with previously weak currencies more attractive markets. However, the adoption of a common currency has also caused problems as European economic powers such as Germany and France have had to step in recently to prop up weaker economies such as those of Greece, Portugal, and Cyprus. The ongoing "euro-crisis" has led some analysts to predict the possible breakup of the euro zone as it is now set up. In a 2016 national referendum, the people of the United Kingdom voted to exit the European Union. The UK is set to depart the EU in early 2019 with a 21-month "transition period" to smooth the way to post-Brexit relations with the remaining EU countries. The so-called "Brexit" has sent aftershocks across Europe and the world, raising concerns about the future of European economic and political unity.

Diff: 3 Type: ES LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking

8 © 2021 Pearson Canada Inc.

28) What is the North American Free Trade Agreement (NAFTA)? In your answer make a reference to the updated agreement, which was ratified in 2020, renamed the CUSMA. Answer: In 1994, the North American Free Trade Agreement (NAFTA) established a free trade zone among the United States, Mexico, and Canada. The agreement created a single market of 487 million people who produce and consume $23.5 trillion worth of goods and services annually. Over the past 20 years, NAFTA has eliminated trade barriers and investment restrictions among the three countries. Total trade among the NAFTA countries nearly tripled from $288 billion in 1993 to $1.2 trillion a year.

The updated version highlights include: - Modified clauses to address cross-border transfer of data and an updated market access obligation.

- Greater transparency obligations to ensure good regulatory practices in government licensing and other market access authorizations.

Diff: 2 Type: ES LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 29) Differentiate between industrializing economies and industrial economies. Give a few examples of each.

Answer: Industrializing economies are also known as emerging economies. In an emerging economy, fast growth in manufacturing results in rapid overall economic growth. Examples include the BRIC countries–Brazil, Russia, India, and China. As manufacturing increases, the country needs more imports of raw textile materials, steel, and heavy machinery, and fewer imports of finished textiles, paper products, and automobiles. Industrialization typically creates a new rich class and a growing middle class, both demanding new types of imported goods.

Industrial economies, on the other hand, are major exporters of manufactured goods, services, and investment funds. They trade goods among themselves and also export them to other types of economies for raw materials and semi-finished goods. The varied manufacturing activities of these industrial nations and their large middle class make them rich markets for all sorts of goods. Examples include the United States, Japan, and Norway.

Diff: 2 Type: ES LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking

9 © 2021 Pearson Canada Inc.

30) Explain with examples how the political-legal environment of a country affects a global firm.

Answer: Nations differ greatly in their political-legal environments. In considering whether to do business in a country, a company should consider factors such as the country's attitudes toward international buying, government bureaucracy, political stability, and monetary regulations. Some nations are very receptive to foreign firms; others are less accommodating.

For example, India has import quotas, currency restrictions, and other limitations that make operating there a challenge. In contrast, Singapore and Thailand court foreign investors and shower them with incentives and favourable operating conditions. Political and regulatory stability is another issue. For example, Russia is consumed by corruption and governmental red tape, which the government finds difficult to control, increasing the risk of doing business there.

The country's recent geopolitical conflicts with Europe, the United States, and other countries have made doing business in Russia difficult and risky. Companies must also consider a country's monetary regulations. Sellers want to take their profits in a currency of value to them.

Ideally, the buyer can pay in the seller's currency or in other world currencies. Short of this, sellers might accept a blocked currency–one whose removal from the country is restricted by the buyer's government–if they can buy other goods in that country that they need or can sell elsewhere for a needed currency. In addition to currency limits, a changing exchange rate also creates high risks for the seller. Most international trade involves cash transactions. Yet many nations have too little hard currency to pay for their purchases from other countries. They may want to pay with other items instead of cash. Barter involves the direct exchange of goods or services. For example, Venezuela regularly barters oil, which it produces in surplus quantities, for food on the international market–rice from Guyana; coffee from El Salvador; sugar, coffee, meat, and more from Nicaragua; and beans and pasta from the Dominican Republic. Venezuela has even struck a deal to supply oil to Cuba in exchange for Cuban doctors and medical care for Venezuelans.

Diff: 3 Type: ES LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking

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31) What are the factors that a company should consider when deciding which markets to enter?

Answer: Before going abroad, a company should try to define its international marketing objectives and policies. It should decide what volume of foreign sales it wants. Most companies start small when they go abroad. Some plan to stay small, seeing international sales as a small part of their business. Other companies have bigger plans, however, seeing international business as equal to–or even more important–than their domestic business. The company also needs to choose in how many countries it wants to market. Companies must be careful not to spread themselves too thin or expand beyond their capabilities by operating in too many countries too soon. Next, the company needs to decide on the types of countries to enter. A country's attractiveness depends on the product, geographical factors, income and population, political climate, and other considerations. In recent years, many major new markets have emerged, offering both substantial opportunities and daunting challenges. After listing possible international markets, the company must carefully evaluate each one. Possible global markets should be ranked on several factors, including market size, market growth, the cost of doing business, competitive advantage, and risk level. The goal is to determine the potential of each market. Then the marketer must decide which markets offer the greatest long-run return on investment.

Diff: 3 Type: ES LO: 15-1: Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company's international marketing decisions.

AACSB: Analytical thinking 32) The simplest way to enter a foreign market is through ________.

A) joint ownership B) exporting C) direct investment D) licensing E) contract manufacturing Answer: B Diff: 1 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 33) Which of the following is true of exporting?

A) It is the most complex way to enter a foreign market.

B) It involves the association of companies with host country partners.

C) It typically requires products to be extensively modified for the foreign market.

D) It involves the least change in a company's product lines.

E) It involves a huge investment if done through independent international distributors.

Answer: D Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking

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34) Asiana, a fragrance manufacturer located in France, markets its products to the North American and Asian countries through independent distributors. In this case, Asiana has entered into international markets through ________.

A) joint ownership B) joint venturing C) indirect exporting D) direct investment E) franchising Answer: C Diff: 3 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 35) The difference between direct and indirect exporting is that indirect exporting involves ________.

A) higher risks B) self-handling of exports C) greater returns D) more product alterations E) less investment Answer: E Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 36) Tim Hortons has taken their iconic Canadian brand to Spain. They did so by ________. This is a method of entering a foreign market by associating with a host (one already established in Spain) company to produce or market products or services.

A) joint venturing B) indirect exporting C) direct investment D) importing E) direct exporting Answer: A Diff: 1 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Application of knowledge

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37) Which of the following is true about joint venturing?

A) Management contracting is highly risky for the domestic firm.

B) Contract manufacturing gives significant control to the domestic firm.

C) Licensing is a highly complex method for entering global markets.

D) A host country partner is necessary for selling or marketing products.

E) Companies are required to invest in the construction of foreign-based facilities.

Answer: D Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 38) Which of the following is a type of joint venture?

A) direct exporting B) contract manufacturing C) direct investment D) retailing E) wholesaling Answer: B Diff: 1 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Application of knowledge 39) Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as ________.

A) joint ownership B) direct exporting C) direct investment D) management contracting E) licensing Answer: E Diff: 1 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Application of knowledge 40) The Tokyo Disney Resort is owned and operated by Oriental Land Company under license from the Walt Disney Company. In this case which of the following is an advantage of licensing?

A) The licensee is not required to invest money in the business.

B) The licensor has more control over the licensee than it does in its own operations.

C) The licensee gains recognition without having to develop a product from scratch.

D) The licensor earns profits without having to share its intellectual property with anyone.

E) The licensor faces no threats of competition from the licensee after the contract ends.

Answer: C Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 13 © 2021 Pearson Canada Inc.

41) The Bread Company promotes its brand in new international markets by providing rights to local bakeries and bistros to use its recipes and brand name. In this case, The Bread Company's market-entry strategy is referred to as ________.

A) licensing B) exporting C) joint ownership D) contract manufacturing E) management contracting Answer: A Diff: 3 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 42) Which of the following is a disadvantage of licensing?

A) The licensing company gains entry into a foreign market at a high risk.

B) It takes a lot of time for the licensee to gain production expertise and name.

C) Licensing is a complex way for a manufacturer to enter international marketing.

D) The licensor potentially creates a competitor in the form of the licensee.

