Test Bank for Advertising and Promotion: An Integrated Marketing Communications Perspective, 12th Edition, George Belch Michael Belch
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Multiple Choice Questions
1. Many marketers are uncertain as to what the integrated marketing communications should contribute to the marketing program. The only goal of their company's advertising and promotional program is to:
A. position the company and its brands.
B. create a positive corporate image.
C. generate sales.
D. create memorable advertising.
E. create awareness of the company.
2. Generally, companies that develop Integrated Marketing Communications (IMC) programs which do not contain specific objectives:
A. will have too many benchmark measures against which the success or failure of their programs can be assessed.
B. will never be successful.
C. may find it difficult to facilitate coordination of the efforts of various groups working on a promotional campaign since the various groups may not understand what goal they are working towards.
D. will be able to save money since they won't spend too much time worrying about what they are trying to do.
E. be more successful than companies that develop IMC programs with specific objectives.
3. One important purpose of setting specific advertising goals and objectives is to:
A. provide a standard against which performance can be measured.
B. put constraints on the creative department.
C. have a method of determining when to delete products from the product line.
D. forecast the market share level that can be attained by good advertising.
E. protect all investors and debt holders.
4. The more specific the firm's advertising objectives, the:
A. easier it becomes to measure advertising effectiveness.
B. more difficult it is for competitor's advertising to be effective.
C. easier it is to measure the advertising-sales response function.
D. smaller the funding needed to meet advertising goals.
E. more difficult it is for a competitor to use competitive parity budgeting.
5. Before setting objectives for advertising and promotion, an organization should:
A. conduct a situation analysis to identify marketing and promotional issues facing the firm.
B. develop its media plan and allocate the budget to each media.
C. evaluate the effectiveness of the advertising and promotional strategies.
D. conduct test marketing to check the effectiveness of the marketing strategies developed for the current products and services.
E. set its advertising and promotional budgets.
6. Arden's task is to determine what was accomplished by his company's advertising and promotional program for a vinyl siding cleanser. You can tell him that:
A. his task is impossible.
B. all he needs is the sales results to determine what the program accomplished.
C. his task could be made easier by setting specific communication objectives.
D. he just requires the post-promotional consumer awareness levels to determine what the program accomplished.
E. this is the easiest task his company has ever asked him to perform.
7. _____ objectives are types of objectives that are usually stated in terms of specific, measurable outcomes such as sales volume, market share, or return on investment.
A. Sales
B. Marketing
C. Communication
D. Advertising
E. Organizational
8. Ace Computer has an objective of increasing its share of the home personal computer market by 5 percent during the upcoming year. This is an example of a(n) _____ objective.
A. marketing
B. organizational
C. advertising
D. functional
E. communication
9. Which of the following statements best describes the relationship between marketing and communications objectives?
A. Marketing objectives and communications objectives are synonymous.
B. Marketing objectives evolve from communication objectives.
C. Communications objectives are derived from marketing objectives.
D. Communications objectives can be developed before or after the development of marketing objectives.
E. There is no relationship between the two.
10. Pace Foods has a goal of expanding its business beyond its traditional Texas market base. This goal is an example of a _____ objective while the goal of establishing a position of authenticity and making Mexican food seem fun is an example of a(n) _____ objective.
A. communication; marketing
B. communication; positioning
C. marketing; communication
D. positioning; organizational
E. advertising; functional
11. To be effective, marketing objectives need to be:
A. realistic and attainable.
B. erudite and challenging.
C. philosophical and fungible.
D. long-term and qualitative.
E. reasonable and elaborate.
12. Marketing goals defined in terms of sales, profits or market share increases are:
A. situational response objectives.
B. usually not appropriate for promotional objectives.
C. integrated marketing communications objectives.
D. relationship marketing objectives.
E. communication objectives.
13. Many marketing managers approach promotion from a(n) _____ perspective and believe the objective of advertising and other promotional mix elements is to relay information about a product to customers.
A. informational
B. communications
C. sales-oriented
D. segmentation
E. product development
14. Many marketing managers prefer sales-oriented objectives for advertising because they believe:
A. the reason a company spends money on advertising and promotion is to sell its products or service.
B. the objective of advertising and other promotional mix elements is usually to communicate information or a selling message about a product or service.
C. the primary role of an integrated marketing communications program is to communicate.
D. the objectives should be based on the achievement of communication objectives.
E. they must provide relevant information and create favorable predispositions toward the brand before purchase behavior will occur.
