Marketing Management merged

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Chapter 1 Overview of Marketing

©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 1.1 Define the role of

marketing.

Learning Objective 1.2 Describe the evolution of

marketing over time.

Learning Objective 1.3 Describe how marketers

create value for a product or service.

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Phyter Bars

4 © McGraw-Hill Education

What Is Marketing?

Marketing is the activity, set of institutions, and

processes for creating, capturing, communicating,

delivering, and exchanging offerings that have

value for customers, clients, partners, and society

at large.

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Exhibit 1.1 Core Aspects of Marketing

Jump to Appendix 1 long

image description

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Marketing Is about Satisfying Customer

Needs and Wants

How does Hershey’s offer value?

©Education Images/UIG via Getty Images

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Exhibit 1.2: Exchange the Underpinning of

Seller-Buyer Relationships

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Exhibit 1.3: The Marketing Mix

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Marketing Creates Value through Product,

Price, Place, and Promotion Decisions

The Marketing Mix:

The controllable set of

decisions or activities that

the firm uses to respond

to the wants of its target

markets.

Product

Price

Promotion

Place

10 © McGraw-Hill Education

Product: Creating Value

The fundamental purpose

of marketing is to create

value by developing a

variety of offerings,

including goods, services,

and ideas, to satisfy

customer needs.

Goods

Services

Ideas

11 © McGraw-Hill Education

Price: Capturing Value

Price is everything a

buyer gives up (money,

time, energy) in

exchange for the

product or service.

©Rich Polk/Clear Channel/Getty Images

12 © McGraw-Hill Education

Place: Delivering the Value Proposition

Place represents all the marketing processes

necessary to get the product to the right customer

when that customer wants it.

Place more commonly deals specifically with

retailing and marketing channel management, also

known as supply chain management.

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Promotion: Communicating the Value

Proposition

Promotion is communication by a marketer that

informs, persuades, and reminds potential buyers

about a product or service to influence their buying

decisions and elicit a response.

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Exhibit 1.4: Marketing Can Be Performed by

Individuals and Organizations

Jump to Appendix 4 long

image description

Etsy

Website

http://www.etsy.com/

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Marketing Impacts Various Stakeholders

• Customers

• Supply Chain Partners

• Employees

• Industry

• Society

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PROGRESS CHECK (1 of 3)

1. What is the definition of marketing?

2. Marketing is about satisfying ______ and

______.

3. What are the four components of the marketing

mix?

4. Who can perform marketing?

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Exhibit 1.5 Marketing Evolution:

Production, Sales, Marketing and Value

Jump to Appendix 5 long

image description

Photos (left to right): © Ryan McVay/Getty Images RF; © CMCD/Getty Images RF; © Ryan McVay/Getty Images RF; © Ted Dayton Photography/Beateworks/Corbis RF; © McGraw-

Hill Education/Mark Dierker, photographer

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Value-Based Marketing

The Meaning of Best Value: Whole Foods’ Purpose-Based Marketing

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Value-Based Marketing Era

What is Value?

Value Cocreation

Relational Orientation

CRM: Customer Relationship Management

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PROGRESS CHECK (2 of 3)

1. What are the various eras of marketing?

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How Does Marketing Create Value and

How Do Firms Become More Value Driven?

Build relationships with customers.

Gather and analyze information.

Balance benefits and costs.

Connect with customers using social and

mobile media.

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Value Stems From Four Main Activities

Adding Value

Using Marketing Analytics

Embracing Social and Mobile Marketing

Ethical and Societal Dilemma: Engaging in

Conscious Marketing

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Marketing Analytics

Companies collect massive amounts of data about

how, when, why, where, and what people buy.

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Connecting With Customers Using Social

and Mobile Marketing

97% of marketers use

social media tools for their

businesses.

4.2 billion people link to

some social media sites

through their mobile

devices.

. © Tanya Constantine/Getty Images RF

25 © McGraw-Hill Education

Resolving Ethical and Societal Dilemmas

Conscious Marketing

Socially Responsible

Firms

Making socially

responsible activities an

integral component of

corporate strategies.

©Hero Images Inc./Alamy Stock Photo

26 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. Does providing a good value mean selling at a

low price?

2. How are marketers connecting with customers

through social and mobile media?

Marketing

Chapter 1

The End

Chapter 2 Developing Marketing Strategies

and a Marketing Plan

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 2.1 Define a marketing strategy.

Learning Objective 2.2 Describe the elements of a marketing plan.

Learning Objective 2.3 Analyze a marketing situation using SWOT

analyses.

Learning Objective 2.4 Describe how a firm chooses which consumer

group(s) to pursue with its marketing efforts.

Learning Objective 2.5 Outline the implementation of the marketing

mix as a means to increase customer value.

Learning Objective 2.6 Summarize portfolio analysis and its use to

evaluate marketing performance.

Learning Objective 2.7 Describe how firms grow their business.

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PepsiCo

4 © McGraw-Hill Education

What is a Marketing Strategy?

A marketing strategy identifies:

• A firm’s target market. • A related marketing mix. • The bases on which the firm plans to build a

sustainable competitive advantage.

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Exhibit 2.1: Macro Strategies for Developing

Customer Value

Jump to Appendix 1 long

image description

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Customer Excellence

• Retaining loyal customers

• Providing outstanding

customer service

©TAO Images Limited/Alamy Stock Photo

7 © McGraw-Hill Education

Operational Excellence

Efficient

operations

Excellent

supply chain

management

Strong

relationship

with

suppliers

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Product Excellence

Provide products with high

perceived value and

effective branding and

positioning.

Bloomberg Businessweek’s top global brands:

• Apple, Google, Microsoft, Coca-Cola,

Amazon, Samsung,

Toyota, Facebook,

Mercedes, IBM

©Sean Gallup/Getty Images

9 © McGraw-Hill Education

Locational Excellence

Especially important for retailers and service

providers.

Many say, “The three most important things in retailing are location, location, location.”

Competitive advantage based on location is not easily

duplicated. Starbucks makes it difficult for competitors

to enter a market and find good locations.

10 © McGraw-Hill Education

Multiple Sources of Advantage

A single strategy (low prices or excellent service) is

usually not enough to build a sustainable

competitive advantage.

Southwest Airlines

• Provides good service at a good value (on-time flights that are reasonably priced)

11 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. What are the various components of a marketing

strategy?

2. List the four macro strategies that can help a

firm develop a sustainable competitive

advantage.

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Exhibit 2.2: The Marketing Plan

Jump to Appendix 2 long

image description

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Step 1: Define the Business Mission

PepsiCo’s Mission Statement: “To provide consumers around the world with delicious, affordable, convenient and complementary foods and

beverages from wholesome breakfasts to healthy and

fun daytime snacks and beverages to evening treats.”

Coke’s Mission Statement: “To refresh the world … To inspire moments of optimism and happiness … To create value and make a difference.”

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Step 1: Conduct a Situation Analysis Using

SWOT Analysis

Internal Strengths

Internal Weaknesses

External Opportunities

External Threats

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Exhibit 2.3: Examples of Elements in a

SWOT Analysis (1 of 2)

Environment Evaluation

Positive Negative

Pepsi Internal Strengths • Brand product portfolio • Strong celebrity

endorsers

• Dedication to charitable and social

causes

• Large marketing budget

Weaknesses

• Relies heavily on Walmart • Relatively lower brand

awareness

• Public scrutiny over practices

• Low profit margins

External Opportunities

• Health food segments • Expansion due to

acquisitions

• Ready-to-drink tea and coffee market growth

• Bottled water

Threats

• Water scarcity • Changes to labeling

regulations

• Increase competition

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Exhibit 2.3: Examples of Elements in a

SWOT Analysis (2 of 2)

Environment Evaluation

Positive Negative

Coca-

Cola

Internal Strengths

• High market share • Strong brand • Strong global

presence

• Excellent customer loyalty

• Supply chain

Weaknesses

• Low diversification • Few healthy beverages

External Opportunities

• Emerging countries • Diversifying products • Bottled water

Threats

• Water scarcity • Potential market

saturation

• Changes to labeling regulations

• Increasing competitors Sources: SWOT analysis of Pepsi, Strategic Management Insight, February 15, 2013, http://www.strategicmanagementinsight.com/swot-analyses/pepsico-swot-analysis.html;

SWOT analysis of Coca-Cola, Strategic Management Insight, February 15, 2013, http://www.strategicmanagementinsight.com/swot-analyses/coca-cola-swot-analysis.html.

17 © McGraw-Hill Education

Step 3: Identifying and Evaluating

Opportunities Using STP

Segmentation

Targeting

Positioning

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Exhibit 2.4: Hertz: Market Segmentation

Illustration

Segment 1 Segment 2 Segment 3 Segment

Segment 5

Segments Single thrill seekers and

gear heads

on vacation

Adrenaline

Collection

Business

customers

and families

who prefer a

luxurious

ride

Prestige

Collection

Environmentally

conscious

customers

Green

Collection

Families

SUV/Mini

van/4x4

Commercial

customers

Commercial

Van/Truck

Cars

Offered

Corvette

ZHZ

Chevrolet

Camaro

Infiniti QX56

Cadillac

Escalade

Toyota Prius

Ford Fusion

Toyota

RAV4

Ford

Explorer

Ford Cargo

Van

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Market Positioning

Choose which segments to pursue, then how to

position within those segments.

Define the marketing mix variables so target

customers have a clear, distinctive, and desirable

understanding of the product compared to

competition.

Hertz positions itself as a quality car and truck

rental company that is the first choice for each

target segment.

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Step 4: Implement Marketing Mix and

Allocate Resources

Price and

Value Capture

Product and

Value Creation

Promotion and

Value

Communication

Place and

Value Delivery

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Product and Value Creation

Successful products and services are those that customers

perceive as valuable enough to purchase.

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Price and Value Capture

Price is what the customer is willing to pay for a

product they perceive as good value.

©digitallife/Alamy Stock Photo

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Place and Value Delivery

The product must be readily accessible when and

where the customer wants it.

Dyson provides product and place value.

Where are Dyson fans available?

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Promotion and Value Communication

IMC: Integrated Marketing Communications

• Advertising • Personal selling • Sales promotion • Public relations • Direct marketing • Online marketing

(including social

media)

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Step 5: Evaluate Performance Using

Marketing Metrics

A metric is a measuring system that quantifies a

trend, dynamic, or characteristic.

Metrics are used to explain why things happened

and also project the future.

Social and Mobile Marketing 2.1: Proctor &

Gamble (P&G) devised a strategy to calculate the

returns on Snapchat campaigns.

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Evaluating Performance

Who is accountable for

performance?

Performance Objectives,

Marketing Analytics, and

Metrics

Financial Performance

Metrics

Portfolio Analysis

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Exhibit 2.6 Boston Consulting Group Matrix

P&G

Website

Jump to Appendix 3 long

image description

http://www.pg.com/

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Which Quadrant?

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PROGRESS CHECK (2 of 3)

1. What are the five steps in creating a marketing

plan?

2. What tool helps a marketer conduct a situation

analysis?

3. What is STP?

4. What do the four quadrants of the portfolio

analysis represent?

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Growth Strategies Exhibit 2.7: Markets/Products and Service Strategies

Jump to Appendix 4 long

image description

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Market Penetration

Existing marketing mix, Existing customers

Marvel used a market penetration strategy by

expanding the distribution of its films:

• Theaters • Xfinity • DVDs (in a variety of retail locations)

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Market Development

Current Products or Services

New Markets

What can a company do to continue to grow in a

difficult retail environment?

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Product Development

New product or service

Current target market

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Diversification

New product or service

New market segment

Related vs. unrelated diversification

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PROGRESS CHECK (3 of 3)

1. What are the four growth strategies?

2. What type of strategy is growing the business

from existing customers?

3. Which strategy is the riskiest?

Marketing

Chapter 2

The End

Chapter 3

Digital Marketing: Online,

Social, and Mobile

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 3.1 Describe the 4E framework of digital

marketing.

Learning Objective 3.2 Examine the seven critical elements of online

marketing.

Learning Objective 3.3 Understand the drivers of social media

engagement.

Learning Objective 3.4 Understand various motivations for using

mobile applications.

Learning Objective 3.5 Recognize and understand the components of

a digital marketing strategy.

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L’Oreal

©Tharanat Sardsn/Shutterstock

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Exhibit 3.1: The 4E Framework for Digital

Marketing

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Excite the Customer

Offer must be relevant to its

targeted customer.

Relevancy can be

achieved by providing

personalized offers.

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Educate the Customer

Golden opportunity:

Educate about the product’s value proposition and communicate offered

benefits.

Source: Worldwide Breast Cancer

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Experience the Product or Service

Provide vivid

information about a

firm’s goods and services.

Simulate real

experiences.

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Engage the Customer

Action, loyalty, and

commitment.

Positively engaged

consumers lead to more

profitability.

Engagement can also

backfire.

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PROGRESS CHECK (1 of 4)

1. What are the 4 Es?

2. What social media elements work best for each

of the 4 Es?

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The 7C Online Marketing Framework

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1. Core Goals

The basis of any

marketing strategy is its

goals.

Determine specific goals.

Align the goals with the

target market and align

the 7Cs with the goals.

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2. Context Elements

Design

Navigation

Must be in alignment with

the target market

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3. Content

Monitor to ensure

relevancy.

Devise appropriate

keywords to improve

organic search.

Implement SEM and paid

search.

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4. Community

Allow customers to

interact.

Use corporate and

professional blogs.

Engage in

Crowdsourcing.

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5. Communication

Clear, helpful, meaningful

content enables effective

communication.

Enables interacting with,

engaging, and educating

site visitors.

Provide a mechanism for

customers to

communicate with the

firm.

16 © McGraw-Hill Education

6. Commerce

Desktop usage is greater,

and conversion rates

higher, for online

purchases.

The most loyal customers

use multiple channels.

Customers want a range

of online purchase

options.

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7. Connection

Engage customers and

provide a call to action.

Allow customers to

interact with the firm

continuously.

Enable positive

engagement.

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PROGRESS CHECK (2 of 4)

1. Describe the components of the 7C online

marketing framework.

2. Differentiate between organic and paid search.

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Exhibit 3.3:

The Wheel of Social Media Engagement

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The Information Effect

Outcome in which relevant information is spread

by firms or individuals to other members of the

social network.

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The Connected Effect

Outcome that satisfies humans’ innate need to connect with other people.

22 © McGraw-Hill Education

The Network Effect

Outcome in which every post is spread

instantaneously across social media.

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The Dynamic Effect

Information is exchanged to network participants

through back-and-forth communications.

Examines how people flow in and out of networked

communities as their interests change.

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The Timeliness Effect

Firms must engage with the customer at the right

place and time.

25 © McGraw-Hill Education

PROGRESS CHECK (3 of 4)

1. What are the five drivers of social media

engagement described in the Wheel of Social

Media Engagement?

26 © McGraw-Hill Education

Going Mobile and Social Exhibit 3.4: Seven Primary Motivations for Mobile App Usage

Need for “Me Time” Need to Socialize

Need to Shop (showrooming)

Need to Accomplish

Need to Prepare

Need to Discover

Need to Self-Express

Jump to Appendix 1 long

image description

Source: “Vision Statement: How People Really Use Mobile,” Harvard Business Review, January/February 2013, http://www.hbr.org

27 © McGraw-Hill Education

App Pricing Models

Ad-supported apps

Freemium apps

Paid apps + in-app purchases

http://www.hbr.org/

28 © McGraw-Hill Education

PROGRESS CHECK (4 of 4)

1. What are the seven types of customer

motivations for using mobile apps?

2. What are the four options for pricing mobile

apps?

3. What are some of the most popular types of

mobile applications?

29 © McGraw-Hill Education

How Do Firms Engage Their Customers?

Exhibit 3.5: Social Media Engagement Process

30 © McGraw-Hill Education

Listen

Sentiment analysis:

• Attitudes • Preferences

Source: NFL Properties LLC

Listening helps determine digital marketing

objectives and strategies.

31 © McGraw-Hill Education

Analyze Using Marketing Analytics

Hits

Page views

Bounce rate

Click paths

Conversion rate

Keyword analysis

Source: salesforce.com

32 © McGraw-Hill Education

Develop and implement

campaigns using social

media.

Effective implementation

based on social and

mobile media activity.

33 © McGraw-Hill Education

Exhibit 3.6 How to Do a Digital Marketing

Campaign

1. Identify strategy and goals

2. Identify the target audience

3. Develop the budget

4. Develop the campaign

5. Monitor & change

Marketing

Chapter 3

The End

Chapter 5 Analyzing the Marketing

Environment

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 5.1 Outline how customers, the

company, competitors, corporate partners, and the

physical environment affect marketing strategy.

Learning Objective 5.2 Explain why marketers must

consider their macroenvironment when they make

decisions.

Learning Objective 5.3 Describe various social trends that

impact marketing.

Learning Objective 5.4 Examine the technological

advances that are influencing marketers.

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A Marketing Environment Analysis Framework

Jump to Appendix 1 long

image description

4 © McGraw-Hill Education© McGraw-Hill Education

Exhibit 5.2: The Immediate Environment

5 © McGraw-Hill Education

Successfully Leveraging Company

Capabilities

Core competency

Existing knowledge,

facilities, patents, etc.

applied to

New markets,

new products, etc.

6 © McGraw-Hill Education

Competitors

Know their strengths, weaknesses, and likely

reactions to firm’s marketing activities.

©Michael Nagle/Bloomberg/Getty Images

/©Charles Sykes/Invision for Curves Jenny Craig/AP Images

7 © McGraw-Hill Education

Corporate Partners

Parties that work

with the focal firm.

Nau works with

manufacturers to

develop clothing

from sustainable

materials.

8 © McGraw-Hill Education

Physical Environment

©Michael Nagle/Bloomberg/Getty Images

/©Charles Sykes/Invision for Curves Jenny Craig/AP Images

Sustainable development: Includes land, water,

air, and living organisms.

Products and services are influenced by how they

are used in the physical environment, and in turn

they can also influence the physical environment.

Examples: • Energy Trends • Greener Practices and Green Marketing • Greenwashing

9 © McGraw-Hill Education

17 Global Goals of Sustainable Development

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1. What are the components of the immediate

environment?

PROGRESS CHECK (1 of 2)

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Macroenvironmental Factors

12 © McGraw-Hill Education

Culture

Shared meanings, beliefs, morals, values, and customs of a

group of people transmitted by words, literature, and

institutions.

Country Culture

• Subtler aspects can be difficult to navigate. • Sometimes best answer is to establish universal appeal within

specific identities of country culture.

Regional Culture

• For national and global chains, particularly important to cater to regional preferences.

• McDonald’s – slightly different variations of staple menu.

13 © McGraw-Hill Education

Demographics

Characteristics of the human population and

segments, especially those used to identify

consumer markets.

Provides an easily understood snapshot of the

typical consumer in a specific target market.

Marketers use data about consumers to target

offers.

14 © McGraw-Hill Education

Exhibit 5.5: Generational Cohorts

Jump to Appendix 2 long

image description

15 © McGraw-Hill Education

Income

Purchasing power is tied to income.

Marketing opportunities exist across the broad

range of income distribution.

©Danita Delimont/Alamy Stock Photo

SC Johnson targets the bottom

of the income pyramid by selling

pest control products in Ghana.

16 © McGraw-Hill Education

Education

Education is related to income, which

determines spending power.

17 © McGraw-Hill Education

Gender

Male/female roles

have been shifting.

Marketing has

changed to reflect

these shifts.

• Firms may need to be careful about gender

neutrality in positioning

their products.

18 © McGraw-Hill Education

Ethnicity

By 2050, minorities will

represent 50% of the

population.

Nearly 23% will be

Hispanic.

©Ethel Wolvovitz/The Image Works

19 © McGraw-Hill Education

Social Trends

Sustainability

Health and Wellness

Efficient Utilization and

Distribution of Food

20 © McGraw-Hill Education

Sustainability

UN Sustainable

Development Goals focus

on social issues for basic

needs.

Certifications from various

agencies may be

important.

©Plush Studios/Blend Images LLC.

21 © McGraw-Hill Education

Health and Wellness

Child and Adult Obesity

New Markets focused on

healthy living

Mobile Apps that support

health and wellness

©Plush Studios/Blend Images LLC.

22 © McGraw-Hill Education

Efficient Utilization and Distribution of Food

Diet-related Products

Reducing Hunger

Reducing Food Waste

23 © McGraw-Hill Education

Technological Advances

Technology impacts every aspect of marketing: • New products and services • New forms of communication • New retail channels

Growing importance of mobile devices

New cutting-edge technology:

• Artificial Intelligence • Robotics • Internet of Things (IoT)

Privacy concerns

24 © McGraw-Hill Education

Economic Situation

Affects the way consumers buy products and services and

spend money.

Monitor the economic situation in home country and

abroad.

Major factors to monitor: • Inflation • Foreign currency fluctuations • Interest rates

Conference Board Website

25 © McGraw-Hill Education

Political/Legal Environment

Comprises political parties, government organizations, and

legislation and laws.

Firms must understand and comply with legislation

regarding: • Fair competition • Consumer protection • Industry-specific regulation

http://www.conference-board.org/data/consumerconfidence.cfm

26 © McGraw-Hill Education

Political/Legal Environment

1890: Sherman

Antitrust Act

1914: Clayton Act

1914: Federal Trade

Commission Act

1936: Robinson-

Patman Act

27 © McGraw-Hill Education

Responding to the Environment

Marketers that succeed are the

ones that respond quickly,

accurately, and sensitively to

consumers.

Implement strategies that

respond to multiple

environmental forces.

28 © McGraw-Hill Education

PROGRESS CHECK (2 of 2)

1. What are the six key macroeconomic factors?

2. Differentiate between country culture and

regional culture.

3. What are some important social trends shaping

consumer values and shopping behavior?

Marketing

Chapter 5

The End

Chapter 6 Consumer Behavior

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 6.1 Articulate the steps in the

consumer buying process.

Learning Objective 6.2 Describe the difference between

functional and psychological needs.

Learning Objective 6.3 Describe factors that affect

information search.

Learning Objective 6.4 Discuss postpurchase outcomes.

Learning Objective 6.5 List the factors that affect the

consumer decision process.

Learning Objective 6.6 Describe how involvement

influences the consumer decision process.

3 © McGraw-Hill Education

Exhibit 6.1: The Consumer Decision Process

Need

recognition

Information

Alternative

evaluation

Purchase

and

Consumption

Postpurchase

4 © McGraw-Hill Education

Need Recognition

Functional needs

Psychological

needs

Needs vs. Wants

5 © McGraw-Hill Education

Search for Information

Internal search for information

External search for information

6 © McGraw-Hill Education

Factors Affecting

Consumers’ Search Processes

Perceived Benefits Perceived Costs

7 © McGraw-Hill Education

The Locus of Control

Internal locus of control =

more search activities

External locus of control =

fate or external factors

8 © McGraw-Hill Education

Actual or Perceived Risk

Performance

risk

Financial risk

Psychological risks

Physiological or Safety risk

Social risk

9 © McGraw-Hill Education

Social & Mobile Marketing 6.1:

Using Snapchat to Reduce Risk at Rent the Runway

Rent the Runway

encourages consumers to

upload photos or videos to

Snapchat.

Consumers are matched

with models with similar

body types to get an idea

of how clothes will look.

©IPGGutenbergUKLtd/Getty Images

10 © McGraw-Hill Education

Evaluation of Alternatives: Attribute Sets

Universal

Retrieval

Evoked

11 © McGraw-Hill Education

Evaluation of Alternatives

Evaluative Criteria

Determinant

Attributes

What are some of the features of a vacation that

would be in your evaluative criteria?

12 © McGraw-Hill Education

Exhibit 6.2: Consumer Decision Rules Compensatory Multi-Attribute Model for Buying Cereal

Taste Calories Natural/

Organic

Claims

Price Overall

Score

Cheerios 10 8 6 8 8.2

Post 8 9 8 3 7.1

Kashi 6 8 10 5 7.2

If the consumer

makes a decision

using a

compensatory

decision rule,

which cereal will

they choose?

If the consumer

makes a decision

based only on

Natural or Organic

claims, which

cereal will they

choose?

All photos: ©M. Hruby

13 © McGraw-Hill Education© McGraw-Hill Education© McGraw-Hill Education

Choice Architecture

Impulse Products

Nudge

Defaults

14 © McGraw-Hill Education

Purchase and Consumption

Increase Conversion Rate

Reduce real or virtual

abandoned carts

Expand product

line

Enhance customer

service

15 © McGraw-Hill Education

Exhibit 6.3: Components of Postpurchase

Outcomes

16 © McGraw-Hill Education

Postpurchase Customer Satisfaction

1. Develop realistic expectations.

2. Demonstrate correct product use.

3. Stand behind the product or service.

4. Encourage customer feedback.

5. Periodically make contact with customers and thank

them for their support.

17 © McGraw-Hill Education

Postpurchase Cognitive Dissonance

More likely for products that are: – Expensive – Infrequently purchased – Do not work as intended – Associated with high levels of risk

Firms attempt to reduce dissonance by reinforcing

the decision: – Return policies – Thank-you letters – Congratulations letters – Tags on garments

18 © McGraw-Hill Education

Postpurchase Customer Loyalty

Marketers attempt to solidify a loyal relationship.

Firms use analytics software and customer

relationship management (CRM) programs to

acquire and retain loyal customers.

©Mark Lennihan/AP Images

19 © McGraw-Hill Education

Postpurchase

Undesirable Consumer Behavior

Negative word of mouth

• Personal blogs, Twitter, corporate websites

Companies use listening software to identify

negative word of mouth.

If a customer believes a complaint will result in

positive action, negative word of mouth is less

likely.

20 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. Name the five stages in the consumer decision process.

2. What is the difference between a need and a want?

3. Distinguish between functional and psychological needs.

4. What are the various types of perceived risk?

5. What are the differences between compensatory and

noncompensatory decision rules?

6. How do firms enhance postpurchase satisfaction and

reduce cognitive dissonance?

21 © McGraw-Hill Education

Factors Influencing the

Consumer Decision Process

Jump to Appendix 1 long

image description

22 © McGraw-Hill Education

Psychological Factors: Motives

Jump to Appendix 2 long

image description

Exhibit 6.5:

Maslow’s Hierarchy of Needs

23 © McGraw-Hill Education

Psychological Factors: Attitude

Behavioral

Cognitive Affective

24 © McGraw-Hill Education

Psychological Factors: Perception

How has society’s perception of people

with tattoos changed in recent years?

Selection

Organization

Interpretation

25 © McGraw-Hill Education

Psychological Factors:

Learning and Memory

Learning affects both

attitudes and

perceptions.

Memory involves encoding, storage, and

retrieval.

26 © McGraw-Hill Education

Psychological Factors: Lifestyle

Lifestyle involves

decisions in spending

time and money.

Actual vs. Perceived Lifestyle

27 © McGraw-Hill Education

Social Factors: Family

Firms must consider how families make purchase decisions

and understand how various family members might

influence these decisions.

When families make purchase decisions, they often

consider the needs of all the family members.

28 © McGraw-Hill Education

Social Factors: Reference Groups

Groups

Family

Friends

Coworkers

Famous people

Provide

Information

Self-image

29 © McGraw-Hill Education

Social Factors: Culture

The shared meanings, beliefs, morals, values, and

customs of a group of people.

Like reference groups, cultures influence

consumer behavior.

A cultural group might be as small as a reference

group at school or as large as a country or religion.

30 © McGraw-Hill Education

Situational Factors

Purchase Situation

Sensory Situation

Temporal State

31 © McGraw-Hill Education

Sensory Situation

Visual

Auditory

Olfactory

Tactile

Taste

Top: ©Kumar Sriskandan/Alamy Stock Photo; Bottom: ©Mahathir Mohd Yasin/Shutterstock

32 © McGraw-Hill Education

Temporal State

A purchase situation may have different appeal

levels depending on time of day and the type of

person a consumer is.

Mood swings can alter consumer behavior.

33 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. What are some examples of specific needs

suggested by Maslow’s hierarchy of needs?

2. Which social factors likely have the most

influence on (a) the purchase of a new outfit for

a job interview and (b) the choice of a college to

attend?

3. What situational factors do firms use to influence

consumer purchase behavior?

34 © McGraw-Hill Education

Involvement and Consumer Buying Decisions

Exhibit 6.6: Elaboration Likelihood Model

Jump to Appendix 3 long

image description

35 © McGraw-Hill Education

Involvement and Consumer Buying Decisions

Types of Buying Decisions

Extended Problem Solving

Limited Problem Solving

• Impulse Buying • Habitual Decision Making

©DreamPictures/Getty Images

36 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. How do low- versus high-involvement

consumers process the information in an

advertisement?

2. What is the difference between extended versus

limited problem solving?

Marketing

Chapter 6

The End

Chapter 7 Business-to-Business Marketing

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 7.1 Describe the ways in which business-to-business (B2B) firms segment their markets.

Learning Objective 7.2 List the steps in the B2B buying process.

Learning Objective 7.3 Identify the roles within the buying center.

Learning Objective 7.4 Describe the different types of organizational cultures.

Learning Objective 7.5 Detail different buying situations.

3 © McGraw-Hill Education

Exhibit 7.1: B2B Markets

U.S. Census Bureau

http://www.census.gov/epcd/www/naics.html

4 © McGraw-Hill Education

Manufacturers and Service Providers

Buy raw materials, components, or parts.

Manufacture their own goods and ancillary

services.

Car Culture/Getty Images

5 © McGraw-Hill Education

Adding Value 7.1: The “Alfonso Versant” Fashion Show

Fuji Xerox faced the challenge of creating excitement for new product in its core market, document management.

Held a fashion show to promote its new HD printer featuring designs made only from materials produced by the printer.

Courtesy of MarketingSherpa and Fuji Xerox

6 © McGraw-Hill Education

Resellers

Manufacturers

Wholesalers and Distributors

Retailers

7 © McGraw-Hill Education

Institutions

Hospitals, educational institutions, and religious organizations

Examples of purchases by institutions:

• Textbooks • Capital construction • Equipment • Supplies • Food • Janitorial services

8 © McGraw-Hill Education

Government

In most countries, government is one the largest purchasers of goods and services.

Local, state, and federal governments.

The U.S. government spends approximately $4 trillion annually; Department of Defense works with cybersecurity firms.

©Stocktrek Images/Getty Images

9 © McGraw-Hill Education

PROGRESS CHECK (1 of 4)

1. What are the various B2B markets?

10 © McGraw-Hill Education

The B2B Buying Process

Jump to Appendix 1 long image description

11 © McGraw-Hill Education

Stage 1: Need Recognition

Can be generated internally or externally.

Adding Value 7.2: Intel partnered with Lady Gaga to extend problem recognition and extend its brand beyond “Intel Inside” slogan.

©Larry Busacca/Getty Images for NARAS

12 © McGraw-Hill Education

Stage 2: Product Specification

After recognizing the need and considering alternative solutions, create a list of potential specifications.

Used by suppliers/vendors to develop proposals.

13 © McGraw-Hill Education

Stage 3: RFP Process Request for Proposal

Vendors or suppliers are invited to bid on supplying required components and services.

Purchasing company may simply post its RFP needs on its website, work through various B2B web portals, or inform their preferred vendors directly.

Federal Business Opportunities Website

https://www.fbo.gov/index?cck=1&au=&ck=

14 © McGraw-Hill Education

Step 4: Proposal Analysis, Vendor Negotiation, and Selection

The buying organization evaluates all the proposals received in response to an RFP.

Often several vendors are negotiating against each other.

Considerations other than price play a role in final selection.

15 © McGraw-Hill Education

Step 5: Order Specification

Firm places the order with its preferred supplier (or suppliers).

The exact details of the purchase are specified, including penalties for noncompliance.

All terms are detailed including payment.

16 © McGraw-Hill Education

Stage 6: Vendor Performance Assessment Using Metrics

17 © McGraw-Hill Education

PROGRESS CHECK (2 of 4)

1. Identify the stages in the B2B buying process.

2. How do you perform a vendor analysis?

18 © McGraw-Hill Education

The Buying Center

Exhibit 7.4: Buying Center Roles

19 © McGraw-Hill Education

Example of Buying Center Roles for a Hospital

Initiator: Doctor

Influencer: Medical device supplier, pharmacy

Decider: Hospital

Buyer: Materials manager

User: Patient

Gatekeeper: Insurance company

©Siri Stafford/Iconica/Getty Images

20 © McGraw-Hill Education

Organizational Culture

21 © McGraw-Hill Education

Building B2B Relationships

There are a multitude of ways to enhance B2B relationships, including the following examples:

– Blogs and social media (LinkedIn, Twitter, Snapchat) can:

• Build awareness • Provide search engine results • Educate clients about products and services • “Warm up” a seemingly cold corporate culture

– White papers prepared by B2B marketers provide information while not appearing as promotion.

22 © McGraw-Hill Education

PROGRESS CHECK (3 of 4)

1. What are the six buying roles?

2. What are the types of cultures that exist in buying centers?

23 © McGraw-Hill Education

Buying Situations

24 © McGraw-Hill Education

New Buy

Most likely when purchasing for the first time.

Usually quite involved.

The buying center will probably use all six steps in the buying process and involve many people in the buying decision.

25 © McGraw-Hill Education

Modified Rebuy

Purchasing a similar product but changing specifications such as price, quality level, customer service level, options, etc.

Current vendors have an advantage.

26 © McGraw-Hill Education

Straight Rebuys

Buying additional units of products that have been previously purchased.

Most B2B purchases fall into this category.

Usually the buyer is the only member of the buying center involved.

27 © McGraw-Hill Education

Identify the Type of Buying Situation

The manager for a Kroger supermarket considers re- ordering items for his store. He will negotiate price concession and quality improvements. The manager is engaging in a(n) __________ situation.

Denise is sharing with coworkers, “This customer just made another big order, and they just keep on coming." Denise is likely selling to a customer in what kind of buying situation?

Benjamin, the new sales manager for Burns & Company, was alarmed that the representatives used paper to track customer information. He made a decision to upgrade to a CRM system. For Benjamin, this represented a(n) __________ situation.

New buy

Modified rebuy

Straight rebuy

28 © McGraw-Hill Education

PROGRESS CHECK (4 of 4)

1. How do new buy, straight rebuy, and modified rebuy differ?

Marketing

Chapter 7

The End

Chapter 8 Global Marketing

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 8.1 Describe the components of a

country market assessment.

Learning Objective 8.2 Understand the marketing

opportunities in BRIC countries.

Learning Objective 8.3 Identify the various market entry

strategies.

Learning Objective 8.4 Highlight the similarities and

differences between a domestic marketing strategy

and a global marketing strategy.

3 © McGraw-Hill Education

Apple

4 © McGraw-Hill Education

Globalization

The processes by which

goods, services, capital,

people, information, and

ideas flow across

national borders.

5 © McGraw-Hill Education

Assessing Global Markets

Jump to Appendix 1 long

image description

6 © McGraw-Hill Education

Evaluating the General Economic Environment

Using Economic Metrics

Gross domestic product

Gross national income

Purchasing power parity

Trade surplus or

deficit

7 © McGraw-Hill Education

Evaluating Market Size

and Population Growth Rate

REUTERS/Arko Datta/Corbis

Population growth dispersal: strong demand in

BRIC (Brazil, Russia, India, China) nations

Distribution of the population within a particular

region: rural vs. urban

8 © McGraw-Hill Education

Evaluating Real Income

Firms can make

adjustments to an existing

product or change the price

to meet the unique needs of

a particular country market.

Bottom of the pyramid

markets

Courtesy of Haier America

9 © McGraw-Hill Education

Analyzing Infrastructure and

Technological Capabilities

Marketers are especially concerned with

four key elements of a country’s infrastructure:

• Transportation • Distribution Channels • Communications • Commerce

10 © McGraw-Hill Education

Analyzing Governmental Actions

Governmental actions

Tariffs

Quotas

Exchange control

Trade agreements

11 © McGraw-Hill Education

Tariffs and Quotas

Tariffs

• Tax on imported goods

• Artificially raises prices

• Lowers demand

Quotas

• Minimum or maximum limit

• Reduces availability of

imported goods

Both benefit domestically made products

because they reduce foreign competition.

12 © McGraw-Hill Education

Exchange Control

Regulation of a country’s currency exchange rate: the measure of how much one currency is worth in relation to

another.

In recent years, the value of the U.S. dollar has changed

significantly compared with other important world

currencies.

Prices are nearly always lower in the country of origin

because there are no customs or import duties to pay, and

international transportation expenses are less than

domestic ones.

13 © McGraw-Hill Education

Exhibit 8.3: Trade Agreements

Name Countries

European Union There are 28 member countries of the EU: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia,

Finland, France, Germany, Greece, Hungary, Ireland, Italy,

Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,

Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the

United Kingdom. There are five official candidate countries to join

the EU: Macedonia, Serbia, Turkey, Montenegro, and Albania.

Bosnia and Herzegovina and Kosovo are also potential

candidates.

NAFTA United States, Canada, and Mexico.

CAFTA United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.

Mercosur Full members: Argentina, Brazil, Paraguay, Uruguay, and Venezuela.

ASEAN Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

Source: Information about EU members is from http://europa.eu/about-eu/countries/./index_en.htm

14 © McGraw-Hill Education

Analyzing Sociocultural Factors

Understanding another culture is crucial to the success

of a global marketing initiative.

Exists on two levels:

• Visible artifacts • Underlying values

http://europa.eu/about-eu/countries/index_en.htm

15 © McGraw-Hill Education

Adding Value 8.2: Can Starbucks Give Italy’s Espresso Culture a Jolt?

• Starbucks “Americanized” the Italian coffee

experience.

• Starbucks is quite different from Italy’s traditional espresso

culture.

• Starbucks’ first Milan store makes nods to

local preferences.

©Alessia Pierdomenico/Getty Images

16 © McGraw-Hill Education

Geert Hofstede’s Cultural Dimensions

CulturePower distance

Uncertainty

avoidance

Individualism Masculinity

Time

orientation

Indulgence

17 © McGraw-Hill Education

Exhibit 8.4: Country Clusters

Power Distance and Individualism

Jump to Appendix 2 long

image description

Source: Geert Hofstede, Gert Jan Hofstede, and Michael Minkov,

Cultures and Organizations, Software of the Mind, Third Revised Edition,

McGraw-Hill 2010, ISBN: 0-07-166418-1. © Geert Hofstede B.V.

quoted with permission.

18 © McGraw-Hill Education

The Appeal of the BRIC Countries

Great potential for

growth in the global

community:

– Brazil – Russia – India – China

19 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. What metrics can help analyze the economic

environment of a country?

2. What types of governmental actions should we

be concerned about as we evaluate a country?

3. What are some important cultural dimensions?

4. Why are each of the BRIC countries viewed as

potential candidates for global expansion?

20 © McGraw-Hill Education

Exhibit 8.5: Choosing a Global Entry Strategy

Jump to Appendix 3 long

image description

21 © McGraw-Hill Education

Franchising

22 © McGraw-Hill Education

Direct Investment

23 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. Which global entry strategy has the least risk

and why?

2. Which global entry strategy has the most risk

and why?

24 © McGraw-Hill Education

Choosing a Global Marketing Strategy:

Segmentation, Targeting, and Positioning (STP)

Subcultures

Cultural nuances

View of product and consumer role

Different positioning

Adaptation

Single positioning strategy

More complicated than

domestic STP

25 © McGraw-Hill Education

The Global Marketing Mix:

Global Product or Service Strategies

Same product or

service in both the

home country

market and host

country.

(Glocalization)

Similar product or

service with minor

adaptations.

Totally new product

or service.

26 © McGraw-Hill Education

The Global Marketing Mix:

Global Pricing Strategies

PriceTariffs

Quotas

Anti-

dumping

laws Currency

exchange

policies

Competitive

factors

27 © McGraw-Hill Education

The Global Marketing Mix:

Global Distribution Strategies

Global distribution

networks form complex

value chains.

In developing countries

consumers may shop at

small, family-owned

stores.

Suppliers must be

creative in delivering to

these outlets.

©Alessia Pierdomenico/Getty Images

Tupperware parties in Indonesia

28 © McGraw-Hill Education

The Global Marketing Mix:

Global Communication Strategies

Literacy levels

vary by country.

Differences in language and customs affect

communication.

Cultural and religious differences also matter.

29 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. What are the components of a global marketing

strategy?

2. What are the three global product strategies?

Marketing

Chapter 8

The End

Chapter 9 Segmentation, Targeting, and

Positioning

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 9.1 Outline the different methods of segmenting a market.

Learning Objective 9.2 Describe how firms determine whether a segment is attractive and therefore worth pursuing.

Learning Objective 9.3 Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing.

Learning Objective 9.4 Determine the value proposition.

Learning Objective 9.5 Define positioning and describe how firms do it.

3 © McGraw-Hill Education

The Segmentation, Targeting, and Positioning Process

Establish strategy or objectives

Use segmentation

methods

Evaluate segment

attractiveness

Select target market

Identify and develop

positioning strategy

4 © McGraw-Hill Education

Step 1: Establish the Overall Strategy or Objectives

Derived from mission and objectives

Consistent with SWOT

Courtesy of Borticelli

5 © McGraw-Hill Education

Step 2: Use Segmentation Methods

6 © McGraw-Hill Education

Geographic Segmentation

Market could be grouped by:

• Country • Region

 Northeast, Southeast

• Areas within region  State, city, neighborhoods, zip codes

Most useful for companies whose products satisfy needs that vary by region.

7 © McGraw-Hill Education

Demographic Segmentation

Most common segmentation

strategy

- Easy to identify

- Easily measured

8 © McGraw-Hill Education

Social & Mobile Marketing 9.1: The Social Sharing Practices of the Teen

Segment

For Generation Z, “if it’s not sharable, it didn’t happen.”

Brands are struggling to connect with social media- addicted young consumers.

Influence is spilling over to older generations and altering the way they shop.

©Paul Bradbury/OJO Images RF/Getty Images

9 © McGraw-Hill Education

Psychographic Segmentation

How consumers describe

themselves in terms of:

Self-values

Self-concept Lifestyles

10 © McGraw-Hill Education

Exhibit 9.3: VALS (Value and Lifestyle) Framework

Jump to Appendix 2 long image description

VALS

Different frameworks are used for different countries. Used with permission.

http://www.strategicbusinessinsights.com/vals/presurvey.shtml

11 © McGraw-Hill Education

Benefit Segmentation

Dividing the market into segments whose needs and wants are best satisfied by the product’s benefits can be a very powerful tool.

12 © McGraw-Hill Education

Behavioral Segmentation

Occasion segmentation:

• Based on when a product or service is purchased or consumed

• Clothing, snack foods

Loyalty segmentation:

• Loyal customers are the most profitable in the long term

• Hotels, airlines, restaurants (Starbucks)

13 © McGraw-Hill Education

Using Multiple Segmentation Methods

Tapestry ™ uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers.

Jump to Appendix 3 long image description

14 © McGraw-Hill Education

PROGRESS CHECK (1 of 2)

1. What are the various segmentation methods?

15 © McGraw-Hill Education

Step 3: Evaluate Segment Attractiveness

16 © McGraw-Hill Education

Identifiable

Who is in their market?

Are the segments distinct from one another?

Does each segment require a unique marketing mix?

17 © McGraw-Hill Education

Substantial

How large is the market segment in terms of size and buying power?

If a market segment is too small, it won’t generate sufficient profits.

If its buying power is insignificant, despite its size, the marketing mix cannot be supported.

18 © McGraw-Hill Education

Reachable

Can the market be reached through persuasive communication and product distribution?

The consumer must:

• Know the product exists. • Understand what it can do. • Recognize how to buy.

19 © McGraw-Hill Education

Responsive

Customers must react similarly and positively to the firm’s offering.

If a firm cannot provide products and services to the segment, it shouldn’t be targeted.

20 © McGraw-Hill Education

Profitable

Assess potential profitability of each segment, both current and future.

Key factors:

• Current market growth rate • Future growth rate • Market competitiveness • Market access costs

21 © McGraw-Hill Education

How to Determine the Profitability of a Segment

Segment = Children under 15

• Segment size = 60 million (<15 yrs) • Segmentation Adoption Percentage = 35% • Purchase Behavior = $500 x 1 time purchase • Profit margin % = 10% • Fixed Cost = $50M

Is this segment profitable?

22 © McGraw-Hill Education

Exhibit 9.6: Profitability of Two Market Segments for Camillo’s Lawn Service

Homeowners Businesses

Segment size 75,000 1,000

Segment adoption percentage

1% 20%

Purchase behavior Purchase price Frequency of purchase

$100 12 times

$500 20 times

Profit margin percentage 60% 80%

Fixed costs $400,000 $1,000,000

Segment profit $140,000 $600,000

23 © McGraw-Hill Education

Step 4: Select a Target Market

The key factor is the marketer’s ability to pursue the market.

Four different targeting strategies can be used.

24 © McGraw-Hill Education

Step 5: Identify and Develop Positioning Strategy

Market positioning

• Defining marketing mix variables so target customers have a clear, distinctive, desirable understanding of what the product does.

Value proposition

• Communicates the customer benefits to be received from a product or service.

(left): ©Buskirk Services, Inc./PhotoEdit; (right): ©Kyodo News via Getty Images

25 © McGraw-Hill Education

Exhibit 9.8: Circles for a Successful Value Proposition (1 of 2)

Part A. No Overlap with Competition

Jump to Appendix 4 long image description

26 © McGraw-Hill Education

Exhibit 9.8: Circles for a Successful Value Proposition (2 of 2)

Part B. Determining the Value Proposition

Jump to Appendix 5 long image description

27 © McGraw-Hill Education

Value Proposition Key Elements

28 © McGraw-Hill Education

Positioning Methods

• Value • Salient Attributes • Symbols • Competition

29 © McGraw-Hill Education

Positioning Using Perceptional Mapping

A perceptual map displays, in two or more dimensions, the position of products or brands in the consumer’s mind.

Ideal Points: Where a particular market segment’s ideal product would lie on the map.

30 © McGraw-Hill Education

Six Positioning Steps to Derive a Perceptual Map

1. Determine consumers’ perceptions and evaluations in relation to competitors’.

2. Identify the market’s ideal points and size.

3. Identify competitors’ positions.

4. Determine consumer preferences.

5. Select the position.

6. Monitor the positioning strategy.

31 © McGraw-Hill Education

Perceptual Maps (1 of 2)

Jump to Appendix 6 long image description

32 © McGraw-Hill Education

Perceptual Maps (2 of 2)

Jump to Appendix 7 long image description

33 © McGraw-Hill Education

PROGRESS CHECK (2 of 2)

1. What is a perceptual map?

2. Identify the six positioning steps.

Marketing

Chapter 9

The End

Chapter 10 Marketing Research

2 © McGraw-Hill Education

Marketing Research

Data: Collecting

Recording

Analyzing

Interpreting

Decision-Making

3 © McGraw-Hill Education

Exhibit 10.1: The Marketing Research Process

Defining the objectives and research needs

Designing the research

Collecting the data

Analyzing data and developing insights

Developing and implementing an action plan

4 © McGraw-Hill Education

Step 1: Defining Objectives and Research Needs

What information is needed to answer specific research questions?

How should that information be obtained?

5 © McGraw-Hill Education

Step 2: Designing the Research

Identify type of data needed.

Determine type of research needed

to obtain data.

6 © McGraw-Hill Education

Step 3: Collecting the Data

Secondary Data

• Collected prior to the start of the research project. • External as well as internal data sources.

Primary Data

• Collected to address specific research needs. • Examples: focus groups, in-depth interviews, surveys. • Sample: Choose a group of customers who represent

the customers of interest and generalize their opinions to the market segment.

7 © McGraw-Hill Education

Step 4: Analyzing the Data and Developing Insights

Converting data into information that is useful in making more effective marketing decisions.

©Moviestore collection Ltd/Alamy Stock Photo

Marketing Analytics 10.1: The Use of Analytics to Predict Box Office Revenues and Award Changes

8 © McGraw-Hill Education

What Insights Can You Develop by Analyzing this Data?

9 © McGraw-Hill Education

Step 5: Developing and Implementing an Action Plan

Executive Summary

Body of the Report

Conclusions

Limitations

Supplements including tables, figures, appendices

10 © McGraw-Hill Education

Secondary Data

A marketing research project often begins with a review of the relevant secondary data.

11 © McGraw-Hill Education

Exhibit 10.4: External Secondary Data Syndicated Data (1 of 3)

Name Services Provided

Nielsen

(http://www.nielsen.com)

With its Market Measurement Services, the company

tracks the sales of consumer packaged goods, gathered

at the point of sale in retail stores of all types and sizes.

IRI

(http://www.iriworldwide.co

InfoScan store tracking provides detailed information

about sales, share, distribution, pricing, and promotion

across a wide variety of retail channels and accounts.

JD. Power and Associates

(http://www.jdpower.com)

Widely known for its automotive ratings, it produces

quality and customer satisfaction research for a variety of

industries.

Mediamark Research Inc.

(http://www.mediamark.co

Supplies multimedia audience research pertaining to

media and marketing planning for advertised brands.

http://www.nielsen.com/

http://www.iriworldwide.com/

http://www.jdpower.com/

http://www.mediamark.com/

12 © McGraw-Hill Education

Exhibit 10.4: External Secondary Data Syndicated Data (2 of 3)

Name Services Provided

National Purchase Diary

Panel

(http://www.npd.com)

Based on detailed records consumers keep about their

purchases (i.e., a diary), it provides information about

product movement and consumer behavior in a variety of

industries.

NOP World

(http://www.nopworld.com)

The mKids US research study tracks mobile

telephone ownership and usage, brand affinities,

and entertainment habits of American youth

between 12 and 19 years of age.

Research and Markets

(http://www.researchandma

rkets.com)

Promotes itself as a one-stop shop for market

research and data from most leading publishers,

consultants, and analysts.

http://www.npd.com/

http://www.nopworld.com/

http://www.researchandmarkets.com/

13 © McGraw-Hill Education

Exhibit 10.4: External Secondary Data Syndicated Data (3 of 3)

Name Services Provided

Roper Center for Public

Opinion Research

(http://www.ropercenter.uco

nn.edu)

The General Social Survey is one of the nation’s longest running surveys of social, cultural, and

political indicators.

Simmons Market Research

Bureau

(http://www.smrb.com)

Reports on the products American consumers buy,

the brands they prefer, and their lifestyles,

attitudes, and media preferences.

Yankelovich

(http://www.yankelovich.co

The MONITOR tracks consumer attitudes, values,

and lifestyles shaping the American marketplace.

http://www.ropercenter.uconn.edu/

http://www.smrb.com/

http://www.yankelovich.com/

14 © McGraw-Hill Education

External Secondary Data Scanner Data

Data from scanner readings of UPC labels at checkout.

Provided and sold by leading research firms:

• IRI • Nielsen

Information helps firms assess what is happening in the marketplace.

IRI

http://www.iriworldwide.com/

15 © McGraw-Hill Education

External Secondary Data Panel Data

Group of consumers

What are they buying or not buying and why?

Survey or sales receipts

16 © McGraw-Hill Education

Internal Secondary Data

Data Warehouses

Data Mining

– Example: Identify Churn Rate

17 © McGraw-Hill Education

Big Data

Changes in marketing research because of: • Increase in amount of data. • Ability to collect data from transactions, CRM, social

media, websites.

• Ease of collecting and storing data. • Computing ability to manipulate data. • Access to software to convert data into decision-making

insights (Amazon, SAP, Splunk, GoodData, Google Analytics.

Big Data incorporates multiple sources of data.

18 © McGraw-Hill Education

Primary Data Collection Techniques

Jump to Appendix 1 long image description

19 © McGraw-Hill Education

Observation

Examining purchase and consumption behaviors

Personal or video camera

scrutiny

Tracking movements electronic-

ally

Microsoft Kinect and heatmaps

Best method to determine

how customers

interact with and use product

In-Store Tracking Analytics

http://online.wsj.com/video/the-brave-new-world-of-shopper-tracking-technology/7503B9D6-2F0D-40B8-9684-E293BA3E9207.html

20 © McGraw-Hill Education

Social Media

Companies monitor, gather, and mine social media data.

Virtual communities

Sentiment mining

21 © McGraw-Hill Education

In-Depth Interviews and Focus Groups

In-Depth interviews

• Trained researchers ask questions one-on-one with a customer.

• Expensive and time-consuming.

Focus group interviews

• Small group of 8 to 12 people with a trained moderator.

• Now often take place online. • Unstructured; qualitative data about

new or existing products or services.

©wdstock/Getty Images

22 © McGraw-Hill Education

Survey Research

The use of surveys or questionnaires.

The most popular type of quantitative primary data collection method.

A document that features a set of questions designed to gather information from respondents that will lead to more effective marketing decisions.

23 © McGraw-Hill Education

Survey Research Structured vs. Unstructured Questions

Jump to Appendix 2 long image description

24 © McGraw-Hill Education

Exhibit 10.7: What to Avoid When Designing a Questionnaire (1 of 2)

Issue Good Question Bad Question

Avoid questions the respondent cannot easily or accurately answer.

When was the last time you went to the grocery store?

How much money did you spend on groceries last month?

Avoid sensitive questions unless they are absolutely necessary.

Do you take vitamins? Do you dye your gray hair?

Avoid double-barreled questions, which refer to more than one issue with only one set of responses.

1. Do you like to shop for clothing? 2. Do you like to shop for food?

Do you like to shop for clothing and food?

25 © McGraw-Hill Education

Exhibit 10.7: What to Avoid When Designing a Questionnaire (2 of 2)

Issue Good Question Bad Question

Avoid leading questions, which steer respondents to a particular response, irrespective of their true beliefs.

Please rate how safe you believe a BMW is on a scale of 1 to 10, with 1 being not safe and 10 being very safe.

BMW is the safest car on the road, right?

Avoid one-sided questions that present only one side of the issue.

To what extent do you believe fast food contributes to adult obesity using a five-point scale? 1: Does not contribute 5: Main cause

Fast food is responsible for adult obesity: Agree/Disagree

Source: Adapted from A. Parasuraman, Dhruv Grewal, and R. Krishnan, Marketing Research, 2nd ed. (Boston: Houghton Mifflin, 2007), Ch. 10.

26 © McGraw-Hill Education

Panel‐ and Scanner‐Based Research Can be either secondary or primary data.

Walmart’s subsidiary Asda uses an online customer panel to determine which products to carry.

©David Levenson/Alamy Stock Photo

27 © McGraw-Hill Education

Experimental Research

Systematically manipulates one or more variables to determine which variables have a causal effect on other variables.

Can also be used on social media.

©wdstock/Getty Images

28 © McGraw-Hill Education

Hypothetical Pricing Experiment for McDonald’s

©AP Photo/Mary Altaffer

29 © McGraw-Hill Education

Exhibit 10.9: Advantages and Disadvantages of Secondary and Primary Research (1 of 2)

Type Examples Advantages Disadvantages

Secondary Research

• Census data • Sales invoices • Internet information • Books • Journal articles • Syndicated data

• Saves time in collecting data because they are readily available.

• Free or inexpensive (except for syndicated data)

• May not be precisely relevant to information needs.

• Information may not be timely.

• Sources may not be original, and therefore usefulness is an issue.

• Methodologies for collecting data may not be appropriate.

• Data sources may be biased.

30 © McGraw-Hill Education

Exhibit 10.9: Advantages and Disadvantages of Secondary and Primary Data (2 of 2)

Type Examples Advantages Disadvantages

Primary Research

• Observation • Focus groups • In-depth interviews • Social media • Surveys • Experiments

• Specific to the immediate data needs and topic at hand

• Offers behavioral insights generally not available from secondary research

• Costly • Time-consuming • Requires more

sophisticated training and experience to design study and collect data.

31 © McGraw-Hill Education

The Ethics of Using Customer Information

Strong ethical

orientation

Adhere to ethical

practices

32 © McGraw-Hill Education

AMA Ethical Guidelines for Conducting Marketing Research

1. Prohibits selling or fund-raising under the guise of conducting research.

2. Supports maintaining research integrity by avoiding misrepresentation or omission of pertinent research data.

3. Encourages the fair treatment of clients and suppliers.

CASRO

http://www.insightsassociation.org/issues-policies/casro-code-standards-and-ethics

33 © McGraw-Hill Education

What Would You Do?

Meet Aaron, a marketing researcher:

• He has just finished giving a successful presentation to a major client.

• The client has asked for a list of companies that participated in the study and copies of all the completed surveys.

34 © McGraw-Hill Education

Threats to Personal Information

Facial recognition software

Neuromarketing

Jump to Appendix 3 long image description

Chapter 11 Product, Branding, and Packaging

Decisions

2 © McGraw-Hill Education

Learning Objectives (1 of 2)

Learning Objective 11.1 Describe the components of a product.

Learning Objective 11.2 Identify the types of consumer products.

Learning Objective 11.3 Explain the difference between a product mix’s breadth and a product line’s depth.

Learning Objective 11.4 Identify the advantages that brands provide firms and consumers.

3 © McGraw-Hill Education

Learning Objectives (2 of 2)

Learning Objective 11.5 Explain the various components of brand equity.

Learning Objective 11.6 Determine the various types of branding strategies used by firms.

Learning Objective 11.7 Distinguish between brand extension and line extension.

Learning Objective 11.8 Indicate the advantages of a product’s packaging and labeling strategy.

4 © McGraw-Hill Education

Exhibit 11.1: Product Complexity

Jump to Appendix 1 long image description Photo 1: Photodisc/Getty Images RF, Photo 2: Michael Blann/Digital Vision/Getty Images

5 © McGraw-Hill Education

Types of Products: Consumers

Specialty Shopping

Convenience Unsought

6 © McGraw-Hill Education

PROGRESS CHECK (1 of 5)

1. Explain the three components of a product.

2. What are the four types of consumer products?

7 © McGraw-Hill Education

Product Mix and Product Line Decisions

8 © McGraw-Hill Education

Product Mix and Product Line Decisions

Breadth

Number of product lines in a product mix

Depth

Number of categories within a

product line

May be too costly to maintain

May cannibalize brands

9 © McGraw-Hill Education

Change Product Mix Depth

Increase Depth:

• Band-Aid now has over 40 products to heal cuts.

Decrease Depth:

• McCormick Spices eliminates dozens of products each year.

10 © McGraw-Hill Education

Change Product Mix Breadth

Increase Breadth:

• True Religion Brand Jeans is now a lifestyle brand with apparel, belts, swimwear, and fragrances.

Decrease Breadth:

• Due to competitive changes, TCBY is now focusing on Yogurt.

11 © McGraw-Hill Education

Product Mix Changes

12 © McGraw-Hill Education

PROGRESS CHECK (2 of 5)

1. What is the difference between product line breadth and product line depth?

2. Why change product mix breadth?

3. Why change product line depth?

13 © McGraw-Hill Education

Branding

Increases awareness and provides a way to differentiate from competitors.

14 © McGraw-Hill Education

What Makes a Brand?

Branding Brand name

URLs

www.eBay.com

Logos and symbols

Characters

Slogans

Jingles/

Sounds

15 © McGraw-Hill Education

Value of Branding for the Customer and the Firm

Facilitate purchases

Establish loyalty

Protect from competition and price competition

Are assets

Affect market value

©Bryn Colton/Bloomberg/Getty Images

16 © McGraw-Hill Education

Brand Equity for the Owner

Source: From Interbrand.com, http://interbrand.com/best-brands/best-global-brands/2015/ranking/#?listFormat=ls.

17 © McGraw-Hill Education

Components of Brand Equity: Brand Awareness

The more aware of or familiar consumers are with a brand, the easier the decision-making process is for consumers, which improves the chances of purchase.

©Editorial Image, LLC

18 © McGraw-Hill Education

Brand Equity: Perceived Value

The relationship between a product’s benefits and its costs.

How do discount retailers like Target, T.J. Maxx, and H&M create value for customers?

©Neilson Barnard/Getty Images

19 © McGraw-Hill Education

Brand Equity: Brand Associations

The mental and emotional links that consumers make between a brand and its key attributes.

Brand associations are often the result of a firm’s advertising and promotional efforts.

Friskies

• Grumpy Cat = entertaining, hip, satirical

©Robin Marchant/Getty Images

20 © McGraw-Hill Education

Brand Equity: Brand Loyalty

An important source of value for firms.

Consumers are less sensitive to price.

Marketing costs are much lower.

Firms are insulated from the competition.

21 © McGraw-Hill Education

PROGRESS CHECK (3 of 5)

1. How do brands create value for the customer and the firm?

2. What are the components of brand equity?

22 © McGraw-Hill Education

Branding Strategies

Whether to use manufacturer brands or retailer/store brands.

How to name brands and product lines.

Whether or not to extend the brand name to other products and markets.

Should the brand name be used with another firm or licensed to another firm?

Whether or not the brand should be repositioned.

23 © McGraw-Hill Education

Branding Strategies Brand Ownership

Manufacturer or National brands

Retailer/Store Brands

(also called Private Label brands)

Kraft, Nike, Coca-Cola Kroger, Costco, Trader Joe’s

24 © McGraw-Hill Education

Exhibit 11.6: Who Owns the Brand?

Top left: ©Steve Cukrov/Shutterstock; Top right: ©McGraw-Hill Education; Bottom left: ©Ian Dagnall/Alamy Stock Photo; Bottom right: ©Food Collection/Alamy Stock Photo

Jump to Appendix 2 long image description

25 © McGraw-Hill Education

Naming Brands and Product Lines

Family brands

• Corporate name used across brands and product lines

• Example: Kraft cheeses

Individual brands

• Products have individual identities

• Example: Kraft owns Velveeta, Classico, Jello

©Michael Neelon/Alamy Stock Photo

26 © McGraw-Hill Education

Brand and Line Extensions

©M. Hruby.

Jump to Appendix 3 long image description

Brand extension: Same brand name in different product line. Line Extension: Same brand name within the same product line.

27 © McGraw-Hill Education

Brand Dilution

Not all brand extensions are successful:

• Evaluate the fit between the product class of the core brand and the extension.

• Evaluate consumer perceptions of the attributes of the core brand and seek out extensions with similar attributes.

• Refrain from extending the brand name to too many products.

• Is the brand extension distanced enough from the core brand?

28 © McGraw-Hill Education

Co-Branding

Marketing two or more brands together.

Can enhance perceptions of quality through links between brands.

Example: Yum! Brands

• Combines two or more of its restaurant chains (A&W, KFC, Long John Silver’s, Pizza Hunt, and Taco Bell) into one store space.

29 © McGraw-Hill Education

Brand Licensing

The NBA team, the New Orleans Pelicans (licensor), provides the right to use its brand to apparel manufacturers (licensee) in return for royalty payments.

30 © McGraw-Hill Education

Brand Repositioning

Change a brand’s focus

Can improve the brand’s fit with its target segment

Can boost vitality of old brands

Not without costs and risks

31 © McGraw-Hill Education

PROGRESS CHECK (4 of 5)

1. What are the differences between manufacturer and private-label brands?

2. What is co-branding?

3. What is the difference between brand extension and line extension?

4. What is brand repositioning?

32 © McGraw-Hill Education

Packaging

An important brand element that has more tangible or physical benefits than other brand elements have.

Primary vs. Secondary package

What packaging do you as a consumer find useful?

©Edible Images/Alamy Stock Photo

33 © McGraw-Hill Education

Key Roles of Packaging

Attracts the consumers’ attention.