E) The licensee is restricted from gaining knowledge about the licensor's intellectual property.

Answer: D Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 43) ________ is a method of going global in which a company makes agreements with producers in the foreign market to produce its product or provide its service.

A) Contract manufacturing B) Direct investment C) Acquisition D) Exporting E) Management contracting Answer: A Diff: 1 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Diverse and multicultural work environments 44) Which of the following is most likely a drawback of contract manufacturing?

A) There are low chances of quickly starting the process.

B) There is decreased control over the manufacturing process.

C) There are significant political and economic risks involved.

D) There is little opportunity of later forming a partnership.

E) There is no possibility of buying out the local manufacturer.

Answer: B Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 14 © 2021 Pearson Canada Inc.

45) PharmaCom serves millions of customers across several Asian countries with the assistance of several pharmaceutical manufacturing sites in China, Japan, and Korea. This is an example of ________.

A) licensing B) exporting C) joint ownership D) contract manufacturing E) management contracting Answer: C Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 46) Under management contracting, a domestic firm ________.

A) adopts management know-how from a foreign company B) manufactures the products of a foreign company C) exports its products to a foreign company D) provides financial capital to a foreign company E) exports management services to a foreign company Answer: E Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Diverse and multicultural work environments 47) The Dance Company, a renowned dance studio in Manhattan, enters into an agreement with La Danza in Spain to operate several dance studios. La Danza will provide capital for running the dance studios and The Dance Company will contribute its world-renowned expertise about the art of dance. In this case, The Dance Company enters a foreign market through ________.

A) contract manufacturing B) management contracting C) licensing D) joint ownership E) direct investment Answer: B Diff: 3 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking

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48) Which of the following is an advantage of management contracting?

A) It involves the fewest changes in a company's product lines.

B) It allows a contracting firm to set up its own operations at the beginning of the contract.

C) It is the simplest way to enter a foreign market.

D) It yields income from the beginning of the contract.

E) It gives a contracting firm an option to buy shares in the managed company immediately.

Answer: D Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 49) Which of the following is a drawback of management contracting?

A) It prevents a company from setting up its own operations for a period of time.

B) It is a high-risk method of getting into a foreign market.

C) It yields income to the contracting firm only much later in the process.

D) It does not provide the option of buying shares in the managed company later on.

E) It requires a domestic firm to export its products to a foreign company.

Answer: A Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 50) ________ ventures consist of one company collaborating with foreign investors to create a local business in which they share possession and control. For example, Kellogg was able to move strongly and quickly into emerging markets in West Africa by taking this approach.

A) Licensing B) Direct investment C) Contract manufacturing D) Management contracting E) Joint ownership Answer: E Diff: 1 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Diverse and multicultural work environments 51) Companies often form ________ ventures to merge their complementary strengths in developing a global marketing opportunity.

A) licensing B) direct investment C) joint ownership D) management contracting E) contract manufacturing Answer: C Diff: 1 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 16 © 2021 Pearson Canada Inc.

52) Kimlee, a food manufacturer based in China, recognizes the immense demand for noodles in the Australian market. Kimlee forms a new business venture to manufacture instant noodles and decides to share possession and control of the new business with a local food processing company. In this case, Kimlee has entered a foreign market through ________.

A) licensing B) contract manufacturing C) direct investment D) joint ownership E) management contracting Answer: D Diff: 3 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 53) Which of the following is most likely a benefit of joint ownership?

A) It allows a firm to gain the financial and managerial resources that it may otherwise lack.

B) It is the simplest way for a domestic company to enter a foreign market.

C) It minimizes the need to build a new manufacturing facility in the foreign market.

D) It allows one firm to acquire complete ownership of the other firm in the venture.

E) It provides significant economies of scale for both the local firm and the foreign investor.

Answer: A Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 54) In addition to joint ownership ventures in China, Intel has made substantial outlays in its own manufacturing and research facilities there. This is an example of ________.

A) exporting B) direct investment C) licensing D) indirect exporting E) management contracting Answer: B Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking

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55) Toyota has manufacturing facilities in Cambridge and Woodstock Ontario. These are wholly-owned subsidiaries of the Japanese based company. Which of the following is an advantage of this direct investment?

A) Direct investment involves fewer risks than joint ownership.

B) Direct investment ensures that a firm is shielded from market changes.

C) Direct investment allows a firm to keep full control over the investment.

D) Direct investment involves minimal financial or time expenditures.

E) Direct investment protects the firm from currency devaluation.

Answer: C Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 56) What is the most likely disadvantage of direct investment for an investing company?

A) weak relationships with local distributors B) minimal investment control C) product standardization requirements D) devalued currency risks E) excessive freight charges Answer: D Diff: 2 Type: MC LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 57) Exporting involves a company entering foreign markets by partnering with foreign companies to produce or market a product or service.

Answer: FALSE Diff: 2 Type: TF LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Diverse and multicultural work environments 58) Management contracting is an unwise choice if a domestic firm can make greater profits by undertaking a whole venture.

Answer: TRUE Diff: 1 Type: TF LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 59) For a fee or royalty payments, a licensee buys the right to use the company's manufacturing process, trademark, patent, trade secret, or other item of value.

Answer: TRUE Diff: 1 Type: TF LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking

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60) Foreign-based production facilities offer many advantages to an investing company if the foreign market is small.

Answer: FALSE Diff: 1 Type: TF LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 61) Management contracting is a low-risk method of getting into a foreign market.

Answer: TRUE Diff: 2 Type: TF LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Diverse and multicultural work environments 62) Explain management contracting with an example. What are its advantages and disadvantages?

Answer: Management contracting is a type of joint venture. In short, the domestic firm provides the management know-how to a foreign company that supplies the capital. So, the domestic firm exports management services rather than products. Hilton uses this arrangement in managing hotels around the world. For example, the hotel chain operates DoubleTree by Hilton hotels in countries ranging from the United Kingdom and Italy to Peru and Costa Rica, to China, Russia, and Tanzania. The properties are locally owned, but Hilton manages the hotel with its worldrenowned hospitality expertise. Management contracting is a low-risk method of getting into a foreign market, and it yields income from the beginning. The arrangement is even more attractive if the contracting firm has an option to buy some share in the managed company later on. The arrangement is not sensible, however, if the company can put its scarce management talent to better uses or if it can make greater profits by undertaking the whole venture.

Management contracting also prevents the company from setting up its own operations for a period of time.

Diff: 3 Type: ES LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking

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63) Explain joint ownership with an example. What are its advantages and disadvantages?

Answer: Joint ownership is a type of joint venture. Joint ownership ventures consist of one company joining forces with foreign investors to create a local business in which they share possession and control. A company may buy an interest in a local firm, or the two parties may form a new business venture. Joint ownership may be needed for economic or political reasons.

For example, the firm may lack the financial, physical, or managerial resources to undertake the venture alone. Alternatively, a foreign government may require joint ownership as a condition for entry. Often, companies form joint ownership ventures to merge their complementary strengths in developing a global marketing opportunity. For example, to increase its presence and local influence in China's mobile phone and tablets markets, chipmaker Intel recently paid $1.5 billion for 20 percent ownership in China's state-run Tsinghua Unigroup, which controls two domestic mobile chipmakers. The joint ownership investment will help Intel to better understand Chinese consumers. It may also help to earn more favourable treatment from Chinese regulators.

So far, Intel has gone untouched by China's recent crackdown on foreign technology companies such as competitor Qualcomm and software makers Microsoft and Symantec. Joint ownership has certain drawbacks. The partners may disagree over investment, marketing, or other policies.

Whereas many U.S. firms like to reinvest earnings for growth, local firms often prefer to take out these earnings; whereas U.S. firms emphasize the role of marketing, local investors may rely on selling.

Diff: 3 Type: ES LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking 64) Briefly explain the three basic market entry strategies of entering a foreign market.