15. Financially oriented managers who view marketing communications as an expense rather than an investment are likely to prefer _____ objectives for advertising and other promotional areas.
A. sales-oriented
B. communication
C. positioning
D. image
E. functional
16. The concept of advertising expenditures producing long term rather than immediate results is known as:
A. the carry-over effect.
B. the communication effect.
C. the low-involvement effect.
D. the halo effect.
E. DAGMAR.
17. The carryover effect:
A. has no impact on sales objectives.
B. has no effect on the relationship between advertising and sales.
C. encourages the use of nonspecific objectives.
D. is particularly apparent with mature, low-priced, and frequently purchased products.
E. helps in determining the precise relationship between advertising and sales.
18. Which of following is a likely problem for a manager who uses sales as a measure of advertising effectiveness?
A. Sales results offer little guidance or direction to those responsible for planning and developing the advertising program.
B. There is a short, often immeasurable, time period between when advertising is run and when sales actually occur.
C. Sales results are affected by no marketing mix variable other than price and promotion.
D. No internal environmental variables have any significant influence on sales results.
E. With the correctly selected promotion variables, no external environmental variables have any significant influence on sales results.
19. Heinz developed a sales promotion program called "All About Family." It offered a coupon of a free Halloween candy when one purchased any of five different participating Heinz brands. Cents-off coupons for the participating brands were placed in newspaper inserts. The campaign also featured a contest called the "Ultimate Family Night" sweepstakes. Heinz management most likely used _____ objectives to measure the effectiveness of this sales promotion.
A. communication persuasiveness
B. short-term sales
C. long-term sales
D. brand inquiry
E. information parameters
20. For which of the following would an advertiser be most likely to use a sales-oriented objective?
A. A direct response ad for a record album
B. A commercial for a new type of electric-powered automobile
C. A political announcement
D. An anti-drug public service announcement
E. A commercial comparing Verizon to AT&T
21. Direct-response advertisers generally set objectives and measure success in terms of:
A. brand awareness.
B. brand attitudes.
C. purchase intentions.
D. sales response generated by an ad.
E. brand equity.
22. Sales-oriented objectives are appropriate for:
A. all Internet marketing.
B. retail advertising promoting a sale or special event.
C. products that have been introduced in a highly volatile market.
D. any advertising campaign aimed at maintaining brand awareness.
E. creating favorable attitudes and images for a brand or a product before purchase could occur.
23. Which of the following statements is true regarding the relationship between advertising and promotion, and sales performance?
A. In mature markets where other marketing mix variables are stable, it is impossible to determine the relationship between advertising and/or sales promotion and sales.
B. The repositioning of brands is often done with a goal of improving sales or market share.
C. When sales expectations are not being met, experienced managers are not very likely to consider changes in their advertising and sales promotion programs.
D. Marketing and brand managers are often under pressure to show sales results and thus may take long-term perspective in evaluating advertising and promotion programs.
E. Managers prefer sales-oriented objectives because they provide operational guidelines for those involved in planning, developing, and executing the advertising and promotional program.
24. Various response hierarchy variables such as awareness, knowledge, interest, attitudes, and intention are the basis for:
A. marketing objectives.
B. sales-oriented objectives.
C. image objectives.
D. communications objectives.
E. the carry-over effects.
25. Advocates of communication-based objectives for advertising propose using _____ as a basis for setting these objectives.
A. sales.
B. market share.
C. stages of a hierarchical response model.
D. carry-over effects.
E. market behavior.
26. Managers who use the communications effects pyramid to set objectives believe that:
A. lower-level objectives such as purchase and reuse form the foundation of the communications program.
B. the foundation of the communications program is set by accomplishing lower-level objectives such as awareness, knowledge, and comprehension.
C. advertising and promotion should first accomplish lower-level objectives such as trial and purchase.
D. advertising and promotion should first accomplish higher-order objectives such as trial and purchase and then create awareness and brand knowledge.
E. advertising and promotion cannot accomplish lower-order objectives.
27. In 2007, Cingular acquired AT&T but renamed itself using AT&T. The choice of the name reflected consumers' awareness and recognition of an established brand. Advertising to make consumers aware of new combined firm would more than likely have _____ objectives.
