Test Bank For Marketing An Introduction 15th Edition (Global Edition) By Gary Armstrong, Philip Kotl

Marketing An Introduction 15e (Global Edition) By Gary Armstrong, Philip Kotler (Test Bank All Chapters, 100% Original Verified, A+ Grade) Marketing: An Introduction, 15e (Armstrong) 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 LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Application of knowledge 2) 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 LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 3) According to the five-step model of the marketing process, the final 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: A Diff: 2 LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking

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4) For marketing to be effective, it must ________.

A) create a buying experience B) help people connect with the people in their lives C) create customer value D) develop a culture of warmth and belonging E) deliver high quality products Answer: C Diff: 3 LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 5) A good definition of marketing is "telling and selling."

Answer: FALSE Diff: 1 LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 6) Marketing is primarily concerned with engaging customers and secondarily with managing profitable customer relationships.

Answer: FALSE Diff: 2 LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 7) The final step in the marketing process is capturing customer value in the form of profits and customer equity.

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

AACSB: Application of knowledge 8) 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 LO: 1-1: Define marketing and outline the steps in the marketing process.

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9) Explain why marketing is not simply "making a sale."

Answer: Marketing is essentially satisfying customer needs. If marketers engage consumers effectively, understands their needs, develops products that provide superior customer value, and price, distribute, and promote them well, these products will sell easily. In fact, according to management guru Peter Drucker, "The aim of marketing is to make selling unnecessary."

Diff: 3 LO: 1-1: Define marketing and outline the steps in the marketing process.

AACSB: Analytical thinking 10) ________ are defined as states of felt deprivation.

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

AACSB: Analytical thinking 11) ________ 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 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 12) 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 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

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13) To market the cause of suicide prevention, rapper Logic worked with the National Suicide Prevent Lifeline (NSPL) to create a video embedded with his song "1-800-273-8255," the NSPL phone number. 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 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 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 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 15) ________ 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 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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Use the information below to answer the following questions.

Amazon founder Jeff Bezos vaulted to the position of wealthiest person in the world in a relatively short period of time by building his small online book selling platform into an online retail giant that was listed as the most valuable brand in the world in 2021. One of the things Bezos does is to frequently read customer emails. When something catches his eye he forwards the email to the appropriate person to take care of the issue. Jeff Bezos views Amazon's role as that of "creating genuine value for customers." Bezos is motivated by the fact that Amazon customers will be loyal until another firm offers better products and/or service. Amazon has also been extremely innovative in the order and delivery process which makes the shopping experience a breeze for consumers. In the past three years Amazon's revenues have more than doubled to $386 billion dollars and the firm accounts for 45% of all online sales.

16) Much of Amazon's success can be attributed to ________.

A) rapid delivery B) selling only the highest quality products C) identifying customer needs D) creating value for customers E) a vast product selection Answer: D Diff: 3 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 17) One simple method used by Jeff Bezos to identify customer concerns is to ________.

A) visit various retail stores B) send out digital surveys C) read customer emails D) periodically call Amazon customers E) analyze big data from the website Answer: C Diff: 2 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

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18) If Jeff Bezos and Amazon originally focused solely on his online product offerings, he would be guilty of ________.

A) marketing myopia B) focusing on needs over wants C) paying too much attention to the customer D) competitive analysis E) niche marketing Answer: A Diff: 2 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Analytical thinking 19) Amazon's primary focus is on its product offerings.

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

AACSB: Analytical thinking 20) Jeff Bezos attributes Amazon's success to the focus on creating value for customers.

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

AACSB: Analytical thinking 21) When backed by buying power, wants become needs.

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

AACSB: Analytical thinking 22) Market offerings are limited to physical products.

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

AACSB: Application of knowledge 23) Market offerings include entities such as people, places, information, and ideas.

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

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24) A greater focus on underlying customer needs than on existing customer wants leads to marketing myopia.

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

AACSB: Application of knowledge 25) A market is a segment of potential consumers who share a common need or want.

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

AACSB: Analytical thinking 26) A market is a physical space where exchange occurs.

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

AACSB: Analytical thinking 27) 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, an American needs food, wants a Big Mac and soft drink, and demands lunch at McDonald's. 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 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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28) 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 LO: 1-2: Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts.

AACSB: Application of knowledge 29) Which of these questions must be answered to develop a winning marketing strategy?

A) How do we deliver products to customers?

B) What products should we focus on selling?

C) What is our value proposition?

D) Which online platform should we use to market our products?

E) How many marketing representatives will we need to hire?

Answer: C Diff: 2 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 30) Savvy marketing managers know ________.

A) the best strategy is to try to serve as many customers as possible B) that market segmentation involves positioning the product for maximum exposure C) it is better to have more products available for sale D) that it is impossible to serve all potential customers in every way E) hiring more sales reps always leads to higher sales volume Answer: D Diff: 3 LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

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31) Which of these questions is answered by a firm's value proposition?

A) What products should I deliver?

B) Which markets do I serve?

C) Why should I buy your brand rather than a competitor's?

D) How will I inform my target audience about my products?

E) Should I use more digital marketing tools or traditional tools?

Answer: C Diff: 2 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) ________ is the art and science of choosing target markets and building profitable relationships with those markets.

A) Differentiation B) Marketing management C) Positioning D) Segmentation E) Customer-perceived value Answer: B Diff: 1 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 33) Dividing a market into several sections of customers is known as ________.

A) mass customization B) market positioning C) market segmentation D) value engineering E) undifferentiated marketing Answer: C Diff: 1 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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34) Dollar General 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 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) 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 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 36) JetBlue's promise that "Just Alright Doesn't Fly Here" and their commitment to deliver "award-winning service from award-winningly nice humans" is their ________.

A) value proposition B) segmentation strategy C) market offering D) selling concept E) production concept Answer: A Diff: 2 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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37) PC manufacturer, Lenovo, focuses on low labor 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 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 38) 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 favor 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 favor products that offer the most in quality, performance, and innovative features Answer: A Diff: 2 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 39) 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 LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

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40) 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 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) 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 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 42) ________ companies research customers deeply to learn about their desires, gather new product ideas, and test product improvements.

A) Production-oriented B) Customer-driving C) Customer-driven D) Functional E) Societal Answer: C Diff: 1 LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

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43) 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 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 44) 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 favor 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 favor products that offer the most in quality, performance, and innovative features Answer: B Diff: 2 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 45) 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 LO: 1-3: Identify the key elements of a customer value-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

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46) 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 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 47) ________ 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 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 48) One of the main considerations underlying societal marketing is the concept of shared value.

Answer: TRUE Diff: 1 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) The 4 Ps of marketing are product, place, people, and promotion.

Answer: FALSE Diff: 1 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) The product concept is a customer-centered, sense-and-respond philosophy.

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

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51) 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 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) The selling concept holds that consumers will favor products that offer the most in quality, performance, and innovative features.

Answer: FALSE Diff: 1 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 53) Organizations that follow the production concept most likely practice socially and environmentally responsible marketing.

Answer: FALSE Diff: 2 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) Product, price, place, and promotion make up the elements of a firm's marketing mix.

Answer: TRUE Diff: 1 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 55) 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 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

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56) Compare and contrast the product and production concepts.

Answer: The production concept holds that consumers will favor 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 labor 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 favor 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 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 57) 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 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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58) 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 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 59) Jared Compton is a marketing manager for an existing product line that generates $23 million in sales volume. He has been charged with increasing sales by 15% next year. What is the minimum sales amount he will need to generate to hit his target?

A) $45.15 million B) $30.00 million C) $26.45 million D) $32.24 million E) $23.55 million Answer: C Diff: 1 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) Stew Leonard believes every sulking customer in his store costs him $50,000. What is his total loss if he loses 5% of 15,600 customers this year?

A) $2,052,500 B) $875,000 C) $39,000,000 D) $101,000,000 E) $555,000 Answer: C Diff: 2 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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61) What is the value of a firm's customer equity if they have 122,000 customers that will be loyal customers for the next 35 years and they spend an average of $555 per year?

A) $4,112,650,000 B) $45,000,500 C) $19,425 D) $2,369,850,000 E) $67,710,000 Answer: D Diff: 3 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 62) What is the customer lifetime value of a person who buys $1,235 in product every year and is expected to be a loyal customer for at least 20 years?

A) $24,700 B) $33,400 C) $101,340 D) $5,500 E) $112,000 Answer: A Diff: 2 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 63) 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 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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64) 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 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 65) 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 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 66) 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 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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67) Which of the following is an example of consumer-generated marketing?

A) Cristal, a jewelry 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 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 68) For the past nine years, PepsiCo's Doritos brand has held a "Crash the Super Bowl" contest in which it invites 30-second ads from consumers and runs the best ones during the game. This is an example of ________.

A) consumer-generated marketing B) frequency marketing C) customer-club marketing D) sustainable marketing E) multi-level marketing Answer: A Diff: 2 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 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 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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70) Stew Leonard's has created what has been called 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 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 71) ________ 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 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 72) ________ 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 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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73) 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 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 74) 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 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 75) 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 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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76) ________ 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 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 77) 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 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 78) 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 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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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 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 80) 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 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 81) One way to increase "share of customer" is to offer greater variety.

Answer: TRUE Diff: 2 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 82) Customer delight creates an emotional relationship with a brand.

Answer: TRUE Diff: 2 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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83) Customer relationship management focuses on retaining existing customers but not on acquiring new customers.

Answer: FALSE Diff: 2 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 84) Social media companies like Facebook deliver customer satisfaction by connecting individuals through shared experiences.

Answer: TRUE Diff: 1 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 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 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 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) 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 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 25 Copyright © 2023 Pearson Education, Inc.

89) Define customer-perceived value.

Answer: Customer-perceived value is defined as the customer's evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers. Importantly, customers often do not judge values and costs accurately or objectively.

They act on perceived value. A customer buys from the firm that offers the highest customerperceived value.

Diff: 1 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 90) 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 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) 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 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 26 Copyright © 2023 Pearson Education, Inc.

92) 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 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 93) 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 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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94) 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 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 95) The use of social media, mobile ads and apps, online video, blogs and other digital platforms to connect with and engage consumers via their digital devices is known as A) real-time marketing.

B) online engagement.

C) digital and social media marketing.

D) sustainability marketing.

E) the Internet of Things.

Answer: C Diff: 2 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking

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96) Which of these is an example of real-time marketing?

A) Procter & Gamble using coupons in the Sunday paper B) Elon Musk tweeting about cryptocurrency C) Best Buy making it easy to return unwanted items D) Taco Bell using navigation apps with directions to nearby stores E) Starbucks collecting customer data on their website Answer: D Diff: 3 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking 97) Mobile marketing accounts for about ________ of all digital ad spending.

A) 67% B) 33% C) 50% D) 25% E) 80% Answer: A Diff: 1 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking 98) Some firms, such as Ben & Jerry's and Unilever, focus on setting themselves apart by being civic minded and socially responsible. These firms are practicing ________.

A) caring capitalism B) socialism C) digital marketing D) financial sustainability E) global marketing Answer: A Diff: 2 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking

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99) What is the potential number of consumers that can be reached via real-time marketing if 80% of 330 million Americans own smartphones and 66% of these consumers keep their phone with them at all times?

A) 174,240,000 B) 264,000,000 C) 217,800,000 D) 330,000,000 E) 287,330,000 Answer: A Diff: 1 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking 100) ________ marketing is perhaps the fastest-growing marketing platform.

A) Online B) Social media C) Mobile D) Website E) Blog Answer: C Diff: 1 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking 101) Not-for-profit organizations are still reluctant to use marketing strategies to raise funds and awareness.

Answer: FALSE Diff: 2 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Application of knowledge 102) More than 75% of all online purchases are now made using mobile devices.

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

AACSB: Application of knowledge 103) Social media provides an ideal platform for online marketing.

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

AACSB: Application of knowledge 30 Copyright © 2023 Pearson Education, Inc.

104) Social media gives marketers immediate access to billions of potential customers.

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

AACSB: Application of knowledge 105) Marketing in the age of disruptions, such as the COVID-19 pandemic, uses the same tactics and strategies as traditional marketing.

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

AACSB: Application of knowledge 106) Digital and social media marketing involves using digital marketing tools such as websites, social media, mobile ads and apps, online video, email, blogs, and other digital platforms to engage consumers.

Answer: TRUE Diff: 2 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking 107) Today, almost every company, large or small, is touched in some way by global competition.

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

AACSB: Application of knowledge 108) List and discuss the most important step in the marketing process.

Answer: The most important step in the marketing process involves engaging target customers and building value-laden, profitable relationships with them. Throughout the process, marketers practice customer relationship management to create customer satisfaction and delight. They engage customers in the process of creating brand conversations, experiences, and community.

In creating customer value and relationships, however, the company cannot go it alone. It must work closely with marketing partners both inside the company and throughout its marketing system. Thus, beyond practicing good customer relationship management and customerengagement marketing, firms must also practice good partner relationship management.

Diff: 2 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Application of knowledge 31 Copyright © 2023 Pearson Education, Inc.

109) How did the COVID -19 pandemic impact marketing?

Answer: The COVID -19 pandemic greatly hastened the shift to digital in almost every area of human activity, including marketing-related activities. For example, the pandemic accelerated the shift to online shopping by an estimated 5 to 10 years. Before the pandemic, e-commerce sales were expected to account of 15 percent of all U.S. sales in 2020. But only three months into the pandemic, 25 percent of all sales were moving through online channels. Similarly, to reach consumers who were often sheltering at home, marketers quickened their shift from in-store and in-person connections to digital-first consumer engagement strategies, boosting their use of online, mobile, social media, and other digital platforms to connect their brands with consumers.

Diff: 2 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Written and oral communication 110) Discuss some of the benefits of real-time marketing.

Answer: Real-time marketing, if done correctly, can solidify a brand's positioning and create brand personality. It can connect a brand with what's happening and important in consumers' lives and keep the conversation going. "Real-time marketing used to be just the content," says the strategist. "But now the content is the spark for conversation and helps brands build a relationship with followers."

Diff: 2 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Written and oral communication

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111) 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 U.S. 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 LO: 1-5: Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

AACSB: Analytical thinking

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Marketing: An Introduction, 15e (Armstrong) 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 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 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 LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Analytical thinking

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Use the information below to answer the following questions.

Marcos started his food truck business 10 years ago with one older model truck he built from the ground up. Through hard work, good food, and a positive attitude his business thrived. His food was not the cheapest around but it was the best. Marcos's company, Meals on Wheels, now ran eight food trucks in the metropolitan area and Marcos still wanted to expand. His plans include expansion into several other major cities but he wants to change his mission statement from the one he came up with years ago when he was starting out. The old mission statement, Fast food to your door, simply did not fit his vision for his company as a mobile restaurant serving great food of all types to clients with limited time for lunch.

4) Which of these mission statements that Marcos is considering is more marketing oriented?

A) Good food at a reasonable price.

B) Mobile eats to save time.

C) Good food at a cheap price.

D) Food matters, that's why we bring the best to you.

E) Food fast and hot.

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

AACSB: Analytical thinking 5) What is Marcos attempting to deliver that should be defined in his mission statement?

A) food B) convenience C) low prices D) a great food experience E) low cost meals on wheels Answer: D Diff: 1 LO: 2-1: Explain company-wide strategic planning and its four steps.

AACSB: Analytical thinking 6) Marcos's business doesn't need a marketing-oriented mission statement since the business model is simplistic.

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

AACSB: Application of knowledge 7) Marcos should not change his mission statement now since his business has been around for 10 years.

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

AACSB: Application of knowledge 2 Copyright © 2023 Pearson Education, Inc.

8) Most firms begin the strategic planning process by developing detailed marketing and departmental plans that support a company-wide plan.

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

AACSB: Application of knowledge 9) An organization's mission statement should emphasize its intentions toward customers and the customer experience the organization seeks to create.

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

AACSB: Application of knowledge 10) "At Dodson, we sell shoes" is a market-oriented business definition.

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

AACSB: Analytical thinking 11) "At CL Online, we create customer connectivity, anytime, anywhere" is a product-oriented mission statement.

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

AACSB: Analytical thinking 12) Which of the following best describes a company's business portfolio?

A) the list of all the marketing activities in which the company invests B) the target segments of the company's various businesses C) the company's products or services in a particular market D) the collection of businesses and products that make up the company E) the company's strengths in terms of technology, people, and products Answer: D Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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13) Which of the following provides a measure of market attractiveness in the Boston Consulting Group approach?

A) relative market share B) market sentiment C) return on marketing investment D) market growth rate E) brand image Answer: D Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 14) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 15) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 16) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 4 Copyright © 2023 Pearson Education, Inc.

17) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 18) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 19) Selling or phasing out a product and using the resources elsewhere can be described as ________.

A) divesting B) harvesting C) market segmentation D) diversification E) market saturation Answer: A Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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20) Which of these is NOT a problem with using the BCG and other centralized approaches for portfolio planning purposes?

A) they do not help identify growth areas B) they provide little advice on future planning C) they are very time consuming D) they are difficult to implement E) SBUs can be hard to identify Answer: A Diff: 3 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 21) The first step in the BCG approach is to ________.

A) identify the firm's strategic business units (SBUs) B) milk the cash cows C) define your marketing mix D) invest funds in stars E) divest the dogs Answer: A Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 22) When a company chooses to harvest a particular strategic business unit, it ________.

A) increases the advertising budget for that strategic business unit B) invests more in the strategic business unit to build its market share C) increases short-term cash flow despite the long-term effect D) invests just enough in the strategic business unit to keep its market share at the current level E) gradually increases investment in the strategic business unit over time to maximize profits Answer: C Diff: 2 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 6 Copyright © 2023 Pearson Education, Inc.

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

AACSB: Analytical thinking 26) Under Armour increasing its advertising spending and offering an ever-increasing range of styles and colors 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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27) Marcos is considering business expansion and buying a local business that provides cleanup and sanitation services for local businesses. In his current business he owns 10 food trucks that serve the greater metropolitan area. If he does buy the sanitation business it would be an example of growing his business through ________.

A) diversification B) market penetration C) market development D) product development E) adaptation Answer: A Diff: 3 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 28) Ainsworth is a toy manufacturer based in Australia. Which of the following most likely indicates that Ainsworth is following a diversification strategy?

A) Ainsworth increases its spending on advertising and promotion.

B) Ainsworth acquires the rights to manufacture toys resembling a popular cartoon character.

C) Ainsworth introduces its toys in the Indian and Southeast Asian markets.

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

E) Ainsworth develops a new line of educational toys targeting its current market.

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

AACSB: Analytical thinking 29) ToyBox is a toy manufacturer based in the United Kingdom. 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 its toys 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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30) BlueBear is a shoe manufacturer based in the United States. Which of the following indicates that the company is following a market development strategy?

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

B) BlueBear employs a British comedian for a U.S. advertising campaign.

C) BlueBear introduces its shoes in the Indian and Southeast Asian markets.

D) BlueBear adds a line of leather purses to its offerings in the U.S. market.

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

Answer: C Diff: 3 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 and Café shops, 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: 3 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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

AACSB: Analytical thinking 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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

AACSB: Analytical thinking 37) ________ 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 38) Which of these might be a reason for a firm to downsize?

A) The high profits will quickly attract competition.

B) The BCG matrix classified the SBU incorrectly.

C) The product line should not be extended.

D) The firm has grown too fast.

E) The products are selling too quickly.

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

AACSB: Analytical thinking 39) A firm should never downsize unless the division is unprofitable.

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

AACSB: Application of knowledge 40) A good reason to sell an SBU is that it no longer fits the firm's overall strategy.

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

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41) An SBU can be a company division or a product line within a division, but not a single product or brand.

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

AACSB: Application of knowledge 42) Ford's performance against Toyota depends on the quality of Ford's overall value delivery network versus Toyota's.

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

AACSB: Application of knowledge 43) Market penetration means making fewer sales to current customers without changing original products.

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

AACSB: Analytical thinking 44) Companies must develop not only strategies for growing their business portfolios but also strategies for downsizing them.

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

AACSB: Application of knowledge 45) Marketing needs to identify, evaluate, and select market opportunities and lay down strategies for capturing them.

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

AACSB: Reflective thinking 46) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Application of knowledge

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47) The product/market expansion grid, like the BCG matrix, is used to identify growth opportunities.

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

AACSB: Analytical thinking 48) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 49) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking

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50) 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 LO: 2-2: Discuss how to design business portfolios and develop growth strategies.

AACSB: Analytical thinking 51) List and discuss some reasons a firm might want to downsize their business portfolio.

Answer: There are many reasons that a firm might want to abandon products or markets. A firm may have grown too fast or entered areas where it lacks experience. The market environment might change, making some products or markets less profitable. For example, in difficult economic times, many firms prune out weaker, less-profitable products and markets to focus their more limited resources on the strongest ones. Finally, some products or business units simply age and die. When a firm finds brands or businesses that are unprofitable or that no longer fit its overall strategy, it must carefully prune, harvest, or divest them.

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

AACSB: Analytical thinking 52) Why do companies need to grow and what is marketing's role in that process?

Answer: Companies need growth if they are to compete more effectively, satisfy their stakeholders, and attract top talent. At the same time, a firm must be careful not to make growth itself an objective. The company's objective must be to manage "profitable growth."

Marketing has the main responsibility for achieving profitable growth for the company.

Marketing needs to identify, evaluate, and select market opportunities and lay down strategies for capturing them.

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

AACSB: Analytical thinking

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53) 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 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 54) Jim's Hardware relies on its ________, which is a series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm's products.

A) supplier networks B) internal value chain C) distributor chain D) portfolio network E) internal supply chain Answer: B Diff: 2 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) 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) favor Answer: C Diff: 2 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

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56) 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 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) From a marketing perspective, a firm's success depends not only on how well each department performs it's work but also on how well these departments ________.

A) coordinate their activities B) utilize their budgets C) advertise their successes D) isolate to do their jobs E) implement cost cutting strategies Answer: A Diff: 2 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 58) The marketing concept suggests that the company strategy should revolve around ________ and building profitable relationships with important consumer groups.

A) cutting costs B) identifying the firm's weaknesses C) creating customer value D) generating efficiencies E) developing new products Answer: C Diff: 3 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

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59) Demetrius scheduled a Zoom meeting with the engineering, production, and finance departments to discuss a new product idea that originated from the marketing department. These internal departments are part of the firm's ________.

A) delivery chain B) value chain C) supply chain D) marketing chain E) finance function Answer: B Diff: 2 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 60) A firm's customers are part of the firm's value chain.

Answer: FALSE Diff: 1 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 61) Walmart's success can be attributed largely to a great marketing department.

Answer: FALSE Diff: 1 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 62) A company's value chain is only as strong as its weakest link.

Answer: TRUE Diff: 1 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 63) A firm's marketing department must partner with other company departments to produce superior value for customers.

Answer: TRUE Diff: 1 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

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64) A company's customer value delivery network does not include members external to the organization.

Answer: FALSE Diff: 1 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 65) 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 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

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66) 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 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 67) Explain what it means for marketing to get all departments to "think consumer."

Answer: Marketers must find ways to get all departments to "think consumer" and develop a smoothly functioning value chain. Engaging customers today requires a whole-company commitment. As HP cofounder David Packard once famously said, "Marketing is too important to be left only to the marketing department." Thus, whether you're an accountant, an operations manager, a financial analyst, an IT specialist, or a human resources manager, you need to understand marketing and your role in creating customer value. "From finance to customer service to manufacturing, every employee should see how their role plays a part in the customer experience," says one marketer.

Diff: 2 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 68) Why is coordination among departments important to the firm?

Answer: Each department carries out value-creating activities to design, produce, market, deliver, and support the firm's products. The firm's success depends not only on how well each department performs its work but also on how well the various departments coordinate their activities. The text gives the example of how closely Walmart's marketing department works with the purchasing department to discover what consumers want and deliver it at a good price.

Diff: 2 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

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69) 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 70) ________ 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 71) Which of the following best describes 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 behaviors Answer: B Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking

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72) 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 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 73) 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 behaviors Answer: E Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 74) 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking

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75) 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 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 76) Ford Motor Company issuing a recall that requires customers to schedule appointments with car dealerships to repair faulty igniters would have the greatest impact on the ________ component of its marketing mix.

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

AACSB: Analytical thinking 77) Which of the following will most likely be included in the "price" component of a company's marketing mix?

A) packaging B) sales promotion C) brand name D) inventory E) discounts Answer: E Diff: 2 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

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78) 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 79) 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 80) Urban transportation firm Lime promises "Smart mobility for the modern world." This simple statement does a good job of ________ the firm's products.

A) positioning B) introducing C) sharing D) integrating E) mixing Answer: A Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking

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81) A company should target market segments in which it can ________.

A) sell the most products B) profitably generate the greatest customer value and sustain it over time C) compete against the fewest number of firms D) quickly harvest the profits and move on to the next segment E) build the greatest brand awareness and survive until it becomes profitable Answer: B Diff: 2 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 82) A firm's marketing program should focus on supporting its positioning strategy.

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

AACSB: Analytical thinking 83) Positioning is one of the four Ps of marketing.

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

AACSB: Analytical thinking 84) Some firms might decide to serve all market segments.

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

AACSB: Analytical thinking 85) Place includes company activities that make the product available to target consumers.

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

AACSB: Analytical thinking 86) 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

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87) A large hotel chain divided its customer market into segments and selected the most promising segments. Deciding what position it wants to occupy in these segments is called diversification.

Answer: FALSE Diff: 3 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 88) 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Analytical thinking 89) In the four Ps of the marketing mix, promotion refers to advertising.

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

AACSB: Analytical thinking 90) Services, such as banking, airline, and retailing services, might also be called service products.

Answer: TRUE Diff: 1 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

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91) 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 LO: 2-4: Describe the elements of a customer value-driven marketing strategy and mix and the forces that influence them.

AACSB: Reflective thinking 92) Some critics point out that the four Ps takes a seller's view of the market. Explain how the four As model might address this shortcoming.

Answer: Under this more customer-centered four As framework, acceptability is the extent to which the product exceeds customer expectations; affordability the extent to which customers are willing and able to pay the product's price; accessibility the extent to which customers can readily acquire the product; and awareness the extent to which customers are informed about the product's features, persuaded to try it, and reminded to repurchase. The four As relate closely to the traditional four Ps. Product design influences acceptability, price affects affordability, place affects accessibility, and promotion influences awareness.

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

AACSB: Analytical thinking

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Firm X and Firm Y are in the same line of business. Use the financial information below to answer the following questions.

Sales Gross Profit Marketing Expenses Net Income (Profit)

Firm X $78,661 $32,111 $11,554 $8,412

Firm Y $94,124 $42,151 $17,851 $9,324

All numbers are in thousands.

93) Firm X's profit margin is ________.

A) 15.2% B) 40.8% C) 8.2% D) 10.7% E) 4.1% Answer: D Diff: 1 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) Firm X's return on sales is ________.

A) 15.2% B) 40.8% C) 8.2% D) 10.7% E) 4.1% Answer: B Diff: 1 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 95) Firm Y's return on sales is ________.

A) 44.8% B) 9.9% C) 19.0% D) 10.7% E) 4.1% Answer: A Diff: 1 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.

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96) Firm Y's profit margin is ________.

A) 15.2% B) 9.9% C) 19.0% D) 10.7% E) 4.1% Answer: B Diff: 1 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 97) Firm Y has the highest profit margin.

Answer: FALSE Diff: 2 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 98) Firm Y has the highest return on sales.

Answer: TRUE Diff: 2 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) 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 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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100) 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 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 101) In a SWOT analysis, which of the following would most likely be considered a strength of a company?

A) a favorable 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 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 102) In a SWOT analysis, which of the following would be considered a weakness of a company?

A) an unfavorable 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 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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103) In a SWOT analysis, ________ refer to favorable 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 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 104) In a SWOT analysis, ________ refer to unfavorable external factors or trends that may present challenges to performance.