Answer: Once a company has decided to sell in a foreign country, it must determine the best mode of entry. Its choices are exporting, joint venturing, and direct investment. The simplest way to enter a foreign market is through exporting. The company may passively export its surpluses from time to time, or it may make an active commitment to expand exports to a particular market. In either case, the company produces all its goods in its home country. It may or may not modify them for the export market. Exporting involves the least change in the company's product lines, organization, investments, or mission. A second method of entering a foreign market is by joint venturing–joining with foreign companies to produce or market products or services. Joint venturing differs from exporting in that the company joins with a host country partner to sell or market abroad. It differs from direct investment in that an association is formed with someone in the foreign country. The biggest involvement in a foreign market comes through direct investment–the development of foreign-based assembly or manufacturing facilities. If a company has gained experience in exporting and if the foreign market is large enough, foreign production facilities offer many advantages. The firm may have lower costs in the form of cheaper labour or raw materials, foreign government investment incentives, and freight savings. The firm may also improve its image in the host country because it creates jobs.

Diff: 2 Type: ES LO: 15-2: Describe three key approaches to entering international markets.

AACSB: Analytical thinking

20 © 2021 Pearson Canada Inc.

65) Chips of Joy, a leading chocolate chip cookie manufacturer, has decided to use the same marketing strategy and marketing mix worldwide for all of its brands. The only change that will be made is language translation on the various packaging. Chips of Joy is using a(n) ________ marketing strategy.

A) collective global B) standardized global C) adapted global D) joint global E) direct global Answer: B Diff: 3 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 66) Compared to adapted global marketing, standardized global marketing ________.

A) adjusts promotional efforts to address cultural differences in target markets B) results in additional marketing and manufacturing costs C) relies on social media to develop customer relationships D) usually results in diluted brand power over time E) uses the same marketing mix worldwide Answer: E Diff: 1 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 67) Compared to standardized global marketing, adapted global marketing ________.

A) uses the same marketing mix elements in all target markets B) lowers marketing costs by using home country sales teams C) modifies marketing strategies to meet local needs D) maintains uniformity across all markets E) results in greater brand power Answer: C Diff: 2 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking

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68) ________ means marketing a product in a foreign market without making any changes to the product.

A) Product adaptation B) Straight product extension C) Communication extension D) Product invention E) Communication adaptation Answer: B Diff: 1 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Application of knowledge 69) Which of the following is a disadvantage of straight product extension?

A) It involves additional product development costs.

B) It involves changing the product to meet local requirements.

C) It requires planning a new promotional strategy to promote the product.

D) It can be costly in the long run if products fail to satisfy consumers in specific global markets.

E) It requires making changes in the manufacturing process.

Answer: D Diff: 2 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 70) Veggie Delight, a leading manufacturer of frozen vegetarian burgers, has recently entered the Middle East markets. Based on its research, consumers in the Middle East prefer spicier burgers than in Canada and other countries. So the company alters the ingredients in its burgers to meet the local preferences. In this scenario, Veggie Delight is using a(n) ________ strategy to market its product.

A) communication adaptation B) undifferentiated marketing C) straight product extension D) product invention E) product adaptation Answer: E Diff: 3 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking

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71) ________ consists of creating something new to meet the needs of consumers in a given country.

A) Product adaptation B) Straight product extension C) Undifferentiated marketing D) Product invention E) Standardized manufacturing Answer: D Diff: 1 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Diverse and multicultural work environments 72) When adapting advertising messages, media may also need to be adapted internationally because media availability and regulations vary from country to country. This illustrates ________.

A) communication extension B) product invention C) communication adaptation D) straight product extension E) product adaptation Answer: C Diff: 2 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Written and oral communication 73) To overcome this problem when selling to less-affluent consumers in developing countries, many companies make simpler or smaller versions of their products that can be sold at lower prices. Others have introduced new, more affordable brands for global markets. This is known as a(n) ________ problem.

A) price escalation B) demand escalation C) inflation D) skimming price E) deflation Answer: A Diff: 2 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking

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74) In a global value delivery network, the first link, ________, moves company products from points of production to the borders of countries within which they are sold.

A) distribution centres B) wholesalers C) channels within nations D) retailers E) channels between nations Answer: E Diff: 2 Type: MC LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 75) L'Oréal, the global cosmetics firm is evidence that global standardization is an all-or-nothing proposition.

Answer: FALSE Diff: 2 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 76) Global branding and standardization result in reduced costs from economies of scale.

Answer: TRUE Diff: 1 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 77) The whole-channel view refers to designing international channels that take into account the entire global supply chain and marketing channel, forging an effective global value delivery network.

Answer: TRUE Diff: 2 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Diverse and multicultural work environments 78) Straight product extension into international markets is often successful.

Answer: FALSE Diff: 2 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking

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79) To overcome the problem of price escalation when selling to less-affluent consumers in developing countries, many companies make simpler or smaller versions of their products that can be sold at lower prices.

Answer: TRUE Diff: 1 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 80) Regardless of how companies go about pricing their products, their foreign prices will most likely be higher than their domestic prices for comparable products.

Answer: TRUE Diff: 1 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 81) Price escalation is caused by transportation costs, tariffs, importer margin, wholesaler margin, and retailer margin. As a result, foreign prices are typically lower than domestic prices for comparable products.

Answer: FALSE Diff: 1 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 82) The Internet is forcing companies toward more standardized international pricing.

Answer: TRUE Diff: 2 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Information technology 83) In the global value delivery network, the second link between the sellers and the final buyers moves products from points of production to the borders of countries within which they are sold.

Answer: FALSE Diff: 2 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking

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84) Adapted global marketing is a global marketing approach that adjusts the marketing strategy and mix elements to each international target market.

Answer: TRUE Diff: 2 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Diverse and multicultural work environments 85) Most of the retailing in Canada is done by small, independent retailers.

Answer: FALSE Diff: 2 Type: TF LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 86) Differentiate between standardized global marketing and adapted global marketing. Describe the advantages and disadvantages of each strategy.

Answer: Companies that operate in one or more foreign markets must decide how much, if at all, to adapt their marketing strategies and programs to local conditions. At one extreme are global companies that use standardized global marketing, essentially using the same marketing strategy approaches and marketing mix worldwide. At the other extreme is adapted global marketing. In this case, the producer adjusts the marketing strategy and mix elements to each target market, resulting in more costs but hopefully producing a larger market share and return.

Some global marketers believe that technology is making the world a smaller place, and consumer needs around the world are becoming more similar. This paves the way for global brands and standardized global marketing. Global branding and standardization, in turn, result in greater brand power and reduced costs from economies of scale. The question of whether to adapt or standardize the marketing strategy and program has been much debated over the years.

On the one hand, some global marketers believe that technology is making the world a smaller place, and consumer needs around the world are becoming more similar. This paves the way for global brands and standardized global marketing. Global branding and standardization, in turn, result in greater brand power and reduced costs from economies of scale. On the other hand, the marketing concept holds that marketing programs will be more engaging if tailored to the unique needs of each targeted customer group. If this concept applies within a country, it should apply even more across international markets. Despite global convergence, consumers in different countries still have widely varied cultural backgrounds. They still differ significantly in their needs and wants, spending power, product preferences, and shopping patterns. Because these differences are hard to change, most marketers today adapt their products, prices, channels, and promotions to fit consumer desires in each country.

Diff: 3 Type: ES LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking

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87) Differentiate between straight product extension and product adaptation. Give a few examples of each.

Answer: Straight product extension means marketing a product in a foreign market without making any changes to the product. Top management tells its marketing people to take the product as is and find customers for it. The first step, however, should be to find out whether foreign consumers use that product and what form they prefer. Straight extension has been successful in some cases and disastrous in others. Apple iPads, Gillette razors, Black & Decker tools, and 7-11 Slurpees are all sold successfully in about the same form around the world. But when General Foods introduced its standard powdered JELL-O in the British market, it discovered that British consumers prefer a solid wafer or cake form. Straight extension involves no additional product development costs, manufacturing changes, or new promotion. But it can be costly in the long run if products fail to satisfy consumers in specific global markets.

Product adaptation involves changing the product to meet local requirements, conditions, or wants. For example, McDonald's operates in more than 100 countries, with sometimes widely varying local food preferences. So although you'll find its signature burgers and fries in most locations around the world, the chain has added menu items that meet the unique taste buds of customers in local markets. McDonald's serves salmon burgers in Norway, mashed-potato burgers in China, shrimp burgers in Japan, a Samurai Pork Burger in Thailand, chicken porridge in Malaysia, and Spam and eggs in Hawaii. In a German McDonald's, you'll find the Nürnburger (three large bratwurst on a soft roll with lots of mustard, of course); in Israel, there's the McFalafel (chickpea fritters, tomatoes, cucumber, and cheese topped with tahini and wrapped in lafa). And menus in Turkey feature a chocolate orange fried pie (Brazil adds banana, Egypt taro, and Hawaii pineapple).