A. sales-oriented
B. market-oriented
C. product development
D. communications
E. product penetration
28. Which of the following is at the top of the communication effects pyramid?
A. awareness
B. knowledge
C. liking
D. preference
E. purchase/repurchase
29. "Encouraging current drinkers of Coca-Cola to drink more of the beverage," would be an example of a(n) _____ objective.
A. sales-oriented
B. market-oriented
C. product development
D. communications
E. product penetration
30. Which of the following statements is true about the communications objectives?
A. It is easy to translate sales goals into communications objectives.
B. It can be difficult to determine the relationship between communications objectives and sales performance.
C. Communications objectives cannot serve as operational guidelines to the planning, execution, and evaluation of the promotional programs.
D. Marketing managers do not recognize the value of setting communications objectives.
E. Precise formulas are to be followed when translating sales goals into specific communications objectives.
31. Which of the following statements is true about communications objectives?
A. When setting objectives using the communications effect pyramid, the last step reached is trial.
B. Sales goal cannot be translated into communications objectives.
C. Marketing and advertising managers do not rely on experience and intuition when setting communications goals.
D. Communications objectives are the criteria used in the DAGMAR approach to setting advertising goals.
E. Communication objectives are used particularly where the advertiser seeks an immediate response.
32. DAGMAR is:
A. a philosophy of advertising goal setting.
B. a model of consumer behavior.
C. a method of setting sales objectives.
D. the most often used method of setting objectives.
E. an attitude measurement device.
33. _____ is an approach to setting advertising goals and objectives which states that communication effects are the logical basis for advertising goals and objectives against which success or failure should be measured.
A. The carryover effect
B. The hierarchy of effects model
C. Zero based communications planning
D. Inside-out communications planning
E. DAGMAR
34. In 2007, Cingular acquired AT&T but renamed itself as AT&T itself. The choice of the name reflected consumers' awareness and recognition of an established brand. To determine how successful it was in making consumers aware of its name change and its new positioning strategy, the firm could have used:
A. zero-based communications planning.
B. a benchmark orientation.
C. DAGMAR.
D. the carryover effect.
E. the recency effect.
35. A stereo speaker manufacturer developed advertising objectives, which stated that the goal of the company's new ad campaign is "To communicate our ability to create an environment of total audio ambience in the home." This statement could serve as an example of a:
A. target audience delineation.
B. benchmark measure.
C. communications task.
D. sales objective.
E. short-term promotional objective.
36. According to DAGMAR, the basic function of advertising is to:
A. create sales.
B. communicate.
C. increase market share.
D. generate action.
E. change behavior.
37. Under the DAGMAR model, a(n) _____ can be performed by, and attributed to advertising rather than a combination of marketing factors.
A. advertising hierarchical plan
B. functional communication change
C. communications task
D. marketing task
E. advertising benchmark
38. According to the criteria outlined in DAGMAR, which of the following is the best statement of a quantitative communications objective?
A. "Increase product users to 40 percent of the total market."
B. "Win new customers and increase sales volume by 15 percent in 6 months."
C. "Increase the number of customers mentioning the brand name when asked for brand preference from 40 percent to 50 percent in one year."
D. "Increase awareness of the brand in one year."
E. "Increase sales revenue by 10 percent."
39. According to DAGMAR, advertising objectives should be written in measurable terms that specify:
A. a communications task, a target market, a benchmark starting point, a time period, and degree of change sought.
B. a budget, a message strategy, a media plan, and the degree of carryover effect desired.
C. the reach, frequency, and point of wearout for advertising messages.
D the purchase motives, demographic composition, and buying habits of the target market.
E. sales potentials, market share, return on investment, and budget forecasts.
40. According to the DAGMAR model, which of the following is a characteristic of a good objective?
A. A good objective is elaborative in nature.
B. A good objective specifies the target audience.
C. A good objective includes both positive and negative points.
D. A good objective specifies the current market share.
E. A good objective is based on sales results.
41. Determining a target market's present level of awareness, knowledge and liking towards a product often requires _____ measures.
A. benchmark
B. sales interval
C. qualitative awareness
D. quantitative awareness
E. reach and frequency
42. Before beginning its new advertising campaign, Landmark Bank conducted a study to determine consumers' level of awareness and knowledge of the bank and its services as well as consumers' perceptions of the bank's image. This was done to:
A. communicate advertising goals.
B. communicate tasks.
C. establish benchmark measures.
D. communicate DAGMAR objectives to the audience.
E. establish marketing research goals.
43. An airline company set the following objective for its new advertising campaign: "To increase the percentage of consumers who know our fares are lower than the competitors' to 75 percent over the next six months." Using the criteria associated DAGMAR approach to setting objective, what is wrong with this objective?