Enables products to stand out from their competitors.

Allows for the same product to appeal to different markets with different sizes.

A recent development is sustainable packaging.

©Edible Images/Alamy Stock Photo

34 © McGraw-Hill Education

Product Labeling

Provides information the consumer needs.

Many labeling requirements stem from various laws.

Is a communication tool.

©Roman Samokhin/123RF.com

35 © McGraw-Hill Education

PROGRESS CHECK (5 of 5)

1. Why do firms change packaging?

2. What objectives do product labels fulfill?

Marketing

Chapter 11

The End

Chapter 13 Services: The Intangible Product

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 13.1 Describe how the marketing of services differs from the marketing of products.

Learning Objective 13.2 Discuss the four gaps in the Service Gaps Model.

Learning Objective 13.3 Examine the five service quality dimensions.

Learning Objective 13.4 Explain the zone of tolerance.

Learning Objective 13.5 Identify three service recovery strategies.

3 © McGraw-Hill Education

Service

By providing good customer service, firms

add value to their products and services.

Any intangible offering that involves a deed, performance, or effort

that cannot be physically possessed.

4 © McGraw-Hill Education

The Service-Product Continuum

Most offerings lie somewhere in the middle.

Jump to Appendix 1 long image description

;

5 © McGraw-Hill Education

Economic Importance of Service

Developed economies are increasingly service- oriented economies.

Production is cheaper in

other countries.

High value placed on

convenience and leisure.

Services become more specialized.

6 © McGraw-Hill Education

Services Marketing Differs from Product Marketing

7 © McGraw-Hill Education

Intangible

Services cannot be touched, tasted, or seen.

Requires using cues to aid customers.

Atmosphere is important to convey value.

Images are used to convey benefit of value.

©Ken James/Bloomberg/Getty Images

8 © McGraw-Hill Education

Inseparable Production and Consumption

FedEx commercial

Production and consumption are simultaneous.

Little opportunity for a consumer to test a service before use.

Lower risk by offering guarantees or warranties.

http://www.youtube.com/watch?v=Set-r53xvBI

9 © McGraw-Hill Education

Heterogeneous

Technology

Training

Automation

10 © McGraw-Hill Education

Perishable

Services can’t be stockpiled.

Ski areas, airlines, cruise ships, movie theaters, and restaurants must find ways to deal with the challenges of perishability.

©Buddy Mays/Corbis/Getty Images

11 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. What are the four marketing elements that distinguish services from products?

2. Why can’t we separate firms into just service or just product sellers?

12 © McGraw-Hill Education

Providing Great Service: The Service Gaps Model

Sources: Adapted from Valarie Zeithaml, A. Parasuraman, and Leonard Berry, Delivering Quality Customer Service (New

York: The Free Press, 1990); and Valarie Zeithaml, Leonard Berry, and A. Parasuraman, “Communication and Control Processes in the Delivery of Service Quality,” Journal of Marketing 52, no. 2 (April 1988), pp. 35–48.

Jump to Appendix 2 long image description

13 © McGraw-Hill Education

Knowledge Gap: Difference between Customer Expectations and

Firm’s Perception of Those Expectations

The Knowledge Gap

Marketing research:

understanding customers

Evaluating service quality

Understanding customer

expectations

14 © McGraw-Hill Education

Filling the Knowledge Gap

How does a college increase successful

outcomes for its students?

15 © McGraw-Hill Education

Understanding Customer Expectations

Expectations are based on knowledge and experience.

Expectations vary according to type of service.

Expectations vary depending on the situation.

©Sascha Burkard/Getty Images

16 © McGraw-Hill Education

Evaluating Service Quality Using Well- Established Marketing Metrics

Jump to Appendix 3 long image description

17 © McGraw-Hill Education

Marketing Research: Understanding Customers

Voice-of-customer (VOC) program

Collects customer inputs and integrates them into managerial decisions

Marketing Analytics 13.1: Kroger’s QueVision helps reduce wait time

©Zuma Press, Inc./Alamy Stock Photo

18 © McGraw-Hill Education

Zone of Tolerance Used to Measure How Well Firms Perform on

the Five Service Quality Dimensions

What is the desired and expected level of service for each dimension?

What are the customer’s perceptions of how well the focal service performs and how well

a competitive service performs?

What is the importance of each service quality dimension?

19 © McGraw-Hill Education

Exhibit 13.5: Customers’ Evaluation of Service Quality for Lou’s Local Diner

Jump to Appendix 4 long image description

20 © McGraw-Hill Education

Standards Gap

Difference between the firm’s perceptions of customer expectations and the service standards it sets.

Need to set standards for quality.

Develop systems to ensure the standards are met.

©Chris Ryan/OJO Images/Getty Images

21 © McGraw-Hill Education

Delivery Gap Difference between the Firm’s Service

Standards and the Actual Service Provided

Reduce delivery

gaps

Empowering service

providers

Support & incentives

for employees

Use of technology

22 © McGraw-Hill Education

Empowering Service Providers

Allowing employees to make decisions

about how service is provided to customers

23 © McGraw-Hill Education

Support and Incentives for Employees

Reduce delivery gap.

Consistent and coherent support from management.

Provide emotional support to service

providers.

Provide instrumental support necessary to deliver

service.

Reward employees for excellent service.

24 © McGraw-Hill Education

Use of Technology

©Luong Thai Linh/EPA/Redux

25 © McGraw-Hill Education

Communications Gap Difference between the Actual Service

Provided and the Service the Firm Promises

Manage customer expectations.

Promise only what you can deliver.

Communicate service expectations.

Getty Images

26 © McGraw-Hill Education

Service Quality and Customer Satisfaction and Loyalty

Postpurchase Evaluation leads to

satisfaction, dissonance, or loyalty.

Good service quality leads to satisfied and

loyal customers.

27 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. Explain the four service gaps identified by the Service Gaps Model.

2. List at least two ways to overcome each of the four service gaps.

28 © McGraw-Hill Education

Service Recovery

Increase Service

Recovery.

Listen to the customer.

Resolve problems quickly.

Find a fair solution.

29 © McGraw-Hill Education

Listening to the Customers

Customers can get emotional over a service failure.

Often customers just want someone to listen.

30 © McGraw-Hill Education

Finding a Fair Solution

Distributive fairness

Procedural fairness

31 © McGraw-Hill Education

Resolving Problems Quickly

The longer it takes to resolve service failure, the more irritated the customer will become and the more people the customer will tell.

It is in the firm’s best interest to solve problems quickly.

32 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. Why is service recovery so important to companies?

2. What can companies do to recover from a service failure?

Marketing

Chapter 13

The End

Chapter 15

Strategic Pricing Methods

and Tactics

2 © McGraw-Hill Education

Learning Objectives (1 of 2)

Learning Objective 15.1 Identify three methods that firms use to set their prices.

Learning Objective 15.2 Describe the difference between an everyday low pricing (EDLP) strategy and a high/low strategy.

Learning Objective 15.3 Explain the difference between a price skimming and a market penetration pricing strategy.

3 © McGraw-Hill Education

Learning Objectives (2 of 2)

Learning Objective 15.4 Identify tactics used to reduce prices to consumers.

Learning Objective 15.5 Identify tactics used to reduce prices to businesses.

Learning Objective 15.6 List the pricing practices that are illegal or unethical.

4 © McGraw-Hill Education

Tiffany & Co.

©Stephen Lovekin/Getty Images for 20th Century Fox

5 © McGraw-Hill Education

Considerations for Setting Price Strategies

©McGraw-Hill Education

6 © McGraw-Hill Education

Value-Based Methods

©McGraw-Hill Education

Setting prices that focus on the overall value of the product offering as perceived by the consumer:

Improvement Value Method

Cost of Ownership Method

These methods require a great deal of research to be implemented successfully.

7 © McGraw-Hill Education

Value-Based Methods: Improvement Value

©McGraw-Hill Education

8 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. What are the three different considerations for setting prices?

2. How can you use value-based methods for setting prices?

9 © McGraw-Hill Education

Pricing Strategies

Everyday low pricing (EDLP)

High/Low Pricing

10 © McGraw-Hill Education

Everyday Low Pricing (EDLP) vs. High/Low Pricing

Create value for consumers in different ways.

EDLP reduces consumers’ search costs.

High/low provides the thrill of the chase for the lowest price.

11 © McGraw-Hill Education

In High/Low Pricing Consumers Use Reference Prices

Internal reference price

External reference price

12 © McGraw-Hill Education

New Product Pricing Strategies

Market Penetration Pricing

Price Skimming

Price skimming is often used for high-demand video games like Far Cry 5 because fans will pay a higher price to be one of the first to own the newest version.

©Chesnot/Getty Images

13 © McGraw-Hill Education

Pricing Tactics Aimed at Consumers (1 of 2)

©McGraw-Hill Education

Markdowns

Quantity Discounts

Seasonal Discounts

Coupons

Rebates

14 © McGraw-Hill Education

Pricing Tactics Aimed at Consumers (2 of 2)

©McGraw-Hill Education

Leasing/Rentals Price Bundling

Leader Pricing Price Lining

15 © McGraw-Hill Education

Business Pricing Tactics and Discounts

©Alex Segre/Alamy Stock Photo

16 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. What are some consumer-oriented pricing tactics?

2. What are some B2B-oriented pricing tactics?

17 © McGraw-Hill Education

Legal and Ethical Aspects of Pricing

Legal and Ethical Aspects

of Pricing

Deceptive or

illegal price

advertising

Predatory

pricing

Price

discrimination

Price

fixing

18 © McGraw-Hill Education

Deceptive or Illegal Price Advertising

Deceptive reference prices

Loss-leader pricing

Bait and switch

©Alex Segre/Alamy Stock Photo

19 © McGraw-Hill Education

Predatory Pricing

Prices set low with the intent to drive competitor out of business

Illegal

Difficult to prove

20 © McGraw-Hill Education

Price Discrimination

Is not always illegal

Different rules in the B2B and B2C markets

Federal law does not apply to sales to end consumers

21 © McGraw-Hill Education

Price Fixing

Horizontal price fixing Vertical price fixing

22 © McGraw-Hill Education

Gray Market Pricing

Uses irregular but not necessarily illegal methods.

Gray market for luxury goods.

23 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. What common pricing practices are considered to be illegal or unethical?

Marketing

Chapter 15

The End

Chapter 17 Retailing and Omnichannel

Marketing

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 17.1 Discuss the four factors manufacturers should consider as they develop their strategies for working with retailers.

Learning Objective 17.2 Outline the considerations associated with choosing retail partners.

Learning Objective 17.3 List the three levels of distribution intensity.

Learning Objective 17.4 Describe the various types of retailers.

Learning Objective 17.5 Describe the components of a retail strategy.

Learning Objective 17.6 Identify the benefits and challenges of omnichannel retailing.

3 © McGraw-Hill Education

Whole Foods + Amazon

Amazon

©Gado Images/Alamy Stock Photo

http://www.amazon.com/

4 © McGraw-Hill Education

What is Retailing?

The set of business activities that add value to products and services sold to

consumers for their personal or family use.

5 © McGraw-Hill Education

Exhibit 17.1: Factors for Establishing a Relationship with Retailers

Jump to Appendix 1 long image description

6 © McGraw-Hill Education

Choosing Retailing Partners

©Catwalking/Getty Images

Channel Structure

Customer Expectations

Channel Member

Characteristics

Distribution Intensity

7 © McGraw-Hill Education

Channel Structure

Degree of vertical integration

Strength of manufacturers’ brand

Relative power of manufacturer and

retailer

8 © McGraw-Hill Education

Exhibit 17.2: Customer Expectations for Coach and Cole Haan Distribution

Jump to Appendix 2 long image description

9 © McGraw-Hill Education

Channel Member Characteristics

Larger firms

Less likely to use supply chain intermediaries

Can gain more control, be more efficient, and save money

10 © McGraw-Hill Education

Distribution Intensity

Intensive

Exclusive

Selective

11 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. What issues should manufacturers consider when choosing retail partners?

2. What are the differences among intensive, exclusive, and selective levels of distribution intensity?

12 © McGraw-Hill Education

Exhibit 17.3 Types of Retailers

Jump to Appendix 3 long image description

13 © McGraw-Hill Education

Food Retailers

Supermarkets Supercenters Warehouse

Clubs Convenience

Stores

Limited nonfood Includes discount store

Limited assortment Limited variety

Differentiated by number of SKUs

Walmart, Meijer, K-Mart, Target

Limited service includes: Costco, Sams, BJ’s

Good locations

14 © McGraw-Hill Education

Online Grocery Retailers

Consumers are willing to pay more

Difficult to achieve profitably for

perishable items

Most online orders are nonfood items

15 © McGraw-Hill Education

General Merchandise Retailers

Department Stores Broad variety and deep assortment

Full-line Discount Broad variety at low prices

Specialty Limited merchandise with service in small store

Drugstores Specialty for pharmaceutical and health

Category Specialists Big-box or category killers with narrow but deep assortment

Extreme-value Full line, limited, very low prices

Off-price Inconsistent assortment of brand-name merchandise at low prices

16 © McGraw-Hill Education

Services Retailers

Firms that primarily sell services rather than merchandise

are a large and growing part of the

retail industry.

©Lane Oatey/Blue Jean Images/Getty Images

17 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. What strategies distinguish the different types of food retailers?

2. What strategies distinguish the different types of general merchandise retailers?

3. Are organizations that provide services to consumers retailers?

18 © McGraw-Hill Education

Developing a Retail Strategy Using the Six Ps: Product

Providing the right mix of merchandise and services that satisfies the needs of the target market.

Private-label or store brands help retailers distinguish themselves from competition.

19 © McGraw-Hill Education

Developing a Retail Strategy Using the Six Ps: Price

Price defines the value of both the

merchandise and the service provided.

©Peter Horree/Alamy Stock Photo

20 © McGraw-Hill Education

Developing a Retail Strategy Using the Six Ps: Promotion

Retailers use a wide variety of promotions, both within their retail

environment and through mass and

social media.

AP Photo/MarkHumphrey

21 © McGraw-Hill Education

Developing a Retail Strategy Using the Six Ps: Place

Convenient location is a key ingredient to success.

©McGraw-Hill Education/Andrew Resek, photographer

Many customers choose stores on the basis of where they are located.

Great locations can create a competitive advantage.

22 © McGraw-Hill Education

Developing a Retail Strategy Using Two Additional Ps: Presentation and Personnel

Presentation Personnel

23 © McGraw-Hill Education

Benefits of the Internet and Omnichannel Retailing

Ability to collect information

Deeper and broader selection

Personalization • Personalized customer service (online chats) • Personalized offering

Expanded market presence

24 © McGraw-Hill Education

Effective Omnichannel Retailing

Integrated CRM

Pricing

Brand Image

Supply Chain

25 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. What are the components of a retail strategy?

2. What are the advantages of traditional stores versus Internet-only stores?

3. What challenges do retailers face when marketing their products through multiple channels?

Marketing

Chapter 17

The End

Chapter 18 Integrated Marketing

Communications

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 18.1 Identify the components of the communication process.

Learning Objective 18.2 Explain the four steps in the AIDA model.

Learning Objective 18.3 Describe the various integrative communication channels.

Learning Objective 18.4 Explain the methods used to allocate the integrated marketing communications (IMC) budget.

Learning Objective 18.5 Identify marketing metrics used to measure IMC success.

3 © McGraw-Hill Education

Pepsi

“Say It With Pepsi” campaign integrated television advertising, digital advertising, and communications created by packaging.

By adding emojis to product labels, Pepsi is connecting its retail efforts with digital marketing.

“Say It With Pepsi”

http://design.pepsico.com/pepsimoji.php

4 © McGraw-Hill Education

Integrated Marketing Communications

Results of the communication

5 © McGraw-Hill Education

Communicating with Consumers: Exhibit 18.1: The Communication Process

Jump to Appendix 1 long image description

6 © McGraw-Hill Education

How Consumers Perceive Communication

Receivers decode messages differently.

Senders adjust messages according to the medium and receivers’ traits.

©imago stock&people/Newscom

7 © McGraw-Hill Education

Exhibit 18.2: The AIDA Model

Jump to Appendix 2 long image description

8 © McGraw-Hill Education

The AIDA Model: Awareness

Senders first must gain the attention of the consumer.

Awareness metrics include:

• Aided recall

• Top-of-mind awareness

9 © McGraw-Hill Education

The AIDA Model: Interest

After awareness comes interest.

The customer must want to further investigate the product/service.

Interest can also be sparked by a little controversy (Ethical and Social Dilemma 18.1: The Need to Take Risks in IMC).

10 © McGraw-Hill Education

The AIDA Model: Desire

I like it I want it

11 © McGraw-Hill Education

The AIDA Model: Action

The ultimate goal of any form of communications is to drive the receiver to action.

But purchase is just one type of action.

What other actions can IMC ask consumers to take?

12 © McGraw-Hill Education

The Lagged Effect

Marketing communications do not always have an immediate impact.

Multiple exposures are often necessary.

It is difficult to determine which exposure led to purchase.

13 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. What are the different steps in the communication process?

2. What is the AIDA model?

14 © McGraw-Hill Education

Channels Used in an IMC Strategy

Jump to Appendix 3 long image description

15 © McGraw-Hill Education

Advertising

Most visible element of an IMC strategy.

Extremely effective at creating awareness and generating interest.

Terry Tate commercial

https://www.youtube.com/watch?v=ZoSCRHVuBkY

16 © McGraw-Hill Education

Public Relations (PR)

“Free” media attention.

Importance of PR has grown as the cost of other media has increased.

As consumers are becoming more skeptical about marketing, PR is becoming more important.

17 © McGraw-Hill Education

Sales Promotions

Can be aimed at both end user consumers or channel members.

Used in conjunction with other forms of IMC.

Can be used for both short-term and long-term objectives.

18 © McGraw-Hill Education

Personal Selling

A two-way communication between the buyer and seller to influence buying decisions.

Some products require the help of a salesperson.

More expensive than other forms of promotion.

Salespeople can add significant value, which can make the expense worth it.

19 © McGraw-Hill Education

Direct Marketing

Communicating directly with target customers to generate a response or transaction.

Growing element of IMC.

Improvements in database technology have contributed to the rapid growth.

Ability to carefully target consumers.

Includes e-mail and mobile marketing.

20 © McGraw-Hill Education

Examples of Mobile Marketing Campaigns

21 © McGraw-Hill Education

Online Marketing

Websites

Blogs

Social

Media

22 © McGraw-Hill Education

Online Marketing: Websites

What websites do you visit all

the time?

Why?

23 © McGraw-Hill Education

Online Marketing: Blogs

Blogs can:

• communicate trends • announce special events • create positive word-of-mouth • connect customers • allow the company to respond to customers • encourage customers to develop a long-term relationship with the

company.

Blogs are becoming more interactive as the communication between bloggers and customers has increased.

Blogs can be linked to other social media.

24 © McGraw-Hill Education

Online Marketing: Social Media

Advantages to firms?

Challenges?

25 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. What are the different elements of an IMC program?

26 © McGraw-Hill Education

Planning for and Measuring IMC Success: Goals

Understand the outcome the firm hopes

to achieve

Short-term or long-term

Should be explicitly defined and measured

27 © McGraw-Hill Education

Examples of Marketing Goals and the Related Campaigns

28 © McGraw-Hill Education

Planning for and Measuring IMC Success: Setting and Allocating the IMC Budget

Rule-of-thumb methods

Objective-and-task method

29 © McGraw-Hill Education

Exhibit 18.6: Rule-of-Thumb Methods (1 of 2)

Method Definition Limitations

Competitive parity

The communication budget is set so that the firm’s share of communication expenses equals its share of the market.

Does not allow firms to exploit the unique opportunities or problems they confront in a market. If all competitors use this method to set communication budgets, their market shares will stay approximately the same over time.

Percentage -of-sales

The communication budget is a fixed percentage of forecasted sales.

Assumes the same percentage used in the past, or by competitors, is still appropriate for the firm. Does not take into account new plans (e.g., to introduce a new line of products in the current year).

30 © McGraw-Hill Education

Exhibit 18.6: Rule-of-Thumb Methods (2 of 2)

Method Definition Limitations

Available budget

Marketers forecast their sales and expenses, excluding communication, during the budgeting period. The difference between the forecast sales and expenses plus desired profit is reserved for the communication budget. That is, the communication budget is the money available after operating costs and profits have been budgeted.

Assumes communication expenses do not stimulate sales and profit.

31 © McGraw-Hill Education

Planning for and Measuring IMC Success: Measuring Success Using Marketing Metrics

Reach

Frequency

Gross rating points

Web tracking

32 © McGraw-Hill Education

Planning, Implementing, and Evaluating IMC Programs—An Illustration of Google

Advertising

Transit is an upscale sneaker store in New York City modeled after

vintage New York City subway trains.

Social Shopping

SEM

Relevance Impressions

Click- through Rate

Return on Investment

(ROMI)

33 © McGraw-Hill Education

Exhibit 18.8: Transit ROMI Assessment

1. Keyword 2. Clicks 3. Marketing Expenditure 4. Sales

5. Gross Margin = Sales X Gross

Margin % = Sales X 50 %

6. Gross Margin ($) (Col. 5) – Marketing

Expenditure (Col 3)

7. ROMI = (Col. 6/Col. 3) X 100

Sneaker store 110

$10/day $70/day $35/day $25 250%

New York City sneakers

40 $25/day $80/day $40/day $15 60%

34 © McGraw-Hill Education

Exhibit 18.9: Transit IMC Goals and Results

Communication Objective

Question Before Campaign

Six Months After

One Year After

Awareness (% mentioning store)

What stores sell sneakers?

38% 46% 52%

Knowledge (5 giving outstanding rating for sales assistance)

Which stores would you rate outstanding on the following characteristics?

9 17 24

Attitude (% first choice) On your next shopping trip for sneakers, which store would you visit first?

13 15 19

Visit (% visited store) Which of the following stores have you been to?

8 15 19

35 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. Why is the objective-and-task method of setting an IMC budget better than the rule-of-thumb methods?

2. How do firms use GRP to evaluate the effectiveness of traditional media?

3. How would a firm evaluate the effectiveness of its Google advertising?

Marketing

Chapter 18

The End

Chapter 19 Advertising, Public Relations, and

Sales Promotions

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 19.1 Describe the steps in designing and executing an advertising campaign.

Learning Objective 19.2 Identify three objectives of advertising.

Learning Objective 19.3 Describe the different ways that advertisers appeal to consumers.

Learning Objective 19.4 Identify the various types of media.

Learning Objective 19.5 Identify agencies that regulate advertising.

Learning Objective 19.6 Describe the elements of a public relations toolkit.

Learning Objective 19.7 Identify the various types of sales promotions.

3 © McGraw-Hill Education

What is Advertising?

A paid form of communication delivered through media from an identifiable sources about an organization, product, service, or idea designed to persuade the receiver.

The most visible form of marketing communications.

Many actions take place before an ad is seen by the target audience.

4 © McGraw-Hill Education

Exhibit 19.1: Steps in Planning and Executing an Ad Campaign

Identify target audience

Set advertising objectives

Determine the advertising budget

Convey the message

Evaluate and select media

Create advertisements

Assess impact

Advertising Age

http://www.adage.com/

5 © McGraw-Hill Education

Step 1: Identify Target Audience

Conduct research to identify target audience.

The information is used to set the tone.

and to select the media.

6 © McGraw-Hill Education

Step 2: Set Advertising Objectives

Push strategy Pull strategy

The objectives of an ad campaign are derived from the overall objectives of the marketing program.

Consumers Wholesalers, Retailers, Salespeople

7 © McGraw-Hill Education

Advertising Objectives

Inform

Persuade

Remind

8 © McGraw-Hill Education

Informative Advertising

Used to create and build brand awareness.

Push the consumer through the buying cycle to a purchase.

Inform customers about upcoming sales events or arrival of new merchandise.

9 © McGraw-Hill Education

Persuasive Advertising

Generally occurs in the growth and early maturity stages of the PLC when competition is most intense.

May be used to reposition an established brand in the later stage of the PLC.

10 © McGraw-Hill Education

Reminder Advertising

Communication used to remind or prompt repurchases.

Occurs after the products have gained market acceptance and are in the maturity stage.

Source: The Advertising Archives

11 © McGraw-Hill Education

Focus of Advertisements

Product-focused advertisements

Institutional advertisements

An ad campaign’s objectives determine each specific ad’s focus.

Example: PSAs

12 © McGraw-Hill Education

Social Marketing

Public Service Advertising (PSA)

• Under Federal Communication Commission rules, broadcasters must devote a specific amount of free airtime to PSAs.

13 © McGraw-Hill Education

Step 3: Determine the Advertising Budget

Considerations:

Role that advertising plays in firm’s attempt to meet its overall promotional objectives.

Expenditures vary over the course of the product life cycle.

Nature of the market and the product influence the size of the budget.

14 © McGraw-Hill Education

Step 4: Convey the Message

Unique selling proposition (USP)

Red Bull . . . Gives You Wings

The New York Times. . . All The News That’s Fit to Print

Ford . . . Built Ford Tough

YouTube. . . Broadcast Yourself

TNT . . . We know drama

15 © McGraw-Hill Education

The Appeal

Informational appeal

• Helps consumers make purchase decisions by offering factual information.

Emotional appeal

• Aims to satisfy consumers’ emotional desires rather than their utilitarian needs.

16 © McGraw-Hill Education

Exhibit 19.2: Emotional Appeals in Advertising

17 © McGraw-Hill Education

Step 5: Evaluate and Select Media

Media planning

Media mix

Media buy

18 © McGraw-Hill Education

Mass and Niche Media

Niche media:

• More focused • Reach narrower segments • Target unique demographics or interests

• HGTV, The Golf Channel, TransWorld Skateboarding, Cosmo Girl

Mass media:

• Ideal for reaching large, anonymous audiences • Include outdoor/billboards, newspapers, magazines,

radio, and television

19 © McGraw-Hill Education

Exhibit 19.3: Choosing the Right Medium (1 of 2)

Medium Advantages Disadvantages

Television Wide reach; incorporates sound and video.

High cost; several channel and program options; may increase awareness of competitors’ products.

Radio Relatively inexpensive; can be selectively targeted; wide reach.

No video, which limits presentation; consumers give less focused attention than TV.; exposure periods are short.

Magazines Very targeted; subscribers pass along to others.

Relatively inflexible; takes some time for the magazine to be available.

Newspapers Flexible; timely; able to localize.

Can be expensive in some markets; advertisements have short life span.

20 © McGraw-Hill Education

Exhibit 19.3: Choosing the Right Medium (2 of 2)

Medium Advantages Disadvantages

Internet/mobile Can be linked to detailed content; highly flexible and interactive; allows for specific targeting.

Becoming cluttered; the ad may be blocked by software on the computer.

Outdoor/billboard Relatively inexpensive; offers opportunities for repeat exposure.

Is not easily targeted; has placement problems in some markets; exposure time is very short.

Direct marketing Highly targeted; allows for personalization.

Cost can vary depending on type of direct marketing used; traditional media, like mail, will be more expensive than newer media.

21 © McGraw-Hill Education

Determining the Advertising Schedule

Continuous

Pulsing

Flighting

22 © McGraw-Hill Education

Step 6: Create Advertisements

Create Ads

The type of medium

determines the execution style.

Creativity plays a major

role in this stage.

Creativity should not

overshadow the

message.

The execution style must match the

medium and objectives.

23 © McGraw-Hill Education

Identify the Headline, Subhead, and Body Copy in this Ad

24 © McGraw-Hill Education

Step 7: Assess Impact Using Marketing Metrics

Pretesting Tracking Posttesting

Jump to Appendix 1 long image description

25 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. What are the steps involved in planning an ad campaign?

2. What is the difference between informational, persuasive, and reminder advertising?

3. What are the pros and cons of the different media types?

4. How can the effectiveness of advertising be evaluated?

26 © McGraw-Hill Education

Regulatory and Ethical Issues in Advertising

27 © McGraw-Hill Education

Puffery

Legal exaggeration of praise, stopping just short of deception, lavished on a product.

Source: The Advertising Archives

Is this ad an example of puffery or deception?

28 © McGraw-Hill Education

Public Relations

Public relations involves managing communications and relationships to achieve various objectives such as:

• Building and maintaining a positive image of the firm.

• Handling unfavorable stories or events.

• Maintaining positive relationships with the media.

29 © McGraw-Hill Education

Popular PR Tools

Cause-related marketing

Event sponsorship

Top” ©Taylor Hill/Getty Images; Bottom: ©James Davies/Alamy Stock Photo

30 © McGraw-Hill Education

Exhibit 19.6: Elements of a Public Relations Toolkit

31 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. Why do companies use public relations as part of their IMC strategy?

2. What are the elements of a public relations toolkit?

32 © McGraw-Hill Education

Sales Promotions

Can be targeted at either the end user consumers or channel members.

Can be used in either push or pull strategies.

33 © McGraw-Hill Education

Types of Sales Promotion (1 of 2)

Promotion Advantages Disadvantages

Coupons • Stimulates demand. • Allows for direct tracking of sales.

• Low redemption rates. • High cost.

Deals • Encourages trial. • Reduces consumer risk.

• May reduce perception of value.

Premiums • Builds goodwill. • Increases perception of value.

• Consumers buy for premium, not product. • Has to be carefully managed.

Contests • Increases consumer involvement. • Generates excitement.

• Requires creativity. • Must be monitored.

Sweepstakes • Increases involvement with the product.

• Sales often decline after the sweepstakes is over.

34 © McGraw-Hill Education

Types of Sales Promotion (2 of 2)

Promotion Advantages Disadvantages

Samples • Encourage trial. • Offer direct involvement. • High cost to the firm.

Loyalty Programs

• Create loyalty. • Encourage repurchase. • High cost to the firm.

POP Displays • Provide high visibility. • Encourage brand trial.

• Difficult to get a good location in the store. • Can be costly to the firm.

Rebates • Stimulate demand. • Increase value perception.

• Easily copied by competitors. • May just advance future sales.

Product Placement

• Displays products nontraditionally. • Demonstrates product uses.

• Firm often has little control over display. • Product can be overshadowed.

35 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. What are various forms of sales promotions?

2. What factors should a firm consider when evaluating a sales promotion?

Marketing

Chapter 19

The End

Chapter 20 Personal Selling and Sales

Management

2 © McGraw-Hill Education

Learning Objectives

Learning Objective 20.1 Describe the value

added of personal selling.

Learning Objective 20.2 Define the steps in the

personal selling process.

Learning Objective 20.3 Describe the key

functions involved in managing a sales

force.

Learning Objective 20.4 Describe the ethical and

legal issues in personal selling.

3 © McGraw-Hill Education

IBM

IBM Watson

©Christian Charisius/dpa/picture-alliance/Newscom

http://www.ibm.com/cognitive/?S_PKG=&cm_mmc=Search_Google-_-9.1+MO+Mktg+Plan+Unknown_CA+Cognitive-_-NA_US-_-ibm's+watson_Exact_&cm_mmca1=000005IG&cm_mmca2=2406&mkwid=481eee7b-92ad-4795-be81-1c5d291dbec5|447|82958

4 © McGraw-Hill Education

The Scope and Nature of Personal Selling

Internet

Face-to-face

Telephone

Video

Teleconference

5 © McGraw-Hill Education

Personal Selling as a Career

People love the lifestyle.

There is a lot of flexibility.

There is a lot of variety in

the job.

Can be very lucrative.

Very visible to

management and good

for promotions.

©perfectlab/Shutterstock

6 © McGraw-Hill Education

The Value Added by Personal Selling

Salespeople provide information and advice.

Salespeople save time and simplify buying.

Salespeople build relationships.

©Kristian Sekulic/Getty Images

7 © McGraw-Hill Education

Exhibit 20.1: The Personal Selling Process

Jump to Appendix 1 long

image description

8 © McGraw-Hill Education

Step 1: Generate and Qualify Leads

Sources

of Leads

Current

Customers

Networking

Events

Social

Media

The

Internet

9 © McGraw-Hill Education

Generate Leads

Trade Shows

Cold calls

Telemarketing

10 © McGraw-Hill Education

Step 2: Preapproach and

the Use of CRM Systems

Conduct additional research and develop plans for meeting with the customer.

Establish goals for meeting with the customer.

©JGI/Jamie Grill/Getty Images

11 © McGraw-Hill Education

Step 3: Sales Presentation

and Overcoming Reservations

The presentation

Handling reservations

12 © McGraw-Hill Education

Exhibit 20.2: Aligning the Personal Selling

Process with the B2B Buying Process

Jump to Appendix 2 long

image description

13 © McGraw-Hill Education

Step 4: Closing the Sale

Obtain a commitment from the customer to make a

purchase.

Often this is the most stressful part of the sales

process.

A “no” one day may be the foundation for a “yes” another day.

14 © McGraw-Hill Education

Step 5: Follow-Up

Five Service Quality

Dimensions

Reliability

Responsiveness

Assurance

Empathy

Tangibles

Using the five service

quality dimensions

discussed in Chapter 13

to understand the

follow-up.

15 © McGraw-Hill Education

PROGRESS CHECK (1 of 3)

1. Why is personal selling important to an IMC

strategy?

2. What are the steps in the personal selling

process?

16 © McGraw-Hill Education

Managing the Sales Force

Managing the sales

force

Determining sales force structure

Recruiting and selecting

salespeople

Training Salespeople

Motivating and compensating salespeople

Evaluating salespeople

17 © McGraw-Hill Education

Sales Force Structure

Company sales force

Employees

Established product lines

Manufacturer’s representatives

(independent agents)

Not employees

Smaller firms

New markets

18 © McGraw-Hill Education

Salesperson Duties

Order getting

Order taking

Sales support personnel

Selling teams

19 © McGraw-Hill Education

Recruiting and Selecting Salespeople

Personality

Optimism

Resilience Self-

motivation

Empathy

20 © McGraw-Hill Education

Recruiting for Success

How does a firm that

focuses on a fun

product recruit

salespeople who

exhibit fun?

21 © McGraw-Hill Education

Sales Training

Selling and negotiation techniques

Product and service knowledge

Technologies used in the selling process

Time and territory management

Company policies and procedures

22 © McGraw-Hill Education

Motivating and Compensating Salespeople

Financial rewards

• Salary • Commission • Bonus • Sales Contest

Nonfinancial rewards

• Recognition from peers and management

• Plaques, pens, rings • Free trips or days off • Given at sales meeting

and publicized in the

company newsletter

23 © McGraw-Hill Education

Evaluating Salespeople by Using Marketing

Metrics

Tied to the reward

structure

Evaluation

measures can be

either objective or

subjective

24 © McGraw-Hill Education

PROGRESS CHECK (2 of 3)

1. What do sales managers need to do to manage

their sales force successfully?

2. What is the difference between monetary and

nonmonetary incentives?

25 © McGraw-Hill Education

Ethical and Legal Issues in Personal Selling

The Salesperson

and the Customer

The Sales Force and Corporate

Policy

The Sales Manager and

the Sales Force

26 © McGraw-Hill Education

Issues for the Sales Manager

and the Sales Force

A sales manager must treat people fairly and equally in

everything he or she does.

Must apply to:

• Hiring • Promotion • Supervision • Training • Assigning Duties • Quotas • Compensation • Firing

27 © McGraw-Hill Education

Issues for the Sales Force

and Corporate Policy

The firm may have a policy to

sell goods or services to

people who cannot afford

them or to people who should

not have them.

Should insurance salespeople

disclose inadequate hurricane

coverage and risk not making

the sale?

©Charlie Riedel/AP Images

28 © McGraw-Hill Education

Issues for the Salesperson

and the Customer

Have you ever felt that you were

treated unethically by a salesperson?

What happened?

29 © McGraw-Hill Education

PROGRESS CHECK (3 of 3)

1. What are three areas of personal selling in which

ethical and legal issues are more likely to arise?

Marketing

Chapter 20

The End

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 1 Overview of Marketing

1) Marketing is an activity that only large firms with specialized departments can perform.

Answer: FALSE

Explanation: Marketing activities can be performed by organizations of all sizes and also by

individuals.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) The marketing plan is broken down into various components—how the product or service will

be conceived or designed, how much it should cost, where and how it will be promoted, and how it

will get to the consumer.

Answer: TRUE

Explanation: The marketing plan is broken down into various components—how the product or

service will be conceived or designed, how much it should cost, where and how it will be

promoted, and how it will get to the consumer.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) Understanding the marketplace and a customer's needs and wants is fundamental to marketing

success.

Answer: TRUE

Explanation: Understanding the marketplace, and especially the needs and wants of the

customer, is fundamental to marketing success.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) When the publisher of the well-known Babar books wanted to celebrate the 80th anniversary of

the series, it initiated a $100,000 campaign. This initiative represented the price component in the

four Ps.

Answer: FALSE

Explanation: When the publisher of the well-known Babar books wanted to celebrate the 80th

anniversary of the series, it initiated a $100,000 campaign. This initiative represented the

promotion component in the four Ps. Promotion is communication by a marketer that informs,

persuades, and reminds potential buyers about a product or service to influence their opinions and

elicit a response.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) The four Ps of the marketing mix include product, promotion, planning, and place.

Answer: FALSE

Explanation: The four Ps of the marketing mix are product, price, place, and promotion.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) Supply chain management is the set of approaches and techniques that firms employ to

efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and other

firms involved in the transaction into a seamless value chain in which merchandise is produced and

distributed in the right quantities, to the right locations, and at the right time.

Answer: TRUE

Explanation: Supply chain management is the set of approaches and techniques that firms

employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores,

and other firms involved in the transaction (e.g., transportation companies) into a seamless value

chain in which merchandise is produced and distributed in the right quantities, to the right

locations, and at the right time, while minimizing systemwide costs and satisfying the service

levels required by the customers.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) Value is what you get for what you give.

Answer: TRUE

Explanation: Value reflects the relationship of benefits to costs, or what you get for what you

give.

Difficulty: 1 Easy

Topic: Product Value Creation

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) In value cocreation, the customer participates in the creation of a good or service, which

provides additional value to the customer.

Answer: TRUE

Explanation: A creative way to provide value to customers is to engage in value cocreation. In

this case, customers can act as collaborators to create the product or service. When clients work

with their investment advisers, they cocreate their investment portfolios; when Nike allows

customers to custom design their sneakers, they are cocreating.

Difficulty: 2 Medium

Topic: Product Value Creation

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) Ninety-seven percent of marketers assert that they use social media tools for their businesses.

Answer: TRUE

Explanation: Ninety-seven percent of marketers assert that they use social media tools for their

businesses.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) Apple makes its innovations compatible with existing products to encourage consumers to

maintain a long-term relationship with the company across all their electronic needs.

Answer: TRUE

Explanation: Apple makes its innovations compatible with existing products to encourage

consumers to maintain a long-term relationship with the company across all their electronic needs.

Difficulty: 1 Easy

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) When a manufacturer sells truck and car parts to Toyota, this is an example of B2C marketing.

Answer: FALSE

Explanation: This is an example of B2B (business-to-business) marketing. B2C marketing would

involve selling cars or trucks to individual consumers.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) The power adapters Dell sells with its computers are built by small companies that specialize

in power-related accessories. When Dell purchases its power adapters from these small

companies, it is engaged in B2B marketing.

Answer: TRUE

Explanation: Dell, a business, is purchasing supplies from another business, so this is an example

of business-to-business (B2B) marketing.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) Garage sales and online classified ads are examples of C2C marketing.

Answer: TRUE

Explanation: These are C2C marketing scenarios, where consumers market to one another.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) During the market-oriented era, manufacturers began to focus on customers' needs before they

designed or sold their products.

Answer: TRUE

Explanation: Manufacturers and retailers began to focus on what consumers wanted and needed

before they designed, made, or attempted to sell heir products and services during the

market-oriented era.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) HappyCow is an example of a location-based social media application.

Answer: TRUE

Explanation: Several restaurant chains are exploiting location-based social media applications.

By using location-based apps on their mobile phones, customers can use, for example, HappyCow

to find nearby vegetarian restaurants or Yelp to find restaurants that are well rated by users.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) As it relates to marketing, the trade of things of value between the buyer and the seller so that

each is better off as a result is known as an exchange.

Answer: TRUE

Explanation: In a marketing exchange, sellers provide products or services, then communicate

and facilitate the delivery of their offering to consumers. Buyers complete the exchange by giving

money and information to the seller.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) Marketing's fundamental purpose is to create value by developing a variety of offerings that

will earn income for the company.

Answer: FALSE

Explanation: Marketing's fundamental purpose is to create value by developing a variety of

offerings, including goods, services, and ideas, to satisfy customer needs.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

18) Margaret likes her morning coffee, and she always stops at Starbucks because it is on her way

to work. Margaret is being influenced by the place element of the marketing mix.

Answer: TRUE

Explanation: Place represents all the activities necessary to get the product to the right customer

when that customer wants it.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

19) To build relationships, firms focus on the lifetime profitability of the relationship, not how

much money is made during each transaction.

Answer: TRUE

Explanation: To build relationships, firms focus on the lifetime profitability of the relationship,

not how much money is made during each transaction.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) Firms have come to realize that good corporate citizenship through socially responsible actions

should be a priority because it will help their bottom line in the long run.

Answer: TRUE

Explanation: Socially responsible firms recognize that including a strong social orientation in

business is a sound strategy—one that is in both its own and its customers' best interest. It shows

consumers that the firm will be around for the long run and can be trusted with their business.

Difficulty: 1 Easy

Topic: Corporate Social Responsibility

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

21) Promotion deals specifically with retailing and marketing channel management, also known as

supply chain management.

Answer: FALSE

Explanation: Place deals specifically with retailing and marketing channel management, also

known as supply chain management.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) A set of approaches and techniques that firms use to make and deliver a given set of goods and

services is known as a distribution network.

Answer: FALSE

Explanation: A set of approaches and techniques that firms use to make and deliver a given set of

goods and services is known as a supply chain or a marketing channel.

Difficulty: 1 Easy

Topic: Marketing Channels

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) Buffalo Wild Wings suggests that its diners check in to its locations using their phones. This

demonstrates the use of ________ to market a product.

A) adding value

B) social media

C) marketing analytics

D) value cocreation

E) social responsibility

Answer: B

Explanation: Social media enables Buffalo Wild Wings to reach young, tech-savvy customers, its

target market.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) What percentage of marketers assert that they use social media tools for their businesses?

A) 80 percent

B) 57 percent

C) 50 percent

D) 97 percent

E) 70 percent

Answer: D

Explanation: Ninety-seven percent of marketers assert that they use social media tools for their

businesses.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

25) What type of marketers constantly measure the benefits that customers perceive against the

cost of their offerings?

A) relationship-oriented marketers

B) production-oriented marketers

C) sales-oriented marketers

D) market-oriented marketers

E) value-oriented marketers

Answer: E

Explanation: Value-oriented marketers constantly measure the benefits that customers perceive

against the cost of their offerings. They use available customer data to find opportunities to satisfy

their customers' needs better, keep down costs, and develop long-term loyalties.

Difficulty: 1 Easy

Topic: Product Value Creation

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) When a T-shirt manufacturer states, "We sell it only in black because that way we can buy

plenty of black fabric and run our plant efficiently," its statement reflects the views that were

popular in which era of the evolution of marketing?

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) economics-oriented

Answer: A

Explanation: This question refers to the production-oriented era, when companies would just

manufacture items without taking individuals' needs or wants into consideration.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) Marketing involves all of the following except

A) conducting exchanges.

B) satisfying customer needs and wants.

C) creating value.

D) efforts by individuals and organizations.

E) production scheduling.

Answer: E

Explanation: Production scheduling is the responsibility of manufacturing; all other activities are

part of marketing.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) Jamie sells construction equipment. Whenever she calls on her building contractor customers,

she asks if they are having any problems. In doing so, Jamie is addressing which of the following

core aspects of marketing?

A) satisfying customer needs and wants

B) completing the exchange function of marketing

C) making product, place, promotion, and price decisions

D) making decisions about the setting in which marketing takes place

E) creating value

Answer: A

Explanation: By asking about problems, Jamie is asking what unmet needs the contractor might

have. She hopes that her company may have products that will help meet these needs.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

29) Julie is considering a career in marketing. She is concerned about the image of marketers as

fast-talking, high-pressure people who care only about making a sale. When reading about the core

aspects of marketing, Julie is relieved to see that in marketing

A) all parties to the transaction should be satisfied.

B) promotion is the most important consideration, followed by pricing decisions.

C) decisions are made regarding how a product is designed.

D) customers are not considered until the product is ready for sale.

E) distribution is controlled by customers.

Answer: A

Explanation: Marketing is about satisfying customer needs and wants. If all parties to the

exchange are satisfied, that indicates that marketers are considering customers' needs as well as the

company's welfare.

Difficulty: 3 Hard

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) Xavier is analyzing potential market segments. He should carefully seek potential customers

who have both an interest in his products and

A) a thorough knowledge of his brand messages.

B) the ability to buy them.

C) knowledge of competing products.

D) the ability to negotiate discounts.

E) are removed from traditional marketing alternatives.

Answer: B

Explanation: If Xavier selects customers with an interest in the kinds of products he offers and

the ability to purchase, he can communicate the value his offerings provide and offer competitive

comparisons as part of his marketing mix.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) When referring to "exchange," marketers are focusing on

A) the location where products and services are traded.

B) the price charged, adjusted for currency exchange rates.

C) location-based tactics for creating value.

D) promotional offers designed to stimulate barter.

E) the trading of things of value.

Answer: E

Explanation: In terms of marketing, an exchange refers to each of the parties involved giving

something and getting something in return.

Difficulty: 1 Easy

Topic: Product Value Creation

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) Whenever Vivian has a new massage therapy customer, she invites the person to be on her

e-mail distribution list. In the process, in addition to exchanging her massage therapy service for

payment, Vivian is gathering

A) information.

B) promotional capital.

C) pricing data.

D) value cocreation.

E) feedback.

Answer: A

Explanation: In this case, Vivian's customer receives a massage, and she receives both payment

and information (in the form of the customer's e-mail address) as part of the exchange process.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

33) Which of the following is a core aspect of marketing?

A) satisfying as many needs as possible

B) creating a product that everyone will want to buy

C) setting prices lower than all competitors

D) making product, place, promotion, and price decisions

E) increasing the company's profit

Answer: D

Explanation: Most of these answers are too broad. Marketers don't generally try to sell to

everyone, and they don't necessarily strive to have the lowest price. Instead, they select customers

they can successfully serve and design a marketing mix (product, place, promotion, and price) to

meet those needs.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) Marketing has traditionally been divided into a set of four interrelated decisions known as the

marketing mix, or four Ps, including all of the following except

A) product.

B) place.

C) performance.

D) promotion.

E) price.

Answer: C

Explanation: The four Ps are product, place, promotion, and price.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) The four Ps make up the marketing mix, which is the ________ set of decisions or activities

that the firm uses to respond to the wants of its target markets.

A) unpredictable

B) external

C) internal

D) controllable

E) global

Answer: D

Explanation: The four Ps are the controllable set of decisions or activities that the firm uses to

respond to the wants of its target markets.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) The fundamental goal of marketers when creating goods, services, or combinations of both is

A) defeat the competition.

B) serve all consumers.

C) operate according to government regulations.

D) stimulate short-term sales.

E) create value.

Answer: E

Explanation: While some of the other answers are things that marketers and their firms have to

consider, the fundamental purpose of marketing activities is to create value for consumers.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) Brett is struggling with the choice of publishing his new book, How to Cook Polish Barbeque,

as an e-book or a paperback. Brett is addressing which core marketing aspect?

A) developing a promotional plan

B) managing the exchange function of marketing

C) making product decisions

D) satisfying a need but not a want

E) pricing the product

Answer: C

Explanation: Since Brett is making decisions about the form his book will take, he is making

product decisions. If he were deciding whether to sell it online, in bookstores, or both, it would be

a "where and how" (place) decision.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) The basic difference between a good and a service is that a good

A) provides intangible benefits.

B) can be physically touched.

C) is always less expensive than a corresponding service.

D) generates greater interest among consumers.

E) is more quickly forgotten by consumers.

Answer: B

Explanation: The basic difference between a good and a service is that a good is a tangible thing

that can be touched; a service is intangible.

Difficulty: 1 Easy

Topic: Components and Classifications of Products and Services

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) Four Winds Art Gallery sells paintings. They have also recently begun offering appraisals of

customers' art collections. Four Winds is

A) expanding from offering just services to also offering goods.

B) implementing a market segmentation strategy.

C) capturing value through multiple pricing strategies.

D) expanding from offering just goods to also offering services.

E) increasing customer value through inflated appraisal evaluations.

Answer: D

Explanation: The paintings are goods; appraisals are services.

Difficulty: 2 Medium

Topic: Components and Classifications of Products and Services

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) Marketers must determine the price of a product carefully, based on potential buyers' beliefs

about

A) its value.

B) the environment.

C) the cost to manufacture the product.

D) the economic outlook.

E) the product's new advertising campaign.

Answer: A

Explanation: Ultimately, a product should attempt to satisfy a customer's needs. Pricing based on

buyers' perceptions of value ensures that buyers believe the product is worth its price.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

41) Some discount stores put products in large bins and let consumers hunt and find bargains. The

price these consumers pay includes

A) only the actual price they pay at the register.

B) the value of their time and energy.

C) the excitement they experience in finding an item they desire.

D) the savings to the store of not having to display the products neatly on shelves.

E) when the product was listed at full price and didn't sell.

Answer: B

Explanation: Price is everything the buyer gives up—money, time, and/or energy—in exchange

for the product.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) Henriette offers financial counseling and management on a fee-only basis. She has found that

different customers are willing to pay different rates for her services. This shows that her pricing

decisions should depend primarily on

A) choosing an average price that she will charge all her clients.

B) changes in technology allowing consumers to manage their own affairs.

C) how different customers perceive the value of her services.

D) changes in the economy.

E) how much her competitors charge for similar services.

Answer: C

Explanation: Although the other factors might need to be considered in pricing, the primary

consideration should be perceived value—and the reason different customers are willing to pay

different rates is because they perceive the value differently.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Marketing channel management is also known as

A) endless chain marketing.

B) a transactional orientation.

C) wholesaling.

D) production management.

E) supply chain management.

Answer: E

Explanation: Marketing channel management, also known as supply chain management, is the

set of approaches and techniques that firms employ to efficiently and effectively integrate their

suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction (e.g.,

transportation companies) into a seamless value chain in which merchandise is produced and

distributed in the right quantities, to the right locations, and at the right time, while minimizing

systemwide costs and satisfying the service levels required by the customers.

Difficulty: 2 Medium

Topic: Supply Chain Management

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) ________ represents all the activities necessary to get the product to the right customer when

that customer wants it.

A) Place

B) Promotion

C) Social media

D) Value cocreation

E) Supply chain marketing

Answer: A

Explanation: Place represents all the activities necessary to get the product to the right customer

when that customer wants it.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) Not only does GIS technology help Starbucks determine the ideal locations for new stores, but

it also can enable the company to decide

A) the age of its target market.

B) which kinds of stores to open.

C) the type of coffee to sell.

D) the type of food to sell.

E) how many new locations it should open.

Answer: B

Explanation: Not only does the GIS technology help Starbucks determine the ideal locations for

new stores, but it also can enable the company to decide which kinds of stores to open. For

example, many of the 1,500 planned new stores will feature drive-through windows; others will be

smaller stores, strategically placed to provide the greatest customer convenience.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) The marketing goal of getting the "right quantities to the right locations, at the right time"

relates to

A) communicating the value proposition.

B) managing the supply chain.

C) performing service marketing.

D) capturing value.

E) managing price and performance.

Answer: B

Explanation: Supply chain management is the set of approaches and techniques that firms

employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores,

and other firms involved in the transaction (e.g., transportation companies) into a seamless value

chain in which merchandise is produced and distributed in the right quantities, to the right

locations, and at the right time, while minimizing systemwide costs and satisfying the service

levels required by the customers.

Difficulty: 1 Easy

Topic: Supply Chain Management

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) Value-oriented marketers constantly measure

A) promotional effectiveness against ethical advertising standards.

B) the problem of price maximization against cost-efficiency.

C) perceived customer benefits against the costs of their offerings.

D) the desire to achieve against the need for a stable source of supply.

E) the goal of efficiency against the price charged by competitors.

Answer: C

Explanation: Value-oriented marketers constantly measure the benefits that customers perceive

against the cost of their offerings. They use available customer data to find opportunities to better

satisfy their customers' needs, keep down costs, and develop long-term loyalties.

Difficulty: 2 Medium

Topic: Product Value Creation

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Many marketing students initially overlook the importance of marketing channel management

because

A) marketing has no responsibility for supply chain management.

B) marketing channel management doesn't add much value for customers.

C) companies do not want customers to know anything about the supply chain.

D) many of these activities take place behind the scenes.

E) marketing channel management is already transparent.

Answer: D

Explanation: Many marketing students initially overlook the importance of marketing channel

management because a lot of these activities are behind the scenes.

Difficulty: 2 Medium

Topic: Supply Chain Management

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) Which element of the marketing mix deals with supply chain management?

A) product

B) price

C) promotion

D) production

E) place

Answer: E

Explanation: The place aspect of the marketing mix represents all the activities necessary to get

the product to the right customer when that customer wants it.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) UPS, FedEx, and other shipping companies support other firms' ________ marketing goals.

A) supply chain management

B) value communication

C) value capture

D) retail management

E) promotion

Answer: A

Explanation: Supply chain management includes the shipment/delivery of products, so these

companies can be an important part of the supply chain.

Difficulty: 2 Medium

Topic: Supply Chain Management

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) ________ is communication by a marketer that informs, persuades, and reminds potential

buyers about a product or service so as to influence their opinions and elicit a response.

A) Pricing

B) Promotion

C) Placement

D) A relational orientation

E) Value cocreation

Answer: B

Explanation: Promotion is communication by a marketer that informs, persuades, and reminds

potential buyers about a product or service so as to influence their opinions and elicit a response.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) Effective promotion enhances a product or service's

A) supply chain management system.

B) wholesaling capabilities.

C) perceived value.

D) design features.

E) trialability.

Answer: C

Explanation: Effective promotion communicates value by attempting to ensure that customers

understand the value being offered.

Difficulty: 1 Easy

Topic: Role of Promotion

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) By promoting perfume based on youth, style, and sex appeal, Calvin Klein is attempting to

A) influence social norms regarding sexuality.

B) encourage consumers to participate in product redesign.

C) stimulate supply chain management cooperation.

D) increase the perceived value of its products.

E) demonstrate social responsibility.

Answer: D

Explanation: Promotion is communication by a marketer that informs, persuades, and reminds

potential buyers about a product or service so as to influence their opinions and elicit a response.

Promotion generally can enhance a product's or service's value.

Difficulty: 2 Medium

Topic: Role of Promotion

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) Retailers accumulate merchandise from producers in large amounts and sell to consumers in

smaller amounts. When they sell to consumers, it is considered ________ marketing.

A) B2C

B) B2B

C) R2C

D) C2C

E) C2B

Answer: A

Explanation: B2C (business-to-consumer) marketing is the process by which businesses sell to

consumers.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

55) By allowing consumers to sell their unwanted goods to other consumers, auction sites like

eBay and Etsy cater to ________ marketing.

A) B2B

B) C2C

C) D2C

D) C2D

E) B2G

Answer: B

Explanation: Consumers can buy and sell from one another on sites like eBay and Etsy,

increasing the amount of consumer-to-consumer (C2C) marketing that takes place.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) As use of the Internet took off, car manufacturers were tempted to sell directly to consumers,

but decided instead to continue to sell through their existing dealer networks. The car

manufacturers considered switching from ________ to ________ marketing.

A) B2C; B2B

B) B2C; C2C

C) B2B; B2C

D) B2B; C2C

E) C2C; B2C

Answer: C

Explanation: The car manufacturers considered switching from B2B marketing (where they sell

cars to dealers, who then sell them to consumers) to B2C marketing (where the car manufacturers

sell directly to consumers).

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

57) Many universities provide physical or electronic bulletin boards to facilitate ride-sharing and

exchange of used books among students. These bulletin boards increase ________ marketing.

A) B2C

B) C2B

C) B2B

D) C2C

E) underground

Answer: D

Explanation: These bulletin boards are designed to encourage consumer-to-consumer (C2C)

marketing since they make it easier for consumers (students, in this case) to connect with one

another.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) The "Milk Life" advertising campaign, designed to increase awareness of the health benefits of

milk, was intended to help market a(n)

A) service.

B) firm.

C) industry.

D) organization.

E) specific product.

Answer: C

Explanation: Marketing can aim to benefit an entire industry or society at large. The dairy

industry targets its "Milk Life" and "Body by Milk" campaigns at different target segments,

including parents, their children, and athletes. Through this campaign, the allied milk producers

have created high levels of awareness about the benefits of drinking milk, including the high levels

of protein, potassium, and calcium it provides.

Difficulty: 2 Medium

Topic: Advertising Appeals

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

59) When the publisher of the well-known Babar books wanted to celebrate the 80th anniversary

of the series, it initiated a $100,000 campaign. Which of the four Ps does this campaign represent?

A) performance

B) price

C) place

D) promotion

E) product

Answer: D

Explanation: The promotion for Babar's 80th anniversary was not only designed to sell books,

but also embrace a sense of nostalgia for the beloved character. This campaign represented

promotion in the four Ps.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) The idea that a good product will sell itself is associated with the ________ era of marketing.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: A

Explanation: In the production-oriented era, the assumption was that if companies built good

products, they would sell without any particular effort.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

61) Henry Ford's statement, "Customers can have any color they want so long as it's black,"

typified the ________ era of marketing.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: A

Explanation: The production-oriented era of marketing dealt primarily with manufacturing

processes and the design of a good product, but without concern for meeting specific customer

needs.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Mary works for a small computer software company. Her boss is constantly improving the

company's products but neglects customers, billing, and promoting the company. Her boss is

probably stuck in the ________ era of marketing.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: A

Explanation: In the production-oriented era of marketing, manufacturers were concerned with

product innovation, not with satisfying the needs of individual consumers, and retail stores

typically were considered places to hold the merchandise until a consumer wanted it.

Difficulty: 3 Hard

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

63) During the ________ era, firms had excess capacity and used personal selling and advertising

to generate customers.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: B

Explanation: In the sales-oriented era, manufacturers had the capacity to produce more than

customers really wanted or were able to buy. Firms found an answer to their overproduction in

becoming sales-oriented: They depended on heavy doses of personal selling and advertising.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) The prevailing marketing strategy of the ________ era was to find customers for inventories

that went unsold.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: B

Explanation: In the sales-oriented era, manufacturers had the capacity to produce more than

customers really wanted or were able to buy. Firms found an answer to their overproduction in

becoming sales-oriented: They depended on heavy doses of personal selling and advertising.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

65) Near the end of the model year, the Move-Them-Out automobile dealership had an unusually

high inventory level. The manager increased her advertising spending and gave extra incentives to

its salespeople. Move-Them-Out operates as if it were in the ________ era.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: B

Explanation: In the sales-oriented era, manufacturers had the capacity to produce more than

customers really wanted or were able to buy. Firms found an answer to their overproduction in

becoming sales-oriented: They depended on heavy doses of personal selling and advertising.

Difficulty: 3 Hard

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Many U.S. companies first discovered marketing during the ________ era.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: C

Explanation: The market-oriented era was when most companies first started thinking in terms of

meeting customer wants and needs before they designed, made, or attempted to sell their products

and services. It was during this period that firms discovered marketing.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

67) Which of the following statements reflects the philosophy of the market-oriented era?

A) A good product will sell itself.

B) The customer is king.

C) Firms should take advantage of a seller's market.

D) Advertising and personal selling should be emphasized in order to make the sale.

E) Firms should focus on value.

Answer: B

Explanation: The market-oriented era was when most companies first started thinking in terms of

meeting customer needs. It was a buyer's market and the customer was king.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) Data about how, when, why, where, and what people buy refers to

A) statistics.

B) demographics.

C) marketing analytics.

D) value-based marketing.

E) relational orientation.

Answer: C

Explanation: This refers to marketing analytics. Modern marketers rely on sophisticated data

analytics to define and refine their approaches to their customers and their markets. Companies

such as Starbucks, CVS, Kroger, Netflix, and Amazon collect massive amounts of data about how,

when, why, where, and what people buy, and then analyze those data to inform their choices.

Difficulty: 1 Easy

Topic: Marketing Metrics

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) During the ________ era, manufacturers and retailers recognized they needed to give their

customers greater value than their competitors did.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: D

Explanation: Before the turn of the 21st century, better marketing firms recognized that there was

more to good marketing than simply discovering and providing what consumers wanted and

needed; to compete successfully, they would have to give their customers greater value than their

competitors did.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) Creative locations, such as kiosks at the baggage claim in airports or small booths in grocery

stores, represent Starbucks' effort to improve its offering on which dimension of the marketing

mix?

A) product

B) promotion

C) price

D) perception

E) place

Answer: E

Explanation: Creative locations, such as kiosks at the baggage claim in airports or small booths in

grocery stores, represent the chain's effort to improve its offering on the place dimension of the

marketing mix.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

71) Troy sells consumer electronics. He knows his customers weigh the costs versus the benefits

associated with the different options available. He decides which products to offer and what prices

to charge based on the way his customers think. Troy operates as if he were in the ________ era.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: D

Explanation: Troy is thinking in terms of the value his customers perceive. Value reflects the

relationship of benefits to costs, or what you get for what you give.

Difficulty: 3 Hard

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) Selena studies her customer profiles, market research data, complaints, and other information,

attempting to better understand what her customers want. Selena most likely operates in the

________ era of marketing.

A) production-oriented

B) sales-oriented

C) market-oriented

D) value-based marketing

E) retailing-oriented

Answer: D

Explanation: Selena is attempting to understand her customers' perceptions of value.

Difficulty: 3 Hard

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) In delivering value, marketing firms attempt to find the most desirable balance between

A) the need for value and the perception of value.

B) explicit versus implicit value.

C) the need to provide benefits to customers and keep down costs.

D) the desire to satisfy customers and the desire to satisfy employees.

E) the need for product improvement and the need for advertising.

Answer: C

Explanation: The challenge for all firms is to provide the value customers expect while keeping

costs low enough to allow the firm to be profitable.

Difficulty: 2 Medium

Topic: Product Value Creation

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Maria is the new restaurant manager in a major hotel. When considering changes in the

restaurant that will increase value to customers, Maria will likely attempt to either provide the

same quality at a lower cost or

A) improve products and services at the same cost.

B) increase prices to increase revenue.

C) offset higher hotel rates with lower restaurant prices.

D) reduce customer expectations through reduced service.

E) lower the quality and the price.

Answer: A

Explanation: By improving products at the same cost, Maria would create additional value for

her customers.

Difficulty: 3 Hard

Topic: Product Value Creation

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

75) Chris has just started with a travel agency, and she has been offering clients and prospective

clients a range of packaged tours. She is concerned because the commissions she is earning on her

sales are lower than she had hoped. Her colleague Pete, who has been with the agency for several

years, is having a great deal of success by working closely with the clients, seeking their ideas, and

building customized tour packages for each one based on their suggestions. Pete's approach is

based on

A) transaction-oriented marketing.

B) premium pricing.

C) his seniority at the firm.

D) special incentives from tour operators.

E) value cocreation.

Answer: E

Explanation: Pete is collaborating with his clients to build custom packages, which is an example

of value cocreation.