A) threats B) strategies C) weaknesses D) opportunities E) strengths Answer: A Diff: 1 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 105) 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 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

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106) 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 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 107) 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 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 108) 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 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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109) Evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are attained is called ________.

A) marketing control B) marketing implementation C) market planning D) marketing development E) market targeting Answer: A Diff: 1 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 110) 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-centered 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 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 111) The marketing department should not be concerned about a product's ROI since that is the focus of the finance department.

Answer: FALSE Diff: 2 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 112) Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives.

Answer: TRUE Diff: 2 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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113) The most common form of marketing organization is the product management organization.

Answer: FALSE Diff: 1 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 114) Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary.

Answer: TRUE Diff: 1 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 115) 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 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 116) Marketing dashboards are used to monitor strategic marketing performance.

Answer: TRUE Diff: 1 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 117) Marketing ROI measures the internal capabilities generated by investments in marketing activities.

Answer: FALSE Diff: 2 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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118) 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 favorable factors or trends in the external environment that a company may be able to exploit to its advantage. And threats are unfavorable 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 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 119) 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 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

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120) 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 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

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121) 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 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

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122) 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 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 123) 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 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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124) 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-centered measures such as customer acquisition, customer engagement, customer retention, customer equity, and customer lifetime value.

Diff: 3 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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Marketing: An Introduction, 15e (Armstrong) 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 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 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 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge

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

AACSB: Analytical thinking 5) American Honda purchases over $20 billion worth of auto parts and materials every year. ________ are an important link in the company's success.

A) Wholesalers B) Suppliers C) Physical distribution firms D) Media firms E) Retailers Answer: B Diff: 2 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 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

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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 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 labor 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 centers Answer: E Diff: 2 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 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

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

AACSB: Analytical thinking

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

AACSB: Analytical thinking 14) Volunteers are part of an organization's ________ publics.

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

AACSB: Analytical thinking; Ethical understanding and reasoning

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

AACSB: Analytical thinking

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

AACSB: Analytical thinking

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

AACSB: Application of knowledge 23) The ABC Company manufactures microprocessors and caters exclusively to private manufacturers that produce high-end computers. Which type of market does ABC directly target?

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

AACSB: Analytical thinking

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25) Which of the following is a major force in the firm's macroenvironment?

A) demographic B) educational C) consumers D) financial sector E) media Answer: A Diff: 2 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Application of knowledge 26) JJ's Trucking Firm transports goods for M&M Clothing. JJ's Trucking firm is an example of which of these intermediaries?

A) supplier intermediary B) reseller markets C) physical distribution firm D) financial intermediary E) marketing services agency Answer: C Diff: 2 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 27) The marketing concept states that successful firms must do more than simply adapt to the needs of their target consumers. They must also gain strategic advantage by ________.

A) becoming the largest firm supplying a particular market B) selling the products or services cheaper than any other firm C) having rapid delivery to the consumers' home D) positioning their offerings strongly against the offerings of their competitors E) sell goods on credit and offer large discounts for cash payments Answer: D Diff: 3 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking

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28) Which of these macroenvironment forces would be most likely to drive a company to be more environmentally conscious?

A) economic B) natural C) technological D) demographic E) cultural Answer: B Diff: 2 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 29) Disruption in the marketing environment ________.

A) did not affect firms until the year 2000 B) has little impact on most firms C) appears to have accelerated in the past few years D) first appeared due to the Covid-19 pandemic E) has little impact on product mix or delivery Answer: C Diff: 2 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 30) During 2020, Coca-Cola's revenue fell by 11.5%. How much did it decline if the previous year's revenue was $37.3 billion?

A) $33.0 billion B) $5.4 billion C) $3.4 billion D) $41.6 billion E) $4.3 billion Answer: E Diff: 2 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 31) Cosmetics firm L'Oréal treats their suppliers as partners to help them create and deliver customer value.

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

AACSB: Analytical thinking

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32) Large firms are rarely impacted by factors in the macroenvironment.

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

AACSB: Analytical thinking 33) The pandemic altered spending patterns of many consumers. For example, Starbucks's revenue fell by over 11% since people shifted to working from home and skipped their morning Starbucks beverage they used to buy on the way to work.

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

AACSB: Analytical thinking 34) Walmart's microenvironment includes suppliers.

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

AACSB: Analytical thinking 35) Marketing intermediaries form an important component of a company's overall value delivery network.

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

AACSB: Analytical thinking 36) Suppliers help a company stock and move goods from their points of origin to their destinations.

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

AACSB: Application of knowledge 37) 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 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 11 Copyright © 2023 Pearson Education, Inc.

38) Advertising agencies that help a company target a certain section of customers are marketing intermediaries.

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

AACSB: Analytical thinking 39) Resellers are distribution channel firms that help the company find customers or make sales to them.

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

AACSB: Application of knowledge 40) 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 LO: 3-1: Describe the environmental forces that affect the company's ability to serve its customers.

AACSB: Analytical thinking 41) What are marketing intermediaries? What are the different types of marketing intermediaries?

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

AACSB: Analytical thinking

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

AACSB: Analytical thinking 43) 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 neighborhood residents and community organizations. Large companies usually create departments and programs that deal with local community issues and provide community support. General public: A company needs to be concerned about the general public's attitude toward its products and activities. The public's image of the company affects its buying behavior.

Internal publics: This group includes workers, managers, volunteers, and the board of directors.

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

AACSB: Analytical thinking

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

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

AACSB: Application of knowledge 45) The current global population is 7.7 billion. The earth's population is expected to be 8.6 billion by 2030. What percentage increase in population does this change represent?

A) 15.4% B) 11.7% C) 4.3% D) 8.2% E) 21.4% Answer: B Diff: 1 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 46) The current U.S. population is 330 million. The U.S. population is expected to be almost 360 million by 2030. What percentage increase in population does this change represent?

A) 15.4% B) 11.7% C) 4.3% D) 9.1% E) 21.4% Answer: D Diff: 1 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking

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47) Which of the following generational groups accounts for 21 percent of the U.S. population but controls 53 percent of all consumer spending?

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

AACSB: Application of knowledge 48) Which of the following is a true statement about Baby Boomers?

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

B) They constitute the largest demographic group in the United States.

C) They were born between 1965 and 1976.

D) They are the most educated generation of Americans.

E) They are the wealthiest generation in U.S. history.

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

AACSB: Application of knowledge 49) One study showed that 82 percent of Baby Boomers are open to trying new brands. What is the potential size of the Baby Boomer market for a firm trying to introduce a new brand if there are 71 million Baby Boomers?

A) 71 million B) 82 million C) 330 million D) 58 million E) 65 million Answer: D Diff: 1 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking

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50) The approximately 80 million ________ make up the generation born between 1997 and 2012.

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

AACSB: Application of knowledge 51) 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 52) 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking

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53) 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 54) 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: A Diff: 2 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 55) 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 the United States to date.

D) They are very comfortable using digital technology.

E) They typically avoid using technology while buying products.

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

AACSB: Application of knowledge 56) 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

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57) 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 58) Which of the following is most likely a true statement about generational groups in the United States?

A) The Millennials account for nearly half of all discretionary consumer spending in the United States.

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

AACSB: Analytical thinking 59) Which of the following is a geographic shift that has been observed in the United States in recent times?

A) fewer Americans moving to Sunbelt states B) fewer Americans moving to the South C) more Americans moving to the Midwest D) more Americans moving to densely populated cities E) more Americans moving to micropolitan areas Answer: E Diff: 2 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking

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60) 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) worker longer hours at the office B) leave the workforce C) telecommute D) work part-time E) purchase second residences Answer: C Diff: 2 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 61) Large companies like P&G and Walmart 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 American market C) the African American market D) the LGBTQ community E) the Hispanic market Answer: E Diff: 2 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments 62) Which of the following is most likely a true statement about diversity in the United States?

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

B) Asian Americans constitute the largest ethnic group in the United States.

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

AACSB: Diverse and multicultural work environments

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63) 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 64) Individuals born after 2012 are known as ________.

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

AACSB: Application of knowledge 65) Which of these groups is the most fluent in digital technologies?

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

AACSB: Application of knowledge

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66) Generation Alphas is still a(n) ________ market.

A) very large B) moderate size C) relatively small D) uninfluential E) less technology savvy Answer: C Diff: 2 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Application of knowledge 67) A recent survey of Gen Alpha parents shows that their children influence most of their technology purchases.

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

AACSB: Analytical thinking 68) Generation Alphas tend to watch more TV than previous generations.

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

AACSB: Analytical thinking 69) The Generation Alpha market is so small that most firms ignore this consumer group.

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

AACSB: Analytical thinking 70) Marketers now face increasingly diverse markets, both at home and abroad, as their operations become more international in scope.

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

AACSB: Analytical thinking

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71) Companies are adapting their promotional efforts to reflect the changing dynamics of American families.

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

AACSB: Diverse and multicultural work environments 72) More than 33% of today's adults have never been married.

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

AACSB: Analytical thinking 73) Many companies have started to target the LGBTQ market segment, which has significant buying power.

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

AACSB: Diverse and multicultural work environments 74) The purchasing power of a population is part of the demographic environment of a company's macroenvironment.

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

AACSB: Application of knowledge 75) In adjusting to the economy, companies may be tempted to increase their marketing budgets.

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

AACSB: Analytical thinking 76) As the economy has improved, consumers are again indulging in luxuries and bigger-ticket purchases.

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

AACSB: Analytical thinking

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77) Discuss how an increased educational level in the United States has affected the American household and how marketers have responded to these changes.

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

The U.S. population is becoming better educated. 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 40 percent of the U.S. workforce in the late 1950s to 69 percent today. American women now make up 40 percent of primary family breadwinners. Among households made up of married couples with children, 60 percent are dual-income households; only the husband works in 28.5%. 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Analytical thinking 78) How do companies use marketing techniques to respond to the changing diversity in the U.S. population? Provide examples to illustrate your response.

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

Marketers now face increasingly diverse markets, both at home and abroad, as their operations become more international in scope. 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 LO: 3-2: Explain how changes in the demographic and economic environments affect marketing decisions.

AACSB: Diverse and multicultural work environments

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79) Diversity goes beyond ethnic heritage. Discuss the factors that have influenced the emergence of the lesbian, gay, bisexual, or transgender (LGBTQ) 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 LGBTQ 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 (LGBTQ) 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 LGBTQ 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 LGBTQ "Rainbow Team," sponsors gay and lesbian community events, and offers a special website (www.aa.com/rainbow), Facebook pages, and Twitter feed featuring LGBTQ-oriented travel deals, information, and discussion. The airline's focus on gay consumers has earned it double-digit revenue growth from the LGBTQ community each year for more than a decade.

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

AACSB: Diverse and multicultural work environments 80) What is one concern marketers should be aware of when marketing to Generation Alpha?

Answer: Generation Alpha consists of children born since 2012. An important Generation Alpha marketing concern involves children's privacy and their vulnerability to marketing pitches.

Companies marketing to this group must do so responsibly or risk the wrath of parents and public policy makers.

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

AACSB: Diverse and multicultural work environments 81) What is Generation Alpha and why are they an important demographic group?

Answer: Generation Alpha consists of children born since 2012. One expert suggests that by 2025 this group will grow larger even than the Millennials. The Alphas hold great promise for marketers. "Generation Alpha will be the most formally educated generation ever, the most technology-supplied generation ever, and globally the wealthiest generation ever," claims the social researcher who gave the group its name. They already wield significant influence with their parents in regard to purchasing decisions.

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

AACSB: Diverse and multicultural work environments

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82) 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 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning 83) 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 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge 84) 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 movement Answer: E Diff: 2 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning

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85) 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 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge 86) One recent trend in the natural environmental that marketers need to be aware of is ________.

A) an overabundance of renewables B) shortages of raw materials C) a global shift toward more fossil fuel consumption D) a move toward limited government regulation and intervention E) a backlash among consumers against the green movement Answer: B Diff: 2 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge 87) Which government agency is in charge of ensuring that new products are safe for consumers?

A) The Food and Drug Administration B) The Consumer Product Safety Commission C) The U.S. Product Safety Agency D) The Bureau of Consumer Protection E) The Federal Reserve Answer: B Diff: 2 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge 88) Government regulations with regard to product safety have increased product development costs.

Answer: TRUE Diff: 1 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge

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89) Major shipping firms hire meteorologists to help them predict weather issues that might prevent on-time delivery of products.

Answer: TRUE Diff: 1 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge 90) The environmental sustainability movement has had very little impact on marketing.

Answer: FALSE Diff: 1 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge 91) The introduction of new technologies tends to be disruptive since an old technology is often replaced.

Answer: TRUE Diff: 1 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Analytical thinking 92) The Consumer Product Safety Commission has created complex regulations for testing new drugs before they are sold to the public.

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

AACSB: Application of knowledge 93) 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 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Application of knowledge

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94) 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 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning 95) 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 United States and 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 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Ethical understanding and reasoning

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96) 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 LO: 3-3: Identify the major trends in the firm's natural and technological environments.

AACSB: Analytical thinking 97) 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 98) Governments often 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning

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99) 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 100) 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 101) P&G's 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning

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102) 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 103) Which of the following is most likely true about people's beliefs and values?

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

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

AACSB: Analytical thinking 104) 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Analytical thinking 105) Although most Americans practice religion, religious conviction and practice have been increasing.

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

AACSB: Analytical thinking

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

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

AACSB: Ethical understanding and reasoning 107) 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 108) Marketers have a better chance of taking advantage of a person's secondary beliefs than his or her core beliefs.

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

AACSB: Analytical thinking 109) The percentage of people who feel a deep sense of spiritual peace and well-being is increasing.

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

AACSB: Analytical thinking 110) 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 the United States, there are many laws created at the national, state, 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 LO: 3-4: Explain the key changes in the political and cultural environments.

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111) 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 LO: 3-4: Explain the key changes in the political and cultural environments.

AACSB: Ethical understanding and reasoning 112) 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 behavior 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 LO: 3-4: Explain the key changes in the political and cultural environments.

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113) 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 colors, flavors, 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 pretax profits to charitable organizations.

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

AACSB: Ethical understanding and reasoning 114) 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 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 115) 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 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking

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Use the following information from your text to answer the questions below.

During the pandemic, the real-time feedback from Keurig's smarthome-brewing machines also gave KDP an early advantage with its K-Cups pods. "I turned our factories to maximum output, way in advance of retail orders," says CEO Gamgort. The connected brewers were telling the company not just where, when, and how much consumers were making coffee but also what they were drinking. For example, early signs showed people were drinking much more premium coffee, likely because at 70 cents for a gourmet K-Cup at home, even premium home-brewed was a bargain compared to the $3 to $5 they would have spent at a Starbucks. Beyond changes in production and operations, KDP also launched a broad "Fueling the Front Line" campaign to recognize and lend support to frontline workers and health-care providers during the challenging times. For every consumer social media post of gratitude that included #FuelingtheFrontline, KDP provided a cup of coffee to a hospital worker. KDP also donated Keurig brewers and coffee to break rooms in more than 350 hospitals across the country. And it sponsored a mobile truck tour that visited selected hospitals to give harried hospital workers and first responders a special moment outside to enjoy a cup of coffee or other beverage.

116) KDP's analysis of smarthome-brewing machine data was only possible because changes in the ________ environment made it possible.

A) cultural B) technological C) political D) natural E) economic Answer: B Diff: 2 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 117) KDP's "Fueling the Frontline" campaign is an example of ________.

A) environmental sustainability B) monitoring impact C) cause-related marketing D) consumer activism E) environmental uncertainty Answer: C Diff: 2 LO: 3-5: Discuss how companies can react to the marketing environment.

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118) KDP's quick recognition of changes in its environment and anticipation of higher sales is an example of a ________ toward their marketing environment.

A) reactive stance B) proactive stance C) concurrent stance D) passive acceptance E) contractual stance Answer: A Diff: 2 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 119) KDP's CEO recognized early in the pandemic that consumers would spend more money at Starbucks.

Answer: FALSE Diff: 1 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 120) KDP's use of technology and data collection gave the firm an early advantage when the pandemic altered the competitive environment.

Answer: TRUE Diff: 1 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 121) People's orientation to their society does not impact their consumption patterns and attitudes toward the marketplace.

Answer: FALSE Diff: 1 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 122) Firms that develop strategies to change the environment are considered proactive.

Answer: TRUE Diff: 1 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking 123) Today's consumers use the digital media to share their brand experiences with companies and with each other.

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

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124) 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 favorable 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 LO: 3-5: Discuss how companies can react to the marketing environment.

AACSB: Analytical thinking

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Marketing: An Introduction, 15e (Armstrong) 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 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge 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 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge 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 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge

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4) New information-based knowledge of customers and the marketplace that helps create customer value, engagement and build relationships is called ________.

A) big data B) customer insights C) a marketing information system D) planning information E) creative data collection Answer: B Diff: 2 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge 5) Some firms have created ________ to help them develop actionable items from marketing information.

A) big data groups B) information teams C) executive teams D) customer insights teams E) consumer groups Answer: D Diff: 2 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge 6) The final step of a marketing information system includes ________.

A) collecting data B) developing marketing intelligence C) making marketing decisions D) assessing information needs E) developing information Answer: C Diff: 2 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge 7) Big data refers to the huge data sets generated by sophisticated information generation, collection, storage, and analysis technologies.

Answer: TRUE Diff: 2 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge

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8) An effective MIS assesses information needs, develops needed information, and distributes the information to help managers with decision making.

Answer: TRUE Diff: 1 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Analytical thinking 9) Marketers don't need more information to help managers with decision making, they need better information.

Answer: TRUE Diff: 1 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Analytical thinking 10) Big data is usually easy to analyze but difficult to collect.

Answer: FALSE Diff: 1 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Analytical thinking 11) A marketing information system consists solely of the technology and computing systems used to capture and utilize information.

Answer: FALSE Diff: 1 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Analytical thinking 12) 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 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Analytical thinking 3 Copyright © 2023 Pearson Education, Inc.

13) Explain what is meant by "big data."

Answer: Big data refers to the huge and complex data sets generated by today's sophisticated information generation, collection, storage, and analysis technologies. In 2021, the people and systems of the world created, captured, copied, and consumed an estimated 74 zettabytes of data.

(A zettabyte contains a trillion gigabytes.) The size of the global datasphere grew tenfold over the past 10 years and will double in size over the next three years. The challenge for marketers is to find ways to tap this data to gain useful marketing insights that will help harvest customer value.

Diff: 1 LO: 4-1: Explain the importance of information in gaining insights about the marketplace and customers.

AACSB: Application of knowledge 14) 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 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking 15) 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 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge

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16) Chantrell is using some internal data from the firm's information system that was collected about 10 years ago. She would like to gain some insight into online buying patterns. What do you see is her biggest challenge with regard to using and evaluating this data?

A) Big data is difficult to manage.

B) Extracting the data C) Data age quickly.

D) Computing technology has changed a lot.

E) Understanding the data Answer: C Diff: 3 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking 17) 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 center of all decisions Answer: B Diff: 2 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking 18) 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 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking

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19) 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 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking 20) 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 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 21) 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 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge

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22) Companies should try to conduct marketing intelligence investigations of themselves so they can ________.

A) find potentially damaging information leaks and protect their own information B) hone their skills to conduct marketing intelligence investigations of their competitors C) learn the capabilities of their internal systems D) use the technique and determine whether it has any value E) adjust their metrics in order to get better information Answer: A Diff: 2 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 23) One method used to gather consumer opinions about your products online is to ________.

A) observe consumers firsthand using webcams B) monitor social media C) send out secret shoppers D) talk to your competitors E) question shoppers as they leave the store Answer: B Diff: 2 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 24) Internal databases are a very costly source of information to the firm.

Answer: FALSE Diff: 2 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 25) The U.S. Securities and Exchange Commission's database is a good source of financial information for your publicly-traded competitors.

Answer: TRUE Diff: 2 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 26) Companies have set up social media command centers that monitor real-time brand-related online mobile media activity.

Answer: TRUE Diff: 2 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge

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27) The U.S. Patent Office and Trademark database cannot be accessed to reveal patents that competitors have filed.

Answer: FALSE Diff: 2 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 28) The information collected for an internal database comes only from the marketing department and the customer service department.

Answer: FALSE Diff: 1 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 29) Secondary data consist of information collected for the specific purpose at hand.

Answer: FALSE Diff: 1 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Application of knowledge 30) 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 behavior, and the industry; and marketing department provides information on customer transactions, demographics, and buying behavior.

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 LO: 4-2: Define the marketing information system and discuss its parts.

AACSB: Analytical thinking

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Use the information below to answer the following questions.

Germane Company conducted a survey to determine customer attitudes about their primary product. They collected the following data about how a random group of 7 consumers perceive their product. Consumers were asked to rate the product on a scale of 1 to 7 with 7 being the best rating.

Consumer # 1 2 3 4 5 6 7

Perception of product (1-7 score) 5 7 3 7 6 4 2

31) What is the mean consumer rating of Germane Company's product?

A) 5.0 B) 4.9 C) 6.1 D) 7.0 E) 3.5 Answer: B Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 32) What is the median consumer rating of Germane Company's product?

A) 5.0 B) 4.9 C) 6.1 D) 7.0 E) 3.5 Answer: A Diff: 1 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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33) What is the mode consumer rating of Germane Company's product?

A) 5.0 B) 4.9 C) 6.1 D) 7.0 E) 3.5 Answer: D Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 34) Germane Company might find this data set does not provide useful results since it is ________.

A) gleaned from survey data B) probably too small a sample C) likely biased by the survey method D) quantitative and not qualitative data E) uses a scoring method with too many options Answer: B Diff: 3 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 35) Asking smart questions is an example of ________.

A) well-directed analysis B) open-minded research C) exploratory research D) integrated marketing E) causal research Answer: A Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 36) If a marketing researcher is willing to accept new possibilities when the results suggest something unexpected it is an example of ________.

A) well-directed analysis B) open-minded analysis C) exploratory research D) integrated marketing E) causal research Answer: B Diff: 1 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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37) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 38) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 39) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 40) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

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41) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 42) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 43) 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 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) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 45) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 46) 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 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) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 48) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 49) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 50) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

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51) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 52) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 53) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 54) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 15 Copyright © 2023 Pearson Education, Inc.

55) Which of the following is a disadvantage of secondary data?

A) It is collected for another purpose.

B) It rarely contains all the data needed.

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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 56) ________ is a method of gathering primary data that involves asking people questions about their knowledge, attitudes, preferences, and buying behavior.

A) Observational research B) Archival research C) Survey research D) Experimental research E) Causal research Answer: C Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 57) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 58) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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59) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 60) Experimental research is best suited for gathering ________ information.

A) exploratory B) causal C) ethnographic D) interactive E) descriptive Answer: B Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 61) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 62) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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63) 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 flavoring, and the other has artificial flavors. This is an example of ________.

A) descriptive research B) ethnographic research C) experimental research D) online research E) exploratory research Answer: C Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 64) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 65) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

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66) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 67) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 68) ________ 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 69) 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 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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70) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 71) ________ mine(s) individual online media connections and conversations.

A) Qualitative research B) Social targeting C) Behavioral sampling methods D) Online behavioral targeting E) A focus group Answer: B Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 72) Which of the following is a structured method of online research where marketers require direct responses from customers?

A) online behavioral targeting B) social media tracking C) online listening D) online surveys E) blog analysis Answer: D Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 73) A practice called ________ allows marketers to use online data to target ads and offers to specific customers.

A) online listening B) behavioral targeting C) social media tracking D) data analytics E) online targeting Answer: B Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 20 Copyright © 2023 Pearson Education, Inc.

74) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 75) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 76) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 77) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 21 Copyright © 2023 Pearson Education, Inc.

78) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 79) Research plans are no longer presented in written format since everything is now digital.

Answer: FALSE Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 80) Marketing research is the systematic design, collection, analysis, and reporting of data directly relevant to a specific marketing situation facing an organization.

Answer: TRUE Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 81) A sample is a segment of the population selected for marketing research to represent the population as a whole.

Answer: TRUE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 82) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 83) In a convenience sample, the researcher selects the easiest population members from which to obtain information.

Answer: TRUE Diff: 3 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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84) Primary data can usually be obtained more quickly and at a lower cost than secondary data.

Answer: FALSE Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 85) Exploratory research would be used to gather data about the market potential for a new product.

Answer: FALSE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 86) Observational research is the most widely used method of primary data collection.

Answer: FALSE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 87) The major advantage of survey research is its flexibility.

Answer: TRUE Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 88) Researchers should use simple, direct, and unbiased wording of questions for research.

Answer: TRUE Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 89) Individual interviews cost three to four times as much as telephone interviews.

Answer: TRUE Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 90) The most important issue facing online researchers in the United States is the lack of a broad cross section of consumers who have access to the Internet.

Answer: FALSE Diff: 2 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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91) Ideally, a sample should be representative so that a researcher can make accurate estimates of the thoughts and behaviors of the larger population.

Answer: TRUE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Reflective thinking 92) Each population member has a known chance of being included when a probability sampling procedure is used.

Answer: TRUE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 93) The questionnaire is the most common research instrument.

Answer: TRUE Diff: 1 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 94) Neuromarketing uses EEG and MRI technologies to track brain electrical activity to learn how consumers feel and respond.

Answer: TRUE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 95) Open-ended questions provide answers that are easier to interpret and tabulate than closedended questions.

Answer: FALSE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 96) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Application of knowledge 97) Neuromarketing and biometric techniques are widely considered to be unethical.

Answer: FALSE Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

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98) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 99) Differentiate between the three types of marketing research objectives: exploratory research, descriptive research, and causal research.

Answer: A marketing research project might have one of three types of objectives. The objective of exploratory research is to gather preliminary information that will help define the problem and suggest hypotheses. The objective of descriptive research is to describe things, such as the market potential for a product or the demographics and attitudes of consumers who buy the product. The objective of causal research is to test hypotheses about cause-and-effect relationships. For example, a causal research study might probe whether a 10 percent decrease in tuition at a private college would result in an enrollment increase sufficient to offset the reduced tuition. Managers often start with exploratory research and later follow with descriptive or causal research.

Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 100) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking

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101) Briefly compare the three different types of research approaches used for gathering primary data.

Answer: The three research approaches for gathering primary data are observations, surveys, and experiments. Observational research involves watching relevant people, actions, and situations, usually to glean customer insights that can't be obtained through direct questions and answers. Observations can reveal information that people are unwilling or unable to provide in surveys or experiments. Survey research is very flexible; it can be used to obtain many different kinds of information in many different situations. Mail, telephone, and online surveys have relatively low costs in comparison to observational research. Surveys are also better suited than observations for identifying people's attitudes and feelings; surveys are best suited for gathering descriptive information. Experimental research is best suited for gathering causal information.

This type of research is most appropriate for determining cause-and-effect relationships.

Diff: 2 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 102) 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 behavior. 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Reflective thinking

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103) 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, behavior, 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Reflective thinking 104) 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 LO: 4-3: Outline the role of marketing research and the steps in the marketing research process.

AACSB: Analytical thinking 105) 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 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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106) Which of the following would NOT be considered a customer touch point?

A) customer purchases B) sales force contacts C) support calls D) social media posts E) manager's opinion Answer: E Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Analytical thinking 107) Approximately 99.9% of big data is ________.

A) stored onsite B) considered actionable C) not very useful D) extremely useful to decision makers E) considered right data Answer: C Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Analytical thinking 108) Technology by which machines think and learn in a way that looks and feels human is known as ________.

A) CRM B) EEG C) marketing analytics D) artificial intelligence E) neuromarketing Answer: D Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Analytical thinking 109) A firm has a huge amount of individual customer data saved in different databases. Which of the following can be used to integrate, analyze, and apply the available information effectively?

A) online market research tools B) integrated marketing systems C) CRM systems D) internal survey methods E) quality assurance tools Answer: C Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Analytical thinking 28 Copyright © 2023 Pearson Education, Inc.