A. It is not a concrete statement of what message the airline wants to communicate.
B. It does not contain a benchmark measure and statement of the degree of change sought.
C. It does not specify a specific time period for accomplishing the objective.
D. It does not specify a well-defined target audience.
E. Nothing is wrong with this objective; it satisfies all of the criteria specified in the DAGMAR model.
44. Assume the Greyhound Bus Company runs a six-month advertising campaign promoting its convenient bus routes and excellent on-time service without conducting any sort of marketing research. At the end of the six-month period, Greyhound conducts a study and finds 80 percent of its frequent travelers agree the bus company has convenient bus routes and excellent on-time service. Greyhound can conclude that:
A. the campaign was successful in changing perceptions regarding its fares.
B. the campaign was successful in changing perceptions regarding its service.
C. the campaign was not successful since it should have nearly 90 percent of riders agreeing that it offers convenient bus routes and excellent on-time service.
D. its advertising is working.
E. without benchmark measures, it will never know if the campaign was a success or a failure.
45. For which of the following advertising communication tasks should the specified time period be the longest?
A. Creating brand awareness
B. Increasing brand awareness levels
C. Creating knowledge regarding a brand attribute
D. Increasing knowledge levels about a brand attribute
E. Repositioning a brand
46. In January 2003, Philip-Morris Companies, Inc., and Kraft Foods became the Altria Group. The change in name reflected the fact the company has changed itself structurally, behaviorally, and culturally. The new name was designed to focus attention on the company's superior performance, financial strength, and its commitment to integrity and corporate responsibility. Which of the following statements about the communications objectives the company would have most likely used as part of this repositioning strategy is true?
A. The communications objectives established with this strategy would need to be abstract.
B. It would be impossible for the company to have any benchmark measures for determining whether it reached its communications objectives.
C. A communications objective concerning the repositioning of the Altria Group would take longer to accomplish than an objective designed to create brand awareness.
D. The target audience could not be specifically defined in the communications objective.
E. Quantitative benchmarks would be impossible due to the fact the Altria Group markets new products.
47. The DAGMAR approach to setting objectives:
A. has little effect on the advertising planning process.
B. has focused advertisers' attention on the value of using communications objectives rather than sales objectives.
C. has never been criticized because it focuses on the hierarchy of effects model.
D. has increased the degree of subjectivity used in the selection of objectives toward which planners' efforts should be directed.
E. has been successful because it is easy to implement.
48. DAGMAR MOD II was developed to alleviate problems with:
A. the response hierarchy used in the original DAGMAR model.
B. the costs of using DAGMAR.
C. the fact that DAGMAR ignores sales results.
D. setting benchmark measures.
E. creating measurable communications objectives.
49. Which of the following is an example of a common criticism of DAGMAR?
A. It ignores communications objectives.
B. It is difficult to implement.
C. It is useful only for small companies that have a small advertising budget.
D. It offers little guidance to those responsible for planning and developing the promotional program.
E. It concentrates only on creativity and does not pay much attention to other objectives.
50. You are working in the advertising department of a large consumer products company. You have suggested that the company use the DAGMAR approach for setting advertising goals. Which of the following is an example of an argument that you are likely to hear against the use of the DAGMAR approach to setting advertising goals?
A. Communication should be the measure of advertising effectiveness rather than salesoriented goals.
B. DAGMAR approach is too creative and hence, leads to difficulty in understanding.
C. DAGMAR can be quite expensive due to research costs and is therefore suitable only for large companies.
D. DAGMAR is too quantitative for most managers to understand.
E. DAGMAR is appropriate only in case of direct - response advertising.
51. Creative executives from the advertising industry might oppose the DAGMAR approach to setting objectives because it:
A. inhibits their creativity by putting too much emphasis on numbers and the quantitative assessment of an advertising campaign.
B. requires that speculative presentations be created and used to set benchmark measures.
C. is only successful if it produces the desired sales results.
D. does not provide any type of communication guidelines.
E. is too concerned with qualitative assessments of the finished campaign.
52. Inside-out planning:
A. focuses on what the marketer wants to say, when the marketer wants to say it, things the marketer believes are important to his or her brand, and the media form the marketer wants to use.