Difficulty: 3 Hard

Topic: Product Value Creation

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) To become a more value-driven organization, Pokrah University is holding regular

coffee-hour discussions with its students and surveying its graduates regarding students'

educational needs and desires. By doing so, Pokrah University is becoming more value driven

through

A) sharing information across the organization.

B) balancing its customers' benefits and costs.

C) evaluating strategic competitive partnerships.

D) building relationships with customers.

E) keeping the faculty members happy.

Answer: D

Explanation: By communicating regularly with students and alumni, Pokrah University is

working to build closer relationships with these groups.

Difficulty: 3 Hard

Topic: Product Value Creation

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

77) As owner of a retail franchise food store, Mary Grey purchases supplies based on specials

advertised nationally throughout the franchise system. One Monday, she was surprised to find

customers asking for specials she hadn't been informed of in advance. The franchise company

failed to live up to the value-driven activity of

A) sharing information across the organization.

B) balancing customers' benefits and costs.

C) evaluating strategic competitive partnerships.

D) building relationships with customers.

E) keeping prices below those charged by competitors.

Answer: A

Explanation: In a value-based, market-oriented firm, marketers share information about

customers and competitors and integrate it across the firm's various departments. Apparently the

national headquarters forgot to inform franchisees of the special, suggesting a failure of

information sharing.

Difficulty: 3 Hard

Topic: Product Value Creation

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) In the past, manufacturer's representatives did not have real-time inventory data about the

products they were selling. Today, manufacturer's representatives are often provided online access

to inventory data for the companies they represent. These online inventory systems allow

companies to become more value driven by

A) sharing information across the organization.

B) balancing customers' benefits and costs.

C) evaluating strategic competitive partnerships.

D) building relationships with government regulators of marketing institutions.

E) keeping prices below those charged by competitors.

Answer: A

Explanation: The online systems discussed help members of the supply chain share information

about inventory levels.

Difficulty: 2 Medium

Topic: Supply Chain Management

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

79) To build relationships, firms focus on the ________ of the relationship, not how much money

is made during each transaction.

A) cost

B) lifetime profitability

C) length

D) value

E) worth

Answer: B

Explanation: To build relationships, firms focus on the lifetime profitability of the relationship,

not how much money is made during each transaction.

Difficulty: 1 Easy

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) One of the benefits of value-driven marketing is that attention to customer needs and wants

will likely result in

A) higher prices than the market leader charges.

B) increased competition.

C) long-term relationships.

D) strong connections among competing firms in the marketplace.

E) lower prices.

Answer: C

Explanation: Value-driven marketing is likely to lead to loyal customers through the

relationships that are formed.

Difficulty: 2 Medium

Topic: CRM

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

81) Even though they operate from out-of-the-way airports and offer few extra services, discount,

no-frill airlines like JetBlue have been successful. Consumers obviously consider

A) the extra services offered by these airlines to be the most thorough in the industry.

B) the long-term relationships established by these airlines to be a critical benefit.

C) the prices to be slightly lower, but not low enough to have much influence.

D) the benefit of lower prices to be greater than the cost of reduced services and less convenience.

E) the major airlines to be worthless.

Answer: D

Explanation: People flying discount airlines have decided to bear some inconvenience in return

for lower prices. The benefits are lower, but so is the cost, so the offering can have value despite

the inconvenience.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) A relational orientation is based on the philosophy that buyers and sellers develop

A) a complete understanding of one another's needs.

B) a long-term relationship.

C) a price-value comparison matrix.

D) supply chain synergy.

E) a marketing value transaction focus.

Answer: B

Explanation: During the past couple of decades, marketers have begun to develop a relational

orientation as they have realized that they need to think about their customers in terms of

relationships rather than transactions.

Difficulty: 1 Easy

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) A local art gallery keeps information on its customers regarding their preferences for certain

artists as well as the style of art that interests them. The gallery uses this information to inform the

customers when new products arrive from their favorite artists and targets them with special

promotions. In this way, the gallery is using ________ to build loyalty among its customers.

A) value cocreation

B) customer relationship management

C) transactional marketing

D) B2B marketing

E) the supply chain

Answer: B

Explanation: Firms that employ customer relationship management (CRM) focus on identifying

and building loyalty among the firm's most valued customers. They do so by systematically

collecting information about their customers' needs and then using that information to target their

best customers with the products, services, and special promotions that appear most important to

them.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) If a firm adopts a CRM business philosophy, it most likely has a(n) ________ orientation with

its customers.

A) transactional

B) external

C) relational

D) internal

E) divisional

Answer: C

Explanation: A relational orientation refers to the building of relationships and the development

of a better understanding of customers' needs and wants. A customer relationship management

(CRM) program uses a set of strategies, programs, and systems that focus on identifying and

building loyalty among the firm's most valued customers.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

85) After major hurricanes like Katrina, many ethical home repair and building supply businesses

continue to charge pre-hurricane prices to their customers, even though they could charge much

more due to the huge increase in demand. These firms probably recognize that

A) they can make more money from government contracts than from sales to customers.

B) a transactional orientation is the key to long-term profitability.

C) none of their competitors would be raising prices.

D) lifetime profitability of relationships matters more than profits from a particular transaction.

E) if they raised prices they would be in violation of Commerce Department regulations.

Answer: D

Explanation: By not raising prices when they could, the firms were resisting the temptation to

make a quick profit and were instead demonstrating the value they placed on long-term

relationships with their customers.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) What is the focus of a firm that develops a relational orientation with its customers?

A) relating product knowledge to customers' interests

B) gaining profit from each customer transaction

C) generating profits quickly before customers shop elsewhere

D) working with competitors to simplify product offerings for customers

E) gaining lifetime profitability from customer relationships

Answer: E

Explanation: Firms that espouse a relational orientation focus on the lifetime profitability of their

customer relationships, not on how much money is made in each transaction.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) The goal of customer relationship management is to

A) manage every customer relationship differently.

B) manage every customer relationship to maximize short-term profitability.

C) eliminate customers who are profitable, but not highly profitable.

D) identify and build loyalty among a firm's most valued customers.

E) generate relationships with competitors' customers.

Answer: D

Explanation: Some of the answers include CRM themes but are carried to an extreme—for

example, although CRM seeks to customize the relationship to meet the customer's primary needs,

it doesn't mean that every customer must be managed differently from every other. But CRM does

concern itself with identifying and building loyalty among the firm's most valued customers.

Difficulty: 2 Medium

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) Fran uses a database software system to remind him when his customers should be ready to

reorder his industrial cleaning products. With this reminder system, Fran contacts his customers

when they are most likely to be "in the buying mode." Fran's system is part of

A) C2C marketing.

B) customer relationship management.

C) a transactional marketing orientation.

D) supply chain management.

E) typical production era marketing practices.

Answer: B

Explanation: Fran's system is one element of a customer relationship management (CRM)

system. Firms that employ CRM systematically collect information about their customers' needs

and then use that information to target their best customers with the products, services, and special

promotions that appear most important to them.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

89) Many catalog companies create special-run issues based on what customers have purchased in

the past. For example, customers who frequently order bedding items like sheets and pillows

receive a catalog with a larger section of bedding items than do customers who mostly order

kitchen tools. These special issues are an example of

A) C2C marketing.

B) customer relationship management.

C) a transactional marketing orientation.

D) supply chain management.

E) typical production-oriented era marketing practices.

Answer: B

Explanation: The catalog is customized based on what is known about the customer's needs and

habits. This is a typical element of a customer relationship management program.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) It was during the market-oriented era that firms first discovered "marketing." In what

timeframe did this occur?

A) around the turn of the 20th century

B) shortly before the Great Depression

C) just after World War II

D) during the Roaring Twenties

E) during the civil rights movement

Answer: C

Explanation: After World War II, soldiers returned home, got new jobs, and started families. At

the same time, manufacturers turned from focusing on the war effort toward making consumer

products. Manufacturers and retailers thus began to focus on what consumers wanted and needed

before they designed, made, or attempted to sell their products and services. It was during this

period that firms discovered marketing.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) Many inventors struggle with the question, "I made it; now how do I get rid of it?" They have

made the error of not creating a(n)

A) marketing plan.

B) value proposition.

C) social media campaign.

D) profit center.

E) advertising campaign.

Answer: A

Explanation: The marketing plan is broken down into various components—how the product or

service will be conceived or designed, how much it should cost, where and how it will be

promoted, and how it will get to the consumer.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) Georgette, the outside sales rep for a major building supply company, reads a report stating

that building permits are down dramatically in her sales territory. She had noticed that things were

slowing down, but now she has data confirming her impression. Based on this information,

Georgette will help her company become more value driven if she

A) pushes her customers to buy products whether they need them or not.

B) advises the production and purchasing departments to produce or order smaller quantities of

products.

C) avoids contacting her customers until the slowdown ends.

D) avoids contact with competing firms in order to maximize value-driven marketing.

E) keeps the information to herself.

Answer: B

Explanation: In a value-based, marketing-oriented firm, information should be shared and

integrated across the firm's various departments. Georgette should share what she has learned with

the production and purchasing departments, so that they can plan accordingly. She should not push

her customers to buy things they don't need—this will damage her firm's reputation and will come

back to haunt her when the downturn ends.

Difficulty: 3 Hard

Topic: Supply Chain Management

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

93) Jane, the delivery and sales representative for a beer distributor, is calling on a retailer and sees

the shelves are almost empty. An unexpected sporting event held nearby resulted in a huge

increase in sales. She calls her company's distribution manager and requests a special delivery for

her customer. Jane is providing the important marketing function of

A) customer relationship management.

B) supply chain management.

C) capturing value.

D) communicating the value proposition.

E) business-to-business marketing.

Answer: B

Explanation: Supply chain management is the set of approaches and techniques that firms

employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores,

and other firms involved in the transaction (e.g., transportation companies) into a seamless value

chain in which merchandise is produced and distributed in the right quantities, to the right

locations, and at the right time, while minimizing systemwide costs and satisfying the service

levels required by the customers.

Difficulty: 3 Hard

Topic: Supply Chain Management

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

94) After the previous sales representative in his territory infuriated an important customer, Ben

visited the customer once a month, never asking for business but hoping to rebuild trust through

listening and expressing concern. Finally, after more than two years, the customer gave Ben an

order. Ben was providing the important marketing function of

A) advising production on how much product to make.

B) alerting the logistics department when to ship products.

C) engaging customers and developing long-term relationships.

D) identifying opportunities to expand.

E) synthesizing and interpreting sales, accounting, and customer-profile data.

Answer: C

Explanation: Ben was involved in a relational orientation, hoping to rebuild the long-term

relationship with this customer.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

95) What type of firms recognize that including a strong social orientation in business is a sound

strategy that is in both its own and its customers' best interest?

A) supply chain management firms

B) socially responsible firms

C) tech savvy firms

D) Internet firms

E) mobile marketing firms

Answer: B

Explanation: Socially responsible firms recognize that including a strong social orientation in

business is a sound strategy that is in both its own and its customers' best interest.

Difficulty: 1 Easy

Topic: Corporate Social Responsibility

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

96) Leslie is the marketing manager for an electronics company. While on vacation in Ecuador,

she visited electronics stores in the major malls in Quito, the capital city. Most of her company's

products were available, except for smartphones. When she returned to work, she mentioned this

observation to her international sales manager. Leslie was providing the important marketing

function of

A) cocreating an investment portfolio.

B) selling products from one business to another.

C) engaging customers, developing long-term relationships.

D) identifying opportunities to expand.

E) enhancing the customer experience.

Answer: D

Explanation: Leslie was identifying a potential opportunity for growth—the absence of the firm's

smartphones from stores in Ecuador.

Difficulty: 3 Hard

Topic: Product Value Creation

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

97) Greenbelt Construction has been a successful small home-building firm for years. The owner

pays subcontractors slightly more than the usual rate for different tasks, reducing the company's

gross margin. Greenbelt rarely changes subcontractors, has relatively few complaints from home

buyers, and is able to get quick responses from subcontractors when buyers do have problems.

Greenbelt is engaged in

A) a traditional transactional orientation.

B) C2C value-driven marketing.

C) effective supply chain management.

D) value cocreation.

E) a virtual monopoly.

Answer: C

Explanation: By maintaining good relationships with subcontractors, Greenbelt Construction

gains the benefit of receiving good service from these subcontractors for itself and for its home

buyers. This is a key benefit of effective supply chain management.

Difficulty: 3 Hard

Topic: Supply Chain Management

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

98) Marketing enriches society by

A) focusing solely on maximizing profits.

B) creating charitable campaigns.

C) recognizing that the firm can do very little by itself, and so it should stay focused on its own

core competencies.

D) facilitating the smooth flow of goods through the supply chain.

E) coordinating marketing functions with other functional areas in the company.

Answer: B

Explanation: Marketing techniques can be applied to social causes as well as to profit-making

enterprises, and the firm's employees can support these causes as well. For example, the Great

American Milk Drive, run in conjunction with Feeding America, seeks to ensure that local food

banks are sufficiently stocked with this nutritious, frequently requested item. Such campaigns

benefit the entire dairy industry and promote the health benefits of drinking milk to society at

large.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

99) Marketing traditionally has been divided into a set of four interrelated decisions and

consequent actions known as the

A) marketing philosophies.

B) marketing mix.

C) marketing fundamentals.

D) target markets.

E) marketing channels.

Answer: B

Explanation: Marketing traditionally has been divided into a set of four interrelated decisions and

consequent actions known as the marketing mix, or four Ps: product, price, place, and promotion.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

100) When clients work with their investment advisers, they ________ their investment portfolios.

A) cocreate

B) discover

C) initiate

D) balance

E) expand

Answer: A

Explanation: A creative way to provide value to customers is to engage in value cocreation. In

this case, customers can act as collaborators to create the product or service. When clients work

with their investment advisers, they cocreate their investment portfolios.

Difficulty: 1 Easy

Topic: Product Value Creation

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

101) If a radio station holds an online contest in which you must log in to its website and submit

personal details such as name, phone number, and e-mail in order to participate, the radio station is

A) offering an exchange.

B) behaving unethically.

C) hoping to receive feedback.

D) implementing a CRM program.

E) overstepping its role.

Answer: A

Explanation: Marketing is about an exchange, the trade of things of value between buyer and

seller so that each is better off. In this instance, the exchange is e-mail or personal information for

a chance to win a contest. CRM would imply closer tracking of customers than this simple

exchange suggests.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

102) Which of the following is true of marketing?

A) Marketing affects various stakeholders.

B) Marketing plays no role in creating value.

C) Marketing is about satisfying the company's needs and wants.

D) Marketing requires place, product, promotion, and perception decisions.

E) Marketing is performed by organizations, not individuals.

Answer: A

Explanation: Marketing is fundamentally about an exchange—the trade of things of value

between the buyer and the seller—so that each is better off as a result.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

103) Traditionally, marketing activities have been divided into product, price, place, and

promotion. Select the term that best describes the four Ps.

A) marketing mix

B) marketing channel

C) marketing plan

D) marketing era

E) marketing implementation

Answer: A

Explanation: The marketing mix—or the four Ps—consists of product, price, place, and

promotion.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

104) Internet sites, physical stores, and kiosks are most closely associated with which element of

the marketing mix?

A) place

B) price

C) product

D) promotion

E) proximity

Answer: A

Explanation: Place represents all the activities necessary to get the product to the right customer

when the customer wants it.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

105) The primary purpose of the ________ plan is to specify the marketing activities for a specific

period of time.

A) marketing

B) business

C) strategic

D) organizational

E) resource

Answer: A

Explanation: The marketing plan specifies the marketing activities for a specific period of time.

Difficulty: 1 Easy

Topic: Strategic Marketing Planning

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

106) The process of value ________, in which customers collaborate in product design, often

provides additional value to the firm's customers.

A) cocreation

B) positioning

C) delivery

D) chain management

E) based marketing

Answer: A

Explanation: Value cocreation is a process in which customers and the firm work together to

customize products. Since the products typically meet more of the customer's needs, this can

provide additional value.

Difficulty: 2 Medium

Topic: Product Value Creation

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

107) How a product or service will be conceived or designed, how much it should cost, where and

how it will be promoted, and how it will get to the consumer are all elements of

A) a marketing plan.

B) a marketing exchange.

C) supply chain logistics.

D) production management.

E) delivery of the value proposition.

Answer: A

Explanation: A marketing plan specifies the marketing activities for a specific period of time and

is broken down into various components—how the product or service will be conceived or

designed, how much it should cost, where and how it will be promoted, and how it will get to the

consumer.

Difficulty: 2 Medium

Topic: Elements of the Marketing Plan

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

108) The activity, set of institutions, and processes for creating, capturing, communicating,

delivering, and exchanging offerings that have value for customers, clients, partners, and society at

large is called

A) marketing.

B) marketing research.

C) market share analysis.

D) market segmentation.

E) market positioning.

Answer: A

Explanation: The American Marketing Association states that "marketing is the activity, set of

institutions, and processes for creating, capturing, communicating, delivering, and exchanging

offerings that have value for customers, clients, partners, and society at large."

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

109) Jeffrey is going to sell sporting apparel, which he has already purchased from manufacturers,

and has signed a deal agreeing to the volume he will sell monthly. He has researched his

competition, talked to some customers, and decided on prices he will charge. Jeffrey has also

developed a plan for promoting his business. Based on this description, which element of the

marketing mix does Jeffrey still need to work on?

A) place

B) product

C) price

D) promotion

E) planning

Answer: A

Explanation: This question outlines each item of the marketing mix except for place, which

represents all the activities necessary to get the product to the right customer when the customer

wants it. Jeffrey needs to decide if he will have a physical store (and if so, where), a website, and so

on.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

110) Jeffrey opened a sporting apparel store and signed a lease on the property. He also signed an

agreement with the manufacturer on the amount of merchandise he will sell and the promotions he

will conduct. Based on this description, which aspect of the marketing mix does he still need to

work on?

A) price

B) place

C) promotion

D) product

E) prototype

Answer: A

Explanation: The answer is price, because this is the only part of the marketing mix missing from

the question description.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

111) At one point in the evolution of marketing, the United States entered a buyer's market and the

customer became king. Which era is being described?

A) market-oriented

B) sales-oriented

C) production-oriented

D) value-based marketing

E) economics-oriented

Answer: A

Explanation: This question is describing the market-oriented era where customers became king.

Difficulty: 1 Easy

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

112) Which of the following is true with regard to mobile advertising?

A) Within just a couple of years, mobile advertising will be a smaller market than digital

advertising.

B) Within just a couple of years, mobile advertising will be a bigger market than digital

advertising.

C) Within just a couple of years, the mobile advertising market will be equal to that of the digital

advertising market.

D) Companies no longer advertise using mobile marketing.

E) The approach and marketing plan of mobile advertising is the same as the approach and

marketing plan of digital advertising.

Answer: B

Explanation: The signs of the growth of mobile advertising, at the expense of other digital forms

such as desktops and laptops, have long been evident. But the speed with which this shift is

occurring seemingly is taking many marketers by surprise, because it is virtually unprecedented.

Consider some of the numbers: In 2009, mobile Internet ad spending was $1.3 billion, while in

2018 it is projected to be $125 billion. Within just a couple of years, mobile advertising will be a

bigger market than digital advertising.

Difficulty: 1 Easy

Topic: Advertising Appeals

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

113) Marketing channel management is related to which of the four Ps?

A) product

B) price

C) place

D) promotion

E) production

Answer: C

Explanation: Marketing channel management, also known as supply chain management, is a

process that manages the value chain to get products to the right customer when that customer

wants it, which is related to the place component of the four Ps.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

114) Marnie bought a dress from a retail store. Which type of transaction was Marnie participating

in?

A) B2B

B) C2C

C) B2C

D) R2C

E) C2B

Answer: C

Explanation: The process by which businesses sell to consumers is known as B2C

(business-to-consumer) marketing.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

115) According to your text, in the broadest terms, the "marketplace" refers to

A) wholesale and retail environments.

B) brick-and-mortar stores and the Internet.

C) the four Ps.

D) channels that are accessible to a given customer.

E) the world of trade.

Answer: E

Explanation: Using the broadest terms, the marketplace refers to the world of trade.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

116) Which element of the marketing mix is most relevant to the activity "capturing value"?

A) promotion

B) purchasing

C) product

D) price

E) place

Answer: D

Explanation: The marketing mix activities are promotion (communicating value), product

(creating value), price (capturing value), and place (delivering value).

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

117) Which element of the marketing mix is most relevant to the activity "delivering value"?

A) promotion

B) purchasing

C) product

D) price

E) place

Answer: E

Explanation: The marketing mix activities are promotion (communicating value), product

(creating value), price (capturing value), and place (delivering value).

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

118) Which element of the marketing mix is most relevant to the activity "creating value"?

A) promotion

B) purchasing

C) product

D) price

E) place

Answer: C

Explanation: The marketing mix activities are promotion (communicating value), product

(creating value), price (capturing value), and place (delivering value).

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

119) Which marketing activity is most directly served by the promotion element of the marketing

mix?

A) communicating value

B) creating value

C) capturing value

D) delivering value

E) producing value

Answer: A

Explanation: The marketing mix activities are promotion (communicating value), product

(creating value), price (capturing value), and place (delivering value).

Difficulty: 2 Medium

Topic: The Promotion Mix

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

120) Janice was tired of her winter coat, so she sold it to her friend, Marissa. This is an example of

________ marketing.

A) B2B

B) B2C

C) C2B

D) C2C

E) BBC

Answer: D

Explanation: Janice and Marissa are both consumers, so this is C2C marketing.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

121) Donna has been asked to write a marketing plan for a new restaurant. What questions will

Donna likely address in her marketing plan? Be specific and offer questions related to a restaurant.

Answer: Responses will vary, but might include:

* Where will the restaurant be located? (place)

* What items will be included on the menu? (products)

* Where will ingredients, supplies, equipment, and furnishings be purchased? (supply chain)

* What prices will the restaurant charge? (pricing)

* How will the restaurant be promoted? (promotion)

Difficulty: 3 Hard

Topic: Elements of the Marketing Plan

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

122) Jean-Pierre is a wine distributor in the United States representing primarily European vintners

(wine producers). He knows his potential market is every wine drinker in the United States, but he

has limited resources to market his products. Using the ideas presented in the text, what should

Jean-Pierre do as a first step when developing his marketing plan?

Answer: Marketing is about creating value for the customer. With limited resources, Jean-Pierre

should attempt to identify the segments of the wine drinking market that are most likely to be

interested in his products. This would probably include people who travel more, are of European

heritage, and are in upper-income groups.

Difficulty: 3 Hard

Topic: Elements of the Marketing Plan

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

123) The text states, "Good marketing is not a random activity." Create an example to respond to

this statement.

Answer: Answers will vary, but should include discussion of marketing as thoughtful planning

addressing questions of what, where, how, when, and for whom.

Difficulty: 3 Hard

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

124) Your friend is writing a "how-to" book and asks you for marketing advice. You start by

exploring the four Ps. What questions will you ask? Be specific.

Answer: Product-related questions should relate to format: printed book (bound or paperback,

type of binding) or an e-book. Second set of questions will be about pricing: retail and wholesale

prices, prices of competing books, costs.

Third set of questions will be about place: how to distribute the book, access to major online

booksellers, shipping costs. Fourth set of questions will be about promotion: how will the book be

promoted, access to publicity outlets, websites, etc.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

125) The manager of a restaurant supply company determined prices by adding a standard markup

to her costs. What might the manager be missing when it comes to effective pricing decisions?

Answer: Pricing should be based on the potential buyer's belief about its value. Some of the items

offered by the restaurant supply company may have greater perceived value than other items.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

126) As the customer service manager for a heating and air conditioning firm, you are constantly

bombarded with complaints about service people not showing up, not having the parts needed to

make repairs, and being unable to quickly get the materials needed to fix things. You decide to

bring in a marketing consultant to assist you with these problems. What area of marketing

specialization would you look for in a marketing consultant and what recommendations would you

expect to receive? Be specific; this is a heating and air conditioning firm.

Answer: The problems span the organization from suppliers, to company employees, to

customers. You would probably look for a supply chain management specialist and look for

recommendations to coordinate parts inventories with vendors, train service personnel in

inventory management, and improve communication among the service personnel, customers, and

scheduling office.

Difficulty: 3 Hard

Topic: Strategic Marketing Planning

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

127) As your first assignment in an advertising agency, your manager asks you to come up with

messages for three billboards promoting the university you attended. The manager wants one ad

for each of the three types of promotion objectives. Create an example of a one-sentence billboard

advertising message for each objective: inform, persuade, and remind.

Answer: Answers will vary, but should include:

Inform—Check out our new online course offerings today.

Persuade—XYZ University is your best value in education.

Remind—Sign up for the fall semester now.

Difficulty: 3 Hard

Topic: Advertising Appeals

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

128) Which type of orientation would you expect among ethically challenged marketers: a

relational or transactional orientation? Explain.

Answer: A transactional orientation, because they just want to get their money and leave; they

are not interested in building relationships.

Difficulty: 2 Medium

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

129) Over the four marketing eras, how did the emphasis on the four Ps change? List the four eras

and describe which of the four Ps were emphasized during each era.

Answer: During the production-oriented era, the focus was on the product. During the

sales-oriented era, the emphasis was on promotion, particularly selling and advertising. During the

market-oriented era, the emphasis was on producing (product) and providing (place) what

customers wanted. In the value-based marketing era, all four Ps are equally important to delivering

customer value.

Difficulty: 3 Hard

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

130) How does value cocreation provide additional value to customers?

Answer: Value cocreation not only involves the customer, it also offers the opportunity to

explain unmet needs the firm can address. Within the broader framework of value-based

marketing, the customer will probably gain greater benefits from the product or service since it

will meet more of the customer's needs.

Difficulty: 2 Medium

Topic: Product Value Creation

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

131) Suppose that your university creates a position for vice president of marketing and promotes

your professor to the position. What activities will the new vice president of marketing probably be

involved in? Be specific.

Answer: Answers will vary, depending on the institution, but should include the four Ps.

Difficulty: 3 Hard

Topic: Role of the Marketing Manager

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

132) During what marketing era did firms depend on heavy doses of personal selling and

advertising?

Answer: The marketing era described was during the sales-oriented era. Firms found an answer

to overproduction in becoming sales-oriented: They depended on heavy doses of personal selling

and advertising.

Difficulty: 2 Medium

Topic: Marketing Eras

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

133) Suppose your college roommate sees you reading your marketing textbook and says,

"Marketing is just advertising and selling." How do you respond?

Answer: Students' responses will vary, but should contain discussion of anticipating and meeting

the needs of customers and in the process creating value. They might cite the AMA's definition of

marketing: "Marketing is the activity, set of institutions, and processes for creating, capturing,

communicating, delivering, and exchanging offerings that have value for customers, clients,

partners, and society at large." They could also state the core aspects of marketing: creating value;

satisfying customer wants and needs; making an exchange; and making product, price, place, and

promotion decisions; and state that marketing is performed by individuals and organizations and

occurs in many settings.

Difficulty: 3 Hard

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) Imagine you graduate with a marketing degree and are hired by the marketing department of

a large consumer products company. You are initially given a two-week training program, which

is an overview of what the marketing department does. What will your training program cover?

Answer: Students' responses will vary, but should include a discussion of the core aspects of

marketing.

Difficulty: 3 Hard

Topic: Role of the Marketing Manager

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

135) How could you use marketing ideas to market yourself to potential employers after you

graduate?

Answer: If an individual seeking a job sees the potential employer as a customer, he or she can

begin to adopt the idea of creating value, focusing the "marketing mix" that the individual brings,

and bring a strategic approach to a job search. Research, of course, will help in separating fact and

reality from suppositions and assumptions.

Difficulty: 3 Hard

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Create

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

136) What are the four Ps of marketing? Give an example of each.

Answer: Product, price, place, and promotion. Examples will vary.

Difficulty: 1 Easy

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) What is the fundamental purpose of marketing?

Answer: To create value by developing a variety of offerings, including goods, services, and

ideas, to satisfy customer needs.

Difficulty: 1 Easy

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

138) "Everything has a price, though it doesn't always have to be monetary." What else is included

in a price?

Answer: Price is everything the buyer gives up—money, time, and/or energy—in exchange for

the product.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

139) How should marketers determine prices?

Answer: Prices should be based on potential customers' perceptions of value as well as covering

the firm's costs.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

140) If you were hired as a supply chain manager, with whom would you interact?

Answer: You would likely interact with suppliers, production staff, warehousing staff,

transportation companies, and retailers.

Difficulty: 2 Medium

Topic: Supply Chain Management

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

141) During the past couple of decades, marketers have begun to develop a relational orientation

as they have realized that they need to think about their customers in terms of relationships rather

than transactions. How does Apple encourage its customers to maintain a long-term relationship

with the company?

Answer: During the past couple of decades, marketers have begun to develop a relational

orientation as they have realized that they need to think about their customers in terms of

relationships rather than transactions. To build relationships, firms focus on the lifetime

profitability of the relationship, not how much money is made during each transaction. Thus,

Apple makes its innovations compatible with existing products to encourage consumers to

maintain a long-term relationship with the company across all their electronic needs.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

142) You are employed by a firm that is considering the use of mobile advertising as opposed to

digital advertising. Describe the similarities and differences between these two approaches to

advertising.

Answer: Both mobile advertising and digital advertising are similar, in the sense that they are

clearly distinct from traditional marketing and seek to reach technologically savvy shoppers;

however, they require unique approaches and marketing plans, because a campaign that works

well on a user's desktop computer might not function effectively on a tablet or smartphone.

Furthermore, mobile marketing offers functionalities and advertising tactics that digital ads cannot

provide. In addition, mobile advertising allows brands and marketers to send timely,

location-based communications to consumers at the moment they enter a store or begin a search

for a nearby restaurant on their phones.

Difficulty: 3 Hard

Topic: Marketing Channels

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) Describe how marketing has evolved into a major business function that crosses all areas of a

firm or organization.

Answer: Marketing advises production about how much of the company's product to make and

then tells supply chain mangers when to ship it. Marketers provide feedback from customers

regarding value so that the firm can set appropriate prices. It creates long-lasting, mutually

valuable relationships between the company and the firms from which it buys. It identifies those

elements that local customers value and makes it possible for the firm to expand globally.

Marketing has had a significant impact on consumers as well. Without marketing, it would be

difficult for any of us to learn about new products and services.

Difficulty: 2 Medium

Topic: Define Marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

144) Suppose you worked at a restaurant near campus, one that was popular with students, and the

manager asked you to explain how the restaurant might benefit from using location-based social

media tools. How would you answer?

Answer: Answers will vary, but the student should explain that mobile advertising allows brands

and marketers to send timely, location-based communications to consumers at the moment they

enter a store or begin a search for a nearby restaurant on their phones. Using location-based apps

on their mobile phones, customers can use, for example, HappyCow to find nearby vegetarian

restaurants or Yelp to find restaurants that are well rated by users.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

145) Rod bought a suit at Men's Warehouse. Men's Warehouse bought the suit from a distributor,

which bought it from a designer. The designer bought the materials to make the suit from a factory

in China, and the suits were made at that same factory. The employees in the factory bought their

suits directly from the factory and sold them to their friends. Explain which of these transactions

were B2B, B2C, and/or C2C.

Answer: Rod bought a suit at Men's Warehouse—B2C

Men's Warehouse bought the suit from a distributor—B2B

The distributor bought it from a designer—B2B

The designer bought materials from a factory where the suits were made—B2B

The employees in the factory bought their suits directly from the factory—B2C

The employees sold the suits to their friends—C2C

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

146) Describe a hypothetical supply chain—from manufacturer to customer.

Answer: Answers will vary. Example: Manufacturer makes a product and sells it to a wholesaler.

The product is shipped by truck to the wholesaler's warehouse. The wholesaler sells it to a retailer.

The product goes by air to the retail company's storage facility, which then ships it by truck to

individual retail stores.

Difficulty: 3 Hard

Topic: Marketing Channels

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

147) Many U.S. companies now use social media tools for marketing purposes. Demonstrate your

knowledge of social media by describing a small company and the ways you would use social

media to produce, promote, place, and price your goods or services.

Answer: Answers will vary, but should include the four Ps and several examples of social media,

such as Facebook and HappyCow.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

148) Explain the process of customer relationship management (CRM) in terms of how it impacts

marketing activities.

Answer: Customer relationship management (CRM) is a business philosophy and set of

strategies, programs, and systems that focus on identifying and building loyalty among the firm's

most valued customers. Firms that employ CRM systematically collect information about their

customers' needs and then use that information to target their best customers with the products,

services, and special promotions that appear most important to them.

Difficulty: 2 Medium

Topic: CRM

Learning Objective: 01-02 Detail the evolution of marketing over time.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

149) You are employed by a marketing firm that needs to become more value driven. How is this

accomplished?

Answer: Firms become value driven by focusing on four activities. First, to ensure that their

offerings are valuable, firms leverage all the various elements of marketing and work to build

relationships with partners and customers to introduce their product, service, or idea to the

marketplace at just the place and time that customers want it. Second, they gather vast information

about customers and competitors, then analyze it and share it across their own organization and

with other partner firms, such as those that provide promotion and social media services. Third,

they strive to balance the benefits and costs of their offerings for not just themselves and their

customers, but also their communities and society as a whole. Fourth, they take advantage of new

technologies and connect with their customers using the latest social media channels.

Difficulty: 2 Medium

Topic: Product Value Creation

Learning Objective: 01-03 Describe how marketers create value for a product or service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

150) Name the various stakeholders who are impacted by marketing and give one example of how

each one might be impacted in a fictitious situation.

Answer: Answers will vary, but the stakeholders mentioned should include customers, clients,

partners, society at large.

Difficulty: 2 Medium

Topic: Define marketing

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

151) How does the exchange of ideas provide value, and what is the role of marketing in this

process? Explain this concept using the example in the text of groups marketing bicycle helmets,

or choose your own scenario.

Answer: Groups promoting bicycle safety go to schools, give talks, and sponsor bike helmet

poster contests for the members of their primary market: children. Then their secondary target

market segment, parents and siblings, gets involved through their interactions with the young

contest participants. The exchange of value occurs when the children listen to the sponsors'

presentation and wear their helmets while bicycling, which means they have adopted, or become

"purchasers" of, the safety idea that the group marketed.

Difficulty: 2 Medium

Topic: Product Value Creation

Learning Objective: 01-01 Define the role of marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 2 Developing Marketing Strategies and a Marketing Plan

1) Strong supplier relations and efficient supply chains help firms such as Walmart achieve

operational excellence.

Answer: TRUE

Explanation: Operational excellence is achieved through efficient operations and excellent

supply chain and human resource management.

Difficulty: 1 Easy

Topic: Supply Chain Management

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) To build a sustainable competitive advantage, companies should focus on a single strategy.

Answer: FALSE

Explanation: In most cases, a single strategy, such as low prices or excellent service, is not

sufficient to build a sustainable competitive advantage. Firms require multiple approaches to build

a "wall" around their position that stands as high as possible.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) It is not always necessary to go through all the steps in the marketing planning process.

Answer: TRUE

Explanation: It is not always necessary to go through the entire process for every evaluation. For

instance, a firm could evaluate its performance in Step 5, and then go directly to Step 2 to conduct

a situation audit without redefining its overall mission.

Difficulty: 1 Easy

Topic: Elements of the Marketing Plan

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) A mission statement describes the specific actions a firm will take to achieve its goals.

Answer: FALSE

Explanation: A mission statement is a broad description of a firm's objectives and the scope of

activities it plans to undertake.

Difficulty: 1 Easy

Topic: The Mission Statement

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) iTunes software is often credited with the success of Apple's iPod MP3 player, because it made

the iPod easier to use than competing players and was difficult for competitors to duplicate. This is

an example of a sustainable competitive advantage.

Answer: TRUE

Explanation: A sustainable competitive advantage is an advantage over the competition that is

not easily copied and thus can be maintained over a long period of time. iTunes made the iPod so

easy to use that it was difficult for other MP3 players to compete. Over time, some competitors

have created similar tools, but it has been difficult enough to copy that these competitors have

never really caught up.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) STP refers to segmentation, testing, and promotion.

Answer: FALSE

Explanation: STP stands for segmentation, targeting, and positioning.

Difficulty: 1 Easy

Topic: Steps in Market Segmentation

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) The components of a SWOT analysis are strengths, weaknesses, opportunities, and tactics.

Answer: FALSE

Explanation: The components of a SWOT analysis are strengths, weaknesses, opportunities, and

threats.

Difficulty: 1 Easy

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) Firms are typically more successful when they focus on opportunities that build on their

strengths relative to those of their competition.

Answer: TRUE

Explanation: After identifying its target segments, a firm must evaluate each of its strategic

opportunities. Firms typically are most successful when they focus on opportunities that build on

their strengths relative to those of their competition.

Difficulty: 2 Medium

Topic: SWOT Analysis

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) Duke's is a surfer-themed restaurant chain in Hawaii. Most of its customers are tourists. In a

SWOT analysis for Duke's, the possibility that the recession might cut back on tourism in Hawaii

would be considered a weakness.

Answer: FALSE

Explanation: A recession is an external factor with possible negative results, so it is a threat.

Difficulty: 3 Hard

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) Price should be based on the value that the customer perceives as giving them a good value for

the product they receive.

Answer: TRUE

Explanation: As part of the exchange process, a firm provides a product or a service, or some

combination thereof, and in return, it gets money. Value-based marketing requires that firms

charge a price that customers perceive as giving them a good value for the product they receive.

Difficulty: 2 Medium

Topic: Setting Prices

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) Jose manages the electrical turbine engine division of General Electric Corporation. He makes

most decisions independently, without consulting headquarters. Jose manages a strategic business

unit.

Answer: TRUE

Explanation: A strategic business unit is a division of the firm that can be managed and operated

somewhat independently from other divisions and may have a different mission or objectives from

other business units.

Difficulty: 2 Medium

Topic: Business Portfolio Analysis

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

12) The strategic planning process always proceeds sequentially through the five steps.

Answer: FALSE

Explanation: Planning processes can move back and forth between the steps as needed.

Difficulty: 2 Medium

Topic: Strategic Marketing Planning

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) Isaac is looking for ways to offer new goods and services to his existing customers. He is

pursuing a market development strategy.

Answer: FALSE

Explanation: This is a product development strategy. A market development strategy offers

existing products and services to new customers.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) SanDisk's MP3 player product line (called the Sansa) has a low relative market share. The

MP3 player market is expected to decline over the next few years. In Boston Consulting Group

(BCG) portfolio analysis, the Sansa would be considered a dog.

Answer: TRUE

Explanation: The Sansa has low relative market share in a low-growth market, which is the

definition of a dog.

Difficulty: 3 Hard

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

15) Which of the following steps occurs during the implementation phase of the marketing plan?

A) Evaluate performance using marketing metrics

B) Conduct a situation analysis

C) Identify and evaluate opportunities

D) Define business mission

E) Define business objectives

Answer: C

Explanation: In the implementation phase, marketing managers identify and evaluate different

opportunities by engaging in a process known as segmentation, targeting, and positioning (STP).

They then are responsible for implementing the marketing mix using the four Ps.

Difficulty: 1 Easy

Topic: Elements of the Marketing Plan

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) What type of analysis does management use to evaluate the firm's various products and

businesses and allocate resources according to which products are expected to be the most

profitable for the firm in the future?

A) portfolio analysis

B) SWOT analysis

C) situation analysis

D) initial analysis

E) positioning analysis

Answer: A

Explanation: In portfolio analysis, management evaluates the firm's various products and

businesses—its "portfolio"—and allocates resources according to which products are expected to

be the most profitable for the firm in the future.

Difficulty: 1 Easy

Topic: Marketing Metrics

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) Which of the following growth strategies employs the existing marketing mix and focuses the

firm's efforts on existing customers?

A) product penetration

B) diversification

C) market development

D) product development

E) market penetration

Answer: E

Explanation: A market penetration strategy employs the existing marketing mix and focuses the

firm's efforts on existing customers.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

18) If a firm wants to develop a sustainable competitive advantage, it should

A) begin an aggressive campaign to buy up competitors.

B) copy the innovative features of other firms that are attractive to customers.

C) examine its operations and customer relations to identify significant things competitors cannot

easily copy.

D) increase its marketing budget so that it outspends its competitors.

E) arrange to meet with competitors to discuss how to avoid direct competition.

Answer: C

Explanation: A sustainable competitive advantage comes from doing things that add value and

that are not easily imitated by competitors. The other options do not achieve this objective.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

19) Which of the following is not one of the four overarching strategies to create and deliver value

and to develop sustainable competitive advantages?

A) locational excellence

B) customer excellence

C) operational excellence

D) product excellence

E) planning excellence

Answer: E

Explanation: The four overarching strategies are locational excellence, customer excellence,

operational excellence, and product excellence.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

20) When Maria, the keynote speaker at a major business leaders' conference, arrived in the middle

of the night at the Ritz-Carlton, she was exhausted and her suit was wrinkled from her 10-hour

plane trip. The night clerk found someone to dry clean Maria's suit and have it ready for her

morning presentation. She has been a loyal Ritz-Carlton customer ever since. In this example,

Ritz-Carlton demonstrated the macro strategy of

A) customer excellence.

B) operational excellence.

C) product excellence.

D) promotional excellence.

E) global excellence.

Answer: A

Explanation: The Ritz-Carlton clerk went to extra trouble to offer excellent customer service,

which is one way to pursue a customer excellence strategy.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

21) Disney's My Magic system, which enables visitors to swipe their Magic Band wristbands to

get on rides, make purchases, and open their hotel room door, is an example of ________

excellence.

A) operational

B) locational

C) customer

D) product

E) service

Answer: C

Explanation: A customer excellence macro strategy, which is one way to pursue a sustainable

competitive advantage, focuses on retaining loyal customers and excellent customer service.

Disney's My Magic system enables visitors to swipe their Magic Band wristbands to get on rides,

make purchases, and open their hotel room door is an example of customer excellence.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) Some banks offer special accounts designed to attract junior high school students. These kids

save in such small amounts that the accounts cost banks more to maintain than they are worth;

however, bankers know that consumers are creatures of habit and hope that the young people they

serve now will become adult customers. These banks recognize

A) that operational excellence is an important macro strategy.

B) the lifetime value of customers.

C) that product excellence leads to loyal customers.

D) the importance of making decisions based on short-term results.

E) that as long as customers bring in some revenue, costs do not matter.

Answer: B

Explanation: Viewing customers with a lifetime value perspective rather than on a

transaction-by-transaction basis is key to modern customer retention programs.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

23) Nordstrom, an upscale department store, has a well-known reputation for going the extra mile

to serve its customers. This reputation for excellent customer service will most likely result in

A) product design excellence.

B) mission statement satisfaction.

C) sustainable price decreases.

D) a sustainable competitive advantage.

E) producer excellence.

Answer: D

Explanation: This is a good example of a potential sustainable competitive advantage based on

customer service (i.e., a customer excellence strategy). A sustainable competitive advantage is an

advantage over the competition that is not easily copied and can be maintained over a long period

of time.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) Firms achieve ________ through efficient procedures and excellent supply chain management.

A) customer excellence

B) locational excellence

C) customer loyalty

D) value-based pricing

E) operational excellence

Answer: E

Explanation: An operational excellence strategy depends on efficiency throughout the supply

chain in order to keep costs low.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

25) Marketers want their firms to develop excellent supply chain management and strong supplier

relations so they can

A) persuade stores to refuse to carry competitors' products.

B) use their power within the supply chain to force weaker firms to accept less favorable pricing.

C) control prices and lock in margins.

D) create a sustainable competitive advantage.

E) justify charging higher prices than competitors do.

Answer: D

Explanation: Some of the potential answers here represent unethical (and potentially illegal)

behavior. The best answer is far simpler—this type of operational excellence helps create a

sustainable competitive advantage by keeping costs low.

Difficulty: 2 Medium

Topic: Supply Chain Management

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) For many years, Southwest Airlines distinguished itself as the low-cost airline. Now, many

other low-cost competitors have entered the market. Similarly, Southwest was one of the first

airlines to offer online ticketing. Now, all airlines have online ticketing. These examples suggest

that

A) no single strategy is likely to be sufficient to build a sustainable competitive advantage.

B) a situation analysis does not accurately predict a firm's strengths.

C) customer excellence cannot be achieved.

D) product excellence is the only true source of a sustainable competitive advantage.

E) innovation is pointless because competitors will develop copycat offerings.

Answer: A

Explanation: The example shows that competitors strive to copy good ideas. But that doesn't

mean innovation is pointless—being the first to do something can still give you an advantage if

you do it best, or if you innovate in ways that are difficult to imitate. What this example shows is

that you cannot come up with a single idea, stay with it long term, and expect to sustain a

competitive advantage. You must always look for new sources of advantage.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

27) Customers around the world know Pepsi and consider it a primary "go-to" brand if they want a

refreshing drink. This positioning reflects Pepsi's

A) locational excellence.

B) operational excellence.

C) product excellence.

D) strategic business unit control.

E) supply chain management.

Answer: C

Explanation: Customers around the world know Pepsi and consider it a primary "go-to" brand if

they want a refreshing drink. This positioning reflects Pepsi's careful targeting and marketing mix

implementation.

Difficulty: 2 Medium

Topic: Strategic Marketing Planning

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) Molly has been directed by her regional marketing manager to cut prices on seasonal items,

place an ad in the local paper, and tell distributors to reduce deliveries for the next month. Which

step of the strategic marketing planning process is Molly engaged in?

A) evaluate performance

B) define the business mission

C) perform situation analysis

D) implement marketing mix and resources

E) identify and evaluate opportunities

Answer: D

Explanation: Carla is dealing with implementation of the marketing mix—price cuts (price),

advertising (promotion), and distribution changes (place).

Difficulty: 3 Hard

Topic: Elements of the Marketing Plan

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

29) When conducting a SWOT analysis, in what phase of the strategic marketing process is an

organization presently engaged?

A) planning

B) implementation

C) control

D) segmentation

E) metrics

Answer: A

Explanation: SWOT analysis is part of the planning phase.

Difficulty: 1 Easy

Topic: SWOT Analysis

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) The automobile manufacturing industry closely watches annual consumer satisfaction surveys.

For years, Japanese car companies consistently had the highest levels of customer satisfaction,

creating a(n) ________ for these companies.

A) strategic marketing plan

B) clear mission statement

C) operational advantage

D) sustainable competitive advantage

E) diversification strategy

Answer: D

Explanation: Satisfied customers, if this satisfaction leads to loyalty, are a source of sustainable

competitive advantage.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) Which of the following is least likely to provide a sustainable competitive advantage?

A) lowering prices

B) having a well-known brand name

C) achieving high levels of customer satisfaction

D) using patented technology

E) creating an efficient supply chain

Answer: A

Explanation: Simply cutting prices is probably the easiest strategic move for a competitor to

copy. In contrast, creating an efficient supply chain that lowers your costs, allowing you to pass on

those savings to customers in the form of price cuts, can create a sustainable competitive

advantage.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) Even when large discount retailers enter a market, a few small, local retailers survive and

prosper. These small retailers have probably developed a(n) ________ that allows them to survive.

A) advertising campaign

B) plan to evaluate results

C) sustainable competitive advantage

D) set of performance metrics

E) SWOT analysis

Answer: C

Explanation: The other items listed could help the retailers develop or evaluate a plan to achieve

a sustainable competitive advantage, but on their own they will not be enough. Small retailers

usually cannot compete with larger competitors on price. But they might survive by offering

services their customers value (and are willing to pay extra to get), by offering specialty products

not carried by larger retailers, or by locating in places where the larger stores don't want to (or

can't) locate.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) As part of her company's SWOT analysis, Cindy is assessing the company's internal

environment, including

A) competition

B) the economy.

C) strengths and weaknesses.

D) demographics.

E) opportunities and threats.

Answer: C

Explanation: The internal components of a SWOT analysis are strengths and weaknesses.

Difficulty: 1 Easy

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) Valerie is charged with assessing her company's external environment as part of a SWOT

analysis. Valerie will study her company's

A) strengths and weaknesses.

B) sales history.

C) pension plan.

D) product specifications.

E) opportunities and threats.

Answer: E

Explanation: The external components of a SWOT analysis are opportunities and threats.

Difficulty: 1 Easy

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) Manufacturers that use just-in-time manufacturing systems coordinate closely with suppliers

to ensure that materials and supplies arrive just before they are needed in the manufacturing

process. While just-in-time systems can offer major advantages in terms of inventory costs, they

must be carefully managed. If a firm found that its just-in-time system was badly managed, leading

to frequent manufacturing delays due to missing parts, this system mismanagement would

represent a(n) ________ in a SWOT analysis.

A) weakness

B) opportunity

C) threat

D) strength

E) metric

Answer: A

Explanation: The management of the just-in-time system is an internal issue; if it is being done

badly, that makes it a weakness.

Difficulty: 3 Hard

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) For U.S. businesses with strong export capabilities, expansion of U.S. trade agreements with

other countries creates

A) weaknesses.

B) opportunities.

C) strengths.

D) threats.

E) strategic plans.

Answer: B

Explanation: Expansion of trade agreements is an external factor that could be favorable for

firms to take advantage of. An external positive factor is an opportunity.

Difficulty: 2 Medium

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) Ford Motor Company may be thinking of announcing that it will severely cut back its

automobile production. For parts companies supplying Ford its parts, this cut back in production

represents a(n)

A) weakness.

B) opportunity.

C) strength

D) threat.

E) strategic plan.

Answer: D

Explanation: For parts companies, Ford's possible actions represent external factors. A possible

cutback in orders is a negative factor. An external negative factor is a threat.

Difficulty: 2 Medium

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) Larry is asked to conduct an STP analysis for his firm. The first step he should perform in this

analysis is to

A) develop a business mission statement.

B) choose the best target markets.

C) reposition existing segments.

D) divide the marketplace into subgroups.

E) conduct a SWOT analysis.

Answer: D

Explanation: With STP, the firm first divides the marketplace into subgroups or segments,

determines which of those segments it should pursue or target, and finally decides how it should

position its products and services to best meet the needs of those chosen targets. Business mission

development and SWOT analysis take place before STP analysis starts, and targeting and

positioning are later stages in STP analysis.

Difficulty: 2 Medium

Topic: Steps in Market Segmentation

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) Walmart has announced that it would begin selling organic food products. In doing so,

Walmart is most likely trying to

A) gain government subsidies.

B) attract a different market segment.

C) reduce its costs.

D) save the environment.

E) offset cost-based pricing pressure.

Answer: B

Explanation: Walmart is probably trying to attract customers who don't shop there because they

wanted to buy organic products. These customers represent a different market segment for

Walmart.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) For years, when considering new products, marketers at Celestial Seasonings asked

themselves, "What would Stacy think?" Stacy was a fictional character representing 25- to

50-year-old educated, upper-income women who rarely watched television but did a lot of reading.

"Stacy" represented Celestial's primary

A) mission statement.

B) positioning.

C) SBU.

D) target market segment.

E) sustainable competitive advantage.

Answer: D

Explanation: Stacy was created to help Celestial's marketers understand its major target market

segment. The segment is more than just a demographic. It includes elements of Stacy's behavior

(reading instead of TV). Stacy isn't Celestial's positioning—rather, the company needs to position

its products to help women like Stacy understand the value Celestial products can offer them.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

41) After identifying various market segments that her company could pursue, Linda evaluated

each segment's attractiveness based on size, income, and accessibility. Linda was involved in

A) target marketing.

B) situation analysis.

C) diversification.

D) positioning.

E) market penetration estimation.

Answer: A

Explanation: A key component of target marketing is the evaluation of potential target segments'

attractiveness.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) LeBron James, Stephen Curry, and other athletes are paid huge sums of money by companies

for celebrity endorsements. If endorsements by these athletes create a clear understanding among

consumers of the companies' products in comparison to competing products, they can help with

the firm's ________ strategy.

A) product excellence

B) targeting

C) positioning

D) segmentation

E) customer excellence

Answer: C

Explanation: Positioning is the creation of a clear, distinct, desirable understanding of what the

product does or represents compared to competitors. Celebrity endorsers are often used to convey

this message.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) ________ involves the process of defining the marketing mix variables so that target

customers have a clear, distinctive, desirable understanding of what a product does or represents in

comparison with competing products.

A) Targeting

B) Market segmentation

C) A sustainable competitive advantage

D) Positioning

E) A customer excellence strategy

Answer: D

Explanation: This is the definition of positioning, which is the final activity in STP analysis.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) Starbucks carefully crafts its offerings and advertising message, and it strategically sets prices

and selects locations to appeal to its target market. These efforts represent Starbucks'

A) value-based promotions.

B) market segmentation.

C) positioning strategy.

D) customer excellence strategy.

E) target marketing.

Answer: C

Explanation: Market positioning involves the process of defining the marketing mix variables so

that target customers have a clear, distinctive, desirable understanding of what the product does or

represents in comparison with competing products. By segmenting the coffee-drinker market,

Starbucks is using a positioning strategy.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

45) When positioning products relative to competitors' offerings, firms typically are most

successful when they focus on opportunities

A) that build on their strengths relative to those of their competition.

B) for diversification.

C) in international markets.

D) where value-based pricing can be ignored.

E) where customer excellence can be substituted for product excellence.

Answer: A

Explanation: Firms typically are most successful when they focus on opportunities that build on

their strengths relative to those of their competition.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) Many small businesses whose competitors are national franchises advertise "we are locally

owned" or "we have been serving the community since 1951." These claims are part of these firms'

A) business mission.

B) market segmentation strategy.

C) positioning strategy.

D) customer excellence strategy.

E) target market.

Answer: C

Explanation: These firms are positioning themselves against the competition, emphasizing their

local presence in order to suggest that this local experience helps them do a better job of serving

consumers.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

47) Among Internet users, some do research online, some shop, some look for entertainment, and

many do all three. Each of these groups would be called a

A) strategic group.

B) strategic business unit.

C) market segment.

D) cash cow.

E) marketing metric.

Answer: C

Explanation: Among Internet users, some do research online, some shop, some look for

entertainment, and many do all three. Each of these groups might be a market segment consisting

of consumers who respond similarly to a firm's marketing efforts.

Difficulty: 1 Easy

Topic: Steps in Market Segmentation

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Suppose your university made a sizable investment in its career services—additional

counselors, increased efforts to bring in recruiters, and other services aimed at helping students

find jobs. This investment would enhance the university's ________ in an attempt to create value

for students and recent graduates.

A) segmentation strategy

B) place strategy

C) locational excellence strategy

D) diversification strategy

E) product value

Answer: E

Explanation: The product the students buy—a degree—is enhanced by the ability to find a good

job after graduation. Thus, this additional investment is related to the product value.

Difficulty: 3 Hard

Topic: Product Value Creation

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

49) The idea of value-based marketing requires firms to charge a price that

A) covers costs and generates a modest profit.

B) includes the value of the effort the firm put into the product or service.

C) captures the value customers perceive that they are receiving.

D) prioritizes customer excellence above operational excellence.

E) matches competitors' prices.

Answer: C

Explanation: Value-based marketing is related to customers' perceived value. If a price is set too

high, it will not generate much volume. If a price is set too low, it may result in lower-than-optimal

margins and profits. Therefore, price should be based on the value that the customer perceives.

Difficulty: 2 Medium

Topic: Pricing Strategy

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) E-books, in addition to being an alternative product form, provide ________ value creation

since they can be downloaded via the Internet immediately when and where they are needed.

A) product

B) place

C) promotion

D) price

E) primary

Answer: B

Explanation: Place refers to getting products to customers when and where they need/want them.

This is what electronic downloading of e-books offers.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) In value-based marketing, the promotion element of the four Ps communicates the ________

to customers through a variety of media.

A) mission statement

B) operational excellence strategy

C) value proposition

D) relative market value

E) target market definition

Answer: C

Explanation: The value proposition is the unique value that a product or service provides to its

customers and how it is better than and different from those of competitors. Promotion is

responsible for communicating this value proposition via a variety of media.

Difficulty: 2 Medium

Topic: Role of Promotion

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) When marketers use a variety of communication disciplines—advertising, personal selling,

sales promotion, public relations, direct marketing, and online marketing including social

media—in combination to communicate a value proposition to the customer, it is referred to as

A) integrated marketing communications.

B) multimedia marketing.

C) diverse marketing communications.

D) comprehensive promotion.

E) managed marketing communications.

Answer: A

Explanation: Integrated marketing communications (IMC) represents the promotion P of the four

Ps. It encompasses a variety of communication disciplines—advertising, personal selling, sales

promotion, public relations, direct marketing, and online marketing including social media—in

combination to provide clarity, consistency, and maximum communicative impact.

Difficulty: 1 Easy

Topic: IMC

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) Google and other search engines allow marketers to bid to have their ads shown when

consumers search keywords related to the firm's products. These marketers are attempting to

create value through

A) product.

B) price.

C) promotion.

D) place.

E) cost-based measures.

Answer: C

Explanation: Ads displayed in search engines are an example of promotion.

Difficulty: 3 Hard

Topic: Role of Promotion

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) Greg sees that his company's quarterly sales and profits are significantly above projections and

says, "That's great. Let's keep doing what we've been doing." Greg is ignoring the ________ step

of the marketing planning process.

A) evaluate performance

B) define the business mission

C) perform situation analysis

D) implement marketing mix and resources

E) identify and evaluate opportunities

Answer: A

Explanation: Greg should still evaluate performance, even if results were good. There's always a

chance that he was successful due to luck, not due to the quality of his plan. There's also a chance

that he did well, but that he could have done even better with a stronger plan.

Difficulty: 2 Medium

Topic: Elements of the Marketing Plan

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

55) The first objective in the evaluate performance phase of the marketing planning process is to

A) determine whether to raise or lower prices.

B) adjust advertising allocations.

C) find ways to cut costs.

D) review implementation programs and results using metrics.

E) consider changing the target market.

Answer: D

Explanation: The starting point for evaluating performance is to compare goals to actual

performance and, for any goals not met, to review implementation programs looking for

explanations.

Difficulty: 2 Medium

Topic: Elements of the Marketing Plan

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) As it pertains to the marketing plan, understanding the causes of performance, regardless of

whether that performance exceeded, met, or fell below the firm's goals

A) enables firms to make appropriate adjustments.

B) allows managers to demonstrate their effectiveness.

C) offers insights into crafting an appropriate mission statement.

D) should always be followed by eliminating underperforming SBUs.

E) allows firms to better assess customer loyalty.

Answer: A

Explanation: Once the causes of above- or below-goal performance are understood, firms can

decide how the marketing plan should be adjusted. Some of the other answers might be true in

some cases, but not in every case.

Difficulty: 2 Medium

Topic: Elements of the Marketing Plan

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

57) A regional manager at GNC, a chain of retail stores selling nutritional supplements, is

reviewing sales data after a recent in-store promotion. The data show success in some stores and

limited response in others. To understand the differences between stores, the manager will

probably next review the company's

A) financial statements, to investigate current and past profits.

B) brand awareness study, to assess national levels of awareness.

C) implementation programs, to see if the promotion was handled consistently in the different

stores.

D) mission statement, to see if it needs adjusting.

E) analysis of national trends in vitamins and herbal supplements, to help predict future sales.

Answer: C

Explanation: Typically, managers begin by reviewing the implementation programs, and their

analysis may indicate that the strategy (or even the mission statement) needs to be reconsidered.

The manager should seek to understand the differences in implementation programs between the

different stores. Perhaps she will find that the successful stores did things the other stores didn't.

While studies of national trends might offer interesting and useful information for the overall

planning process, to understand the difference between stores she needs to focus at a local level.

Difficulty: 3 Hard

Topic: Elements of the Marketing Plan

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) After conducting STP analysis for her custom auto parts store and developing strategies for

each of the four Ps, Monique now has to make ________ decisions.

A) competitive response

B) resource allocation

C) market growth

D) product line

E) mission statement

Answer: B

Explanation: Monique has chosen a target market, determined positioning strategies, and

developed marketing mixes. She now has to consider available resources and determine how they

will be allocated across the different options available for implementation.

Difficulty: 2 Medium

Topic: The Marketing Plan

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

59) Lamar owns four dry cleaning stores in the suburbs of Orlando, Florida. He recently updated

his STP analysis, and has just finished adjusting his marketing mix based on the STP results. His

next strategic marketing decision will most likely involve determining

A) how Disney World crowds will impact his business.

B) which employees to promote or fire.

C) how to allocate resources among his four stores.

D) what new government regulations might create opportunities or threats.

E) when to shift from a customer excellence to an operational excellence strategy.

Answer: C

Explanation: Lamar should already have considered a strategy shift in an earlier step of the

planning process, and should have evaluated the impact of Disney World and of possible

government regulation in a situation analysis. After STP analysis, he should be considering his

implementation plan for the four Ps and deciding how to allocate resources. In this case, he could

invest equally in all four stores, or he could adjust his allocations according to the situation at each

store.

Difficulty: 3 Hard

Topic: Elements of the Marketing Plan

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) In most companies, portfolio management is typically done at the SBU or ________ level of

the firm.

A) corporate

B) product line

C) customer care

D) sales representative

E) accounting

Answer: B

Explanation: In general, marketing resources are allocated to SBUs or product lines.

Understanding the causes of the performance, regardless of whether that performance exceeded,

met, or fell below the firm's goals, enables firms to make appropriate adjustments.

Difficulty: 2 Medium

Topic: Business Portfolio Analysis

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

61) A(n) ________ is a group of products that consumers may use together or perceive as similar

in some way.

A) SBU

B) STP

C) product line

D) market segment

E) promotional service

Answer: C

Explanation: This is the definition of a product line.

Difficulty: 1 Easy

Topic: Product Line

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Heidi has been assessing several of her firm's products using the Boston Consulting Group

(BCG) approach to portfolio analysis. She has been trying to assess the strength in a particular

market and is looking at the sales of the product and the overall market as well as the sales of

competitors. Heidi is trying to determine

A) the product's relative market share.

B) the market growth rate.

C) a source of competitive advantage.

D) the impact of population shifts on future demand.

E) cash equivalent values for each product.

Answer: A

Explanation: A company's relative share of a market is determined by comparing its market share

to market shares of competitors.

Difficulty: 3 Hard

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

63) To determine how attractive a particular market is using the BCG portfolio analysis, ________

is(are) established as the vertical axis.

A) competitive intensity

B) sales dollars

C) market size

D) market growth rate

E) market profit potential

Answer: D

Explanation: The BCG matrix uses market growth rate on the vertical axis and relative market

share on the horizontal axis. The other factors are not unimportant—they are simply not part of

BCG portfolio analysis.

Difficulty: 2 Medium

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) In BCG portfolio analysis, products in low-growth markets that have received heavy

investment and now have excess funds available to support other products are called

A) stars.

B) cash cows.

C) question marks.

D) dogs.

E) anchors.

Answer: B

Explanation: Cash cows are product lines with high relative market share as the result of past

investment, but in low-growth markets. Because these products have already received heavy

investments to develop their high market share, they have excess resources that can be spun off to

those products that need it.

Difficulty: 2 Medium

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

65) Fernando was thrilled to find out that his company had just decided to invest a great deal of

money in the product he was managing. He knows that even with its recent high rate of growth and

the fact that it dominates its market, he would need more money to establish it firmly. Using the

BCG portfolio analysis, his product would be classified as a(n)

A) star.

B) cash cow.

C) question mark.

D) dog.