Diff: 3 Type: ES LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 88) Explain product invention with the help of suitable examples.

Answer: Product invention consists of creating something new to meet the needs of consumers in a given country. As markets have gone global, companies ranging from appliance manufacturers and carmakers to candy and soft drink producers have developed products that meet the special purchasing needs of low-income consumers in developing economies. For example, Chinese appliance producer Haier developed sturdier washing machines for rural users in emerging markets, where it found that lighter-duty machines often became clogged with mud when farmers used them to clean vegetables as well as clothes. And solar lighting manufacturer d.light Solar has developed affordable solar-powered home lighting systems for the hundreds of millions of people in the developing world who don't have access to reliable power. d.light's hanging lamps and portable lanterns require no energy source other than the sun and can last up to 15 hours on one charge. The company has already reached 49 million users, is adding 1 million users per month, and plans to reach 100 million users by 2020.

Diff: 2 Type: ES LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking

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89) Jazz is a costume jewellery manufacturing company based in Alberta, Canada. The company decides to sell its products abroad, but it faces the major problem of price escalation. What is price escalation? How can Jazz overcome this problem?

Answer: Companies face many considerations in setting their international prices. Regardless of how Jazz goes about pricing its products, its foreign prices probably will be higher than its domestic prices for comparable products. Jazz must add the cost of transportation, tariffs, importer margin, wholesaler margin, and retailer margin to its factory price. Depending on these added costs, the product may have to sell two to five times as much in another country to make the same profit. This is called price escalation. To overcome this problem when selling to lessaffluent consumers in developing countries, Jazz can make simpler or smaller versions of its products that can be sold at lower prices. Jazz can also introduce new, more affordable brands in emerging markets.

Diff: 3 Type: ES LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 90) Explain the whole-channel view of the distribution process.

Answer: An international company must take a whole-channel view of the problem of distributing products to final consumers. There are two major links between the seller and the final buyer. The first link, channels between nations, moves company products from points of production to the borders of countries within which they are sold. The second link, channels within nations, moves products from their market entry points to the final consumers. The wholechannel view takes into account the entire global supply chain and marketing channel. It recognizes that to compete well internationally, the company must effectively design and manage an entire global value delivery network. Channels of distribution within countries vary greatly from nation to nation. There are large differences in the numbers and types of intermediaries serving each country market and in the transportation infrastructure serving these intermediaries.

Diff: 3 Type: ES LO: 15-3: Explain how companies adapt their marketing strategies and mixes for international markets.

AACSB: Analytical thinking 91) In managing their international marketing activities, most companies first ________.

A) organize an import department B) create an international division C) initiate foreign direct investment D) form a domestic subsidiary E) organize an export department Answer: E Diff: 1 Type: MC LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Analytical thinking

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92) It is common that a multinational company eventually creates ________ or subsidiaries to handle all of its international activity.

A) export departments B) international divisions C) geographical organizations D) world product groups E) global organizations Answer: B Diff: 2 Type: MC LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Diverse and multicultural work environments 93) Lemon N' Honey is a juice manufacturing company in Canada. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. The firm will most likely need to create a(n) ________ to handle all its worldwide activities.

A) international division B) domestic market C) value delivery network D) export department E) domestic division Answer: A Diff: 3 Type: MC LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Analytical thinking 94) Which of the following is true of international divisions that are structured as geographical organizations?

A) Geographical organizations are operating units under the export department.

B) Geographical organizations are usually formed to implement whole-channel supply chains.

C) Geographical organizations are managed by product managers, each responsible for different product groups.

D) Geographical organizations are inadequate if the firm moves into joint ventures or direct investments.

E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

Answer: E Diff: 2 Type: MC LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Analytical thinking

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95) Which of the following is an international division organized based on different merchandise categories?

A) global organization B) world product group C) geographical organization D) export department E) international subsidiary Answer: B Diff: 1 Type: MC LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Analytical thinking 96) Many organizations no longer have a clearly defined home market. Nor do they have homeoffice staffs. Instead, multicultural managers operate out of facilities located all around the world, bringing diverse cultural perspectives to their brands and operations. They are truly ________.

A) world product groups B) geographical organizations C) international subsidiaries D) global organizations E) export departments Answer: D Diff: 1 Type: MC LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Diverse and multicultural work environments 97) Which of the following is most likely true about a global organization?

A) Worldwide policies are planned by top corporate management.

B) Global operating units report to international division chiefs.

C) Executive training is restricted to domestic operations.

D) Employees are recruited exclusively from the home country.

E) It considers itself a national marketer that sells abroad.

Answer: A Diff: 2 Type: MC LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Analytical thinking 98) Companies that export goods to one country cannot have a subsidiary in another country because of international trade agreements.

Answer: FALSE Diff: 1 Type: TF LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Analytical thinking

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99) Global companies recruit management from many countries, buy components and supplies where they cost the least, and invest where the expected returns are greatest.

Answer: TRUE Diff: 2 Type: TF LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Diverse and multicultural work environments 100) Strawberry Fizz is a renowned bottled juice manufacturer in Canada. It exports its products to Mexico, has a joint venture in Hong Kong, and owns a subsidiary in South Africa. The company has organized an export department to manage its international marketing activities. Do you think it has made the right decision? Justify your answer.

Answer: Organizing an export department is not the correct decision in this scenario. An export department is established when a firm has expanded its international sales by shipping out its products. If the firm moves into joint ventures or direct investment, the export department will no longer be adequate. Strawberry Fizz should create international divisions or subsidiaries to handle all its international activities. International divisions are organized in a variety of ways.

An international division's corporate staff consists of marketing, manufacturing, research, finance, planning, and personnel specialists. It plans for and provides services to various operating units, which can be organized in one of three ways. They can be geographical organizations, with country managers who are responsible for salespeople, sales branches, distributors, and licensees in their respective countries. Or the operating units can be world product groups, each responsible for worldwide sales of different product groups. Finally, operating units can be international subsidiaries, each responsible for their own sales and profits.

Diff: 3 Type: ES LO: 15-4: Identify the three major forms of international marketing organization.

AACSB: Application of knowledge

31 © 2021 Pearson Canada Inc.

Marketing: An Introduction, 7ce (Armstrong/Kotler/Trifts) Chapter 16 Sustainable Marketing: Social Responsibility and Ethics 1) Unilever is working with millions of customers worldwide to improve the social and environmental impact of its products. "Small actions. Big difference." This is an example of ________ marketing, which meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs.

A) Sustainable B) Customer driving C) Mass D) Customer-driven E) Differential Answer: A Diff: 1 Type: MC LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 2) The ________ concept specifically focuses on future company needs, but not the future welfare of customers.

A) societal marketing B) strategic planning C) sustainable marketing D) global marketing E) cause marketing Answer: B Diff: 1 Type: MC LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 3) The ________ concept specifically focuses on the future welfare of customers, but not on future company needs.

A) societal marketing B) strategic planning C) sustainable marketing D) marketing E) selling Answer: A Diff: 1 Type: MC LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning

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4) The ________ concept focuses on meeting the company's short-term sales, growth, and profit needs by engaging customers and fulfilling their needs and wants more effectively and efficiently than the competition.

A) societal marketing B) strategic planning C) sustainable marketing D) marketing E) cause marketing Answer: D Diff: 1 Type: MC LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Application of knowledge 5) The ________ concept focuses on the future welfare of consumers and future company needs.

A) societal marketing B) strategic planning C) sustainable marketing D) marketing E) cause marketing Answer: C Diff: 1 Type: MC LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 6) Truly sustainable marketing requires a smooth-functioning marketing system in which consumers, companies, public policy makers, and others work together to ensure socially and environmentally responsible marketing actions.

Answer: TRUE Diff: 2 Type: TF LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 7) While the societal marketing concept considers the future welfare of consumers and the sustainable marketing concept considers future company needs, the strategic planning concept considers both.