B. is another term for zero-based communications planning.
C. starts with the customer and builds backward to the brand when developing an IMC program.
D. is a method of implementing DAGMAR objectives.
E. is used to forecast the validity of DAGMAR objectives.
53. Outside-in planning:
A. focuses on what the marketer wants to say, when the marketer wants to say it, things the marketer believes are important to his brand, and the media form the marketer wants to use.
B. is another term for zero-based communications planning.
C. starts with the customer and builds backward to the brand when developing an IMC program.
D. is a method of implementing DAGMAR objectives.
E. is used to forecast the validity of DAGMAR objectives.
54. ___ is an approach to integrated marketing communications planning that involves determining what tasks need to be done and which marketing communications planning functions should be used to accomplish them.
A. The objective/task pyramid
B. DAGMAR
C. Inside out planning
D. Zero-based communications planning
E. Refutation planning
55. According to Duncan's zero-based marketing communications planning approach,
A. advertising should always be the main tool for accomplishing marketing communications objectives
B. sales promotion is usually the best tool for accomplishing marketing communications objectives
C. big ideas for a promotional campaign can be based on public relations, advertising, sales promotion or media advertising
D. integrated marketing communications programs should lead with the promotional function that least effectively addresses a company's communication problem or opportunity
E. managers should focus on what the customer wants and work backward to the brand
56. To more fully appreciate the value of advertising and promotion, managers should treat the communications budget as a(n):
A. variable cost.
B. expense.
C. liability.
D. investment.
E. fixed cost.
57. _____ is the difference between total revenue generated by a brand and its total variable costs.
A. Contribution margin
B. Aggregated cost
C. Promotional result
D. Net worth
E. Return on investment
58. According to Robert Steiner, which of the following terms is synonymous with contribution margin?
A. Total revenue generated by a product
B. Net worth
C. Financial optimization
D. Marginal analysis
E. Total profit generated by a product
59. In the case of marginal analysis approach, profits are shown to be a result of:
A. advertising expenditure minus sales.
B. sales minus advertising expenditures.
C. gross margin minus advertising expenditures.
D. gross margin minus sales.
E. net worth minus sales.
60. Which of the following statements describes a weakness inherent in the use of the marginal analysis model for establishing an advertising budget?
A. It is unsuitable as a basis for budgeting in case of direct response advertising.
B. Only environmental factors that are considered by the model will affect the effectiveness of the promotional program.
C. Budgetary amount is often set by fiat.
D. The budget is determined by management solely on the basis of what is felt to be necessary.
E. It is very illogical and virtually no theoretical base is used to determine the budgets.
61. The _____ function model is based on the microeconomics law of diminishing returns.
A. concave-upward
B. S-shaped demand
C. S-shaped response
D. marginal utility
E. concave-downward
62. The concave-downward function model is based on:
A. the microeconomics law of diminishing returns.
B. the economic law of supply and demand.
C. price elasticity of demand quotients.
D. the change in contribution margins as item price is changed.
E. perceptual mapping results.
63. A marketing firm decides to purchase media time in an attempt to sell its new product. After purchasing approximately $1 million dollars of time, it has noticed no impact on the sales of the product. However, at $3 million, a substantial increase is shown. This might best be explained by:
A. arbitrary allocation method.
B. the objective and task method.
C. competitive parity method.
D. an S-shaped response function.
E. rapidly diminishing returns.
64. The S-shaped response function implies that:
A. initial advertising expenditures will have little impact on sales.
B. advertising expenditures will have major impact on sales.
C. sales effects will follow the microeconomic law of diminishing returns.
D. sales will immediately increase then decrease.
E. sales will immediately decrease then increase.
65. The two models that are commonly used to explain the relationship between advertising and sales are the:
A. concave-downward function and the S-shaped response function.
B. S-shaped response function and the concave-upward function.
C. marginal utility function and the S-shaped demand function.
D. S-shaped demand function and the convex-downward function.
E. concave-upward function and the S-shaped demand function.
66. According to the concave-downward model,
A. the effects of advertising quickly begin to diminish.
B. the carryover effect is especially true for low-priced, frequently purchased consumer products.
C. sales decrease rapidly if the price is too high.
D. initial outlays of the advertising budget have little impact on sales.
E. sales are not directly related to the size of the advertising budget.
67. According to the S-shaped response curve,
A. the effects of advertising quickly begin to diminish.
B. the carryover effect is especially true for low-priced, frequently purchased consumer products.
C. sales decrease rapidly if the price is too high.
D. initial outlays of the advertising budget have little impact on sales.
E. sales are not directly related to the size of the advertising budget.
68. The S-shaped response curve suggests that:
A. advertising effectiveness will not be related to spending.
B. very low advertising budgets will not work.
C. advertising effectiveness will vary inversely with the spending levels.
D. the carryover effect is especially true for low-priced, frequently purchased consumer products.
E. sales and spending on advertising are not directly related.
69. Which of the following is a factor that influences the setting of the advertising budget?
A. The use of communications or sales objectives.
B. The corporate structure.
C. The basis for product differentiation.
D. The extent of selective retention.
E. The recruitment plans.
70. When higher-level executives determine the budget amounts to be allocated for each department's advertising expenditures, a _____ approach is being used.
A. bottom-up
B. marginal contribution
C. top-down
D. Delphi
E. contribution forecast
71. The _____ method of budgeting is being employed when expenditure is allocated by an analysis of expenditure for all aspects of producing and marketing the product. The ad budget is determined by making sure a certain amount is not exceeded.
A. arbitrary allocation
B. percentage of sales
C. affordable
D. return on investment
E. competitive parity
72. You know the _____ method of budgeting is being employed after hearing an experienced marketing department manager respond to a new employee's question, "How was the ad budget established last year?" by saying, "The same way it's always been done. I just have an instinct for how much should be budgeted where."
A. arbitrary allocation
B. percentage of sales
C. ROI
D. return on investment
E. competitive parity
73. Which top-down budgeting method is being employed when expenditure is allocated by assigning a budget based on gut feelings?
A. arbitrary allocation
B. percentage of sales
C. affordable method
D. payout planning
E. competitive parity
74. Which of the following is an advantage of the arbitrary allocation method?
A. By using the arbitrary allocation method, the company can be sure of not getting into any financial problems.
B It keeps the ad spending within reasonable limits.
C. It uses a logical basis for determining the budgets.
D. This method of budgeting is generally stable.
E. The arbitrary allocation approach has no obvious advantages.
75. The most commonly utilized method of budget determination by large firms is:
A. competitive parity method.
B. objective and task method.
C. percentage of sales method.
D. arbitrary allocation method.
E. the affordable method.
76. The _____ method of budgeting is being employed when expenditures are allocated by assigning a part of the cost of the product to be allocated to advertising. The total budget is based on units sold.
A. arbitrary allocation
B. percentage of sales
C. objective and task
D. return on investment
E. competitive parity
77. In the _____ method to budgeting, sales are projected for the coming year based on the marketing manager's estimates.
A. competitive parity
B. objective and task method
C. unit cost production
D. straight-projected sales
E. arbitrary method
78. To set an advertising budget, the marketer of filing cabinets examines advertising to sales ratios published in trade magazines, and then allocates a percentage of sales dollars to the advertising effort. Which two budgeting methods are being employed?
A. Competitive parity and percent of sales method.
B. Competitive parity and payout planning method.
C. Payout planning and percent of sales method.
D. Percent of sales and objective and task method.
E. Payout planning and arbitrary allocation method.
79. Which of the following budgeting procedures would be used if a firm wanted a method that is simple to understand and financially safe?
A. competitive parity
B. marginal analysis
C. percentage of sales
D. objective and task
E. arbitrary method
80. The _____ method of budgeting uses advertising/sales ratio data.
A. objective and task
B. affordable
C. percent of sales
D. ROI
E. arbitrary allocation
81. The major problem associated with the _____ budgeting method is that it reverses the cause and effect relationship between advertising and sales.
A. percent of sales
B. objective and task method
C. competitive parity
D. S-shaped response
E. rapidly diminishing returns
82. The _____ budgetary allocation method is designed to promote stability and minimize marketing warfare as well as take advantage of the collective wisdom of the industry.
A. ROI
B. arbitrary allocation
C. percentage of sales
D. competitive parity
E. objective and task
83. When using the competitive parity budgeting method, the firm:
A. matches its share of total industry advertising expenditures to its market share.
B. spends as much as it can.
C. allocates some portion of planned sales for the period to advertising.
D. spends the same total amount as its major competitors spend.
E. bases its advertising and promotion expenditures on sales.
84. Which of the following methods of determining a budget requires a marketing department manager to use input from a clipping service?