E) anchor.

Answer: A

Explanation: Stars occur in high-growth markets and are high market share products and often

require a heavy resource investment in such things as promotions and new production facilities to

fuel their rapid growth.

Difficulty: 2 Medium

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Using the BCG portfolio analysis, a "dog" should be phased out unless

A) its marketing manager is a champion of the product.

B) additional resources could increase its relative market share slightly.

C) it complements or boosts the sales of another product.

D) the market has a small chance of rebounding.

E) none of these. Dogs should be phased out.

Answer: C

Explanation: Dogs can be worth keeping if they assist with the sales of another more successful

product.

Difficulty: 2 Medium

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

67) The strategic marketing planning process

A) is a five-step process that should always be completed in order.

B) is frequently used in reverse.

C) begins with establishing specific, measurable outcomes.

D) is not always sequential.

E) forces marketing managers to think rationally.

Answer: D

Explanation: The planning process suggests that managers follow a set sequence when they make

strategic decisions. Namely, after they've defined the business mission, they perform the situation

analysis, identify strategic opportunities, evaluate alternatives, set objectives, allocate resources,

develop the implementation plan, and, finally, evaluate their performance and make adjustments.

But actual planning processes can move back and forth among these steps.

Difficulty: 1 Easy

Topic: Strategic Marketing Planning

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) Which of the following is not one of the four major growth strategies marketers typically

utilize?

A) market penetration

B) market development

C) segment development

D) diversification

E) product development

Answer: C

Explanation: The four growth strategies are market penetration, market development, product

development, and diversification.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) Andy decides to add new sales representatives and increase advertising to increase sales in her

existing market for her current line of security systems. Andy is pursuing a ________ growth

strategy.

A) segment development

B) market development

C) market penetration

D) diversification

E) product development

Answer: C

Explanation: Andy is trying to sell more of her current products to current customers, which is a

market penetration strategy.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) A ________ growth strategy employs the existing marketing offering to reach new market

segments.

A) product proliferation

B) market development

C) market penetration

D) diversification

E) product development

Answer: B

Explanation: This is the definition of a market development strategy.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

71) Quitman Enterprises sells its business language dictionary to college students throughout the

United States. Joseph Quitman, the owner, wants to start selling the book to international students

abroad. Quitman wants to pursue a ________ growth strategy.

A) product proliferation

B) market development

C) market penetration

D) diversification

E) product development

Answer: B

Explanation: Since Quitman wants to sell an existing product to new customers, this is a market

development strategy.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) When Marvel launched several successful series on Netflix, including Jessica Jones, The

Defenders, Iron Fist, and Luke Cage, it employed a ________ strategy.

A) product development

B) customer development

C) market penetration

D) market development

E) diversification

Answer: A

Explanation: When Marvel launched several successful series on Netflix, including Jessica

Jones, The Defenders, Iron Fist, and Luke Cage, it employed a product development strategy.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) H&R is a small, local heating and air conditioning business. The local military base is a

potential source of growth, and H&R already installs and services the type of equipment the

military would require, but it is difficult to get established as a certified government contractor.

H&R is considering a ________ growth strategy.

A) product proliferation

B) market development

C) market penetration

D) diversification

E) product development

Answer: B

Explanation: A market development strategy employs the existing marketing offering to reach

new market segments. This is a market development strategy because the military is a new type of

customer, but H&R's current offerings would be used.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Many states create licensing requirements for a variety of professionals (such as lawyers and

accountants) designed to restrict entry into their market by professionals from other states. This

strategy limits ________ growth strategies.

A) product proliferation

B) market development

C) market penetration

D) diversification

E) product development

Answer: B

Explanation: By restricting the ability of lawyers and other professionals to easily expand their

businesses across state lines, states are preventing these professionals from selling existing

services to new customers. These would be market development opportunities.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

75) Marketers who design and offer new products and services to their existing customers are

pursuing a ________ growth strategy.

A) product proliferation

B) market development

C) market penetration

D) diversification

E) product development

Answer: E

Explanation: A product development strategy offers a new product or service to a firm's current

target market.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) Most banks now have customer relationship software that, when a customer contacts the bank,

tells the service representative what types of accounts, loans, and credit cards the customer

currently has. Service representatives use this information to sell some of the other services the

bank currently offers to these customers. This is a ________ growth strategy.

A) product proliferation

B) market development

C) market penetration

D) diversification

E) product development

Answer: C

Explanation: A market penetration strategy employs the existing marketing mix and focuses the

firm's efforts on existing customers. Such a growth strategy might be achieved by attracting new

consumers to the firm's current target market or encouraging current customers to patronize the

firm more often or buy more merchandise on each visit.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

77) Mary Ann phoned her auto insurance agent to renew her policy. The agent told her about new

types of insurance now available—to cover her apartment, or even the engagement ring she just

got from her fiancé. The agent was pursuing a ________ growth strategy.

A) product development

B) market development

C) market penetration

D) diversification

E) product proliferation

Answer: A

Explanation: The agent is trying to sell new types of insurance to a current customer, which is a

product development strategy.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) Introducing newly developed products or services to a market segment the company is not

currently serving is called

A) product development.

B) market development.

C) market penetration.

D) diversification.

E) product proliferation.

Answer: D

Explanation: A diversification strategy introduces a new product or service to a market segment

that currently is not served.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

79) Zara is a women's clothing retailer headquartered in Spain, with stores located in many

countries. Zara has developed a "quick response" system that allows store merchandise to be

adjusted rapidly to fit changing customer preferences. Every aspect of Zara's operation is

optimized for this system, making it difficult for competitors like The Gap to duplicate. Zara has

established

A) customer loyalty.

B) locational excellence.

C) a diversification growth strategy.

D) a sustainable competitive advantage.

E) a related diversification opportunity.

Answer: D

Explanation: Zara has established an advantage that is difficult to copy—this is a sustainable

competitive advantage.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) Fourteenth National Bank prides itself on offering better service than any of its competitors. If

this is accurate, and if customers recognize and value Fourteenth National's superior service, the

bank creates and delivers value through

A) promotional excellence.

B) product excellence.

C) operational excellence.

D) global excellence.

E) customer excellence.

Answer: E

Explanation: Superior service is a key facet of a customer excellence strategy.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

81) Angie has gone to the same hair salon for the past ten years. She believes that her stylist, the

salon owner, does a better job of cutting and styling her hair than anyone else could. Other salons

have opened closer to Angie's home, some offering more plush facilities or lower prices, but she

isn't tempted to switch. Angie's attitude toward the salon is an example of

A) a sustainable competitive advantage.

B) a customer retention program.

C) an opportunity, in SWOT analysis.

D) customer loyalty.

E) the benefits of a locational excellence strategy.

Answer: D

Explanation: By refusing to consider competitive offerings and staying in a long-term

relationship with the salon, Angie is demonstrating loyalty to her stylist and salon. If the salon has

a large number of loyal customers due to the quality of its service, that could be considered a

sustainable competitive advantage, but one loyal customer isn't enough to establish that.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) Customer retention programs are based on what concept?

A) Customer excellence is the easiest macro strategy to follow.

B) Customer relationships should be viewed from a lifetime value perspective rather than on a

transaction-by-transaction basis.

C) It is important to maximize profits in the first few months of a customer relationship.

D) Segmentation, targeting, and positioning analysis should not be rushed.

E) Firms must spend large amounts of money to retain customers.

Answer: B

Explanation: Taking a lifetime value view of customer relationships demonstrates that profits

through the entire relationship matter more than short-term profitability. While it is true that STP

should not be rushed, this is not the focus of customer retention programs. Maximizing profits at

the expense of relationships is almost the opposite of customer retention programs, since it focuses

on quick profits at the possible expense of larger profits in the long run. The other two incorrect

choices may be true in a few instances but they are often not true; customer excellence can be

extremely difficult to achieve, and customer retention does not necessarily demand high levels of

spending.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) Most banks implement customer retention programs aimed at their best customers. They do

this because they know that retaining customers usually results in

A) a product development growth strategy.

B) an operational advantage.

C) opportunities for diversification.

D) increased long-term profits.

E) more clearly defined market segments.

Answer: D

Explanation: Viewing customers with a lifetime value perspective rather than on a

transaction-by-transaction basis is key to modern customer retention programs. This approach

looks at the value of the customer relationship on a lifetime basis instead of considering only the

current transaction.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) Some universities offer online degree programs, competing with traditional colleges based on

the convenience of taking online courses. These online programs are most likely pursuing which

macro strategy?

A) customer excellence

B) locational excellence

C) operational excellence

D) product excellence

E) purchase excellence

Answer: B

Explanation: Locational excellence refers to having a good physical location and Internet

presence. Online courses are available anywhere, as long as the student has Internet access and a

computer or mobile device.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

85) When a pharmaceutical company develops a new medication, it typically applies for a patent

in order to prevent competitors from developing copycat products for several years.

Pharmaceutical companies apply for patents to establish

A) an operational excellence macro strategy.

B) a market penetration growth strategy.

C) a sustainable competitive advantage.

D) an efficient supply chain.

E) product efficiency.

Answer: C

Explanation: The patent protects the company's product from imitation, thus creating a

competitive advantage that is sustainable through the life of the patent.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) One example of a customer loyalty program is

A) a "frequent diner" card at a restaurant, offering a free appetizer for every $100 in food

purchases.

B) a quantity discount offered for large purchases at an office supply store.

C) seasonal sales on top-selling items.

D) an "everyday low price" policy on all products at a grocery store.

E) an extensive customer service training program for new employees at a hair salon.

Answer: A

Explanation: A "frequent diner" program gives a customer an incentive to visit the restaurant

more often, even if competitors try to win customers away with special menus or other offers,

because the customer wants to earn the rewards that come with frequent visits.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) Which of the following is the third step in the marketing planning process?

A) define the business mission

B) identify and evaluate opportunities

C) evaluate using a matrix

D) implement marketing mix and allocate resources

E) perform situation analysis

Answer: B

Explanation: The steps, in order, are: (1) define the business mission, (2) perform a situation

analysis, (3) identify and evaluate opportunities, (4) implement marketing mix and allocate

resources, and (5) evaluate performance.

Difficulty: 1 Easy

Topic: Elements of the Marketing Plan

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) In 2010, Hewlett-Packard Company (HP) acquired Palm Computing Inc., a manufacturer of

personal devices and smartphones. Before deciding to acquire the company, strategic planners at

HP spent time thinking about how Palm and HP would "fit" together, and how the acquisition

might change HP's core goals and objectives. The strategic planners were engaged in the

________ step of the marketing planning process.

A) perform situation analysis

B) implement marketing mix and allocate resources

C) identify and evaluate opportunities

D) evaluate performance

E) define the business mission

Answer: E

Explanation: By considering questions of "fit" and changing objectives, the planners are

considering HP's business mission and how the acquisition might change it.

Difficulty: 3 Hard

Topic: Strategic Marketing Planning

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

89) After defining the business mission, what should a firm do next to develop a marketing plan?

A) conduct an STP analysis

B) perform a situation analysis

C) develop a positioning strategy

D) select a target market

E) implement the four Ps

Answer: B

Explanation: A situation analysis is the second step of the marketing planning process.

Difficulty: 1 Easy

Topic: Elements of the Marketing Plan

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) In a SWOT analysis, increasing gasoline prices would represent a potential ________ for

manufacturers of electric cars.

A) weakness

B) threat

C) opportunity

D) operational advantage

E) locational advantage

Answer: C

Explanation: Higher gas prices should make consumers more likely to consider buying electric

cars, so this is a positive factor. It is external to the firm since it is beyond the firm's control. An

external positive factor is an opportunity.

Difficulty: 2 Medium

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) A former advertising campaign for GEICO Insurance used the slogan "So easy, even a

caveman could do it" to emphasize the ease of buying insurance on GEICO's website. This

campaign was part of GEICO's

A) mission statement.

B) market segmentation plan.

C) product strategy.

D) customer excellence strategy.

E) positioning strategy.

Answer: E

Explanation: GEICO is seeking to define itself in customers' minds as a very easy way to save

money on insurance, in order to distinguish it from its competitors. This is the nature of

positioning.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) Abercrombie & Fitch, a clothing retailer, includes a "SHARE" link on the product pages of its

website. This link encourages an Abercrombie customer to post a link (perhaps showing a new

style of jeans) on Facebook or Twitter. Abercrombie & Fitch hopes that the customer's friends

(who are probably very much like current customers) will click the link, visit the page, and make

purchases. This is an example of a ________ growth strategy.

A) product proliferation

B) market development

C) market penetration

D) diversification

E) product development

Answer: C

Explanation: In this situation, Abercrombie & Fitch is trying to sell more of its existing products

to its current target market, which is a market penetration strategy. Market development would

involve attracting new market segments, but the company is assuming that the friends of current

customers will be similar to those customers (and thus part of the same market segment).

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

93) Sodexo is a corporation that manages school cafeterias, university dining halls, mess halls at

military bases, concession stands at sports arenas, and other large-scale food service facilities. If

Sodexo were to begin to sell individual frozen meals in supermarkets, it would be pursuing a

________ growth strategy.

A) product development

B) market development

C) market penetration

D) diversification

E) product proliferation

Answer: D

Explanation: Individually packaged frozen meals would be a new product area for Sodexo (even

though it is still a food, the manufacturing process would be quite different from the bulk food

service required by cafeterias and dining halls). Consumers in grocery stores would also be a new

market, since Sodexo currently serves universities, the military, and the like. Thus, with a new

market and a new product, this would be an example of diversification.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) Singapore Airlines seeks to differentiate itself from competing airlines, in part through

innovative design of its airplane seats and in-flight entertainment systems. Through continuous

innovation in these areas, Singapore Airlines is pursuing a(n) ________ macro strategy.

A) customer excellence

B) global excellence

C) locational excellence

D) operational excellence

E) product excellence

Answer: E

Explanation: The innovations described are in the area of the product offering, and so they

represent product excellence.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

95) 3M involves its customers in the process of developing new products. In this way, it can

benefit from current customers' insights and develop new products that will meet these customers'

needs. 3M is pursuing a ________ growth strategy.

A) diversification

B) market development

C) market penetration

D) product development

E) product penetration

Answer: D

Explanation: While some of the new products may attract new markets (which would represent

diversification), the initiative described is aimed primarily at developing new products to serve

current customers, and so represents a product development strategy.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) Over the last few months, Jose and his colleagues have analyzed the current business situation

and identified target markets for his firm's personal care products. Finally, they developed the

products, prices, distribution, and promotion that should appeal to each of those target markets. In

doing so, Jose has also identified what he believes is an advantage his competitors cannot match.

Jose and his colleagues have been developing

A) a business mission statement.

B) a strategic vision.

C) team-building exercises.

D) a marketing strategy.

E) competitive assessments.

Answer: D

Explanation: The question describes the situation analysis, STP, and positioning steps of

developing a marketing strategy, as well as a potential sustainable competitive advantage.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

97) Gerald's Tire Store sets itself apart from competitors by the extra attention it pays to retaining

loyal customers by providing fast, courteous service in a clean, professional-looking environment.

Gerald's has used this strategy for over 40 years, expanding to 15 outlets. Gerald's Tire Store has

created a ________ macro strategy to create and deliver value and to develop a sustainable

competitive advantage.

A) supply chain excellence

B) locational excellence

C) product excellence

D) diversification excellence

E) customer excellence

Answer: E

Explanation: Gerald's Tire Store has a macro strategy focusing primarily on customer excellence,

based on the quality of customer service mentioned in the question.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) Which of the following is the best way to build a sustainable competitive advantage using

product excellence?

A) being the first to offer customers desired features, even if competitors can copy them easily

B) positioning the product using a clear, distinctive, desirable brand image

C) having the most features on each model

D) focusing on being cutting edge and continually eliminating older features that are still in use by

customers

E) copying the market leader's features, but at a lower cost

Answer: B

Explanation: The incorrect options all describe ways to create new product models that are

probably easy for competitors to copy (or that, in one case, copies competitors' offerings). A clear,

distinct, desirable positioning, though, offers a more sustainable advantage through product

excellence.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

99) A competitive advantage based on location is often sustainable because

A) mobile marketing has not yet proven its value for most customers.

B) real estate prices have been dropping.

C) few marketers are aware of its importance yet.

D) it is not easily duplicated.

E) the Internet has diminished the importance of brick-and-mortar stores.

Answer: D

Explanation: If you have a wide variety of locations in prime areas, that's difficult (and often

expensive) for a competitor to duplicate. While some of the other answers are true statements, they

don't explain why a locational excellence strategy tends to be sustainable.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) Four companies dominate the cereal industry. These firms produce in large volumes, promote

heavily, and control access to the supermarket shelves through "slotting allowances," which are

payments to retailers in return for shelf space. Combined, these four firms have

A) identical marketing mixes.

B) customer excellence.

C) a sustainable competitive advantage.

D) achieved product excellence.

E) violated laws governing competition.

Answer: C

Explanation: While some of the other statements might be true, we don't have enough

information in the question to draw those conclusions. But what's been described is a sustainable

competitive advantage because it's so difficult for another competitor to break into the market.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

101) Value creation through place decisions for a consumer product involves

A) putting the product in the front of the store.

B) designing creative displays to capture consumers' attention.

C) pricing products differently at different stores.

D) making sure the product is available in the stores where customers will want to find it, and that

it is always in stock so they can buy it when they want to.

E) focusing exclusively on Internet sales to reduce supply chain costs.

Answer: D

Explanation: Value creation through place has to do with making sure the product is available

when and where the customer wants it. Some of the other options (like the creative displays, or

putting the product in the front of the store) may cause more consumers to notice the product, but

the correct answer is the one that best describes ensuring that the product is available to the

customer.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) In recent years, cellular (mobile) service providers have worked hard to eliminate "dead

zones," providing customers with service wherever they traveled. By working to make the network

available in more locations, cellular service companies were focusing on ________ value creation.

A) product

B) price

C) promotion

D) place

E) financial

Answer: D

Explanation: By making sure the mobile network is available to use where and when customers

want it, cellular service companies are working on place value creation.

Difficulty: 2 Medium

Topic: The Four Ps

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

103) When firms successfully implement poor strategies (perhaps due to good luck) or do a poor

job of implementing good strategies, it can be difficult to

A) generate cost-based performance ratios.

B) evaluate performance and make adjustments.

C) increase product excellence without reducing customer excellence.

D) develop segmentation strategies.

E) choose a business mission.

Answer: B

Explanation: Good luck may mask the weaknesses in a bad strategy, and poor execution may

mask the strengths of a good strategy, making evaluation difficult in both cases.

Difficulty: 1 Easy

Topic: Elements of a Marketing Strategy

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) In 2007, Apple Computer introduced its new iPhone, adding a cellular telephone, a camera,

and Internet access to its iPod. The company was pursuing a(n) ________ strategy.

A) market development

B) market penetration

C) operational excellence

D) customer excellence

E) product development

Answer: E

Explanation: Apple was creating a new product for its existing customers, which is a product

development strategy. Some people might believe that the iPhone wasn't for Apple's existing

customers, but was for new customers, which would make "diversification" the best answer. But

since that answer isn't offered, "product development" is the best of the remaining examples.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

105) Juan is in the marketing department of a midsized firm that develops and sells

communications systems. He is proud of the human resource area in the company that provides the

firm with excellent employees. Juan himself really enjoys his work, but he knows the work of HR

helps create an operational advantage for the firm because of all the following except

A) customers appreciate the kind of service that knowledgeable employees provide.

B) employees play a major role in the success of the firm.

C) it is easier to communicate with and inspire the customer if the employees believe in what the

firm is doing.

D) building customer loyalty depends on a committed workforce.

E) the company provides products with a high perceived value.

Answer: E

Explanation: Excellence in human resource management is one aspect of operational excellence

for all of the reasons listed except the company provides products with a high perceived value.

This option relates to product excellence, not operational excellence.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Teamwork

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) Which of the following actions would be the most likely to support and enhance an

operational excellence macro strategy?

A) Singapore Airlines installing more comfortable seats in the economy-class cabins of its

airplanes

B) 3M Corporation implementing new software to improve communication with its suppliers

C) Adidas inviting customer suggestions to guide the design of the next generation of shoes

D) Nike opening hundreds of new company stores in high-traffic shopping areas

E) McDonald's lowering prices on its coffee drinks

Answer: B

Explanation: Operational excellence is achieved through efficient operations and excellent

supply chain and human resource management. By improving communication with its suppliers,

3M would probably improve efficiency of the supply chain, which is how firms achieve

operational excellence. The ability to offer lower prices, as in the McDonald's example, is a

potential benefit enjoyed by firms that achieve operational excellence, but lower prices do not help

create operational excellence.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

107) Which of the following factors, listed in a situation analysis for a major U.S. auto

manufacturer, is the best example of a threat?

A) The factory that manufactures a new, popular car cannot build enough vehicles to meet the

demand, while other factories have excess capacity.

B) Recent consumer studies have indicated that Chinese consumers prefer American cars.

C) A New York law firm has filed a $10 million class action suit against the company on behalf of

car owners whose gas tanks exploded.

D) Due to outdated engine technology, the company's cars get lower gas mileage than those of

major competitors.

E) The company has lower manufacturing costs than its key competitors, allowing it to sell its cars

at low prices.

Answer: C

Explanation: A threat is an external negative event. Being the target of a lawsuit is certainly a

negative event, and the law firm is external to the company. Problems in balancing manufacturing

capacity are internal to the firm and so are weaknesses. Potential demand in China is a positive

external factor—an opportunity. A lower cost structure is a positive internal factor—a strength.

The gas mileage issue might sound like a threat in that competitive offerings are superior, and

competitors are external to the firm; however, the example states that gas mileage is inferior due to

outdated technology, which is an issue internal to the firm.

Difficulty: 3 Hard

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) Which of the following factors, listed in a situation analysis for a major U.S. auto

manufacturer, is the best example of an opportunity?

A) The factory that manufactures a new, popular car cannot build enough vehicles to meet the

demand, while other factories have excess capacity.

B) Recent consumer studies have indicated that Chinese consumers prefer American cars.

C) A New York law firm has filed a $10 million class action suit against the company on behalf of

car owners whose gas tanks exploded.

D) Due to outdated engine technology, the company's cars get lower gas mileage than those of

major competitors.

E) The company has lower manufacturing costs than its key competitors, allowing it to sell its cars

at low prices.

Answer: B

Explanation: An opportunity is an external positive event. Potential demand in China could be a

positive thing for the company, and since it deals with Chinese consumers it is an external factor.

A lower cost structure is a positive internal factor—a strength. The remaining factors are negative,

and so cannot be opportunities.

Difficulty: 3 Hard

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

109) The global athletic footwear market is expected to experience only very slow growth over the

next several years. Nike is the market leader. According to Boston Consulting Group portfolio

analysis, how should Nike treat its athletic shoe business?

A) Nike will probably have to invest heavily in the athletic shoe business, including extensive

promotions and new production facilities.

B) Nike should consider exiting the athletic shoe market.

C) Nike should stop investing in its athletic shoe business; it has already reaped all the benefits it is

likely to receive.

D) Nike's athletic shoe business still requires some investment, but it is likely to produce excess

resources that can be invested in other divisions of the company.

E) Nike should invest in the athletic shoe market only if it helps boost the sales of other products in

fast-growing markets.

Answer: D

Explanation: A market leader in a low-growth market is, in BCG terms, a cash cow. This means

that, although Nike certainly wants to maintain its market leadership position, the athletic shoe

business can be expected to generate excess resources that can be invested in other areas of the

company. This question deals with the athletic shoe market as a whole—note that there could be

niches that are growing rapidly, and where heavier investment might be warranted.

Difficulty: 3 Hard

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) Subway is a large chain of franchise sandwich shops. Marcia owns three Subway stores in a

large city. At the end of the year, she notes that sales rose from 2 to 5 percent over last year's sales

at Stores 1 and 2, but fell 2 percent at Store 3. Based on this information, which of the following is

the best course of action as to how Marcia should reward (or punish) her store managers?

A) She should give bonuses to the managers of Stores 1 and 2, and put the Store 3 manager on

probation.

B) She should ignore the sales data; they are not an appropriate marketing metric.

C) She should give each manager a raise, tied to the store results.

D) She should review at least 10 years of sales data about her stores' performance before making a

decision.

E) She should seek more information about why the stores had different results before making a

decision.

Answer: E

Explanation: There could be a reason why one store performed more poorly than the others that is

outside the store manager's control. For example, perhaps it is located in a shopping center that has

lost tenants and has several empty storefronts. The shopping center would probably experience

reduced traffic, which would likely hurt sales at the Subway shop.

Difficulty: 3 Hard

Topic: Elements of the Marketing Plan

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

111) Coca-Cola sells two different zero-calorie versions of Coke: Diet Coke and Coke Zero. It has

chosen to attempt to appeal to men with Coke Zero. In addition to launching an ad campaign

featuring men enjoying Coke Zero, Coca-Cola also designed a masculine-looking can for Coke

Zero, with bold red lettering on a black background. This specially designed can is an example of

A) positioning.

B) targeting.

C) segmentation.

D) a market segment.

E) market penetration.

Answer: A

Explanation: Segmentation and targeting decisions have already taken place at this point, with

the decision to target men with the Coke Zero introduction. The can design is one element of the

marketing mix, attempting to give men an understanding that this drink is designed for them.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) Delta Airlines is among the companies experimenting with selling products and services on

their Facebook pages. The idea is to make purchasing even easier for customers who may spend

large portions of the day with Facebook active on their computers or mobile devices. There is no

need even to navigate to Delta's website—users can book a trip in Delta's "Ticket Agent"

application without ever leaving Facebook. Which element of the marketing mix does this

represent?

A) product and value creation

B) price and value capture

C) place and value delivery

D) promotion and value communication

E) positioning and value promotion

Answer: C

Explanation: Place is the element of the marketing mix that relates to making sure the firm's

offerings are available to customers where and when they want them. By allowing customers to

make flight reservations inside Facebook, Delta is increasing convenience for consumers by

allowing them to make the reservations without leaving Facebook, thus delivering value through

place.

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

113) Because it was able to deliver merchandise overnight, in the required quantities and at a lower

delivered cost than its competitors, Joe's Sports Shack was given exclusive rights to sell clothing

with school logos for the school district. Joe's demonstrates ________ excellence.

A) product

B) place

C) customer

D) operational

E) locational

Answer: D

Explanation: Getting customers the merchandise they want, when they want it, in the required

quantities, and at a lower price are all elements of operational excellence.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) During which phase of the marketing planning process does a firm engage in segmentation,

targeting, and positioning?

A) planning phase

B) implementation phase

C) identify and evaluate opportunities phase

D) control phase

E) strategy phase

Answer: C

Explanation: After completing the situation audit, the next step (3) is to identify and evaluate

opportunities for increasing sales and profits using segmentation, targeting, and positioning (STP).

Difficulty: 1 Easy

Topic: Elements of the Marketing Plan

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

115) During a SWOT analysis, a company should assess the opportunities and uncertainties of the

marketplace due to changes in several factors, given the acronym CDSTEP. Which of the

following is not one of these factors?

A) ethical

B) cultural

C) political

D) technological

E) demographic

Answer: A

Explanation: CDSTEP stands for cultural, demographic, social, technological, economic, and

political forces.

Difficulty: 1 Easy

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

116) The process of dividing the market into groups of customers with different needs, wants, or

characteristics is called

A) target marketing.

B) market segmentation.

C) positioning.

D) allocation.

E) value capture.

Answer: B

Explanation: The process of dividing the market into groups of customers with different needs,

wants, or characteristics—who therefore might appreciate products or services geared especially

for them—is called market segmentation.

Difficulty: 1 Easy

Topic: Steps in Market Segmentation

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

117) ________ involves the process of defining the marketing mix variables so that target

customers have a clear, distinctive, desirable understanding of what the product does or represents

in comparison with competing products.

A) Target marketing

B) Market segmentation

C) Market positioning

D) Allocation

E) Value capture

Answer: C

Explanation: Market positioning involves the process of defining the marketing mix variables so

that target customers have a clear, distinctive, desirable understanding of what the product does or

represents in comparison with competing products.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

118) All of the following statements regarding marketing metrics are true except

A) they can be used at various levels in an organization.

B) they assist in comparing results among SBUs.

C) they cannot be used to project the future.

D) they quantify a trend, dynamic, or characteristic.

E) they help a firm make appropriate adjustments to its marketing plan.

Answer: C

Explanation: By comparing results across regions, SBUs, product lines, and time periods,

marketing metrics can help explain why things happened and also project the future.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

119) A product that is in a high-growth market but has a low market share would be classified as a

________ on the BCG matrix.

A) ladder

B) dog

C) cash cow

D) star

E) question mark

Answer: E

Explanation: This is the definition of a question mark. If the product is infused with resources, it

has the potential to become a star.

Difficulty: 1 Easy

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

120) Of what use is a sustainable competitive advantage to a firm?

Answer: Establishing a sustainable competitive advantage makes it hard for competitors to enter

a market or attract a firm's customers. The advantage should be difficult to copy and should be

something that can be maintained over time.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

121) The text states, "Viewing customers with a lifetime value perspective rather than on a

transaction-by-transaction basis is key to modern customer retention programs." Create an

example demonstrating a lifetime value perspective. Why is customer retention almost always a

profitable marketing strategy?

Answer: Answers to the first part will vary, but should demonstrate how much business a

customer brings in over a lifetime. For example, a customer spending $4 at Starbucks, five days

per week, for 20 years equals $20,800. Customer retention is profitable because it costs more to get

new customers than to retain existing ones.

Difficulty: 3 Hard

Topic: Strategic Marketing Planning

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

122) Although most people do not have a personal marketing plan, when would one be

appropriate?

Answer: Students might reflect on their own personal circumstances, but three plausible

responses include the choice and process they used to select a college or university, a potential

marriage, and a job.

Difficulty: 3 Hard

Topic: Strategic Marketing Planning

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

123) One of the benefits of taking marketing courses is the opportunity to apply marketing

concepts to marketing yourself. When selling yourself, you are a product including all the skills,

aptitudes, and attitudes you bring to the market. What is a sustainable competitive advantage?

What can you do to give yourself a sustainable competitive advantage in the marketplace?

Answer: A sustainable competitive advantage is something you can persistently do better than

the competition. Skills including statistical analysis, ability to use technology, communication,

and accounting are all important and valuable. Aptitudes including rational thinking and problem

solving are lifelong abilities that can benefit any organization. Attitudes such as persistence, a

sense of humor, and teamwork are valuable in any business environment. But, as best-selling

author Stephen Covey suggests, we must always "sharpen the saw," meaning continually grow and

learn in order to be successful and maintain a sustainable competitive advantage.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Analyze

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

124) Your marketing professor, Dr. Wilson, has been asked to participate in the university's

strategic marketing planning process. During the planning phase of the process, what questions

will Dr. Wilson likely ask? Be specific to the university's strategic marketing planning process.

Answer: Answers will vary, but should begin with a discussion of creating or revising the

university's mission statement, leading to questions such as: What type of university are we? What

does the university need to accomplish its goals and objectives? Additionally, discussion of the

mission statement will likely lead to questions concerning how the university can build a

sustainable competitive advantage. Dr. Wilson will also assist with the situation analysis, which

will include internal examination of the current status of the university, asking questions such as:

What are the university's strengths and weaknesses? Questions about external forces, threats, and

opportunities will also be asked during the SWOT analysis.

Difficulty: 3 Hard

Topic: Strategic Marketing Planning

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

125) The text describes Southwest Airlines, which operates in a competitive market but

successfully differentiates itself from the competition. This gives Southwest a sustainable

competitive advantage. What is a sustainable competitive advantage? Describe an example of a

product or business you have encountered that has developed a sustainable competitive advantage.

Why is that product's or firm's advantage sustainable?

Answer: A sustainable competitive advantage is something you can consistently do better than

the competition. Students' examples will vary, but should include product, operational, locational,

or customer excellence that competitors have not been able to duplicate.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

126) Your marketing professor, Dr. Murphy, has been asked to participate in the university's

strategic marketing planning process. After completing the planning phase of the process, Dr.

Murphy has been asked to assist with the STP analysis. What questions will Dr. Murphy ask

during the STP analysis? Be specific to the university's strategic marketing planning process.

Answer: STP analysis includes segmentation, targeting, and positioning. Dr. Murphy will ask

questions such as: What basis for segmentation should be used? Should the university's market be

divided based on age, income, geographic area, or maybe educational interests? After

segmentation, which segments can be pursued profitably, or targeted?

Many market segments will likely be identified, but Dr. Murphy will often have to ask, Can we

effectively and efficiently reach that group of potential consumers? (For example, one university

considered providing educational services to a local prison but ran into a host of problems making

it impossible to target that market.)

Last, Dr. Murphy will ask questions about how the university intends to position itself in the

various market segments: What products or services are going to be promoted? How are the

university's products and services different from what competitors are offering? Where and how

can the university build on existing strengths?

Difficulty: 3 Hard

Topic: Elements of a Marketing Strategy

Learning Objective: 02-04 Describe how a firm chooses which consumer group(s) to pursue with

its marketing efforts.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

127) Explain how Marvel, the superhero entertainment giant, employed a market penetration

strategy using its existing marketing mix and focusing its efforts on existing customers.

Answer: Answers will vary, but should include the following: To further penetrate its current

customer base, the super-hero entertainment giant Marvel has expanded its movie offerings. In

collaboration with several production companies, as well as talented directors and well-known

actors, Marvel has helped bring the X-Men, Spiderman, Superman, Iron Man, and other popular

characters to the big screen, where they confront some relevant, modern-day topics such as

discrimination, environmental destruction, and international wars—before ultimately kicking tail

and saving the city. These films have grossed massive profits. Marvel has further increased its

market penetration by expanding the distribution of its films. Today, Marvel movies can be seen in

theaters, accessed on Xfinity, and viewed on DVDs available in discount stores, grocery stores,

and a host of other stores, including book and comic stores.

Difficulty: 3 Hard

Topic: Elements of a Marketing Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

128) Your marketing professor, Dr. Sullivan, has been asked to participate in the university's

strategic marketing planning process. After completing the first three steps of the process, Dr.

Sullivan has been asked to assist with implementing the marketing mix and allocating resources.

What questions will Dr. Sullivan ask? Be specific to the university's strategic marketing planning

process.

Answer: Dr. Sullivan will ask marketing mix and resource allocation questions. Dr. Sullivan will

ask general product questions such as: Which courses and degree programs will create the most

value for our consumers? What prices should we charge for in-state and out-of-state students?

What prices should we charge for graduate versus undergraduate programs? Should we charge

higher or lower prices for online programs? Place or value delivery questions might include these

questions: Should we emphasize day or night programs, classroom or online programs? Should the

university open satellite campuses? Last, Dr. Sullivan will ask questions regarding where and how

to promote the university's programs. One of the critical but potentially controversial questions

will be how to allocate the university's resources. Virtually every program on campus will want

more resources and think their program creates the most value for students. Dr. Sullivan will have

to be careful when recommending additional resources for the marketing program!

Difficulty: 3 Hard

Topic: The Four Ps

Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to

increase customer value.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

129) Janice, a sales manager for an industrial materials company, reviews each sales

representative's performance quarterly. She knows business has been good, but is surprised to see

some reps are selling much more than their goals while others are not meeting their goals. What

should Janice do?

Answer: Janice should start by looking closely at the data. Were the successful salespeople

selling one or two items at discounts in order to generate volume, or did they sell the full line of the

company's materials to each customer, resulting in increased sales? Did the poorly performing

sales reps sell to fewer customers, make too many small sales, or fail to sell the full line of

materials? After reviewing the data, Janice will probably talk with each sales rep and ask about that

person's results, both those exceeding goals and those not meeting goals. Janice will seek to

explain the variation and utilize the information to make changes.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

130) You and your friend Alicia work in different parts of a large firm. In a recent analysis, your

area was labeled a "cash cow" and hers was labeled a "question mark." What things would you do

differently in your area than Alicia would do in hers?

Answer: There are many possible answers, but students should be able to describe both cash

cows and question marks as well as understand the different kinds of strategies, the use of

resources, and the future of each unit.

Difficulty: 3 Hard

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

131) Boston Consulting Group's portfolio analysis classifies a company's products or product lines

into a two-by-two matrix. What are the bases of classification and what are the products or product

lines in each of the four quadrants called? What marketing strategies are usually considered for

each of the four classifications?

Answer: The two bases of classification are relative market share (high-low) and market growth

rate (high-low). This leads to four quadrants labeled stars, cash cows, dogs, and question marks.

• Stars: high market share/high growth rate. Usually require continued promotion efforts and

expansion of production capacity.

• Cash cows: high market share/low growth rate. Sources of funding for other parts of the firm.

• Dogs: low market share/low growth rate. Candidates to be phased out unless they are needed to

complement or boost sales of other products.

• Question marks: low market share/high growth rate. Candidates for strategic marketing

planning, assessing potential for growth.

Difficulty: 3 Hard

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

132) Your new sales manager, who previously worked for Boston Consulting Group, directs each

sales rep to "toss out the dogs," "exploit the stars," and "milk the cows." Translate this into

everyday English: What is the sales manager asking the sales reps to do?

Answer: Your sales manager wants you to stop selling those products that are in slow-growth

markets and in which the company has a small relative market share. The manager also wants you

to spend more time and effort selling products that are in high-growth markets and in which the

company has a high market share. Finally, you should continue to sell but not put additional effort

into high relative market share, low-market-growth products, referred to as cash cows.

Difficulty: 3 Hard

Topic: The BCG Matrix

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

133) After finishing his marketing degree, Bryan inherited the family Shrimp Shack restaurant.

The restaurant is a small, local institution that beach visitors have been coming to for decades.

Bryan wants to make his business grow and is considering either a market penetration or market

development strategy. Describe what Bryan will likely do if he pursues either strategy.

Answer: If Bryan pursues a market penetration strategy, he will likely expand advertising and

promotion, maybe adding billboards, promoting specials, adding hours, and likely expanding the

restaurant to serve more customers.

If Bryan pursues a market development strategy, he will attempt to serve new market segments.

Since his product is a restaurant, market development would likely include opening additional

locations in other areas, offering the same menu.

Difficulty: 3 Hard

Topic: Elements of a Marketing Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) Garden Gate is a one-location nursery business, selling plants and flowers for home

gardeners. The new owners want to grow through either a product development or diversification

strategy. What will the owners likely do if they pursue either strategy?

Answer: If they pursue a product development strategy, they will offer new products or services

to the firm's current target market. A nursery could logically provide a landscape design consulting

service, landscape maintenance service, soil and pest testing service, or add additional products

such as indigenous plants.

If they pursue a diversification strategy, they would market new products or services to a market

segment they are not currently serving. Targeting landscape design or maintenance services for

commercial customers would be one type of diversification.

Difficulty: 3 Hard

Topic: Elements of a Marketing Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Create

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

135) Southwest Airlines is known for being the low-cost provider in the U.S. airline industry.

What type of macro strategy has Southwest pursued?

Answer: Southwest Airlines has pursued the macro strategy of operational excellence because it

focuses on efficiency in its supply chain.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

136) Every summer, university administrators attempt to estimate how many students will show

up in the fall. When August arrives, they hire part-time instructors and reassign faculty to teach the

courses students want. In the spring, administrators often go on a retreat to consider how to do

things differently next year. What phase of the strategic planning process do they engage in during

each of the three seasons (summer, fall, and spring)?

Answer: Summer—planning; fall—implementation; spring—control.

Difficulty: 2 Medium

Topic: Elements of the Marketing Plan

Learning Objective: 02-02 Describe the elements of a marketing plan.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) When catalog companies send sale catalogs to their current customers, which type of growth

strategy are they pursuing?

Answer: Market penetration, because the companies are trying to sell additional products

(marked down) to current customers.

Difficulty: 1 Easy

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

138) When musicians and their concert promoters began offering CDs of a live concert

immediately after the concert ended, what type of growth strategy were they pursuing?

Answer: Product development, because the CD is a new product (just recorded) and it's being

sold to current customers.

Difficulty: 2 Medium

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

139) Several years ago, the Florida Orange Juice Growers Association ran a promotional

campaign with the slogan "Orange juice. It isn't just for breakfast anymore." Based on this slogan,

which of the four growth strategies was the association pursuing? Briefly explain your reasoning.

Answer: The best answer is that this is a market penetration strategy. The slogan seeks to increase

sales of a current product (orange juice), which reduces the options to market penetration or

market development. "It isn't just for breakfast anymore" sounds like the Growers Association

want those who drink orange juice at breakfast time to consider it at other times of the day too. In

other words, it focuses on increasing usage among current customers, which is market penetration.

Some students might say that it is a market development strategy. For this to be correct, they would

have to argue that a different market segment that currently doesn't drink orange juice is being

targeted.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-07 Describe how firms grow their business.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

140) Suppose that you and a friend decide to turn your favorite sports activity—inline

skating—into a business. You plan to design a line of fashionable clothing that integrates elbow

and kneepads. For each of the four macro strategies, briefly describe the most important thing your

company should do if you intend to focus on that strategy. Your answers should be specific to the

inline skating business.

Answer: There are many correct answers; here is a sample. To make this question easier, you

could ask the student to provide an idea for just one or two of the macro strategies.

• Product excellence: Focus on continually improving the products and making them the most

advanced ones on the market, perhaps using stylish yet durable fabrics that won't be damaged in a

fall. Then work to develop a clear positioning statement for your brand.

• Customer excellence: Offer outstanding service, perhaps including live chat on the website as

well as no-hassle returns if the customer changes his or her mind about a purchase.

• Operational excellence: Develop close relationships with suppliers of fabric and other raw

materials and with retailers.

• Locational excellence: In addition to having a top-notch website, try to get your products into as

many retail stores as possible, probably focusing on sporting goods stores.

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-01 Define a marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

141) Conduct a brief SWOT analysis of your prospects of finding a good job related to your major

when you graduate (if you already have such a job, think about finding a job with more

responsibility). Be sure to include at least one factor representing each of the four major sections of

a SWOT analysis, and be sure to label each factor to indicate which of those four sections it

belongs in.

Answer: To make sure the students clearly classify the factors, you might want to provide an

answer space with four sections; in each one, include a blank line for the name of the section and

additional space for the factor.

Students will come up with a variety of answers depending on their individual situations. They will

probably need to do some speculation for opportunities and threats. Here is a sample:

• Strengths—students might mention internship experience, past work experience, classes taken,

personal characteristics, or personal contacts

• Weaknesses—possibilities include lack of experience, inability to relocate, or a low GPA

• Opportunities—could include expected growth in the field, a new firm starting up in the area

that will be hiring, or a shortage of graduates in the field

• Threats—could include the recession, a glut of graduates in the field, or reduced demand for

professionals in the field

Difficulty: 3 Hard

Topic: SWOT Analysis

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

142) In 2010, Microsoft discontinued the Kin, its social networking phone, after just six weeks of

disappointing sales. During what step of the strategic marketing planning process would Microsoft

have made the decision to stop offering the product?

Answer: Step 5—Evaluate performance using marketing metrics.

Some students might also answer "Control phase." Strictly speaking, this is a phase and not a step;

however, Step 5 is the only step of the process that fits into the Control phase, so you may want to

accept both as correct answers.

If you want to make this question more difficult, you can add to the question the following: What

should Microsoft have done before deciding to discontinue the product? The

Answer: Microsoft should have determined the causes for the disappointing sales to determine

whether or not another action (perhaps a different target market, a price adjustment, or a revised

promotion plan) could put sales back on track.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate marketing

performance.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) Nike, the prominent athletic shoe manufacturer, relies heavily on athlete sponsorships to

build demand for its products. Spectators at major sporting events—both those attending in person

and those watching at home—frequently see the Nike "swoosh" logo worn by elite athletes. Given

the vast worldwide audience for Olympics broadcasts, an Olympic year gives Nike increased

exposure. On a Nike situation analysis in an Olympic year, would you consider this exposure to be

a strength or an opportunity? Explain your reasoning; be specific.

Answer: A reasonable argument can be made for this being a strength or an opportunity, so this is

about the rationale offered. This could be viewed as a strength in that Nike's logo is ubiquitous and

well recognized, and customers in Nike's target markets will be reminded of the many sports for

which Nike offers shoes and apparel. It could also be viewed as an opportunity to strengthen Nike's

position overseas (due to international viewership) and to increase awareness of the breadth of

Nike's products (due to increased viewership of niche sports that ordinarily don't get much

attention).

Difficulty: 3 Hard

Topic: Developing a Competitive Strategy

Learning Objective: 02-03 Analyze a marketing situation using SWOT analyses.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 3 Digital Marketing: Online, Social, and Mobile

1) The term social media refers exclusively to social networking sites like Facebook.

Answer: FALSE

Explanation: The term social media refers to online and mobile technologies that distribute

content to facilitate interpersonal interactions, with the assistance of various firms that offer

platforms, services, and tools to help consumers and firms build their connections. Through these

connections, marketers and customers share information of all forms—from personal assessments

and thoughts about products or images, to uploaded personal pictures, music, and videos.

Difficulty: 1 Easy

Topic: Social Media Definition

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

2) Firms actively use social networks such as Facebook, Pinterest, and WhatsApp to communicate

deals that are likely to engage consumers.

Answer: FALSE

Explanation: Firms actively use social networks such as Facebook, Pinterest, and WhatsApp to

communicate deals that are likely to excite, not engage, consumers.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

3) The focus of social media efforts targeted at customer interaction is building connections.

Answer: TRUE

Explanation: The term social media refers to online and mobile technologies that distribute

content to facilitate interpersonal interactions, with the assistance of various firms that offer

platforms, services, and tools to help consumers and firms build their connections. Through these

connections, marketers and customers share information of all forms—from personal assessments

and thoughts about products or images, to uploaded personal pictures, music, and videos.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) The objectives of the 4E framework for digital marketing are excite, educate, engage, and

evaluate.

Answer: FALSE

Explanation: The objectives of the 4E framework for social media are excite, educate,

experience, and engage.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

5) Positive engagement through social media often makes customers more profitable for the firm.

Answer: TRUE

Explanation: Positively engaged customers tend to be more profitable consumers.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

6) The dynamic effect of social media engagement expands the impact of the network effect by

examining how people flow in and out of networked communities as their interests change.

Answer: TRUE

Explanation: The impact of the dynamic effect of social media engagement is twofold. First, it

describes the way in which information is exchanged to network participants through

back-and-forth communications in an active and effective manner. Second, the dynamic effect

expands the impact of the network effect by examining how people flow in and out of networked

communities as their interests change.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) The connected effect is the outcome of social media engagement in which every time a firm or

person posts information, it is transferred to the poster's vast connections across social media,

causing the information to spread instantaneously.

Answer: FALSE

Explanation: The network effect is the outcome of social media engagement in which every time

a firm or person posts information, it is transferred to the poster's vast connections across social

media, causing the information to spread instantaneously.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

8) The Wheel of Social Media Engagement includes the following five effects as drivers of social

media: Information, Connected, Network, Dynamic, and Timeliness.

Answer: TRUE

Explanation: A unifying framework, the Wheel of Social Media Engagement comprises the

fundamental drivers of social media as five related effects. The authors propose that the hub is a

repository of past and current social media engagements, and the circles around the wheel are the

five effects that drive social media. The five effects are Information, Connected, Network,

Dynamic, and Timeliness.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

9) A blog is an example of a thought-sharing site.

Answer: TRUE

Explanation: Blogs and microblogs are frequently used sites allowing users to share their

thoughts.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) The most popular microblogging site is Google Analytics.

Answer: FALSE

Explanation: Google Analytics is an example of marketing analytic software. One of the most

popular microblogging sites is Twitter.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

11) An advantage of a corporate blog is that all content on the blog can be completely controlled by

the company.

Answer: FALSE

Explanation: Corporate blogs created by the companies themselves are central to their digital

marketing efforts. These blogs can educate customers as they discuss their products or services,

and create excitement when they promote special offers. Although they do not have control over

customers' posts, and sometimes the customers' posts are negative, this two-way dialog with end

users is very engaging.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

12) Twitter is considered a corporate blog.

Answer: FALSE

Explanation: Twitter is considered a microblog, not a corporate blog.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) In the United States, 77 percent of adults own a smartphone and more than half of them make

purchases on these devices.

Answer: TRUE

Explanation: This is correct. In the United States, 77 percent of adults own a smartphone and

more than half of them make purchases on these devices. Almost 200 billion apps were

downloaded globally in 2017, and customers spent more than $86 billion, even though nearly 93

percent of apps downloaded are free.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

14) In Candy Crush Saga, you get five lives to play in the game. When you lose a life, it takes 30

minutes in real-life time to get that life back, or you can spend $0.99 to get all five lives back.

Candy Crush Saga is an example of a paid app.

Answer: FALSE

Explanation: Candy Crush Saga is an example of a freemium app, which is free to download but

includes in-app purchases.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

15) When discussing the pricing models of paid apps and freemium apps, it currently appears that

the best pricing model is the paid app.

Answer: FALSE

Explanation: When discussing the pricing models of paid apps and freemium apps, it currently

appears that the best pricing model is the freemium app. Freemium apps are apps that are free to

download but include in-app purchases that enable the user to enhance an app or game. In Candy

Crush Saga, you get five lives to play in the game. When you lose a life, it takes 30 minutes in

real-life time to get that life back. This is where in-app purchases come in. For just $0.99, you can

get all five lives back immediately so you can keep playing. Candy Crush Saga is estimated to earn

the developer about $1 million a day in revenue from in-app purchases.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

16) A disadvantage of the current design of mobile apps like MyFitnessPal is that they are able to

fulfill only one need at a time.

Answer: FALSE

Explanation: Many mobile apps can meet several needs at once. MyFitnessPal, for example,

allows users to track their daily exercise, calories, and weight loss, and its social component

enables people to post their successes. This app also can interact with Fitbit, Jawbone UP, and

iHealth Wireless Scales.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

17) One of the seven primary needs that apps meet is the need to deliver.

Answer: FALSE

Explanation: There are seven primary needs that apps meet: the need to find "me" time, socialize,

shop, accomplish, prepare, discover, and self-express.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

18) The three-stage process that firms use to engage customers through social, online, and mobile

media involves listening, analyzing, and correcting.

Answer: FALSE

Explanation: The three-stage process firms use to engage their customers through social, online,

and mobile media involves listening to what customers have to say, analyzing the information

available through various touch-points, and finally implementing (or doing) social media tactics to

excite customers.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

19) eHarmony used metrics such as the bounce rate to understand what its clients want, both in a

service provider and in a mate.

Answer: TRUE

Explanation: The bounce rate refers to the percentage of times a visitor leaves a website almost

immediately, such as after viewing only one page. Analyzing which pages are the most frequent

entry and exit locations provides direction on how to make a website more effective.

Difficulty: 1 Easy

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

20) When designing a digital marketing campaign, the first step is to identify the target audience.

Answer: FALSE

Explanation: The first step should be to identify the strategy and goals for the program. The

second step is to identify the target audience.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

21) The development of strong, eye-catching images and designs is important in the "monitor and

change" step of developing a digital marketing campaign.

Answer: FALSE

Explanation: Strong, eye-catching images and designs are important in the campaign

development step (experiment and engage) of developing a digital marketing campaign.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

22) Sentiment analysis allows marketers to analyze data from content sites like Facebook, Twitter,

online blogs, and reviews to collect consumer comments about companies and their products.

Answer: TRUE

Explanation: Sentiment analysis allows marketers to analyze data from these sources to collect

consumer comments about companies and their products. The data are then analyzed to distill

customer attitudes and preferences, including reactions to specific products and campaigns.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

23) What effect of social media engagement is achieved when individuals post a picture to

Instagram, upload a video to YouTube, or share a link to an article they have liked on Facebook?

A) timelessness effect

B) dynamic effect

C) network effect

D) information effect

E) connected effect

Answer: E

Explanation: The connected effect is an outcome of social media engagement that satisfies

humans' innate need to connect with other people. Individuals achieve this connection by checking

in, posting a picture to Instagram, uploading a video to YouTube, or sharing a link to an article

they have liked on Facebook.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

24) If Katy Perry tweets a close-up of her eyelashes, lengthened by using a Cover Girl mascara

product, then Cover Girl will have instantly reached all her millions of followers. What effect of

social media engagement is this an example of?

A) timelessness effect

B) dynamic effect

C) network effect

D) information effect

E) connected effect

Answer: C

Explanation: If Katy Perry tweets a close-up of her eyelashes, lengthened by using a Cover Girl

mascara product, then Cover Girl will have instantly reached all her millions of followers. This is

an example of the network effect.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

25) Thought-sharing sites are particularly effective for creating

A) a sense of community.

B) excitement.

C) additional sales.

D) engaging content.

E) potential customers.

Answer: A

Explanation: Thought-sharing sites are particularly effective for creating a sense of community,

whether they take the form of personal, corporate, professional, or micro blogs.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

26) The 4E framework of social media includes

A) excite, educate, experience, engage.

B) excite, educate, entertain, engage.

C) expand, engage, educate, emphasize.

D) emphasize, excite, educate, engage.

E) expect, emphasize, educate, engage.

Answer: A

Explanation: The incorrect answers do not include the four correct elements of the 4E framework

of social media. The four elements are excite, educate, experience, and engage.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

27) According to your text, how do social media technologies help marketers connect with their

customers?

A) by helping firms appear more "hip" to customers

B) by helping build connections between customers and firms

C) by helping firms establish an Internet presence

D) by allowing customers to search for products more easily

E) by allowing firms to capture customer information

Answer: B

Explanation: The term social media refers to online and mobile technologies that distribute

content to facilitate interpersonal interactions, with the assistance of various firms that offer

platforms, services, and tools to help consumers and firms build their connections. Through these

connections, marketers and customers share information of all forms—from personal assessments

and thoughts about products or images, to uploaded personal pictures, music, and videos.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

28) The 4E framework for social media guides marketers in using social media effectively to build

and deepen customer relationships. All of the following are included in the 4E framework except

A) engagement.

B) energy.

C) excitement.

D) experience.

E) education.

Answer: B

Explanation: The 4E framework includes exciting the customer, educating the customer, offering

ways for the customer to experience the product or service, and engaging the customer.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

29) Dustin just posted an entry in his blog talking about how happy he is with his new GoPro

camera. In the blog he also posted videos that he took with the camera. As a customer of the

product, which facet of the 4E framework for social media is Dustin most exhibiting?

A) engagement

B) energizing

C) excitement

D) experiencing

E) educating

Answer: A

Explanation: In a sense, the first three Es set the stage for the last one: engaging the customer.

With engagement comes action, the potential for a relationship, and possibly even loyalty and

commitment. Through social media tools such as blogging and microblogging, customers actively

engage with firms and their own social networks.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

30) In terms of the 4E framework, in order for a firm's offer to excite its targeted customers, the

offer must be

A) unique.

B) relevant.

C) substantial.

D) easy to understand.

E) tangible.

Answer: B

Explanation: To excite customers, an offer must be relevant to its targeted customer. Relevancy

can be achieved by providing personalized offers, which are determined through insights and

information obtained from customer relationship management and/or loyalty programs.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

31) A Groupon offer for discounted theater tickets was sent to targeted customers who had

previously purchased movie or theater tickets. This best describes which of the 4E frameworks?

A) engage

B) energize

C) excite

D) experience

E) educate

Answer: C

Explanation: To excite customers, an offer must be relevant to its targeted customer. Relevancy

can be achieved by providing personalized offers, which are determined through insights and

information obtained from customer relationship management and/or loyalty programs.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

32) While waiting to be seated at a restaurant, Jason receives a customer loyalty coupon through an

app on his mobile phone for half off a dessert with the purchase of an entrée. This use of a

location-based software application is designed to promote which of the 4E framework objectives?

A) engage

B) energize

C) excite

D) experience

E) educate

Answer: C

Explanation: To excite customers, an offer must be relevant to its targeted customer. In some

cases, location-based software and applications help bring the offer to the customers when they are

in the process of making a purchase decision.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

33) While waiting in line to make a purchase at Best Buy, Janice sees signs reminding her to visit

the company's website for online specials and to sign up on her smartphone for the Best Buy

Loyalty Rewards Program. Other signs remind her that Best Buy will match competitors' prices on

any item they sell. This is an example of which 4E framework?

A) engage

B) energize

C) excite

D) experience

E) educate

Answer: E

Explanation: When potential customers arrive at the websites or stores, the marketer has a golden

opportunity to educate them about its value proposition and communicate offered benefits. This is

an example of educating the customer.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

34) What type of marketing pertains to all online marketing activities?

A) Internet

B) social media

C) mobile

D) digital

E) channel

Answer: D

Explanation: Digital marketing pertains to all online marketing activities, which includes all

digital assets, channels, and media, spanning not just online but also social media and mobile

marketing.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

35) Jose wants to upgrade his look before a job interview. A friend tells him about a men's clothing

line that allows potential customers to virtually try on suits and see what looks best. It even offers

an interactive "custom fit" feature. After checking out his options, Jose takes his measurements

and orders a suit without ever leaving his office. Virtually trying on a suit best describes which of

the 4E framework objectives?

A) engage

B) energize

C) excite

D) experience

E) educate

Answer: D

Explanation: Trying out a product or service before purchasing it is an example of the experience

aspect of the 4E framework. Being able to experience a product or service before buying it has

expanded the market significantly.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

36) It is not unusual to see firms offering free product samples in grocery stores to let customers try

the product before buying it. Similarly, in today's world of digital marketing, one can read a

chapter of a book before buying it, or watch YouTube videos on different ways to use a product.

All of these scenarios are aimed at which aspect of the 4E framework?

A) engage

B) energize

C) excite

D) experience

E) educate

Answer: D

Explanation: Today, consumers can download a chapter of a new book to their tablet before

buying it. They can try out a software option for a month before buying it. They often view

tutorials on everything from how to purchase caviar to how cowboy boots are made. Being able to

experience a product or service before buying it has expanded the market significantly.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

37) Andrew's Complete Cameras offers its customers an interactive website to help them choose

the best camera for their lifestyle. But the site's most-used feature is its user blog in which

customers—both satisfied and unsatisfied—talk about products they have purchased and the

service received at Andrew's. The user blog best describes which of the 4E frameworks for the

store's customers?

A) engage

B) energize

C) excite

D) experience

E) educate

Answer: A

Explanation: Through social media tools such as blogging and microblogging, customers

actively engage with firms and their own social networks. Such engagement can be negative or

positive. Positively engaged consumers tend to be more profitable consumers.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

38) When the Minnesota Timberwolves encouraged Facebook fans to post a great shot of a dunk

onto its Pinterest page for a chance to win tickets to a game, which dimension of the 4E framework

was being targeted?

A) educate

B) experience

C) engage

D) energize

E) excite

Answer: E

Explanation: Marketers use many kinds of social media-related offers to excite customers,

including mobile applications "apps" and games to get the customers excited about an idea,

product, brand, or company. Firms actively use social networks such as Facebook, Pinterest, and

WhatsApp to communicate deals that are likely to excite consumers.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

39) Which aspect of the 4E framework is aimed at action, the potential for a relationship, and

possibly even loyalty and commitment?

A) educate

B) energize

C) excite

D) experience

E) engage

Answer: E

Explanation: With engagement comes action, the potential for a relationship, and possibly even

loyalty and commitment.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

40) An example of the ________ effect is when BMW gained in-depth information about visitors

to a popular Chinese social media site and used that information to determine which visitors were

likely to be luxury car buyers and targeted advertising toward them.

A) media

B) information

C) connected

D) social

E) interconnected

Answer: B

Explanation: BMW gained in-depth information about visitors to a popular Chinese social media

site and used that data to determine which visitors were likely to be luxury car buyers and targeted

advertising toward them.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

41) Individuals achieve the ________ effect when they check in, post a picture to Instagram,

upload a video to YouTube, or share a link to an article they have liked on Facebook.

A) media

B) information

C) connected

D) social

E) interconnected

Answer: C

Explanation: People can connect by sharing different types of information, whether their

location, the food they have consumed, exercises they have completed, or a news article they find

interesting. And they achieve this connection by checking in, posting a picture to Instagram,

uploading a video to YouTube, or sharing a link to an article they have liked on Facebook.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

42) Coca-Cola relies on ________ technology to offer their customers a free Coke at the moment

they walk through a movie theater.

A) network

B) dynamic

C) radar

D) satellite

E) beacon

Answer: E

Explanation: Many customers enjoy the timely interactions with firms when they engage with

them at the point of purchase. To reach customers at the right time, Coca-Cola relies on beacon

technology—that is, technology that allows companies to detect where customers (who have

enabled the feature) are at each moment, through their smartphones.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

43) At the Sol Wave House hotel, located on the beautiful island of Majorca, Spain, a Twitter

concierge stays in constant contact with its guests. If a guest has a problem or question, the answer

is just a hashtag away. This is an example of the impact of which of the following?

A) dynamic effect

B) network effect

C) connected effect

D) interconnected effect

E) information effect

Answer: A

Explanation: The dynamic nature of social media is a very efficient way to get information or to

resolve disputes, and can provide the firm with insights into how to best provide a product or

service in the future. Customers can communicate their level of satisfaction with an issue and

suggest further actions to be taken.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

44) For companies, what digital marketing tool can both educate and excite customers?

A) corporate blog

B) microblog

C) weblog

D) professional blog

E) personal blog

Answer: A

Explanation: Corporate blogs created by the companies themselves are central to their digital

marketing efforts. These blogs can educate customers as they discuss their products or services,

and create excitement when they promote special offers.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

45) Trina is developing a marketing campaign for an organic stain-removal product. As "stain

removal" is rather dull, she is trying to educate consumers about the value and uniqueness of the

product, and appeal to the environmentally conscious. Which of the following is the best social

media application for this task?

A) Twitter

B) LinkedIn

C) blog

D) Instagram

E) Facebook

Answer: C

Explanation: In terms of the 4E framework, blogs are particularly effective at educating and

engaging users and in many cases enhance their experience with the products and services being

discussed.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

46) Mercedes-Benz bypassed Facebook for ________ for its social media campaign since its

professional audience is more in line with Mercedes' target customer base.

A) Amazon

B) LinkedIn

C) Twitter

D) YouTube

E) Google Analytics

Answer: B

Explanation: Mercedes-Benz bypassed Facebook for LinkedIn for its social media campaign

since its professional audience is more in line with Mercedes' target customer base.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

47) Staples provides their loyal customers with a relevant coupon based on previous purchases

through their mobile phone, while they are in the store. This represents the ________ aspect of the

4E framework of digital marketing.

A) engage

B) energize

C) excite

D) experience

E) educate

Answer: C

Explanation: Location-based software and applications can help bring a special offer to

customers right on their smartphones when they are in the process of making a purchase decision.

This best represents the excitement aspect of the 4E framework of digital marketing. For instance,

Staples may provide loyal customers a relevant coupon based on previous purchases through their

mobile phone, while they are in the store—a hopefully exciting experience.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

48) Manufacturers, retailers, and service providers have created and maintain websites, blogs, and

________to enable customers to interact with them over the Internet.

A) software applications

B) product reviews

C) hardware applications

D) a social media presence

E) social bookmarks

Answer: D

Explanation: Nearly all manufacturers, retailers, and service providers in operation today have

created and maintain websites, blogs, and a social media presence (such as on Facebook or

Twitter) to enable customers to interact with them over the Internet.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

49) Which of the following is the most powerful and influential online marketer in the United

States?