110) 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 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 111) 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 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 112) 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 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 113) The analysis tools and processes used to dig out meaningful patterns in big data is called customer relationship management.

Answer: FALSE Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 114) Most big data is useful to marketers.

Answer: FALSE Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

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115) The main challenge for researchers using big data is to find the small fraction of data that provides meaningful information.

Answer: TRUE Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 116) Artificial intelligence is not advanced enough yet to have any real marketing application.

Answer: FALSE Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 117) Marketers should start with the fundamentals of managing customer relationships and then employ high-tech data and analytics solutions.

Answer: TRUE Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 118) CRM analysts use big data and marketing analytics to unearth patterns in customer data.

Answer: TRUE Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 119) What is customer relationship management (CRM)? What are the functions of CRM? How do firms benefit from CRM systems?

Answer: Most companies are awash in information about their customers. This information is usually scattered widely across the organization. It is buried deep in the separate databases and records of different company departments. To overcome such problems, many companies are now turning to customer relationship management. CRM systems integrate, analyze, and apply the mountains of individual customer data contained in their databases. CRM consists of sophisticated software and analytical tools from companies such as Salesforce.com, Oracle, Microsoft, and SAS that integrate customer information from all sources, analyze it in depth, and apply the results to build stronger customer relationships. CRM integrates everything that a company's sales, service, and marketing teams know about individual customers, providing a 360-degree view of the customer relationship. Marketing information has no value until it is used to make better marketing decisions.

Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

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120) 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 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 121) 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 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 122) What is artificial intelligence and how is it used in marketing?

Answer: Artificial intelligence (AI), is the technology by which machines think and learn in a way that looks and feels human but with a lot more analytical capacity. Artificial intelligence has taken the marketing–and about everything else in the world–by storm. Marketers are now using AI for everything from big data analytics to engaging customers to crafting personalized advertising and selling efforts. Although still in its infancy, AI offers vast potential for marketing. As Google's CEO Sundar Pichai suggests, AI "is more profound than fire or electricity."

Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge

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123) List some examples of how AI is currently being used.

Answer: Amazon's Echo is a very visible example of AI. Echo answers questions, creates music play lists, and send text messages all while collecting consumer preferences. IBM's Watson can tell jokes, answer questions, and write songs. Marketers use AI to gather information and target advertising in every sector of the economy. Firms can use it to keep inventory up to date so stockouts do not result in missed sales. Home Depot uses AI to give shoppers home renovation ideas and product suggestions. The applications of AI for marketing are limitless.

Diff: 2 LO: 4-4: Explain how companies analyze and use marketing information.

AACSB: Application of knowledge 124) For most small businesses useful market information and customer insight is ________.

A) too expensive to obtain B) attainable without spending a lot of money C) only possible if they adopt AI D) typically determined by hiring a consulting firm E) obsolete before it is analyzed Answer: B Diff: 2 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Application of knowledge 125) Online sources of valuable information for small businesses include all of the following EXCEPT ________.

A) observation B) competitor websites C) service review websites D) social media posts E) government agency data Answer: A Diff: 2 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Application of knowledge 126) One of the challenges of conducting international marketing research is ________.

A) a scarcity of good secondary data B) the homogeneity of foreign markets C) that primary data is not very useful in these markets D) hiring good marketing researchers to interpret the data E) there are too many similarities across countries Answer: A Diff: 2 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

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127) 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 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Application of knowledge 128) 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 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Analytical thinking 129) Which of the following statements about international marketing research is true?

A) International marketing research has declined over the past decade due to global economic decline.

B) Conducting personal interviews in developing countries is generally less difficult and less expensive than doing so in developed nations.

C) International researchers follow a different set of steps in marketing research than domestic researchers.

D) Language translation in international marketing research typically increases costs and raises the risk of errors.

E) International researchers benefit from useful secondary data that is available online, so primary data is typically unnecessary.

Answer: D Diff: 2 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Analytical thinking

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130) 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. In these circumstances, which of the following is the most ethical approach that Vincent Cosmetics can follow?

A) It should market the product as planned with the promotional line of "nine times smoother."

B) It should modify the results of the study to depict a strong correlation.

C) It should report the result as it is, or improve the product to match its claim.

D) It can continue to claim a high correlation and add a tag line saying "results may vary."

E) It should feature a testimonial from a satisfied user in an advertisement to support its claim.

Answer: C Diff: 3 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Ethical understanding and reasoning 131) Intrusions on consumer privacy is one of the main ethical issues facing marketers.

Answer: TRUE Diff: 1 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Ethical understanding and reasoning 132) Consumer data protection issues do not impact marketers since they are the primary focus of the information technology department.

Answer: FALSE Diff: 1 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Ethical understanding and reasoning 133) Consumer privacy issues are easy to identify for marketers collecting consumer data.

Answer: FALSE Diff: 1 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Ethical understanding and reasoning

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134) 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 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Reflective thinking 135) 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 LO: 4-5: Discuss the special issues some marketing researchers face, including public policy and ethics issues.

AACSB: Ethical understanding and reasoning

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Marketing: An Introduction, 15e (Armstrong) Chapter 5 Understanding Consumer and Business Buyer Behavior 1) About 35% of active Twitter users are ________.

A) Hispanic Americans B) Native Americans C) Pacific Islanders D) Asian Americans E) African Americans Answer: A Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Diverse and multicultural work environments 2) ________ represent a large growing market segment of over 61 million people that have a total annual buying power of about $1.7 trillion.

A) Hispanic Americans B) Native Americans C) Pacific Islanders D) Asian Americans E) African Americans Answer: A Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Diverse and multicultural work environments 3) ________ are the most affluent demographic segment in the United States with an annual buying power of $1.2 trillion yet only about 20 million in population.

A) Hispanic Americans B) Native Americans C) Pacific Islanders D) Asian Americans E) African Americans Answer: D Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Diverse and multicultural work environments

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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 behaviors.

B) In the United States, 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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 5) Which of these is the most important membership reference group and consumer buying organization in society?

A) family B) race C) gender D) trade organization E) occupational group Answer: A Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking

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7) ________ are people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others.

A) Opinion leaders B) Late mainstream adopters C) Strangers D) Barnacles E) Lagging adopters Answer: A Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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) Influencer marketing D) Direct marketing E) Values marketing Answer: C Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge 9) When marketers want to promote their products and services through word-of-mouth influence, they typically begin by ________.

A) pushing one-way commercials at customers B) identifying and targeting late adopters C) developing print and radio advertisements D) enlisting established influencers to spread the word E) withdrawing from online social networks Answer: D Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking

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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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge 12) Which of the following is a personal factor that influences a consumer's buying behavior?

A) life stage B) motivation C) status D) family E) social networks Answer: A Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge

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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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking

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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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking

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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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking

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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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge 23) ________ means that consumers are likely to remember good points made about a brand they favor 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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge

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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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 27) A person's occupation is more likely to influence the type of ________.

A) social media they use B) jewelry they buy C) food they eat D) clothes they wear E) leisure events they attend Answer: D Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking

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28) Influencer marketing involves ________ to spread the word about a company's brands.

A) enlisting established influencers B) telling consumers online C) blasting the internet with advertising D) hiring celebrities E) using employees Answer: A Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 29) Experts have found that the key to influencer marketing is to find online influencers who have strong networks of ________, a credible voice, and a good fit with the brand.

A) family members B) relevant followers C) employees D) celebrity endorsers E) techies Answer: B Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 30) One of the leading life-cycle stage segmentation systems, PRIZM, classifies every American household into one of ________.

A) six major racial and ethnic divisions B) four broad demographic groups C) 68 distinct life-stage segments D) 12 different occupational groups E) eight distinct family types Answer: C Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 31) The Covid-19 pandemic did not cause any long-term shifts in consumer behavior.

Answer: FALSE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking

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32) The Covid-19 pandemic accelerated the shift toward online shopping.

Answer: TRUE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 33) P&G developed a waterless line of shampoos and other hair care products that required no water for South African consumers facing severe water shortages.

Answer: TRUE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 34) Social class is determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables.

Answer: FALSE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 35) Subcultures are groups of people with shared value systems based on common life experiences and situations.

Answer: TRUE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge 36) Reference group influence on consumer buying behavior does not vary across products and brands.

Answer: FALSE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 37) A role consists of the activities people are expected to perform according to the people around them.

Answer: TRUE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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38) Learning describes changes in an individual's behavior arising from experience.

Answer: TRUE Diff: 1 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge 39) According to Maslow's theory, safety and social needs must be fulfilled after selfactualization needs.

Answer: FALSE Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 40) 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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Application of knowledge 41) It's advisable for a company to fit its products into existing attitude patterns rather than attempt to change them.

Answer: TRUE Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 42) Explain the cultural factors that influence consumer behavior.

Answer: Culture is the most basic cause of a person's wants and behavior. Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. Many subcultures make up important market segments. Social classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Unlike nationality or ethnic subculture, social class is determined by a combination of many variables, such as occupation, income, education, and wealth. Social scientists have identified seven social classes within the American culture, ranging from upper class to lower class.

Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Diverse and multicultural work environments

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43) Explain the concepts of word-of-mouth influence and opinion leaders.

Answer: Word-of-mouth influence can have a powerful impact on consumer buying behavior.

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. Some firms enlist opinion leaders to serve as "brand ambassadors" who spread the word about a company's products. For example, Mercedes-Benz wanted 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, it broke sales records. Many companies now create brand ambassador programs in an attempt to turn influential but everyday customers into brand evangelists.

Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Reflective thinking 44) A consumer's behavior is influenced by social factors, such as the consumer's small groups, family, and social roles and status. Explain the differences among these social factors.

Answer: Many small groups influence a person's behavior. 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 behaviors. An aspirational group is one to which the individual wishes to belong. Reference groups expose a person to new behaviors and lifestyles, influence a person's attitudes and self-concept, and create pressures to conform that may affect the person's product and brand choices. Opinion leaders are also included in reference groups. Family members can strongly influence buyer behavior 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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

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45) What are personality traits, and how do they affect purchase behavior? 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 behavior 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 F-150 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 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 46) Explain Maslow's hierarchy of needs.

Answer: Maslow suggested that our unfulfilled needs motivate us and that our needs are arranged in a hierarchy. That hierarchy includes these needs: physiological, safety, social, esteem, and self-actualization. Maslow suggested that we fulfill the lower-level, basic needs first before moving up the hierarchy. Until more important, basic needs such as safety are fulfilled, an individual has little interest in higher-level needs such as esteem and self-actualization. When that need is satisfied, it will stop being a motivator, and the person will then try to satisfy the next most important need. For example, starving people (physiological need) will not take an interest in the latest happenings in the art world (self-actualization needs) nor in how they are seen or esteemed by others (social or esteem needs) nor even in whether they are breathing clean air (safety needs). But as each important need is satisfied, the next most important need will come into play.

Diff: 2 LO: 5-1: Understand the consumer market and the major factors that influence consumer buyer behavior.

AACSB: Analytical thinking 47) Most unhappy customers ________.

A) never tell the company about their problem B) post the information on Facebook C) tell everyone they know about the experience D) contact the firm for a refund E) are always unhappy and cannot be pleased Answer: A Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 14 Copyright © 2023 Pearson Education, Inc.

48) The sum of the ongoing experiences consumers have with a brand that affect their buying behavior, engagement, and brand advocacy is known as ________.

A) postpurchase behavior B) the customer journey C) cognitive dissonance D) the customer acquisition process E) brand loyalty Answer: B Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 49) For marketers, the stage of the customer journey that represents ultimate success is ________.

A) learning behavior B) brand advocacy C) cognitive dissonance D) customer acquisition of product E) product awareness Answer: B Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 50) 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 behavior Answer: A Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge

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51) 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 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 52) 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 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 53) 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 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 54) The most effective sources of information about a product tend to be ________.

A) commercial B) public C) experimental D) personal E) paid Answer: D Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

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55) 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 behavior Answer: A Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 56) 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 favorite 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 behavior B) evaluation of alternatives C) information search D) need recognition E) purchase decision Answer: E Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 57) 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 behavior Answer: E Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

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58) ________ is a discomfort caused by postpurchase conflict.

A) Selective retention B) Cognitive dissonance C) Selective attention D) Restraint bias E) Subliminal perception Answer: B Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Application of knowledge 59) 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 postpurchase 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 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 60) 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) postpurchase behavior D) information search E) alternate evaluation Answer: C Diff: 2 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 61) Postpurchase customer satisfaction is the key to building profitable long-term customer relationships.

Answer: TRUE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking

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62) The customer journey includes the same sequence of events for everyone.

Answer: FALSE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 63) The customer journey ends when the customer buys the product.

Answer: FALSE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 64) Marketing should only be concerned with meeting the minimum expectations of customers.

Answer: FALSE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 65) Marketers need to understand that bad word of mouth often travels farther and faster than good word of mouth.

Answer: TRUE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 66) A factor that can come between the purchase intention and the purchase decision is the attitudes of others.

Answer: TRUE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 67) Personal sources of information normally inform the buyer, but commercial sources legitimize or evaluate products for the buyer.

Answer: FALSE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 68) If marketers know what evaluative processes go on, they can take steps to influence the buyer's decision.

Answer: TRUE Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

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69) 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 postpurchase behavior.

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. Postpurchase Behavior: After purchasing the product, the consumer will either be satisfied or dissatisfied and will engage in postpurchase behavior 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 LO: 5-2: Identify and discuss the stages in the buyer decision process.

AACSB: Analytical thinking 70) Explain what is meant by the "customer journey."

Answer: The customer journey is defined as the sum of the ongoing experiences consumers have with a brand. Almost all discussions of the customer journey begin with customer brand awareness and end with the customer advocating the brand to others. However, customers rarely move consistently through any or all of these stages. Rather, in their brand relationship-building journey, customers collect a portfolio of brand experiences. They move from touch point to touch point, sometimes circling back or moving off the path altogether. Under the customer journey concept, marketers focus not just on what customers do across the stages and touch points in the buying process but also on understanding and shaping the evolving customer experience.

Diff: 1 LO: 5-2: Identify and discuss the stages in the buyer decision process.

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71) ________ is the mental sequence of events a person goes through that begins with hearing about the product or innovation and ends with the decision to use the product.

A) Postpurchase behavior B) The customer journey C) The adoption process D) The customer acquisition process E) The brand loyalty process Answer: C Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge Use the information below to answer the following questions.

Data on adopter categories in Figure 5.5 in the text states that 2.5% of people are innovators, 13.5% are early adopters, 34% are early mainstream, 34% are late mainstream, and 16% are lagging adopters. Firms often use this information to target consumers for early adoption when they launch new products. The 2019 U.S. population is estimated to be 328 million. Answer the following questions under the assumption that 60 million of those individuals were below age 10 and not consumers.

72) What is the total number of people in this target adopter group?

A) 328 million B) 8.2 million C) 278 million D) 268 million E) 91.1 million Answer: D Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 73) What is the total number of people in this target adopter group that are innovators?

A) 328 million B) 6.7 million C) 278 million D) 268 million E) 91.1 million Answer: B Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge

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74) What is the total number of people in this target adopter group that are early adopters?

A) 328 million B) 8.2 million C) 36.2 million D) 268 million E) 91.1 million Answer: C Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 75) What is the total number of people in this target adopter group that are lagging adopters?

A) 42.9 million B) 8.2 million C) 36.2 million D) 268 million E) 91.1 million Answer: A Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 76) 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 77) 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge

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78) ________ 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 79) Fred's faith in Asics, his favorite 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 80) ________ 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge

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81) ________ 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 82) Electric cars are not considerably different or difficult to drive relative to gas-powered cars.

However, this is not aligned with the perceptions or conceptual concerns held by the public about the new technology. In addition, recharging stations are not as ubiquitous as gas stations. These factors will likely slow the adoption rate due to the ________ of the innovation.

A) relative advantage B) compatibility C) complexity D) divisibility E) communicability Answer: C Diff: 1 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 83) ________ 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge

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84) ________ 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 85) Only about 19% of the population are innovators.

Answer: FALSE Diff: 1 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Application of knowledge 86) Early mainstream adopters are deliberate in their thought process.

Answer: TRUE Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 87) Firms with innovative products should focus their initial advertising efforts on early mainstream adopters.

Answer: FALSE Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 88) Adoption is the decision by an individual to try the product.

Answer: FALSE Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 89) 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking

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90) 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 91) 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 92) 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 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking 93) Why is it important for an innovative firm to understand product adopter categories?

Answer: Innovative firms need to focus their initial marketing efforts on the fraction of the population that adopts products before other segments. These consumer innovators will be the first to try a new product and spread the word to others. Early adopters are also important since they are often opinion leaders who are respected in their communities. Identifying these groups and targeting early marketing efforts on them should yield better early results.

Diff: 2 LO: 5-3: Describe the adoption and diffusion process for new products.

AACSB: Analytical thinking

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94) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 95) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 96) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Application of knowledge

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97) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 98) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 99) ________ is defined as a business strategy where business buyers prefer to buy a complete solution to a problem from a single seller rather than buying and consolidating separate products and services from several suppliers.

A) Modified rebuy B) Straight rebuy C) New task buying D) Systems selling E) Supplier development Answer: D Diff: 1 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Application of knowledge

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100) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 101) The Covid-19 pandemic had limited impact on the B-to-B market since this was largely already online.

Answer: FALSE Diff: 1 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 102) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 103) A business marketer normally deals with far fewer buyers than a consumer marketer.

Answer: TRUE Diff: 1 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 104) The total demand for many business products is not much affected by price changes, especially in the short run.

Answer: TRUE Diff: 3 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking

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105) Interpersonal factors are a major influence on business buyer behavior.

Answer: TRUE Diff: 1 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Interpersonal relations and teamwork 106) In a straight rebuy, a buyer reorders something without any modifications.

Answer: TRUE Diff: 1 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Application of knowledge 107) Supplier development refers to systematically developing networks of supplier-partners to ensure a dependable supply of the products and materials.

Answer: TRUE Diff: 2 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Interpersonal relations and teamwork 108) The buying center consists of key decision makers from both the buying organization and the supplier.

Answer: FALSE Diff: 1 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Application of knowledge 109) Business buying is done by newly trained purchasing agents who are learning how to buy better.

Answer: FALSE Diff: 2 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking

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110) Discuss how the COVID-19 pandemic changed B-to-B marketing.

Answer: the recent COVID-19 pandemic dramatically changed how business buyers and sellers meet, interact, and make decisions. Work-from-home regimens and other social-distancing measures "forced B-to-B buyers and sellers to go digital in a massive way," says a report from consulting firm McKinsey & Company. Marketers stepped up technologies to digitally "selfserve" information to remote buyers and to engage buyers remotely though digital work sharing and conferencing. The use of remote meeting technologies such as Zoom and Microsoft Teams surged. Changes resulting from the pandemic have had a lasting impact on how B-to-B marketing is conducted. Both sellers and buyers have found that self-serve and remote interactions have made it easier, faster, and more convenient for buyers to get needed information, place orders, and obtain service, usually at less cost to the marketer.

Diff: 2 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 111) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 112) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking

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113) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Analytical thinking 114) 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Reflective thinking

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115) 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 behavior and strategies, especially in the international marketing environment. The business buyer must watch these factors, determine how they will affect the buyer, and try to turn 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 LO: 5-4: Define the business market and identify the major factors that influence business buyer behavior.

AACSB: Reflective thinking 116) 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 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Analytical thinking 117) 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 LO: 5-5: List and define the steps in the business buying decision process.

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118) Which of the following is considered a major influence on business buyer behavior?

A) general need B) organizational factors C) social forces D) demographic criteria E) performance reviews Answer: B Diff: 1 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge 119) 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 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Analytical thinking 120) 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 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge

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121) 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 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Interpersonal relations and teamwork 122) Effective sellers must manage the total customer relationship, not just individual purchases.

Answer: TRUE Diff: 1 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge 123) Vendor-managed inventory occurs when the buyer manages the inventory process.

Answer: FALSE Diff: 1 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge 124) The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a specific product or service.

Answer: TRUE Diff: 1 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge 125) What is a vendor-managed inventory system?

Answer: A vendor-managed inventory occurs when a large buyer shares sales and inventory information with a key vendor. The vendor or supplier then becomes responsible for monitoring and replenishing the inventory.

Diff: 1 LO: 5-5: List and define the steps in the business buying decision process.

AACSB: Application of knowledge

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126) 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 LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Application of knowledge 127) When a company puts purchasing requests online and inviters suppliers to bid for the business it is known as a(n) ________.

A) company buying site B) intranet link C) reverse auction D) trading exchange E) product value analysis Answer: C Diff: 1 LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Application of knowledge 128) Purchasing, often called e-procurement, has grown rapidly in recent years.

Answer: TRUE Diff: 1 LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Application of knowledge 129) Business-to-business e-procurement lowers purchasing costs and reduces the time between order and delivery.

Answer: TRUE Diff: 1 LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Application of knowledge

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130) 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 LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Application of knowledge 131) Technology has had limited impact on business-to-business e-procurement since this business segment is about building relationships.

Answer: FALSE Diff: 1 LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Application of knowledge 132) 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 LO: 5-6: Discuss how online, mobile, and social media have changed business-to-business marketing.

AACSB: Analytical thinking

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Marketing: An Introduction, 15e (Armstrong) 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 behavior.

A) Differentiation B) Mass marketing C) Market targeting D) Market segmentation E) Positioning Answer: D Diff: 1 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) behavioral Answer: D Diff: 3 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 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 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) Market ________ consists of selecting the market segments to enter.

A) differentiation B) positioning C) targeting D) segmentation E) fracturing Answer: C Diff: 1 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 6) ________ consists of altering the market offering to create superior customer value.

A) Differentiation B) Positioning C) Targeting D) Segmentation E) Fracturing Answer: A Diff: 1 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) Targeting occurs when the firm selects the market segment or segments it intends to enter.

Answer: TRUE Diff: 1 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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8) Segmentation involves clustering groups into larger market segments.

Answer: FALSE Diff: 1 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 9) The best customer value-driven marketing strategy for most firms is to try and serve all market segments.

Answer: FALSE Diff: 2 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical thinking 10) Companies today are moving away from target marketing and toward mass marketing.

Answer: FALSE Diff: 1 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical thinking 11) Creating market offerings that best serve targeted customers is called differentiation.

Answer: TRUE Diff: 1 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 12) 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 behaviors, 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 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 Copyright © 2023 Pearson Education, Inc.

13) 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) behavioral Answer: A Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 14) Gulf Coast, a wholesale shrimp distributor, groups its customers by regions in the United States, such as Midwest, Northeast, and Southwest. For each region, Gulf Coast tailors a different set of advertisements and promotions. The supplier is segmenting its market according to ________.

A) behavioral factors B) personality characteristics C) geographic location D) benefits sought E) demographics Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 15) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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16) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 17) Delta, an American 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) demographic B) geographic C) behavioral D) gender E) income Answer: A Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 18) ________ segmentation factors divide buyers into different groups based on social class, lifestyle, or personality characteristics.

A) Geographic B) Demographic C) Psychographic D) Behavioral E) User status Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge

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19) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 20) 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) behavioral E) psychographic Answer: E Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 21) Dividing buyers into groups based on their knowledge, attitudes, uses, or responses to a product is called ________ segmentation.

A) behavioral B) psychographic C) age and life-cycle D) user status E) geographic Answer: A Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 22) Bakeries and coffee bistros that offer pumpkin-flavored 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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23) The marketing manager at Frizzles' Eateries targets customers who are working to lose weight but who still want to dine out. The restaurant chain offers a wide variety of low-fat, lowcalorie meals that appeal to dieters. Frizzles' approach is best referred to as ________ segmentation.

A) age and life-cycle B) user status C) benefit D) demographic E) geographic Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 24) 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) behavioral segmentation E) loyalty status segmentation Answer: A Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 25) Shampoo marketers segment buyers as light, medium, or heavy product users. This is an example of ________ segmentation.

A) user status B) usage rate C) benefits sought D) occasion E) psychographic Answer: B Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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26) 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) behavioral variables E) psychographic segmentation bases Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 27) Danko International is a multinational company that targets the BRIC countries (Brazil, Russia, India, and China) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 28) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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29) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 30) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 31) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 32) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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33) If men and women respond dissimilarly to the marketing efforts for a root beer-flavored malt beverage, they are considered ________ market segments.

A) accessible B) measurable C) reachable D) differentiable E) observable Answer: D Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 34) Which of these countries is one of the BRICS countries?

A) Ireland B) Burundi C) Democratic Republic of Congo D) South Africa E) Chad Answer: D Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 35) Cross-market segmentation involves ________.

A) forming segments of consumers who have similar needs and buying behaviors that are located in the same country B) forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries C) segmenting consumer groups into smaller units with similar buying behaviors D) targeting only the most affluent consumer groups in each country E) segmenting the domestic market in order to reap the most profit Answer: B Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 36) Joseph Industries decided to focus their marketing efforts on France, Germany, and Austria.

This type of international segmentation is most likely ________ segmentation.

A) values-based B) cultural C) geographic D) political E) legal Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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37) In most countries it is considered a mistake to segment the market based on cultural factors.

Answer: FALSE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 38) The countries known as the BRICS include Bolivia, Russia, Indonesia, China, and Singapore.

Answer: FALSE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 39) Target and Kohl's have opened smaller-format stores designed to fit the needs of densely packed urban neighborhoods. This is an example of geographic segmentation.

Answer: TRUE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 40) In cross-market segmentation, marketers form segments of consumers who have similar needs and buying behaviors even though they are located in different countries.

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Diverse and multicultural work environments 41) Demographic factors are the most popular bases for segmenting customer groups.

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 42) Countries can be segmented by cultural factors, grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns.

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Diverse and multicultural work environments 43) Not all companies that use income segmentation target the affluent.

Answer: TRUE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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44) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 45) Marketers typically limit their market segmentation analysis to a single variable in order to simplify the process.

Answer: FALSE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 46) Geographic segmentation assumes that nations close to one another will have many common traits and behaviors.

Answer: TRUE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 47) Business and consumer marketers use many of the same variables to segment their markets.

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 48) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 49) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge

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50) Business marketers use variables such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Answer: TRUE Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 51) Many firms have rejected the idea that consumers make decisions based on gender and have moved to gender-neutral products and marketing campaigns.

Answer: TRUE Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Application of knowledge 52) Explain the four major segmentation variables for consumer markets.

Answer: For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioral. Geographic segmentation divides the market into different geographic units, such as nations, regions, states, countries, cities, or neighborhoods.

Many companies are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions, cities, and neighborhoods. 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. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product. Many marketers believe that behavioral variables are the best starting point for building market segments.

Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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53) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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54) 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 U.S. hospitals.

Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 55) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 56) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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57) 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 behaviors.

Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Diverse and multicultural work environments 58) 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 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 59) Why is gender-neutral marketing something firms need to consider in their marketing strategy?

Answer: Gender-neutral products look beyond traditional gender stereotypes and all the consumer to make their own decisions about consumption regardless of gender. "Newer brands are entering the gate with gender fluidity already built in," says one analyst. By focusing on gender, marketers risk overlooking deeper insights into the roots of consumer behavior. Rather than targeting stereotypical gender roles, these products are "more inclusive, and they hit on more of the things that are important to younger consumers today, like 'sustainable' or 'clean' or 'genderless.'"

Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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60) Ninety-five percent of Rolls-Royce buyers customize their order in some way. The ability to customize their vehicle is an example of ________.

A) niche marketing B) local marketing C) individual marketing D) mass marketing E) market segmentation Answer: C Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 61) Which of these strategies do modern marketers have doubts about the effectiveness of pursuing?

A) undifferentiated marketing B) micromarketing C) target marketing D) local marketing E) differentiated marketing Answer: A Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 62) Concentrated marketing is also known as ________ marketing.

A) undifferentiated B) item-specific C) niche D) local E) individual Answer: C Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge

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63) Many firms begin as ________ marketers before moving into broader market segments.

A) individual B) undifferentiated C) mass D) niche E) personal Answer: D Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 64) Micromarketing involves ________.