A. ROI method
B. Arbitrary allocation method
C. Percentage of sales method
D. Competitive parity method
E. Objective and task method
85. The _____ method of budgeting is being employed when expenditures are allocated based on information about industry averages for advertising. The budget is set to maintain a level consistent with industry spending.
A. arbitrary allocation
B. percentage of sales
C. objective and task
D. return on investment
E. competitive parity
86. Which of the following is an advantage of the competitive parity method?
A. It makes use of the buildup approach to establishment of promotional budgets.
B. It leads to stability in the marketplace by minimizing marketing warfare.
C. It is based on the fact that advertising and promotions are designed to accomplish specific objectives by addressing certain problems and opportunities.
D. It gives due recognition to the contributions of creative executions and/or media allocations.
E. Under this method, the budget is driven by the objectives to be attained.
87. A disadvantage associated with the _____ method is its assumption that because firms have similar promotional expenditures their programs will be equally effective.
A. return on investment
B. affordable
C. competitive parity
D. objective and task
E. payout planning
88. In the _____ method of budget determination advertising is considered an investment, similar to plant and equipment.
A. payout planning
B. objective and task
C. ROI budgeting
D. competitive parity
E. percentage of sales
89. Top-down budgeting methods are commonly used because of:
A. their effectiveness.
B. upper management's desire for control.
C. the growing availability of computer simulations.
D. the ease with which a manager can assess the impact of sales on ROI.
E. their quantitative nature.
90. The task and objective method of budgeting as well as the payout plan are both examples of the _____ approach.
A. trading up
B. top-down
C. bottom-up
D. build-up
E. trickle up
91. Defining the communications objectives to be accomplished and estimating the costs associated with the performance of the necessary strategies and activities are steps in the _____ method of budgeting.
A. competitive parity
B. payout planning
C. ROI
D. return on investment
E. objective and task
92. Which of the following is an example of a budgeting allocation method that uses a buildup approach?
A. ROI
B. competitive parity
C. objective and task
D. arbitrary allocation
E. percentage of sales
93. The first task in the objective and task method of budgeting is to:
A. conduct a system analysis.
B. create an organizational budget.
C. isolate advertising objectives.
D. determine what tasks need to be accomplished.
E. reevaluate objectives from previous years.
94. Which of the following statements provides a good rule of thumb for setting the advertising budget for a new product?
A. Its advertising budget should be twice the desired market share.
B. Its advertising budget should be equal to that of the largest market shareholder in the product category.
C. Its advertising budget should be as much as the firm can afford.
D. Its advertising budget should be ten percent greater than the average budget planned for the entire payout period.
E. Its advertising budget should be less than that needed to maintain the desired market share.
95. The objective and task method is most difficult to use when:
A. the product to be promoted is intangible and in the maturity stage of its product life cycle.
B. the product to be promoted is in the decline stage of its product life cycle.
C. the product to be promoted is a cash cow.
D. the product to be promoted is new to the market.
E. a service is being promoted.
96. _____ is a method for allocating budgets designed to determine the investment value of the advertising appropriation.
A. Payout planning
B. Percent of sales method
C. Competitive parity
D. Arbitrary allocation
E Objective and task
97. During the first months of a new product introduction, a useful budgeting technique to determine a ballpark figure for setting feasible objectives is the _____ method.
A. payout planning
B. percent of sales
C. competitive parity
D. 401k
E. marginal analysis
98. As a tool for budget allocation, multiple regression analysis is most often employed in budget models using:
A. computer simulation
B. competitive parity
C. arbitrary allocation
D. percentage of sales
E. a top-down approach
99. As a result of ____, large advertisers can maintain advertising expenditure shares that are smaller than their market shares because they get lower advertising rates and accrue the advantages of advertising several products jointly.
A. economies of scale
B. differential advertising advantages
C. competitive parity
D. a concave-downward response
E. multiple advertising channels
100. As a result of economies of scale, large advertisers:
A. are likely to enjoy more favorable advertising time and space than smaller advertisers.
B. get higher advertising rates than smaller advertisers.
C. accrue the disadvantages of advertising several products jointly.
D. have higher average costs of production.
E. can spend more money on advertising and realize a better return.
101. As a result of economies of scale, smaller advertisers:
A. are likely to enjoy more favorable advertising time and space than large advertisers.
B. have declining average costs of production.
C. get higher advertising rates than large advertisers.
D. can maintain advertising expenditure shares that are smaller than their market shares.
E. can accrue the advantages of advertising several products jointly.