Answer: FALSE Diff: 2 Type: TF LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning

2 © 2021 Pearson Canada Inc.

8) Describe the concept of sustainable marketing. How is it different from the marketing concept, the societal marketing concept, and the strategic planning concept?

Answer: Sustainable marketing calls for socially and environmentally responsible actions that meet the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. The marketing concept recognizes that organizations thrive from day to day by determining the current needs and wants of target customers and fulfilling those needs and wants more effectively and efficiently than competitors do. It focuses on meeting the company's short-term sales, growth, and profit needs by giving customers what they want now. However, satisfying consumers' immediate needs and desires does not always serve the future best interests of either customers or the business. Whereas the societal marketing concept considers the future welfare of consumers and the strategic planning concept considers future company needs, the sustainable marketing concept considers both.

Sustainable marketing calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company.

Diff: 3 Type: ES LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 9) A common criticism of the marketing system is that intermediaries ________.

A) are too few in number B) mark up prices beyond the value of their services C) provide only essential services D) undervalue their service costs E) are overly protective of manufacturers' interests Answer: B Diff: 1 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 10) Critics charge that high advertising and promotion costs unnecessarily increase retail prices.

Marketers most likely respond to this criticism by arguing that advertising ________.

A) provides essential psychological benefits about products B) adds value by giving consumers product information C) generates tax breaks for small businesses D) applies a functional value to the product E) lowers prices by increasing competition Answer: B Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

3 © 2021 Pearson Canada Inc.

11) A toothbrush that costs ten cents to manufacture may cost a consumer $3.00 to buy.

According to critics, this is an example of ________.

A) deceptive advertising B) redlining C) excessive markup D) high-pressure selling E) shoddy manufacturing Answer: C Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Analytical thinking; Ethical understanding and reasoning 12) ________ includes practices such as misrepresenting the product's features or performance or luring customers to the store for a bargain that is out of stock.

A) Deceptive packaging B) Deceptive promotion C) Deceptive pricing D) Deceptive distribution E) Deceptive branding Answer: B Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 13) The ________ was a Canadian Act of Parliament, implemented in 1910, passed in 1923 by the government lead by MacKenzie King, which regulated certain corporate business practices that were anti-competitive. It prohibited monopolies, misleading advertising, bid-rigging, price fixing, and other means of limiting competition.

A) Robinson-Patman Act B) Combines Investigation Act C) Consumer Product Safety Act D) Taft-Hartley Act E) Sherman Act Answer: B Diff: 1 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

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14) In advertising, puffery refers to ________.

A) broadcasting a straightforward promotional message B) including innocent exaggeration for effect C) creating emotional appeals for a brand D) creating subliminal appeals for a brand E) providing value-added promotions Answer: B Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Written and oral communication 15) Insurance, real estate, and used cars salespeople are trained to deliver smooth, canned talks to entice purchases. This is known as ________.

A) sustainable marketing B) high-pressure selling C) customer-driven marketing D) redlining E) reverse redlining Answer: B Diff: 1 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Written and oral communication 16) High-pressure selling may work in situations that involve ________.

A) valued customers B) repeat customers C) service-based sales D) one-time sales E) complex products Answer: D Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Analytical thinking 17) A company should avoid high-pressure selling if it wants to ________.

A) achieve short-term gains B) move a previous year's product models C) comply with local and federal laws D) build long-term relationships with valued customers E) maintain an accurate customer database Answer: D Diff: 3 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Interpersonal relations and teamwork

5 © 2021 Pearson Canada Inc.

18) A class-action lawsuit was brought against a national burger chain, charging that its food contributed to the nationwide obesity epidemic. The suit was eventually dismissed, but critics continue to point out the health dangers of many fast food menu items. From the description, it can be concluded that these critics are concerned that the fast food industry is ________.

A) using high-pressure sales tactics B) creating deceptive promotions C) engaging in deceptive pricing D) utilizing misleading packaging E) selling harmful products Answer: E Diff: 3 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 19) Some companies intentionally manufacture their products with materials or components that will break, wear, rust, or rot sooner than they should. This practice is called ________.

A) perceived obsolescence B) redlining C) planned obsolescence D) puffery E) reverse redlining Answer: C Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 20) Trendy Teens manufactures fashionable clothing and accessories for the tween and teen female markets. New merchandise with a very different look is rolled out each season and heavily promoted as the "must-have" style in a variety of media. For which of the following could Trendy Teens be easily criticized in this scenario?

A) deceptive promotion B) redlining C) high-pressure selling D) planned obsolescence E) perceived obsolescence Answer: E Diff: 3 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Analytical thinking

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21) Critics claim that companies in the ________ industry are more likely to introduce planned streams of new products that make older models obsolete.

A) automotive B) housing C) food and beverage D) consumer electronics E) music Answer: D Diff: 1 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 22) Critics claim that the urban poor often have to shop in smaller stores that carry inferior goods and charge higher prices because the large, national chain stores refuse to establish stores. This is known as the discriminatory practice of ________.

A) perceived obsolescence B) reverse redlining C) redlining D) puffery E) planned obsolescence Answer: C Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 23) The nation's poor areas have 30 percent fewer supermarkets than do affluent areas. As a result, many low-income consumers find themselves ________.

A) buying due to high-pressure methods B) in food deserts C) redlining D) being influenced by heavy advertising and promotion E) influenced by predatory pricing tactics Answer: B Diff: 3 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

7 © 2021 Pearson Canada Inc.

24) Critics who assert that the marketing system promotes too much interest in material possessions are most likely concerned that the result of successful marketing will be ________.

A) high-pressure selling tactics B) unsustainable overconsumption C) perceived obsolescence D) planned obsolescence E) deceptive pricing Answer: B Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 25) Which of the following most likely suggests that marketers lack the power to create consumer needs and control market demand?

A) consumer acceptance of changing clothing styles B) affordable products in disadvantage communities C) use of social media in product comparisons D) consumer interest in modern technology E) high failure rate of new products Answer: E Diff: 3 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Analytical thinking 26) ________ includes practices such as misrepresenting the product's features or performance or luring customers to the store for a bargain that is out of stock.

A) Deceptive packaging B) Deceptive pricing C) Deceptive promotion D) Puffery E) Alluring imagery Answer: C Diff: 1 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Analytical thinking

8 © 2021 Pearson Canada Inc.

27) A University is organizing a sustainability conference and is using a portion of the fees to purchase carbon offsets, which are contributions to projects that combat global warming by reducing carbon emissions. This is an example of the institution paying some of the ________costs.

A) promotional B) safety C) recovery D) distribution E) social Answer: E Diff: 3 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 28) People who buy magazines that they like or who opt in to e-mail, social media, or mobile marketing programs rarely complain about the ads because they involve products and services of interest. This is counter to the claim that the marketing system creates ________.

A) minimalistic social costs B) the creation of false wants C) excessive materialism D) high promotion costs E) cultural pollution Answer: E Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 29) Patagonia's "conscience consumption," (don't buy what you don't need) and L.L. Bean's "When" (encouraging customers to buy and hang onto products that last rather than always buying new ones) are two examples of addressing ________.

A) high promotion costs.

B) cultural pollution.

C) deceptive practices.

D) false wants and too much materialism.

E) the balance between private goods and social goods.

Answer: B Diff: 3 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

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30) Which of the following is not a social criticism of marketing?

A) High prices B) Deceptive practices costs C) Branding D) Planned obsolescence increases cultural pollution.

E) High-pressure selling Answer: C Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Information technology 31) The European Commission recently accused Google of abusing its Web-search dominance, harming both competitors and consumers in European Union markets. The Commission also began investigating antitrust issues related to Google's Android mobile operating system. This is an example of ________.

A) planned obsolescence B) excessive materialism C) predatory competition D) acquisition E) redlining Answer: C Diff: 2 Type: MC LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 32) Deceptive practices lead consumers to believe that they will get more value than they actually do. They fall into three groups: promotion, pricing and delivery.

Answer: FALSE Diff: 1 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 33) Critics charge that large marketing companies can use patents and heavy promotion spending to drive out competitors.

Answer: TRUE Diff: 2 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 34) Though marketers may make long-term gains with high-pressure selling tactics, this approach can do serious damage to short-term customer relationships.