A) tailoring products to individual tastes B) convincing consumers one at a time to buy your existing product C) mass marketing to smaller groups of consumers D) selling only in small unit batches E) just-in-time production and selling of smaller batches Answer: A Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 65) Location-based marketing has benefitted from ________.

A) the government tracking mechanisms located in big cities B) video cameras in stores that track consumer locations C) products like smartphones that integrate geolocation technologies D) lack of travel and social isolation due to the Covid-19 pandemic E) geo sensors placed in most stores Answer: C Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 66) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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67) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 68) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 69) Port Orleans Shipping markets different services to the tourism, defense, and trade segments.

The firm designs separate offers for each segment based on their needs. This approach is called ________ marketing.

A) concentrated B) differentiated C) individual D) mass E) local Answer: B Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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70) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 71) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 72) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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73) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 74) Unlike other car rental agencies that are based in airports to serve travelers, Rental Wheelz has a network of neighborhood offices. The firm strives to serve people who need car rentals for reasons other than vacation, such as when their own cars are being repaired. Rental Wheelz caters to a small share of the large car rental market. From this description, it can be concluded that Rental Wheelz most likely practices ________.

A) undifferentiated marketing B) multi-segmented marketing C) individual marketing D) local marketing E) concentrated marketing Answer: E Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 75) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge

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76) ________ marketing tailors brands and promotions to the needs and wants of specific cities, neighborhoods, and even stores.

A) Differentiated B) Mass C) Niche D) Local E) Individual Answer: D Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 77) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 78) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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79) When a company interacts one-to-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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking Use the information below to answer the following questions.

Ambivalent Industries makes energy efficient boilers for heavy manufacturing firms.

Ambivalent's research shows there are approximately 452,000 boilers currently in use in the U.S. that will likely need to be replaced in the next five years. Each firm has an average of two boilers in use. The installed price of one of Ambivalent's boilers averages $4,500 and the firm's marketers believe they can capture about 9% of this market given that competition is increasing at this time.

80) What is the total number of potential customers in this target market?

A) 452,000 B) 339,000 C) 113,000 D) 226,000 E) 169,500 Answer: D Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 81) What is the total market potential in dollars for this market segment?

A) $183,060,000 B) $2,034,000,000 C) $11,865,000 D) $1,017,000,000 E) $366,000,000 Answer: B Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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82) What is the total market potential for Ambivalent Industries for this market?

A) $183,060,000 B) $2,034,000,000 C) $11,865,000 D) $1,017,000,000 E) $366,000,000 Answer: A Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 83) Ambivalent Industries should automatically increase the price of their boilers.

Answer: FALSE Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 84) Ambivalent Industries needs to make sure they have the financial resources in place to service this market.

Answer: TRUE Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 85) Tesla initially used a niche-marketing strategy to enter the automotive market.

Answer: TRUE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 86) In the extreme, micromarketing becomes individual marketing.

Answer: TRUE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 87) Local marketing and individual marketing are the same thing.

Answer: FALSE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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88) Big data and data analytics can be used to hypertarget potential customers.

Answer: TRUE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 89) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 90) Developing separate marketing plans for separate segments requires very little marketing research or channel management.

Answer: FALSE Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 91) Micromarketing includes global marketing and standardized marketing.

Answer: FALSE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 92) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 93) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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94) In target marketing, the issue is not really who is targeted but rather how and for what.

Answer: TRUE Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 95) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 96) The full positioning of a brand is called the unique selling proposition.

Answer: FALSE Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Application of knowledge 97) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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98) Compare and contrast the four major strategies that are generally used to target market segments.

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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 99) 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, neighborhoods, 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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100) 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 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Ethical understanding and reasoning 101) A firm's ________ states how the firm will create differentiated value for targeted market segments and the position the firm wants to occupy in those segments.

A) segmentation plan B) product position statement C) mission statement D) value proposition E) targeting statement Answer: D Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge 102) A ________ helps a firm visualize how consumers perceive their brand versus those of their competitors in the marketplace.

A) product mix statement B) perceptual positioning map C) value proposition D) positioning chart E) perception survey graph Answer: B Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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103) If a firm can position itself as having products that provide superior customer value in some way then it can ________ its competitors.

A) increase its value proposition relative to B) deliver a higher quality product relative to C) spend less on advertising relative D) change its mission statement to reflect dominance over E) gain a competitive advantage over Answer: E Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 104) Product slogans often identify the firm's ________.

A) competitive advantage B) mission statement C) perception map D) differentiation concept E) market segments Answer: A Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 105) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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106) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 107) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 108) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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109) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 110) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 111) When firms use symbols, colors, 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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112) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 113) Eastline, a manufacturer of outdoor patio furniture, positions its products as superior in weatherproofing and durability. This is an example of ________ differentiation.

A) product B) services C) image D) people E) channels Answer: A Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 114) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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115) Rad, a manufacturer of luxury watches, charges a higher price for its products than its competitors. Despite the high prices, the brand is popular among customers for its quality and service in comparison to cheaper alternatives available in the market. In this case, Rad 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 116) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 117) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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118) The full positioning of a brand is referred to as the ________.

A) differentiated strategy B) brand's value proposition C) unique selling proposition D) value proposition E) undifferentiated strategy Answer: B Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge 119) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 120) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge

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121) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 122) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge 123) Zeal is a popular automobile brand, and its positioning statement is: "For upscale American 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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124) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Application of knowledge 125) When a firm chooses a position in the market it must translate that choice into concrete actions and deliver that position.

Answer: TRUE Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 126) Dunkin' positions itself as a more-for-more provider of breakfast foods.

Answer: FALSE Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 127) A firm's value proposition answers the question "Why should I buy your brand?"

Answer: TRUE Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 128) Chosen symbols, characters, and other image elements are communicated through advertising that conveys the company's or brand's personality.

Answer: TRUE Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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129) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Reflective thinking 130) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 131) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 132) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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133) 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 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 134) Why do some marketers believe that a firm should aggressively promote only one benefit of a product or service to the target market?

Answer: One former advertising executive, Rosser Reeves, believes the company should develop a unique selling proposition for each brand and stick to it. The brand should pick an attribute that can be touted as "number one" relative to all others in that market. Reeves believes buyers tend to remember products that are number one better than others in today's society.

Diff: 2 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, 15e (Armstrong) 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 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 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 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 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 color 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 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 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 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 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) candy B) furniture C) life insurance D) automobile E) refrigerator Answer: A Diff: 2 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge

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11) Major appliances, furniture, and clothing are typical examples of ________ products.

A) convenience B) shopping C) unsought D) specialty E) capital Answer: B Diff: 2 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 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) toothpaste B) fast food C) laundry detergent D) television E) candy Answer: D Diff: 2 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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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 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 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 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 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 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 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) cleaning agents B) wheat C) lumber D) elevator E) generator Answer: A Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 22) Which of these product categories would be an example of raw materials that will likely be used to produce other products?

A) capital items B) augmented products C) supplies and services D) farm products E) shopping products Answer: D Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge

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23) 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 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 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Ethical understanding and reasoning

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26) ________ marketing helps someone build their reputation which can lead to product endorsements.

A) Segmented B) Person C) Organization D) Idea E) Social Answer: B Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 27) Little Rock, Arkansas is the former home of President Bill Clinton when he was a sitting governor of the state. His presidential library is located in Little Rock and the city uses this connection to generate tourism. This is an example of ________ marketing.

A) place B) person C) organization D) idea E) social Answer: A Diff: 3 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 28) Many firms engage in ________ marketing to support ideas they believe in.

A) place B) person C) organization D) idea E) social Answer: E Diff: 3 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 29) 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge

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30) Products include only tangible objects.

Answer: FALSE Diff: 1 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 31) Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people.

Answer: TRUE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 32) 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 33) 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 34) Shopping products are purchased more frequently than convenience products.

Answer: FALSE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 35) Life insurance is an example of a convenience product.

Answer: FALSE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 36) When buying unsought products, consumers spend considerable time and effort in gathering information and making comparisons.

Answer: FALSE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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37) Consumers rarely compare shopping products before purchasing them.

Answer: FALSE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 38) Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places.

Answer: TRUE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 39) Consumers are generally willing to make more effort than usual to buy specialty products.

Answer: TRUE Diff: 1 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 40) 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 41) Ideas can't be marketed.

Answer: FALSE Diff: 1 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 42) Specialty products are primarily purchased for use in conducting a business.

Answer: FALSE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 43) A laptop that is purchased for a graphic design studio is considered an industrial product.

Answer: TRUE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking

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44) Interactive marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people.

Answer: FALSE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 45) Only not-for-profit organizations practice organizational marketing.

Answer: FALSE Diff: 1 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 46) Detroit markets itself as "America's Great Comeback City." This is an example of social marketing.

Answer: FALSE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 47) NBA player LeBron James and other celebrities are likely to engage in person marketing.

Answer: TRUE Diff: 2 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Application of knowledge 48) 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 LO: 7-1: Define product and describe the major classifications of products and services.

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49) 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 50) 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 LO: 7-1: Define product and describe the major classifications of products and services.

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51) 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 LO: 7-1: Define product and describe the major classifications of products and services.

AACSB: Analytical thinking 52) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 53) 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 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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54) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 55) Product quality has two dimensions: level and ________.

A) price B) consistency C) taste D) overall feel E) satiation ability Answer: B Diff: 2 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 56) When a product is free from defects and consistently delivers a targeted level of performance it possesses ________.

A) price quality B) consistency C) conformance quality D) a value proposition E) total quality Answer: C Diff: 2 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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57) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 58) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 59) A product line is most likely too long if 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 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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60) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 61) ________ simply describes the appearance of a product.

A) Filling B) Strengthening C) Mixing D) Style E) Widening Answer: D Diff: 1 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 62) A good product ________ contributes to both the product's appearance but also the product's usefulness.

A) design B) positioning strategy C) style D) brand message E) symbol Answer: A Diff: 1 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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63) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 64) Clorox sells five major product lines including cleaning, household, lifestyle, professional, and international. Together the product lines make up Clorox's ________.

A) product length B) product mix C) product depth D) product consistency E) product assemblage Answer: B Diff: 2 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 65) 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 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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66) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 67) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 68) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 69) 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 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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70) Good packaging can be used to create immediate consumer recognition of the brand.

Answer: TRUE Diff: 1 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 71) The ability to customize a product by adding features is a competitive tool for differentiating the company's product from competitors' products.

Answer: TRUE Diff: 1 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Application of knowledge 72) Product quality is the focus of the production department and the marketing department's job is simply report product defects.

Answer: FALSE Diff: 1 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 73) Chick-fil-A's "upstream ordering" is a good example of the customer service the chain is known for delivering.

Answer: TRUE Diff: 1 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 74) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 75) Support services are an important part of a customer's overall brand experience.

Answer: TRUE Diff: 2 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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76) A product label gives information about the product but does not promote the brand and engage customers.

Answer: FALSE Diff: 2 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 77) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 78) 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 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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79) 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. 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 80) 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 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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81) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 82) 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 LO: 7-2: Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.

AACSB: Analytical thinking 83) How can product support services be used to help create a brand?

Answer: 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. Some firms have built brands by combining service with a good product. For example, Chick-fil-A is not just good food in the consumers' minds. It represents fast and friendly service and is linked to a family friendly atmosphere.

Diff: 2 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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84) Which of these Ps of the services marketing mix refers to the fact that the service market offering can't be separated from the employees who provide it?

A) promotion B) physical evidence C) process D) people E) place Answer: D Diff: 2 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 85) Which of these Ps in NOT one of the 7 Ps of the services marketing mix?

A) physical evidence B) promotion C) place D) people E) portability Answer: E Diff: 2 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 86) ________ refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased.

A) Service intangibility B) Service portability.

C) Service variability D) Service perishability E) Service inseparability Answer: A Diff: 2 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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87) Jauna read some online reviews and client comments about a relatively new hair stylist that she was thinking about trying. Jauna was looking for a signal of service ________.

A) reliability B) perishability C) inseparability D) quality E) intangibility Answer: D Diff: 3 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 88) The ________ links service firm profits with employee and customer satisfaction.

A) profit margin B) return on marketing investment C) service profit chain D) service value circle E) finance division Answer: C Diff: 2 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 89) 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 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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90) 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 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 91) 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 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 92) 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 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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93) Which link in the service profit chain emphasizes superior employee selection and training?

A) healthy service profits and growth B) satisfied and loyal customers C) greater service value D) satisfied and productive service employees E) internal service quality Answer: E Diff: 1 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Application of knowledge 94) 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 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 95) 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 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 96) Services account for about 32% of the U.S. gross domestic product.

Answer: FALSE Diff: 2 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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97) In recent years services have declined in importance in the U.S. Answer: FALSE Diff: 1 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 98) Some marketers believe there should be the 7 Ps of the services marketing mix.

Answer: TRUE Diff: 2 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 99) The physical evidence P of the services marketing mix refers to the importance of providing tangible proof of the service quality.

Answer: TRUE Diff: 2 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 100) Service variability means that the quality of services does not depend on who provides them.

Answer: FALSE Diff: 2 LO: 7-3: Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.

AACSB: Analytical thinking 101) Orienting and motivating customer-contact employees to work as a team to provide customer satisfaction is known as social marketing.

Answer: FALSE Diff: 2 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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102) Some marketers call for adding three more Ps to create the 7 Ps of the services marketing mix. What are these three additional Ps? Answer: The 7Ps are the 4Ps plus people, process, and physical evidence. The people element points to the fact that the service market offering can't be separated from the people who provide it. Service marketers should emphasize the expertise and qualifications of their providers. The process element recognizes that service experiences usually happen over time. Services marketers must develop efficient and effective service delivery processes that ensure a consistent standard of service quality, from anticipating customer needs through responding to customer feedback. Finally, the physical evidence element refers to the importance of providing tangible proof of quality in addition to intangible service attributes.

Diff: 2 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 103) 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 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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104) ________ is the practice of adding an existing brand name to new product categories.

A) Line extension B) Cobranding C) Multibranding D) Expansion E) Brand extension Answer: E Diff: 1 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 105) 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 106) The fundamental asset underlying brand equity is ________.

A) customer equity B) the physical assets of the firm C) the product mix D) the firm's mission E) the firm's marketing division Answer: A Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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107) Financial services company YourFuture paints potential clients a picture of their dream life in retirement. This is an example of positioning the brand using a ________.

A) product attribute B) service attribute C) deliverable D) benefit E) physical asset Answer: D Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 108) Which of these is an example of a store brand?

A) Target B) Wranglers C) Kraft D) Kellogg's E) Samsung Answer: A Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 109) 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking

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110) 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 111) 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 112) Sam's Club, a national warehouse club affiliated with Walmart, sells its own brand of items across all categories. Such items are considered ________ brands.

A) national B) manufacturer's C) private D) extended E) licensed Answer: C Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

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113) 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 114) ________ occurs when two established brand names of different companies are used on the same product.

A) Licensing B) Co-branding C) Private branding D) Franchising E) Brand positioning Answer: B Diff: 1 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Application of knowledge 115) 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 flavor, TangyBerry.

C) The company introduces a line of flavored milk and yogurt under a new brand name.

D) The company creates a new brand, NatureFresh, for a line of cosmetics based on fruit flavors and colors.

E) BerryBerry teams up with SFX, a sporting goods company, to introduce a line of energy bars called BerryBerry SFX. Answer: E Diff: 3 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

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116) ________ occurs when a company uses its existing brand name for new forms, colors, sizes, ingredients, or flavors of an existing product category.

A) Line extension B) Co-branding C) Private labeling D) Brand extension E) Clustered branding Answer: A Diff: 1 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 117) Non-Dairy Delight, a manufacturer of soy milk, attracts new customers by adding cinnamon, pumpkin, and vanilla flavors 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 118) 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 flavor, TangyBerry.

C) The company introduces a line of flavored milk and yogurt under a new brand name.

D) The company creates a new brand, NatureFresh, for a line of cosmetics based on fruit flavors and colors.

E) BerryBerry teams up with SFX, a sporting goods company, to introduce a line of energy bars called BerryBerry SFX. Answer: A Diff: 3 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

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119) ________ 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Application of knowledge 120) Sportware, a leading shoe manufacturer, markets sneakers under the brand name "Athletix" and dress shoes under the brand name "Cameo" in order to target the two different market segments. What branding strategy is most likely being used by Sportware?

A) brand extensions B) line extensions C) multibrands D) new brands E) co-brands Answer: C Diff: 3 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking Use the information below to answer the following questions.

Fuzzy Wuzzy plans to extend its product line by offering a new diet beverage. The new drink will sell for $1.65 per bottle and Fuzzy Wuzzy expects to sell 200,000 bottles per year. However, the product will reduce (i.e. cannibalize) the sales of other Fuzzy Wuzzy drinks by about 45,000 bottles per year which are a little cheaper and sell for $1.50 per bottle. The production costs for both drinks are about 75% of the selling price.

121) How much additional revenue will Fuzzy Wuzzy earn if it offers the new diet drink?

A) $550,000 B) $67,500 C) $330,000 D) $262,500 E) $247,500 Answer: D Diff: 3 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

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122) How much will the new drink cost to produce if the firm sells 200,000 bottles per year?

A) $550,000 B) $67,500 C) $330,000 D) $262,500 E) $247,500 Answer: E Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 123) How much revenue will Fuzzy Wuzzy lose from lower sales of the existing drinks?

A) $550,000 B) $67,500 C) $330,000 D) $262,500 E) $247,500 Answer: B Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 124) Adding a new product to an existing product mix may reduce the sales of a firm's existing products.

Answer: TRUE Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 125) Powerful brands have high levels of brand equity.

Answer: TRUE Diff: 1 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 126) Brand value is the value of annual sales generated by a brand.

Answer: FALSE Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

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127) A brand can be better positioned by associating its name with a desirable benefit.

Answer: TRUE Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 128) 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 129) A brand extension gives a new product instant recognition and faster acceptance.

Answer: TRUE Diff: 2 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 130) What is brand equity?

Answer: Brand equity is the differential effect that knowing the brand name has on customer response to the product and its marketing. It's a measure of the brand's ability to capture consumer preference and loyalty. A brand has positive brand equity when consumers react more favorably to it than to a generic or unbranded version of the same product. It has negative brand equity if consumers react less favorably than to an unbranded version.

Diff: 1 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 131) 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

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132) 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 colors 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

AACSB: Analytical thinking 133) 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, colors, sizes, ingredients, or flavors 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 LO: 7-4: Discuss branding strategy—the decisions companies make in building and managing their brands.

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Marketing: An Introduction, 15e (Armstrong) 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 LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 2) Which of these is NOT a way for a firm to obtain a new product?

A) purchase another firm with different products B) receive one from the government C) develop a new brand D) obtain a patent E) modify an existing product Answer: B Diff: 2 LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 3) Which of these is NOT a reason that new products fail?

A) They are incorrectly positioned.

B) They are launched at the wrong time.

C) They are made overseas.

D) They are priced too high.

E) They are poorly advertised.

Answer: C Diff: 1 LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Application of knowledge 4) Product modifications are an important source of new products for organizations.

Answer: TRUE Diff: 1 LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 5) New products are not very important to a firm's long-term success.

Answer: FALSE Diff: 1 LO: 8-1: Explain how companies find and develop new product ideas.

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6) According to one estimate, approximately 75 percent of all new products fail.

Answer: FALSE Diff: 1 LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 7) 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 favorite 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 LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 8) List some ways that firms obtain new products.

Answer: They can acquire a new product through the outright purchase of another company, purchase of a patent, or by buying a license to build and sell the product. They can invest in research and development and come up with new products, product improvements, modifications of existing products, or new brands.

Diff: 1 LO: 8-1: Explain how companies find and develop new product ideas.

AACSB: Analytical thinking 9) The new product development starts with ________.

A) idea screening B) idea generation C) concept development D) concept testing E) market strategy development Answer: B Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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10) 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 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) Some companies, such as Google, 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 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) 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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13) In which of the following cases 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 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) 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 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) 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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16) 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 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) 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 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 18) 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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19) 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 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 20) The style, ease of use, and multi-blade technology of Gillette's Fusion razor system is a ________ that has favorably 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 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) 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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22) 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 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 23) 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, the planned value proposition, and the sales goals E) planned long-run sales and market share Answer: D Diff: 2 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) The second part of a marketing strategy statement describes the ________ of a new product.

A) marketing mix strategy B) profit and the sales goals C) planned price, distribution, and the marketing budget D) target market and the sales goals E) planned value proposition Answer: C Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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25) The third part of a marketing strategy statement describes the ________ of a new product.

A) sales, market mix strategy, and profit goals B) distribution and pricing strategy C) marketing budget and cost-benefit analysis D) planned value proposition E) target market and sales goals Answer: A Diff: 2 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 26) The first part of the business analysis is to ________.

A) forecast sales B) create an advertising campaign C) begin building the products D) develop a sales force E) estimated profits Answer: A Diff: 2 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) ________ 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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28) 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 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 29) 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 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 30) 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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31) ________ 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 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 32) 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 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 33) Foods International is developing a new gluten-free, chili-flavored 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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34) 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 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 35) 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 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 36) ________ is the stage where a product and its proposed marketing program are introduced into realistic market settings.

A) Market strategy development B) Concept testing C) Test marketing D) Concept development E) Business analysis Answer: C Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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37) 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 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 38) 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 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 39) Which of the following costs is most likely associated with commercialization?

A) building or renting a manufacturing facility B) paying groups of consumers for participating in crowdsourcing activities C) determining a product's planned price, distribution, and marketing budget D) developing a prototype of a product E) using simulated tests to measure market capacity Answer: A Diff: 2 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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40) 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 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 41) 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 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 42) 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 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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43) 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 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 44) 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 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 45) 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-centered B) team-based C) sequential D) supply/demand E) systematic Answer: A Diff: 3 LO: 8-2: List and define the steps in the new product development process and the major considerations in managing this process.

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46) At Fantastic Flavors, 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 Flavors 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 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 47) 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 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) Several companies sponsor times when employees take some time away from their day-today work to develop new ideas. These ________ are legendary at Facebook.

A) vacations B) hackathons C) staycations D) test markets E) strategy development sessions Answer: B Diff: 2 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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49) One study found that most successful new products are differentiated, ________, and offer a compelling customer value proposition.

A) solve major customer problems B) very inexpensive C) widely advertised D) rapidly distributed E) high quality Answer: A Diff: 2 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 50) Companies that engage their customers in new product development and innovation tend to have ________ when new products are introduced relative to firms that do not engage customers in the innovation process.

A) twice the return on assets B) five times the profitability C) surprisingly lower sales D) four to five times higher sales E) lower distribution costs Answer: A Diff: 2 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) Some firms may create ________ programs to reward individuals who contribute the best new product ideas.

A) innovation management systems B) lottery box systems C) recognition programs D) innovation labs E) promotion and pay raise Answer: C Diff: 2 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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52) An innovation management system will result in ________.

A) very few ideas worth pursuing B) higher employee turnover as jaded employees leave C) automatically higher profits D) an innovation oriented company culture E) a more diverse workforce Answer: D Diff: 2 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 53) For companies to survive in the long run they need to develop a systematic new product development process.

Answer: TRUE Diff: 1 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 54) Most innovation management systems do not generate enough good ideas to justify their costs.

Answer: FALSE Diff: 1 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 55) An innovation management system can create an innovation-oriented company culture that consistently generates new product ideas worth pursuing.

Answer: TRUE Diff: 2 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) In the team-based approach, if one area hits snags, it works to resolve them while the team moves on.

Answer: TRUE Diff: 1 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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57) 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 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 58) Commercialization focuses on finding new ways to solve customer problems and create more customer satisfying experiences.

Answer: FALSE Diff: 2 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 59) 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 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) During concept testing, a product is evaluated by management without any input from external sources.

Answer: FALSE Diff: 2 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 61) An innovation management system collects, reviews, evaluates, and manages new product ideas.

Answer: TRUE Diff: 1 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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62) Customer involvement has a positive effect on the new product development process and product success.

Answer: TRUE Diff: 2 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) The business analysis stage is the final step in the new product development process.

Answer: FALSE Diff: 1 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 64) Product development usually costs the least among all the steps of the new product development process.

Answer: FALSE Diff: 1 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) 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 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) A sequential product development approach is team-oriented, enabling firms to bring products to market very quickly.

Answer: FALSE Diff: 2 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

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67) 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 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 68) A new product must have the required functional features and also convey the intended psychological characteristics.

Answer: TRUE Diff: 3 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 69) Companies that combine a customer-centered 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 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 70) It's important for a market pioneer to choose a launch strategy that is consistent with competitive positioning strategies.

Answer: FALSE Diff: 2 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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71) 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-centered, team-based, systematic effort.

Diff: 2 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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72) 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 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 73) 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 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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74) 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 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 75) 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 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 76) 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 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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77) 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 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 78) 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 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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79) What are the advantages of an innovation management system for developing new products?

Answer: The new product development process should be holistic and systematic rather than compartmentalized and haphazard. Otherwise, few new ideas will surface, and many good ideas will sputter and die. To avoid these problems, a company can install an innovation management system to collect, review, evaluate, and manage new product ideas. The innovation management system approach yields two favorable outcomes. First, it helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation.

Second, it will yield a larger number of new product ideas, among which will be found some especially good ones. The good new ideas will be more systematically developed, producing more new product successes. Good ideas will not suffer from the lack of a sounding board or a senior product advocate.

Diff: 2 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 80) What does it mean to have an "innovation-oriented culture"?

Answer: An innovation-oriented culture is one where top management supports, encourages, and rewards innovation. The employees are much more likely to advance ideas that might turn into profitable new products. The best ideas will be systematically developed and many will make it to market. The success stories will breed even more innovation until it is embedded in the overall firm at every level.

Diff: 2 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 81) ________ 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 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

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82) 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 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) 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 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 84) 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 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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85) 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 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) Fads 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 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 87) 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 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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88) Flurrbies, a line of winter accessories by a leading fashion label, quickly fell in and out of favor with customers. Flurrbies represents an example of a ________.

A) form B) fashion C) fad D) style E) drift Answer: C Diff: 2 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 89) 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 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 90) 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 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

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91) 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 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 92) 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 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 93) 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 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) Craft Inc.'s Krayons is a multi-color 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 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) 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 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 96) 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 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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97) Gershwin, a musical toy for toddlers, is in the maturity stage of the product life cycle, and Gershwin managers have decided to modify the product. What will Gershwin managers most likely do to achieve this goal?

A) change distributors B) offer coupons for the toy C) change the packaging of the toy D) launch an online advertising campaign E) cut prices of the toy to attract new customers Answer: C Diff: 2 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 98) 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 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 99) 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 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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100) During the ________ stage of the product life cycle, 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 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 101) In which of the following product life cycle stages will the firm make the most money?

A) decline B) growth C) maturity D) ideation E) analysis Answer: C Diff: 1 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 102) In which of these life cycle stages will the firm be the most likely to incur financial losses?

A) decline B) growth C) maturity D) introduction E) analysis Answer: D Diff: 1 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

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103) Which of these products is most likely to have had the longest life cycle?

A) Apple iPhone B) Crayola Crayons C) Taylor Swift music D) Tide laundry detergent E) Fidget spinners Answer: B Diff: 1 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 Use the information below to answer the following questions.

Micah's Food Service is adding another catering vehicle to her fleet that she will use for festivals, county fairs, and other events. The new food service truck will cost $150,000 equipped with all the food preparation appliances. Her variable costs per meal served will average $8 each. She expects to sell an average of 1,200 meals per week out of the new truck given her current event schedule. The average price per meal Micah charges is $15.

104) What are Micah's unit costs per meal served for the year based on expected sales?

A) $8.00 B) $10.40 C) $15.00 D) $17.40 E) $2.40 Answer: B Diff: 2 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 105) What is Micah's break-even level of unit sales or break-even volume?

A) 21,429 meals B) 41,345 meals C) 13,562 meals D) 17,090 meals E) 52,141 meals Answer: A Diff: 2 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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106) What is Micah's break-even level of revenue?