A) YouTube

B) Google

C) Amazon

D) Facebook

E) Twitter

Answer: C

Explanation: Arguably the most powerful and influential online marketer in the United States,

the firm that strives to be "earth's most customer-centric company; to build a place where people

can come to find and discover anything they might want to buy online," is Amazon.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

50) Twitter is an example of what type of blog?

A) microblog

B) corporate blog

C) personal blog

D) weblog

E) professional blog

Answer: A

Explanation: Twitter is an example of a microblog.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

51) The most loyal customers use

A) websites.

B) mobile apps.

C) multiple channels.

D) desktop computers.

E) in-store channels.

Answer: C

Explanation: The most loyal customers use multiple channels. Customers thus demand that firms

offer them a range of options, consistently and constantly, so that they can pick and choose the

channel from which to purchase at any specific time.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

52) Which of the following would be considered informational content on a website?

A) design

B) navigation

C) font

D) color

E) audio

Answer: E

Explanation: The information content on the site (text, graphics, video, and audio) is critical to

being successful with the 4Es of digital marketing.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

53) Which of the following is a traditional contextual element of website design?

A) graphic

B) video

C) audio

D) color

E) text

Answer: D

Explanation: The second element of website design involves the traditional contextual elements,

such as design (e.g., color, font) and navigation.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

54) What is the basis of any marketing strategy?

A) content

B) goals

C) community

D) commerce

E) connection

Answer: B

Explanation: The basis of any marketing strategy is its goals.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

55) What Amazon innovation might suggest replenishment of a previously ordered item, facilitate

the purchase of a tool that the shopper is missing for a DIY project, or even recommend

alternatives to consistently purchased products and brands?

A) Spark

B) Alexa

C) Amazon ecosystem

D) Pinterest

E) Twitter

Answer: B

Explanation: Amazon's influence spreads far beyond its increasingly important URL. New

marketing innovations are emerging for the Echo service, such that Alexa can prompt consumers

to purchase various items.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

56) Lauren decides to use Twitter to market her hand-painted scarves to other women on her

campus. She sets up a Twitter account with the name @uniquedesignsbylauren and posts this on

her Facebook page, making sure to tweet every few days. Soon Lauren is selling a lot of scarves.

Lauren's Twitter account is an example of

A) microblogging.

B) media sharing.

C) thought sharing.

D) professional networking.

E) social bookmarking.

Answer: A

Explanation: Twitter is an example of a microblogging site.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

57) This type of blog typically provides the highest level of digital marketing control for

companies.

A) professional blog

B) corporate blog

C) personal blog

D) microblog

E) weblog

Answer: B

Explanation: Corporate blogs created by the companies themselves are central to their digital

marketing efforts. These blogs can educate customers as they discuss their products or services,

and create excitement when they promote special offers. Although they do not have control over

customers' posts, and sometimes the customers' posts are negative, this two-way dialog with end

users is very engaging.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

58) From a marketing perspective, what role is played by professional bloggers?

A) engaging customers on behalf of companies

B) introducing new products to the marketplace

C) sharing videos and photos of products

D) recruiting employees

E) reviewing and giving product and service recommendations

Answer: E

Explanation: Professional bloggers review products and give recommendations on products and

services. Consumers seem to trust professional bloggers' reviews—except when they realize that

professional bloggers are being compensated for positive reviews.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

59) Of the various types of blogs, which one do marketers have the lowest level of control over?

A) personal

B) corporate

C) professional

D) corporate microblogs

E) professional microblogs

Answer: A

Explanation: Personal blogs are created by and usually for individuals, with relatively few

marketing implications. Thus, of the types of blogs, marketers have the lowest level of control over

this type.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

60) What is Spark?

A) an experimental, advanced search engine

B) a website where users can work together to create documents

C) a site offering analytical information about website usage

D) a social networking site

E) a video-sharing site intended for businesses

Answer: D

Explanation: Amazon's new commercially oriented social network Spark (which seeks to

combine the recommendations of Pinterest with the ease of Instagram), remunerates influential

social media actors for posting their submissions, suggestions, and reviews.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

61) Which of the following encourages visitors to delve deeper into a website, to explore other

pages and, in general, spend more time on the site?

A) downloadable bar codes

B) mobile apps

C) call-to-action buttons

D) corporate blogs

E) posted videos

Answer: C

Explanation: Call-to-action buttons such as Buy Now, Learn More, or Show Your Support

encourage visitors to delve deeper into a website, to explore other pages and, in general, spend

more time on the site.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

62) What is a microblog?

A) a blog whose owner doesn't post very often

B) a blog that supports only links to other posts

C) a blog run by a small business

D) a blog that allows people to share their thoughts, opinions, and feelings

E) a blog that targets a very small consumer group

Answer: D

Explanation: Whereas they previously might have been confined to a journal or diary, kept

hidden in a person's room, blogs (from "weblog") or microblogs (e.g., Twitter) allow people to

share their thoughts, opinions, and feelings with the entire world.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

63) American Express operates a blog called American Express Open Forum, where business

experts share their wisdom in various posts. The information is both engaging and educational.

American Express Open Forum is an example of a

A) corporate blog.

B) network blog.

C) personal blog.

D) professional blog.

E) social blog.

Answer: A

Explanation: Corporate blogs are blogs created by companies in order to engage their customers.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

64) Isabel loves to read and write. She started a blog about books, including writing hints and book

reviews. The readership of her blog gradually increased, and eventually publishers started sending

her new books, hoping she would review them. Over time, Isabel's blog has changed from a

________ blog to a ________ blog.

A) professional; network

B) professional; personal

C) personal; professional

D) personal; social

E) social; network

Answer: C

Explanation: By receiving free merchandise in return for reviews, Jordan's blog has moved from

a personal blog to a professional blog.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

65) All of the following are primary needs that apps meet except

A) the need to find "me time."

B) the need to socialize.

C) the need to shop.

D) the need to share.

E) the need to discover.

Answer: D

Explanation: There are seven primary needs that apps meet: the need to find "me time," socialize,

shop, accomplish, prepare, discover, and self-express.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

66) Which of the following is a pricing model for apps discussed in your text?

A) cost-plus

B) ad-supported

C) premium

D) per-use

E) data-driven

Answer: B

Explanation: The four types of pricing models for apps are ad-supported, freemium, paid apps,

and paid apps with in-app purchases.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

67) Of the seven primary motivations for mobile app usage, which one do people spend the most

amount of time on each month?

A) need for "me time"

B) need for socializing

C) need for shopping

D) need for accomplishing

E) need for self-expression

Answer: A

Explanation: Although we need to organize, accomplish, and socialize, we also need to have time

set aside just for us—to be unproductive. The most popular need is all about entertainment and

relaxation. Not surprisingly, people spend nearly half their time on their smartphone seeking fun.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

68) In a process called ________, a customer visits a store to touch, feel, and even discuss a

product's features with a sales associate, and then instantly compares the prices online to see

whether a better deal is available.

A) deal-finding

B) window-shopping

C) highlighting

D) matching

E) showrooming

Answer: E

Explanation: Shoppers want to shop anytime they choose. In a process called showrooming, a

customer visits a store to touch, feel, and even discuss a product's features with a sales associate,

and then instantly compares the prices online to see whether a better deal is available.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

69) Which of the following apps would help consumers fulfill their "need to accomplish"?

A) Snapchat

B) Google Calendar

C) Flipboard

D) MyFitnessPal

E) SkyMap

Answer: D

Explanation: The need to accomplish means that people seek to manage their finances, improve

their health, or become more productive through apps. MyFitnessPal allows users to track their

daily exercise, calories, and weight loss, and its social component enables people to post their

successes.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

70) Apps like calendars, trip planners, and flight trackers help consumers fulfill which primary

motivation?

A) to prepare

B) to accomplish

C) to discover

D) to work

E) to organize

Answer: A

Explanation: Calendars, flight trackers, and trip planning apps help consumers meet their need to

prepare. For example, Google Trips helps people plan vacations by storing and organizing all their

travel information, such as flight itineraries and hotel reservations.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

71) ________ are free to download, but appear as ads on the screen; they generate revenue while

users interact with the app.

A) Ad-supported apps

B) Freemium apps

C) In-app purchases

D) Paid apps

E) Paid apps with in-app purchases

Answer: A

Explanation: Ad-supported apps are free to download, but appear as ads on the screen. They

generate revenue while users interact with the app. Although there are many of these types of apps,

the majority of app revenue is generated from other forms of pricing models.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

72) Which app pricing model is used by the app Candy Crush Saga?

A) ad-supported apps

B) freemium apps

C) in-app purchases

D) paid apps

E) paid apps with in-app purchases

Answer: B

Explanation: Freemium apps are apps that are free to download but include in-app purchases that

enable the user to enhance an app or game. In Candy Crush Saga, you get five lives to play in the

game. When you lose a life, it takes 30 minutes in real-life time to get that life back. This is where

in-app purchases come in. For just $0.99, you can get all five lives back immediately so you can

keep playing. Candy Crush Saga is estimated to earn the developer about $1 million a day in

revenue from in-app purchases.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

73) The elements of the digital marketing engagement process are.

A) listening, reacting, and correcting.

B) exciting, listening, and doing.

C) analyzing, developing, and engaging.

D) listening, engaging, and evaluating.

E) listening, analyzing, and doing.

Answer: E

Explanation: The three-stage process for digital marketing engagement involves listening to

what customers have to say, analyzing the information available through various touch-points, and

implementing (or doing) social media tactics to excite customers.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

74) Companies can find out a lot about customers using sentiment analysis on sites like Facebook

and Twitter, or put another way, by

A) reacting.

B) exciting.

C) engaging.

D) listening.

E) educating.

Answer: D

Explanation: Using a technique known as sentiment analysis, marketers can analyze the content

found on sites like Facebook, Twitter, and online blogs and reviews to assess the favorableness or

unfavorableness of the sentiments.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

75) One important measure of social media's effectiveness is the percentage of site visitors who

take the action the site owner hoped for—making a purchase, subscribing to a service, or donating

money, for example. This measure is called the site's

A) conversion rate.

B) extended network.

C) bounce rate.

D) hits.

E) click paths.

Answer: A

Explanation: The conversion rate is a measure that indicates what percentage of visitors or

potential customers act as the marketer hopes, whether by clicking, buying, or donating. Not only

does it measure how well the site is achieving its goals, it can also signal a serious problem.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

76) When a company that uses social media runs a contest online, it will measure its effectiveness

in a variety of ways. One such measure is the conversion rate. The conversion rate for the contest

promotion would be

A) the number of people who entered the contest.

B) the number of people who entered the contest plus the number of people who visited the page

describing the contest.

C) the number of people who visited the page describing the contest.

D) the percentage of visitors to the page describing the contest who entered the contest.

E) the percentage of fans of the company's page who learned about the contest.

Answer: D

Explanation: The conversion rate is a measure that indicates what percentage of visitors or

potential customers act as the marketer hopes, whether by clicking, buying, or donating. Not only

does it measure how well the site is achieving its goals, it can also signal a serious problem. Sites

with low conversion rates could possibly not be doing a good job of persuading visitors to take

action, or are possibly not doing a good job of attracting the right kind of site visitor (i.e., the

appropriate target market).

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

77) Suppose that Burger King wanted to evaluate social media content to find out how well its

most recent advertising campaign was being received by consumers. This could be done using

A) Google Analytics.

B) sentiment analysis.

C) click path analysis.

D) keyword analysis.

E) bounce rate.

Answer: B

Explanation: Sentiment analysis analyzes data from a variety of social media sites to collect

consumer comments about products, services, or (in this case) promotional campaigns.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

78) Despite its vivid design, the website for Molly's Bookstore did not seem to attract customers

who lingered. In fact, most website visitors left the site before they made a purchase. Which

measure does the owner need to address?

A) sentiment analysis

B) page views

C) bounce rates

D) keyword analysis

E) mobilization rates

Answer: C

Explanation: Digital marketers use metrics such as the bounce rate, which refers to the

percentage of times a visitor leaves the site almost immediately, such as after viewing only one

page. This would be the most helpful for the bookstore owner.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

79) Companies that specialize in sentiment analysis are least likely to look at ________ for data.

A) personal blogs

B) Facebook

C) Twitter

D) YouTube

E) online reviews

Answer: D

Explanation: Marketers analyze the content found on sites like Facebook, Twitter, online blogs,

and online reviews to assess the favorability or unfavorability of the sentiments.

Difficulty: 1 Easy

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

80) One measure of traffic from visitors on sites, the total requests for a page, is measured in units

called

A) clickers.

B) hits.

C) paths.

D) tweets.

E) impressions.

Answer: B

Explanation: Measures of website traffic include hits (i.e., total requests for a page), visits to a

particular site or page, unique visitors to the site, and page views.

Difficulty: 1 Easy

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

81) William has developed a better type of medication vial for travelers. He is not sure how to

develop a marketing program for his product, as there are a few similar ones on the market. What

technique can William use to analyze data from his competitor's websites, particularly to learn

how people search for similar products online?

A) click path data

B) sentiment analysis

C) social influence

D) keyword analysis

E) budget analysis

Answer: D

Explanation: With information obtained from keyword analysis, marketers can refine their

websites by choosing keywords to use on their site that their customers use.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

82) What is a bounce rate?

A) how users proceed through information on the site

B) percentage of times a visitor leaves the site after viewing one page

C) measure that indicates what percentage of visitors or potential customers act as the marketer

hopes

D) number of unique visitors to the site

E) amount of traffic on the site

Answer: B

Explanation: The bounce rate refers to the percentage of times a visitor leaves the site almost

immediately, such as after viewing only one page.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

83) How is the cost to companies and entrepreneurs using Google Analytics calculated?

A) a few cents per 100 hits

B) correlation to conversion rates of website

C) flat fee

D) free for individuals; corporate rates based on usage

E) free for everyone

Answer: E

Explanation: Google Analytics offers a sophisticated, in-depth form of analysis, all for free.

Difficulty: 1 Easy

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

84) The first step in the process of creating a digital marketing campaign is to

A) develop a budget.

B) identify the target audience.

C) set goals.

D) design the elements of the campaign.

E) monitor the program.

Answer: C

Explanation: The first step is to identify a strategy and goals.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

85) The final step in the process of creating a digital marketing campaign is to

A) develop a budget.

B) identify the target audience.

C) set goals.

D) design the elements of the campaign.

E) monitor the program.

Answer: E

Explanation: The final step is to review the success of the campaign and make changes as

necessary.

Difficulty: 1 Easy

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

86) When developing a digital marketing campaign, what is unique about the copy and images to

be used that is more critical with social media that other forms of IMC?

A) They need to be humorous.

B) They need to be updated almost constantly.

C) They need to feature only young actors.

D) They must appear only in color (not black and white).

E) They must appeal to a diverse, multicultural audience.

Answer: B

Explanation: An aspect that is more critical with social media than other forms of integrated

marketing communications (IMC) is that the images and messages need to be updated almost

constantly. Because people expect changing content online, it would be inappropriate to run the

same campaign for several months.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

87) A disadvantage for companies using a "daily budget" such as that offered by Facebook to its

advertisers is that it

A) has poor cost control.

B) is unable to make adjustments.

C) may limit exposure if ad is very successful.

D) is unattractive to consumers.

E) encourages negative feedback.

Answer: C

Explanation: This option can be risky if the firm is getting great feedback and, all of a sudden, a

compelling ad disappears.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

88) Explain how social media have changed how firms communicate with their customers relative

to traditional forms of marketing products.

Answer: Answers will vary. Discussion should include that the changes and advances in online,

social media, and mobile technologies have created a perfect storm, forcing firms to change how

they communicate with their customers. Traditional ways to market products, using

brick-and-mortar stores, traditional mass media (e.g., print, television, radio), and other sales

promotional vehicles (e.g., mail, telemarketing), are no longer sufficient for many firms. The

presence of online, social media, and mobile marketing is steadily expanding relative to these

more traditional forms of integrated marketing channels and communications.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

89) Explain the 4E framework for digital marketing and identify the social and mobile media tools

that are most effective for accomplishing each of the 4Es.

Answer: The answer should include the following points:

• Excite—Excite customers with relevant offers. Social networks and mobile applications are

effective.

• Educate—Educate them about the offering. Thought-sharing sites can be effective.

• Experience—Help them experience products directly or indirectly. Media-sharing sites can be

effective.

• Engage—Give them an opportunity to engage via digital marketing activities. Media-sharing

and thought-sharing sites are effective.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

90) What forms of digital marketing are good choices for "exciting" the customer?

Answer: Answers will vary, but may include social networks such as Facebook, Pinterest, and

WhatsApp because of their ability to communicate deals that are likely to excite consumers. Also,

location-based software and applications help bring offers to consumers when they are in the

process of making a purchase decision.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) A local manufacturer has developed a scented USB drive targeted strictly at male consumers.

The scents include options such as pine, bacon, and beer. Using the 4E framework, briefly describe

the target client, and outline a complete digital marketing program for this new product.

Answer: The targeted client is likely to be young, educated, and technologically savvy. The

digital marketing program should include reasonable suggestions for each of the 4Es (excite,

educate, experience, and engage).

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Create

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) Explain how YouTube helps customers "experience" a product or service.

Answer: Answers will vary, but should include a discussion of how videos posted on YouTube

can provide vivid information about a firm's goods and services—how they work, how to use

them, and where they can be obtained. YouTube and similar sites can come relatively close to

simulating real, rather than virtual, experiences.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

93) In terms of the 4E framework, what is the significance of "engaging" the customer?

Answer: Answers will vary, but should show an understanding that with engagement comes

action and the potential for a relationship, and possibly even loyalty and commitment on the part of

the customer. Students should also understand that engagement can be either positive or negative.

Positively engaged consumers tend to be more profitable consumers.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

94) Suppose that Samsung wants to create a social media program to build consumer engagement

around a new line of smartphones. Using the 4E framework, explain (with examples) how

Samsung could build this program.

Answer: Answers will vary, but should include reasonable suggestions for each of the 4Es

(excite, educate, experience, and engage).

Difficulty: 3 Hard

Topic: Technological Environment

Learning Objective: 03-01 Describe the 4E framework of digital marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

95) Briefly describe the three-stage process for engaging customers using online, social, and

mobile media.

Answer: The three-stage process involves listening to what customers have to say, analyzing the

information available through various touch-points, and implementing (or doing) social media

tactics to excite customers.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

96) Suppose that a restaurant near campus wants to use social media to get more students to visit

the restaurant. The manager plans to offer a free dessert to anyone who "likes" the restaurant's

Facebook page. Describe some data the restaurant should collect to measure the effectiveness of

the campaign.

Answer: A good starting point is to measure the number of page views received by the page

explaining the promotion. Next, measure the number of "likes" that occur while the promotion is

ongoing, although some of those might have occurred even without the promotion. Finally, the

number of times someone redeems the free-dessert offer should be measured.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Analyze

AACSB: Technology

Accessibility: Keyboard Navigation

97) Suppose that a restaurant near campus wants to use social media to get more people to visit the

restaurant. The manager plans to offer a free dessert to anyone who "likes" the restaurant's

Facebook page. In this situation, how would you measure the conversion rate?

Answer: The goal of the promotion is to get people to visit the restaurant. The conversion rate is

a measure that indicates what percentage of visitors or potential customers act as the marketer

hopes, whether by clicking, buying, or donating. It measures how well the site is achieving its

goals. However, this requires offline measurement (since the offer is redeemed offline).

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Analyze

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) Suppose that a restaurant near campus wants to use social media to get more students to visit

the restaurant. The manager plans to offer a free dessert to anyone who "likes" the restaurant's

Facebook page. Describe some data the restaurant should collect to measure the effectiveness of

the campaign.

Answer: A good starting point is to measure the number of page views received by the page

explaining the promotion. Next, measure the number of "likes" that occur while the promotion is

ongoing, although some of those might have occurred even without the promotion. Finally, the

number of times someone redeems the free-dessert offer should be measured.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-05 Recognize and understand the components of a digital marketing

strategy.

Bloom's: Analyze

AACSB: Technology

Accessibility: Keyboard Navigation

99) Burger King has become known for launching edgy—and often risky—advertising and social

media campaigns. How might Burger King use sentiment analysis to gain insights into consumers'

reactions to a new ad campaign?

Answer: Burger King could use sentiment analysis to analyze the content found on sites such as

Facebook, Twitter, and online blogs and reviews to assess the favorability or unfavorability of the

sentiments. Sentiment analysis allows marketers to analyze data from these sources to collect

consumer comments about companies and their products.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 03-02 Examine the seven critical elements of online marketing.; 03-05

Recognize and understand the components of a digital marketing strategy.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

100) Firms use primary online channels for a variety of goals that reflect the 4Es. Describe the 4Es

and the online channels that reflect these goals.

Answer: Answers will vary, but should include the following: informational websites that

educate consumers, entertaining websites that excite them, transactional ecommerce channels to

help them experience the products they sell, culminating in websites that engage with consumers.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

101) Give an example of how digital marketing can be used to provide improved customer service.

Answer: Answers may vary; the text example is of Sephora, which has perfected the art of

customer service in-store, online, and in social media.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

102) Compare the role of corporate, professional, and personal bloggers regarding a new product.

Choose one product/service and use this as an example in your explanation.

Answer: Answers will vary, but should address the role of corporate blogs (created by the

company), professional blogs (unbiased product reviews and recommendations), and personal

blogs (created by and usually for individuals, with relatively few marketing implications).

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

103) What is the purpose of search engine marketing (SEM)?

Answer: Search engine marketing (SEM) is an activity used in online searches to increase the

visibility of a firm by using paid searches to appear higher up in search results.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) Describe a crowdsourcing and provide an example of how it is used to build community in

online marketing.

Answer: Crowdsourcing is when users submit ideas for a new product or service, and/or

comment and vote on the ideas submitted by others. The text uses the example of LEGO, which

allows individuals to upload ideas for new LEGO products. The ideas receiving a large number of

votes are reviewed by LEGO's product design team, and if approved, a portion of the sales are

shared with whoever submitted the design.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

105) How do companies like American Express utilize corporate blogs? Provide an example.

Answer: Answers will vary. The text describes the American Express Open Forum site that

invites business experts to share their wisdom in various posts. Because the information is so

engaging and educational, the site draws many visitors, and though American Express does not

create the content (or, hopefully, have to pay for it), it retains editorial control.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

106) Discuss why mobile marketing should be considered significant by companies and marketing

firms.

Answer: In the United States, 77 percent of adults own a smartphone and more than half of them

make purchases on these devices. Almost 200 billion apps were downloaded globally in 2017, and

customers spent more than $86 billion, even though nearly 93 percent of apps downloaded are free.

Mobile app downloads are expected to grow to 353 billion annually by 2021. Thus, mobile

marketing is significant and growing.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-02 Examine the seven critical elements of online marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

107) Marketers rely on different types of online marketing strategies. Describe when a

thought-sharing site would be particularly effective.

Answer: Answers will vary, but should include a description as follows:

Thought-sharing sites are particularly effective for creating a sense of community, whether they

take the form of personal, corporate, professional, or micro blogs. The different types of blogs

have varying degrees of efficacy with regard to 4E framework of digital marketing.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

108) List and describe the seven primary motivations for mobile app usage.

Answer: Answers should include a description of each of the seven primary motivations for

mobile app usage.

• "Me time"—seeking relaxation or entertainment

• Socializing—interacting with other people

• Shopping—seeking a product or a service

• Accomplishing—managing finances, health, and productivity

• Preparation—planning for upcoming activities

• Discovery—seeking news and information

• Self-expression—participating in hobbies and interests

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

109) Select four of the seven primary motivations for mobile apps and provide examples of apps

that correspond to each motivation.

Answer: Answers will vary, but may include:

• "Me time"—various game apps (Candy Crush Saga), or TV/movie apps (Netflix)

• Socializing—Twitter, Facebook, Weixin

• Shopping—Showrooming Amazon app

• Accomplishing—MyFitnessPal

• Preparation—Google Trips, flight planners, calendars

• Discovery—Flipboard

• Self-expression—Tapatalk

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

110) Explain the concept of "showrooming," including what type of app it is associated with and

what primary motivation need it fulfills.

Answer: In a process called showrooming, a customer visits a store to touch, feel, and even

discuss a product's features with a sales associate, and then instantly compares the prices online to

see whether a better deal is available. Using the Amazon app, if the Amazon price is better, the

customer can buy the product online with a single click.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

111) List and describe the four basic ways of generating revenue from apps.

Answer: Answers should include a description of each of the four basic ways of generating

revenue from apps.

• Ad-supported apps are free to download, but appear as ads on the screen. They generate

revenues while users interact with the app.

• Freemium apps are free to download but include in-app purchases that enable the user to

enhance an app or game.

• Paid apps charge the customer an upfront price to download the app, but offer full functionality

once downloaded.

• Paid apps with in-app purchases require the consumer to pay initially to download the app and

then offer the ability to buy additional functionality.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

112) You are the owner of a new deli that encourages customers to "build their own sandwiches."

What social and mobile media tools could you use to enhance your business?

Answer: Answers will vary, but should include the use of various social and mobile media tools.

An example would be the following: The deli could set up a Facebook page to let customers know

about daily specials and offer coupons; it could encourage customers to post photos of their

sandwich creations on Instagram; it could set up a Twitter account to educate customers on the deli

and its products; it could develop a mobile app that would automatically calculate the calories of

customers' sandwich creations.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-04 Understand various motivations for using mobile applications.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

113) List, in order, the steps involved in developing a digital marketing campaign.

Answer:

1. Identify strategy and goals

2. Identify target audience

3. Develop the budget

4. Develop the campaign: Experiment and engage

5. Monitor and change

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-05 Recognize and understand the components of a social digital

marketing strategy.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

114) Describe the Wheel of Social Media Engagement.

Answer: The Wheel of Social Media Engagement comprises the fundamental drivers of social

media engagement as five related effects. The authors propose that the hub is a repository of past

and current social media engagements, and the circles around the wheel are the five effects that

drive social media. The Wheel of Social Media Engagement consists of the information effect,

connected effect, network effect, dynamic effect, and timeliness effect.

Difficulty: 2 Medium

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

115) Provide an example of how a company, such as Coca-Cola, might engage a customer through

the use of beacon technology.

Answer: Answers will vary, but should include that many customers enjoy the timely

interactions with firms when they engage with them at the point of purchase. To reach customers at

the right time, Coca-Cola relies on beacon technology, that is, technology that allows companies to

detect where customers (who have enabled the feature) are at each moment, through their

smartphones. Coca-Cola's pilot campaign offered moviegoers a free Coke at the moment they

walked through the movie house if they had already downloaded the appropriate app from the

brand.

Difficulty: 3 Hard

Topic: Social Media as Part of the Marketing Plan

Learning Objective: 03-03 Understand the drivers of social media engagement.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 4 Conscious Marketing, Corporate Social Responsibility, and Ethics

1) The purpose of conscious marketing is to make a product by selling products and services.

Answer: FALSE

Explanation: Conscious marketing entails a sense of purpose for the firm that is higher than

simply making a profit by selling products and services. It encompasses four overriding principles:

recognition of marketing's greater purpose; consideration of stakeholders and their

interdependence; the presence of conscious leadership, creating a corporate culture; and the

understanding that decisions are ethically based.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

2) Marketing ethics is concerned with distinguishing between right and wrong actions and

decisions that arise in a business setting, according to broad and well-established moral and ethical

principles that might arise in a business setting, and any special duties or obligations that apply to

persons engaged in commerce.

Answer: FALSE

Explanation: Business ethics is concerned with distinguishing between right and wrong actions

and decisions that arise in a business setting, according to broad and well-established moral and

ethical principles that might arise in a business setting, and any special duties or obligations that

apply to persons engaged in commerce.

Difficulty: 1 Easy

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

3) Marketing ethics can involve societal issues such as the sale of products or services that may

damage the environment or global issues such as the use of child labor.

Answer: TRUE

Explanation: Marketing ethics examines ethical situations that are specific to the domain of

marketing, including societal, global, or individual consumer issues. They can involve societal

issues such as the sale of products or services that may damage the environment, global issues such

as the use of child labor, or individual consumer issues such as misrepresenting a product in

advertising or marketing dangerous products.

Difficulty: 1 Easy

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

4) The consideration of stakeholders and their interdependence is one of the four overriding

principles of conscious marketing.

Answer: TRUE

Explanation: The four overriding principles of conscious marketing include: recognition of

marketing's greater purpose; consideration of stakeholders and their interdependence; the presence

of conscious leadership, creating a corporate culture; and the understanding that decisions are

ethically based.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

5) Key corporate social responsibility (CSR) stakeholders include employees, customers, the

marketplace, and society.

Answer: TRUE

Explanation: Key corporate social responsibility (CSR) stakeholders include employees,

customers, the marketplace, and society.

Difficulty: 1 Easy

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

6) When Walmart pressured its vendors to supply it with environmentally friendly merchandise

with labels to prove it, this effort most relates to the concept of sustainability.

Answer: TRUE

Explanation: This is an example of sustainability. According to the U.S. Environmental

Protection Agency, "Sustainability is based on a simple principle: Everything that we need for our

survival and well-being depends, either directly or indirectly, on our natural environment."

Therefore, sustainable actions, including sustainable marketing, allow "humans and nature [to]

exist in productive harmony, that permit fulfilling the social, economic and other requirements of

present and future generations."

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

7) One way in which conscious marketing differs from corporate social responsibility (CSR) is

that CSR takes a holistic, ecosystem view of business as a complex, adaptive system.

Answer: FALSE

Explanation: Corporate social responsibility (CSR) differs from conscious marketing in that CSR

reflects a mechanistic view of business.

Difficulty: 1 Easy

Topic: Corporate Social Responsibility

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

8) From a conscious marketing perspective, social responsibility is at the core of the business

through the higher purpose and viewing the community and the environment as stakeholders.

Answer: TRUE

Explanation: From a conscious marketing perspective, social responsibility is at the core of the

business through the higher purpose and viewing the community and the environment as

stakeholders.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

9) Coca-Cola spent $102 million through The Coca-Cola Campaign focusing on water

stewardship, healthy and active lifestyles, community recycling, and education. This initiative is

an illustration of a CSR program.

Answer: TRUE

Explanation: This is an example of a CSR program.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

10) The first step in ethical decision making is to gather information and identify stakeholders.

Answer: FALSE

Explanation: The first step in ethical decision making is to identify the issue.

Difficulty: 1 Easy

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

11) The Golden Rule test asks the question, "Would I like to be on the receiving end of this action

and all its potential consequences?"

Answer: TRUE

Explanation: The Golden Rule test asks the question, "Would I like to be on the receiving end of

this action and all its potential consequences?"

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

12) A roofing company agreed to complete a job in one week and collected a 50 percent deposit,

but never showed up to do the job. The same roofing company then donated $6,000 to a local

children's hospital. The roofing company could be considered socially responsible.

Answer: TRUE

Explanation: It is possible to be socially responsible yet unethical, which describes this particular

company. Its failure to meet its agreements demonstrates ethical issues; however, its community

support shows social responsibility.

Difficulty: 3 Hard

Topic: Ethical Issues in Marketing

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

13) BlendMate, a firm that manufactures high-end blenders, donates $10 per blender sold to a local

food bank. This is a form of corporate social responsibility.

Answer: TRUE

Explanation: When companies embrace CSR, they appeal not only to their shareholders, but also

to their primary stakeholders—including their own employees, consumers, the marketplace, and

society at large. In this case, the company would be supporting a charity that helps society at large.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

14) Ethos Water donates 2 percent of its profits to children in need of clean water. This action

demonstrates that Ethos Water is a firm with a strong ethical climate.

Answer: FALSE

Explanation: This is an example of corporate social responsibility, as it is a nonmandated action

designed to help the community at large.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

15) Corporate social responsibility refers to the coordinated actions of government organizations

to address the ethical, social, and environmental impacts of business operations.

Answer: FALSE

Explanation: Corporate social responsibilities are not mandated by any law or regulation but

instead are associated with the demands, expectations, requirements, and desires of various

stakeholders.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

16) Among the key differences between conscious marketing and CSR is the unique view on

shareholders that is absolutely critical to CSR.

Answer: FALSE

Explanation: Among the key differences between conscious marketing and CSR, we can

highlight the unique view on shareholders that is absolutely critical to conscious marketing.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) Stakeholders typically include the firm's employees and their families, customer groups,

members of the community, the environment, and the firm's partners and competitors.

Answer: TRUE

Explanation: Stakeholders typically include the firm's employees and their families, customer

groups, members of the community, the environment, and the firm's partners and competitors.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

18) Brainstorming in the ethical decision-making framework occurs immediately following the

identification of issues.

Answer: FALSE

Explanation: Brainstorming occurs after the firm has identified the stakeholders and their issues

and gathered all available data.

Difficulty: 1 Easy

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

19) Badger Hardware was planning on raising the pay of its managers, but not its frontline

employees. To determine the potential ethical issues, it should first identify the issues involved so

that it can gather facts related to those issues.

Answer: TRUE

Explanation: Identifying issues is the first step in the ethical decision-making framework.

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

20) A common view in today's business climate is that the only responsibility of a business is to its

shareholders, so its only purpose is to make a profit.

Answer: FALSE

Explanation: At one point, a popular view held that the only responsibility of a business was to its

shareholders, so its only purpose was to make a profit. In many parts of the world, that view has

been supplanted with the idea that companies must consider their responsibilities to a wider range

of stakeholders who make up society.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

21) Tipco Computer Company decided to market its tablet computers to preschoolers, even though

the tablets were better suited for much older children. This potentially unethical activity takes

place during the control phase of the strategic marketing planning process.

Answer: FALSE

Explanation: Firms identify potential target markets and ways to deliver the four Ps to them in the

implementation phase.

Difficulty: 3 Hard

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

22) Once the marketing strategy is implemented, controls must be in place to be certain that the

firm has actually done what it has set out to do.

Answer: TRUE

Explanation: Control is the final stage of the strategic marketing planning process.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) Conscious marketers have no need for contingency plans that reflect their conscious leadership

and conscious culture.

Answer: FALSE

Explanation: Conscious marketers adopt contingency plans from the start, reflecting their

conscious leadership and conscious culture. In this sense, conscious marketing remains an ongoing

crucial component of the strategic marketing planning process and should be incorporated into all

the firm's decision making down the road.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) What is the most basic corporate social responsibility to employees?

A) To ensure the highest pay for the work performed

B) To ensure a safe working environment

C) To ensure all potential conscious marketing issues are raised

D) To assess each employee's level of confidence

E) To ensure the firm primarily serves the community in surrounding neighborhoods

Answer: B

Explanation: The most basic corporate social responsibility to employees is to ensure a safe

working environment, free of threats to their physical safety, health, or well-being.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

25) Pepsi has cooperated with America on the Move to improve many of its products and their

labels, such as reducing the saturated fat in its Frito-Lay Ruffles. This form of social responsibility

most directly impacts

A) marketers.

B) prospective employees.

C) supply chain partners.

D) shareholders.

E) customers.

Answer: E

Explanation: This most directly impacts customers, although if it increases sales of the products

it could impact shareholders down the road.

Difficulty: 3 Hard

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) The principle that decisions be ethically based is part of the concept of

A) marketing analytics.

B) individual consumer issues.

C) conscious marketing.

D) the triple bottom line.

E) corporate social responsibility.

Answer: C

Explanation: Conscious marketing entails a sense of purpose for the firm that is higher than

simply making a profit by selling products and services. It encompasses four overriding principles,

one of which is the understanding that decisions be ethically based.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) Conscious marketing encompasses all of the following overriding principles except

A) recognition of marketing's greater purpose.

B) recognition of the company's bottom line.

C) consideration of stakeholders and their interdependence.

D) the presence of corporate leadership, creating a corporate culture.

E) the understanding that decisions are ethically based.

Answer: B

Explanation: Conscious marketing encompasses these four overriding principles: recognition of

marketing's greater purpose; consideration of stakeholders and their interdependence; the presence

of conscious leadership, creating a corporate culture; and the understanding that decisions are

ethically based.

Difficulty: 1 Easy

Topic: Ethical Issues in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) Marketing ethics is concerned with all of the following except

A) the sale of products or services that may damage the environment.

B) the use of child labor.

C) misrepresenting a product.

D) marketing dangerous products.

E) distinguishing between right and wrong actions in a business setting.

Answer: E

Explanation: Marketing ethics is concerned with societal issues such as the sale of products or

services that may damage the environment and global issues such as the use of child labor.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

29) The sale of products that may damage the environment, the use of sweatshop labor, and the

marketing of dangerous products are examples of

A) internal, controllable marketing issues.

B) issues that don't even need to be discussed in ethical firms.

C) marketing issues but not ethical issues.

D) marketing ethical issues.

E) ethical issues but not marketing issues.

Answer: D

Explanation: These are examples of ethical issues of concern to marketers. Even in a firm with a

strong ethical climate, some business opportunities that arise may raise ethical concerns and need

to be considered in the context of the firm's ethical values.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) When Walmart issued new standards for livestock products that were raised on food without

antibiotics or artificial growth hormones, it considered multiple ________, including the ranchers

that supply the food, its customers, and animal welfare groups.

A) stakeholders

B) investors

C) marketing executives

D) bankers

E) corporate shareholders

Answer: A

Explanation: When Walmart issued new standards for livestock products that were raised on

food without antibiotics or artificial growth hormones, it considered multiple stakeholders

including the ranchers that supply the food, its customers, and animal welfare groups.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) All of the following are included in the decision-making metric except

A) the publicity test.

B) the likability test.

C) the moral mentor test.

D) the transparency test.

E) the admired observer test.

Answer: B

Explanation: The ethical-decision making metric includes the following tests: publicity, moral

mentor, admired observer, transparency, person in the mirror, and golden rule.

Difficulty: 1 Easy

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) ________ provides a detailed, multipronged "Statement of Ethics" that can serve as a

foundation for marketers.

A) Johnson & Johnson

B) The American Marketing Association

C) The Mayo Clinic

D) A group of well-respected marketing executives

E) The Advertising Association of America

Answer: B

Explanation: The American Marketing Association (AMA) provides a detailed, multipronged

"Statement of Ethics" that can serve as a foundation for marketers, emphasizing that "As marketers

. . . we not only serve our organizations but also act as stewards of society in creating, facilitating

and executing the transactions that are part of the greater economy."

Difficulty: 1 Easy

Topic: Role of Ethics in Marketing

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

33) In the ethical decision-making metric, the question that asks "Would I want the person I admire

most to see me doing this?" applies to the

A) publicity test.

B) admired observer test.

C) moral mentor test.

D) transparency test.

E) person in the mirror test.

Answer: C

Explanation: This question applies to the admired observer test.

Difficulty: 1 Easy

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) The ________ for natural skin care company Burt's Bees is to "create natural, Earth-friendly

personal care products formulated to help you maximize your well-being and that of the world

around you."

A) mission statement.

B) market analysis

C) company description

D) financial plan

E) executive summary

Answer: A

Explanation: With strong leadership, marketers can introduce conscious marketing at the

beginning of the planning process by including statements in the firm's mission or vision

statements. For example, the mission statement for natural skin care company Burt's Bees is to

"create natural, Earth-friendly personal care products formulated to help you maximize your

well-being and that of the world around you."

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) In the ________ stage, a firm will decide what level of commitment to its ethical policies and

standards it is willing to declare publicly and how the firm plans to balance the needs of its various

stakeholders.

A) brainstorming

B) implementation

C) planning

D) control

E) evaluation

Answer: C

Explanation: In the planning stage, the firm will decide what level of commitment to its ethical

policies and standards it is willing to declare publicly and how the firm plans to balance the needs

of its various stakeholders.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) Which of the following statements regarding corporate social responsibility is true?

A) It incorporates higher purpose and a caring culture.

B) It takes a holistic, ecosystem view of business as a complex adaptive system.

C) It understands that decisions are ethically based.

D) Social responsibility is at the core of the business through the higher purpose and viewing the

community and the environment as stakeholders.

E) It sees limited overlap between the business and society, and between business and the planet.

Answer: E

Explanation: Corporate social responsibility sees limited overlap between the business and

society, and between business and the planet. All of the other statements describe conscious

marketing.

Difficulty: 1 Easy

Topic: Corporate Social Responsibility

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Remember

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

37) Which of the following statements regarding conscious marketing is correct?

A) It recognizes that business is a subset of society, and that society is a subset of the planet.

B) It sees limited overlap between the business and society, and between business and the planet.

C) It is often grafted on to traditional business model, usually as a separate department or part of

PR.

D) It reflects a mechanistic view of business.

E) It is independent of corporate purpose or culture.

Answer: A

Explanation: Conscious marketing recognizes that business is a subset of society, and that

society is a subset of the planet. The other statements reflect corporate social responsibility.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Analyze

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) When marketers work in controversial or polluting industries such as tobacco or fossil fuels,

their central activities largely bar them from becoming

A) ethical human beings.

B) conscious marketers.

C) profitable.

D) successful.

E) recognized.

Answer: B

Explanation: When marketers work in controversial or polluting industries such as tobacco or

fossil fuels, their central activities largely bar them from becoming conscious marketers.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) Which of the following descriptions embodies conscious marketing principles?

A) not socially responsible

B) questionable firm practices, yet donates a lot to the community

C) neither socially nor ethically responsible

D) not involved with the larger community

E) both ethically and socially responsible

Answer: E

Explanation: A firm that embodies conscious marketing is both socially and ethically

responsible.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) New real estate disclosure regulations require sellers and their agents to tell prospective buyers

about any existing problems with the property. Previously, they were expected only to answer

buyers' questions. The new regulation addressed the marketing ethics problem of

A) high-pressure sales techniques.

B) deceptive pricing tactics.

C) misrepresentation of company data.

D) misleading advertising.

E) withholding information.

Answer: E

Explanation: Withholding or destroying information that could hurt a company's sales or image

is considered unethical.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

41) When making decisions, managers often have to decide between doing what is beneficial for

themselves (and possibly the firm) in the short run, and doing what is right and beneficial for the

firm and for society in the long run. To address this conflict, a firm

A) must evaluate its quarterly profit statement from an ethics standpoint.

B) must state its long-term goals in general terms, so as to not interfere with managers' short-term

goals.

C) must always put society's needs ahead of the firm's needs.

D) must align the short-term goals of each employee with the long-term, overriding goals of the

firm.

E) should adhere rigidly to legal standards in its industry.

Answer: D

Explanation: To avoid potentially unethical behaviors, conscious marketing seeks to align the

short-term goals of each employee with the long-term, overriding goals of the firm.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) To avoid having ethical situations become problematic for a firm, the short-term goals of each

employee must

A) be aligned with the long-term goals of the firm.

B) be overridden by the overall goals of the firm.

C) become secondary to the needs of the remaining stakeholders.

D) be reviewed on an annual basis.

E) change on a regular basis.

Answer: A

Explanation: To avoid unethical situations causing problems for a firm, it is important that the

short-term goals of each employee be aligned with the long-term goals of the firm.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

43) Compared to the average company, firms with strong ethical climates tend to

A) employ more business development consultants.

B) offer more goods and services.

C) be more socially responsible.

D) invest more in sales training software.

E) have higher turnover.

Answer: C

Explanation: Conscious marketing should be integrated into the very foundation of the firm by its

leaders, such as in the firm's mission statement. Then top management must follow through and

commit to supporting CSR, a strong ethical climate in the organization, and conscious marketing

principles.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) Courses of action such as halting the market research project, making responses anonymous,

and instituting training on the AMA Code of Ethics for all researchers would be identified during

the ________ stage.

A) planning

B) identification

C) implementation

D) brainstorming

E) evaluation

Answer: D

Explanation: After the marketing firm has identified the stakeholders and their issues and

gathered the available data, all parties relevant to the decision should come together to brainstorm

any alternative courses of action. These might include halting the market research project, making

responses anonymous, or instituting training on the AMA Code of Ethics.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

45) The XYZ firm is in Step 4 of its ethical decision-making process. Executives were asked to

take the Publicity Test using an ethical-decision making metric. All scores were in the "No"

column. What does this mean?

A) The situation is not ethically troubling to the executives.

B) The executives need to step back and reflect on how they wish to proceed.

C) The situation is ethically troubling to the executives.

D) The executives need to retake the test or take the moral mentor test instead.

E) The results are invalid and the executives need to take the transparency test.

Answer: C

Explanation: If scores tend to be in the "Yes" area, then the situation is not ethically troubling. If,

in contrast, scores tend to be in the "No" area, it is ethically troubling. If scores are scattered or are

in the "Maybe" area, executives need to step back and reflect on how they wish to proceed.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) Ironically, while the leaders of Enron Corporation were manipulating the company's finances

for their personal benefit, the company was a major donor to Houston area charities. Enron had

unethical business practices, but was also

A) practicing marketing ethics.

B) falsifying the company's finances through charitable donations.

C) creating a local ethical business climate.

D) demonstrating corporate social responsibility.

E) manipulating the public sentiment for its own benefit.

Answer: D

Explanation: Enron was exhibiting unethical behavior through its financial manipulation, while

at the same time demonstrating social responsibility through its charitable donations.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

47) The ethical decision-making framework includes all of the following steps except

A) identify issues.

B) promote the firm's corporate social responsibility efforts.

C) gather information and identify stakeholders.

D) brainstorm alternatives.

E) choose a course of action.

Answer: B

Explanation: Corporate social responsibility is separate from the ethical decision-making

framework.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Gary has just purchased a beer distributorship. He wants to increase the visibility of his firm in

local markets, but he knows there are a number of regulations and socially accepted practices

associated with promoting alcoholic beverages. The first thing Gary should do is to

A) identify issues that need to be addressed.

B) promote the firm's corporate social responsibility efforts.

C) gather information and identify stakeholders.

D) brainstorm alternatives.

E) choose a course of action.

Answer: A

Explanation: Identifying potential ethical issues is the first step in the ethical decision-making

process.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) Hisaoki picks up the local newspaper and reads a stinging letter to the editor criticizing his

beverage company for supporting a sporting event for children with disabilities. The letter writer is

critical of a banner displayed at the event with the logos of alcoholic beverages and Hisaoki's

company name. Hisaoki never considered that this problem might arise. Hisaoki's company failed

A) identify issues.

B) promote the firm's corporate social responsibility efforts.

C) analyze the needs of the industry.

D) brainstorm and evaluate alternatives.

E) choose a course of action.

Answer: A

Explanation: Hisaoki failed to identify possible ethical issues in advertising alcoholic beverages

at an event for children.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) Many corporations are shifting from defined benefit to defined contribution retirement

programs. When considering changes to retirement programs, the primary stakeholders are the

A) shareholders.

B) employees.

C) customers.

D) marketing managers.

E) competition.

Answer: B

Explanation: The primary stakeholders are the employees whose retirement programs are

changing.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) ________ entails a sense of purpose for the firm that is higher than simply making a profit by

selling products and services.

A) Corporate social responsibility

B) Conscious marketing

C) Triple bottom line

D) Marketing analytics

E) The four Ps

Answer: B

Explanation: Conscious marketing entails a sense of purpose for the firm that is higher than

simply making a profit by selling products and services.

Difficulty: 1 Easy

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) All of the following statements regarding corporate social responsibility are true except

A) firms believe that they have legal and economic duties in addition to responsibilities to society.

B) a firm's responsibilities to society are not associated with the demands, expectations,

requirements, and desires of various stakeholders.

C) CSR can be defined as context-specific actions and policies, taking stakeholders' expectations

into account, to achieve what is referred to as the triple bottom line.

D) today, virtually all large and well-known companies engage in some form of CSR.

E) CSR actions are not mandated by law.

Answer: B

Explanation: A firm's responsibilities to society associated with the demands, expectations,

requirements, and desires of various stakeholders.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

53) The Harvest County School Board is concerned about deteriorating school facilities, combined

with a shrinking budget. The board began by studying the issue, and then identified parents,

children, teachers, staff, and taxpayers as groups who have a vested interest in the problem. The

school board has listened to each group's concerns. In the ethical decision-making framework, its

next action should be to

A) identify issues of concern to lawmakers.

B) assess impact of its actions beyond the classroom.

C) engage in brainstorming alternatives.

D) choose a course of action.

E) evaluate the legal ramifications.

Answer: C

Explanation: The school board has completed the first two steps of the ethical decision-making

framework. The third step is to assemble the stakeholders to brainstorm for alternatives.

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) After a firm has identified the various stakeholders and their issues and gathered available data

related to an ethical decision-making situation, ________ should engage in brainstorming and

evaluating alternatives.

A) the senior managers most involved

B) key customers

C) elected officials

D) all parties relevant to the decision

E) any individuals with competing interests

Answer: D

Explanation: All relevant parties should participate in brainstorming and evaluation.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Knowledge Application; Teamwork

Accessibility: Keyboard Navigation

55) After a firm has identified the various stakeholders and their issues and gathered available data

related to an ethical decision-making situation, all parties relevant to the decision should

A) engage in legal discourse.

B) vote, with the majority deciding the best course of action.

C) reidentify the issues.

D) choose a course of action.

E) brainstorm for alternatives.

Answer: E

Explanation: It is too soon to make a choice—at this point, the involved parties should

brainstorm and then evaluate alternatives.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Teamwork

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) After a firm has identified the various stakeholders and their issues and gathered the available

data, all parties relevant to the decision should engage in brainstorming and evaluating

alternatives. ________ then review and refine these alternatives, and choose a course of action.

A) Company leaders and managers

B) The firm's lawyers

C) Key customers

D) Community leaders

E) All stakeholders

Answer: A

Explanation: Although all stakeholders should be involved in the earlier steps of the process,

company leaders and managers review and refine alternatives, leading to the final step.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

57) Dwayne's company is facing a difficult ethical issue. The firm has identified the various

stakeholders and their issues and gathered the available data. Everyone with an interest in the issue

has engaged in brainstorming and evaluating alternatives. Management reviewed and refined the

alternatives. It should now choose the course of action that

A) maximizes profits.

B) creates the least possible publicity.

C) involves the fewest employees.

D) minimizes costs.

E) seems best after weighing the concerns of all stakeholders.

Answer: E

Explanation: The purpose of the earlier stages of the process is to identify stakeholders' issues

and generate possible solutions. The final stage is to weigh this information and select the

alternative that does the best job of addressing the issues.

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) Rock-Bend Company is considering buying out a competing firm and closing most of the

competitor's factories. The firm has identified the various stakeholders and their issues and

gathered the available data. Everyone with an interest in the issue has engaged in brainstorming

and evaluating alternatives. Management reviewed and refined the alternatives, and then chose a

course of action. If the managers are not confident about the decision, they should

A) lower their offering price for the competing firm.

B) reexamine their alternatives.

C) consult customers.

D) trust their instincts and move forward.

E) choose the least risky option.

Answer: B

Explanation: Perhaps the chosen course of action is not truly the best choice. By reexamining the

alternatives, the firm may find a better choice.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

59) Imagine the use (or misuse) of data collected from consumers by a marketing research firm.

One of the issues that might arise is the way the data are collected. At what step in the framework

for ethical decision making would this issue be identified by the marketing research firm?

A) Step 1—identifying issues

B) Step 2—gathering information and identifying stakeholders

C) Step 3—brainstorming alternatives

D) Step 4—choosing a course of action

E) Step 5—reviewing outcome of decision

Answer: A

Explanation: There are four steps in the framework for ethical decision making. Step 1 is

identifying issues. Step 2 is gathering information and identifying stakeholders. Step 3 is

brainstorming alternatives. Step 4 is choosing a course of action.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) David is considering the question, "Did our actions have a negative impact on any stakeholder

group?" David is addressing marketing ethical issues in the ________ phase of the strategic

marketing planning process.

A) planning

B) control

C) implementation

D) brainstorming

E) situation analysis

Answer: B

Explanation: This question evaluates the outcome of marketing decisions, which takes place in

the control phase.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

61) Every year, General Mills issues a report discussing how the firm has performed against its

own standards of conscious marketing. This report is part of General Mills' ________ phase of its

strategic marketing planning process.

A) planning

B) implementation

C) control

D) evolution

E) marketing mix

Answer: C

Explanation: General Mills is evaluating its performance, which is a part of the control phase.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Charges that firms are using "sweatshop" labor to produce their products are likely to occur

during the ________ phase of the strategic marketing planning process.

A) planning

B) implementation

C) control

D) evolution

E) marketing mix

Answer: B

Explanation: In the implementation phase of the marketing strategy, when firms are identifying

potential markets and ways to deliver the four Ps to them, firms must consider several pertinent

issues. Sometimes a firm's choice of target market and how it pursues it can lead to charges of

unethical behavior.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

63) Marketers that include ethical policies and standards in the firm's mission or vision statements

are introducing these concepts at which stage of the strategic marketing planning process?

A) implementation phase

B) control phase

C) planning phase

D) evaluation phase

E) idea generation phase

Answer: C

Explanation: During the planning phase, marketers will decide what level of commitment to its

ethical policies and standards it is willing to declare publicly. It is during this phase that ethical

statements in the firm's mission or vision statements can be incorporated.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) During the ________ phase of the strategic marketing planning process, marketers utilize

systems to check whether each conscious marketing issue raised in earlier phases was addressed.

A) implementation

B) control

C) planning

D) assessment

E) social responsibility

Answer: B

Explanation: The firm assesses its performance regarding ethics during the control phase.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

65) Alicia has been asked to approve a marketing campaign that, although it is not illegal,

promotes food products to children. She is concerned that the food products are not particularly

nutritious, although they are not as bad for children as some others sold by competitors. By using

the ethical decision-making metric, Alicia will

A) ignore the metric as unworkable, since the campaign might pass some of the tests and fail

others.

B) consider the profit potential first; then explore the vague tests in the metric.

C) not worry about the children; their parents are likely to make the buying decision, and they

should be able to decide for themselves.

D) evaluate the alternative using a series of questions.

E) consult the firm's code of ethics for guidance and leave personal ethical considerations out of

the decision-making process.

Answer: D

Explanation: If Alicia has concerns arising out of her personal ethics, she needs to pause and ask

more questions before making a go/no-go decision.

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) According to one definition, CSR can be described as context-specific actions and policies,

taking stakeholders' expectations into account, to achieve what is referred to as the triple bottom

line. The triple bottom line includes ________ performance.

A) economic, social, and environmental

B) economic, social, and political

C) financial, economic, and social

D) social, environmental, and political

E) financial, social, and environmental

Answer: A

Explanation: One definition describes CSR as context-specific actions and policies, taking

stakeholders' expectations into account, to achieve what is referred to as the triple bottom line:

economic, social, and environmental performance.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

67) When Toyota owners began to report problems with sticking accelerator pedals and

nonfunctioning brakes, Toyota at first ignored or rejected the claims. Eventually, the company

evaluated the issue and issued a recall. Which of the four steps of the ethical decision-making

framework was Toyota performing when it recalled several of its models?

A) assess risk

B) identify issues

C) gather information and identify stakeholders

D) brainstorm and evaluate alternatives

E) choose a course of action

Answer: E

Explanation: When using the ethical decision-making framework, the first step is to identify the

issues. The next three steps are to gather information, brainstorm/evaluate alternatives, and finally

to choose a course of action. Toyota, in issuing its recall, had chosen a course of action.

Difficulty: 2 Medium

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) For every consumer who purchases a pair of TOMS shoes for $55, the company promises that

a needy child will receive a pair of shoes. TOMS shoes is actively engaging in

A) corporate social responsibility.

B) business ethics.

C) marketing ethics.

D) environmental marketing.

E) overpricing of its products.

Answer: A

Explanation: TOMS shoes is engaged in corporate social responsibility by making shoes

available to children in need.

Difficulty: 1 Easy

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) If Hazel decides to sell the best ice cream on earth, and intends to establish a strong ethical

climate in her organization, during which phase of the strategic marketing planning process should

she introduce ethical considerations?

A) planning

B) implementation

C) control

D) experience

E) ethics

Answer: A

Explanation: Firms should begin establishing an ethical climate at the planning phase by

including ethical statements in the firm's mission or vision statements.

Difficulty: 1 Easy

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) Anupam's company manufactures industrial ladders. He is concerned that consumers who do

not understand ladder safety will purchase these extra-tall ladders and injure themselves. During

which phase of the strategic marketing planning process should this issue be addressed?

A) control

B) planning

C) implementation

D) design

E) ethics

Answer: C

Explanation: During the implementation phase, the company can discuss targeting decisions and

implementing the marketing mix appropriately to minimize this risk. Perhaps safe use of the ladder

should be emphasized in marketing communications, or perhaps steps should be taken to

discourage certain consumers from buying these ladders.

Difficulty: 3 Hard

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

71) A meat-packing company discovers that six months ago it unknowingly distributed meat from

a cloned cow. The firm is unaware of any specific risks to humans consuming the meat; however,

some scientists have raised questions, and some consumers are afraid of possible future problems.

The meat company has to decide whether or not to make this matter public. How should it begin

the process of making an ethical decision?

A) Brainstorm the available alternatives.

B) Ask its managers to vote for or against public disclosure.

C) Let the board of directors decide what to do.

D) Identify the issues raised by the situation.

E) Find out who purchased the meat, and offer them refunds in return for their silence.

Answer: D

Explanation: It is too late to recall the meat—it has been consumed or discarded long ago—so

emergency action is neither possible nor necessary. The company should begin the ethical

decision-making framework by identifying all issues raised by this situation. This should happen

before attempting to choose a course of action.

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) Maria is the CEO of a small manufacturing firm. She is concerned with meeting the investment

objectives of the firm's shareholders, and sees no value in corporate social responsibility. Maria's

attitude is

A) insupportable in the 21st century.

B) consistent with the views of other critics of corporate social responsibility.

C) typical of nearly all manufacturers.

D) a reaction to regulatory directives of the U.S. government.

E) unethical.

Answer: B

Explanation: Which is the more important corporate objective: making a profit or protecting

customers, employees, and the broader needs of society and the environment? This question

underlies a primary dilemma that marketers have long faced.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) How might a technology company like Apple ensure that it behaves in a socially responsible

way toward its employees?

A) It can pay at least minimum wage when the law requires it.

B) It can adhere to government-mandated safety standards in the workplace.

C) It can ensure that pay practices are fair at all levels of the company.

D) It can ensure that its packaging materials are recyclable.

E) Social responsibility isn't relevant where employees are concerned; they are paid for their work

and that's enough.

Answer: C

Explanation: Obeying the law when it comes to minimum wage and safety isn't sufficient to be

considered socially responsible—the firm is simply behaving legally. Using recyclable materials

would be a socially responsible practice, but it serves society (the environment), not specifically

employees. By ensuring fair pay practices, though, Apple would be treating its employees in a

socially responsible manner.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) How might a technology company like Apple ensure that it behaves in a socially responsible

way toward its customers?

A) It can protect the privacy of personal information collected on its website.

B) It can adhere to government-mandated safety standards in its stores.

C) It can ensure that it pays its employees fairly.

D) It can ensure that its packaging materials are recyclable.

E) Social responsibility isn't relevant where customers are concerned; it has to do with serving

society as a whole.

Answer: A

Explanation: Obeying the law when it comes to safety isn't sufficient to be considered socially

responsible—the firm is simply behaving legally. Using recyclable materials would be a socially

responsible practice, but it serves society (the environment), not specifically customers. Similarly,

fair pay practices serve employees, not specifically customers. Apple can exhibit socially

responsible behavior toward customers by treating their personal information with respect.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

75) How might Starbucks ensure that it behaves in a socially responsible way toward members of

its supply chain?

A) It can pay its employees minimum wage as required by law.

B) It can use cups made from recycled paper.

C) It can offer healthy drinks and snacks in its stores.

D) It can purchase coffee beans from suppliers who pay coffee growers a fair price.

E) Social responsibility isn't relevant where channel partners are concerned; it has to do with

serving society as a whole.

Answer: D

Explanation: Most of these are reasonable social responsibility initiatives, but serve stakeholders

other than channel partners. By choosing a socially responsible coffee bean supplier and paying a

fair price, Starbucks behaves in a socially responsible manner toward its suppliers, who are part of

the supply chain.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) All of the following terms are generally associated with the definition of corporate social

responsibility except

A) voluntary.

B) stakeholders.

C) social impact.

D) environmental impact.

E) profit.

Answer: E

Explanation: Although there are many and varied definitions of corporate social responsibility

(CSR), firms generally acknowledge that, in addition to economic and legal duties, they have

responsibilities to society. These responsibilities are not mandated by any law or regulation but

instead are associated with the demands, expectations, requirements, and desires of various

stakeholders. For example, one definition describes CSR as context-specific actions and policies,

taking stakeholders' expectations into account, to achieve what is referred to as the triple bottom

line: economic, social, and environmental performance.

Difficulty: 1 Easy

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

77) When companies embrace ________, they appeal not only to their shareholders but also to all

of their key stakeholders.

A) social media

B) conscious marketing

C) CSR

D) profit sharing

E) conscious advertising

Answer: B

Explanation: When companies embrace conscious marketing, they appeal not only to their

shareholders but also to all of their key stakeholders.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) For corporate leaders, their firm's ability to ________ must be of paramount importance.

A) balance profits and expenses

B) balance employees' needs with the needs of the environment

C) balance shareholder interests with the needs of society

D) benefit shareholders only

E) make a profit

Answer: C

Explanation: For corporate leaders, their firm's ability to balance the needs of various

stakeholders—while building and maintaining consumer trust by conducting ethical, transparent,

clear transactions that have a positive impact on society and the environment—must be of

paramount importance.

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

79) All of the following are questions posed in the ethical decision-making metric except

A) Would I want to see this action described on the front page of the local paper?

B) Will this action help advance my career?

C) Would the person I admire most engage in this activity?

D) Can I give a clear explanation for my action?

E) Will I be able to look at myself in the mirror and respect what I see?

Answer: B

Explanation: The ethical decision-making metric poses a set of questions to help make ethical

business decisions. All of the questions listed are part of the metric except for wondering if an

action will help further one's career.

Difficulty: 1 Easy

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) When integrating conscious marketing into a marketing strategy, a key task is to ensure that all

managers are evaluated on their actions from a conscious marketing perspective. This action

would take place during which stage of the strategic marketing planning process?

A) brainstorming phase

B) planning phase

C) implementation phase

D) control phase

E) revision phase

Answer: D

Explanation: During the control phase of the strategic marketing planning process, managers

must be evaluated on their actions from a conscious marketing perspective. Systems must be in

place to check whether each conscious marketing issue raised in the planning process was actually

successfully addressed.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

81) Burt's Bees mission is to be a "Natural, Earth-Friendly Personal Care Company." As part of

that mission, Burt's Bees has a "Zero Waste to Landfill" initiative. During which phase of the

strategic marketing planning process would this initiative be pursued?

Answer: The initiative would need to be discussed during the implementation phase, which is

when firms identify potential markets and discuss how to successfully deliver the four Ps.

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) Identify how a company might evaluate whether or not to support the United Way, a program

that collects donations and distributes them to a wide range of charities.

Answer: If a company decides to support the United Way, it must ensure that the charities it

supports will benefit the firm's various stakeholders identified in Exhibit 4.3 (employees and their

families, current and potential customers, partners, competitors, the community, and the

environment).

Difficulty: 3 Hard

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) The CEO of your firm, a distributor for a domestic beer manufacturer, has asked you to take on

a special project. She has been hearing about a growing trend toward corporate social

responsibility, but she wonders if this is a reasonable investment for the firm. Outline the costs and

benefits in general terms and draw your own conclusion for her consideration.