Answer: FALSE Diff: 2 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

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35) It's easy to differentiate predatory practices from effective competitive strategy and tactics.

Answer: FALSE Diff: 2 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 36) Many low-income consumers find themselves in food deserts, which are plentiful in fruits and vegetables, fresh fish, and chicken but lack products like frozen pizzas, Cheetos, Moon Pies, and Cokes.

Answer: FALSE Diff: 1 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 37) Marketers respond that most businesses try to price fairly to consumers because they want to build customer relationships and repeat business.

Answer: TRUE Diff: 1 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 38) An increase in private goods, such as cars, typically leads to an increased need for public services, such as parking spaces.

Answer: TRUE Diff: 2 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Analytical thinking 39) Marketing's purpose is to promote consumption, and the inevitable outcome of successful marketing is sustainable consumption.

Answer: FALSE Diff: 2 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 40) When a company expands by developing its own products rather than acquiring a competitor, the company is likely to be accused of reducing competition.

Answer: FALSE Diff: 2 Type: TF LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

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41) Briefly describe a few ways the Canadian marketing system is accused of harming the consumer.

Answer: Many critics charge that the Canadian marketing system causes prices to be higher than they would be under more "sensible" systems. Critics point to three factors–high costs of distribution, high advertising and promotion costs, and excessive markups. A longstanding charge is that greedy marketing channel members mark up prices beyond the value of their services. As a result, distribution costs too much, and consumers pay for these excessive costs in the form of higher prices. Modern marketing is also accused of pushing up prices to finance unneeded advertising, sales promotion, and packaging. Critics charge that much of this promotion and packaging adds only psychological, not functional, value. Critics also charge that some companies mark up goods excessively.

Marketers are sometimes accused of deceptive practices that lead consumers to believe they will get more value than they actually do. Deceptive practices fall into three groups: promotion, packaging, and pricing. Deceptive promotion includes practices such as misrepresenting the product's features or performance or luring customers to the store for a bargain that is out of stock. Deceptive packaging includes exaggerating package contents through subtle design, using misleading labeling, or describing size in misleading terms. Deceptive pricing includes practices such as falsely advertising "factory" or "wholesale" prices or a large price reduction from a phony high retail list price.

Diff: 2 Type: ES LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 42) What are the three categories of deceptive marketing practices? Briefly describe each.

Answer: Deceptive practices fall into three groups: pricing, promotion, and packaging.

Deceptive pricing includes practices such as falsely advertising "factory" or "wholesale" prices or advertising a large price reduction from a phony high retail list price. Deceptive promotion includes practices such as misrepresenting the product's features or performance or luring customers to the store for a bargain that is out of stock. Deceptive packaging includes exaggerating package contents through subtle design, using misleading labeling, or describing size in misleading terms.

Diff: 2 Type: ES LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

12 © 2021 Pearson Canada Inc.

43) Identify and discuss the major social criticisms of marketing.

Answer: The impact of marketing on society has been criticized for creating false wants, too much materialism, too few social goods, and excessive cultural pollution. Critics have charged that the marketing system urges too much interest in material possessions, and that Canada's love affair with worldly possessions is not sustainable. Too often, people are judged by what they own rather than by who they are. The critics do not view this interest in material things as a natural state of mind but rather as a matter of false wants created by marketing. Marketers, they claim, stimulate people's desires for goods and create materialistic models of the good life. Thus, marketers have created an endless cycle of mass consumption based on a distorted interpretation of what is important in measuring success in our society.

Business has also been accused of overselling private goods at the expense of public goods. As private goods increase, they require more public services that are usually not forthcoming. For example, private automobile ownership (private good) requires highways, traffic control, parking spaces, and police services (public goods). The overselling of private goods results in social costs.

Critics also charge the marketing system with creating cultural pollution. They feel our senses are being constantly assaulted by marketing and advertising. Commercials interrupt serious programs; pages of ads obscure magazines; billboards mar beautiful scenery; spam fills our email inboxes; flashing display ads intrude on our online and mobile screens. What's more, the critics claim, these interruptions continually pollute people's minds with messages of materialism, sex, power, or status.

Diff: 3 Type: ES LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 44) Identify the social costs of increased automobile ownership. Describe two options for restoring the balance between private and public goods. Give specific examples.

Answer: Business has been accused of overselling private goods at the expense of public goods.

As private goods increase, they require more public services that are usually not forthcoming.

For example, an increase in automobile ownership (private good) requires more highways, traffic control, parking spaces, and police services (public goods). The overselling of private goods results in social costs. For cars, some of the social costs include traffic congestion, gasoline shortages, and air pollution. One option for restoring the balance between private and public goods is to make producers bear the full social costs of their operations. The government could require automobile manufacturers to build cars with more efficient engines and better pollutioncontrol systems. Automakers would then raise their prices to cover extra costs. A second option is to make consumers pay the social costs. For example, many cities around the world are starting to charge congestion tolls in an effort to reduce traffic congestion. To decrease rush hour traffic on the Bay Bridge between Oakland and San Francisco, California, the Metropolitan Transportation Commission charges a $6 toll during peak commute hours versus $4 at other times. The charge reduced the flow of drivers during peak hours, cutting the average 32-minute wait time some bridges approach in half.

Diff: 3 Type: ES LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning

13 © 2021 Pearson Canada Inc.

45) Describe the harmful impact that a company's marketing practices could have on other businesses.

Answer: Critics charge that a company's marketing practices can harm other companies and reduce competition. They identify three problems: acquisitions of competitors, marketing practices that create barriers to entry, and unfair competitive marketing practices. Critics claim that firms are harmed and competition reduced when companies expand by acquiring competitors rather than by developing their own new products. The large number of acquisitions and the rapid pace of industry consolidation over the past several decades have caused concern that vigorous young competitors will be absorbed, thereby reducing competition. In some cases, acquisitions can be good for society. The acquiring company may gain economies of scale that lead to lower costs and lower prices. In addition, a well-managed company may take over a poorly managed company and improve its efficiency. An industry that was not very competitive might become more competitive after the acquisition. But acquisitions can also be harmful and, therefore, are closely regulated by the government. Critics have also charged that marketing practices bar new companies from entering an industry. Large marketing companies can use patents and heavy promotion spending or tie up suppliers or dealers to keep out or drive out competitors. Those concerned with antitrust regulation recognize that some barriers are the natural result of the economic advantages of doing business on a large scale. Existing and new laws can challenge other barriers. For example, some critics have proposed a progressive tax on advertising spending to reduce the role of selling costs as a major barrier to entry. Finally, some firms have, in fact, used unfair competitive marketing practices with the intention of hurting or destroying other firms. They may set their prices below costs, threaten to cut off business with suppliers, discourage the buying of a competitor's products, or use their size and market dominance to unfairly damage rivals. Although various laws work to prevent such predatory competition, it is often difficult to prove that the intent or action was really predatory.

Diff: 3 Type: ES LO: 16-2: Identify the major social criticisms of marketing.

AACSB: Ethical understanding and reasoning 46) The two major citizen action movements to keep businesses in line are ________.

A) consumerism and environmentalism B) protectionism and materialism C) consumerism and protectionism D) liberalism and monetarism E) innovation and predatory pricing Answer: A Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

14 © 2021 Pearson Canada Inc.

47) ________ is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers.

A) Environmentalism B) Proactivism C) Affirmative action D) Consumerism E) Liberalism Answer: D Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 48) Which of the following is a traditional right of sellers?

A) the right to introduce any product in any size and style, provided it is not hazardous to personal health or safety B) the right to expect a product to be safe C) the right to expect a product to perform as claimed D) the right to consume now in a way that will preserve and sustain the world for future generations of consumers E) the right to be well informed about important aspects of a product Answer: A Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 49) Which of the following is a traditional right of buyers?

A) the right to charge any price for a product, provided no discrimination exists among similar kinds of buyers B) the right to spend any amount to promote a product, provided it is not defined as unfair competition C) the right to use any product message, provided it is not misleading or dishonest in content or execution D) the right to use buying incentive programs, provided they are not unfair or misleading E) the right not to buy a product that is offered for sale Answer: E Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

15 © 2021 Pearson Canada Inc.

50) Controlling the ingredients that go into certain products and reducing the level of advertising "noise" are part of proposals relating to the consumer's right to ________.