A) $135,674 B) $436,805 C) $499,200 D) $321,435 E) $936,000 Answer: D Diff: 2 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 107) What price would Micah charge for her meals if she wanted a 45% markup?

A) $18.91 B) $15.25 C) $18.52 D) $12.69 E) $14.99 Answer: A Diff: 2 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 108) What price would Micah charge for her meals if she wanted a 25% markup?

A) $18.91 B) $13.87 C) $18.52 D) $12.69 E) $14.99 Answer: B Diff: 2 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 109) Most product life cycles last over 100 years.

Answer: FALSE Diff: 1 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

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110) A specific brand's life cycle can change rapidly due to attacks from competitors.

Answer: TRUE Diff: 1 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 111) A fidget spinner is one example of a fashion.

Answer: FALSE Diff: 1 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 112) Fads take the market by storm and then often fizzle out.

Answer: TRUE Diff: 1 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 113) Fashions are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.

Answer: FALSE Diff: 1 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 114) 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 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 115) 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 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

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116) The moral of the product life cycle is that companies must continually innovate; otherwise, they risk extinction.

Answer: TRUE Diff: 2 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 117) 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 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 118) 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 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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119) 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 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 120) 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 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 121) Which of these service companies is least likely to expand internationally?

A) professional services B) medical providers C) telecommunications D) banking E) airlines Answer: B Diff: 2 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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122) Which of these business types is among the latest to expand globally?

A) medical providers B) manufacturing C) commercial banks D) restaurants E) retailers Answer: E Diff: 2 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 123) Consumer tastes and preferences differ widely around the world which creates the need for firms to ________.

A) standardize products to lower costs B) stay in their domestic market C) adapt their product offerings D) train consumers when they enter new markets E) lower prices to encourage consumption of new products Answer: C Diff: 2 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 124) A recent survey of manufacturing firms showed that their biggest litigation concern was ________.

A) labor and employment matters B) product liability C) environmental issues D) Federal government lawsuits E) being sued by competitors Answer: A Diff: 2 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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125) A recent survey of manufacturing firms showed that product liability was the firm's ________ litigation concern.

A) largest B) second-largest C) third-largest D) fourth-largest E) smallest Answer: B Diff: 2 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 126) 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 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 127) 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 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 128) The increase in product liability litigation has caused huge increases in product liability insurance premiums.

Answer: TRUE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

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129) Consumers are prohibited from suing manufacturers if they are injured by a product with historically low product defect rates.

Answer: FALSE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 130) The Consumer Product Safety Act of 1972 gives the government the legal authority to ban potentially harmful products.

Answer: TRUE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 131) Companies are legally prohibited from making their new product too similar to another firm's established product.

Answer: TRUE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 132) Marketers do not need to concern themselves with public policy since the government changes policies often.

Answer: FALSE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 133) 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 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Ethical understanding and reasoning 134) Standardization helps a company develop a consistent worldwide image, and lowers the product design, manufacturing, and marketing costs.

Answer: TRUE Diff: 1 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

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135) 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 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Diverse and multicultural work environments 136) Discuss how product standardization helps and hinders a firm when they expand internationally.

Answer: Standardized products help a company develop a consistent global image. It also reduces product design, manufacturing, and marketing costs. However, consumer tastes differ significantly around the world. The firm will usually need to respond to these differences by varying their product offerings. The McDonald's example in the text provides a great case study of how the fast food chain has varied their menu depending on location.

Diff: 2 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Diverse and multicultural work environments 137) What is the role of a product steward?

Answer: Some companies now appoint product stewards to protect consumers from harm and the company from costly product liability lawsuits. Their job is to proactively identify any potentially dangerous product problems.

Diff: 2 LO: 8-4: Discuss two additional product issues: socially responsible product decisions and international product and services marketing.

AACSB: Diverse and multicultural work environments

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138) 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 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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Marketing: An Introduction, 15e (Armstrong) 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 Kohl's and JCPenney 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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 LO: 9-1: Define price, 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: A Diff: 2 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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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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 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 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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge

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31) There are more than 50 blueberry farmers in Shammonton, New Jersey, that grow, package, and distribute the same quality blueberries. 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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 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 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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge

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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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 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 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 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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37) The Great Recession of 2008-2009 and the 2020-2021 COVID-19 pandemic caused many consumers to ________.

A) buy mainly food products B) focus more on luxury goods C) become more thrifty D) spend more money than normal E) limit their spending on clothing Answer: C Diff: 1 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 38) As a result of the Great Recession of 2008-2009 and the 2020-2021 COVID-19 pandemic marketers have increased their focus on ________.

A) price elastic product sales B) value-for-the-money pricing strategies C) goods sold in oligopolistic markets D) organizational pricing strategies E) higher priced products in the marketing mix Answer: B Diff: 2 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 39) Pricing may play an important role in helping a firm accomplish their objectives. Which of these is NOT one of those roles?

A) attracting new customers B) retaining customer loyalty C) prevent competitors from entering the market D) create brand excitement E) sell below cost to eliminate competitors Answer: E Diff: 2 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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40) ________ reverses the usual process of first designing a new product, determining its cost, and then asking "Can we sell that?"

A) Target costing B) Break-even analysis C) Product mixing D) Monopolizing E) Price elasticity of demand Answer: A Diff: 1 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 41) When demand is inelastic, a small change in price will have a large impact on units sold.

Answer: FALSE Diff: 2 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 42) Companies can ignore social concerns when setting prices.

Answer: FALSE Diff: 2 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 43) The Covid-19 pandemic had a major impact on the demand for some products.

Answer: TRUE Diff: 2 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 44) Price elasticity is a measure of the sensitivity of demand to changes in price.

Answer: TRUE Diff: 2 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Application of knowledge 45) In monopolistic competition, the market is dominated by one seller.

Answer: FALSE Diff: 2 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

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46) Under oligopolistic competition, the market consists of only a few large sellers.

Answer: TRUE Diff: 1 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 47) The demand curve shows the number of units the market will buy in a given time period at similar prices.

Answer: FALSE Diff: 2 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 48) 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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 49) If demand is elastic rather than inelastic, sellers typically consider increasing their prices.

Answer: FALSE Diff: 1 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 50) Pricing strategies usually remain the same as a product passes through its life cycle.

Answer: FALSE Diff: 2 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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51) With reference to the different types of markets, compare pure competition with monopolistic competition.

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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 52) 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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 53) 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 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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54) 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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 55) 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 LO: 9-2: Identify and define the other important external and internal factors affecting a firm's pricing decisions.

AACSB: Analytical thinking 56) How did the COVID-19 pandemic affect pricing decisions?

Answer: Many consumers are now more price conscious given that budgets had to be tightened in their households. This behavior is expected to continue well beyond the duration of the pandemic. Marketers have been forced to focus more effort on value-for-the-money pricing strategies. Many firms cut prices and offered discounts to make their products more affordable.

However, firms concerned that the value of their brand might deteriorate offered more perks at the same price. For example, some hotels offered a "resort credit" for future travel. This technique helps redefine value for the customer.

Diff: 2 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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57) 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 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 58) The first Target store opened in 1962. Its initial strategy was to set prices low to attract a large number of buyers quickly 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 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 59) 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 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Reflective thinking

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60) 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 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 61) 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 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 62) Firms should begin thinking about product pricing ________.

A) at the very beginning of the design process.

B) after the test market is finished C) when mass production begins D) when the design process is completed E) when the distribution channels are fixed Answer: A Diff: 2 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 63) ________ only makes sense if the product's quality and image support a higher price and enough buyers want the product at that price.

A) Market-penetration pricing B) Market-skimming pricing C) Optional-product pricing D) By-product pricing E) Allowance pricing Answer: B Diff: 2 LO: 9-3: Describe the major strategies for pricing new products.

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64) Market-skimming pricing involves skimming revenue layer by layer from the market.

Answer: TRUE Diff: 2 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 65) Market-penetration pricing involves setting a low price for a new product in order to attract a large customer base.

Answer: TRUE Diff: 2 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 66) Market-skimming works best if the initial price is set low enough to attract a large number of buyers.

Answer: FALSE Diff: 2 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 67) Market penetration makes sense when a product's quality and image must support its higher price.

Answer: FALSE Diff: 2 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking 68) 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 LO: 9-3: Describe the major strategies for pricing new products.

AACSB: Analytical thinking

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69) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 70) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 71) 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 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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72) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 73) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 74) 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 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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75) Microsoft offers a full line of Surface tablets, laptops, and PCs at various prices depending on the chosen configuration. This is referred to as ________ pricing.

A) by-product B) product bundle C) captive-product D) optional-product E) product line Answer: E Diff: 2 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 76) Roberto ordered his new Ford vehicle with a premium sound system and upgraded tires and rims. Ford will set the car's price using ________ pricing.

A) by-product B) product bundle C) captive-product D) optional-product E) product line Answer: D Diff: 2 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 77) Nintendo sells its Switch video game consoles for slightly more than it costs to make the units. However, Nintendo expects to make up for the thin margins by selling higher margin video games. This is referred to as ________ pricing.

A) by-product B) product bundle C) captive-product D) optional-product E) product line Answer: C Diff: 2 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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78) Tyson Foods and Perdue Farms sell chicken in the United States but there is no domestic market for chicken feet. However, both firms ship chicken feet to China where they are considered a delicacy. Chicken feet now generate substantial revenue for these companies. This is referred to as ________ pricing.

A) by-product B) product bundle C) captive-product D) optional-product E) product line Answer: A Diff: 2 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 79) Captive-product pricing occurs when firms charge a high price for the main product and lower prices for the supplemental products.

Answer: FALSE Diff: 2 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Application of knowledge 80) When a firm uses optional-product pricing, it must decide which items are included in the base price and which items will be available as options.

Answer: TRUE Diff: 2 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Application of knowledge 81) Captive-product pricing refers to setting prices across an entire product line.

Answer: FALSE Diff: 2 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Application of knowledge 82) 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 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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83) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 84) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 85) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Analytical thinking 86) 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 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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87) 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 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Application of knowledge 88) List an example of by-product pricing. How does it affect the firm's profits?

Answer: The example given in the text uses Perdue Foods. They sell millions of pounds of chicken every year. However, there is no market for the chicken feet in the United States. This by-product was sold for less than a penny a pound to be rendered into lard and used for animal feed. However, they discovered that chicken feet are a delicacy in China and now sell about $40 million of this by-product to the Chinese market. Chicken feet are now a profit center.

Diff: 2 LO: 9-4: Explain how companies find a set of prices that maximizes the profits from the total product mix.

AACSB: Application of knowledge Use the information below to answer the following questions.

Amelia's Animal Care sells veterinary supplies and pet products to small vet clinics and major big box outlets that provide all pet care needs. She offers a number of discounts to her customers based on rapid payment (2/10, net 30) and also on sales volume (4% discount on the total amount when the sales exceed $10,000). Some of her customers also get a functional discount for storing and distributing her products (6% on all purchases) and she offers seasonal discounts leading up to the Christmas holiday season. Her seasonal discounts are typically 3% and she will also honor the 2/10, net 30 for early payment.

89) Pet Products, a big box outlet in the southern U.S., just purchased $25,000 worth of product from Amelia's Animal Care. How much revenue will she receive from this sale given her discount policies?

A) $24,000 B) $25,000 C) $22,000 D) $26,000 E) $21,000 Answer: A Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

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90) Vilonia Valley Vet Clinic purchased $5,000 in products from Amelia's Animal Care. How much revenue will she receive from this sale given her discount policies if they pay on the eighth day?

A) $5,000 B) $4,800 C) $4,900 D) $5,100 E) $5,200 Answer: C Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 91) Vilonia Valley Vet Clinic purchased $5,000 in products from Amelia's Animal Care. How much revenue will she receive from this sale given her discount policies if they pay on the fourteenth day?

A) $5,000 B) $4,800 C) $4,900 D) $5,100 E) $5,200 Answer: A Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 92) Little Rock Vet Service bought $8,500 of products from Amelia's Animal Care. This was a seasonal purchase so they received a seasonal discount and they paid on the fifth day. How much revenue will she receive from this sale given her discount policies?

A) $8,500 B) $8,075 C) $8,600 D) $8,245 E) $8,330 Answer: B Diff: 2 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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93) Little Rock Vet Service bought $8,500 of products from Amelia's Animal Care. This was a seasonal purchase so they received a seasonal discount and they paid on the twenty-fifth day.

How much revenue will she receive from this sale given her discount policies?

A) $8,500 B) $8,075 C) $8,600 D) $8,245 E) $8,330 Answer: D Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 94) Faulkner County Vet Supplies receives a functional discount for storing and distributing Amelia's products in central Arkansas. Given her discount policy how much will Amelia receive if they make a $50,000 purchase?

A) $47,000 B) $48,000 C) $49,000 D) $50,000 E) $45,000 Answer: A Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 95) 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 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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96) 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 97) 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 98) 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 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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99) Metro 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 100) Busch Stadium in St. Louis charges different prices for seats in different areas of the ball park, 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 101) 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 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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102) 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 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 103) 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 104) ________ 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 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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105) 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 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 106) When a manufacturer offers a ________, a customer buys a product from a manufacturer's dealer within a specified time period, and the manufacturer then sends the customer a check.

A) cash rebate B) quantity discount C) promotional allowance D) flash sale E) functional discount Answer: A Diff: 1 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 107) 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 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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108) 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 109) Wilkinson & Company sells plumbing supplies across the United States. Wilkinson uses Chicago as its central location for determining freight costs regardless of the city from which products are actually shipped. For example, a Dallas customer pays the freight cost from Chicago to Dallas even if the goods are shipped from Dallas. Wilkinson most likely uses ________ pricing.

A) basing-point B) FOB-origin C) freight-absorption D) zone E) reference Answer: A Diff: 3 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 110) 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 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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111) 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 112) There are numerous price discounts that many firms use to increase sales.

Answer: TRUE Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 113) Offering a 2/15, net 60 discount rewards customers for volume purchases.

Answer: FALSE Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 114) A functional discount may be offered to a trade-channel member that performs various function such as storage or record keeping.

Answer: TRUE Diff: 2 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 115) Seasonal discounts are only offered over the Christmas holidays.

Answer: FALSE Diff: 2 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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116) 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 LO: 9-5: Discuss how companies adjust and change their prices to take into account different types of customers and situations.

AACSB: Analytical thinking 117) Freight-absorption pricing is used for market skimming and holding on to monopolistic markets.

Answer: FALSE Diff: 2 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 118) 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 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 119) 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 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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120) 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 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 121) 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 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Analytical thinking 122) ________ is a core element of our free-market economy.

A) Cost substitution B) Price competition C) Deceptive pricing D) Predatory pricing E) Inflationary pricing Answer: B Diff: 2 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Analytical thinking

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123) ________ is illegal in the U.S. A) Cost inflation B) Price competition C) Offering cheaper alternatives D) Price-fixing E) By-product pricing Answer: D Diff: 2 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Analytical thinking 124) The Sherman Act, Clayton Act, and Robinson-Patman Act are all federal laws that were initially adopted to curb the formation of ________.

A) monopolies B) oligopolies C) competitive markets D) international markets E) limited partnerships Answer: A Diff: 2 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 125) ________ 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 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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126) 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 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 127) ________ 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 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 128) Selling excess inventory below cost is considered predatory pricing and illegal in the U.S. Answer: FALSE Diff: 2 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 129) If two or more sellers collude to set prices it is called price-fixing.

Answer: TRUE Diff: 2 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 130) There have not been any cases of price fixing in the U.S. in the last 30 years.

Answer: FALSE Diff: 2 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

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131) The Robinson-Patman 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 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 132) Federal legislation on price-fixing states that sellers must set prices after talking to customers and competitors.

Answer: FALSE Diff: 2 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 133) Sellers are prohibited from using predatory pricing.

Answer: TRUE Diff: 1 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Ethical understanding and reasoning 134) 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 LO: 9-6: Discuss the major public policy concerns and key pieces of legislation that affect pricing decisions.

AACSB: Analytical thinking

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135) 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 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, 15e (Armstrong) 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 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 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 center C) marketing intermediary D) value delivery network E) disintermediation system Answer: D Diff: 2 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 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 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 in Florida?

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 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 Amway 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) behavioral Answer: C Diff: 2 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. When a retailer conveys to a wholesaler that a new line of hip-hop clothing is not selling, 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 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 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) an online website Answer: E Diff: 2 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 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 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 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 14) The USA Cotton Growers Cooperative sells unfinished cotton to The Weaving Experts who refine the raw material for sale to The Sheet Factory. It's then used in the manufacturing process of 300, 400, and 500 thread count bed sheet sets. The Sheet Factory distributes their products through a number of wholesalers, including Linen Traders. Linen Traders then resells the bed sheet sets to retailer Bedding Plus who markets the products to consumers. Which of the following represents a marketing intermediary transaction?

A) only Linen Traders B) only Bedding Plus C) only The Weaving Experts D) Linen Traders selling to Bedding Plus E) The Weaving Experts selling to Linen Traders Answer: D Diff: 3 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 15) Which of these examples highlights a firm using a distribution system to gain a competitive advantage?

A) A small mom and pop store selling high-end clothing B) Walmart asking suppliers for volume discounts C) Enterprise Rent-A-Car setting up off-airport rental offices D) Toyota managing a complex value delivery network for the Camry E) Unilever making and selling Dove Beauty Bar soap Answer: C Diff: 3 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking

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16) Which of these functions is NOT a key function that might be performed by a marketing channel member?

A) Promotion B) Production C) Financing D) Matching E) Information gathering Answer: B Diff: 2 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 17) Distribution channels can largely be ignored since they have almost no impact on the firm's other marketing decisions.

Answer: FALSE Diff: 1 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 18) Distribution channel decisions often involve long-term commitments to other firms.

Answer: TRUE Diff: 1 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 19) Introducing intermediaries into a distribution chain increases the number of direct channel transactions between a manufacturer and its customers.

Answer: FALSE Diff: 1 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 20) 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 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Reflective thinking

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21) Direct marketing is the longest distribution channel between a producer and consumer.

Answer: FALSE Diff: 1 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Application of knowledge 22) Intermediaries play a minimal role in matching supply and demand.

Answer: FALSE Diff: 1 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 23) 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 LO: 10-1: Explain why companies use marketing channels and discuss the functions these channels perform.

AACSB: Analytical thinking 24) 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 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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25) Vertical conflicts in distribution channels are conflicts that occur between ________.

A) same levels in the same channel B) different levels of the same channel C) same levels of different channels D) different levels of different channels E) retailers and customers Answer: B Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 26) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 27) 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 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) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 29) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 30) 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 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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31) 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) ________ .

A) contractual VMS B) corporate VMS C) administered VMS D) horizontal VMS E) direct VMS Answer: B Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 32) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 33) 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 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) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 35) Luccia's is a restaurant based in Illinois that exclusively sells Italian food. Luccia's sells the rights to its recipes to a British firm, Clover Trading, which then opens an outlet in London under the Luccia's brand name. Which kind of channel arrangement does Luccia's most likely have with Clover Trading?

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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 36) 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 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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37) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 38) A 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 39) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

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40) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 41) 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 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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42) Victoria's Closet, a manufacturer of bohemian-style clothing and accessories, sells its products through its online website, a catalogue, and specialty boutiques that target women.

Which kind of channel arrangement does Victoria's Closet 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 43) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 44) Home Depot sells about $110 billion in merchandise annually. One of its suppliers, RPM International, generates $5.6 billion in annual sales. Home Depot sells ________ times as much merchandise as RPM and is one of its biggest customers which gives it the power to exert influence over this supplier A) 20.5 B) 21.2 C) 19.6 D) 16.4 E) 24.1 Answer: C Diff: 2 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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45) One recent trend in distribution, known as ________, is to cut out some marketing channel intermediaries and go directly to the buyer.

A) channel disruption B) segmentation C) distribution elimination D) dealer substitution E) business segmenting Answer: A Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 46) One example of ________ occurred when online music downloading almost eliminated traditional music-store retailers.

A) direct-to-consumer branding B) channel delivery change C) substitution D) disintermediation E) delivery mode change Answer: D Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 47) Kaleeb's taxi service generated about $1,250,000 in revenues in 2020. However, Uber and Lyft have eroded 34% of Kaleeb's revenue since 2020. He anticipates 2023 revenue will fall even more and only be about 61% of 2020's revenue. How much revenue does Kaleeb expect to generate in 2023?

A) $825,000 B) $425,000 C) $525,000 D) $487,500 E) $762,500 Answer: E Diff: 2 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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48) Channel innovators who find new ways to add value in the channel can displace traditional resellers and reap the rewards.

Answer: TRUE Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 49) Channel disruption has been around for decades and has already made a major impact on traditional marketing channels.

Answer: FALSE Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 50) Historically, conventional distribution channels have provided channel leadership and have had the power to assign roles and manage conflict.

Answer: FALSE Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 51) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 52) An administered VMS integrates successive stages of production and distribution under single ownership.

Answer: FALSE Diff: 1 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 53) Each channel member plays a specialized role in the channel.

Answer: TRUE Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 16 Copyright © 2023 Pearson Education, Inc.

54) In an administered VMS, the producer assumes the leadership position in a distribution channel by default.

Answer: FALSE Diff: 2 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 55) A horizontal marketing system can develop between a company and its competitor.

Answer: TRUE Diff: 1 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 56) Horizontal conflict occurs among firms at different levels of the channel.

Answer: FALSE Diff: 1 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 57) Disintermediation occurs when product or service producers cut out intermediaries and sell directly to final buyers.

Answer: TRUE Diff: 1 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Application of knowledge 58) 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 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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59) 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 centers and dating services, from wedding consultants and handyman services to funeral homes, fitness centers, 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 60) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 61) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

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62) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Reflective thinking 63) 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 LO: 10-2: Discuss how channel members interact and how they organize to perform the work of the channel.

AACSB: Analytical thinking 64) Give some recent examples of channel disruption.

Answer: The text lists Uber and Lyft disrupting traditional taxi services, iTunes and Amazon music downloads eliminating traditional music stores, Toys "R" Us disrupting mom and pop toy stores and then being driven to bankruptcy by online vendors.

Diff: 1 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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65) Producers of convenience products and common raw materials typically seek ________ distribution—a strategy in which they stock their products in as many outlets as possible.

A) selective B) exclusive C) intensive D) exponential E) comprehensive Answer: C Diff: 1 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 66) 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 67) 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking

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68) 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 69) ________ 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 70) 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 71) ________ calls for analyzing customer needs, setting channel objectives, identifying major channel alternatives, and then evaluating those alternatives.

A) Identifying intermediaries B) Marketing channel design C) Creating a customer value delivery network D) Understanding environmental factors E) Evaluating the right intermediary Answer: B Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

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72) A(n) ________ will tailor one firm's product to the unique needs of its customers.

A) value-added reseller B) intensive distributor C) exclusive distributor D) channel designer E) direct reseller Answer: A Diff: 1 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 73) When a firm compares channel delivery options using likely sales, costs, and profitability it is using ________ to evaluate different channel alternatives.

A) accounting criteria B) adaptability criteria C) economic criteria D) control criteria E) cost criteria Answer: C Diff: 1 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 74) Jericho Consumables Inc. attempts to stock its products in as many gas stations and convenience stores as possible. This practice is an example of ________.

A) channel focus B) single distribution C) selective distribution D) intensive distribution E) exclusive distribution Answer: D Diff: 1 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 75) A firm should evaluate channel delivery alternatives using broad ________ criteria.

A) economic, control, and adaptability B) economic, cost, and financial C) financial, distribution, and adaptability D) financial, accounting, and economic E) cost, adaptability, and scalability Answer: A Diff: 3 LO: 10-3: Identify the major channel alternatives open to a company.

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76) Global marketers must usually adapt their channel strategies to the existing structures within each country.

Answer: TRUE Diff: 1 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Diverse and multicultural work environments 77) Companies should state their marketing channel objectives in terms of targeted levels of customer service.

Answer: TRUE Diff: 3 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Reflective thinking 78) Selective distribution is a strategy in which producers of convenience goods stock their products in as many outlets as possible.

Answer: FALSE Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 79) Exclusive distribution is a strategy in which producers of convenience goods stock their products in as many outlets as possible.

Answer: FALSE Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 80) Intensive distribution is a strategy in which producers of convenience goods stock their products in as many outlets as possible.

Answer: TRUE Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 81) A preference for channel adaptability suggests that long-term channel commitments must be far superior to other options.

Answer: TRUE Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 82) When a firm uses channel intermediaries it typically keeps control of product marketing.

Answer: FALSE Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

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83) Distribution channels are very similar from one country to another.

Answer: FALSE Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Application of knowledge 84) 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 85) 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 LO: 10-3: Identify the major channel alternatives open to a company.

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86) 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking 87) 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 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Reflective thinking 88) What are some of the distribution channel issues a firm might face when entering an emerging market country?

Answer: Many emerging markets lack the necessary infrastructure that will allow for distribution of the firm's products. A firm may have to invest in utilities (water, sewer, electric, etc.) to be able to distribute products. Other regions may lack transportation networks and require creative delivery solutions. For example, Nestlé launched floating supermarkets in the Amazon River Basin since the region lacked functional roads. Sourcing raw materials may also be problematic and require firms to relocate product sources closer to the retail site.

Diff: 2 LO: 10-3: Identify the major channel alternatives open to a company.

AACSB: Analytical thinking

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89) 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 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 90) ________ 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 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning 91) 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 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning

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92) 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 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 93) 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 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 94) ________ are in place when a producer agrees not to sell its products to other dealers in a given area.

A) Exclusive territorial agreements B) Regional distribution laws C) Producer surplus agreements D) Licensing agreements E) Full-line forcing agreements Answer: A Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

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95) ________ involve selling only to dealers that agree to sell some or all of the producer's product line.

A) Exclusive territorial agreements B) Regional distribution laws C) Producer surplus agreements D) Licensing agreements E) Full-line forcing agreements Answer: E Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 96) Which of these software systems do firms use to manage client relationships?

A) PRM B) CRM C) SCM D) CCM E) PZM Answer: B Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 97) When the seller allows only certain outlets to carry its products, this strategy is called ________.

A) exclusive territorial agreements B) full-line forcing C) producer mandating D) licensing agreements E) exclusive distribution Answer: E Diff: 1 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 98) Gemini Products requires all of its distributors to carry the firm's entire product line. This practice is known as ________.

A) exclusive territorial agreements B) full-line forcing C) producer mandating D) licensing agreements E) distributional exclusion Answer: B Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

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99) Many companies are now installing integrated high-tech partnership relationship management (PRM) systems to coordinate their whole-channel marketing efforts.

Answer: TRUE Diff: 1 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

100) Exclusive dealing that creates a monopoly comes under the scope of the Clayton Act of 1914.

Answer: TRUE Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning 101) Customer relationship management software is used for selecting, managing, and motivating individual channel members and evaluating their performance over time.

Answer: FALSE Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge 102) Full-line forcing is considered an illegal arrangement that violates the Clayton Act. Answer: FALSE Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Ethical understanding and reasoning 103) In exclusive dealing, a producer may agree not to sell to other dealers in a given area.

Answer: TRUE Diff: 1 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge 104) Marketing channel management calls for selecting, managing, and motivating individual channel members and evaluating their performance over time.

Answer: TRUE Diff: 1 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge 105) Established brands do not have issues dealing with powerful channel members since they have so much financial clout.

Answer: FALSE Diff: 1 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge

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106) Most companies practice strong partner relationship management to forge long-term partnerships with channel members.

Answer: TRUE Diff: 1 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge 107) Companies rarely need to check channel member performance against standards since the channel member also profits when the customer is satisfied.

Answer: FALSE Diff: 2 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge 108) For the most part, companies are legally free to develop whatever channel arrangements suit them.

Answer: TRUE Diff: 1 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Application of knowledge 109) 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 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

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110) 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 LO: 10-4: Explain how companies select, motivate, and evaluate channel members.