Answer: A number of options could be considered, but the student should focus on ways in which

the distributor could serve the different stakeholders identified in Exhibit 4.3 (employees and their

families, current and potential customers, partners, competitors, the community, and the

environment). As the company is a beer distributor, the student can bring in issues associated with

alcoholic consumption and/or recycling and green marketing considerations.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) Henry wants to work for a firm that demonstrates corporate social responsibility. Draw up a

list of questions Henry could use in an interview to determine the level of commitment of potential

employers.

Answer: The student should include questions addressing the ways in which the firm serves the

various stakeholder groups identified in Exhibit 4.3 (employees and their families, current and

potential customers, partners, competitors, the community, and the environment).

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

85) How would you distinguish a firm that practices corporate social responsibility from one that

practices conscious marketing?

Answer: Although CSR is an important element of conscious marketing, it is not the same thing.

The student should cite examples from Exhibit 4.2: How Conscious Marketing Differs from CSR.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

86) When marketers work in controversial or polluting industries such as tobacco or fossil fuels,

their central activities largely bar them from becoming conscious marketers. How might they

engage in CSR in an effort to mitigate the damage that their products cause?

Answer: When marketers work in controversial or polluting industries such as tobacco or fossil

fuels, their central activities largely bar them from becoming conscious marketers. However, they

might engage in CSR in an effort to mitigate the damage that their products cause, such as when

cigarette companies sponsor public information campaigns or oil companies plant trees to balance

out their carbon footprint. In addition, these companies might undertake efforts in other sectors,

such as donating time in local communities or guaranteeing fair wages, because they recognize the

importance of such socially responsible efforts.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

87) Avoiding a GMO label might help companies sell more of their products. Thus far, many food

manufacturers seem to be fighting GMO labeling. However, despite the fact that removing GMOs

may increase production costs, companies such as General Mills have removed GMOs from some

of their products, and grocers such as Whole Foods have committed to issuing GMO labels by

2018. Who are the stakeholders in this situation?

Answer: The stakeholders in this situation are diverse—they include farmers, consumers,

manufacturing companies, shareholders, retailers, and the environment.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

88) Distinguish between business ethics and marketing ethics.

Answer: Business ethics is concerned with distinguishing between right and wrong actions and

decisions that arise in a business setting, according to broad and well-established moral and ethical

principles that might arise in a business setting, and any special duties or obligations that apply to

persons engaged in commerce. Marketing ethics, in contrast, examines ethical situations that are

specific to the domain of marketing, including societal, global, or individual consumer issues.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

89) Paulo, owner of a local plumbing repair company, wants to improve his company's reputation

for corporate social responsibility. What could Paulo do?

Answer: Corporate social responsibility includes that a firm acknowledge that, in addition to

economic and legal duties, it has responsibilities to society. These responsibilities are not

mandated by any law or regulation but instead are associated with the demands, expectations,

requirements, and desires of various stakeholders. Answers will vary, but a plumbing repair

company could volunteer to help with a Habitat home, assist with community efforts to help poor

or elderly homeowners, provide a free seminar on how consumers can avoid being taken

advantage of, or offer to replace aging lead pipes in public buildings at cost.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) After a series of embarrassing and unprofessional actions by her marketing team, Ming wants

to align personal and corporate ethics goals within her firm. What general and specific actions will

she need to take?

Answer: To align personal and corporate goals, firms need to have a strong ethical climate

exemplified by the actions of corporate leaders and filtered through an ethically-based corporate

culture. There should be explicit rules for governing transactions; these rules should include a code

of ethics and a system for rewarding and punishing inappropriate behavior.

Difficulty: 3 Hard

Topic: Ethical Issues in Marketing

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

91) Funeral home businesses have been criticized for accepting payments from medical parts

companies for assisting them in finding families who would allow materials to be harvested from

deceased family members. Though not illegal, the payments raised ethical questions. How should

the funeral industry go about addressing these questions?

Answer: Answers will vary. The industry could use the ethical decision-making framework,

which includes four steps:

• Identify issues: What are the issues?

• Gather information and identify stakeholders: How widespread is the practice? Which groups

are raising questions? What are their concerns?

• Brainstorm and evaluate alternatives: Should the payments be banned? Should they be made

known to donating families? Should they be shared with donating families? Other alternatives?

• Choose a course of action: Should the choice be industry-wide or left to individual firms?

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) As stated in your text, conscious marketing encompasses four overriding principles. Which do

you feel is the most important, and why?

Answer: Answers will vary, but will should include discussion of one of the following principles:

recognition of marketing's greater purpose; consideration of stakeholders and their

interdependence; the presence of conscious leadership, creating a corporate culture; or the

understanding that decisions are ethically based.

Difficulty: 3 Hard

Topic: Role of Ethics in Marketing

Learning Objective: 04-01 Define conscious marketing.

Bloom's: Analyze

AACSB: Ethics

Accessibility: Keyboard Navigation

93) Lucinda has just learned that a brand of clothing she has been selling for years in her store is

being made by workers in sweatshops, who work under inhumane working conditions and are paid

subsistence wages. Which of the questions in the ethical decision-making metric will most likely

affect her decision to discontinue the brand?

Answer: Answers may vary, but the first test, the Publicity Test—Would I want to see this action

that I'm about to take described on the front page of the local paper or in a national

magazine?—would likely be important. Any ethical retailer would not want to be publicly

associated with selling sweatshop-made products. The Person in the Mirror test could also be

important. Could she live with herself making money off sweatshop-made products? The

Transparency Test could also affect her decision. Could she justify not taking the brand off her

shelves given the information she has received?

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) Describe how Walmart engages in CSR efforts to mitigate the criticism it receives for being

the worst-paying company in the United States.

Answer: The retail giant has been widely criticized as the worst-paying company in the United

States. Yet it also engages in extensive CSR programs across the triple bottom line. It has

committed to reducing its carbon footprint (environmental performance), donates more than $1

billion in cash and in-kind items to charitable causes per year (social performance), and still earns

strong profits (economic performance).

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

95) Describe three ways in which corporate social responsibility differs from conscious marketing.

Answer: Answers will vary, but student responses should include information from Exhibit 4.2:

How Conscious Marketing Differs from CSR.

Difficulty: 2 Medium

Topic: Role of Ethics in Marketing

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

96) What is the difference between government regulation of business and corporate social

responsibility?

Answer: Corporate social responsibility is not mandated by any law or regulation but instead is

associated with the demands, expectations, requirements, and desires of various stakeholders.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-03 Differentiate between conscious marketing and corporate social

responsibility.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

97) During which phase(s) of the strategic marketing planning process are issues related to

conscious marketing likely to be addressed?

Answer: In their constant pursuit of conscious marketing, firms can address relevant questions at

each stage of the strategic marketing planning process.

Difficulty: 1 Easy

Topic: Role of Ethics in Marketing

Learning Objective: 04-05 Explain how conscious leadership can produce a conscious culture in

the firm.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

98) A local deli has decided that it wants to become more socially responsible. For three of the

stakeholder groups listed in the chapter, suggest socially responsible actions the deli could take to

serve those stakeholders.

Answer: Answers will vary depending on the stakeholders selected for the answer. Some

examples:

• Employees: The deli could offer additional benefits to employees, or could investigate its pay

structure to ensure that employees are paid fairly at all levels of responsibility.

• Community: The deli could support a community project—perhaps donating food to a local

food bank.

• Customers: The deli could ensure that it offers healthy dining choices on its menu.

Difficulty: 3 Hard

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

99) Describe the four steps in the ethical decision-making framework and include some questions

that should be asked in each step.

Answer:

1. Identify issues: What are the issues?

2. Gather information and identify stakeholders: How widespread is the practice? Who are the

stakeholders? Which groups are raising questions? What are their concerns?

3. Brainstorm and evaluate alternatives: What are the possible courses of action?

4. Choose a course of action: What are the advantages and disadvantages of each alternative course

of action? What potential legal issues may be involved? Does the decision being made meet the

stated decision-making criteria? What are the ethical issues?

Difficulty: 3 Hard

Topic: Ethical Decision Making

Learning Objective: 04-07 Identify the four steps in ethical decision making.

Bloom's: Analyze

AACSB: Ethics

Accessibility: Keyboard Navigation

100) Name at least two examples of socially responsible behavior that you have witnessed in a

company or heard about through the media. How do these instances meet the criteria for socially

responsible behavior as outlined in the text?

Answer: Answers will vary, but should focus on the definition of corporate social responsibility.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-02 Describe what constitutes marketing's greater purpose.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

101) Briefly describe the three phases of the strategic marketing planning process and give one

example of an ethical dilemma that might arise during each phase.

Answer: Answers will vary, but must list the planning, implementation, and control phases of the

strategic marketing planning process and an appropriate example for each phase.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing

Learning Objective: 04-06 Describe how ethics constitutes an integral part of a firm's conscious

marketing strategy.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) Briefly describe how CSR affects the various stakeholder categories.

Answer:

• Employees: Perhaps the most basic corporate social responsibility to employees is to ensure a

safe working environment, free of threats to their physical safety, health, or well-being. More

firms today realize that happy employee families make happy and productive employees, so they

are offering new benefits and options, such as on-site daycare or flextime arrangements.

• Customers: Firms must respect and protect privacy in an electronic world and ensure the

healthiness of products, especially those aimed at children.

• Marketplace: When one firm in the industry leads the way toward CSR, its partners and

competitors often have no choice but to follow—or run the risk of not doing business or being left

behind. The initiating firm enjoys an advantage by gaining a reputation for being on the cutting

edge of CSR efforts.

• Society: This is when firms expend time and energy engaging in activities aimed at improving

the overall community and the physical environment.

Difficulty: 2 Medium

Topic: Corporate Social Responsibility

Learning Objective: 04-04 Describe the ways in which conscious marketing helps various

stakeholders.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 5 Analyzing the Marketing Environment

1) By paying close attention to customer needs and continuously monitoring the business

environment in which it operates, a good marketer can identify potential opportunities.

Answer: TRUE

Explanation: Changes in the environment can be a source of opportunities for the firm.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) When analyzing the immediate environment and the macroenvironment, marketers must be

careful to keep the firm at the center of all analyses.

Answer: FALSE

Explanation: The consumer, not the firm, should be kept at the center of all activity.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) The marketing firm must consider the entire business process, all from a consumer's point of

view.

Answer: TRUE

Explanation: The marketing firm must consider the entire business process, all from a consumer's

point of view.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) In the immediate environment, the competition has no effect on consumers.

Answer: FALSE

Explanation: Consumers may be influenced directly by the immediate actions of the focal

company, the company's competitors, corporate partners, and the physical environment that work

with the firm to make and supply products and services to consumers.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) The four elements of the consumer's immediate environment are the company, competition,

corporate partners, and the physical environment.

Answer: TRUE

Explanation: Consumers may be influenced directly by the immediate actions of the focal

company, the company's competitors, corporate partners, and the physical environment that work

with the firm to make and supply products and services to consumers.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) Demographics are transmitted by words, literature, and institutions from generation to

generation.

Answer: FALSE

Explanation: Transmitted by words, literature, and institutions, culture is passed down from

generation to generation and learned over time.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) Demographic profiles of customers provide an easily understood snapshot of the typical

consumer in a specific target market.

Answer: TRUE

Explanation: Demographics provide an easily understood snapshot of the typical consumer in a

specific target market.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) As the euro becomes more expensive relative to the dollar, Americans are likely to purchase

more European wines.

Answer: FALSE

Explanation: Foreign currency fluctuations can influence consumer spending. When the euro

becomes more expensive relative to the dollar, it means that it costs more dollars to buy European

goods, which is likely to lead to a drop in the quantity of European wine purchased by Americans.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) Macroenvironmental factors include the company, competition, corporate partners, and the

physical environment.

Answer: FALSE

Explanation: Macroenvironmental factors are external factors such as culture, demographics,

social trends, technological advances, economic situation, and political/regulatory environments.

The factors listed in the question relate to the immediate environment.

Difficulty: 1 Easy

Topic: Macroenvironment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) Members of Generation Y are also called Millennials.

Answer: TRUE

Explanation: The group of people born between 1977 and 2000 are referred to as Generation Y,

Gen Y, or Millennials, and include the more than 60 million people born in the United States

between 1977 and 2000.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) As the children of the Baby Boomers, Generation X is the biggest cohort since the original

post–World War II boom.

Answer: FALSE

Explanation: As the children of the Baby Boomers, Generation Y is the biggest cohort since the

original post–World War II boom.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) The members of Generation X are also referred to as Digital Natives.

Answer: FALSE

Explanation: Digital Natives are members of Generation Z, not Generation X.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) According to trend watchers and marketing researchers, consumers are concerned about the

vast disparity in income.

Answer: FALSE

Explanation: What trend watchers and market researchers tell us, over and over, is that

consumers are seeking healthier food options.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) Culture can broadly be defined as the shared meanings, beliefs, morals, values, and customs of

a group of people.

Answer: TRUE

Explanation: This is the definition of culture. Culture can be transmitted by words, literature, and

institutions; it is passed down from generation to generation and learned over time.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) Companies can no longer use cartoon characters to promote products such as burgers and fries

because the characters do not retain popularity among young children for very long.

Answer: FALSE

Explanation: Feedback: Advertised food items must provide basic nutrients, have less than 30

percent of their total calories from fat, and include no added sweeteners. The advertising cannot be

aired during children's programming, and companies cannot link unhealthy foods with cartoon and

celebrity figures.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) Socially responsible marketing involves a strategic effort by firms to supply customers with

environmentally friendly, sustainable merchandise and services.

Answer: FALSE

Explanation: Green marketing involves a strategic effort by firms to supply customers with

environmentally friendly, sustainable merchandise and services.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) Firms that disingenuously market products or services as environmentally friendly, with the

goal of gaining public approval and sales rather than actually improving the environment, are

engaging in greenwashing.

Answer: TRUE

Explanation: Consumers need to question whether a firm is spending significantly more money

and time advertising its green credentials or describing how it helps the environment, rather than

actually spending these resources on developing and expanding environmentally sound practices.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

18) Google's self-driving cars have been the most widely talked about product, in part because its

driverless car program, which began in 2009, is the oldest.

Answer: TRUE

Explanation: Google's self-driving cars have been the most widely talked about product, in part

because its driverless car program, which began in 2009, is the oldest. The Google car might not be

ready yet, but it seems to be leading the pack and improving rapidly.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

19) Inflation refers to the cost of borrowing money.

Answer: FALSE

Explanation: Inflation refers to the persistent increase in the prices of goods and services.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) The 1890 Sherman Antitrust Act prohibits monopolies and other activities that would restrain

trade or competition and makes fair trade within a free market a national goal.

Answer: TRUE

Explanation: The 1890 Sherman Antitrust Act prohibits monopolies and other activities that

would restrain trade or competition and makes fair trade within a free market a national goal.

Difficulty: 1 Easy

Topic: Political and Legal Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

21) Consumers' needs and wants, as well as their ability to purchase, depend on a host of factors

that remain consistent over time.

Answer: FALSE

Explanation: Consumers' needs and wants, as well as their ability to purchase, depend on a host

of factors that change and evolve over time.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) Parties that work with the focal firm are its corporate partners.

Answer: TRUE

Explanation: Firms collaborate with other firms to produce and market their products.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) Jean, who lives in Boston, refers to Pepsi as "tonic," while Paul, who lives in Chicago, calls it

"pop." These different terms are an example of

A) regional culture differences.

B) demographic differences.

C) different economic situations.

D) different social trends.

E) country culture differences.

Answer: A

Explanation: The region in which people live in a particular country has its own regional culture

that affects many aspects of people's lives, including their dietary tastes and preferences.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) Lisle Hair Company keeps track of the gender and age of its customers so it can target e-mails

to them and be sure to have the right hair products in stock when they visit. This is an example of

the use of ________ in marketing.

A) innovation

B) sustainability

C) competition

D) demographics

E) competency

Answer: D

Explanation: Typical demographics include age, gender, race, and income.

Difficulty: 3 Hard

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

25) Whereas it took 38 years for the radio to be adopted by 50 million people and 13 years for

television, it only took 2 years for the same number of consumers to sign up for

A) Google

B) Amazon

C) Facebook

D) smartphones

E) Netflix

Answer: C

Explanation: Whereas it took 38 years for the radio to be adopted by 50 million people and 13

years for television, it only took 2 years for the same number of consumers to sign up for

Facebook.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) As a retail clothing store manager, Sandy frequently asks his staff what customers are saying

and what they are asking for. He also attends the quarterly clothing show at the regional

merchandise mart. Sandy's efforts will likely help him

A) avoid cognitive dissonance.

B) implement just-in-time marketing promotions.

C) identify potential opportunities.

D) avoid the need to understand regional culture.

E) achieve cost savings.

Answer: C

Explanation: By paying close attention to customer needs and continuously monitoring the

business environment in which the company operates, a good marketer can identify potential

opportunities.

Difficulty: 3 Hard

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

27) The centerpiece of the marketing environment analysis framework is

A) the economy.

B) corporate partners.

C) culture.

D) competitive intelligence.

E) consumers.

Answer: E

Explanation: The consumer is the center of all marketing efforts.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) A firm's macroenvironment includes all of the following except

A) competition.

B) culture.

C) demographics.

D) economics.

E) political/legal issues.

Answer: A

Explanation: Competition is part of the immediate environment, not the macroenvironment.

Difficulty: 1 Easy

Topic: Macroenvironment

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

29) The center of all marketing efforts is

A) profits.

B) the consumer.

C) corporate social responsibility.

D) top management.

E) the firm.

Answer: B

Explanation: The consumer is the centerpiece of the marketing environment.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) The U.S. Centers for Disease Control and Prevention (CDC) estimates that approximately 87.5

percent of U.S. adults are

A) diabetic.

B) obese.

C) unhealthy.

D) athletic.

E) healthy.

Answer: B

Explanation: The U.S. Centers for Disease Control and Prevention (CDC) estimates that

approximately 87.5 percent of U.S. adults are obese.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) One of the goals of value-based marketing is

A) to provide the greatest value for the least profit.

B) to sell products for the highest possible price.

C) to offer greater value than competitors offer.

D) to determine the value of the brand.

E) to sell to all consumers, regardless of their needs.

Answer: C

Explanation: Because the consumer is the center of all marketing efforts, value-based marketing

aims to provide greater value to consumers than competitors offer. Therefore, the marketing firm

must consider the entire business process, all from a consumer's point of view.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) Bryan knows that one of the goals of value-based marketing is to provide greater value to

consumers than competitors offer. To accomplish this goal, Bryan's firm must look at everything it

does

A) in order to value each person in the organization.

B) for each generational cohort.

C) to avoid cultural clashes.

D) from a consumer's point of view.

E) to sensitize organization members to ethical values.

Answer: D

Explanation: Because the consumer is the center of all marketing efforts, value-based marketing

aims to provide greater value to consumers than competitors offer. Therefore, the marketing firm

must consider the entire business process, all from a consumer's point of view.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) Yvonne knows her firm must look at everything it does from a consumer's point of view. One

major difficulty is that consumers' ________ change(s) over time.

A) ethnic background

B) needs, wants, and ability to purchase

C) culture

D) just-in-time processes

E) demographics

Answer: B

Explanation: Consumers' needs and wants, as well as their ability to purchase, depend on a host

of factors that change and evolve over time.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) Select the statement that best describes the key traits of Generation Y.

A) This generation varies the most in age, ranging from teenagers to adults who have their own

families.

B) This generation is the largest population of 50-plus consumers.

C) This generation is the group that was born immediately after World War II.

D) This generation was the first generation of latchkey children.

E) Members of this generation—also known as Digital Natives—have had access to the Internet

for their entire lives.

Answer: A

Explanation: Generation Y is the biggest cohort since the original post–World War II boom. It

also varies the most in age, ranging from teenagers to adults who have their own families.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) Which of the following statements accurately describes the current income distribution in the

United States?

A) The purchasing power of lower-income groups has been steadily rising.

B) The middle class is outpacing all other income groups.

C) Wealthy households are outpacing both poor and middle-class households.

D) The income distribution among all households is becoming more equal.

E) Wealthy households are declining rapidly in purchasing power.

Answer: C

Explanation: Income distribution in the United States has grown more polarized—the

highest-income groups are growing, whereas many middle- and lower-income groups' real

purchasing power keeps declining.

Difficulty: 2 Medium

Topic: Macroenvironment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) When you register your telephone number with the National Do Not Call Registry, you are

responding to a need for

A) privacy.

B) enhanced information flow.

C) lower phone bills.

D) marketing contact.

E) tactical communication skills.

Answer: A

Explanation: Privacy is a major concern for consumers. An amendment to the Telemarketing

Sales Rule established a National Do Not Call Registry, requiring telemarketers to abstain from

calling consumers who opt to be placed on the list.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) In the immediate marketing environment, the first factor that affects the consumer is

A) demographics.

B) cultural values.

C) social trends.

D) the company's capabilities.

E) technological advances.

Answer: D

Explanation: The components of the immediate environment are the company's capabilities, its

competitors, its corporate partners, and the physical environment.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) Successful firms focus their efforts on satisfying customer needs that

A) are easiest to satisfy.

B) provide minimal core value.

C) are important to all generational cohorts.

D) competitors have tried and failed to satisfy.

E) match their core competencies.

Answer: E

Explanation: In the immediate environment, the first factor that affects the consumer is the firm

itself. Successful marketing firms focus on satisfying customer needs that match their core

competencies.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) The Mayo Clinic in Minnesota is known for top-quality medical care. For decades, even

presidents and dictators from around the world flew to the Mayo Clinic to utilize its services. The

Mayo Clinic used its reputation to create additional medical facilities in Jacksonville, Florida, and

elsewhere. This is an example of a firm focusing its efforts on satisfying customer needs that

A) are easiest to satisfy.

B) provide minimal core value.

C) are important to all generational cohorts.

D) competitors have tried and failed to satisfy.

E) match its core competencies.

Answer: E

Explanation: In the immediate environment, the first factor that affects the consumer is the firm

itself. Successful marketing firms focus on satisfying customer needs that match their core

competencies.

Difficulty: 3 Hard

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) Nau works with its ________ to develop socially responsible outdoor and urban apparel.

A) corporate partners

B) consumers

C) competitors

D) marketers

E) legal team

Answer: A

Explanation: Nau works with its corporate partners to make modern urban and outdoor apparel

from renewable sources such as sustainably harvested eucalyptus and recycled plastic bottles.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

41) Parties that work along with the focal firm to provide goods and services to consumers are

viewed as

A) cultural cohorts.

B) corporate partners.

C) cartels.

D) cooperatives.

E) customers.

Answer: B

Explanation: Parties that work with the focal firm are its corporate partners.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) Yellow Trucking provides transportation services for Dan's Delicious Donuts so that Dan's

stores always have fresh stock. Yellow Trucking is an example of a

A) cultural cohort.

B) corporate partner.

C) cartel.

D) cooperative.

E) customer.

Answer: B

Explanation: Parties that work with the focal firm are its corporate partners.

Difficulty: 3 Hard

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

43) The difference between a firm's immediate marketing environment and its macroenvironment

is that the macroenvironment

A) is external.

B) is easier to understand.

C) is easier to control.

D) has fewer components.

E) is internal.

Answer: A

Explanation: The macroenvironment consists of factors external to the firm.

Difficulty: 1 Easy

Topic: Macroenvironment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) The shared meanings, beliefs, morals, values, and customs of a group of people constitute their

A) social concerns.

B) culture.

C) demographics.

D) generational cohorts.

E) religion.

Answer: B

Explanation: This is the definition of culture. Some of the answer options (such as religion) are

aspects of culture, but it is a broader concept.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) Political candidates are notorious for appealing to the different beliefs and values of groups of

potential voters in different areas of the country. These politicians are appealing to differences in

A) popular culture.

B) regional culture.

C) demographics.

D) generational cohorts.

E) country culture.

Answer: B

Explanation: The region in which people live in a particular country has its own regional culture

that affects many aspects of people's lives, including their preferences.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) Insight Guides, a line of travel books, provides travelers with background information about

people's beliefs, values, and customs in various parts of the world. Insight's books educate

travelers about a country's

A) social concerns.

B) political parties.

C) demographics.

D) generational cohorts.

E) culture.

Answer: E

Explanation: People's beliefs, values, and customs relate to their culture.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) When studying culture, the challenge for marketers is to determine whether culture

A) can help identify a particular group that might be interested in the marketer's products.

B) is regional or subregional.

C) reinforces stereotypes.

D) is related to educational achievement.

E) offers opportunities for competitors.

Answer: A

Explanation: The challenge for marketers is to have products or services identifiable by and

relevant to a particular group of people. Our various cultures influence what, why, how, where,

and when we buy.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Late in the day on September 11, 2001, the day of the World Trade Center attacks, Americans

purchased all the American flags Walmart stores had available, nationwide. These purchases were

indicative of

A) regional culture.

B) generational cohort characteristics.

C) country culture.

D) a red/blue marketing campaign.

E) the Walmart Effect.

Answer: C

Explanation: Country culture consists of a country's shared beliefs and values, which included a

strong thread of patriotism after the World Trade Center attacks. The visible nuances of a country's

culture, can include artifacts, behavior, dress, symbols, physical settings, ceremonies, language

differences, colors, tastes, and food preferences,

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

49) The United States has often been called the "melting pot" society, integrating people from

many different cultures into the social fabric of the country. The challenge for marketers is to

determine whether a group's culture

A) is socially important.

B) is passed from generation to generation orally or by written guides.

C) competes with or complements U.S. traditional culture.

D) can be used as a relevant identifier for a particular target group.

E) is an important immediate marketing environment variable.

Answer: D

Explanation: The challenge for marketers is to have products or services identifiable by and

relevant to a particular group of people. Our various cultures influence what, why, how, where,

and when we buy.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) When considering the use of a radio commercial in England that was designed for U.S.

markets, a marketer would likely need to consider which of the following aspects of culture that

might be different between the two countries?

A) dress

B) symbols

C) demographics

D) language

E) social trends

Answer: D

Explanation: Language would be an important cultural issue; while both countries speak English,

there are many differences in vocabulary.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) In New England, foot-long sandwiches are called "grinders," while in many other parts of the

country they are called "subs." This is an example of the impact of

A) regional culture.

B) country culture.

C) generational factors.

D) social trends.

E) regulatory factors.

Answer: A

Explanation: The region in which people live in a particular country has its own regional culture

that affects many aspects of people's lives, including their dietary tastes and preferences.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) The shift of population from the Rust Belt in the North to the Sun Belt in the South and

Southwest will likely

A) decrease national cultural identity.

B) reduce regional cultural differences.

C) make it difficult to collect demographic information.

D) create a demand for a new generational cohort.

E) make it more difficult for companies to differentiate their products.

Answer: B

Explanation: The region in which people live in a particular country has its own regional culture

that affects many aspects of people's lives. The more people move from one region to another, the

more the cultures will tend to blend and become more similar.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) Typical demographic data include all of the following except

A) gender.

B) income.

C) race.

D) education.

E) language differences.

Answer: E

Explanation: All of these are examples of demographic factors except language differences,

which is a cultural trait.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) When marketers look at advertising media, they often begin with viewer or listener profiles

such as age, gender, race, and income. They then compare the media profile with their target

audience. These marketers are using ________ to see if the media "fit" with their advertising

agenda.

A) country culture

B) regional culture

C) demographics

D) micromarketing measures

E) scenario planning

Answer: C

Explanation: Age, gender, race, and income are demographic factors.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

55) Generational cohorts are groups of people of the same generation who have similar ________

because they have shared experiences and are in the same stage of life.

A) regional cultures

B) inflationary expectations

C) political affiliations

D) purchase behaviors

E) cultural values

Answer: D

Explanation: Consumers in a generational cohort—a group of people of the same

generation—have similar purchase behaviors because they have shared experiences and are in the

same stage of life.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) Viewers of the World Series are likely to see ads for beer and cars, and viewers of the

Academy Awards broadcast are likely to see ads for clothing and hair care products, due to

A) cultural expectations.

B) male domination in corporate boardrooms.

C) differing demographic data for potential and past viewers.

D) marketers' general perceptions.

E) multiyear advertising contracts that cannot be broken.

Answer: C

Explanation: Gender is a demographic variable, and these programs do tend to attract different

genders; thus, this difference in advertising is based on demographic information.

Difficulty: 3 Hard

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

57) ________ is(are) distinguished from the other generational cohorts in that the group's oldest

members are now collecting Social Security.

A) Baby Boomers

B) Generation W

C) Generation X

D) Generation Y

E) Generation Z

Answer: A

Explanation: Baby Boomers, those born between 1946 and 1964, are now collecting Social

Security.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) Marketers wanting to use social media to reach consumers should understand that people in the

________ group were born into a world that was already full of electronic gadgets and digital

technologies such as the Internet and social networks.

A) Baby Boomers

B) Generation W

C) Generation X

D) Generation Y

E) Generation Z

Answer: E

Explanation: Members of Generation Z are also known as Digital Natives since they have always

had electronic gadgets and digital technologies in their world.

Difficulty: 2 Medium

Topic: Technological Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

59) The first "latchkey" children belong to which generational cohort?

A) Baby Boomers

B) Generation W

C) Generation X

D) Generation Y

E) Generation Z

Answer: C

Explanation: Generation X children grew up in homes in which both parents worked.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) According to your text, the wealthiest 10 percent of the population control approximately what

percentage of Americans' total net worth?

A) 5.2 percent

B) 15.8 percent

C) 26.9 percent

D) 76 percent

E) 51.9 percent

Answer: D

Explanation: Income distribution in the United States has grown more polarized. The wealthiest

10 percent control 76 percent of Americans' total net worth; in comparison, the bottom 50 percent

control only 1 percent.

Difficulty: 1 Easy

Topic: Macroenvironment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

61) ABC Company knew that its customers were interested in environmentally friendly business

practices, so it began marking all of its products as environmentally friendly because they were

made with all-natural ingredients, even though ABC's plant was one of the worst polluters in town.

The term for this practice is

A) deceptive advertising.

B) greenwashing.

C) environmental exploitation.

D) virtual greening.

E) enviromarketing.

Answer: B

Explanation: The term for disingenuously marketing products as environmentally friendly when

they are not is greenwashing.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) When considering income as a demographic variable affecting marketing efforts, marketers

need to recognize that

A) everyone is equal.

B) income in the United States has become more unevenly distributed.

C) everyone has been equally affected by the recession.

D) there is increasing purchasing power among lower-income groups.

E) middle-income consumers are quickly becoming upper-income consumers.

Answer: B

Explanation: Income distribution in the United States has grown more polarized—the

highest-income groups are growing, whereas many middle- and lower-income groups' real

purchasing power keeps declining.

Difficulty: 2 Medium

Topic: Macroenvironment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

63) Astute marketers recognize that the increasing disparity of income between upper- and

lower-income groups

A) will create inflationary expectations.

B) will disappear as ethnicity becomes a stronger cultural determinant.

C) creates opportunities to provide value to each group.

D) will vanish once the recession ends.

E) is attributable to technological expertise of immigrant groups.

Answer: C

Explanation: Upper-income, middle-income, and lower-income individuals are all consumers,

and all can be offered value in different ways. The broad range in incomes creates marketing

opportunities at both the high and low ends of the market.

Difficulty: 2 Medium

Topic: Macroenvironment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) Population estimates show that by the year 2050, nearly 23 percent of the population in the

United States will come from which group?

A) Hispanics

B) Asians

C) Pacific Islanders

D) Native Americans

E) Eastern Europeans

Answer: A

Explanation: Approximately 80 percent of all population growth in the next 20 years is expected

to come from African American, Hispanic, and Asian communities. Minorities now represent

approximately one-quarter of the population; by 2050 they will represent about 50 percent, nearly

23 percent of the population Hispanic, by 2055 there will not be an ethnic minority in the United

States.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

65) For some products, marketers can combine education level with other data like occupation and

income to obtain

A) a sense of consumers' regional culture.

B) consumers' value sensitivity quotient (VSQ).

C) the educational value equation.

D) complete profiles of individual consumers.

E) accurate predictions of purchase behavior.

Answer: E

Explanation: For some products, marketers can combine education level with other data such as

occupation and income and obtain pretty accurate predictions of purchase behavior.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Marketers know that, compared to high school graduates who are working full time, college

students

A) will earn less over their working lifetime.

B) spend their disposable dollars differently.

C) are less likely to buy textbooks.

D) have almost identical spending patterns.

E) are more likely to drink beer and less likely to drink wine.

Answer: B

Explanation: For some products, marketers can combine education level with other data such as

occupation and income and obtain pretty accurate predictions of purchase behavior. For instance, a

full-time college student with a part-time job may have relatively little personal income but will

spend his or her disposable dollars differently than would a high school graduate who works in a

factory and earns a similar income.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

67) Which of the following is true regarding modern gender roles?

A) Gender roles are a constant cultural norm.

B) Modern standards require firms to produce gender neutral advertising for every product.

C) Gender roles have been blurred in the past several years.

D) Gender boundaries should never be crossed in marketing efforts.

E) Gender roles are unimportant to marketers.

Answer: C

Explanation: Years ago gender roles appeared clear, but those male and female roles have been

blurred. In particular, women today outperform men scholastically, earn higher grades on average,

and graduate from both high school and college at greater rates. These shifts in status, attitudes,

and behaviors affect the way many firms need to design and promote their products and services.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) Which of the following is true of changing gender roles?

A) Women consistently underperform scholastically compared to men.

B) Women graduate from high school and college at greater rates than men.

C) Less than 10 percent of gamers are female.

D) Women have become less prominent in politics.

E) More than 50 percent of married women earn more than their husbands.

Answer: B

Explanation: Women outperform men scholastically, they graduate from high school and college

at greater rates than men, and the percentage of seats in Congress held by women has been

increasing steadily in recent years. About 42 percent of gamers are female, and approximately 38

percent of married women outearn their husbands.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) Marketers in the United States are paying increasing attention to ethnic groups because

A) they represent a majority of the population in nonurban areas of the country.

B) approximately 80 percent of all population growth in the next 20 years is expected to come

from minority groups.

C) they are more susceptible to marketing messages.

D) government subsidies assist marketers attempting to communicate value to these groups.

E) country culture is replacing regional culture as a key marketing consideration.

Answer: B

Explanation: Approximately 80 percent of all population growth in the next 20 years is expected

to come from African American, Hispanic, and Asian communities. Among the different groups,

Hispanic buying power was projected to reach $1.3 trillion in 2015, a cumulative increase of

around 25 percent compared with 2010.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) Marketers are more likely to find higher concentrations of foreign-born Americans and recent

immigrants in

A) rural areas.

B) smaller states.

C) New York, Los Angeles, San Francisco, and Chicago.

D) coastal resort areas.

E) Great Lakes agricultural areas.

Answer: C

Explanation: Although they can be found anywhere, many foreign-born Americans and recent

immigrants tend to concentrate in a handful of metropolitan areas, such as New York, Los

Angeles, San Francisco, and Chicago.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

71) Though Asian Americans comprise only about 5.6 percent of the U.S. population, they

represent

A) the fastest-growing minority population.

B) the easiest minority group to access.

C) a large proportion of the minorities in the Midwest.

D) a uniform group of consumers with a common language and cultural background.

E) all of these

Answer: A

Explanation: Asian Americans make up only about 5.6 percent of the U.S. population, but they

also represent the fastest-growing minority population, tend to have more spending power, have

more schooling, and be more likely to be professionally employed or own a business.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) Strategic efforts to supply consumers with environmentally friendly merchandise are called

A) reduce, reuse, recycle.

B) green marketing.

C) the green generation.

D) the inconvenient truth.

E) earth marketing.

Answer: B

Explanation: Green marketing refers to the marketing of environmentally friendly, sustainable

merchandise or service.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) Which of the following is a critical ethical consideration for green marketers?

A) capability

B) dependability

C) availability

D) sustainability

E) profitability

Answer: D

Explanation: Feedback: When they undertake green marketing strategic efforts, firms work to

supply customers with environmentally friendly, sustainable merchandise and services.

Sustainability is a critical ethical consideration for marketers.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Many American consumers are purchasing hybrid automobiles even though they are more

expensive than conventional compact cars. These consumers

A) value contributing to a greener environment.

B) are economically irrational.

C) are responding to global corporate pressure for social responsibility.

D) would prefer an SUV.

E) are greenwashing.

Answer: A

Explanation: Firms are actively engaging in sustainable practices in terms of how they go about

manufacturing products and provisioning services, as well as the types of products and services

that they offer. These consumers are willing to pay more for environmentally friendly products

because care for the environment is something that adds value.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

75) Every time a consumer surfs the web and clicks on a site, online marketers can place ________

on that user's computer, showing them where the user starts, proceeds, and ends the online

encounter—as well as what the user buys and doesn't buy.

A) web portals

B) cookies

C) browsers

D) bookmarks

E) pirates

Answer: B

Explanation: Every time a consumer surfs the web and clicks on a site, online marketers can

place "cookies" on that user's computer, showing them where the user starts, proceeds, and ends

the online encounter—as well as what the user buys and doesn't buy. For many consumers, such

close access to their behaviors is an unacceptable invasion of privacy.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) Which of the following are commonly found in distribution and fulfillment centers to fill

orders for stores or individual customers?

A) mobile devices

B) robots

C) drones

D) smartphones

E) mobile hotspots

Answer: B

Explanation: Robots in all shapes, sizes and forms are entering the marketplace and performing

work that previously was the responsibility of human workers. They already are commonly in

distribution and fulfillment centers to fill orders for stores or individual customers.

Difficulty: 1 Easy

Topic: Technological Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

77) In what country was a law recently passed requiring grocery stores to donate food to charity

that would otherwise be tossed?

A) France

B) United States

C) China

D) England

E) Germany

Answer: A

Explanation: In 2010, grocery stores and restaurants threw out almost $47 billion worth of food,

much of which was not past its expiration date or otherwise uneatable. This is not the case in

France, however. A recently passed law requires grocery stores to donate food to charity that

would otherwise be tossed.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) One of the UN Sustainable Development Goals is to

A) reduce stress through yoga.

B) promote healthy meals.

C) reduce hunger.

D) eliminate artificial dyes from food.

E) use only natural ingredients in foods.

Answer: C

Explanation: One of the UN Sustainable Development Goals is to reduce hunger, and reducing

food waste is critical to that effort.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

79) When marketers monitor the economic situation affecting their target markets, they are likely

to monitor changes in all of the following except

A) purchasing power.

B) interest rates.

C) inflation.

D) age.

E) currency exchange rates.

Answer: D

Explanation: Marketers monitor the general economic situation, both in their home country and

abroad, because it affects the way consumers buy merchandise and spend money. Some major

factors that influence the state of an economy include the rate of inflation, foreign currency

exchange rates, and interest rates.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) If the inflation rate in Mexico was twice the rate in the United States, but the Mexican

monetary authorities kept the peso-dollar exchange rate almost constant, which of the following

would be true?

A) The high inflation rate in Mexico would increase its citizens' purchasing power.

B) The high inflation rate in Mexico would mean that its products would cost less overall.

C) Mexican products would be less expensive, while U.S.-made products would become

comparatively more expensive.

D) Mexican products would be more expensive, while U.S.-made products would become

comparatively less expensive.

E) U.S.-made products would become less attractive to purchase.

Answer: D

Explanation: Foreign currency fluctuations can influence consumer spending. By keeping the

exchange rate constant, U.S.-made products' prices would go down, compared to their Mexican

counterparts, whose prices would rise with inflation.

Difficulty: 3 Hard

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

81) Laws that prohibit the formation of monopolies or alliances that would damage a competitive

marketplace benefit consumers through

A) increased choices.

B) higher prices.

C) protection from false advertising.

D) fair debt collection practices.

E) fewer competitors.

Answer: A

Explanation: The 1890 Sherman Antitrust Act prohibits monopolies and other activities that

would restrain trade or competition and makes fair trade within a free market a national goal.

Difficulty: 2 Medium

Topic: Political and Legal Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) Which of the following groups has never lived without easy access to the Internet and other

digital technologies?

A) Baby Boomers

B) Generation W

C) Generation X

D) Generation Y

E) Generation Z

Answer: E

Explanation: Members of Generation Z (Gen Z) are also known as Digital Natives because

people in this group were born into a world that already was full of electronic gadgets and digital

technologies such as the Internet and social networks.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) Which of these is a macroenvironmental factor?

A) culture

B) corporate partners

C) competition

D) company

E) competencies

Answer: A

Explanation: Corporate partners, competition, and company are all part of the immediate

environment.

Difficulty: 1 Easy

Topic: Macroenvironmental Factors

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) When Kimberly-Clark introduced rolls of toilet paper without the cardboard core, what social

trend did this product respond to?

A) green marketing

B) time-poor society

C) cultural diversity

D) technological advances

E) regulatory issues

Answer: A

Explanation: By eliminating the cardboard core, a form of consumer waste is eliminated, which

would be of interest to consumers concerned about the environment. When they undertake green

marketing strategic efforts, firms work to supply customers with environmentally friendly,

sustainable merchandise and services.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

85) If McDonald's wanted to change its marketing strategy in response to the social trends outlined

in the text, it might consider all of the following ideas except

A) offering an expanded menu of healthy options.

B) making nutritional information readily available to consumers.

C) using recycled paper in its food packaging.

D) using solar power in its restaurants.

E) creating an advertising campaign targeting elementary schoolchildren.

Answer: E

Explanation: Targeting preteens is related to demographic factors, not a current social trend, and

in fact would probably be considered to work against the social trend toward health and wellness,

given that many of McDonald's menu items are considered to be unhealthy.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) For most makers of ________, especially those that resonate strongly with consumers' sense of

nostalgia and childhood memories, changing ingredients to healthier options represents a grave

risk.

A) processed foods

B) organic foods

C) alcoholic beverages

D) bottled water

E) original recipes

Answer: A

Explanation: Feedback: For most makers of processed foods, especially those that resonate

strongly with consumers' sense of nostalgia and childhood memories, changing ingredients to

healthier options represents a grave risk.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

87) Some companies have been accused of taking advantage of the current social trend of green

marketing, positioning their products as environmentally friendly when this may not actually be

the case. This practice is called

A) fake greening.

B) greenwashing.

C) greenbaiting.

D) green puffery.

E) red marketing.

Answer: B

Explanation: Greenwashing is the practice of claiming environmental benefits for your product

that are not genuine.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) Part of the social trend toward health and wellness is a concern about the increasing degree of

obesity in the United States. Related to this concern, the text notes the increasing popularity of

A) flu shots.

B) high-carbohydrate diets.

C) yoga.

D) cooking shows on TV.

E) juicing.

Answer: C

Explanation: Consumer spending on yoga classes, mats, and clothing has increased from $10

billion to $16 billion in just four years.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

89) The political/regulatory environment comprises political parties, governmental organizations,

and

A) legislation and laws.

B) citizens.

C) interest groups.

D) for-profit and nonprofit businesses.

E) international influences.

Answer: A

Explanation: The political/regulatory environment comprises political parties, government

organizations, and legislation and laws.

Difficulty: 1 Easy

Topic: Political and Legal Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) Christie, a marketing executive who was born in 1955, advocated that her company focus on a

print campaign for its new line of lipsticks rather than spending money on online ads. This point of

view may be attributed to the fact that she is a member of which generational cohort?

A) Baby Boomer

B) Gen X

C) Gen Y

D) Gen Z

E) Millennials

Answer: A

Explanation: After World War II, the birthrate in the United States rose sharply, resulting in a

group known as the Baby Boomers, the 78 million Americans born between 1946 and 1964.

Difficulty: 3 Hard

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

91) Which generation's members are also known as Millennials?

A) Baby Boomer

B) Gen X

C) Gen Y

D) Gen Z

E) the Digital Natives

Answer: C

Explanation: Members of Generation Y (Gen Y), also called Millennials, include the more than

60 million people born in the United States between 1977 and 2000.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) The poorest 25 percent of the U.S. population earned ________ or less per year in 2016.

A) $48,500

B) $50,000

C) $30,500

D) $59,039

E) $24,002

Answer: E

Explanation: For 2016, the average (median) yearly income of the richest 5 percent of the

population was $225,252 or more, the average (median) weekly income for the United States as a

whole was $59,039, and the poorest 25 percent of the population earned $24,002 or less per year.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

93) Which statement about the changing ethnicity in the United States is true?

A) Minorities now represent almost half of the population in the United States.

B) In spite of an increase in the Hispanic population, Hispanic buying power is expected to

maintain its current level.

C) Hispanics differ vastly from other groups in America in terms of consumer behavior.

D) A majority of black Americans now live in the suburbs.

E) Asian Americans are the slowest-growing minority population.

Answer: D

Explanation: Thirty-two percent of black households earn more than $75,000, and it is expected

that a majority of black Americans now live in the suburbs.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) In 2016, in response to the threats of climate change, the United Nations rectified the

A) Robinson-Patman Act.

B) Paris Accord.

C) Clayton Act.

D) Sherman Act.

E) Federal Trade Commission Act.

Answer: B

Explanation: In 2016, in response to the threats of climate change, the United Nations rectified

the Paris Accord. Countries participating in this accord agreed to reduce greenhouse gas emission

as they see best fit, limiting the atmosphere to rise 2°C in this century.

Difficulty: 1 Easy

Topic: Macroenvironmental Factors

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

95) The government has enacted laws that promote both fair trade and competition by prohibiting

the formation of monopolies or alliances that would damage a competitive marketplace, fostering

fair pricing practices for all suppliers and consumers. These actions are part of the ________

environment of business.

A) communication

B) political/regulatory

C) constitutional

D) social

E) technological

Answer: B

Explanation: The political/regulatory environment comprises political parties, government

organizations, and legislation and laws.

Difficulty: 2 Medium

Topic: Political and Legal Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) Which of the following specifically prohibits monopolies?

A) Sherman Antitrust Act

B) Federal Trade Act

C) Robinson-Patman Act

D) Financial Reform Law

E) Consumer Product Act

Answer: A

Explanation: The 1890 Sherman Antitrust Act prohibited monopolies and other activities that

would restrain trade or competition and made fair trade within a free market a national goal.

Difficulty: 1 Easy

Topic: Political and Legal Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

97) What is most likely to happen when inflation increases?

A) Consumers buy more discretionary merchandise.

B) Consumers buy fewer personal care and home entertainment products.

C) Off-price and discount retailers suffer from lower sales.

D) Consumers buy lower-priced foods.

E) Consumers buy less food.

Answer: D

Explanation: Inflation refers to the persistent increase in the prices of goods and services.

Increasing prices cause the purchasing power of the dollar to decline; in other words, the dollar

buys less than it used to. When inflation increases, consumers probably don't buy less food, but

instead buy less expensive food to make their dollar go further.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) ________ is the cost to the customers or the fee the bank charges those customers for

borrowing money.

A) Interest

B) A service charge

C) Tax

D) Tariff

E) A user fee

Answer: A

Explanation: Interest rates represent the cost of borrowing money.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

99) In the summer of 2002, the euro was valued at slightly less than US$1. By 2008, it had risen to

an all-time high of $1.60, but in late 2017, the euro was once again slightly less than $1. This

change in value is called

A) interest destabilization.

B) inflation.

C) recession.

D) foreign currency fluctuations.

E) global financial impact.

Answer: D

Explanation: Foreign currency fluctuations can influence consumer spending. For instance, in

the summer of 2002, the euro was valued at slightly less than US$1. By 2008, it had risen to an

all-time high of $1.60, but in late 2017, the euro was once again slightly less than $1.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) When Diane went to college, tuition was $650 per semester. Now that same college charges

$6,500 per semester. This number reflects a persistent increase in price known as

A) currency fluctuation.

B) inflation.

C) recession.

D) interest.

E) deflation.

Answer: B

Explanation: Inflation refers to the persistent increase in the prices of goods and services.

Difficulty: 3 Hard

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

101) The Child Protective Act

A) prohibits the sale of harmful toys and components to children.

B) limits the number of commercials shown during children's programming.

C) requires food manufacturers to display nutritional contents on product labels.

D) prohibits the manufacture or sale of adulterated or fraudulently labeled food and drug products.

E) regulates safety standards for consumer products.

Answer: A

Explanation: The Child Protective Act prohibits the sale of harmful toys and components to

children and sets the standard for child-resistant packaging.

Difficulty: 2 Medium

Topic: Political and Legal Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) Which of the following is an example of greenwashing?

A) A company markets a product made from recycled glass bottles.

B) A company charges more for a hybrid car than for a similar gas model.

C) A company donates money to a school reading project so it can advertise itself as

environmentally friendly.

D) The Smiths installed energy-saving lightbulbs in their rental apartment buildings.

E) The corner Laundromat stocks only phosphate-free detergent in its vending machines.

Answer: C

Explanation: Donating money to a school for a reading project is socially responsible, but not

necessarily environmentally friendly. This is greenwashing for public approval.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

103) Nearly what percentage of U.S. adults now recycle their soda bottles and newspapers?

A) 10 percent

B) 20 percent

C) 50 percent

D) 75 percent

E) 90 percent

Answer: C

Explanation: Nearly half of U.S. adults now recycle their soda bottles and newspapers, and

European consumers are even more green.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) Which of the following is a social trend listed in the text?

A) thrift

B) health and wellness

C) environmental legislation

D) economic concerns

E) technological advances

Answer: B

Explanation: Various social trends appear to be shaping consumer values in the United States and

around the world, including a greater emphasis on sustainability, health and wellness

considerations, and more efficient utilization and distribution of food.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

105) Which ethnic group in the United States tends to earn more, have more schooling, and be

more likely to be professionally employed or own a business?

A) Northern European

B) Middle Eastern

C) Hispanic

D) Asian American

E) African American

Answer: D

Explanation: Asian Americans make up only about 5.6 percent of the U.S. population, but they

also represent the fastest-growing minority population, tend to have a lot of spending power, have

more schooling, and are more likely to be professionally employed or own a business.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) Which ethnic group tends to be not only more affluent and suburban than previously thought,

but also younger, with 58 percent between the ages of 15 and 49 years?

A) Caucasian

B) Pacific Islander

C) Hispanic

D) Asian

E) African American

Answer: E

Explanation: In 2016 African American U.S. households had a mean (average) yearly income of

over $49,000. They tend to be younger, such that 58 percent are between the ages of 15 and 49

years (a key age demographic for many marketers). Thirty two percent of black households earn

more than $75,000, and it is expected that a majority of black Americans now live in the suburbs.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

107) A generational cohort is a group of people

A) who purchase only one brand of a product throughout their lifetime.

B) who grew up and went to school together.

C) with the same beliefs and values.

D) who are of the same generation.

E) who are not open to new things.

Answer: D

Explanation: Consumers in a generational cohort—a group of people of the same

generation—have similar purchase behaviors because they have shared experiences and are in the

same stage of life.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) Discuss how privacy concerns have become a current social issue. What technological

invention has prompted the rise in concern over privacy?

Answer: More and more consumers worldwide sense a loss of privacy. At the same time that the

Internet has created an explosion of accessibility to consumer information, improvements in

computer storage facilities and the manipulation of information have led to more and better

security and credit check services. In recent years there have been a number of hacking scandals.

However, the largest one came to light in October 2017, when Yahoo announced that all 3 billion

of its accounts had been hacked in 2013. Yahoo states that the information that was hacked did not

include bank account or credit card data, but it did include security questions and back-up e-mail

addresses, making other accounts of those who were hacked also vulnerable. Although companies

continuously develop new ways to keep customer information safe, some observers suggest

hackers are just getting more effective.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

109) Imagine that you have just been made the marketing manager for your university. Your first

task is to assess your university's immediate environment. What questions will you likely ask?

Answer: Answers will vary depending on the type of university, but should include discussion of

the following:

Consumers—Who are the university's current consumers? What are their demographic profiles, or

recent changes in composition?

Company's abilities (in this case, the university's)—What is the university doing well, differently

from the past? What are its strengths and weaknesses?

Competition—Who are the competitors? What are their strengths and weaknesses?

Corporate partners—For a university, likely partners include alumni, the community, and vendors,

particularly technology vendors. What are they offering? How can they help the university?

Physical environment—How close is the university to restaurants, hotels, and shopping? What is

the make-up of the campus buildings and facilities?

Difficulty: 3 Hard

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) Irvina is a general practice physician. Her office includes a number of nurses, clerical

assistants, and a physician's assistant. She runs a well-organized practice, but she depends on a

variety of corporate partners to create value for her patients. Who are likely to be Irvina's corporate

partners and how do they help or hinder her efforts to create value?

Answer: Answers will vary, but will likely include discussion of the following:

• Vendors, including laboratory testing companies. Many physicians depend on quick, accurate

test results to meet the needs of their clients.

• Hospitals. As a general practice physician, Irvina probably regularly sends patients to local

hospitals and visits them there.

• Specialty physicians. Irvina probably sends her patients for consultations to a wide array of

specialists. She depends on them for expertise and timely service.

Difficulty: 3 Hard

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

111) International marketers new to the United States often struggle to define American culture.

What would these international marketers need to study in order to define the term and what would

they be likely to learn?

Answer: They would need to study shared meanings, beliefs, morals, values, and customs of

Americans. They would likely learn that there are many regional cultures in the United States with

differences based on history, ethnicity, and geographic area.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) The United States has often been called the "melting pot" society, integrating people from

many different cultures into the social fabric of the country. What challenges do marketers face in

assessing U.S. culture?

Answer: The challenge for marketers is to have products or services identifiable by and relevant

to a particular group of people. Our various cultures influence what, why, how, where, and when

we buy.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

113) Baby Boomers represent a tremendous opportunity for today's marketers. Who are the Baby

Boomers? Based on their age, what might be some products that they would be interested in?

Answer: Baby Boomers are the post-World War II generation born between 1946 and 1964. The

oldest Boomers are collecting Social Security and this generational cohort will be the largest

population of 50-plus consumers in the United States. Examples will vary, but based on the age of

Baby Boomers, they may likely be interested in beauty products that prevent aging, products

related to health care and insurance, travel related products, and so on.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) "Income distribution in the United States has grown more polarized." What does this mean in

general, and what does it mean especially to marketers in the United States?

Answer: Income distribution in the United States has grown more polarized—the highest-income

groups are growing, whereas many middle- and lower-income groups' real purchasing power

keeps declining. Although the trend to wealthy households outpacing both poor and middle classes

is worldwide, it is particularly prominent in the United States. For marketers it has many

meanings. Marketers targeting affluent Americans know this group has considerable discretionary

spending power. For marketers targeting lower- and middle-income groups, value and price are

becoming even more important as their purchasing power languishes.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

115) At almost every major university, some group on campus pressures the university to become

"greener." What does this mean? What does it usually involve? Why would a university want to

become greener?

Answer: Becoming greener on a university campus means providing more environmentally

friendly, sustainable goods and services. For a university, it would start with recycling but also

might involve green building design, mass transportation, and environmental education. The role

of universities is to educate people, including education about consumers' impact on the

environment.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

116) How can marketers identify potential opportunities?

Answer: By paying close attention to customer needs and continuously monitoring the

environment in which it operates, a good marketer can identify potential opportunities.

Difficulty: 1 Easy

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

117) Gaetana is the new marketing director for a local theater. One of her major responsibilities is

to monitor and manage aspects of the theater's immediate environment. What will Gaetana

monitor and manage?

Answer: The four factors in consumers' immediate environment are the company's capabilities,

competition, corporate partners, and the physical environment.

Difficulty: 2 Medium

Topic: Stakeholders Effect on Marketing Strategy

Learning Objective: 05-01 Outline how customers, the company, competitors, corporate

partners, and the physical environment affect marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

118) Marketers in the United States are learning that Hispanic and other minority groups are not

alike. How do cultural differences affect purchase decisions?

Answer: Due to immigration and increasing birthrates among various ethnic and racial groups,

the United States continues to grow more diverse. Approximately 80 percent of all population

growth in the next 20 years is expected to come from African American, Hispanic, and Asian

communities. Minorities now represent approximately one-quarter of the population; by 2050 they

will represent about 50 percent. Culture influences what, why, how, where, and when groups buy

things. Lifestyle changes within these groups will have an effect on their purchases.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

119) Describe the buying power and characteristics of the Hispanic consumer.

Answer: Hispanic buying power was projected to reach $1.3 trillion in 2015, a cumulative

increase of around 25 percent compared with 2010. The 50 million Hispanic consumers in the

United States have increasing influences on mainstream U.S. culture. Many families have been in

the United States for multiple generations, and the consumer behavior of these highly acculturated

Hispanics differs little from that of other groups of Americans.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

120) Grace is studying the demographics of the students attending the local elementary school.

What information will Grace study?

Answer: Demographics indicate the characteristics of human populations and segments,

especially those used to identify consumer markets. Grace will likely look at gender, race, income,

and ethnicity data.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

121) Describe Digital Natives, and explain the impact of technological advances on this group.

Answer: Members of Generation Z (Gen Z) are also known as Digital Natives because people in

this group were born into a world that already was full of electronic gadgets and digital

technologies such as the Internet and social networks. These technologies are being developed and

adopted at an unprecedented rate. Whereas it took 38 years for the radio to be adopted by 50

million people and 13 years for television, it only took 2 years for the same number of consumers

to sign up for Facebook.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

122) As the marketing manager of the ABC company, which cohort group would you target that

varies most in age from teenagers to adults who have their own families? Members of Generation

Y (Gen Y), also called Millennials, include the more than 60 million people born in the United

States between 1977 and 2000. As the children of the Baby Boomers, this group is the biggest

cohort since the original post–World War II boom. It also varies the most in age, ranging from

teenagers to adults who have their own families.

Answer: Answers will vary.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

123) In recent decades, how has income distribution changed in the United States?

Answer: Income distribution in the United States has grown more polarized—the highest-income

groups are growing, whereas many middle- and lower-income groups' real purchasing power

keeps declining. Although the trend of wealthy households outpacing both poor and middle classes

is worldwide, it is particularly prominent in the United States.

Difficulty: 1 Easy

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

124) Every year Pamela reassesses the economic situation in the target markets her company

serves. What factors will Pamela likely assess?

Answer: Pamela will likely assess changes in inflation, foreign currency exchange rates, and

interest rates.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

125) An Uncle Ben's box of rice has a symbol stating that the packaging is made from 100 percent

recycled material and encourages consumers to recycle. Identify the social trend being addressed

by Uncle Ben's.

Answer: Green marketing, which is a strategy by companies to supply customers with

environmentally friendly, sustainable merchandise and services.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

126) As demographic factors, why are marketers interested in the education level, occupation, and

income of consumers?

Answer: For some products, marketers can combine education level with other data such as

occupation and income and obtain pretty accurate predictions of purchase behavior. For instance, a

full-time college student with a part-time job may have relatively little personal income but will

spend his or her disposable dollars differently than would a high school graduate who works in a

factory and earns a similar income. Marketers need to be cognizant of the interaction among

education, income, and occupation.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

127) Identify three tactics that a mid-priced motel chain might employ to take advantage of the

social trends discussed in the text, in hopes of increasing its business. For each tactic, identify the

social trend it is based on.

Answer: Answers will vary, depending on the trends the student picks to discuss; however, here

are some examples:

• Health and wellness: Add a fitness center, or expand it if one already exists. If free breakfast is

offered, make sure that healthy options are offered.

• Greener consumers: Implement a recycling program at the hotel, or expand the use of products

made from recycled materials.

• Privacy concerns: Have a secure website for customers to book rooms and don't share

customers' personal information with other firms.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

128) Why are generational cohorts important to marketers?

Answer: Consumers in a generational cohort—a group of people of the same generation—have

similar purchase behaviors because they have shared experiences and are in the same stage of life.

Applying age as a basis to identify consumers is quite useful to marketers, as long as it is used in

conjunction with other consumer characteristics.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

129) As the marketing manager of the ABC company, you understand that gender roles are not as

clear as they were years ago. What factors do you consider in your promotion of the company's

products to women?

Answer: Years ago gender roles appeared clear, but those male and female roles have been

blurred. In particular, women today outperform men scholastically, earn higher grades on average,

and graduate from both high school and college at greater rates.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

130) Name the various social trends that impact marketing, and give one example that

demonstrates how each one influences marketing practices.

Answer: Answers will vary, but should include the following social trends: a greater emphasis on

health and wellness concerns, greener consumers, and privacy concerns.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

131) Discuss the political and regulatory environment of business as it relates to the protection of

consumers. Name and describe at least two laws that had a major impact on fair competition,

consumer protection, or industry-specific regulation.

Answer: Students should discuss in general how the political/regulatory environment relates to

the marketing of products to consumers. Legislation has been enacted to protect consumers in a

variety of ways. First, regulations require marketers to abstain from false or misleading advertising

practices that might mislead consumers, such as claims that a medication can cure a disease when

in fact it causes other health risks. Second, manufacturers are required to refrain from using any

harmful or hazardous materials (e.g., lead in toys) that might place a consumer at risk. Third,

organizations must adhere to fair and reasonable business practices when they communicate with

consumers. For example, they must employ reasonable debt collection methods and disclose any

finance charges, and they are limited with regard to their telemarketing and e-mail solicitation

activities. Laws specifically mentioned might be the 1890 Sherman Antitrust Act, the 1936

Robinson-Patman Act, or the 1914 Clayton Act.

Difficulty: 2 Medium

Topic: Political and Legal Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

132) How do the economic factors of inflation, foreign currency fluctuations, and interest rates

affect firms' ability to market goods and services?

Answer: Shifts in the three economic factors make marketing easier for some and harder for

others. For instance, when inflation increases, consumers probably don't buy less food, but they

may shift their expenditures from expensive steaks to less expensive hamburgers. Grocery stores

and inexpensive restaurants win, but expensive restaurants lose. Consumers also buy less

discretionary merchandise, though off-price and discount retailers often gain ground at the

expense of their full-price competitors.

Similarly, the sales of expensive jewelry, fancy cars, and extravagant vacations decrease, but the

sale of low-cost luxuries, such as personal care products and home entertainment, tends to

increase.

Difficulty: 2 Medium

Topic: Economic Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

133) Name one technological advance that has impacted how consumers research and buy

products. Give an example from your own experience.

Answer: Answers will vary, but could discuss smartphones, tablet computers, mobile apps, and

Netflix, or similar websites.

Difficulty: 3 Hard

Topic: Technological Environment

Learning Objective: 05-04 Examine the technological advances that are influencing marketers.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) How is the balance of ethnicities in the U.S. population changing, and what implications does

this have for marketers?

Answer: Because of immigration and increasing birthrates among various ethnic and racial

groups, the United States continues to grow more diverse. Since different ethnic groups have

different cultural values and buying patterns, marketers must stay on top of this trend and adjust

their marketing accordingly.

Difficulty: 2 Medium

Topic: Demographic Environment

Learning Objective: 05-02 Explain why marketers must consider their macroenvironment when

they make decisions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

135) You are the marketing manager of a fast-food business that wants to appeal to consumers

focused on improving their health. Citing an example from the text, what marketing initiatives

would you suggest the company take?

Answer: Answers will vary, but should include that new advertising guidelines require marketers

to produce food in reasonably proportioned sizes. Advertised food items must provide basic

nutrients, have less than 30 percent of their total calories from fat, and include no added

sweeteners. The advertising also cannot be aired during children's programming, and companies

cannot link unhealthy foods with cartoon and celebrity figures. For example, the SUBWAY

FRESH FIT FOR KIDS™ offerings meet the American Heart Association's criteria for a

heart-healthy meal, because they feature lean protein, fruits, vegetables, grains, and milk, with

fewer than 500 calories. The company also has partnered with Disney in a Star Wars-related

television ad promoting healthy meals.