A) not buy a product that is offered for sale B) expect a product to perform as claimed C) be well informed about important aspects of the product D) be protected against questionable products, promotions, and marketing practices E) influence marketing practices in ways that will improve quality of life Answer: E Diff: 2 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 51) Promoting the use of sustainable ingredients, recycling and reducing solid wastes, and managing energy consumption relate to the consumer's right to ________.

A) not buy a product that is offered for sale B) be well informed about important aspects of a product C) consume now in a way that will preserve the world for future generations D) be protected against questionable products and marketing practices E) influence marketing practices in ways that will improve quality of life Answer: C Diff: 2 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 52) ________ is an organized movement of concerned citizens, businesses, and government agencies designed to protect and improve people's current and future living environment.

A) Socialism B) Consumerism C) Environmentalism D) Consumption E) Reduction Answer: C Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

16 © 2021 Pearson Canada Inc.

53) Adidas set ambitious goals for sustainable products and operations. When creating new products, the company considers their environmental impact before ever producing them. This is an example of ________.

A) Consumerism B) Quasi-environmentalism C) Environmental sustainability D) Materialism E) The marketing concept Answer: C Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 54) Natural & Safe sells a concentrated, biodegradable bathroom cleaner in a recycled container.

This is best described as a component of the company's internal ________ program.

A) green marketing B) consumerism C) sustainability D) environmental E) sociological Answer: A Diff: 2 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 55) ________ involves minimizing pollution from production and all environmental impacts throughout the full life cycle of goods.

A) The marketing concept B) Pollution control C) Product stewardship D) Consumerism E) Pollution prevention Answer: C Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

17 © 2021 Pearson Canada Inc.

56) The Card Company strives to recover, reuse, and recycle paper at the end of its life cycle to be used in the production of all new greeting cards. In fact, a hundred percent of all of its cards are made from recycled materials. In this case, The Card Company is demonstrating ________.

A) pollution prevention B) pollution control C) product stewardship D) the marketing concept E) the selling concept Answer: C Diff: 3 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Analytical thinking 57) ________ involves thinking ahead to create products that are easier to recover, reuse, recycle, or safely return to nature after usage, thus becoming part of the ecological cycle.

A) Consumerism B) Design for environment C) Beyond greening D) Pollution control E) Pollution prevention Answer: B Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 58) ________ serves as a guide to the future, laying out how a company's products and services, processes, and policies must evolve and what new technologies must be developed to get there.

A) An environmental mission statement B) A cradle-to-cradle practice C) Pollution prevention D) Product stewardship E) A sustainability vision Answer: E Diff: 1 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

18 © 2021 Pearson Canada Inc.

59) What do most companies today focus on when it comes to protecting the environment?

A) investing heavily in pollution prevention B) practicing product stewardship C) developing a sustainable vision D) investing heavily in environmental technology E) increasing the biodegradability of products Answer: A Diff: 2 Type: MC LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 60) Traditional seller's rights include the right to expect the product to perform as claimed.

Answer: FALSE Diff: 2 Type: TF LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 61) Today, enlightened companies implement environmental sustainability strategies not because someone is forcing them to or to reap short-run profits but because it's the right thing to do.

Answer: TRUE Diff: 1 Type: TF LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 62) In the progress toward environmental sustainability, a company must first develop a sustainability vision, which serves as a guide to the future.

Answer: FALSE Diff: 2 Type: TF LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 63) Proposals relating to quality of life include controlling the ingredients that go into certain products and packaging and reducing the level of advertising "noise."

Answer: TRUE Diff: 2 Type: TF LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

19 © 2021 Pearson Canada Inc.

64) Environmentalism is a management approach that involves developing strategies that both sustain the environment and produce profits for the company.

Answer: FALSE Diff: 2 Type: TF LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 65) What are the traditional rights of sellers and buyers?

Answer: Traditional sellers' rights include the following: 1. The right to introduce any product in any size and style, provided it is not hazardous to personal health or safety, or, if it is, to include proper warnings and controls 2. The right to charge any price for the product, provided no discrimination exists among similar kinds of buyers 3. The right to spend any amount to promote the product, provided it is not defined as unfair competition 4. The right to use any product message, provided it is not misleading or dishonest in content or execution 5. The right to use buying incentive programs, provided they are not unfair or misleading Traditional rights of buyers include the following: 1. The right not to buy a product that is offered for sale 2. The right to expect the product to be safe 3. The right to expect the product to perform as claimed Diff: 2 Type: ES LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Analytical thinking 66) Define consumerism and environmentalism.

Answer: Consumerism is an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers. Environmentalism is an organized movement of concerned citizens, businesses, and government agencies designed to protect and improve people's current and future living environment.

Diff: 1 Type: ES LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

20 © 2021 Pearson Canada Inc.

67) List the consumer rights called for by consumer advocates.

Answer: Consumer advocates call for the following consumer rights: 1. The right to be well informed about important aspects of the product 2. The right to be protected against questionable products and marketing practices 3. The right to influence products and marketing practices in ways that will improve "quality of life" 4. The right to consume now in a way that will preserve the world for future generations of consumers Diff: 2 Type: ES LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 68) Describe product stewardship, design for environment (DFE), and cradle-to-cradle practices.

Answer: Companies can practice product stewardship — minimizing not only pollution from production and product design but also all environmental impacts throughout the full product life cycle, while at the same time reducing costs. Many companies are adopting design for environment (DFE) and cradle-to-cradle practices. This involves thinking ahead to design products that are easier to recover, reuse, recycle, or safely return to nature after usage, thus becoming part of the ecological cycle. Design for environment and cradle-to-cradle practices not only help to sustain the environment, but they can also be highly profitable for the company.

Diff: 2 Type: ES LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning 69) Mountain Equipment Co-op (mec.ca) ensures all business decisions align with the company's social and environmental accountability. "We believe a quality product has the smallest possible footprint, that it's made carefully and with respect for the people who produce it". In the context of MEC, what is a sustainability vision?

Answer: Companies can develop a sustainability vision, which serves as a guide to the future. It shows how the company's products and services, processes, and policies must evolve and what new technologies must be developed to get there. This vision of sustainability provides a framework for pollution control, product stewardship, and new environmental technology for the company and others to follow.

Diff: 2 Type: ES LO: 16-3: Define consumerism and environmentalism and explain how they affect marketing strategies.

AACSB: Ethical understanding and reasoning

21 © 2021 Pearson Canada Inc.

70) The ________ concept holds that a company's marketing should support the best long-run performance of the marketing system.

A) selling B) global marketing C) sustainable marketing D) differential marketing E) marketing Answer: C Diff: 1 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Application of knowledge 71) Enlightened marketing calls for building long-run consumer engagement, loyalty, and relationships by continually improving the benefits consumers receive from the firm's market offering. This is related to ________, one of the five sustainable marketing principles.

A) consumer-oriented marketing B) innovative marketing C) sense-of-mission marketing D) societal marketing E) customer value marketing Answer: E Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 72) The App Store views and organizes its marketing activities from the viewpoint of its buyers, who are predominantly comprised of the Millennial generation. Management works hard to sense, serve, and satisfy the needs of this tech savvy demographic. Which of the following does The App Store most likely practice?

A) consumer-oriented marketing B) societal marketing C) sense-of-mission marketing D) affiliate marketing E) innovative marketing Answer: A Diff: 3 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking

22 © 2021 Pearson Canada Inc.

73) Which sustainable marketing principle emphasizes building long-run consumer engagement, loyalty, and relationships?

A) sense-of-mission marketing B) innovative marketing C) customer value marketing D) consumerist marketing E) differential marketing Answer: C Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Interpersonal relations and teamwork 74) Amazon never stops looking for new ways to create customer value. An example of this includes Amazon Prime Now. In this case innovative marketing most likely involves ________.

A) protecting the natural environment B) considering the consumer's point of view C) seeking real product and marketing improvements D) defining goals in broad social terms rather than narrow product terms E) placing an emphasis on increasing short-run sales rather than long-term value Answer: C Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 75) "Doing good" and "doing well" are considered a double bottom line of values and profits for many organizations such as TOMS. Profits sometimes suffer as a result. This is one of the challenges of ________ marketing.