AACSB: Analytical thinking 111) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 112) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

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113) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 114) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 115) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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116) Which of the following is a difference between storage warehouses and distribution centers?

A) Storage warehouses are used to store agricultural products, while distribution centers are used to store nonagricultural products.

B) Storage warehouses store goods for moderate to long periods, while distribution centers are used to move goods rather than just store them.

C) Storage warehouses are always owned by a producer, while distribution centers are rented.

D) Storage warehouses are more likely to use newer, computer-controlled systems, while distribution centers generally use outdated materials-handling methods.

E) Storage warehouses are exclusively used by government agencies, while distribution centers are exclusively used by private businesses.

Answer: B Diff: 2 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 117) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 118) 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) RFID technology can be used to tell when it is time to reorder and can place orders automatically.

Answer: E Diff: 2 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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119) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 120) Which of the following is 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 121) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking

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122) ________ 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 123) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 124) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

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125) Levi Strauss launched a new manufacturing process that consumes 96% less water to make the company's trademark jeans. How much water is the firm saving if it now uses 235 million gallons of water?

A) 5,875 million gallons of water B) 6,105 million gallons of water C) 215 million gallons of water D) 11,225 million gallons of water E) 4,785 million gallons of water Answer: A Diff: 2 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 126) How much money is Levi Straus saving if the firm reduced water consumption by 150,000,000 gallons in the manufacturing process if the water costs $14.39 per 1,000 gallons?

A) $1,552,100 B) $2,158,500 C) $3,550,000 D) $15,000,000 E) $1,439,000 Answer: B Diff: 2 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 127) Customer-centered logistics starts with the marketplace and works backward to the factory.

Answer: TRUE Diff: 1 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 128) Supply chain management involves managing both upstream and downstream value-added flows of materials.

Answer: TRUE Diff: 1 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge

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129) The goal of any logistics system should be to maximize sales, not profits.

Answer: FALSE Diff: 1 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 130) Inbound logistics involves managing the flow of products from an intermediary to a customer.

Answer: FALSE Diff: 1 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge 131) With a vendor-managed inventory system, the supplier takes full responsibility for managing inventories and deliveries.

Answer: TRUE Diff: 1 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 132) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Ethical understanding and reasoning 133) The goal of marketing logistics should be to provide a targeted level of customer service at the least cost.

Answer: TRUE Diff: 2 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Application of knowledge

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134) 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 LO: 10-5: Discuss the nature and importance of marketing logistics and integrated supply chain management.

AACSB: Analytical thinking 135) 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 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, 15e (Armstrong) 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 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 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 marketing C) Test marketing D) Online marketing E) Consolidation marketing Answer: B Diff: 2 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 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 6) Food Galore is a regional chain of supermarkets in the Midwest. 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. Food Galore 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 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 jewelry 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 jewelry 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 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 9) The American Tie Company, a necktie retailer, offers a deep assortment of men's neckties.

The American Tie 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 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 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 12) Jones & Company, a major retail chain across the United States, offers a wide range of consumer goods such as clothing, furniture, home appliances, cosmetics, jewelry, and food.

Jones & Company is best described as a ________.

A) supermarket B) department store C) specialty store D) pop-up store E) category killer Answer: B Diff: 2 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 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 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 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 center E) supermarket Answer: C Diff: 3 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) Hotels, banks, airlines, restaurants, colleges, and hospitals can be viewed as service retailing.

E) A feature common to all types of retail stores is the use of the everyday low pricing strategy.

Answer: D Diff: 2 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 Target, now dominate the retail scene.

However, even "small-box" stores like Dollar General, 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 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 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 21) Kids.com is an online retailer that buys clothing from a variety of brand name manufacturers at less-than-regular wholesale prices and then charges customers less than retail. Kids.com 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 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 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 center Answer: B Diff: 3 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 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 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 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 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 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 the United States.

A) Franchises B) Factory outlets C) Superstores D) Acquisitions E) Joint agreements Answer: A Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 30) To meet the needs of today's consumers, store retailers are often integrating ________ into their operations.

A) larger product selections B) smaller storefronts C) online and mobile shopping D) more frequent discounting E) larger square footage stores Answer: C Diff: 2 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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31) The COVID-19 pandemic accelerated a major shift from brick-and-mortar stores to online shopping channels. By April 2020, about ________ of all sales were occurring via online channels.

A) 25% B) 35% C) 15% D) 45% E) 75% Answer: A Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 32) The record level of retail bankruptcies and store closings is referred to, by some, as the ________.

A) pandemic effect B) retail apocalypse C) online wave D) death of brick-and-mortar E) death cycle Answer: B Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 33) Which kind of marketing involves sending an offer, announcement, reminder, or other item to a person at a particular postal address?

A) in-person marketing B) direct digital marketing C) mass marketing D) direct-mail marketing E) telephone marketing Answer: D Diff: 1 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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34) The process in which printed catalogs, 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 35) 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) face-to-face marketing Answer: A Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 36) The promotion of products and services through printed material with multiple pages that sell multiple products has been traditionally referred to as ________ marketing.

A) catalog B) viral C) telephone D) television E) email Answer: A Diff: 1 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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37) 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) catalog marketing D) kiosk marketing E) viral marketing Answer: C Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 38) 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 catalogs B) blogs C) kiosks D) traditional catalogs E) mobile apps Answer: A Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 39) 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 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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40) 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 41) Which of the following has been limited in recent years by the implementation of the National Do Not Call Registry?

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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 42) Which of the following direct marketing forms includes infomercials?

A) direct-response television marketing B) outbound telephone marketing C) print-catalog marketing D) direct-mail marketing E) face-to-face marketing Answer: A Diff: 2 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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43) A 30-minute or longer advertising program on television that markets a single product is called a(n) ________.

A) interactive TV B) DRTV C) podcast D) catalog E) spambot Answer: B Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 44) Printed catalogs often fail to increase in-store, online, and mobile sales.

Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 45) 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 46) Whereas space is limited in an online catalog, print catalogs can offer an almost unlimited amount of merchandise.

Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 47) Properly designed and targeted telemarketing provides many benefits, including purchasing convenience and increased product and service information.

Answer: TRUE Diff: 2 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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48) Marketers use inbound telephone marketing to sell to customers directly.

Answer: FALSE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 49) 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 catalogs.

Answer: TRUE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 50) The National Do Not Call Registry is managed by the Federal Trade Commission.

Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 51) Telemarketing is infrequently for outbound B-to-B marketing.

Answer: FALSE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 52) Although do-not-call legislation has hurt parts of the consumer telemarketing industry, inbound and outbound consumer telemarketing remain strong and growing.

Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 53) Examples of a service retailer include hotels, airlines, banks, colleges, and many others.

Answer: TRUE Diff: 1 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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54) An off-price retailer buys and sells at lower wholesale prices.

Answer: TRUE Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 55) 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 56) 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 57) 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 58) The shift toward digital and omni-channel buying was greatly accelerated by the COVID-19 pandemic.

Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 59) Omni-channel buyers make a significant distinction between in-store shopping and online shopping.

Answer: FALSE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

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60) The "retail apocalypse" refers to the record level of physical store closings driven by the shift to online shopping.

Answer: TRUE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Application of knowledge 61) Most experts predict that most consumers will switch to 100% online shopping by 2025.

Answer: FALSE Diff: 1 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 62) 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 catalogs would be a good option.

Printed catalogs 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 catalogs are going digital.

Digital catalogs eliminate printing and mailing costs. And whereas space is limited in a print catalog, online catalogs can offer an almost unlimited amount of merchandise. They also offer a broader assortment of presentation formats, including search and video. Finally, online catalogs 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 catalogs anywhere they go, even when shopping at physical stores.

Diff: 3 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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63) How has the implementation of the National Do Not Call Registry changed telephone marketing?

Answer: The National Do Not Call Registry was created by legislation passed in 2003; 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 64) 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 catalogs.

Diff: 2 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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65) 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 behavior. What differentiates the concept of shopper marketing is the suggestion that these efforts should be coordinated around the shopping process itself.

Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 66) 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 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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67) 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 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 68) 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 supercenters, 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 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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69) Crunch and Munch is the country's favorite 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 centers, auto sales and service dealerships, and real estate agencies. Since Crunch and Munch enjoys the position of being a favorite among consumers, franchising is a good tool to capitalize on its reputation without losing its identity.

Diff: 3 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Reflective thinking 70) Discuss some ways that the COVID-19 pandemic changed retailing.

Answer: The COVID-19 pandemic accelerated the shift to online shopping as consumers practice social distancing. One consulting firm, Kantar, stated the pandemic led to the "most rapid and forced transformation in history" in the U.S. retail sector. More sales were pushed online and by April 2020 25% of sales were via online channels. Successful retailers developed better online selling platforms and strategies. This shift to online continues to transform the retail sector and some experts predict the death of the brick-and-mortar store altogether Diff: 2 LO: 11-1: Explain the role of retailers in the distribution channel and describe the major types of retailers.

AACSB: Analytical thinking 71) 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 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Analytical thinking

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72) 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 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 73) 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 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 74) Walmart, Target, Macy's, and other major retailers offer handy ________ that pull customers to both their websites and stores.

A) mobile apps B) in-store shopping experiences C) channels D) platforms E) product information Answer: A Diff: 1 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge

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75) 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 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 76) Beyond direct online sales, retailer online sites, mobile apps, and social media influence a large amount of in-store buying.

Answer: TRUE Diff: 1 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 77) It's estimated that most U.S. retail sales are either transacted directly or influenced by online research.

Answer: FALSE Diff: 2 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 78) According to research, nearly 60 percent of shoppers research product information on their smartphone while shopping.

Answer: FALSE Diff: 3 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 79) 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 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge

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80) The boundaries between in-store and online retailing are rapidly blurring.

Answer: TRUE Diff: 2 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 81) 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 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Application of knowledge 82) 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 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Analytical thinking 83) Describe the growth of online retailing.

Answer: Online retailing is thriving. Although it currently accounts for only about 9 percent of total U.S. retail sales, online buying is growing at a much brisker pace than retail buying as a whole. Last year's U.S. online retail sales grew 16 percent over the previous year versus a 4.4 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 U.S. retail sales are either transacted directly or influenced by online research.

Diff: 2 LO: 11-2: Discuss how retailers are using omni-channel marketing to meet the cross-channel shopping behavior of today's digitally connected consumers.

AACSB: Analytical thinking

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84) 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 85) 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 86) 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 jewelry. 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Reflective thinking

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87) 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 88) The Toby's chain of first-class department stores carries a wide range of product lines, including clothing, jewelry, kitchenware, and home furnishings. Toby's typically charges higher prices on an everyday basis and then holds frequent sales and price promotions to increase store traffic. Toby's 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 89) 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge

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90) 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 center C) warehouse D) category killer E) convenience store Answer: B Diff: 1 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 91) Which of the following statements is true of shopping centers?

A) Most shopping centers function at the regional level rather than at the neighborhood level.

B) Shopping centers typically contain only those stores that target a niche market segment of high-income groups.

C) Shopping centers are groups of retail businesses built on a site that is planned, developed, owned, and managed as a unit.

D) Shopping centers usually contain exclusive brands and specialty stores rather than convenience stores or department stores.

E) Shopping centers are huge superstores that offer a deep assortment of a particular product line.

Answer: C Diff: 2 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 92) A ________ contains between 15 and 50 retail stores, including a department or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.

A) community shopping center B) warehouse club C) superstore D) neighborhood shopping center E) regional shopping mall Answer: A Diff: 1 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge

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93) Power centers 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 94) 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 center B) lifestyle center C) community shopping center D) power center E) warehouse club Answer: B Diff: 1 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 95) Too many retailers, even big ones, fail to clearly define their target markets and positions.

Answer: TRUE Diff: 1 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Application of knowledge 96) The retailer's product assortment should be distinguishable and also match target shoppers' expectations.

Answer: TRUE Diff: 1 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 97) Pricing decisions of specialty stores are typically based on low markups on a high volume of products.

Answer: FALSE Diff: 2 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking

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98) 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 99) 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Reflective thinking 100) 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking

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101) Three types of shopping centers are regional shopping centers, community shopping centers, and neighborhood shopping centers or strip malls. Describe how they differ from each other.

Answer: Regional shopping centers are the largest and most dramatic shopping centers. 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 centers, community shopping centers 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 neighborhood shopping centers 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 LO: 11-3: Describe the major retailer marketing decisions.

AACSB: Analytical thinking 102) 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 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 103) Carleese, 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 centers B) franchises C) shopping centers D) pop-up stores E) category killers Answer: D Diff: 3 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking

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104) 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 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 105) Grace and her fiancé visit several furniture stores in and around their hometown of Milwaukee. They use their smartphones to capture information about manufacturers and pricing, and ultimately decide to purchase their favorite items online. This is referred to as ________.

A) warehousing B) wholesaling C) retailing D) franchising E) showrooming Answer: E Diff: 1 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 106) 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 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Application of knowledge 107) The COVID-19 pandemic had a huge impact on retail. For example, ________ of U.S. restaurants permanently closed in 2020.

A) 11 percent B) 31 percent C) 17 percent D) 59 percent E) 53 percent Answer: C Diff: 2 LO: 11-4: Discuss the major trends and developments in retailing.

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108) ________ is the art and science of preparing for multiple imagined futures.

A) Simulation analysis B) Scenario analysis C) Financial analysis D) Sensitivity analysis E) Prognosticating Answer: B Diff: 2 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Application of knowledge 109) Which of these changes is a result of the COVID-19 pandemic?

A) the shift toward digital and omni-channel buying B) increased research into self-driving vehicles C) population migration into the inner cities D) higher gasoline prices due to increased demand E) an increase in new local store openings Answer: A Diff: 2 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Application of knowledge 110) Which of these sectors experienced the biggest decline is sales due to the COVID-19 pandemic?

A) appliances B) groceries C) furniture stores D) electronics E) automobiles Answer: C Diff: 2 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Application of knowledge 111) 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 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking

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112) 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 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Ethical understanding and reasoning 113) The COVID-19 pandemic forced retailers to rapidly adapt to a changing environment.

Answer: TRUE Diff: 2 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 114) Some experts believe that consumers will continue to use many of the shopping habits, such as online shopping with curbside delivery, they adopted during the pandemic.

Answer: TRUE Diff: 2 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking 115) Differentiate between power centers and lifestyle centers.

Answer: Power centers are huge unenclosed shopping centers 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 centers 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 centers often consist of mixed-use developments, with ground floor retail establishments and apartments or condominiums above, combining shopping convenience with community feel of a neighborhood center. Meanwhile, traditional regional shopping malls are adding lifestyle elements—such as fitness centers, common areas, and multiplex theaters—to make themselves more social and welcoming. In all, today's centers are more like places to hang out rather than just places to shop.

Diff: 2 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Analytical thinking

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116) Amex Retail, the country's largest and oldest retail chain, was recently recognized as one of the most influential companies in the United States. 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 Amex 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 LO: 11-4: Discuss the major trends and developments in retailing.

AACSB: Ethical understanding and reasoning 117) ________ 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge

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118) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge 119) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 120) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge

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121) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 122) ________ 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 123) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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124) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 125) ________ 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Application of knowledge 126) 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 centers D) warehouse clubs E) factory outlet malls Answer: B Diff: 3 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 127) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

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128) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 129) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 130) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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131) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 132) Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence.

Answer: TRUE Diff: 1 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 133) Merchant wholesalers are the largest single group of wholesalers, accounting for roughly 50 percent of all wholesaling.

Answer: TRUE Diff: 1 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 134) Brokers and agents usually take title to goods and perform various functions for retailers.

Answer: FALSE Diff: 2 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 135) The Great Recession put heavy pressure on wholesalers to increase their operation costs and limit warehouse automation systems.

Answer: FALSE Diff: 2 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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136) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking 137) 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 LO: 11-5: Explain the major types of wholesalers and their marketing decisions.

AACSB: Analytical thinking

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Marketing: An Introduction, 15e (Armstrong) 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 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge 2) Greentech is launching a line of miniature solar chargers for laptops, cell phones, 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 Greentech's new solar chargers?

A) a front-page notice of the release of Greentech'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 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Analytical thinking 3) In a company's total promotion 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 LO: 12-1: Define the four 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 the Northeast. 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 LO: 12-1: Define the four 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 unfavorable rumors and events.

A) personal selling B) sales promotion C) direct marketing D) advertising E) public relations Answer: E Diff: 1 LO: 12-1: Define the four 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 LO: 12-1: Define the four 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 LO: 12-1: Define the four 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 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Ethical understanding and reasoning 9) Which of these activities is NOT designed to engage the firm's various publics and build good relations with them?

A) stories B) sponsorships C) demonstrations D) events E) webpages Answer: C Diff: 2 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge

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10) Jakarta Tankers Inc. transports fossil fuels all over the United States. Recently one of Jarkarta's trucks wrecked and released thousands of gallons of oil into a freshwater stream near a housing development. Which of these components of the promotion mix should the firm use to handle this problem?

A) sales promotion B) advertising C) public relations D) predictive analytics E) personal selling Answer: C Diff: 1 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge 11) 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 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge 12) A firm that sends email updates to customers about new products is engaging in personal selling.

Answer: FALSE Diff: 2 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge 13) Sales promotion includes discounts, coupons, displays, and demonstrations.

Answer: TRUE Diff: 2 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge 14) Advertising includes any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

Answer: TRUE Diff: 2 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge

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15) The promotion mix is also called the marketing communication mix.

Answer: TRUE Diff: 2 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Application of knowledge 16) 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 favorable publicity, building up a good corporate image, and handling or heading off unfavorable 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 LO: 12-1: Define the four promotion mix tools for communicating customer value.

AACSB: Written and oral communication 17) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

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18) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 19) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 20) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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21) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 22) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 23) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

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24) ________ 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 25) Which of the following is a disadvantage of advertising?

A) It does not allow dramatization of the brand or company.

B) It often 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 26) Karen Dodd is employed by Dell and responsible for calling on primary schools in her home state of Maine 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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27) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 28) Surf's Up, a family-owned business, offers a free surf lesson with the purchase of any surfboard over $200 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 29) Which of the following is most often 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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30) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 31) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 32) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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33) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 34) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 35) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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36) A recent study showed that more than two-thirds of advertisers and their agencies are planning video ad campaigns that ________.

A) will only be used for television ads B) tap into televisions core strength of vast reach C) will be seen on multiple viewing platforms D) will only be shown on local television stations E) focus solely on national media outlets Answer: C Diff: 2 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 37) In general, digital media can ________ relative to television advertising.

A) be more costly B) be more targeted C) be less engaging D) reach more people E) be overutilized Answer: B Diff: 2 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 38) Jerry Springer's Ice Cream Shop is planning a media blitz that will use television ads, print ads in magazines, Facebook ads, Twitter, and other social media platforms. This type of ad campaign is known as a(n) ________ campaign.

A) social media B) accelerator C) multiple outlet D) cross-platform E) blitzkrieg Answer: D Diff: 2 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 39) Marketing strategies have been relatively static over time.

Answer: FALSE Diff: 1 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge

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40) Marketing content may not provide a consistent message since it often comes from different parts of the company.

Answer: TRUE Diff: 1 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 41) The explosion of digital media marketing complicates and fragments the overall marketing communications.

Answer: TRUE Diff: 1 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 42) In a pull strategy, the producer promotes the product to channel members who in turn promote it to final consumers.

Answer: FALSE Diff: 1 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 43) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 44) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 45) Mass marketing is the optimal promotion tool for building personal and long-lasting relationships with customers.

Answer: FALSE Diff: 1 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

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46) Some marketers now rely almost entirely on digital and social media.

Answer: TRUE Diff: 1 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 47) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 48) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 49) John Deere's sales force working with Lowe's, Home Depot, 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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50) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Application of knowledge 51) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking

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52) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication 53) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Written and oral communication

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54) 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 LO: 12-2: Discuss the changing communications landscape and the need for integrated marketing communications.

AACSB: Analytical thinking 55) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 56) "Informing the target market about a price change for a signature cookie dough product through a national TV campaign within three months" is an example of a(n) ________ objective.

A) reminder B) comparative C) informative D) advertising E) persuasive Answer: D Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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57) The objective of ________ advertising is to build primary demand.

A) reminder B) comparative C) personal D) informative E) persuasive Answer: D Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 58) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking; Ethical understanding and reasoning 59) The primary objective of ________ advertising is to build selective demand.

A) reminder B) classified C) personal D) informative E) persuasive Answer: E Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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60) ________ advertising often results in attack ads between competitors.

A) Reminder B) Comparative C) Personal D) Informative E) Classified Answer: B Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 61) ________ 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 62) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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63) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 64) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 65) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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66) 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 the average company 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 67) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 68) Walgreens' "Red Nose Day" is an example of ________.

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) corporate social responsibility Answer: E Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge

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69) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 70) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 71) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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72) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 73) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 74) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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75) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 76) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 77) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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78) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 79) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 80) Which of the following is a limitation 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge

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81) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 82) Worldwide spending on advertising is estimated to be approximately ________.

A) $7 billion B) $11 trillion C) $651 billion D) $237 billion E) $400 million Answer: C Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge

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Use the information below to answer the following questions.

A recent article by Kelley Main, (January 21, 2021 "Everything you need to know about TV advertising costs," Fit Small Business) on television advertising discussed recent statistics on TV ad costs for both production and airing. For example, she stated the average cost for a 30-second ad that was nationally broadcast was $115,000 in 2020. However, the amount depends on the total viewership with 2020 Super Bowl ads costing over $5.6 million for a 30-second ad.

Advertising costs also vary by city. Assume the 60-second ad costs listed in column 2 for these major U.S. cities are accurate. Population data is for the city only (and not surrounding areas) in April 2020.

60-Second TV Ad Cost Estimates by Major U.S. City in 2020 Total Cost (includes City population City $40k creation cost) (thousands) Los Angeles $565,000 10,014 New York City $411,000 8,804 Cleveland $174,000 372 Detroit $221,000 639 Kansas City $124,000 508 83) What is the potential viewership in Los Angeles if 45% of the city's population views the ad?

A) 5,507,700 B) 4,506,300 C) 10,014,000 D) 8,804,000 E) 3,961,800 Answer: B Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 84) What is the potential viewership in New York City if 45% of the city's population views the ad?

A) 5,507,700 B) 4,506,300 C) 10,014,000 D) 8,804,000 E) 3,961,800 Answer: E Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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85) What is the CPM (cost-per-thousand) to reach viewers in Los Angeles if 45% of the city's population views the ad?

A) $2,104.45 B) $103.74 C) $125.38 D) $988.15 E) $697.41 Answer: C Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 86) What is the CPM (cost-per-thousand) to reach viewers in New York City if 45% of the city's population views the ad?

A) $2,104.45 B) $103.74 C) $125.38 D) $988.15 E) $697.41 Answer: B Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 87) What is the CPM (cost-per-thousand) to reach viewers in Cleveland if 35% of the city's population views the ad?

A) $2,104.45 B) $103.74 C) $125.38 D) $988.15 E) $697.41 Answer: A Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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88) Which of these cities has the lowest CPM (cost-per-thousand) to reach viewers if 45% of the populations of Los Angeles and New York City views the ad running in their city and 35% of the populations of Cleveland, Detroit, and Kansas City view the ads?

A) Los Angeles B) Cleveland C) New York City D) Detroit E) Kansas City Answer: C Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 89) Advertisers in the Cleveland market spend the most money to reach one thousand viewers.

Answer: TRUE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 90) The average CPM for each of these cities is about $200.

Answer: FALSE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 91) The mood or image style shows the company's expertise in making the product.

Answer: FALSE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 92) Comparative advertising is a type of persuasive advertising.

Answer: TRUE Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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93) 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 social media platform.

Answer: TRUE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 94) Traditional mass media still make up a majority of today's media mixes.

Answer: TRUE Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 95) A promotion strategy consists of two major elements: creating advertising messages and selecting advertising media.

Answer: FALSE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 96) The competitive-parity method of setting promotion budgets prevents promotion wars between companies.

Answer: FALSE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 97) Product placement is a form of brand integration.

Answer: TRUE Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge 98) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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99) Advertising's goal is to help move consumers through the buying process.

Answer: TRUE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 100) In advertising media selection, frequency describes the qualitative value of message exposure through a given medium.

Answer: FALSE Diff: 1 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 101) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 102) Standardization produces many benefits—lower advertising costs, greater global advertising coordination, and a more consistent worldwide image.

Answer: TRUE Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Diverse and multicultural work environments 103) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication

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104) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 105) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking

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106) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 107) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Application of knowledge

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108) What are the important factors that a marketer should be aware of when developing a creative concept for an advertisement?

Answer: An advertiser must develop a compelling creative concept–or big idea–that will bring a message strategy to life in a distinctive and memorable way. The creative concept will guide the choice of specific appeals to be used in an advertising campaign. Advertising appeals should have three characteristics. First, they should be meaningful, pointing out benefits that make the product more desirable or interesting to consumers. Second, appeals must be believable.

Consumers must believe that the product or service will deliver the promised benefits. However, the most meaningful and believable benefits may not be the best ones to feature. Appeals should also be distinctive. They should tell how the product is better than competing brands.

Diff: 2 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Written and oral communication 109) 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 LO: 12-3: Describe and discuss the major decisions involved in developing an advertising program.

AACSB: Analytical thinking 110) 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 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking

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111) Which of these functions would fall under the domain of public relations?

A) product development B) advertising C) lobbying D) personal selling E) media integration Answer: C Diff: 2 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 112) CVS Health announced it would no longer sell tobacco products. The firm's campaign "CVS Quits for Good" is an example of ________.

A) a public relations campaign B) self-serving advertising C) bombardment D) community engagement E) a profit-seeking campaign Answer: A Diff: 2 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Application of knowledge 113) A public relations campaign can result in ________.

A) loss of revenue B) higher stock prices C) a smaller customer base D) lost market share E) consumer ire Answer: B Diff: 2 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 114) Public relations can have a strong impact on consumers ________.

A) if it is backed by political opinion B) if the company uses social media as its primary communication mode C) but typically reaches a smaller audience D) at a much higher cost relative to other promotional activities E) at a much lower cost relative to other promotional activities Answer: E Diff: 2 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking

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115) Historically, the use of public relations was often limited ________.

A) and primarily used to influence potential stockholders B) because it was ineffective C) since it was often handled by a third-party agency D) since PR employees viewed their primary job as branding E) and used only to create advertising content Answer: C Diff: 2 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 116) Which of these is NOT a commonly used public relations tool?

A) news B) corporate identity materials C) press release D) value proposition E) financial contributions Answer: D Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Application of knowledge 117) One key to a successful PR department is to ________.

A) focus the public relations department on more lobbying efforts B) devote approximately 30% of the firm's advertising budget to PR C) ensure it is integrated into the company's other marketing and promotion activities D) provide staff with unlimited resources E) have the PR department all engage in volunteer work Answer: C Diff: 2 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 118) Companies can improve public goodwill by contributing money and time to public service activities.

Answer: TRUE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Application of knowledge 119) A common PR tool is special events designed to reach and interest target publics.

Answer: TRUE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Written and oral communication

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120) Usually, when using public relations, a company pays for the space or time in the media.

Answer: FALSE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Written and oral communication 121) Lobbying refers to a PR department maintaining relationships with shareholders and others in the financial community.

Answer: FALSE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Application of knowledge 122) Financial contributions to charitable causes provide very little benefit to corporate donors.

Answer: FALSE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 123) Logos, brochures, and uniforms all help create a distinct company identity.

Answer: TRUE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Written and oral communication 124) Press releases can be one of the most expensive public relations tools.

Answer: FALSE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Written and oral communication 125) Public relations pros are considered to be an organization's master storytellers.

Answer: TRUE Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Written and oral communication 126) Public relations departments are not necessary at not-for-profit organizations.

Answer: FALSE Diff: 2 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking

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127) 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 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking 128) 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 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking

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129) List some of the major public relations tools in use today.