Difficulty: 2 Medium

Topic: Social-cultural Environment

Learning Objective: 05-03 Identify various social trends that impact marketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 6 Consumer Behavior

1) Generally, people buy one product or service instead of another because they perceive it to be a

better value.

Answer: TRUE

Explanation: Value is the difference between what we get and what we must give to get it.

Perceptions of value usually drive purchase decisions.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) The consumer decision process begins with a comparison of available alternatives.

Answer: FALSE

Explanation: The consumer decision process begins with need recognition when consumers

recognize they have an unsatisfied need and they would like to go from their actual, needy state to

a different, desired state. The greater the discrepancy between these two states, the greater the need

recognition will be.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) The greater the difference between a consumer's unsatisfied need and the desired state, the

greater the need recognition will be.

Answer: TRUE

Explanation: The consumer decision process begins when consumers recognize they have an

unsatisfied need and they would like to go from their actual, needy state to a different, desired

state. The greater the discrepancy between these two states, the greater the need recognition will

be.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) Sally wants a new car that will be dependable transportation and look good. She wants to satisfy

both functional and psychological needs.

Answer: TRUE

Explanation: A functional need relates to product performance—for example, dependable

transportation. A psychological need relates to personal gratification—for example, having a car

that looks good.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) When Glenn is thirsty, he always buys a Coke. Like many consumers, Glenn engages in

considerable alternative evaluation when buying habitual products like his Coke.

Answer: FALSE

Explanation: Habitual decision making involves little conscious effort—these are purchases that

we make regularly and by habit, without even considering alternatives.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) One benefit of having satisfied customers is that they may spread positive word of mouth.

Answer: TRUE

Explanation: Satisfied customers sometimes spread positive word of mouth. They are also likely

to become loyal and to purchase again.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) Setting high customer expectations is a good strategy that will help avoid customer

dissatisfaction in the long run.

Answer: FALSE

Explanation: Setting unrealistically high consumer expectations of the product through

advertising, personal selling, or other types of promotion may lead to higher initial sales, but it

eventually will result in dissatisfaction if the product fails to achieve high performance

expectations.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) Customers are more likely to talk about service that exceeded their expectation than about

service that did not meet their expectation.

Answer: FALSE

Explanation: Negative word of mouth occurs when consumers spread negative information about

a product, service, or store to others. When customers' expectations are met or even exceeded, they

often don't tell anyone about it. But when consumers believe that they have been treated unfairly in

some way, they usually want to complain, often to many people.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) Maslow's hierarchy of needs is an interesting concept for psychology, but it has little relevance

for marketing.

Answer: FALSE

Explanation: Maslow's hierarchy of needs helps explain motives, which are needs or wants that

are strong enough to cause someone to seek satisfaction. In many cases, satisfaction is tied to a

purchase decision.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) Situational factors sometimes override psychological and social factors in the consumer

decision process.

Answer: TRUE

Explanation: Situational factors can lead to different decisions than the consumer would make

otherwise. Situational factors may influence purchasing decisions.

Difficulty: 2 Medium

Topic: Situational Influences

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) Frank is out of milk and bread and needs to decide what is for dinner. He will be stopping at the

grocery store on the way home. Frank will likely engage in limited problem solving.

Answer: TRUE

Explanation: Milk and bread might be habitual purchases, or Frank might consider different

types of bread or different-sized containers of milk. He must also decide on a menu for dinner and

purchase the groceries he needs. None of this requires extended problem solving—in each case he

will probably consider only a few alternatives—but a small amount of thought will be needed. This

is an example of limited problem solving, which occurs during a purchase decision that calls for, at

most, a moderate amount of effort and time.

Difficulty: 3 Hard

Topic: Limited Decisions

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) Consumers involved in habitual decision making engage in little conscious decision making.

Answer: TRUE

Explanation: Habitual decision making involves little conscious thought; instead, the consumer

simply follows habitual patterns, usually without considering other brands.

Difficulty: 1 Easy

Topic: Routine Decisions

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) As manager of a local donut shop, Arnold greets his regular customers by name and often

begins making their order when he sees them drive into the parking lot. Arnold knows habitual

purchasers with strong store loyalty are great customers.

Answer: TRUE

Explanation: Habitual purchasing customers rarely even consider alternative brands or stores,

and so they are excellent customers.

Difficulty: 3 Hard

Topic: Routine Decisions

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

14) Rachel is visiting colleges before applying to schools. Rachel is likely to be involved in an

impulse buying process.

Answer: FALSE

Explanation: It is very unlikely that Rachel will make such an important decision impulsively.

The fact that she is visiting schools in advance of applying indicates that she is conducting

extensive information search, and is probably involved in extended problem solving.

Difficulty: 3 Hard

Topic: Extended Problem Solving

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

15) When making an important purchase, consumers often consult friends and family. This is

considered an external search for information.

Answer: TRUE

Explanation: An external search for information occurs when the buyer seeks information

outside his or her personal knowledge base to help make the buying decision.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) Maria will not consider purchasing an "American" car brand based on negative comments

made by her parents; therefore, she has developed a negative attitude toward American brand cars.

Answer: TRUE

Explanation: An attitude is a person's enduring evaluation of his or her feelings about and

behavioral tendencies toward an object or idea. An attitude consists of three components:

cognitive, affective, and behavioral. Maria's knowledge of her parents' comments could have

influenced one, two, or all three of these components of her attitude.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) A reference group may have direct or indirect influence on your attitude toward a particular

clothing store.

Answer: TRUE

Explanation: A reference group is one or more persons whom an individual uses as a basis for

comparison regarding beliefs, feelings, and behaviors. Reference groups provide information to

consumers directly through conversation, either face-to-face or electronically, or indirectly

through observation.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

18) After purchasing an expensive pair of shoes, you may question whether or not the shoes are

any better than the less expensive shoes you could have purchased instead. This is an example of

postpurchase cognitive dissonance.

Answer: TRUE

Explanation: Postpurchase cognitive dissonance is an internal conflict that arises from an

inconsistency between two beliefs, or between beliefs and behavior. In this case, someone who

spends a lot of money on shoes may feel a conflict due to the possibility that a cheaper pair would

have satisfied the need for shoes just as well, leaving the extra money available for another use.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

19) Pamela didn't go see the movie Gravity because her friends all said she wouldn't be able to

handle it. When she found out how good it was, she blamed her friends. Pamela is demonstrating

an internal locus of control.

Answer: FALSE

Explanation: By letting her friends' opinions control her actions, and then blaming them for her

decision, she is demonstrating an external locus of control. With an external locus of control,

consumers believe that fate or other external factors control all outcomes. In that case, they believe

it doesn't matter how much information they gather; if they make a wise decision, it isn't to their

credit, and if they make a poor one, it isn't their fault.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

20) Another name for physiological risk is safety risk.

Answer: TRUE

Explanation: As it relates to a purchase decision, physiological (or safety) risk refers to the fear of

an actual harm should the product not perform properly.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

21) Jack usually buys Nike shoes, so when his friend asked him what shoes he should buy, Jack

said Nike because it was the first brand he thought of. Jack's response was an evoked set.

Answer: FALSE

Explanation: This is a retrieval set because it is the brand that was readily brought forth from

memory without considering other brands.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) When Hakim asked Mary where she wanted to go for lunch, she said Chili's because she went

there at least once a week and always liked it. Mary conducted an internal search for information.

Answer: TRUE

Explanation: In an internal search for information, the buyer examines his or her own memory

and knowledge about the product or service, gathered through past experiences.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) Vlad decided not to purchase the iPod shuffle because he didn't think it would hold all of his

songs. Vlad was using his assessment of the iPod shuffle's ________ risk in making his decision.

A) financial

B) performance

C) social

D) safety

E) psychological

Answer: B

Explanation: Vlad is worried about the performance risk, which involves the perceived danger

inherent in a poorly performing product or service.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) What attributes are product or service features that are important to the buyer and on which

competing brands or stores are perceived to differ?

A) determinant

B) evaluative

C) ethereal

D) multi

E) universal

Answer: A

Explanation: Determinant attributes are product or service features that are important to the

buyer and on which competing brands or stores are perceived to differ.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

25) According to Maslow's hierarchy of needs, which needs are the needs that people first seek to

meet?

A) safety

B) self-actualization

C) physiological

D) esteem

E) love

Answer: C

Explanation: In Maslow's hierarchy of needs, physiological needs, those dealing with the basic

biological necessities of life—food, drink, rest, and shelter—are the needs people seek to meet

first.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) Marketers often use principles and theories from sociology and psychology to better

understand consumers' actions and to

A) develop basic strategies for dealing with their behavior.

B) contribute to the theoretical knowledge in those disciplines.

C) avoid cultural reference group problems.

D) maximize postpurchase cognitive dissonance.

E) satisfy ritual consumption needs while avoiding overconsumption.

Answer: A

Explanation: Sociology and psychology have both contributed many theories to marketing

knowledge. Marketers have used these theories to decipher many consumer choices and develop

basic strategies for dealing with consumers' behavior.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) Generally, people buy one product or service instead of another because they

A) want to get the lowest price possible.

B) perceive it to be the better value for them.

C) prefer to avoid doing extended problem solving.

D) have conducted a thorough internal search for information.

E) are unaware of key determinant attributes.

Answer: B

Explanation: Generally, people buy one product or service instead of another because they

perceive it to be the better value for them; that is, the ratio of benefits to costs is higher for a

particular product or service than for any other.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) The consumer decision process model represents

A) the concept of habitual decision making.

B) the retrieval of an evoked set based on physiological needs.

C) the steps that consumers go through before, during, and after making purchases.

D) the shift from an internal to an external locus of control.

E) the types of decisions all consumers must make.

Answer: C

Explanation: The consumer decision process model represents the steps that consumers go

through before, during, and after making purchases.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

29) The consumer buying process begins when

A) a consumer enters a store.

B) consumers' functional needs are greater than their psychological needs.

C) a consumer's performance risk is minimized.

D) a consumer recognizes an unsatisfied need.

E) learning follows perception.

Answer: D

Explanation: Need recognition is the first step in the consumer buying process.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) When Caren realized her dog had fleas and the pet store did not stock flea medication, Caren

was faced with

A) a social-perceptual incongruence.

B) a psychological need.

C) a cognitive learning failure.

D) a universal shopping need.

E) an unsatisfied need.

Answer: E

Explanation: Need recognition is the first step in the consumer buying process. Caren's need

recognition of flea medication for her dog was unsatisfied since the pet store did not stock what her

dog needed.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) The greater the discrepancy between a consumer's needy state and the desired state, the greater

A) time needed to satisfy the need.

B) the effort consumers will invest in searching for alternatives.

C) the consumer's need recognition will be.

D) the size of the universal set will be.

E) the amount of external information search will be needed.

Answer: C

Explanation: A greater discrepancy will create a stronger drive to satisfy the need.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) The greater the discrepancy between a consumer's ________, the greater the consumer's need

recognition will be.

A) financial risk and performance risk

B) search for alternatives and alternatives found

C) needy state and desired state

D) universal set and evoked set

E) external and internal information search

Answer: C

Explanation: The consumer decision process begins when consumers recognize they have an

unsatisfied need, and they would like to go from their actual, needy state to a different, desired

state. The greater the discrepancy between these two states, the greater the need recognition will

be.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) Upscale men's and women's clothing stores like Nordstrom, Neiman Marcus, or Saks Fifth

Avenue are more likely to appeal to consumers' ________ needs.

A) functional

B) postpurchase

C) safety

D) psychological

E) situational

Answer: D

Explanation: Upscale clothing can improve a person's image or make him or her feel a certain

way, both of which are examples of psychological needs. Psychological needs pertain to the

personal gratification consumers associate with a product and/or service.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) When skydivers purchase equipment for parachuting, their purchases are primarily addressing

________ needs.

A) functional

B) prepurchase

C) social

D) psychological

E) functional and psychological

Answer: A

Explanation: Skydivers need parachutes for when they jump out of planes. This is an example of

a functional need, which pertains to the performance of a product or service.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) Lauren has an almost-new economy car, but she wants a Ford Mustang because she thinks it

would be exciting to own one. If she decides to purchase a sports car such as the Mustang, she will

be primarily fulfilling a ________ need.

A) functional

B) postpurchase

C) safety

D) psychological

E) functional and psychological

Answer: D

Explanation: Since Lauren already has a car that works, she does not have a functional need for a

car. A choice to purchase a sports car would represent a psychological need, which pertains to the

personal gratification consumers associate with a product and/or service. Perhaps the car makes

her feel "cool" or adventurous.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) A key to successful marketing is determining how to meet the correct balance of ________

needs that best appeals to the firm's target markets.

A) functional and social

B) postpurchase and prepurchase

C) safety and situational

D) psychological and physiological

E) functional and psychological

Answer: E

Explanation: Marketers must understand what needs are most likely to drive customers to

consider their products, and design offerings to meet those needs.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) By producing motorcycles that do more than get riders to their destinations and back,

Harley-Davidson is addressing consumers' ________ needs.

A) functional and social

B) postpurchase and prepurchase

C) safety and situational

D) psychological and physiological

E) functional and psychological

Answer: E

Explanation: A motorcycle fulfills a need for transportation, but by doing more than that, the

motorcycle may also be providing entertainment or excitement.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) When the floor rusted through on her old car, Kelly knew she had a problem. Logically, Kelly's

next step in the consumer decision process would be to

A) identify her need.

B) search for information about cars.

C) evaluate alternatives.

D) purchase a new car.

E) assess her satisfaction with the car she purchased.

Answer: B

Explanation: After recognizing a need (to solve the problem of the rusted floor), the next step in

the consumer buying process is to search for information about the various options that exist to

satisfy that need.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) When Kyle began searching for a new car to replace her old, rusty one, she probably relied on

________ sources of information.

A) interpersonal and sensual

B) compensatory and noncompensatory

C) ritual and spiritual

D) psychological and functional

E) internal and external

Answer: E

Explanation: Since Kyle has already owned a car, she has some personal experience (an example

of internal information). She may also know about certain brands (also internal information). But

she would probably also want to educate herself by visiting car-related websites, reading expert

opinions, or asking friends for advice (all examples of external information).

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) When Branden decided he needed a new car, he immediately called his old college roommate,

who owns a BMW dealership, to ask questions about options and financing. Branden was

searching for information from

A) an external source.

B) an internal locus of control.

C) a reference source.

D) an internal source.

E) a situational factor group.

Answer: A

Explanation: Branden's friend is an external information source. An internal source would come

from Branden's own memory and experience.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

41) Pete wanted an unbiased source of information to help him decide what brand of appliances to

buy for his new condominium. Pete would most likely search for information from

A) the Sears catalog.

B) the Consumer Reports website.

C) the local Better Business Bureau.

D) the website for Best Buy

E) Psychology Today magazine.

Answer: B

Explanation: Of the sources listed, the Consumer Reports website is the best choice as it is an

unbiased source of information. The Sears catalog would be biased toward its own products. While

Best Buy sells many brands, it might favor some more than others and so can't be 100 percent

trusted to be objective. Psychology Today would be an irrelevant source. The Better Business

Bureau, while it would probably be objective, would have information about the trustworthiness of

a company, not the quality of its products.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) Once consumers have recognized a need, they begin to search for ways to satisfy that need.

The internal search is characterized by

A) looking through the internal records of a firm, often found on the company website.

B) examining personal memories and knowledge.

C) using the Internet to find what other consumers feel about a specific product or service.

D) consulting close friends and families before expanding the search to a wider, external group.

E) being influenced by advertising.

Answer: B

Explanation: Internal information comes from the individual's own memory and experience.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Every time Katy wants to eat salad for lunch, she and her friends go to Sweet Tomatoes, but if

she's craving dessert, she heads straight to The Cheesecake Factory. In making these choices, she

relies on a(n)

A) perceived benefits analysis.

B) external locus of control.

C) exceptional marketing campaign.

D) external source of information.

E) internal search for information.

Answer: E

Explanation: In an internal search for information, the buyer examines his or her own memory

and knowledge about the product or service gathered through past experiences. For example, every

time Katy wants to eat salad for lunch, she and her friends go to Sweet Tomatoes, but if she's

craving dessert, she heads straight to The Cheesecake Factory. In making these choices, she relies

on her memory of past experiences when she has eaten at these restaurant chains.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) Bryan believes he is responsible for his actions, and he will conduct extensive searches before

making a purchase. Mike's favorite phrase, when confronted by the need to make a decision, is

"Whatever." In marketing terms, Bryan is said to have a(n) ________ and Mike, a(n) ________.

A) obsessive personality; laissez-faire approach

B) formal search function; casual search function

C) increased search anxiety; decreased search anxiety

D) internal locus of control; external locus of control

E) focused sense of information; unfocused sense of information

Answer: D

Explanation: An internal locus of control refers to a situation where an individual feels that he or

she has control over the outcome, which is Bryan's situation. Mike's response of "Whatever"

suggests that he has an external locus of control, feeling that he has no control over the outcome

and that therefore it doesn't matter what he does.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

45) In the consumer decision process, we decide how much time and effort to expend searching for

information based partly on

A) postpurchase dissonance.

B) the outcome of the alternative evaluation process.

C) the degree of perceived risk associated with the product or service being considered.

D) the results of habitual decision making.

E) the results of the external search.

Answer: C

Explanation: The length and intensity of the search are based on the degree of perceived risk

associated with purchasing the product or service. The remaining factors listed come later in the

decision process.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) Katy has naturally curly hair and has often been disappointed with the haircuts she has

received. When she moved to a new town, she approached her new office mates and several

strangers with curly hair and asked them where they had their hair cut. She chose to spend

considerable effort finding a new hair stylist based on the ________ associated with her purchase

decision.

A) evoked set

B) reference group

C) physiological risk

D) performance risk

E) financial risk

Answer: D

Explanation: Katy is afraid of getting another bad haircut. This represents performance risk, in

that Kathy is worried about the quality of the service she will receive. Performance risk involves

the perceived danger inherent in a poorly performing product or service.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

47) Before flying, Jorden researches the types of planes the airline uses, scans the plane for defects

as it taxis up to the terminal, and follows the pilot and crew as they come through the airport. He

has no experience as a pilot or airplane mechanic. Jorden probably has a misguided sense of his

A) postpurchase dissonance.

B) locus of control.

C) reference group identification.

D) attribute sets.

E) social risk.

Answer: B

Explanation: Jorden seems to have an internal locus of control for this flight—he thinks he has

control over the outcome. This seems misguided, since he lacks the experience to evaluate the

condition of the aircraft and since he does not know how to fly a plane.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Every year before he puts his boat in the water, Jamie has his mechanic put a new battery in the

boat. Jamie is most likely concerned with ________ risk.

A) psychological

B) financial

C) performance

D) social

E) physiological

Answer: C

Explanation: A boat with a dead battery represents a performance risk, which Jamie hopes to

avoid by getting a new battery. Performance risk involves the perceived danger inherent in a

poorly performing product or service.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

49) Sasha is a travel agent. Whenever she sells an expensive vacation package, she encourages the

customer to buy travel insurance, which provides reimbursement in case of trip cancellation due to

illness or another emergency. Sasha is trying to reduce her customers' ________ risk.

A) psychological

B) financial

C) performance

D) social

E) physiological

Answer: B

Explanation: If a traveler had to cancel a trip at the last minute, deposits already paid would

probably be lost. This is an example of financial risk, which is risk associated with a monetary

outlay and includes the initial cost of the purchase as well as the costs of using the item or service.

The travel insurance reduces this risk by reimbursing these deposits under at least some

circumstances.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) Andy was afraid his new condominium would look shabby to his future in-laws, so he had it

painted just before their visit. Andy was addressing his ________ risk.

A) social

B) financial

C) performance

D) psychological

E) physiological

Answer: A

Explanation: Andy was worried that his in-laws would judge him by the condition of his condo,

which represents a social risk since it relates to the way others see him. Social risk involves the

fears that consumers suffer when they worry others might not regard their purchases positively. If

Andy had done the painting to preserve his self-image, that would be related to psychological risk.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) Consumers consider universal, retrieval, and evoked sets during which stage of the consumer

decision process?

A) need recognition

B) postpurchase evaluation

C) information search

D) situational analysis

E) evaluation of alternatives

Answer: E

Explanation: Different sets of alternatives are a factor during the third stage of the consumer

decision process, evaluation of alternatives.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) When Margo decided to buy a new computer, she considered all the brands she could recall

seeing advertised. The products she recalled represent Margo's ________ set.

A) universal

B) retrieval

C) evoked

D) deterministic

E) behavioral

Answer: B

Explanation: The universal set represents all brands, regardless of whether or not the consumer is

aware of them. The retrieval set represents all brands the consumer can recall (as in this case). The

evoked set represents all brands the consumer would consider buying.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) When Magda decided to buy a new computer, she thought about all the brands she could recall

seeing advertised, but she would consider only those brands she could buy at her local Best Buy

electronics store. The brands she considered represent Magda's ________ set.

A) universal

B) retrieval

C) evoked

D) deterministic

E) behavioral

Answer: C

Explanation: The universal set represents all brands, regardless of whether or not the consumer is

aware of them. The retrieval set represents all brands the consumer can recall. The evoked set

represents all brands the consumer would consider buying (as in this case).

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) Marketers particularly want their brands and products to be in consumers' ________ sets.

A) universal

B) retrieval

C) evoked

D) deterministic

E) behavioral

Answer: C

Explanation: The universal set represents all brands, regardless of whether or not the consumer is

aware of them. The retrieval set represents all brands the consumer can recall. The evoked set

represents all brands the consumer would consider buying. Marketers want their brands to be in

evoked sets, since this gives those brands a serious chance of being selected for purchase.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

55) Elaine is in the process of buying a new car. There are many possible cars to choose from, but

she is focused on a few she would actually consider buying. These make up her ________ set.

A) universal

B) retrieval

C) immediate

D) evoked

E) focus

Answer: D

Explanation: The universal set represents all brands, regardless of whether or not the consumer is

aware of them. The retrieval set represents all brands the consumer can recall. The evoked set

represents all brands the consumer would consider buying (as in this case).

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) The Wall Street Journal provides a set of guidelines each year for purchasing a laptop

computer. The guidelines include recommendations for hard disk capacity, memory size, battery

life, and several other attributes. The Wall Street Journal is providing consumers with

A) an evoked set.

B) psychological needs.

C) social concerns.

D) evaluative criteria.

E) biased information.

Answer: D

Explanation: These attribute recommendations are examples of evaluative criteria, which are the

salient, or important, attributes about a particular product a consumer considers when evaluating

available alternatives.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

57) ________ attributes are product or service features that are important to buyers and that are

used to differentiate among choices.

A) Retrieval

B) Financial

C) Social

D) Determinant

E) Safety/performance

Answer: D

Explanation: Determinant attributes are product or service features that are important to the

buyer and on which competing brands or stores are perceived to differ.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) Angela and Carl got married a year ago and are ready to move out of their apartment and into a

new home. After looking at several houses, they have developed a list of features that are

important to them and that are different among the homes they have visited. The features on their

list are called

A) an evoked set.

B) determinant attributes.

C) short lists.

D) perceived risk factors.

E) trade-off elements.

Answer: B

Explanation: Determinant attributes are product or service features that are important to the

buyer and on which competing brands or stores are perceived to differ.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

59) Johnathan prefers shirts made with 100 percent cotton, but he will sometimes buy shirts with

less cotton if they are less expensive. Johnathan uses ________ to decide which shirts to buy.

A) a compensatory decision rule

B) a noncompensatory decision rule

C) habitual decision making

D) social factors

E) temporal factors

Answer: A

Explanation: A compensatory decision rule assumes that the consumer, when evaluating

alternatives, trades off one characteristic against another, such that good characteristics

compensate for bad characteristics. This is a compensatory decision rule because an advantage in

price can compensate for a lower cotton content.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) Cindy flies regularly between Atlanta and Los Angeles. She almost always uses Delta Airlines

and has lots of Delta Sky Miles credit (Delta's frequent-flyer program). Still, she uses an online

fare comparison website each time to see if a competitor has a better price or a more convenient

schedule. Cindy uses ________ to decide which airline to fly.

A) a compensatory decision rule

B) a noncompensatory decision rule

C) habitual decision making

D) social factors

E) temporal factors

Answer: A

Explanation: This is a compensatory decision rule because Cindy makes trade-offs when

evaluating the flights available. A low price or a convenient schedule can compensate for the lack

of Delta frequent-flyer credit.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

61) Jordan is buying a laptop computer to take on trips. Although she has looked at several brands,

she refuses to buy a computer that weighs more than five pounds. Jordan is basing her decision on

A) a compensatory decision rule.

B) a noncompensatory decision rule.

C) habitual decision making.

D) social factors.

E) temporal factors.

Answer: B

Explanation: This is a noncompensatory decision rule because no trade-off is possible. No matter

how inexpensive or powerful a computer may be, if it weighs more than five pounds, Jordan will

not buy it. A noncompensatory decision rule is when the consumer chooses a product or service on

the basis of one characteristic or one subset of a characteristic, regardless of the values of its other

attributes.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Marketers are particularly interested in postpurchase behavior because it

A) involves both compensatory and noncompensatory consumers.

B) offers insights into information search methods.

C) avoids situational conflicts.

D) involves actual rather than potential customers.

E) involves both actual and potential customers.

Answer: D

Explanation: Unlike prepurchase behavior, postpurchase behavior reflects the characteristics of

actual customers. Satisfied customers may be a source of future purchases and/or positive word of

mouth.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

63) Sometimes consumers have second thoughts after buying goods that are expensive,

infrequently purchased, or associated with a high level of risk. This is an especially critical time for

marketers, as their customers are dealing with

A) criteria reevaluation.

B) buyer's remorse.

C) competitive leverage.

D) purchase uncertainty.

E) consumer vulnerability.

Answer: B

Explanation: Buyer's remorse, or postpurchase cognitive dissonance, is felt most often for

expensive products purchased infrequently and/or associated with high levels of risk.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) Many teenagers, both male and female, have clothes they purchased in the past that they

"would not be caught dead in" today. When they occasionally see those clothes hanging in the back

of their closet, these teenagers probably feel

A) cognitive bias.

B) postpurchase cognitive dissonance.

C) psychological risk.

D) need recognition.

E) physiological risk.

Answer: B

Explanation: This is an example of buyer's remorse, or postpurchase cognitive dissonance, which

generally occurs when a consumer questions the appropriateness of a purchase after his or her

decision has been made.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

65) Postpurchase cognitive dissonance is especially likely for products that are

A) cheap, poorly made, and made of plastic.

B) personally valuable, antique, or foreign-made.

C) simple, easily copied, and new.

D) psychologically soothing, purchased impulsively, and part of a consumer's evoked set.

E) expensive, infrequently purchased, or associated with high levels of risk.

Answer: E

Explanation: Postpurchase cognitive dissonance is especially likely for products that are

expensive, are infrequently purchased, do not work as intended, or are associated with high levels

of risk.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Marketers frequently design customer relationship management programs to

A) retain loyal customers.

B) attract consumers who have safety needs.

C) reinforce postpurchase cognitive dissonance.

D) increase internal information search.

E) improve profit margins.

Answer: A

Explanation: Customer relationship management programs are aimed at current customers, to

build loyalty.

Difficulty: 2 Medium

Topic: CRM

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

67) Marketers fear negative word of mouth because when consumers are dissatisfied, they

A) are less likely to say something than when they are satisfied.

B) often want to complain to many people.

C) buy more of the product to prove they were correct in their criticism.

D) often file a lawsuit.

E) don't buy any of the company's other products.

Answer: B

Explanation: Dissatisfied customers are very likely to complain to others, whereas satisfied

customers often tell no one.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) Most firms maintain customer complaint services online, in the store, or over the telephone.

Firms attempt to respond quickly to complaints, hoping to

A) get themselves into the universal set.

B) reduce the cost of postpurchase advertising.

C) minimize negative word of mouth.

D) extend decision rules to the customer complaint desk.

E) offset performance risk with financial risk.

Answer: C

Explanation: To handle complaints promptly and efficiently, firms respond to negative word of

mouth through customer service representatives—whether online, on the phone, or in stores—who

have the authority to handle complaints. Many companies also allow customers to post comments

and complaints to proprietary social media sites.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) Maslow's hierarchy of needs includes physiological needs at the lowest level and

self-actualization at the top. The three levels in between are

A) material goods, safety, and love.

B) community, family, and self.

C) safety, stability, and striving.

D) health, wealth, and happiness.

E) safety, love, and esteem.

Answer: E

Explanation: Maslow's hierarchy, in order from lowest to highest, is (1) physiological, (2) safety,

(3) love, (4) esteem, and (5) self-actualization.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) After Sherry graduated from college, she found a steady and good-paying job, got married and

began to raise a family, and began to receive recognition at work and in the community.

Eventually, she began to devote more time and effort to intellectual and aesthetic pursuits. Sherry

is moving up to what level on Maslow's Hierarchy of Needs?

A) self-fulfillment

B) self-esteem

C) self-confidence

D) self-actualization

E) self-care

Answer: D

Explanation: Sherry's steady job took care of the two lowest levels in Maslow's hierarchy

(physiological and safety needs). Marriage took care of the third level (love), and recognition

addressed needs for esteem, the fourth level. Sherry's current activities address the final level,

self-actualization.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

71) A(n) ________ is a need or want strong enough to cause a person to seek satisfaction.

A) locus of control

B) motive

C) attitude

D) perception

E) learning curve

Answer: B

Explanation: A motive is a need or want that is strong enough to cause the person to seek

satisfaction

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) There are approximately 1 billion people living in India. It is estimated that only about 200

million of these people earn more than the equivalent of $1,000 per year. According to Maslow's

hierarchy, most of the other estimated 800 million Indian consumers are primarily addressing their

________ needs.

A) social

B) personal

C) psychological

D) esteem

E) physiological

Answer: E

Explanation: Many people in India are living at a subsistence level, able to afford little but basic

necessities (if that). This indicates that they are at the lowest level in Maslow's hierarchy,

physiological needs.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) Negative attitudes are typically difficult for marketers to change because

A) most consumers' attitudes depend on prices.

B) consumers weigh performance risk against functional needs when assessing their attitudes.

C) attitudes are learned and long lasting.

D) attitudes shift consumers from limited to extended problem-solving situations.

E) consumers' attitudes are derived from unchanging decision rules.

Answer: C

Explanation: While attitude change is possible, it is difficult since attitudes are learned and long

lasting.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Though he has never owned a Jaguar, Gerry thinks they are poorly made and have many

mechanical problems. For Jaguar to sell Gerry a car, the company would need to change the

________ component of Gerry's attitude.

A) social

B) affective

C) functional

D) cognitive

E) physiological

Answer: D

Explanation: Thinking that Jaguars are poorly made and have mechanical problems are part of

the cognitive component of Gerry's attitude since they reflect his belief system, or what he believes

to be true. The affective component is represented by his emotional responses to the car (he may

feel anger, remembering a time he rode in someone else's Jaguar and it broke down). The

behavioral component is represented by what he actually does (driving past a Jaguar dealer and not

even looking at the cars as he goes by).

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

75) Apple computer users tend to like the company and love its products. Apple has nurtured this

________ component of its customers' attitudes.

A) social

B) affective

C) psychological

D) cognitive

E) physiological

Answer: B

Explanation: The words like and love are important here, as they represent feelings and emotions,

which make up the affective component of an attitude. The cognitive component would be

represented by beliefs (for example, the belief that Apple is better at innovation than its

competitors). The behavioral component would be represented by actions (for example, the choice

to buy an Apple computer instead of a Windows PC).

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) ________ refer(s) to the process by which consumers select, organize, and interpret

information to form a meaningful picture of the world.

A) Attitude

B) Learning

C) Perception

D) Values

E) Consumption

Answer: C

Explanation: Perception is the process by which we select, organize, and interpret information to

form a meaningful picture of the world. Perception in marketing influences our acquisition and

consumption of goods and services through our tendency to assign meaning to such things as

color, symbols, taste, and packaging.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

77) American visitors to the Indonesian island of Bali are often aghast when they see the sign for

the Swastika resort. Americans associate the swastika symbol with Nazi Germany while

Indonesians associate the symbol with the four major elements on Earth. The two groups have

different

A) lifestyles.

B) risk factors.

C) perceptions.

D) factual norms.

E) postpurchase dissonance.

Answer: C

Explanation: The cultural differences between Americans and Indonesians have led to different

perceptions of the meaning of the swastika symbol. Perception is the process by which we select,

organize, and interpret information to form a meaningful picture of the world. Perception in

marketing influences our acquisition and consumption of goods and services through our tendency

to assign meaning to such things as color, symbols, taste, and packaging.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) Learning refers to a change in a person's thought process or behavior that arises from

A) attitudes.

B) experience.

C) risk analysis.

D) cultural norms.

E) postpurchase dissonance.

Answer: B

Explanation: Learning refers to a change in a person's thought process or behavior that arises

from experience and takes place throughout the consumer decision process.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

79) Stewart wanted to impress Jan with the perfect engagement ring. He had been saving money

for months, and he noticed his attitudes and perceptions about diamond rings changing as he began

paying attention to ads for rings. Marketers call this process

A) consumer confidence building.

B) self-actualization.

C) a decision rule.

D) reducing prepurchase dissonance.

E) learning.

Answer: E

Explanation: Stewart is receiving new information through the experience of paying attention to

the ads, and this is likely to change his attitudes about the purchase. Learning refers to a change in

a person's thought process or behavior that arises from experience and takes place throughout the

consumer decision process.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) Among the factors affecting the consumer decision-making process is the way consumers

spend their time and money to live, otherwise known as

A) lifestyle.

B) conspicuous consumption.

C) the demonstration effect.

D) external validation.

E) life standards.

Answer: A

Explanation: Lifestyle refers to the way consumers spend their time and money to live.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

81) Chris bought Timberland boots because he felt they were perfect for his outdoor activities. Pat

bought the same kind of boots because he felt they were stylish, especially with the logo clearly

visible. The psychological factor driving Pat's behavior is

A) a functional need.

B) lifestyle.

C) his universal set.

D) learned behavior.

E) his evoked set.

Answer: B

Explanation: Of the factors listed, lifestyle is the best choice because it represents the way Pat

chooses to spend his time and money. He wants to be stylish, and so he chooses the boots. This is

an example of a psychological, not a functional, need.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) A consumer's external social environment includes

A) impulse, habitual, and limited problem-solving processes.

B) functional and psychological needs.

C) universal, retrieval, and evoked sets.

D) cognitive, affective, and behavioral environments.

E) the customer's family, reference groups, and culture.

Answer: E

Explanation: External social environment factors include the customer's family, reference

groups, and culture.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) Jenny's spending decisions are heavily influenced by her family, her peers, and her religious

education. These influences on her spending decisions are all ________ influences.

A) psychological risk

B) external social environment

C) physiological need

D) cognitive need

E) evoked set

Answer: B

Explanation: Jenny's decisions are influenced by her family, her reference group (peers), and her

religious training (an aspect of culture). These are the three categories of the external social

environment.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) Nancy and her fiancé Don are planning their wedding. She knows her mother wants her to have

a traditional church wedding with a Roman Catholic priest officiating. Nancy would like to have

an informal ceremony on the beach, since that type of wedding has become popular with her

friends. Furthermore, Don is from Thailand and would like to have a monk officiate. Nancy and

Don's wedding decisions are most influenced by

A) impulse, habitual, and limited problem-solving processes.

B) functional and psychological profit.

C) universal, retrieval, and evoked sets.

D) cognitive, affective, and behavioral environments.

E) family, reference groups, and culture.

Answer: E

Explanation: The wedding decision is being influenced by family (Nancy's mother), reference

groups (Nancy's friends who have gotten married on the beach), and culture (Don's Thai heritage).

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

85) Many Hollywood movie stars were among the first to buy electric and hybrid vehicles. These

stars often become ________, influencing other consumers' behavior.

A) reference groups

B) internal loci of control

C) cultural icons

D) cognitive parameters

E) evoked images

Answer: A

Explanation: Celebrities can serve as a reference group, since some consumers like to identify

with celebrities and to follow their lead.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) The shared meanings, beliefs, morals, values, and customs of a group of people constitute its

A) reference group.

B) family.

C) culture.

D) cognitive frame.

E) evoked set.

Answer: C

Explanation: Culture is defined as he shared meanings, beliefs, morals, values, and customs of a

group of people.

Difficulty: 1 Easy

Topic: Social-cultural Environment

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) Beverage firms sometimes hire attractive young people to sit at fashionable bars, sipping the

company's latest product offering. The firms hope these "models" will serve as a(n) ________ and

influence consumers.

A) reference group

B) risk avoider

C) cultural determinant

D) cognitive learning experiment

E) evoked set

Answer: A

Explanation: The firms hope the models will serve as a reference group, due to their

attractiveness, and that others will identify with them and copy their behavior.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) Before going on his first business trip to China, Bradley asked his Chinese American friend to

advise him on customs and values common among the Chinese businesspeople he will likely

encounter. Bradley is trying to avoid ________ business blunders.

A) reference group

B) situational

C) cultural

D) cognitive

E) evoked

Answer: C

Explanation: Bradley is concerned about meanings, beliefs, values, and customs that he will not

understand: in other words, the culture in China.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

89) Where Carol grew up, everyone knew everyone else, no one locked their doors, and a person's

word could be trusted. When she went to work in another part of the country, she was surprised by

how few people had similar values and beliefs. Carol had to adjust to ________ differences.

A) reference group

B) situational

C) cognitive

D) cultural

E) evoked

Answer: D

Explanation: Caroline comes from a place that values friendliness and honesty as part of its

culture; she is now in a place with a different culture. Culture is defined as he shared meanings,

beliefs, morals, values, and customs of a group of people.

Difficulty: 3 Hard

Topic: Social-cultural Environment

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) The traditional marketing strategy of selling umbrellas when it is raining is an example of how

________ factors influence consumers' decisions.

A) situational

B) psychological

C) shopping

D) interpersonal

E) economic

Answer: A

Explanation: This is an example of a situational factor, taking advantage of a weather condition

that creates specific needs.

Difficulty: 2 Medium

Topic: Situational Influences

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) ________ factors override or at least influence psychological and social issues.

A) Situational

B) Extended habitual

C) Postpurchase dissonance

D) Interpersonal

E) Economic

Answer: A

Explanation: Sometimes situational factors, or factors specific to the situation, override or at least

influence psychological and social issues. These situational factors are related to the purchase and

sensory situation as well as to temporal states.

Difficulty: 1 Easy

Topic: Situational Influences

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) Pauline is about to open a new hardware store. She is making decisions regarding lighting,

colors, and layout of merchandise. Pauline knows these ________ factors will influence

consumers' purchase decisions.

A) interpersonal

B) extended habitual

C) postpurchase dissonance

D) sensory

E) social

Answer: D

Explanation: Lighting, color, and merchandise layout are examples of sensory factors.

Difficulty: 3 Hard

Topic: Situational Influences

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

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93) Steven wasn't sure what kind of salsa he wanted to get for his upcoming Super Bowl party. It

seemed like there were dozens of varieties to choose from. He noticed that he could sample a few

at a station in the store. He tried four, rejected two, and bought several jars of the two he really

liked. He also ended up buying a different—and more expensive—kind of tortilla chip after tasting

it. Marketers identify this as a success story of the

A) visual sense.

B) olfactory sense.

C) auditory sense.

D) tactile sense.

E) taste sense.

Answer: E

Explanation: The taste sense can be influenced by marketers and is of tantamount importance in

restaurants and for food and beverage retailers such as Steven's purchase of the salsas and the more

expensive tortilla chips.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) What is the first sense triggered in a new setting?

A) tactile sense

B) taste sense

C) visual sense

D) olfactory sense

E) auditory sense

Answer: C

Explanation: For most people, the first sense triggered in a new setting is the visual sense. Visual

atmospherics refer to the colors, lighting, brightness, size, shape, and set-up of a retail space and

the products within it.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

95) Many states have laws regulating the prices businesses charge during emergencies like

hurricanes. These laws are designed to protect consumers whose ________ state may impair their

ability to make sound purchase decisions.

A) shopping

B) social

C) theoretical

D) temporal

E) physical

Answer: D

Explanation: Our state of mind at any particular time can alter our preconceived notions of what

we are going to purchase. A temporal state is a temporary state of mind, such as the fear that would

be aroused by an impending hurricane.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) There is a saying "Never go to the grocery store hungry." This saying suggests that a

consumer's ________ state may adversely affect purchasing decisions.

A) shopping

B) social

C) theoretical

D) external

E) temporal

Answer: E

Explanation: Hunger is an example of a temporal state, a temporary state of mind that can

influence decision making. In this case, the suggestion is that hunger will cause the consumer to

purchase things he or she wouldn't buy otherwise.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

97) The consumer's level of involvement can lead to two types of buying decisions: ________ or

________.

A) extended problem solving; limited problem solving

B) culturally influenced; autonomous

C) economic; social

D) physiological/safety; esteem/self-actualization

E) habitual; extended

Answer: A

Explanation: Extended problem solving typically occurs under a high level of involvement;

limited problem solving typically occurs under a low level of involvement.

Difficulty: 2 Medium

Topic: Extended Problem Solving

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) Consumers use and process different aspects of advertising or messages. ________ yields

greater attention and deeper processing, and leads to strong attitudes and purchase intentions.

A) An external locus of control

B) High involvement

C) Low involvement

D) Differential content

E) Internet advertising

Answer: B

Explanation: High involvement often leads to extended problem solving, which involves greater

attention and deeper processing.

Difficulty: 2 Medium

Topic: Involvement

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

99) Kia has to decide which college to attend. This is the most important, riskiest, and most

expensive decision she has ever made. She will be engaged in

A) low-involvement decision making.

B) extended problem solving.

C) habitual decision making.

D) prepurchase dissonance.

E) limited problem solving.

Answer: B

Explanation: Due to the cost, importance, and relative risk involved, Kia will probably engage in

extended problem solving.

Difficulty: 3 Hard

Topic: Extended Problem Solving

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) Limited problem solving usually relies on

A) past experience more than on external information.

B) situational stimuli and attitudes.

C) external searches for information.

D) financial analysis of performance risk.

E) evaluation of the universal set.

Answer: A

Explanation: Limited problem solving occurs during a purchase decision that calls for, at most, a

moderate amount of effort and time. Customers engage in this type of buying process when they

have had some prior experience with the product or service and the perceived risk is moderate.

Limited problem solving usually relies on past experience more than on external information.

Difficulty: 2 Medium

Topic: Limited Decisions

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

101) Last semester, Henry bought his textbooks over the Internet and saved a considerable amount

of money. Classes start in a few days, and he needs to decide right away how and where to

purchase his books. Henry will most likely engage in a(n) ________ process.

A) impulse buying

B) limited problem-solving

C) extended problem-solving

D) ritual consumption

E) affective decision

Answer: B

Explanation: Henry will probably use a limited problem-solving process. He doesn't have time

for extended evaluation of all his options. Besides, his recent positive experience buying books

online will probably influence him to do the same this time (unless he has waited too long and can't

get his books in time).

Difficulty: 3 Hard

Topic: Limited Decisions

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) Most big box retailers regularly move products from one aisle to another. They also put

personal care products in the pharmacy area, many aisles away from the grocery products. They do

this because consumers who spend more time walking through the store are likely to buy things

they hadn't planned to buy, or make

A) impulse purchases.

B) limited problem-solving decisions.

C) extended problem-solving decisions.

D) ritual consumption purchases.

E) affective alternative decisions.

Answer: A

Explanation: A common type of limited problem solving is impulse buying, a buying decision

made by customers on the spot when they see the merchandise.

Difficulty: 3 Hard

Topic: Involvement

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Analytical Thinking

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103) Marketers love consumers who engage in ________, buying their company's product with

little thought or consideration of alternatives.

A) compensatory decisions

B) personal problem solving

C) extended problem solving

D) reference group consumption

E) habitual decision making

Answer: E

Explanation: Habitual decision making describes a purchase decision process in which

consumers engage in little conscious effort.

Difficulty: 2 Medium

Topic: Routine Decisions

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) To attract and maintain habitual purchasers, marketers spend considerable effort

A) analyzing consumer data for postpurchase dissonance signals.

B) creating strong brands and store loyalty.

C) cultivating cultural decision making.

D) reducing financial risk and increasing psychological payout.

E) offering alternative brands.

Answer: B

Explanation: Habitual purchasers are most likely to remain loyal to strong brands, and to respond

to efforts to build their loyalty further.

Difficulty: 2 Medium

Topic: Involvement

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

105) For which of the following purchases would consumers most likely engage in limited problem

solving?

A) college courses

B) a new car

C) a home

D) coffee to go, for a regular coffee drinker

E) a location for a large wedding reception

Answer: A

Explanation: A new car, a home, and a wedding location are major decisions that will probably

lead to extended problem solving. Coffee to go for a regular coffee drinker is probably a habitual

purchase. But college courses will probably lead to limited problem solving. Students will check

available options, consider their choices, and might consult friends or past course evaluations for

more information; however, they are unlikely to engage in extensive information search or

extensive evaluation of alternatives, especially since some courses will be required for a degree.

Difficulty: 2 Medium

Topic: Limited Decisions

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) The three components of an attitude are

A) cognitive, affective, and behavioral.

B) connected, applicable, and bearable.

C) confident, achievable, and believable.

D) consistent, affordable, and particular.

E) controlled, uncontrolled, and visible.

Answer: A

Explanation: An attitude consists of three components: cognitive, affective, and behavioral.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

107) Alexander makes a donation to the Autism Research Institute. Which component of

Alexander's attitude toward autism research does this represent?

A) behavioral component

B) affective component

C) cognitive component

D) affordable component

E) connected component

Answer: A

Explanation: An attitude consists of three components: cognitive, affective, and behavioral. In

this case, Alexander is demonstrating an attitude through his behavior by donating to the

organization. The behavioral component pertains to the actions we undertake based on what we

know and feel.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) An online retailer needs to be able to measure how well its website converts purchase

intentions into actual purchases. This is known as the

A) conversion rate.

B) collection ratio.

C) consumer index.

D) customer total.

E) buyer quotient.

Answer: A

Explanation: The conversion rate is the percentage of purchase intentions that are converted into

actual purchases.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

109) Zappos.com constantly reminds customers of recently viewed items and informs them when

stock is low in an effort to entice the customer to make a purchase. Zappos is trying to improve its

A) conversion rate.

B) collection ratio.

C) consumer index.

D) customer total.

E) culture quotient.

Answer: A

Explanation: The conversion rate is the percentage of purchase intentions that are converted into

actual purchases.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) Tomas, a bank employee, doesn't feel that his coworkers accept him. He decides to dress

more casually, as they do, hoping to be accepted. Which level of Maslow's hierarchy of needs is

Tomas trying to work on?

A) esteem

B) physiological

C) safety

D) love

E) self-actualization

Answer: D

Explanation: The five needs are physiological, safety, love, esteem, and self-actualization. Love

needs relate to our interactions with others, which Tomas is seeking in the form of acceptance from

his colleagues.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

111) There are five types of risks associated with purchase decisions. Which of the following best

describes a situation where your new car stalls in the middle of a busy intersection?

A) physiological risk

B) social risk

C) financial risk

D) functional risk

E) psychological risk

Answer: A

Explanation: Physiological risk (or safety risk) refers to the fear of actual harm should the

product not perform properly, as could happen in this situation. This might also be considered an

example of performance risk, since the product has failed, but it was not one of the options offered.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) Barry is considering buying a hybrid car, but he's not sure that he believes the gas mileage

estimates. Barry is concerned about

A) physiological risk.

B) social risk.

C) financial risk.

D) safety risk.

E) performance risk.

Answer: E

Explanation: Performance risk involves the perceived danger inherent in a poorly performing

product or service, in this case referring to poorer-than-expected gas mileage.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

113) A home security company will advertise the need for home surveillance products to appeal to

which level of Maslow's Hierarchy of Needs?

A) safety

B) love

C) esteem

D) self-actualization

E) physiological

Answer: A

Explanation: Safety needs pertain to protection and physical well-being.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) Joanne lives according to her own rules, unconcerned about designer labels, brand names,

and luxury items. Joanne is at which level in Maslow's hierarchy of needs?

A) self-actualization

B) safety

C) love

D) esteem

E) physiological

Answer: A

Explanation: Self-actualization occurs when you feel completely satisfied with your life and how

you live, and are not concerned about what others think.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

115) Some websites allow consumers to shop while getting opinions from online friends. Which of

the influences on the consumer buying process does this represent?

A) psychological

B) social

C) situational

D) motives

E) perception

Answer: B

Explanation: Friends are likely to be part of the shopper's reference group, which is a social

factor. A reference group is one or more persons whom an individual uses as a basis for

comparison regarding beliefs, feelings, and behaviors.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

116) ________ are the three types of attribute sets.

A) Universal, retrieval, and evoked

B) University, relatives, and expression

C) United, relations, and exploration

D) Urban, random, and exchange

E) Unanimity, rule, and express

Answer: A

Explanation: Research has shown that the consumer's mind organizes and categorizes

alternatives to aid his or her decision process. Universal sets, retrieval sets, and evoked sets are the

three types of sets identified.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

117) While on vacation, Marta had her camera stolen. Not wanting to waste vacation time

shopping for a new camera, Marta simply purchased another camera just like her old one. For

Marta, the ________ was low.

A) perceived benefit versus perceived cost of search

B) locus of control for this decision

C) determinant attribute for this decision

D) universal set of camera options

E) prepurchase dissonance factor

Answer: A

Explanation: Marta could have used her experience with her current camera to find an even better

one—perhaps a newer model—but her vacation time was worth a great deal to her and she didn't

want to spend it shopping for a camera. Furthermore, her old camera had apparently met her needs

fairly well. So, she could spend little or no time and purchase a satisfactory product, which made

more sense to her than spending time in order to buy an only slightly better camera.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

118) Reggie greets his regular customers by name every morning when they come in for coffee. He

offers them a taste of anything special he is cooking that day. He has a database with their

birthdays, and offers them free meals on their birthdays. Reggie hopes that this attention to his

"regulars" will encourage them to

A) assist him in meeting his functional needs.

B) always include his firm in their universal set.

C) extend problem solving beyond ritual consumption.

D) internalize impulse attitudes.

E) spread positive word of mouth.

Answer: E

Explanation: Although people are more likely to complain when dissatisfied than to praise when

satisfied, Reggie can still encourage positive word of mouth from his regulars.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

119) "Black Friday," as the day after Thanksgiving has come to be known in the United States, is a

day marked by many special deals in most retail stores, including deep-discounted products

available in limited quantities, called "doorbusters," and designed to get shoppers into the store.

But one danger of running out of the doorbuster deals is that a shopper may become angry or

discouraged at failing to get the special item, and decide not to do any more shopping. This is an

example of the impact of ________ on the consumer decision process.

A) the purchase situation

B) lifestyle

C) setting high expectations

D) perception

E) learning

Answer: C

Explanation: Setting unrealistically high consumer expectations of the product through

advertising, personal selling, or other types of promotion may lead to higher initial sales, but it

eventually will result in dissatisfaction if the product fails to achieve high performance

expectations.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

120) Americans often equate "bigger" with "better," and prefer larger cars, TV screens, homes,

even meals. Researchers suspect that in doing so, we are trying to reduce ________ risk in the

consumer decision process.

A) psychological

B) financial

C) performance

D) social

E) physiological

Answer: A

Explanation: Recent research suggests that psychological risks might help explain why

consumers often think that "bigger is better." Especially when consumers feel powerless or more

vulnerable, they equate larger sizes— whether in televisions, houses, or menu items—with

improved status.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

121) Zappos online shoe and clothing store has a unique way of dealing with abandoned shopping

carts. If a site visitor places items into the shopping cart and then leaves the site without making a

purchase, several days later Zappos sends a humorous e-mail saying, "Let us show you what your

shopping cart did while you were gone," along with a photo of a cute dog intended to represent the

shopping cart. This attention-getting device is designed to improve the site's

A) postpurchase dissonance.

B) selective perception.

C) conversion rate.

D) reference group influence.

E) position in the evoked set.

Answer: C

Explanation: If Zappos can encourage consumers to return to the site and purchase items in the

shopping cart, this improves its conversion rate (the percentage of site visitors who take the firm's

desired action—in this case, making a purchase).

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

122) Marketers believe that the decision-making process begins with a consumer's need

recognition. Not everyone agrees. How would you answer critics who believe marketers can force

people to buy things they don't want?

Answer: Students may have passionate responses to this question, but the response should

include a description of need recognition and the desire to satisfy that need. By understanding the

decision-making process, marketers can help consumers satisfy needs of which they may not even

be aware. It is not likely that customers will buy without satisfying some kind of need.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

123) What is the difference between a functional need and a psychological need? How can getting

a college education fulfill both types of needs?

Answer: A functional need relates to product performance, whereas a psychological need

pertains to personal gratification associated with a product or service. A college education fulfills a

functional need when it makes graduates eligible for certain jobs and careers that they would not

have been considered for without a degree. A degree also satisfies many students' personal needs

for attaining a goal, learning, or self-esteem.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

124) After her first year in college, Veronica wants to decide on a major. What internal and

external sources of information will she use to help her in making a decision?

Answer: After defining a need or want (to decide on a major), Veronica will likely begin to

search for information. She might begin with an internal search: topics that interest her, and

whatever she can recall from first-year student orientation and from courses she liked. She will

likely search the school's catalog, website, course listings, and degree requirements, all of which

are external sources. Since it is an important decision, Veronica will probably also talk with

professors, other students, and advisors.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

125) Using automobiles as an example, explain the differences between universal, retrieval, and

evoked sets, and identify the one that is most important to marketers.

Answer: The universal set is all the automobiles available in the market. All the automobiles you

can name would be the retrieval set. All the autos you would consider when deciding to buy a car

would be the evoked set. Marketers would definitely prefer to be part of a consumer's evoked set.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

126) Provide two decision-making examples: one of an occasion when a consumer might use a

compensatory decision rule, and one when the consumer might use a noncompensatory decision

rule. For each, briefly identify the characteristics of the decision that would make a compensatory

or noncompensatory rule the best choice. Be specific.

Answer: Responses will vary widely. The discussion should include an understanding of the

terms compensatory and noncompensatory. A compensatory decision rule assumes that the

consumer, when evaluating alternatives, trades off one characteristic against another, such that

good characteristics compensate for bad characteristics. When a consumer uses a

noncompensatory decision rule, he or she chooses a product or service on the basis of one

characteristic or one subset of a characteristic, regardless of the values of its other attributes.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

127) What evaluative criteria would consumers be likely to use in choosing a family physician?

Answer: Most consumers would begin by assessing the physician's reputation, primarily through

word of mouth. Nurses are often an excellent source of information. A second criterion might be

convenience. How far is the physician's office from a family's home or business? A third criterion

might be availability. Can you get an appointment in a reasonable period of time? The fourth

criterion might be comfort. Do you feel comfortable with the physician? Participation in the

consumer's insurance plan would be another criterion. Price probably would not be a criterion

unless an individual lacked health insurance.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

128) Assume you are the manager of a resort property that is close to the mountains, to several

recreational sites, and to a few luxury restaurants and stores. How would you manage customer

expectations to enhance postpurchase satisfaction? Be specific.

Answer: Students might select any of the following: building realistic expectations by listing the

nearby attractions and showing photos, offering demonstrations by posting videos of the area,

reducing risk through guarantees or similar programs, and encouraging feedback and

communication with customers, even after the purchase.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

129) Harvey's Heating and Air Conditioning Service is considering using the slogan, "We fix it the

first time, every time." Why might this slogan be a bad idea if Harvey wants to maximize

postpurchase satisfaction? Create a better slogan for Harvey.

Answer: Harvey should create realistic expectations. His proposed slogan is risky because it

makes a promise he probably can't keep, thus setting unreasonably high expectations that are likely

to lead to dissatisfied customers if, for example, he can't make a repair on the first visit because a

part needs to be ordered. Suggested slogans will vary but might include: "We fix it the first time, or

the next time is on us."

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

130) At a convenience store, Ryan bought a bag of chips he had never tried before. Driving down

the road, Ryan opened the bag, took a bite, and realized he had purchased pork rinds by mistake.

Being a vegetarian, Ryan threw away the chips. Ryan felt very little buyer's remorse and soon

forgot about the experience. Why?

Answer: Buyer's remorse or postpurchase cognitive dissonance is generally greater for products

that are expensive, infrequently purchased, and involve perceived risk. None of that applies to

snack food purchases.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

131) Often political candidates position themselves as "outsiders," not part of the establishment.

These candidates assume that voters have a negative attitude toward incumbent politicians (i.e.,

those currently in office). Describe three components of attitudes voters might have toward

incumbent politicians.

Answer: The three components are:

Cognitive—what voters believe to be true or untrue about a politician

Affective—how voters feel about a politician or political issue

Behavioral—how voters may vote

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

132) Why are attitudes important in consumer decision making?

Answer: Attitudes are learned and long lasting, and they might develop over a long period of

time, though they can also abruptly change. Astute students will include consideration of the three

components: cognitive, affective, and behavioral. From the marketer's perspective, attitudes

influence the decision-making process. At a minimum, the marketer should know what prevailing

attitudes are, and how they might affect the overall process.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

133) How does the sensory situation affect consumer behavior?

Answer: When a consumer enters a store, various sensory aspects influence his or her decisions.

When leveraged in concert with other aspects of the retail environment and retail strategy, the five

senses (visual, auditory, olfactory, tactile, and taste) can strongly influence consumer decision

processes. Students should give an example of how each sensory situation might influence a

purchasing decision.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

134) Using examples, describe the difference between impulse buying and habitual decision

making.

Answer: Impulse buying occurs when decisions are made on the spot when people see the

merchandise. Retailers put candy, soft drinks, WD-40 (in a hardware store), and other impulse

items near the checkout counter. Impulse items for kids are often lower on the shelf at the checkout

counter. Habitual decision making describes purchases made with even less thought than impulse

buying. Consumers who buy the same item every day are making habitual purchases. Consumers

who have the same coffee, tea, or chai each morning, the same beverage after work, or order the

same meal at a restaurant are making habitual purchases.

Difficulty: 3 Hard

Topic: Involvement

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

135) Marketers often use the principles and theories from other disciplines to understand consumer

actions and develop marketing strategies. According to the text, what disciplines are most useful to

marketers trying to understand consumer behavior?

Answer: Marketers often use the principles and theories from psychology and sociology.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

136) Harley-Davidson knows that many of its customers today are professional people who want

the pride of owning a Harley. Harley-Davidson also appeals to its more traditional market: cyclists

who want a smooth, powerful ride. To be successful, Harley-Davidson needs to appeal to which

type(s) of needs?

Answer: It needs to appeal to both psychological and functional needs of its customers.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-02 Describe the difference between functional and psychological needs.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

137) When Diane has business in Denver, she often goes out for a fancy meal. When deciding

where to go, the restaurants she usually chooses are the local Thai restaurant and the elegant

French restaurant. Do these two restaurants represent her universal, retrieval, or evoked set of

choices?

Answer: These are her retrieval set. There are obviously many other restaurants, and she may be

aware of some of these others, but she considers only these two because they are the first ones she

thinks of due to past experience.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

138) Lawrence operates a fishing resort in the Galapagos Islands. Few guests visit his remote

island more than once, but Larry has his assistant e-mail recent customers each month to see how

satisfied they were with their stay at his resort. Why would Lawrence spend effort on past

customers if few guests come more than once?

Answer: Past customers' opinions are important because they are from actual, not potential,

customers. Even though they may not visit again, they could provide tremendous word-of-mouth

publicity as well as helpful comments for improving the resort's services.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

139) When Randy decides which airline to use to fly from Baltimore to San Diego, he considers

the price, number of stops, and frequent-flyer miles he will earn. However, earning frequent-flyer

miles is the most important factor for him. Is Randy using a compensatory or noncompensatory

decision rule? Explain your reasoning.

Answer: Roger is using a compensatory decision rule because he is weighing the alternatives, but

one factor outweighs the others.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

140) Why is it dangerous for marketers to set unrealistically high consumer expectations?

Answer: Setting unrealistically high consumer expectations may lead to higher initial sales, but

will eventually result in dissatisfaction if the product or service fails to achieve the high

performance expectations.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

141) Whenever major golf professionals use a new piece of golf equipment, sales of that

equipment jump rapidly. What type of social influence do PGA and LPGA professionals represent

for average golfers?

Answer: They are reference groups who influence people's behavior.

Difficulty: 1 Easy

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

142) Nadine knows that habitual purchasers make great customers for her coffee shop. How can

Nadine attract and maintain habitual purchasers?

Answer: Creating and maintaining strong brands and strong store loyalty will help Nadine create

habitual purchasers. She should be hesitant to change brands of coffee, hours, and other features

loyal customers have grown to prefer without a clear understanding of their preferences.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

143) For years Marc sold new cars, but he and his wife recently grew tired of city life and moved to

a beach town. Now he sells costume jewelry (made by his wife) at an open-air market near the

ocean. To be successful, what will Marc have to recognize about the difference between

consumers' problem-solving processes for cars and costume jewelry?

Answer: Most consumers engage in an extended problem-solving process when purchasing cars,

while costume jewelry is more likely to be an impulse purchase.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

144) For many American consumers, the purchase of a personal computer has shifted from an

extended problem-solving decision to a limited problem-solving decision. How does this change

the way retail stores should display and sell computers?

Answer: Answers will vary, but consumers involved in extended problem solving will devote

considerable time and effort to evaluating alternatives. For personal computer companies,

well-trained salespeople both in-store and online were needed to address consumers' questions.

Now that many American consumers know more about personal computer features and options,

online software and informative displays are often enough to guide consumer decision making.

Difficulty: 3 Hard

Topic: Involvement

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

145) Several years ago, BMW produced The Hire, a series of short films that were distributed

online. The purpose of the film was to make the BMW brand relevant to young males who, BMW

hoped, would become interested in the brand and would be more likely to purchase a BMW in the

future. The films were directed by popular action-film directors of that time, and showed the BMW

engaging in high-speed chases and other high-adrenaline situations. No actual product information

was provided. BMW made it easy for site visitors to share the videos with friends. The films were

viewed millions of times, and BMW considered it a highly successful promotion. Of the factors

affecting the consumer decision process, which ones were the primary factors this campaign

sought to use to affect the consumer decision process of those who watched the films?

Answer: The films attempted to change consumer attitudes toward BMW, primarily the affective

component of the attitude. In addition, by making it easy to share the videos, reference-group

social influence could also be applied.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

146) Budweiser is well known for the use of humor in its ad campaigns for Bud Light beer. Based

on the use of humor in advertising for beer, does Budweiser believe that beer is a

high-involvement or low-involvement purchase for most consumers? Explain your answer using

the elaboration likelihood model.

Answer: Low-involvement. The purpose of the ads is not to provide a high-involvement buyer

with information about the beer to be processed deeply in order to form strong attitudes; rather, the

ads seek to entertain us and to associate good feelings about the ad with the beer being advertised.

Difficulty: 3 Hard

Topic: Involvement

Learning Objective: 06-06 Describe how involvement influences the consumer decision process.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

147) You are shopping for a new car. Using the steps in the consumer decision process, describe

what you would do at each step during the purchasing experience.