A) societal B) sense-of-mission C) consumer-oriented D) customer value E) innovative Answer: B Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Ethical understanding and reasoning

23 © 2021 Pearson Canada Inc.

76) Bullfrog Power does exactly what the customer wants. These customers are willing to pay a premium for a way to contribute to the solution to climate change by using renewable power sources. This approach could be most accurately described as practising ________ marketing.

A) affiliate B) undifferentiated C) differentiated D) innovative E) sense-of-mission Answer: E Diff: 3 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 77) When a company makes marketing decisions by considering consumers' wants and interests, the company's requirements, and society's long-run interests, it is most likely practicing ________ marketing.

A) value B) societal C) sense-of-mission D) consumer-oriented E) customer value Answer: B Diff: 1 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Ethical understanding and reasoning 78) What are deficient products?

A) products that have neither immediate appeal nor long-run benefits B) products that give high immediate satisfaction but hurt consumers in the long run C) products that have low appeal but may benefit consumers in the long run D) products that are either unsafe or inferior E) products in the decline stage of the product life cycle Answer: A Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Application of knowledge

24 © 2021 Pearson Canada Inc.

79) Products that give high immediate satisfaction but may hurt consumers in the long run are called ________ products.

A) deficient B) pleasing C) salutary D) desirable E) threatening Answer: B Diff: 1 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Application of knowledge 80) Which of the following is the best example of a salutary product?

A) cereal B) cigarettes C) bottled water D) junk food E) dental insurance Answer: E Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 81) Beverages that are high in sugar are called ________ products.

A) deficient B) pleasing C) salutary D) desirable E) salubrious Answer: B Diff: 1 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 82) ________ products give both high immediate satisfaction and high long-run benefits.

A) Deficient B) Pleasing C) Desirable D) Salutary E) Threatening Answer: C Diff: 1 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Application of knowledge

25 © 2021 Pearson Canada Inc.

83) Maytag's front-loading Neptune washer comes in attractive designs and also guarantees quick cleaning and high energy efficiency. The Neptune washer is most likely an example of a ________ product.

A) deficient B) pleasing C) salutary D) desirable E) disposable Answer: D Diff: 3 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 84) The societal marketing concept states that companies should try to turn ________.

A) deficient products into pleasing ones B) desirable products into pleasing ones C) deficient products into salutary ones D) all of their products into salutary ones E) all of their products into desirable ones Answer: E Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Ethical understanding and reasoning 85) The challenge for makers of ________ products is to add long-run benefits without reducing the products' agreeable qualities.

A) salutary B) desirable C) pleasing D) durable E) deficient Answer: C Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 86) The challenge posed by ________ products is to add some agreeable qualities so that they will become more desirable in the consumers' minds.

A) salutary B) desirable C) pleasing D) durable E) aesthetic Answer: A Diff: 2 Type: MC LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 26 © 2021 Pearson Canada Inc.

87) In customer value marketing, a company should seek real product and marketing improvements.

Answer: FALSE Diff: 1 Type: TF LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 88) When a company views and organizes its marketing activities from only the consumer's point of view, it is practicing societal marketing.

Answer: FALSE Diff: 1 Type: TF LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 89) A company that makes marketing decisions by considering consumers' wants and long-run interests, the company's requirements, and society's long-run interests is practicing consumeroriented marketing.

Answer: FALSE Diff: 2 Type: TF LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 90) Bicycle helmets and some insurance offerings are considered pleasing products that give high immediate satisfaction but may hurt consumers in the long run.

Answer: FALSE Diff: 2 Type: TF LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 91) Cigarettes and junk food are considered pleasing products.

Answer: TRUE Diff: 2 Type: TF LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking 92) Xorbate Blue is a relatively new food supplement that provides both high immediate satisfaction and high long-run benefits. Xorbate Blue is best classified as a salutary product.

Answer: FALSE Diff: 3 Type: TF LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Analytical thinking

27 © 2021 Pearson Canada Inc.

93) Briefly discuss the five principles of sustainable marketing.

Answer: Under the sustainable marketing concept, a company's marketing should support the best long-run performance of the marketing system. It should be guided by five sustainable marketing principles: consumer-oriented marketing, customer value marketing, innovative marketing, sense-of-mission marketing, and societal marketing.

1. Consumer-oriented marketing acts from the consumer's point of view. It should work hard to sense, serve, and satisfy the needs of a defined group of customers–both now and in the future.

2. Customer value marketing exists when a firm puts most of its resources into customer valuebuilding marketing investments. By creating value for consumers, the company can capture value from consumers in return.

3. Innovative marketing seeks real product and marketing improvements. The company that overlooks new and better ways to do things will eventually lose customers to another company that has found a better way.

4. When a company defines its mission in broad social terms rather than narrow product terms, it is practicing sense-of-mission marketing. Brands linked with broader missions can serve the best long-run interests of both the brand and consumers.

5. Finally, societal marketing is in use when the company makes marketing decisions by considering consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests. Companies should be aware that neglecting consumer and societal long-run interests is a disservice to consumers and society. Alert companies view societal problems as opportunities.

Diff: 2 Type: ES LO: 16-4: Describe the principles of sustainable marketing.

AACSB: Ethical understanding and reasoning 94) Jeff Barkins is a conscientious marketing manager. Sometimes, Jeff and his staff are unclear what decisions to make when faced with moral dilemmas. Jeff and other managers could create broad guidelines that everyone in the organization must follow in the form of a ________.

A) business value statement B) company mission statement C) company vision statement D) corporate marketing ethics policy E) financial statement Answer: D Diff: 3 Type: MC LO: 16-5: Explain the role of ethics in marketing.

AACSB: Ethical understanding and reasoning 95) Dealing with issues of ethics and social responsibility in a proactive, open, and forthright way helps to build and maintain strong customer relationships based on honesty and trust.

Answer: TRUE Diff: 2 Type: TF LO: 16-5: Explain the role of ethics in marketing.

AACSB: Ethical understanding and reasoning

28 © 2021 Pearson Canada Inc.

96) Corporate marketing ethics policies should most likely address distributor relations, advertising standards, customer service, pricing product development, and general ethical standards.

Answer: TRUE Diff: 2 Type: TF LO: 16-5: Explain the role of ethics in marketing.

AACSB: Ethical understanding and reasoning 97) According to the societal marketing concept, firms and managers should focus primarily on what marketing efforts are legal and allowed.

Answer: FALSE Diff: 1 Type: TF LO: 16-5: Explain the role of ethics in marketing.

AACSB: Ethical understanding and reasoning 98) According to the World Bank, firms from Australia, Denmark, Finland, and Japan engage in the most corrupt business practices.

Answer: FALSE Diff: 2 Type: TF LO: 16-5: Explain the role of ethics in marketing.

AACSB: Ethical understanding and reasoning 99) How can companies help marketers act ethically when faced with ethical dilemmas?

Answer: Companies can develop corporate marketing ethics policies to provide broad guidelines for everyone in the organization to follow. These policies should cover distributor relations, advertising standards, customer service, pricing, product development, and general ethical standards. Companies must develop a set of principles that will help employees figure out the moral importance and implications of each situation and decide how far they can go in good conscience.

Diff: 2 Type: ES LO: 16-5: Explain the role of ethics in marketing.

AACSB: Ethical understanding and reasoning

29 © 2021 Pearson Canada Inc.

100) Compare the two common principles that can be used to guide companies and marketing managers on issues of ethics and social responsibility.

Answer: One principle states that issues of ethics and social responsibility should be decided by the free market and legal system. Under this principle, companies and their managers are not responsible for making moral judgments. Companies can in good conscience do whatever the market and legal systems allow. A second principle puts responsibility not on the system but in the hands of individual companies and managers. This more enlightened philosophy suggests that a company should have a social conscience. Companies and managers should apply high standards of ethics and morality when making corporate decisions, regardless of "what the system allows." Each firm and marketing manager must work out a philosophy of socially responsible and ethical behaviour. Under the societal marketing concept, managers must look beyond what is legal and allowable and develop standards based on personal integrity, corporate conscience, and long-run consumer welfare.

Diff: 2 Type: ES LO: 16-5: Explain the role of ethics in marketing.

AACSB: Ethical understanding and reasoning

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