Answer: PR departments use press releases, news conferences, and corporate identity materials like logos and uniforms. They also create favorable news events to gain media coverage and often contribute money and time to public service activities. All types of written materials and social media platforms are also used by the PR team.

Diff: 1 LO: 12-4: Explain how companies use public relations to communicate with their publics.

AACSB: Analytical thinking

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Marketing: An Introduction, 15e (Armstrong) 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 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 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) A salesperson represents a company to customers in many ways. Which of these activities is NOT typically considered one of the salesperson's jobs?

A) recruiting B) prospecting C) communicating D) selling E) information gathering Answer: A Diff: 2 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking

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4) When a salesperson acts in their role as "champion" of the customers' interests and managing the buyer-seller relationship they might ________.

A) sell larger volumes of the company's products B) relay customer concerns back to the company C) find and develop new customers D) communicate information about the company's products to new customers E) work more closely with wholesalers to sell products Answer: B Diff: 2 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 5) Which of these products or services would most likely be sold by a salesperson functioning as an "order getter?"

A) men's suits B) automobiles C) IT services D) groceries E) shoes Answer: C Diff: 2 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) Jarrod works in the marketing department of a large firm that sells industrial products. He was recently assigned the role of working closely with the sales force to help coordinate the firm's marketing efforts. Which of these job titles most closely fits Jarrod's new role?

A) order getter B) salesforce champion C) customer champion D) creative seller E) sales liaison Answer: E Diff: 2 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) Order getters typically participate in creative selling, social selling, and relationship building.

Answer: TRUE Diff: 1 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

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8) Manufacturers relay customer concerns about company products and actions back inside to those who can handle them.

Answer: FALSE Diff: 2 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 9) In consumer product companies such as P&G or Nike, the sales force works directly with customers.

Answer: FALSE Diff: 1 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 10) Personal selling can be very effective in complex selling situations.

Answer: TRUE Diff: 2 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 11) Personal selling can be very effective in complex selling situations.

Answer: TRUE Diff: 2 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 12) Salespeople often serve two masters — buyers and sellers.

Answer: TRUE Diff: 1 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 13) Sales and marketing are essentially the same function.

Answer: FALSE Diff: 2 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking

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14) The most successful sales people have the ability to detach their role from the company and convince the customer they are on their side.

Answer: FALSE Diff: 2 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking 15) 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 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 16) 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 LO: 13-1: Discuss the role of a company's salespeople in engaging customers, creating customer value, and building customer relationships.

AACSB: Analytical thinking

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17) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 18) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 19) Rug Designs Inc., a manufacturer of large area rugs, markets its products throughout the United States 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 20) 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 LO: 13-2: Identify and explain the six major sales force management steps.

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21) Loretta Inc., a U.S.-based watch manufacturer, sells its products in 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 22) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 23) Which of the following examples represents a product sales force structure?

A) Venson's produces frozen dinners at its factory in Ohio, 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 uptown New York 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 LO: 13-2: Identify and explain the six major sales force management steps.

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24) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 25) Appliance maker Whirlpool assigns individual teams of salespeople to big retail customers such as Sears, 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 26) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

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27) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 28) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 29) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

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30) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 31) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 32) ________ 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 LO: 13-2: Identify and explain the six major sales force management steps.

33) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork

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34) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 35) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 36) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 37) 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 LO: 13-2: Identify and explain the six major sales force management steps.

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38) ________ 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 39) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 40) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 41) 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 LO: 13-2: Identify and explain the six major sales force management steps.

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42) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 43) The COVID-19 pandemic ________.

A) had limited impact on selling since most sales were already conducted online B) resulted in increasing face-to-face contact but substantially reduced sales C) forced salespeople to use remote phone and video conferencing technologies D) reenforced the fact that face-to-face selling is much more effective E) resulted in many sales functions being outsourced to other countries Answer: C Diff: 3 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 44) Lakita plans to make eight person-to-person field calls this week and 25 online contacts. Her sales manager estimates a field call costs the firm about $550 and a phone or online contact costs about $30. How much will Lakita's efforts cost the firm this week?

A) $5,200 B) $3,675 C) $4,400 D) $750 E) $5,150 Answer: E Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 45) The federal government's Do Not Call Registry ________.

A) eliminated all B-to-B marketing B) eliminated all telephone sales to consumers C) does not apply to B-to-B telephone sales D) made it illegal to cold call anyone E) can only be used to limit calls to businesses Answer: C Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

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46) Marquita was reviewing her client list and classifying her accounts by workload. Her low numbered accounts require more customer contacts each year. Her #1 accounts demand the most attention with an average of 25 contacts per account each year. Her #2 accounts need less attention but she still needs to touch base with them about once a month. Her #3 accounts need to be called every quarter. How many contacts will Marquita need to make next year if she has 32 #1 accounts, 27 #2 accounts, and 71 #3 accounts?

A) 324 B) 608 C) 1,408 D) 1,132 E) 1,624 Answer: C Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 47) Mark needed one more sale to earn his bonus for the month. However, a personal emergency prevented him from reaching his goal. Despite not reaching his quota Mark still received his bonus because his sales manager factored in Mark's personal emergency and wanted to keep him motivated and happy. This type of organizational climate ________.

A) does not encourage competition among the salespeople B) provides less incentive to work hard to reach individual sales quotas C) will result in a reduction in morale when the other employees learn Mark received his bonus D) will likely result in higher sales and lower employee turnover.

E) gives the impression that sales quotas do not apply to favored employees Answer: D Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 48) Mike, the sales manager at LeBron's Industrial Supplies Inc., knows the firm needs to make about 75,000 contacts next year to reach the firm's sales goal. Assuming each salesperson can make 800 contacts per year, how many salespeople will be needed to reach the firm's goal?

A) 94 B) 101 C) 75 D) 69 E) 124 Answer: A Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

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49) Studies show that salespeople only spend about 70 percent of their time in active selling.

Answer: FALSE Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 50) The cost of hiring a bad salesperson is minimal since they can be quickly terminated and replaced with a new hire.

Answer: FALSE Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 51) Companies often sponsor sales contests with negative consequences for the salesperson coming in last place.

Answer: FALSE Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 52) A company's organizational climate describes the feeling that salespeople have about their opportunities, value, and rewards for a good performance.

Answer: TRUE Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 53) Many large customer companies have implemented team-based purchasing, requiring marketers to employ equivalent team-based selling.

Answer: TRUE Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 54) Training online instead of on-site can cut travel and other training costs, and it takes up less of a salesperson's selling time.

Answer: TRUE Diff: 1 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge 55) Using a customer sales force structure, a company organizes its sales force along customer or industry lines required.

Answer: TRUE Diff: 1 LO: 13-2: Identify and explain the six major sales force management steps.

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56) The goal of supervision is to encourage salespeople to "work hard" and energetically toward sales force goals.

Answer: FALSE Diff: 2 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 57) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 58) Sales force automation systems enable salespeople to profile prospects, forecast sales, and prepare expense reports.

Answer: TRUE Diff: 1 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 59) Many companies motivate their salespeople by setting sales quotas.

Answer: TRUE Diff: 1 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 60) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Application of knowledge

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61) The LA Fashion Magazine is published in Los Angeles. The magazine is bought by readers in the United States and Europe. Which type of sales force structure is most appropriate for LA Fashion? 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 62) Vintage, one of the largest companies in the United States, produces a vast range of goods which includes cameras, home appliances, and personal-care products. The company also competes vigorously in the services market by managing a number of hotels and hospitals.

Vintage entered the real-estate industry in the last decade and proved to be a success in that field too. Considering the vast range of products and services Vintage 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. Vintage should employ different sales forces within different product and service divisions of its major businesses. Within Vintage, for instance, the company should have separate sales forces for energy, transportation, and water processing products and technologies. As no single salesperson can become an expert in all of these product categories managed by Vintage, product specialization is required. In all, it is best if a company as large and complex as Vintage has dozens of separate sales forces serving its diverse product and service portfolio.

Diff: 3 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 63) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking

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64) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Interpersonal relations and teamwork 65) 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 LO: 13-2: Identify and explain the six major sales force management steps.

AACSB: Analytical thinking 66) How did the COVID-19 pandemic affect selling?

Answer: The COVID-19 pandemic, with its social distancing and stay-at-home mandates, also had a substantial impact on how selling is conducted. It placed severe restrictions on face-to-face contact, forcing salespeople and their customers to use remote phone and video conferencing technologies. Both buyers and sellers learned that, in many cases, such remote meetings can be as effective yet less costly, less time-consuming, and easier to arrange than face-to-face sales calls. Thus, the pandemic has accelerated an already-surging technology transformation in selling.

Diff: 1 LO: 13-2: Identify and explain the six major sales force management steps.

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67) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 68) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 69) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

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70) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 71) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 72) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork

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73) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 74) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork 75) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

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76) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 77) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 78) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge

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79) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 80) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 81) Camilla had a couple of hours of free time at the end of her day. She decided to randomly drop by a few businesses to see if she could get some new clients. This practice is known as ________.

A) qualifying B) presentation C) closing D) cold calling E) preapproach Answer: D Diff: 3 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

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82) Ling is going through some sales leads to screen out the ones that do not appear to be as likely to make a purchase. This practice is called ________.

A) the sales pitch B) presenting C) cold calling D) qualifying leads E) closing Answer: D Diff: 3 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 83) Which of these is NOT a common way salespeople prospect for new clients?

A) ask for client referrals B) cultivate suppliers for leads C) set up a time to meet the customer D) use social media E) cold calls Answer: C Diff: 3 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 84) Prior to calling on a customer, a salesperson should ________.

A) be prepared to ask for referrals B) set call objectives C) compute the value of the sale needed to earn their bonus D) meet with the customer's supervisor E) send a copy of the presentation in advance Answer: B Diff: 2 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

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85) A recent large survey found that the number one skill that buyers want from a salesperson is ________.

A) timeliness B) the ability to give discounts C) product knowledge D) rapid presentations E) active listening Answer: E Diff: 3 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 86) The goal of a transaction-oriented selling process is to close a specific sale with a customer.

Answer: TRUE Diff: 1 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork 87) Successful sales organizations know that simply making good products will enable them to win and keep most sales accounts.

Answer: FALSE Diff: 2 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork 88) Relative to a hard sell, the customer-solution approach to selling fits better with today's relationship marketing focus.

Answer: TRUE Diff: 1 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork 89) Cold calling typically results in a very high success rate.

Answer: FALSE Diff: 2 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

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90) Most salespeople spend much of their time maintaining existing accounts and building longterm customer relationships.

Answer: TRUE Diff: 1 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Interpersonal relations and teamwork 91) The primary purpose of every customer contact should be to make an immediate sale.

Answer: FALSE Diff: 2 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 92) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Application of knowledge 93) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking

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94) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 95) 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 LO: 13-3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.

AACSB: Analytical thinking 96) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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97) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Written and oral communication 98) ________ 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 99) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 100) ________ are certificates that save buyers money while they purchase specified products.

A) Price packs B) Samples C) Coupons D) Point-of-purchase promotions E) Premiums Answer: C Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge

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101) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 102) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 103) Cracker Jack, an American brand snack of caramel-coated popcorn and peanuts, has been in existence since 1896. The brand became popularized 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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104) Koffee, a brand of instant coffee, gives away a free coffee mug with its logo imprinted on it with every purchase of a 500 g 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 105) Wisconsin Cheddar has introduced an aged jalapeño cheddar. Displays are set up at various retail cheese stores in the state and patrons are offered free samples as well as $2 off coupons.

Which promotion tool is Wisconsin Cheddar most likely using?

A) rebates B) price packs C) point-of-purchase promotions D) coupons E) advertising specialties Answer: C Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 106) 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) event marketing B) a premium C) a point-of-purchase promotion D) a trade promotion E) a price pack Answer: A Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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107) Sales promotion tools used to persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers are collectively called ________ promotions.

A) consumer B) point-of-purchase C) sales force D) trade E) business Answer: D Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 108) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 109) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 110) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

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111) ________ help companies reach many prospects that are not reached through their sales forces.

A) Trade shows B) Rebates C) Allowances D) Point-of-purchase promotions E) Sweepstakes Answer: A Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Written and oral communication 112) 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 favorable manner Answer: B Diff: 3 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 113) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 114) The COVID-19 pandemic ________.

A) caused marketers to eliminate all event marketing B) halted physical events but pushed the development of virtual events C) had a limited impact on event marketing D) boosted event sales E) eliminated the ability of marketers to have interactive exhibits Answer: B Diff: 3 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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115) A ________calls for customers to submit their names for a prize drawing.

A) premium B) game C) point-of-purchase promotion D) sweepstakes E) contest Answer: D Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 116) Home Depot is offering a cash incentive to buy a particular brand of power tool. The customer will receive a cash refund after sending in proof of purchase. This cash refund is known as a ________.

A) price pack B) sample C) coupon D) contest E) rebate Answer: E Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 117) Price packs are very effective at stimulating short-term sales.

Answer: TRUE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 118) The COVID-19 pandemic limited the use of event sponsorships as a promotion tool.

Answer: TRUE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 119) Sales promotion levels represent over half of marketing spending, Answer: FALSE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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120) Digital coupons are the slowest growing coupon segment because consumers are concerned about privacy issues and spamming.

Answer: FALSE Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 121) Consumer promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.

Answer: FALSE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 122) Manufacturers provide allowances to retailers as compensation for advertising or creating special displays for their products.

Answer: TRUE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 123) The most common evaluation method for sales promotions is to compare sales before, during, and after a promotion.

Answer: TRUE Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 124) Providing samples is the most inexpensive way to introduce a new product.

Answer: FALSE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 125) Price reductions from rebates are given to consumers at the point of sale.

Answer: FALSE Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 126) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

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127) Sweepstakes give consumers a chance to win something, such as cash, trips, or goods, by luck or through extra effort.

Answer: TRUE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Application of knowledge 128) Contests, premiums, and displays are tools solely used for trade promotions.

Answer: FALSE Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 129) Sales promotion does not need to be coordinated with other promotion mix elements within the overall IMC program.

Answer: FALSE Diff: 1 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 130) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Reflective thinking

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131) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 132) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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133) 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 flavor 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking 134) 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 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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135) How did the COVID-19 pandemic affect event marketing?

Answer: The COVID-19 pandemic halted in-person events and gatherings due to social distancing requirements. However, many marketers quickly replaced physical events with virtual events. These online events were often interactive and designed to keep potential customers engaged. Virtual events may not completely replace physical events going forward but they will become more prevalent.

Diff: 2 LO: 13-4: Explain how sales promotion campaigns are developed and implemented.

AACSB: Analytical thinking

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Marketing: An Introduction, 15e (Armstrong) Chapter 14 Digital Marketing 1) ________ marketing uses technology-intensive platforms such as the internet, mobile devices, and social media to engage consumers, consumer communities, and businesses.

A) Differentiated B) Mass C) Digital D) External E) Website Answer: C Diff: 1 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 2) Which of the following is most likely true about digital marketing?

A) It is typically used to sell goods to an undifferentiated market segment.

B) It is inconvenient and lengthens the process for most buyers.

C) Digital marketing makes it difficult to engage individual consumers.

D) Digital marketing often uses social media to engage consumers.

E) It is declining in popularity.

Answer: D Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 3) Which of these is the fastest-growing forms of marketing?

A) digital B) mail C) television D) radio E) promotions Answer: A Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge

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4) Total digital advertising spending now makes up an estimated ________ of all U.S. advertising.

A) 15 percent B) 58 percent C) 79 percent D) 43 percent E) 9 percent Answer: B Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 5) Which of the following is true about digital marketing?

A) Digital marketing is growing at more than 20 percent per year.

B) Digital marketing is difficult to customize.

C) Spending on digital marketing will never catch up with spending on television ads.

D) It includes any use of print media to reach consumers.

E) It reduces the number of interaction options between buyers and sellers.

Answer: A Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 6) Which of these businesses is NOT a direct-to-consumer brand that has been made possible by the digital transformation of business?

A) Dollar Shave Club B) Peloton C) Costco D) Harry's E) Casper Answer: C Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge

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7) Many brick-and-mortar stores use digital marketing ________.

A) as a primary sales channel B) as a supplementary sales channel C) solely as an information source for consumers D) solely as a mechanism to deliver promotional materials E) as their complete business model Answer: B Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 8) Which of these major steps is the first step in the digital marketing process?

A) Preparing for a digital marketing campaign B) Understanding digital marketing C) Employing digital channels in an omni-channel strategy D) Addressing public policy issues in digital marketing E) Investing in necessary technology to support digital marketing Answer: B Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 9) Companies that use digital marketing as their complete business model do not have a brickand-mortar presence.

Answer: TRUE Diff: 1 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 10) One of the benefits of digital marketing is that it can give consumers a sense of brand engagement and community.

Answer: TRUE Diff: 1 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Written and oral communication 11) One disadvantage of digital marketing is the difficulty in changing information on the digital platform utilized.

Answer: FALSE Diff: 1 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Written and oral communication 3 Copyright © 2023 Pearson Education, Inc.

12) As consumers spend more and more time on their tablets and smartphones, ad spending on mobile media is exploding.

Answer: TRUE Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 13) Digital marketing through online, mobile, and social media provides a sense of brand engagement and community.

Answer: TRUE Diff: 1 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Application of knowledge 14) Explain the major benefits of digital marketing for both customers and sellers.

Answer: For buyers, digital marketing is convenient, easy, and private. It gives 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. Buyers can interact with sellers 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. Digital marketing also offer sellers greater flexibility. It lets marketers make ongoing adjustments to prices and programs, or make immediate, timely, and personal announcements and offers. Digital marketing is a powerful tool for moving customers through the buying process and for building customer engagement, community, and relationships. The new digital marketing tools provide rich opportunities for building close, personalized, interactive customer relationships.

Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Analytical thinking

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15) Explain how advances in technology have facilitated direct-to-consumer brands and provide some examples.

Answer: Direct-to-consumer brands are firms that only sell online. This method was not possible until the development of the internet and various technologies that made it easy to develop and use digital platforms. Examples include Dollar Shave Club, Peloton, and Casper.

However, it is worth noting that while Dollar Shave Club started out as a 100% online seller it now places products at major retailers such as Walmart and Costco.

Diff: 2 LO: 14-1: Define digital marketing and discuss its rapid growth and benefits to customers and companies.

AACSB: Analytical thinking 16) The consumer's use of multiple marketing channels, both digital and nondigital, to help them make a buying decision is known as ________.

A) consumer omni-channel navigation behavior B) multi-modal buying C) digitizing the buying process D) navigating the blogosphere E) webcrawling Answer: A Diff: 1 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 17) Which of the following is a direct digital marketing tool?

A) printed catalog B) direct mail C) telephone D) television E) blogs Answer: E Diff: 1 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge

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18) Today's digital marketers use marketing analytics to develop detailed, nuanced, tangible representations of the prototypical consumer. These profiles are known as ________.

A) internet facsimiles B) digitized consumers C) memes D) avatars E) digital consumer personas Answer: E Diff: 2 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 19) One of the challenges of understanding consumer omni-channel navigation behavior is that ________.

A) harvesting value at every stage of the buying process is difficult to accomplish B) consumer behaviors are easy to predict which increases competition C) the specific pattern of channel navigation varies across consumers D) many consumers never use the digital channels E) geographic data is almost impossible to capture Answer: C Diff: 3 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge Use the information below to answer the following questions.

Jeremiah's High End Handbags pays Facebook $1.25 for every consumer who clicks on their ad.

Last year 274,600 consumers clicked on the company's ad and approximately 22% followed through with a purchase. Jeremiah receives an average of $750 for each handbag.

20) How much does the company spend on Facebook advertising per purchase?

A) $1.25 B) $5.68 C) $5.11 D) $0.28 E) $2.50 Answer: B Diff: 3 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Analytical thinking

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21) How many handbags does Jeremiah sell as a result of the Facebook ad?

A) 60,412 B) 75,000 C) 54,211 D) 33,475 E) 91,117 Answer: A Diff: 3 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Analytical thinking 22) How much in total sales revenue does Jeremiah receive from his Facebook ad?

A) $15,211,000 B) $412,000 C) $756,000 D) $55,000,000 E) $45,309,000 Answer: E Diff: 3 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Analytical thinking 23) How much in total sales revenue will Jeremiah receive from his Facebook ad if he drops the price by 20% and sales increase by 15%?

A) $15,211,000 B) $41,684,280 C) $756,000 D) $55,000,000 E) $45,309,000 Answer: B Diff: 3 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Analytical thinking 24) Jeremiah will be better off to keep his price at $750 since he will generate more revenue and make fewer handbags.

Answer: TRUE Diff: 3 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Analytical thinking

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25) Social media marketing is a traditional direct marketing tool.

Answer: FALSE Diff: 1 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 26) A well-prepared consumer persona captures the key traits of a targeted market segment.

Answer: TRUE Diff: 1 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 27) Preparing for a digital marketing campaign begins with a deep knowledge of digital consumers and their omni-channel navigation behavior.

Answer: TRUE Diff: 1 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 28) One application of experimentation would be to assess the impact of a price drop on sales volume.

Answer: TRUE Diff: 1 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 29) Digital marketers can use experimentation tools even if they do not have a clear hypothesis.

Answer: FALSE Diff: 2 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 30) One disadvantage of digital marketing is that it is difficult to scale up and reach more customers.

Answer: FALSE Diff: 2 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge

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31) Experimentation in digital marketing can be used to assess everything from changes in pricing to the effectiveness of different online product offerings, brand messages, or presentation formats.

Answer: TRUE Diff: 1 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 32) What are the main forms of digital marketing?

Answer: The main forms of digital marketing include company websites, online ads and promotions, email, online videos, and blogs, social media marketing, and mobile marketing.

These marketing options continue to expand as new social media platforms continue to emerge.

Diff: 2 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 33) Explain how a digital marketer can create and use a digital consumer persona to increase sales.

Answer: Advanced marketing analytics and the presence of big data give marketers the ability to create detailed, nuanced, tangible representations of the prototypical consumer. These digital consumer personas help marketers fine tune their efforts and target consumers more effectively to increase sales. For example, if the creation of a digital consumer persona shows they typically buy a hot beverage between 10 am and 11 am the marketer can push ads and coupons during that time period.

Diff: 2 LO: 14-2: Discuss the consumer and market research required to design an effective digital marketing campaign.

AACSB: Application of knowledge 34) ________ 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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35) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Analytical thinking 36) 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 way 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 37) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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38) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 39) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 40) Which of the following is the primary purpose of brand 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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41) Online visitors can't buy anything at ESPN.com. 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) brand community website B) promotional website C) interactive website D) e-tailing website E) direct marketing website Answer: A Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 42) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 43) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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44) Which of the following account for the largest portion of firms' online advertising spending?

A) search-related advertisements B) rich media advertisements C) company website advertisements D) community websites E) blog posts Answer: A Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 45) ________ 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 46) Every time a search is made 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 advertising C) digital catalog D) community website E) Web blog Answer: B Diff: 3 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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47) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 48) Which of the following is most likely a consequence of permission-based email marketing?

A) higher response rates B) excessive spamming C) increased consumer frustration D) lower consumer response rates E) reduced consumer interaction Answer: A Diff: 3 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 49) Posting digital content on brand websites or on social media sites such as YouTube, Facebook, TikTok, 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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50) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 51) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 52) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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53) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 54) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 55) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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56) Elise Philips, a leading fashion designer, connects with her followers through a strong online presence, promoting her brand and discussing fashion tips through articles and videos on her personal fan page. In this case, which of the following marketing forms does Elise use?

A) direct email B) a catalog C) a search engine D) a spambot E) a blog Answer: E Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 57) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 58) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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59) Websites that are primarily focused on engaging consumers are known as ________.

A) brand community websites B) contextual advertisements C) infomercials D) marketing websites E) online marketing platforms Answer: A Diff: 3 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 60) 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 the United States and overseas.

C) They can 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 61) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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62) ________ 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 63) 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, jewelry, 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 64) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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65) Companies can use ________, such as Hypetap and Klout, where popular online personalities can help them market new products and services.

A) location platforms B) social bookmarking platforms C) influence platforms D) messaging platforms E) crowdfunding platforms Answer: C Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 66) Raina discovered a great little hole-in-the-wall restaurant when she was shopping downtown.

While she rarely posted this information, the food was so good she took a photo of the storefront and put a digital sticker and a short review online. What type of social media platform did Raina probably use to post this information?

A) location platform B) social bookmarking platform C) influence platform D) messaging platform E) crowdfunding platform Answer: A Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Analytical thinking 67) Jemarcus wants to start an online retail platform to sell his artwork and also list pieces from other artists. However, he needs to raise some money to get started. Which type of social media platform should he explore to raise funds?

A) location platform B) social bookmarking platform C) influence platform D) messaging platform E) crowdfunding platform Answer: E Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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68) A(n) ________ is a social online network of individuals who share a tightly focused interest.

A) nicheworking platform B) social bookmarking platform C) influence platform D) messaging platform E) wiki Answer: A Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 69) Some websites are primarily designed to engage customers and move them closer to a direct purchase.

Answer: TRUE Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 70) Omni-channel retailing aims to create a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping.

Answer: TRUE Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 71) 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 colors and studying the various options and models. In this case, Archer has been using BMW's marketing website.

Answer: TRUE Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Analytical thinking 72) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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73) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Analytical thinking 74) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 75) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 76) Wikis are collaborative knowledge networks that are created and managed by the public.

Answer: TRUE Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 77) Service networking platforms support social communities that link service providers and consumers.

Answer: TRUE Diff: 2 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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78) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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79) Compare online 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 online 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 sportsrelated 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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80) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 81) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge

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82) 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 LO: 14-3: Discuss the different digital channels and media and explain how companies employ them to create an omni-channel marketing strategy.

AACSB: Application of knowledge 83) 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 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning

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84) Fox 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 Security number, and current mortgage information in order to receive a free loan quote. Suspicious of the offer, Fox 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 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 85) Which of the following is generally regarded as the most challenging issue with regard to 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 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 86) The Children's Online Privacy Protection Act 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 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning

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87) ________ refers to the trails of data left behind as consumers browse, share information, complete forms, make purchases, make social media posts, and otherwise engage in the digital world.

A) Digital exhaust B) Big data C) Snooping trails D) Data mining E) Crowdsourcing Answer: A Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 88) In 2020, in the U.S. alone there were over ________ major online security breaches that affected over 155 million people.

A) 1,500 B) 1,000 C) 1,200 D) 4,100 E) 5,000 Answer: B Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 89) In 2018 the European Union implemented the ________. This legislation set strict requirements for collecting and protecting personal information of people living in the EU. A) COPPA B) Federal Trade Commission Data Act C) General Data Protection Regulation D) Sherman Antitrust Act Extension E) EU Data Act Answer: C Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 90) The ad industry has adopted an advertising option icon that ________.

A) protects consumers from online data theft B) allows consumers to opt out of receiving additional targeted ads C) warns consumers the ad contains adult content D) monitors online behavior and reports it to the government E) notifies the consumer their keystrokes are being logged Answer: B Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

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91) A recent survey shows that 77% of U.S. consumers are very concerned about data privacy.

Answer: TRUE Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 92) Most U.S. consumers believe the government should deregulate firms that provide data security for large firms.

Answer: FALSE Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 93) The COVID-19 pandemic surprisingly resulted in a decline in internet scams.

Answer: FALSE Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 94) Phishing is a type of identity theft that uses deceptive emails and fraudulent websites to fool users into divulging personal data.

Answer: TRUE Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 95) A major internet marketing concern is related to the difficulty of restricting minors' access to adult-oriented material.

Answer: TRUE Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 96) Losses from internet fraud exceeded $10 billion in 2020.

Answer: FALSE Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning 97) Marketers have the ability to use big data and sophisticated analytics to mine databases and microtarget their selling efforts.

Answer: TRUE Diff: 2 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

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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 LO: 14-4: Identify and discuss the public policy issues presented by digital 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 LO: 14-4: Identify and discuss the public policy issues presented by digital 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, Congress is drafting legislation that would give consumers more control over how online information is used. In addition, the FTC is taking a more active role in policing online privacy. Of special concern are the privacy rights of children. In 2000, Congress passed the Children's Online Privacy Protection Act (COPPA), which requires online operators targeting children to post privacy policies on their sites. They must also notify parents about any information they're gathering and obtain parental consent before collecting personal information from children under age 13. With the subsequent advent of online social media, mobile phones, and other digital technologies, Congress in 2013 extended COPPA to include "identifiers such as cookies that track a child's activity online, as well as geolocation information, photos, videos, and audio recordings." 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 LO: 14-4: Identify and discuss the public policy issues presented by digital marketing.

AACSB: Ethical understanding and reasoning

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Marketing: An Introduction, 15e (Armstrong) Chapter 15 The Global Marketplace 1) Companies often enter global markets ________.

A) if shareholders demand higher levels of risk B) when management is looking for a challenge C) to retaliate against foreign competitors D) when their government is unstable E) when they have saturated domestic markets Answer: E Diff: 2 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Analytical thinking 2) Which of these sentences best describes global trade since 1990?

A) Global trade has been shrinking as a percentage of GDP. B) Global trade has grown from about $3.5 trillion to $25 trillion.

C) Most countries have adopted protectionist policies.

D) Global trade makes up an insignificant percentage of worldwide GDP. E) Global trade now represents about 35% of worldwide GDP. Answer: B Diff: 2 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 3) Walmart's annual sales revenue is larger than all but the world's ________ largest economies.

A) 25 B) 50 C) 10 D) 15 E) 40 Answer: A Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge

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4) ________ is the process of marketing products and services within and across multiple countries.

A) Exporting B) Market integration C) Global marketing D) Globalization E) International segmentation Answer: C Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 5) A(n) ________operates in more than one country and gains marketing, production, research and development, and financial advantages that are not available to purely domestic competitors.

A) segmented firm B) importer C) exporter D) global company E) international competitor Answer: D Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 6) Which of these steps in NOT one involved in the global marketing process?

A) deciding on the global marketing organization B) deciding on the global marketing program C) deciding how to produce salable goods D) understanding the global marketing context E) deciding how to enter global markets Answer: C Diff: 2 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Analytical thinking

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7) Part of step two of the global marketing process is deciding ________.

A) how much money to spend on going global B) who will lead the global effort C) on the global marketing program D) how to enter global markets E) which markets to enter Answer: E Diff: 2 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 8) Global companies gain advantages in marketing, production, and other areas that are not available to domestic companies.

Answer: TRUE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Diverse and multicultural work environments 9) Global companies view the world as a source of cheap labor and other resources.

Answer: FALSE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Diverse and multicultural work environments 10) The first step in the five-step global marketing process is to decide whether to go global.

Answer: FALSE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Diverse and multicultural work environments 11) Global firm Walmart has annual revenues greater than all but 10 countries.

Answer: FALSE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 12) One reason for the rapid expansion of global marketing is the explosion of global trade.

Answer: TRUE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 3 Copyright © 2023 Pearson Education, Inc.

13) The total volume of global trade in 2020 exceeded $100 trillion.

Answer: FALSE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 14) If companies were counted as economies, about half of the world's largest economies would be multinational corporations.

Answer: TRUE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 15) In 2020, about 32 percent of global GDP was due to global trade.

Answer: FALSE Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Application of knowledge 16) List the five steps in the global marketing process.

Answer: The five steps of the global marketing process are: 1) Understanding the global marketing context 2) Deciding whether to go global and which markets to enter 3) Deciding how to enter global markets 4) Deciding on the global marketing program 5) Deciding on the global marketing organization Diff: 1 LO: 15-1: Define global marketing and the questions companies must ask in deciding whether and how to go global AACSB: Diverse and multicultural work environments 17) A tax on an imported product designed to raise revenue or protect domestic firms is referred to as a(n) ________.

A) exchange B) excise C) fine D) quota E) tariff Answer: E Diff: 1 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Application of knowledge 4 Copyright © 2023 Pearson Education, Inc.

18) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 19) Which of the following is an example of a nontariff trade barrier?

A) a sales tax B) customs duty C) host-country regulations D) excise duty E) import taxes Answer: C Diff: 2 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments 20) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking

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21) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments 22) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 23) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking

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24) In 1994, the North American Free Trade Agreement established a free trade zone among the United States, Mexico, and Canada. This agreement was replaced in July 2020 by the ________.

A) Union of South American Nations B) European Union C) United States-Mexico-Canada Agreement D) Central American Free Trade Agreement E) Latin American Free Trade Association Answer: C Diff: 1 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments 25) A country's ________ shapes its product and service needs, income levels, and employment levels.

A) legal system B) political system C) consumer reaction scale D) subsistence economy E) level of industrial development Answer: E Diff: 2 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Application of knowledge 26) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments

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27) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 28) Many companies 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 pyramid" C) "emerging economies" D) "developed economies" E) industrial economies Answer: B Diff: 3 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments 29) An emerging market 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments

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30) ________ economies are major exporters of manufactured goods, services, and investment funds.

A) Dominant B) Developed C) Subsistence D) Agricultural E) Emerging Answer: B Diff: 1 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 31) 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) developed D) barter E) subsistence Answer: C Diff: 2 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 32) Which of the following statements is true of developed 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking

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33) 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: 2 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 34) The ________ framework is a useful tool for analyzing the forces that might impact marketing decisions in various global environments.

A) POLITY B) Bottom of the Pyramid C) PESTLE D) BRICS E) MENA Answer: C Diff: 2 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 35) Which of these is NOT a component of the PESTLE framework?

A) Sociocultural B) Technological C) Political D) Environmental E) Engagement Answer: E Diff: 1 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 36) Tariffs and duties are often used to force favorable trade behaviors from other nations.

Answer: TRUE Diff: 2 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments

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37) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments 38) Industrial economies offer few market opportunities.

Answer: FALSE Diff: 2 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 39) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 40) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Diverse and multicultural work environments 41) Barter involves the direct exchange of goods and services.

Answer: TRUE Diff: 1 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Application of knowledge

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42) 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 43) 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 labor 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking

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44) 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 favorable 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 LO: 15-2: Understand how global political, economic, sociocultural, technological, legal, and environmental factors affect a company's global marketing decisions.

AACSB: Analytical thinking 45) Which of these is NOT a benefit of staying solely in the domestic market?

A) Domestic firms can avoid the complexities of cultural barriers.

B) Global expansion can provide better growth opportunities.

C) Operating domestically is easier and safer.

D) Concentrating on one market creates a sense of focus and discipline.

E) Most local businesses only need their local and regional markets.

Answer: B Diff: 1 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Analytical thinking

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46) Most companies ________ when they enter global markets.

A) start small B) go all in C) start with about 10 countries D) start with emerging market countries E) enter EU countries Answer: A Diff: 1 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Analytical thinking 47) Which of these is an economic indicator of market potential?

A) currency controls B) labor restrictions C) income distribution D) environmental regulations E) social norms Answer: C Diff: 1 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Analytical thinking 48) Which of these is a political indicator of market potential?

A) currency controls B) national priorities C) income distribution D) environmental regulations E) social norms Answer: B Diff: 1 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Analytical thinking 49) Which of these is a sociocultural indicator of market potential?

A) currency controls B) national priorities C) income distribution D) environmental regulations E) business norms Answer: E Diff: 1 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

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50) 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 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Diverse and multicultural work environments 51) Global markets typically provide fewer growth opportunities since they are often saturated.

Answer: FALSE Diff: 2 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Diverse and multicultural work environments 52) Going global has both benefits and risks.

Answer: TRUE Diff: 2 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Diverse and multicultural work environments 53) Currency controls are not an indicator of market potential.

Answer: FALSE Diff: 2 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Diverse and multicultural work environments

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54) 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 LO: 15-3: Discuss how companies decide whether to go global and, if so, which markets to enter.

AACSB: Analytical thinking 55) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 56) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking

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57) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 58) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 59) ________ is a method of entering a foreign market by associating with foreign companies 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Application of knowledge 60) 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 LO: 15-4: Describe three key approaches to entering global markets.

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61) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Application of knowledge 62) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Application of knowledge 63) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 64) 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 LO: 15-4: Describe three key approaches to entering global markets.

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65) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 66) ________ 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Diverse and multicultural work environments 67) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 68) 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 LO: 15-4: Describe three key approaches to entering global markets.

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69) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Diverse and multicultural work environments 70) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 71) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 72) 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 LO: 15-4: Describe three key approaches to entering global markets.

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73) ________ ventures consist of one company collaborating with foreign investors to create a local business in which they share possession and control.

A) Licensing B) Direct investment C) Contract manufacturing D) Management contracting E) Joint ownership Answer: E Diff: 1 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Diverse and multicultural work environments 74) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 75) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking

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76) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 77) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 78) Which of the following is an advantage of 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 79) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking

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80) Exporting involves a company entering foreign markets by partnering with foreign companies to produce or market a product or service.

Answer: FALSE Diff: 2 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Diverse and multicultural work environments 81) Management contracting is an unwise choice if a domestic firm can make greater profits by undertaking a whole venture.

Answer: TRUE Diff: 1 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 82) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 83) Foreign-based production facilities offer many advantages to an investing company if the foreign market is small.

Answer: FALSE Diff: 1 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 84) Management contracting is a low-risk method of getting into a foreign market.

Answer: TRUE Diff: 2 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Diverse and multicultural work environments

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85) 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 86) 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, chip maker Intel recently paid $1.5 billion for 20 percent ownership in China's state-run Tsinghua Unigroup, which controls two domestic mobile chip makers. The joint ownership investment will help Intel to better understand Chinese consumers. It may also help to earn more favorable 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking

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87) 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 labor 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 LO: 15-4: Describe three key approaches to entering global markets.

AACSB: Analytical thinking 88) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 89) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

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90) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 91) ________ 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Application of knowledge 92) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking

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93) 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 the United States 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 94) ________ 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Diverse and multicultural work environments 95) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Written and oral communication

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96) To overcome ________ firms selling to less-affluent consumers in developing countries may 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.

A) price escalation B) demand escalation C) inflation D) skimming price E) deflation Answer: A Diff: 2 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 97) 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 centers B) wholesalers C) channels within nations D) retailers E) channels between nations Answer: E Diff: 2 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking

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Use the information below to answer the following questions.

Companies face numerous price considerations when setting prices in foreign markets.

Regardless of how companies go about pricing their products, foreign prices are often higher than domestic prices for comparable products. This is often driven by tariffs and other levies on imported products. For example, an Apple iPhone 12 was recently priced at $1,071 in the United States, $1,262 in China (where the product is primarily manufactured and assembled), $1,290 in the United Kingdom, and $1,636 in India. The high price in India is largely because of high import tariffs and other taxes. Assume the Apple iPhone 12 costs $700 to manufacture.

98) What is the percentage markup for Apple iPhone 12 in India?

A) 111% B) 226% C) 84% D) 47% E) 134% Answer: E Diff: 3 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 99) How much gross profit will Apple make if it sells 7,850,000 new iPhone 12s in India? Ignore any tariffs and levies that might apply.

A) $4,112,550,000 B) $7,347,600,000 C) $1,580,250,000 D) $7,987,110 E) $936 Answer: B Diff: 3 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 100) What is the percentage markup for Apple iPhone 12 in the U.K.?

A) 111% B) 226% C) 84% D) 47% E) 134% Answer: C Diff: 3 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

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101) How much total revenue will Apple make if it sells 1,225,000 iPhones in the United Kingdom?

A) $4,112,550,000 B) $7,347,600,000 C) $1,580,250,000 D) $772,750,000 E) $936 Answer: C Diff: 3 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 102) How much gross profit will Apple make if it sells 1,225,000 iPhones in the United Kingdom? Ignore any tariffs and levies that might apply.

A) $4,112,550,000 B) $7,347,600,000 C) $1,580,250,000 D) $772,750,000 E) $936,351,400 Answer: D Diff: 3 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 103) Similar consumer needs around the world suggest that a strategy of adapted global marketing is appropriate for most international firms.

Answer: FALSE Diff: 2 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 104) Global branding and standardization result in reduced costs from economies of scale.

Answer: TRUE Diff: 2 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking

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105) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Diverse and multicultural work environments 106) Straight product extension into international markets is often successful.

Answer: FALSE Diff: 2 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 107) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 108) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 109) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 110) The Internet is forcing companies toward more standardized international pricing.

Answer: TRUE Diff: 2 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

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111) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 112) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Diverse and multicultural work environments 113) Most of the retailing in the United States is done by small, independent retailers.

Answer: FALSE Diff: 2 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking

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114) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking

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115) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 116) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

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117) Jazz is a costume jewelry manufacturing company based in the United States. 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 118) 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 LO: 15-5: Explain how companies adapt their marketing strategies and marketing mixes for global markets.

AACSB: Analytical thinking 119) 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 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Analytical thinking

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120) It is common that a multinational company eventually creates ________ or subsidiaries to handle all of its international activity.

A) export departments B) global divisions C) geographical organizations D) world product groups E) global organizations Answer: B Diff: 2 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Diverse and multicultural work environments 121) Lemon N' Honey is a juice manufacturing company in the United States. 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) global division B) domestic market C) value delivery network D) export department E) domestic division Answer: A Diff: 3 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Analytical thinking 122) Which of the following is true of global 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 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Analytical thinking

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123) Which of the following is a global 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 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Analytical thinking 124) 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 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Diverse and multicultural work environments 125) 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 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Analytical thinking 126) Companies that export goods to one country cannot have a subsidiary in another country because of international trade agreements.

Answer: FALSE Diff: 1 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Analytical thinking

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127) 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 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Diverse and multicultural work environments 128) Global divisions can be organized geographically with country managers responsible for the marketing decisions in their respective countries.

Answer: TRUE Diff: 2 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Diverse and multicultural work environments 129) Global cosmetic firm L'Oréal has a clearly defined home market in France.

Answer: FALSE Diff: 2 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Diverse and multicultural work environments 130) An export department will not be adequate if a firm moves into joint ventures or direct investment.

Answer: TRUE Diff: 2 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Diverse and multicultural work environments 131) Global divisions are organized in a variety of ways including geographical organizations and worldwide product groups.

Answer: TRUE Diff: 2 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Diverse and multicultural work environments

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132) Strawberry Fizz is a renowned bottled juice manufacturer in the United States. 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 LO: 15-6: Identify the three major forms of global marketing organization.

AACSB: Application of knowledge

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Marketing: An Introduction, 15e (Armstrong) Chapter 16 Sustainable Marketing: Social Responsibility and Ethics 1) ________ 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.

A) Sustainable B) Customer driving C) Mass D) Customer-driven E) Differential Answer: A Diff: 1 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 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 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 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 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 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 LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 8) One example of a sustainability initiative is McDonald's commitment to use packaging that is recyclable.

Answer: TRUE Diff: 2 LO: 16-1: Define sustainable marketing and discuss its importance.

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9) The sustainable marketing concept calls for sacrificing current profits to focus on meeting the future needs of consumers.

Answer: FALSE Diff: 2 LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 10) 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 LO: 16-1: Define sustainable marketing and discuss its importance.

AACSB: Ethical understanding and reasoning 11) A common criticism of the marketing system is that marketing channel members ________.

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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 12) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

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13) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning; Analytical thinking 14) ________ 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 15) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Written and oral communication 16) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

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17) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Analytical thinking 18) Some salespeople practice high-pressure selling because ________.

A) their personalities are more suited to that tactic B) their compensation is often tied to their sales C) they enjoy the challenge of convincing someone to buy something they don't need D) it is the only tactic that works E) it helps build a long-term relationship with the customer Answer: B Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Analytical thinking 19) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Interpersonal relations and teamwork 20) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

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21) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 22) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Analytical thinking 23) Which of these consequences is NOT a likely outcome of selling shoddy or unsafe products?

A) product liability lawsuits B) loss of customers C) attracting the attention of regulators D) bad reputation E) higher production costs Answer: E Diff: 3 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Analytical thinking

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24) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 25) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 26) Consumers that rush to buy the newest model of a mobile phone or mobile device are considered to be ________.

A) trend setters B) victims of high-end marketing campaigns C) redliners D) serial replacers E) overconsumers Answer: D Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning

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27) The nation's low-income 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 28) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 29) ________ 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Analytical thinking

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30) Carboi is a company that offers consumers the opportunity to buy carbon offsets, which are contributions to projects that combat global warming by reducing carbon emissions. Carboi offers contribution packages for driving, flying, and home energy use. Through Carboi, consumers can pay some of the ________ costs of their private goods and services.

A) promotional B) safety C) recovery D) distribution E) social Answer: E Diff: 3 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 31) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 32) Jeremy Clarkson, a marketing critic, is concerned about the pervasiveness of marketing. He points to advertising messages everywhere, from websites and e-mails to unwanted direct mail and catalogs to television commercials and product tie-ins to billboards and store signs. From the description given, it can be concluded that Jeremy is concerned about ________.

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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning

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33) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Application of knowledge 34) The European Commission 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. If the accusations prove to be true, Google is practicing ________.

A) planned obsolescence B) excessive materialism C) predatory practices D) acquisition E) redlining Answer: C Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 35) Deceptive pricing practices include misrepresenting the product's features or performance or luring customers to the store for a bargain that is out of stock.

Answer: FALSE Diff: 1 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 36) Critics charge that large marketing companies can use patents and heavy promotion spending to drive out competitors.

Answer: TRUE Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 37) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning

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38) It's easy to differentiate predatory practices from effective competitive strategy and tactics.

Answer: FALSE Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 39) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 40) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 41) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Analytical thinking 42) Marketing's purpose is to promote consumption, and the inevitable outcome of successful marketing is sustainable consumption.

Answer: FALSE Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 43) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning

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44) Much of the so-called planned obsolescence reflects the working of the competitive and technological forces in a free society.

Answer: TRUE Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 45) There are 75 percent fewer supermarkets in low-income communities.

Answer: FALSE Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 46) The COVID-19 pandemic intensified the problem of food deserts as many smaller food stores in low-income areas closed down and transportation options withered.

Answer: TRUE Diff: 2 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 47) Briefly describe a few ways the American marketing system is accused of harming the consumer.

Answer: Many critics charge that the American 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning

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48) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 49) 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 America'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 the "American Dream."

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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning

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50) 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. For example, many cities now levy congestion tolls to reduce downtown traffic jams. New York City recently implemented "Central Business District tolling," by which it charges motorists to enter Manhattan's busiest areas. The toll is also expected to raise more than $1 billion a year to improve the city's worn-down public transit systems.

Diff: 3 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning

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51) 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 LO: 16-2: Identify the major social criticisms of marketing and some counterarguments.

AACSB: Ethical understanding and reasoning 52) A major step in regulating unfair or deceptive acts or practices was the enactment of the ________ in 1938.

A) Robinson-Patman Act B) Wheeler-Lea Act C) Consumer Product Safety Act D) Taft-Hartley Act E) Sherman Act Answer: B Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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53) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 54) ________ 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 55) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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56) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 57) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 58) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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59) ________ 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 60) ________ is a management approach that involves developing strategies that both support the ecological balance and produce profits for the company.

A) Consumerism B) Quasi-environmentalism C) Environmental sustainability D) Materialism E) The marketing concept Answer: C Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 61) A product's ________ is the total negative CO2e impact associated with its manufacture and consumption and ultimate disposal.

A) green score B) consumer value C) sustainability index D) environmental impact E) carbon footprint Answer: E Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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62) A product or service's ________ is calculated by adding together the greenhouse gas emissions resulting from every stage of a product or service's lifetime, from raw material production, sourcing, manufacturing, packaging, transport, and wholesale and retail processes to consumer usage and end-of-life disposal.

A) carbon footprint B) consumer value C) sustainability index D) environmental impact E) green score Answer: A Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 63) Firms that manufacture products that cannot be made without emitting carbon dioxide can buy ________ to reduce their overall carbon footprint.

A) green shoots B) renewable energy credits C) carbon cleaners D) environmental controllers E) carbon reducers Answer: B Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 64) JJ's Steel takes iron ingots and makes high tensile steel products. The manufacturing process releases significant amounts of carbon dioxide into the atmosphere so the firm buys land and plants enough pine trees to absorb the same amount of greenhouse gases it emits during the steel making process. JJ's Steel is practicing ________.

A) carbon offsetting B) carbon footprinting C) carbon cleaning D) environmental controlling E) carbon reducing Answer: A Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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65) ________ 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 66) A company can develop a ________ that provides a framework for pollution control, product stewardship, and new environmental technology for the company and others to follow.

A) pollution prevention mantra B) carbon offsetting program C) product stewardship pledge D) sustainability vision E) beyond green initiative Answer: D Diff: 3 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Analytical thinking 67) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Analytical thinking

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68) ________ 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 69) ________ 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 70) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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71) The Rainforest Alliance evaluates farmers and other agricultural suppliers and certifies those using methods that support its "three pillars of sustainability." These three pillars are ________.

A) air pollution reduction, water recycling, and pesticide-free farming B) social, economic, and environmental C) clean water, clean air, and clean food D) carbon neutral, carbon reduction, and zero carbon E) no pesticides, no herbicides, and no genetically modified seeds Answer: B Diff: 3 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 72) Which of these actions is NOT a specific approach a company can take to reduce environmental harm?

A) Source materials from sustainable suppliers.

B) Reimagine material choices.

C) Simplify product design.

D) Construct closed-loop value chains.

E) Offer more product options.

Answer: E Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 73) Some firms, such as terrapass, will calculate a firm's carbon footprint and then sell them renewable energy credits that offset their CO2e emissions.

Answer: TRUE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 74) One example of a closed-loop value chain is a firm shifting to sustainable energy sources in its manufacturing process.

Answer: FALSE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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75) According to one study, the apparel and footwear industry alone accounts for more than 8 percent of global climate impact.

Answer: TRUE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 76) Product manufacturers are the only entities that create carbon footprints.

Answer: FALSE Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 77) Traditional seller's rights include the right to expect the product to perform as claimed.

Answer: FALSE Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 78) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 79) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 80) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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81) Environmentalism is a management approach that involves developing strategies that both sustain the environment and produce profits for the company.

Answer: FALSE Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 82) Traditional buyers' rights include the right to expect the product to perform as claimed.

Answer: TRUE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 83) Environmentalists call for doing away with "mindless consumption."

Answer: TRUE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 84) Environmentalists call for doing away with most consumption.

Answer: FALSE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 85) Environmentalists assert that the marketing system's goal should be to maximize life quality.

Answer: TRUE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 86) Environmentalists assert that the marketing system's goal should not be to maximize consumption and consumer choice.

Answer: TRUE Diff: 1 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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87) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Analytical thinking 88) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 89) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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90) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 91) 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 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 92) What does it mean for a company to practice carbon offsetting?

Answer: Companies that manufacture products that release greenhouse gases often cannot reduce their emissions due to either technology constraints or high costs. These firms can opt to offset these emissions by planting trees or engaging in other activities that absorb greenhouse gases or create renewable energy. They can also buy carbon credits from other firms, like terrapass, that specialize in providing this service.

Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning

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93) What does it mean to go "beyond greening"?

Answer: Greening activities focus on what the firm is doing today. Beyond greening activities focus on the future. For example, internally, companies can plan for new clean technology. To create fully sustainable strategies, companies will need to develop and employ innovative new technologies. One example of beyond greening is energy technology giant Siemens's commitment to become fully carbon neutral by 2030. Making that happen will require lots of innovation. Companies can also develop a sustainability vision, which serves as a guide to the future. It shows how the company's offerings, processes, and policies must evolve and what new technologies must be developed to get there. This vision provides a framework for pollution control, product stewardship, and new environmental technology for the company and others to follow. It addresses not just challenges related to protecting the natural environment but also opportunities for using environmental strategies to create sustainable value for the firm and its markets.

Diff: 2 LO: 16-3: Understand how consumer, societal, and corporate forces drive sustainable marketing strategy.

AACSB: Ethical understanding and reasoning 94) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Application of knowledge 95) 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) embracing a sense of mission C) helping society D) green marketing E) building long-term customer value Answer: E Diff: 2 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking

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96) 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-centric marketing B) societal marketing C) sense-of-mission marketing D) affiliate marketing E) innovative marketing Answer: A Diff: 3 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 97) Which sustainable marketing principle emphasizes building long-run consumer engagement, loyalty, and relationships?

A) sense-of-mission marketing B) innovative marketing C) customer value-building marketing D) consumerist marketing E) differential marketing Answer: C Diff: 2 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Interpersonal relations and teamwork 98) Ethical marketing most likely involves ________.

A) applying high moral standards when making marketing decisions 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: A Diff: 2 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking

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99) "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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 100) Lakeland Inc. employees get 40 hours paid leave each year to pursue volunteer projects.

The company runs a service day that hosts projects in 25 countries, and it supports a nonprofit that brings young people into public service for a year. Lakeland could be most accurately described as practicing ________ marketing.

A) affiliate B) undifferentiated C) differentiated D) innovative E) sense-of-mission Answer: E Diff: 3 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 101) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning

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102) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Application of knowledge 103) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Application of knowledge 104) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 105) Beverages that are high in sugar are called ________ products.

A) deficient B) pleasing C) salutary D) desirable E) salubrious Answer: B Diff: 1 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking

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106) ________ 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Application of knowledge 107) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 108) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 109) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

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110) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 111) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning Use the information below to answer the following questions.

Jamal's Pet Products manufactures pet foods with healthy ingredients. Most of his competitors use a lot of filler materials and produce pet foods that are not very nutritious yet they create a sense of being full when the animals consume their products. These competitors can sell their pet foods at prices that are 20% lower than what Jamal has to charge. Jamal's sales have fallen as more competitors have entered this market. He was selling 150,000 20-pound bags of high-end dog food for $18 a bag. Now his sales have fallen to 120,000 bags. He is considering lowering his prices to $17.50 a bag but leaving his quality unchanged. He believes this price change will increase his sales by about 8,000 bags.

112) How much revenue did Jamal make when he was selling 150,000 bags of dog food?

A) $2,625,000 B) $2,240,000 C) $2,100,000 D) $2,700,000 E) $2,160,000 Answer: D Diff: 3 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 32 Copyright © 2023 Pearson Education, Inc.

113) How much revenue does Jamal make selling 120,000 bags of dog food?

A) $2,625,000 B) $2,240,000 C) $2,100,000 D) $2,700,000 E) $2,160,000 Answer: E Diff: 3 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 114) How much revenue has Jamal lost due to declining sales?

A) $625,000 B) $540,000 C) $210,000 D) $270,000 E) $216,000 Answer: B Diff: 3 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 115) How much are Jamal's competitors charging for a 20-pound bag of dog food?

A) $13.10 B) $12.50 C) $14.40 D) $17.50 E) $18.00 Answer: C Diff: 3 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 116) How much revenue will Jamal make if he drops the price to $17.50 a bag?

A) $2,625,000 B) $2,240,000 C) $2,100,000 D) $2,700,000 E) $2,160,000 Answer: B Diff: 3 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning

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117) In customer value marketing, a company should seek real product and marketing improvements.

Answer: FALSE Diff: 1 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 118) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 119) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 120) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 121) Cigarettes and junk food are considered pleasing products.

Answer: TRUE Diff: 2 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking 122) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Analytical thinking

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123) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 124) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 125) According to the societal marketing concept, firms and managers should focus primarily on what marketing efforts are legal and allowed.

Answer: FALSE Diff: 1 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 126) Firms that practice sense-of-mission marketing sometimes sacrifice profits in order to do what they think is right.

Answer: TRUE Diff: 1 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning

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127) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning 128) 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning

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129) 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 behavior. 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 LO: 16-4: Understand how to build a sustainable marketing organization.

AACSB: Ethical understanding and reasoning

37 Copyright © 2023 Pearson Education, Inc.