Answer: Answers will vary but must include the five steps: need recognition, information search,

alternative evaluation, purchase, and postpurchase.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

148) Demonstrate your understanding of the terms internal locus of control and external locus of

control by giving an example of each.

Answer: People who have an internal locus of control believe they have some control over the

outcomes of their actions, in which case they generally engage in more search activities. With an

external locus of control, consumers believe that fate or other external factors control all outcomes.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-03 Describe factors that affect information search.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

149) Define the term postpurchase cognitive dissonance and give an example of when this

happened to you. Then explain what the company could have done to lessen your dissonance.

Answer: The answer should demonstrate understanding of the term postpurchase cognitive

dissonance: an internal conflict that arises from an inconsistency between two beliefs, or between

beliefs and behavior. The response should also suggest at least one possible way to reduce the

dissonance.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-04 Discuss postpurchase outcomes.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

150) The text lists five psychological factors that can influence purchase decisions. List and give

an example of each.

Answer: The five psychological factors are motives, attitudes, perception, learning, and lifestyle.

Examples will vary.

Difficulty: 3 Hard

Topic: Consumer Purchase Decision Process

Learning Objective: 06-05 List the factors that affect the consumer decision process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

151) The appliance retailer Pirch encourages people to test out showerheads in the store before

installing them in their homes. What process does this demonstrate?

Answer: Trying out things is an important part of the external search process for some products.

In an external search for information, the buyer seeks information outside his or her personal

knowledge base to help make the buying decision, such as testing out the Pirch showerheads in a

retail environment prior to purchasing the product.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

152) Describe how CVS has changed its image to be more positive and the plans in the future to

expand on that positive image.

Answer: Since the CVS tobacco ban did not drive customers away, CVS is planning to expand on

its positive image, as well as its underlying goals to make its customers healthier, by targeting

candy, low-protection sunscreen, and foods containing artificial trans-fats next. In four test stores,

the retailer has moved candy and other snack foods to the back of the store, where they are less

visible. The chain will no longer carry any sun protection products with SPF ratings lower than 15.

CVS will also stop stocking foods with artificial trans fats more than a year before a new FDA ban

on such ingredients takes effect. At the same time, it will be increasing the number of healthier

food options available through its private-label brand, Gold Emblem; overall, it anticipates

increasing healthy food options in its stores by 50 percent. This change will be accompanied by

changes to the store layout, such that several new aisles will heavily showcase the healthier food

items, along with beauty products. This move away from its old strategy—namely, being a

convenient store for virtually anything—signals its effort to show customers that the company

stands for something specific: health.

Difficulty: 2 Medium

Topic: Consumer Purchase Decision Process

Learning Objective: 06-01 Articulate the steps in the consumer buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 7 Business-to-Business Marketing

1) Business-to-business (B2B) marketing refers to buying and selling goods or services to

consumers.

Answer: FALSE

Explanation: Business-to-business (B2B) marketing refers to the process of buying and selling

goods or services to be used in the production of other goods and services for consumption by the

buying organization and/or resale by wholesalers and retailers.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) B2B marketing involves manufacturers, wholesalers, and retailers.

Answer: TRUE

Explanation: B2B organizations market goods and services to other businesses but not to the

ultimate consumer.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) Resellers differ from producers in that resellers significantly alter the form of goods they sell.

Answer: FALSE

Explanation: Resellers are marketing intermediaries that resell manufactured products without

significantly altering their form. Wholesalers, distributors, and retailers are all resellers.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) The B2B buying process tends to be more formal than B2C buying.

Answer: TRUE

Explanation: The B2B buying process is more structured than the B2C process, involving written

specification of needs and formal proposals.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) The RFP process is used by buyers to allow customer input into value creation.

Answer: FALSE

Explanation: The request for proposals (RFP) is a common process through which organizations

invite alternative vendors or suppliers to bid on supplying their required components or

specifications.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) The final step of the business-to-business buying process is a formal vendor performance

analysis.

Answer: TRUE

Explanation: In this final step, the selected vendor's performance is evaluated in order to decide

whether or not to give the vendor additional business in the future.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) Organizational culture may vary by geography.

Answer: TRUE

Explanation: Organizational culture may vary by geography, by division, or by functional

department.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) Most B2B buying situations can be categorized into three types: new buys, structured rebuys,

and automatic rebuys.

Answer: FALSE

Explanation: Most B2B buying situations are categorized as either new buys, modified rebuys, or

straight rebuys.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) In both new buy and straight rebuy situations, several members of a buying center will be

intensely involved in the purchasing decision.

Answer: FALSE

Explanation: In a new buy, many members of the buying center will be involved in the

purchasing decision; however, in a straight rebuy, it is likely that the buyer will handle the

transaction alone.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) An architect working for a large firm requests specific computer software to produce designs,

drawings, and other technical information for his clients. The architect probably serves as a

gatekeeper in the buying center.

Answer: FALSE

Explanation: The architect will fill the user role. The user is the person who consumes or uses the

product or service. In addition, the architect is probably the initiator who is the person who first

suggests buying the particular product or service. The gatekeeper controls information or access,

or both, to decision makers and influencers.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) A buying center whose members reach a decision based on a collective agreement is known as

an autocratic buying center.

Answer: FALSE

Explanation: In an autocratic buying center, even though there may be multiple participants, one

person makes the decision alone. A consensus buying center is one in which all members of the

team must reach a collective agreement that they can support a particular decision.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) A small business decides to upgrade its aging phone system. The business will probably place

a straight rebuy order.

Answer: FALSE

Explanation: Straight rebuys occur when the buyer or buying organization simply buys

additional units of products that had previously been purchased. Many B2B purchases are likely to

fall in the straight rebuy category. In this case, a new buy is the most likely choice because the

customer is purchasing goods and services for the first time.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) When the Toyota Prius first entered the marketplace, dealers kept waiting lists of people

wanting one and the factories had to ramp up production and order more raw materials. Increased

factory product indicates derived demand.

Answer: TRUE

Explanation: Derived demand reflects the link between consumers' demand for a company's

output and the company's purchase of necessary inputs to manufacture or assemble that particular

output.

Difficulty: 3 Hard

Topic: Allocating Resources

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

14) Fabricworld buys fabric from China and sells it to clothing manufacturers in the United States.

Fabricworld is a retailer.

Answer: FALSE

Explanation: Fabricworld is a reseller because resellers are marketing intermediaries that resell

manufactured products without significantly altering their form. A retailer sells directly to a

consumer.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

15) Public institutions do not engage in B2B relationships.

Answer: FALSE

Explanation: Public institutions engage in B2B relationships to fulfill their needs for capital

construction, equipment, supplies, food, and janitorial services.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) Formal performance evaluations of the vendor and the products sold generally occur in the

B2C buying process.

Answer: FALSE

Explanation: Formal performance evaluations of the vendor and the products sold generally do

not occur in B2C buying situations as they do in the B2B setting.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) The local school district realized it needed to upgrade the computers in the school libraries.

This represents the product specification stage of the B2B buying process.

Answer: FALSE

Explanation: In the first stage of the B2B buying process, the buying organization recognizes,

through either internal or external sources, that it has an unfilled need—in this case, upgraded

computers for the school libraries.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

18) A small business may use a web portal as a means of forming a supply chain that can respond

to its needs.

Answer: TRUE

Explanation: Smaller companies may lack the ability to attract broad attention to their requests,

so they might turn to a web portal. Portals can provide tremendous cost savings because they

eliminate periodic negotiations and routine paperwork, and they offer the means to form a supply

chain that can respond quickly to the buyer's needs.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

19) Once a vendor receives an order from a firm, it responds by immediately filling the order.

Answer: FALSE

Explanation: The supplier first sends an acknowledgment that it has received the order, and fills

it by the specified date.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) As the owner of a small business with 60 employees that makes custom floor mats, Paula

makes all of the buying decisions. Paula is most likely the user.

Answer: FALSE

Explanation: Paula is the influencer, decider, buyer, and gatekeeper, but probably not the user.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

21) When you go to the hospital for an operation, you are the decider in the buying process.

Answer: FALSE

Explanation: You are the user. The decider would be the person who chose the supplies for your

surgery.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) Consultative buying centers use one person to make a decision but solicit input from others

before doing so.

Answer: TRUE

Explanation: This is the definition of consultative buying centers.

Difficulty: 1 Easy

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) The goal of ________ is to provide valuable information that a potential B2B buyer can easily

understand and that will help the company address its problems with new solutions.

A) white papers

B) LinkedIn.com

C) Twitter

D) a democratic buying center

E) microblogs

Answer: A

Explanation: When executives confront an unfulfilled business need, they normally turn to white

papers prepared by potential B2B marketers. The goal of white papers is to provide valuable

information that a potential B2B buyer can easily understand and that will help the company

address its problems with new solutions.

Difficulty: 1 Easy

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) As Diane's business grew, she needed to find a new way to manage payroll for her employees,

so she researched payroll companies to see which one would best meet her needs. What type of

buying situation was Diane involved in?

A) straight buy

B) modified rebuy

C) new buy

D) modified buy

E) straight rebuy

Answer: C

Explanation: In a new buy situation, a customer purchases a good or service for the first time,

which means the buying decision is likely to be quite involved because the buyer or the buying

organization does not have any experience with the item.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

25) Neighbors Bicycles needed more bicycle seats. It decided to order gel seats in addition to the

traditional seats it had always ordered. What type of buying situation does this represent?

A) straight rebuy

B) modified buy

C) straight buy

D) new buy

E) modified rebuy

Answer: E

Explanation: This is a modified rebuy. In a modified rebuy, the buyer has purchased a similar

product in the past but has decided to change some specifications such as the desired price, quality

level, customer service level, options, and so forth.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) Business-to-business marketing involves buying and selling goods or services by all of the

following except

A) manufacturers.

B) consumers.

C) retailers.

D) producers.

E) wholesalers.

Answer: B

Explanation: Business-to-business (B2B) marketing refers to the process of buying and selling

goods or services to be used in the production of other goods and services for consumption by the

buying organization and/or resale by wholesalers and retailers. When businesses sell to

consumers, it is B2C marketing.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) David bought a pickup truck to transport his equipment on weekend fishing trips. He also

bought a trailer for his lawn maintenance business. His purchases were

A) both B2C purchases since he is the user in both situations.

B) both B2B purchases since he is the user in both situations.

C) neither B2C nor B2B since he is the consumer and his uses might be mixed.

D) B2C and B2B, respectively.

E) B2B and B2C, respectively.

Answer: D

Explanation: The truck David purchased for fishing tournaments is for his personal use and was a

business-to-consumer purchase. The trailer he bought for his business was a B2B purchase.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) Jacquie works as a sales rep for a company that produces and sells steel used in building

construction. Jacquie is in ________ sales.

A) G2B

B) B2C

C) B2B

D) C2C

E) G2G

Answer: C

Explanation: Jacquie sells materials used by other businesses; thus, she is in B2B sales.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

29) Sales of electric components manufactured by Dick's company depend on sales of new cars.

Dick's company faces ________ demand.

A) synthetic

B) situational

C) monopolistic

D) contrived

E) derived

Answer: E

Explanation: Derived demand refers to the link between consumers' demand for a company's

output and the company's purchase of necessary inputs to manufacture or assemble that particular

output. The car manufacturer's demand for electric components is derived from the demand for its

cars.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) Daphne has developed a successful business selling appliances to homebuilders. She carefully

monitors the issuance of new home permits to anticipate how many appliances she will need to buy

in order to supply her customers. Daphne is concerned with ________ demand.

A) modified

B) secondary

C) rebuy

D) derived

E) delayed

Answer: D

Explanation: Derived demand refers to the link between consumers' demand for a company's

output and the company's purchase of necessary inputs to manufacture or assemble that particular

output. The homebuilders' demand for appliances is derived from the demand for its homes.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

31) Whether targeting consumers or resellers, marketers need to focus on

A) creating value for their customers.

B) buying center synergy.

C) private exchange efficiency.

D) corporate profit sharing.

E) reducing derived demand.

Answer: A

Explanation: Value creation is a key consideration for both B2C and B2B marketing.

Difficulty: 1 Easy

Topic: Product Value Creation

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) Unlike manufacturers, ________ buy products from other businesses but do not significantly

alter the form of the products they buy before selling them.

A) producers

B) consumers

C) resellers

D) raw materials suppliers

E) gatekeepers

Answer: C

Explanation: Resellers—both wholesalers and distributors—are marketing intermediaries that

resell manufactured products without significantly altering their form.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) A ________ is a type of reseller, a business that buys from other businesses but does not

significantly alter the form of the products it buys.

A) manufacturer

B) producer

C) consumer

D) wholesaler

E) factory

Answer: D

Explanation: Resellers include wholesalers, distributors, and retailers.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) Marty buys overrun clothing from factories around the South. He sells the clothes to discount

retailers. Marty is a

A) manufacturer.

B) producer.

C) consumer.

D) factory agent.

E) reseller.

Answer: E

Explanation: Resellers include wholesalers, distributors, and retailers. Resellers purchase

products from businesses and sell them to other businesses without significantly altering them.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

35) Hospitals, schools, and religious organizations are examples of ________ buyers.

A) manufacturing

B) retail

C) institutional

D) factory agent

E) reseller

Answer: C

Explanation: Institutional buyers include organizations such as hospitals, educational

organizations, and religious organizations.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) Which of the following is an example of an institutional buyer?

A) Mayo Clinic Hospital

B) Procter & Gamble

C) U.S. Marine Corps

D) Nucor Steel Corporation

E) Walmart

Answer: A

Explanation: Institutional buyers include organizations such as hospitals, educational

organizations, and religious organizations.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

37) Which of the following is an example of a government buyer?

A) Mayo Clinic Hospital

B) Procter & Gamble

C) the Department of Defense

D) Nucor Steel Corporation

E) Walmart

Answer: C

Explanation: In most countries, the central government is one of the largest purchasers of goods

and services. The Department of Defense would be considered a large government agency buyer.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) In most countries, ________ is(are) among the largest purchasers of goods and services.

A) the largest retailer

B) the central government

C) construction firms

D) the intelligence agency

E) hospitals

Answer: B

Explanation: In most countries, the central government is one of the largest purchasers of goods

and services. For example, the U.S. federal government spends nearly $4 trillion annually on

procuring goods and services.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) Both the B2B and B2C buying processes begin with

A) central planning.

B) need recognition.

C) postpurchase dissonance.

D) alternative evaluation.

E) order specification.

Answer: B

Explanation: Need recognition is the first step of both the B2C and B2B buying processes.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) Compared to the B2C process, the information search and alternative evaluation steps in the

B2B process are

A) decentralized.

B) less focused on customer value creation.

C) identical.

D) more formal and structured.

E) based on derived supply analysis.

Answer: D

Explanation: The information search and alternative evaluation steps are more formal and

structured in the B2B process. Typically, B2B buyers specify their needs in writing and ask

potential suppliers to submit formal proposals, whereas B2C buying decisions are usually made by

individuals or families and do not need formal proposals.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

41) Typically, B2B buyers ask potential suppliers to

A) write the RFP for the buyer.

B) submit formal proposals.

C) sponsor interviews with final customers in order to determine product needs.

D) always be involved in reselling.

E) organize themselves into selling cooperatives.

Answer: B

Explanation: The information search and alternative evaluation steps are more formal and

structured in the B2B process. Typically, B2B buyers specify their needs in writing and ask

potential suppliers to submit formal proposals.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) B2B buying decisions are often made by

A) governors.

B) influencers.

C) committees.

D) resellers.

E) consumers.

Answer: C

Explanation: In most large organizations, several people are responsible for buying decisions.

These buying center participants can range from employees who have a formal role in purchasing

decisions (i.e., the purchasing or procurement department) to members of the design team who will

specify the equipment or raw materials needed for employees who will be using a new machine

that is on order.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) When Goodwish Marketing decided to upgrade its computer network, many people were

involved in the decision. In B2B buying systems, decisions are often made

A) quickly.

B) by a single expert.

C) at auction sites.

D) by a committee after considerable deliberation.

E) through community debating organizations.

Answer: D

Explanation: In most large organizations, several people are responsible for buying decisions.

These buying center participants can range from employees who have a formal role in purchasing

decisions (i.e., the purchasing or procurement department) to members of the design team who will

specify the equipment or raw materials needed for employees who will be using a new machine

that is on order.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) Judith knows it is important to approach business buyers at the right time, often during the first

stage of their buying process, which is

A) need recognition.

B) the RFP process.

C) proposal analysis.

D) vendor negotiation and selection.

E) product specification.

Answer: A

Explanation: Both the B2B and the B2C buying processes begin with need recognition.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) After need recognition, a business develops ________ that suppliers might use to develop their

proposals.

A) derived demand

B) initiator instructions

C) determinant attributes

D) product specifications

E) focal alternatives

Answer: D

Explanation: Product specifications are detailed descriptions of the business's specific

requirements for the purchase occasion.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) After Hurricane Katrina, many states reevaluated their coastal area building requirements.

These new building codes represented ________ that building materials companies used to

develop new products.

A) derived demand

B) initiator instructions

C) determinant products

D) product specifications

E) focal alternatives

Answer: D

Explanation: The new building codes present detailed information that all builders and their

suppliers need to adhere to. As such, they will form part of the specifications for any purchase of

building supplies.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

47) Charles is hoping to get a chance to bid on supplying key components to Ned's business. He is

eager to move forward, but he must wait until

A) Ned completes vendor negotiations.

B) Ned develops a list of product specifications.

C) Ned's buying center has an opening.

D) Ned agrees to move Charlie's firm from the evoked set to the retrieval set.

E) Ned completes the order specification process.

Answer: B

Explanation: Until Ned develops his product specifications—a detailed list of the attributes and

features he needs—Charles will not know what to bid.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) After need recognition and product specification, many firms using the B2B buying process

A) identify contract specifications.

B) issue a request for proposals from invited suppliers.

C) proceed to proposal analysis.

D) enter vendor negotiation and selection.

E) revise their need recognition analysis.

Answer: B

Explanation: The third step, after need recognition and product specification, is for the firm to

provide a request for proposals from suppliers detailing what the firm needs to purchase.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) During the RFP stage, B2B buyers

A) recognize obstacles that the firm must work around.

B) revise their need recognition analysis.

C) invite suppliers to bid on supplying what is requested.

D) proceed to vendor analysis.

E) negotiate contract terms.

Answer: C

Explanation: The request for proposals (RFP) is a common process through which organizations

invite alternative vendors or suppliers to bid on supplying their required components or

specifications.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) The process through which organizations invite alternative vendors or suppliers to bid on

supplying their required components or specifications is formally referred to as

A) specification review.

B) contract development.

C) a bidding initiative.

D) request for proposals.

E) invitation to review.

Answer: D

Explanation: After a firm develops its product specifications, it will invite alternative vendor or

suppliers to bid on supplying the required components. This process is formally known as requests

for proposals.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) After posting an RFP for telecommunications equipment, USF Corporation received six

proposals from qualified vendors. Next, USF will

A) recognize obstacles that must be circumvented.

B) reevaluate the firm's needs.

C) give one vendor a purchase order.

D) conduct vendor analysis.

E) evaluate the proposals and narrow the choice to a few suppliers.

Answer: E

Explanation: The buying organization, in conjunction with its critical decision makers, evaluates

all the proposals it receives in response to its RFP. Many firms narrow the process to a few

suppliers, often those with which they have existing relationships, and discuss key terms of the

sale, such as price, quality, delivery, and financing.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) The buying center for USF Corporation is in the process of discussing price, quality, and

delivery schedules with potential suppliers. They are in the ________ stage of the

business-to-business buying process.

A) vendor negotiation

B) product specification

C) need recognition

D) vendor performance assessment

E) RFP

Answer: A

Explanation: Once the list of potential suppliers has been limited to a few finalists who are able to

meet USF's needs, the firm will probably negotiate with each of the finalists regarding price,

quality, delivery, and financing, in order to get the best deal possible.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

53) An Internet site whose purpose is to be a major starting point for users when they connect to

the web and is often used by smaller companies in the RFP process is referred to as a(n)

A) podcast.

B) Internet channel.

C) web portal.

D) buying center.

E) search engine.

Answer: C

Explanation: Smaller companies may lack the ability to attract broad attention to their requests,

so they might turn to a web portal, an Internet site whose purpose is to be a major starting point for

users when they connect to the web. Although there are general portals such as Yahoo! or MSN,

B2B partners connect to specialized or niche portals to participate in online information exchanges

and transactions.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) Rita has just received a major order from Northrop Corporation for her firm's hydraulic lift

equipment. After reviewing the order information, Rita will

A) send an acknowledgment that the order has been received.

B) rewrite her firm's proposal.

C) submit a competitive bid.

D) proceed to vendor analysis.

E) evaluate performance.

Answer: A

Explanation: The supplier then sends an acknowledgment that it has received the order and fills it

by the specified date.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

55) The final stage in the business-to-business buying process is to

A) place the order.

B) select the vendor.

C) assess vendor performance.

D) address additional needs.

E) prepare an RFP.

Answer: C

Explanation: As the final stage in the business-to-business buying process, vendor analysis

evaluates a selected supplier's performance in delivering on the current order, helping the firm

decide whether or not to continue to do business with the supplier.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) As purchasing manager for Avalon Electronics, Cary is required to submit a vendor

performance analysis every three months. To meet this requirement, Cary will most likely

A) interview vendors and seek their feedback.

B) specify and weight performance factors and score the vendors.

C) develop an RFP for vendor analysis.

D) recruit new suppliers.

E) use a modified rebuy vendor form.

Answer: B

Explanation: Vendor analysis evaluates a selected supplier's performance in delivering on the

current order, helping the firm decide whether or not to continue to do business with the supplier.

Various performance metrics are calculated such as customer service, issue resolution, delivery

(based on promised delivery date), and quality, along with weights for these metrics matching the

buyer's priorities.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

57) In most large organizations, several people are responsible for making a purchase decision.

This group is called the

A) supply chain.

B) reselling team.

C) decider group.

D) buying center.

E) expediters.

Answer: D

Explanation: The buying center is a group that works together to make a purchase decision.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) As the largest network of business professionals, with global reach, this company counts

approximately 530 million members, including at least one executive from all of the Fortune 500

companies. Which of following social media platforms is well known for connecting

businesspeople?

A) LinkedIn

B) Amazon

C) Twitter

D) Snapchat

E) Facebook

Answer: A

Explanation: LinkedIn is well known for connecting businesspeople; as the largest network of

business professionals, with global reach, it counts approximately 530 million members, including

at least one executive from all of the Fortune 500 companies. Its promise for networking, whether

individually or for the company, is virtually unsurpassed.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

59) Selena is the director of human resources for a small manufacturing firm. She has a strong

personal interest in technology, and is known throughout the firm as the one with the most

knowledge about new kinds of communications technologies. If the firm decides to upgrade its

network, Selena will probably function in what role in the firm's buying center?

A) leader

B) initiator

C) influencer

D) decider

E) gatekeeper

Answer: C

Explanation: Due to her expertise, Selena's opinion and advice will probably be sought, making

her an influencer. The influencer is the person whose views influence other members of the buying

center in making the final decision.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) Raycom Construction needs heavy-duty equipment to install a new pipeline in northern

Alaska. Raycom's engineers have been asked to provide detailed specifications and

recommendations for the equipment needed. The Raycom engineers will primarily play the

________ role in the company's buying center.

A) buyer

B) initiator

C) influencer

D) user

E) gatekeeper

Answer: C

Explanation: Due to their technical expertise, the Raycom engineers will influence the purchase

decision with their specifications and recommendations. The influencer is the person whose views

influence other members of the buying center in making the final decision.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

61) At many universities, education faculty members were among the first to ask for personal

computers. These faculty members were ________ in the buying center.

A) buyers

B) initiators

C) influencers

D) deciders

E) gatekeepers

Answer: B

Explanation: By requesting computers, the faculty initiated the purchase situation. The initiator is

the person who first suggests buying the particular product or service.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Raycom Construction needs heavy-duty equipment to install a new pipeline in northern

Alaska. After a vendor is chosen, Reginald will handle the paperwork and send out the purchase

order. Reginald plays the role of ________ in the buying center.

A) buyer

B) initiator

C) influencer

D) user

E) gatekeeper

Answer: A

Explanation: The buyer is the member of the buying center who handles the actual paperwork of

the actual purchase.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

63) Kimberly is the sales representative for a major textbook publisher. When she calls on the

business faculty at General University, her first stop is to chat with Frances, the business

department secretary. From Frances, Kimberly learns which professors have left the university or

have newly arrived. Frances also helps Kimberly make appointments to see professors to discuss

textbook choices. Frances acts as the ________ in the business department buying center.

A) buyer

B) initiator

C) influencer

D) user

E) gatekeeper

Answer: E

Explanation: The gatekeeper is the person who controls information or access, or both, to

decision makers and influencers.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) Kimberly is the sales representative for a major textbook publisher. When she calls on the

business faculty at General University, she also tries to meet with several students to get their

feedback on textbooks. She passes this feedback to her managers to guide the development of the

publisher's future textbooks. The students are the ________ in the buying center.

A) deciders

B) initiators

C) influencers

D) users

E) gatekeepers

Answer: D

Explanation: The students are users of the selected textbooks. If their feedback was used by the

faculty to choose books, they would also be influencers, but in this case their feedback is being

used by the publisher, not by the faculty members who make the decision.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

65) Many health insurance policies require patients to call their insurance company to get

preapproval for tests or procedures. The health insurance company acts as a(n) ________ for the

purchase of these medical services.

A) decider

B) initiator

C) influencer

D) user

E) gatekeeper

Answer: E

Explanation: The gatekeeper controls information or access, or both, to decision makers and

influencers. Since the insurance company controls access to tests and procedures, it is a gatekeeper

in health-related decisions.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Unlike a firm's mission statement or employee handbook, a firm's organizational culture often

A) lists specific job tasks for employees.

B) is of no importance to purchase decisions.

C) exists as a set of unspoken guidelines.

D) is ignored by the vast majority of employees.

E) determines the order specification process.

Answer: C

Explanation: A firm's organizational culture reflects the set of values, traditions, and customs that

guide its employees' behavior. The firm's culture often comprises a set of unspoken guidelines that

employees share with one another through various work situations.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

67) A firm's organizational culture reflects

A) B2C dynamics.

B) an RFP process.

C) a buying center philosophy.

D) a set of values, traditions, and customs.

E) a derived set of influences.

Answer: D

Explanation: A firm's organizational culture reflects the set of values, traditions, and customs that

guide its employees' behavior.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) While no one in the firm has discussed it, Brad notices everyone else seems to dress more

casually on Fridays during the summer. Brad is observing part of his firm's

A) organizational culture.

B) governing principles.

C) human resource policy.

D) employee obligations.

E) code of ethics.

Answer: A

Explanation: The organization's culture is a set of values, traditions, and customs that are

typically unwritten. "Casual Friday" dress is an example of such a custom.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

69) While training for her new job as a pharmaceutical sales representative, Valerie spent several

days shadowing an experienced company rep. She watched the rep focusing on the benefits of the

new drugs while not volunteering pricing information, side effects, or comparison data. Valerie

assumed that this reflected part of the pharmaceutical firm's

A) buying center.

B) culture.

C) mission statement.

D) corporate social responsibility.

E) RFP process.

Answer: B

Explanation: The organization's culture is a set of values, traditions, and customs that are

typically unwritten. Unfortunately, Valerie is observing a lack of regard for ethics that might be

characteristic of this one sales rep, or might be an aspect of the company's culture. (Note that this is

an issue of ethics, not corporate social responsibility.)

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) All of the following are general types of organizational cultures except

A) autocratic.

B) democratic.

C) consultative.

D) capitalist.

E) consensus.

Answer: D

Explanation: The four types of organizational cultures are autocratic, democratic, consultative,

and consensus.

Difficulty: 1 Easy

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

71) The customer whom Maria is calling on today has a(n) ________ buying center culture. This

means that the decision process will involve reaching agreement among all members of the buying

center.

A) consensus

B) autocratic

C) consultative

D) republican

E) democratic

Answer: A

Explanation: In a consensus buying center, all members of the team must reach a collective

agreement that they can support a particular purchase.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) Markham Publishing is known for its consultative buying center culture. Recognizing this

corporate culture, someone attempting to sell to Markham Publishing should

A) treat all members of the buying center as equally important.

B) address the concerns of all members of the buying center with particular attention to the

decision maker.

C) focus on providing information to and making the sales approach to the one decision maker.

D) attempt to facilitate the collective agreement of all members of the buying center.

E) focus attention on the gatekeeper in the buying center's team.

Answer: B

Explanation: A consultative buying center culture uses one person to make a decision but solicits

input from others before doing so.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

73) Fordham Hardware is known for its consensus buying center culture. Recognizing this

corporate culture, someone attempting to sell to Fordham Hardware should

A) focus exclusively on the head of the buying center.

B) address the concerns of all members of the buying center with particular attention to the

decision maker.

C) focus on providing information to and making the sales approach to the one decision maker.

D) attempt to facilitate the collective agreement of all members of the buying center.

E) attempt to get one "friend" on the committee to support his products.

Answer: D

Explanation: In a consensus buying center culture all members of the team must reach a

collective agreement that they can support a particular purchase.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) At the main campus of a large university, faculty always refer to one another as "Dr.," wear

suits, and guard their academic domains against one another. This leads to frequent name-calling

and strenuous debates. Meanwhile, at the various branch campuses, faculty members call one

another by their first names, dress casually, and support one another's scholarly efforts. This

example illustrates the differences in ________ that can exist within an organization.

A) supply chain communication

B) autocratic buying center culture

C) organizational culture

D) business missions

E) corporate social responsibility

Answer: C

Explanation: A firm's organizational culture reflects the set of values, traditions, and customs that

guide its employees' behavior. The two campuses reflect widely different organizational

cultures—one is formal and competitive, whereas the other is casual and encourages cooperation.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

75) Not knowing the roles of key players in the buying process could cause a sales representative

A) bid too high a quantity.

B) fail the vendor analysis.

C) respond to an RFP too quickly.

D) waste time and alienate people.

E) misdirect his or her product.

Answer: D

Explanation: Whether you are a member of the buying center or a supplier trying to sell to it, it is

extremely important to understand the buying center's culture and the roles of the key players in

the buying process. Not knowing the roles of the key players could waste a lot of time and even

alienate the real decision maker.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) When Jeanne gave her presentation to the BigDeal buying center team, she focused on

answering Beverly's questions, since Beverly is the decision maker. What type of buying center

does BigDeal employ?

A) democratic

B) consultative

C) consensus

D) autocratic

E) authoritative

Answer: D

Explanation: In an autocratic buying center, though there may be multiple participants, one

person makes the decision alone—in this case, Beverly, who is the decision maker.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

77) Jennifer was buying the company's first digital copier, and she involved all of the company's

department heads in the decision. Jennifer spent weeks evaluating options, inviting RFPs, and

negotiating with vendors before she finally made a purchase decision. This buying situation would

most likely be classified as a

A) new buy.

B) modified rebuy.

C) straight rebuy.

D) modified buy.

Answer: A

Explanation: Since this was a first time purchase and involved all of the stages of the buying

process, this would be a new buy situation.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) Most B2B buying situations can be categorized as new buys, modified rebuys, and

A) generic buys.

B) straight rebuys.

C) ordinary rebuys.

D) adapted buys.

E) minor buys.

Answer: B

Explanation: The three kinds of B2B buying situations are new buys, modified rebuys, and

straight rebuys.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

79) The RFP stage of the B2B buying process is not required for

A) a new buy.

B) a modified rebuy.

C) a straight rebuy.

D) either a new buy or a modified rebuy.

E) an adapted buy.

Answer: C

Explanation: A new buy or a modified rebuy may require an RFP; however, straight rebuys do

not require one since they are simple repurchases of previously purchased products.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) The buying decision is likely to be most complex and take longest to complete in a(n)

________ B2B buying situation.

A) new buy

B) modified rebuy

C) straight rebuy

D) adapted buy

E) generic buy

Answer: A

Explanation: The most complex and difficult is the new buy. In a new buy situation, a customer

purchases a good or service for the first time, which means the buying decision is likely to be quite

involved because the buyer or the buying organization does not have any experience with the item.

In the B2B context, the buying center is likely to proceed through all six steps in the buying

process and involve many people in the buying decision.

Difficulty: 1 Easy

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

81) In which buying situation is the buyer most likely to proceed through all six steps in the buying

process?

A) new buy

B) modified rebuy

C) straight rebuy

D) generic buy

E) adapted buy

Answer: A

Explanation: The most complex and difficult is the new buy. In a new buy situation, a customer

purchases a good or service for the first time, which means the buying decision is likely to be quite

involved because the buyer or the buying organization does not have any experience with the item.

In the B2B context, the buying center is likely to proceed through all six steps in the buying

process and involve many people in the buying decision.

Difficulty: 1 Easy

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) Manitoba University is buying a distance learning system. Previously, the school had no

distance learning technology. For Manitoba University this represents a(n) ________ situation.

A) adapted buy

B) modified rebuy

C) straight rebuy

D) new buy

E) generic buy

Answer: D

Explanation: Since Manitoba has no experience buying distance learning systems and no existing

vendor relationships, this is a new buy situation.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

83) Renate is the sales rep for ATV Communication Systems. She wants to bid on the RFP issued

by Manitoba University for distance learning technology. She knows she will need to provide

considerable information and demonstrations of her firm's technology because Manitoba

University is in a new buy situation and does not have

A) the money to afford it.

B) any experience with the product it wishes to purchase.

C) anyone interested in the technology.

D) any derived demand for the system.

E) any students who might be interested in distance learning.

Answer: B

Explanation: Since Manitoba has no experience buying distance learning systems and no existing

vendor relationships, this is a new buy situation.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) When Olga took over as facilities manager for Burlington Furniture Manufacturing, she was

shocked to see the factory was still heated with a coal-fired boiler. She made an immediate

decision to upgrade the heating system to something more efficient, and began to research

available options. For Olga and Burlington Furniture, this represented a(n) ________ situation.

A) adapted buy

B) modified rebuy

C) straight rebuy

D) generic buy

E) new buy

Answer: E

Explanation: Olga and Burlington Furniture lack experience with updated heating systems, so

this will be a new buy situation.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

85) In a(n) ________ situation, the buyer has purchased a similar product in the past but has

decided to change some specifications.

A) new buy

B) modified rebuy

C) straight rebuy

D) adapted buy

E) generic buy

Answer: B

Explanation: In a modified rebuy, the buyer has purchased a similar product in the past but has

decided to change some specifications such as the desired price, quality level, customer service

level, options, and so forth.

Difficulty: 1 Easy

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) When a business buyer decides to change specifications such as quality or options associated

with products purchased in the past, the buyer is engaged in a(n) ________ situation.

A) new buy

B) modified rebuy

C) straight rebuy

D) adapted buy

E) side-by-side

Answer: B

Explanation: In a modified rebuy, the buyer has purchased a similar product in the past but has

decided to change some specifications such as the desired price, quality level, customer service

level, options, and so forth.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) When Walmart considers reordering items for its stores, its buyers are instructed to negotiate

price concessions, quality improvements, and/or added options. In this situation, Walmart buyers

are engaged in a(n) ________ situation.

A) new buy

B) modified rebuy

C) straight rebuy

D) adapted buy

E) generic buy

Answer: B

Explanation: In a modified rebuy, the buyer has purchased a similar product in the past but has

decided to change some specifications such as the desired price, quality level, customer service

level, options, and so forth.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) In a modified rebuy situation, ________ are likely to have an advantage in getting the order.

A) consumers

B) resellers

C) current vendors

D) gatekeepers

E) new vendors

Answer: C

Explanation: A modified rebuy situation is one in which the buyer has purchased similar

products in the past, but now wants to modify some specifications. Current vendors are likely to

have an advantage in acquiring the sale in a modified rebuy situation as long as the reason for the

modification is not dissatisfaction with the vendor or its products.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

89) When Hal sees the RFP issued by one of his customers, he is concerned that the company has

changed its specifications since it placed a previous order with him. His company's products do not

meet the new specifications. In this situation, being the current vendor

A) will necessitate renegotiating price and delivery terms.

B) allows for a straight rebuy.

C) offsets a consensus buying center culture.

D) will probably not be an advantage in getting the new order.

E) will allow Hal to get the order even though his products do not meet the specifications.

Answer: D

Explanation: Since Hal cannot meet the new specifications, his existing relationship with the

buyer will not offer him any advantage.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) A(n) ________ occurs when the purchasing agent orders additional units of products that have

previously been purchased.

A) new buy

B) modified rebuy

C) straight rebuy

D) adapted buy

E) generic buy

Answer: C

Explanation: A straight rebuy occurs when the company is buying more of the same product it

has bought in the past.

Difficulty: 1 Easy

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) If a B2B customer is satisfied with an existing supplier, it will probably engage in a(n)

________ to purchase additional quantities of the item.

A) new buy

B) modified rebuy

C) adapted buy

D) straight rebuy

E) generic buy

Answer: D

Explanation: A straight rebuy occurs when the company is buying more of the same product it

has bought in the past.

Difficulty: 1 Easy

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) Yvonne uses her customer relationship management (CRM) system to predict when her

business customers will need more of her company's packaging materials. When she thinks a

customer should be ready to make another order, she contacts them. Yvonne is using CRM to

encourage customers to engage in a(n)

A) new buy.

B) modified rebuy.

C) adapted buy.

D) straight rebuy.

E) generic buy.

Answer: D

Explanation: A straight rebuy occurs when the company is buying more of the same product it

has bought in the past. This is what Yvonne is trying to encourage.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

93) Phillip put down the phone and told Alicia, "I just love that customer. I got another big order,

and they just keep on coming." Phillip is most likely selling to a firm in what kind of buying

situation?

A) new buy

B) modified rebuy

C) straight rebuy

D) generic buy

E) adapted buy

Answer: C

Explanation: A straight rebuy occurs when the company is buying more of the same product it

has bought in the past. It sounds like Phillip's customer places straight rebuy orders frequently.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) When a business customer engages in a straight rebuy, the member of the buying center most

likely to be involved in the purchase is the

A) decider.

B) initiator.

C) influencer.

D) user.

E) buyer.

Answer: E

Explanation: Straight rebuys occur when the buyer or buying organization simply buys

additional units of products that had previously been purchased.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

95) In established businesses, a large proportion of B2B purchases fall into the ________ category.

A) straight rebuy

B) new buy

C) adapted buy

D) modified rebuy

E) generic buy

Answer: A

Explanation: Straight rebuys occur when the buyer or buying organization simply buys

additional units of products that had previously been purchased. Many B2B purchases are likely to

fall in the straight rebuy category.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) The three types of buying situations

A) create confusion among B2B sellers.

B) suggest that B2B sellers should develop one marketing mix to use for all situations.

C) require business sellers to be consistent in their marketing mixes.

D) are theoretical and have little relation to what happens in the real world.

E) call for different marketing and selling strategies.

Answer: E

Explanation: The type of buying situation also affects the B2B decision process. Most B2B

buying situations can be categorized into three types: new buys, modified rebuys, and straight

rebuys. These varied types of buying situations can call for very different marketing and selling

strategies.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

97) The ________ situation usually involves more members of a buying center and involves more

time to complete than the other buying situations.

A) modified rebuy

B) new buy

C) adapted buy

D) straight rebuy

E) generic buy

Answer: B

Explanation: The new buy decision is generally the most complex since the organization does not

have experience with purchasing the product, nor any existing vendor relationships. For this

reason, the process often takes longer and involves a larger buying center.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) A(n) ________ situation in B2B marketing is similar to limited problem solving in the B2C

process.

A) adapted buy

B) new buy

C) modified rebuy

D) straight rebuy

E) generic buy

Answer: C

Explanation: In modified rebuys the buyers spend less time at each stage of the B2B buying

process, similar to limited decision making in the B2C process.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

99) For B2B salespeople, usually the easiest sale is a(n) ________ situation.

A) adapted buy

B) new buy

C) modified rebuy

D) straight rebuy

E) generic buy

Answer: D

Explanation: In straight rebuys, the buyer is often the only member of the buying center involved

in the process. Like a consumer's habitual purchase, straight rebuys often enable the buyer to

recognize the firm's need and go directly to the fifth step in the B2B buying process, skipping the

product specification, RFP process, proposal analysis, and supplier selection steps.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) The office policy and procedure states that any purchase requests that are $3,000 and over

must be given to Virginia Reynolds, who will obtain authorization from the chief financial officer.

Virginia serves as a(n) ________ in the buying center.

A) gatekeeper

B) decider

C) buyer

D) user

E) initiator

Answer: A

Explanation: The gatekeeper is the person who controls information or access, or both, to

decision makers and influencers.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

101) The president of the Northwoods University student body made a formal request to the IT

department for additional computers in the main computer lab. The student body president is the

________ in the buying center.

A) initiator

B) gatekeeper

C) decider

D) buyer

E) gateway

Answer: A

Explanation: The initiator is the first to suggest buying a particular product or service.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) The Northwoods University IT department is planning to buy additional computers for the

computer lab. Pedro Vechara, manager of the lab, is asked for a recommendation, and he suggests

buying Macintosh computers instead of Windows PCs. What role does Pedro play in the buying

center?

A) gatekeeper

B) influencer

C) decider

D) buyer

E) initiator

Answer: B

Explanation: An influencer is a person whose views influence other members of the buying

center in making the final decision.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

103) Rob Roberts founded Robertico, an equipment leasing company, three decades ago.

Although he is now in his seventies, he still has a "hands on" management style. His employees

have learned that there isn't much point in making purchase recommendations for new equipment,

because Rob is going to choose whatever he thinks is best regardless of their views. Robertico has

a(n) ________ buying center culture.

A) autocratic

B) democratic

C) consultative

D) consensus

E) bureaucratic

Answer: A

Explanation: An autocratic buying center may have multiple participants, but one person makes

the decision alone.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) A buying center that makes its decisions by majority vote is a(n) ________ buying center.

A) autocratic

B) democratic

C) consultative

D) consensus

E) bureaucratic

Answer: B

Explanation: A democratic buying center is one where the majority opinion is used to make the

purchase decision.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

105) The local skydiving team is buying new parachutes. The team's coach has invited all team

members to make recommendations, after which he will select the successful vendor. The

skydiving team's buying center has a(n) ________ organizational culture.

A) democratic

B) consultative

C) consensus

D) autocratic

E) bureaucratic

Answer: B

Explanation: A consultative buying center is one in which a single person makes the decision, but

first gets opinions from others before doing so.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) To maximize efficiency, farmers send their eggs to a ________ who handles sales and

shipments to supermarkets.

A) distributor

B) fabricator

C) contractor

D) trafficker

E) manufacturer

Answer: A

Explanation: A distributor buys products from manufacturers or producers, and then sells the

products to retailers.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

107) The chair of the board of the local Humane Society chose the bank where the organization

keeps its money; however, the office manager is the primary person who makes deposits, writes

checks, and balances the account every month. The office manager is the ________ in the buying

center for the bank account.

A) initiator

B) decider

C) gatekeeper

D) user

E) influencer

Answer: D

Explanation: The user is the person who consumes or uses the product or service.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) B2B partners often connect to each other on the Internet through special ________ designed

to facilitate information exchanges and transactions.

A) search engines

B) web masters

C) web portals

D) web routes

E) gatekeepers

Answer: C

Explanation: A web portal is an Internet site whose purpose is to be a major starting point for

users when they connect to the web. Specialized portals exist to facilitate B2B exchanges.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

109) A wholesaler is an example of a

A) reseller.

B) merchandiser.

C) reference group.

D) manufacturer.

E) retailer.

Answer: A

Explanation: Wholesalers, distributors, and retailers are all resellers.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) What type of B2B organization is a retail store such as T.J.Maxx?

A) Internet

B) institution

C) government

D) manufacturer

E) reseller

Answer: E

Explanation: Wholesalers, distributors, and retailers are all resellers.

Difficulty: 2 Medium

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

111) Which of the following details is(are) included in the order specification stage of the B2B

buying process?

A) prices and delivery dates

B) vendor performance assessment

C) the RFP

D) bids for supplying the required components or parts

E) reasons for choosing a selected vendor

Answer: A

Explanation: In the order specification stage, the buyer places an order that includes a detailed

description of the goods, prices, delivery dates, and in some cases, penalties for noncompliance.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) Firms typically repurchase office supplies (paper, ink cartridges, pens, etc.) through straight

rebuys on their supplier's website. Should an office supplies sales rep stay in close touch with his

or her current customers? Why or why not?

A) No; this is a waste of time since straight rebuys are straightforward and easy to handle.

B) No; the sales rep should be looking for new customers instead.

C) Yes; straight rebuys require a lot of the sales rep's assistance.

D) Yes; the sales rep might learn about a new opportunity in the need recognition stage.

E) Yes; history has shown that online reordering can't be trusted.

Answer: D

Explanation: While the sales rep probably doesn't need to be involved in the details of straight

rebuy orders, there are other reasons to stay involved. In particular, the sales rep might learn of

new opportunities just recognized by the firm and get an opportunity to win new business.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

113) Suppose that Volkswagen is preparing an RFP for a hands-free phone connection for a new

car model. All of the following would be included in the RFP except

A) a description of the required features for the device.

B) a time frame when the devices are needed.

C) specifications for connecting the device to the car.

D) a vendor analysis.

E) instructions for preparing proposals.

Answer: D

Explanation: Vendor analysis takes place after the vendor has been selected and has delivered

products; it is part of the final stage of the B2B buying process.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) Because they do so much driving while visiting doctors' offices and hospitals, pharmaceutical

sales representatives are often given company cars to drive. When a pharmaceutical company like

Merck is preparing to purchase new company cars, sales reps' feedback will be sought on car

models and features, but the final decision will be made by higher levels of management. What

role(s) do the sales reps play in the buying center?

A) users

B) initiators

C) influencers

D) users and influencers

E) users and initiators

Answer: D

Explanation: The sales reps offer feedback—which makes them influencers—and are also the

people who will drive the cars—which makes them users.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

115) Kim has just learned that Caribou Coffee is looking for a new source of commercial-grade

coffee makers, one of the products she sells. She knows Caribou has been in business for many

years, but she has not been able to get any business from them. When developing her marketing

strategy, Kim will probably assume that this represents a(n) ________ situation for Caribou

Coffee, and she will want to find out why Caribou is considering alternatives.

A) adapted buy

B) new buy

C) modified rebuy

D) straight rebuy

E) generic buy

Answer: C

Explanation: Caribou is apparently looking for a new supplier for a product it has purchased in

the past, which makes this a modified rebuy situation. Kim will want to find out why Caribou is not

simply executing a straight rebuy, since this will give her insight into the company's unmet needs.

In a modified rebuy, the buyer has purchased a similar product in the past but has decided to

change some specifications such as the desired price, quality level, customer service level, options,

and so forth.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

116) Normally, BC bottling company attaches plastic labels to its bottles. However, a new

regulation requires that the company now use fabric labels. To use this latest innovation, BC

bottling company must now source these fabric labels from another company. This is an example

A) a modified rebuy situation.

B) vendor analysis.

C) need recognition.

D) a straight rebuy situation.

E) an RFP.

Answer: C

Explanation: This new requirement has created a need, setting off the first stage in the B2B

buying process.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

117) CA Technologies, a firm providing software and services to information technology

departments, maintains a corporate blog. How can this blog help CA Technologies with B2B

marketing?

A) as a place to post responses to RFPs

B) by building brand awareness among potential customers

C) by simplifying vendor performance assessment

D) by streamlining purchasing and distribution

E) by matching buyers' requests and sellers' offers

Answer: B

Explanation: Blogs can be used to build awareness; posts can provide expert advice and create

awareness of the company and its offerings.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

118) LinkedIn is mainly used for ________ in the B2B marketplace.

A) requests for proposals

B) vendor evaluation

C) communication with customers

D) professional networking

E) competitive analysis

Answer: D

Explanation: The LinkedIn.com social network is mainly used for professional networking in the

B2B marketplace.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

119) Hinsdale High School has recently decided to sponsor a rugby team. It is in the process of

considering where to buy the uniforms. This purchase is a ________ situation.

A) straight rebuy

B) new buy

C) straight new buy

D) modified new buy

E) modified rebuy

Answer: B

Explanation: This is a new buy situation. In a new buy situation, a customer purchases a good or

service for the first time.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

120) Which step in the buying process is most likely to happen in a straight rebuy situation?

A) product specification

B) RFP process

C) need recognition

D) proposal analysis

E) supplier selection

Answer: C

Explanation: Straight rebuys often enable the buyer to recognize the firm's need and go directly

to the fifth step in the B2B buying process, skipping the product specification, RFP process, and

proposal analysis, and supplier selection steps.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

121) Jack owns a bike rental business at a resort destination. He is looking at the number of

upcoming bookings to the resort to help him figure out how many new bikes to purchase for next

season. What type of demand is he facing?

Answer: Demand for bike rentals will depend on demand for the resort destination. As such, Jack

faces derived demand.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

122) Michelin Tire Company produces a variety of tires at factories in South Carolina. Name three

B2B markets in which Michelin might sell its tires.

Answer: It would sell to automobile manufacturers, resellers including tire store chains, and

possibly to government through specialty military purchases.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

123) Walt used to sell cars at an automobile dealership. Now he sells repossession services to

automobile dealers. To be successful, what changes in the buying process will Walt have to adjust

to?

Answer: Walt has moved from B2C sales to B2B sales. In general, B2B sales are more formal

and structured. He will probably have to provide more information in writing, deal with different

types of buying centers, and respond to formal vendor analysis.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

124) Elaine is asked to create a vendor analysis process for a physician in private practice,

evaluating suppliers of products such as medical supplies. What should Elaine include in a formal

vendor analysis using metrics?

Answer: Answers should include the following metrics: delivery (based on promised delivery

date), quality customer service, and issue resolution.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

125) Create a realistic example of a B2B buying center, describing the different roles played by

members of the team.

Answer: Answers will vary, but should include the six roles: initiator, influencer, decider, buyer,

user, and gatekeeper.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

126) The buying center concept has parallels in business-to-consumer buying situations when

groups are making buying decisions. Describe a situation where a group of consumers will make a

purchasing decision and explain how consumer roles might mirror those in a buying center.

Answer: Students might choose a situation such as friends planning a vacation, a family buying a

car, or a purchase decision by a social organization. Roles of the initiator, influencer, decider,

buyer, and user should be relatively easy to chart. The gatekeeper role may be a bit more difficult.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

127) As a business-to-business marketer, would you prefer to market to a firm with an autocratic

or a consensus buying center culture, and why?

Answer: Students' responses will vary with their own preferences, but should explore the two

cultures to demonstrate variations in the kind and number of contacts that would be required, the

nature of the marketing challenge, and distinctions in the kinds of negotiations that might emerge.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

128) How are the B2B and B2C buying processes different?

Answer: The primary difference is the ultimate user of the service or product. The B2B buying

process tends to be more formal and structured than the B2C process and may include more

participants.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

129) How is vendor analysis different from a consumer's postpurchase evaluation?

Answer: Vendor analysis tends to be more formal and structured than a consumer's postpurchase

evaluation.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

130) Lance wants his company to consider using Vonage for VOIP telephone calls instead of its

existing telephone provider. He approaches his supervisor, the telecomm manager, and suggests

this change. Describe the role that Lance plays in the buying center concept.

Answer: Lance is the initiator, the person who first suggests buying the particular product or

service.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

131) When Lance proposed switching the company to Vonage for VOIP telephone calls, he had to

approach Debbie, assistant to the firm's head of the purchasing department, to find out how to

proceed. Everyone in the company knows that nothing gets purchased without going through

Debbie first. Explain Debbie's role in a buying center.

Answer: Debbie plays the role of gatekeeper, the person who controls information or access, or

both, to decision makers and influencers.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

132) The World Trade Organization creates proposals that are then discussed by more than 150

member countries and not approved until the proposal is agreeable to all. Describe the type of

organizational culture that exists in the WTO.

Answer: The WTO has a consensus organizational culture. In a consensus buying center, all

members of the team must reach a collective agreement that they can support a particular purchase.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

133) Why is it important for marketers to identify who plays which role in a buying center?

Answer: Identifying who plays which role in a buying center is important because it can save a

lot of time and it can avoid miscommunication. By identifying participant roles, marketers can

adjust their communications to meet the needs of each participant. Not knowing the roles of the

key players could even alienate the real decision maker.

Difficulty: 2 Medium

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) When Fulton University built its first dormitories, it hired a consulting engineer to advise the

university in choosing an architectural firm and contractor. For Fulton University, building its first

dormitories represented what kind of buying situation?

Answer: It represented a new buy situation, and involved many new issues and decisions. In a

new buy situation, a customer purchases a good or service for the first time, which means the

buying decision is likely to be quite involved because the buyer or the buying organization does

not have any experience with the item.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

135) Why is it important for sales representatives to know whether a potential business customer is

making a new buy or a modified rebuy decision?

Answer: A potential customer in a new buy situation will require more information and involve

more members of a buying center, while a modified rebuy situation will involve more comparison

of alternatives, and will probably involve a smaller buying center.

Difficulty: 3 Hard

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

136) Identify and give an example of each of the four B2B markets.

Answer: The four B2B markets are resellers, manufacturers and service providers, institutions,

and governments. Resellers may be wholesalers or distributors who buy products and then sell

them to retailers. Manufacturers buy raw materials, components, and parts that allow them to make

and market their own goods and ancillary services. Institutions are hospitals, educational

organizations, and religious organizations. In most countries, the central government is one of the

largest purchasers of goods and services.

Difficulty: 1 Easy

Topic: Buyer-seller Relationships

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) Define derived demand and give an example of how demand for B2B sales is often derived

from B2C sales.

Answer: Examples will vary, but students should explain that derived demand reflects the link

between consumers' demand for a company's output and the company's purchase of necessary

inputs to manufacture or assemble that particular output.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

138) Identify the four general types of organizational buying center cultures, and explain how

these may impact the approach taken by a salesperson.

Answer: The four types of organizational buying cultures are democratic, autocratic,

consultative, and consensus. As a salesperson, it is important to understand the different

organizational buying cultures as this may impact how and to whom information about your

product is presented. For an autocratic buying center, you may present to multiple participants but

will focus on just one person who will be making the decision. For a democratic buying center, the

salesperson will need to convince multiple people about the product/service, as the majority will

rule on the decision. A salesperson presenting to a consultative buying center will need to have

external facts to contribute to describing the product/service. Presenting to a consensus buying

center, the salesperson should find ways to help the buying center members to reach an agreement.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

139) Of the three buying situations, in which one is a salesperson most likely to be involved?

Answer: The salesperson is mostly likely to be involved in a new buy situation because the

buying organization lacks experience with the item and/or the company making the sale.

Difficulty: 1 Easy

Topic: B2B Buying Process

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

140) Francesca is a textbook company salesperson about to call on the Philadelphia School

District. She would like to know in advance whether the school district's buying center is

autocratic or democratic. What types of behavior might she observe that would help her to tell

which of these two types of buying centers it is? How should she change her sales approach

depending on which type it is?

Answer: In an autocratic buying center, there may be multiple participants but one person makes

the purchase decision alone. If Francesca can identify that person, she can focus information and

attention to the decision maker. In a democratic buying center, a majority vote or opinion will

likely determine which textbooks are adopted. In this environment, Francesca will need to address

each buying center member's concerns equally.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Analyze

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

141) Manufacturers like Volkswagen often have testing departments that test incoming parts and

supplies. The primary reason for these premanufacturing tests is to avoid using faulty materials in

the manufacturing process that can cause major problems later on. How might Volkswagen also

use these results in the business-to-business buying process?

Answer: There are a few possible answers—for example, if error rates are too high, product

specifications might be revised in the future to require higher quality parts and supplies; however,

the best answer is that these results are a vital part of vendor performance assessment.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Analyze

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

142) Imagine that you are a sales representative for IBM, selling consulting services. Which of the

four types of buying center cultures do you think it would be easiest to sell to? Using the

characteristics of the buying center culture you chose, explain why it was your choice, and how

you would approach selling to that type of buying center.

Answer: The student might select any of the four types of buying centers—autocratic,

democratic, consultative, or consensus. Some may believe that the autocratic type would be easiest

because the sales rep can focus heavily on the decider and allocate less time to other members of

the buying center.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) Suppose that six months ago, Levi Strauss & Co. began working with a new vendor for

zippers, snaps, and other hardware used on its jeans. Now the buying center wants to assess the

new vendor's performance. Describe how Levi Strauss & Co. might perform this assessment. Be

specific.

Answer: The student might model the assessment after the example in the text. The buying center

must decide on a set of criteria on which to evaluate the vendor. These will probably include

product quality, customer service, and promptness of delivery, but may include other things as

well. The team will want to prioritize these issues, possibly assigning each one a weight or

importance score. Then, the vendor should be evaluated on each of the criteria. If a total numeric

score is desired, the team could multiply individual criteria scores by the weighting factors and

then calculate the sum.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Create

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

144) Describe the four B2B markets and explain how their transactions differ.

Answer:

Manufacturers—buy raw materials, components, and parts that allow them to make and market

their own goods and services.

Resellers—marketing intermediaries that resell manufactured products without significantly

altering their form.

Institutions—hospitals, educational organizations, and religious organizations buy goods and

services to fulfill their needs.

Government—major purchaser of goods and services.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

145) Explain the advantages and disadvantages of using the RFP process, both for the buying

organization and the vendor.

Answer: Answers will vary, depending on whether the student has had any experience with

RFPs. Advantages for the buyer would include more control over communicating the

specifications to vendors and more competition among vendors, possibly leading to lower prices.

Disadvantages might be the time needed to create the RFP and to manage the responses to it. For

vendors, RFPs give them an opportunity to bid for a job that might otherwise not be available to

them, but an RFP can create a lot of extra work for a vendor, and it might be necessary to reduce

prices in order to be competitive.

Difficulty: 3 Hard

Topic: B2B Buying Process

Learning Objective: 07-02 List the steps in the B2B buying process.

Bloom's: Create

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

146) A team of people are brought together to purchase new pews for a church. Father Andrew has

been trying for years to get the church to buy new pews, so he is thrilled. Mrs. Swanson, Father

Andrew's longtime secretary, feels very strongly that the pews need to be made of maple to match

the old pews, and they need to have cushions for the older people. Everyone is a little afraid of Mrs.

Swanson because she manages Father Andrew closely and no one gets to him without her OK. Mr.

Jones called the meeting and is the chair of the committee, so he will ultimately choose which

pews they will purchase. Mrs. Leverett is the treasurer for the church and does all of the ordering.

Using the six categories of roles within the buying center, state which person is fulfilling each role.

Answer: Father Andrew is the initiator. Mrs. Swanson is the influencer and the gatekeeper. Mr.

Jones is the decider. Mrs. Leverett is the buyer. The parishioners are the users.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-03 Identify the roles within the buying center.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

147) Briefly describe the four types of buying centers and give an example of each.

Answer: In an autocratic buying center, though there may be multiple participants, one person

makes the decision alone, whereas the majority rules in a democratic buying center. Consultative

buying centers use one person to make a decision but solicit input from others before doing so.

Finally, in a consensus buying center, all members of the team must reach a collective agreement

that they can support a particular purchase. Examples will vary.

Difficulty: 3 Hard

Topic: Buying Center

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

148) Name three ways a B2B marketer can enhance customer relationships.

Answer: Blogs and social media can build awareness and are a great medium for providing

information. Web analytics, such as traffic on the website and the number of comments, can offer

tangible evaluations.

Difficulty: 3 Hard

Topic: Buyer-seller Relationships

Learning Objective: 07-04 Describe the different types of organizational cultures.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

149) What is a new buy, and what steps in the buying process does it typically go through?

Answer: In a new buy situation, a customer purchases a good or service for the first time, which

means the buying decision is likely to be quite involved because the buyer or the buying

organization does not have any experience with the item. In the B2B context, the buying center is

likely to proceed through all six steps in the buying process and involve many people in the buying

decision.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

150) Describe a straight rebuy situation, and explain how it differs from a modified rebuy.

Answer: Straight rebuys occur when the buyer or buying organization simply buys additional

units of products that had previously been purchased. In a modified rebuy, the buyer has purchased

a similar product in the past but has decided to change some specifications, such as the desired

price, quality level, customer service level, options, and so on.

Difficulty: 2 Medium

Topic: Buying Situations

Learning Objective: 07-05 Detail different buying situations.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

151) LinkedIn is well known for connecting businesspeople; as the largest network of business

professionals, with global reach, it counts approximately 530 million members, including at least

one executive from all of the Fortune 500 companies. Its promise for networking, whether

individually or for the company, is virtually unsurpassed. Such networking entails several key

groups. Describe these networking groups.

Answer: Answers will vary but should include descriptions of customers and prospective

customers, investors, suppliers, employees and prospective employees, and analysts.

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

152) Derived demand reflects the link between consumers' demand for a company's output and the

company's purchase of necessary inputs to manufacture or assemble that particular output. Provide

an example which demonstrates this concept.

Answer: Answers will vary, but should be similar to the example in the text that if more

customers want to purchase staplers (a B2C transaction), a company that produces them must

purchase more metal from its supplier to make additional staplers (a B2B transaction).

Difficulty: 2 Medium

Topic: B2B Buying Process

Learning Objective: 07-01 Describe the ways in which business-to-business (B2B) firms

segment their markets.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 8 Global Marketing

1) Firms would prefer to manufacture in a country that has a trade surplus, or a higher level of

exports than imports.

Answer: TRUE

Explanation: Firms would prefer to manufacture in a country that has a trade surplus, or a higher

level of exports than imports, because it signals a greater opportunity to export products to more

markets.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) The greater the wealth of a country, generally, the better the opportunity a firm will have in that

particular country.

Answer: TRUE

Explanation: The greater a country's wealth, the more buyers a market is likely to have who can

afford to purchase a company's products.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) The Big Mac Index is a measure of economic health in a country.

Answer: FALSE

Explanation: The Economist's Big Mac Index suggests that exchange rates should adjust to

equalize the cost of a basket of goods and services, wherever it is bought around the world.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) Cory wants information about the infrastructure in the countries his company is planning to

export to, so he should gather information about the transportation and communications

capabilities in each country.

Answer: TRUE

Explanation: Infrastructure is defined as the basic facilities, services, and installations needed for

a community or society to function, such as transportation and communications systems, water and

power lines, and public institutions such as schools, post offices, and prisons.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) Tariffs artificially lower prices and make goods more competitive.

Answer: FALSE

Explanation: Tariffs are intended to make imported goods more expensive and thus less

competitive with domestic products,

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) Among the various international trade agreements, the North American Free Trade Agreement

represents the highest level of integration across individual nations.

Answer: FALSE

Explanation: Comprised of 28 member countries, the European Union (EU) represents the

highest level of integration of any trade agreement.

Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions and International Organizations

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) The BRIC countries are Bolivia, Russia, Italy, and China.

Answer: FALSE

Explanation: The BRIC countries are Brazil, Russia, India, and China.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) Even as growth in its gross domestic product has slowed, China maintains a thriving retail

market, likely to reach the $8 trillion mark soon and surpass the United States as the world's

largest.

Answer: TRUE

Explanation: This is correct. China maintains a thriving retail market, likely to reach the $8

trillion mark soon and surpass the United States as the world's largest.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) India is one of the fastest-growing markets and has one of the youngest populations in the world.

Answer: TRUE

Explanation: With more than 1.2 billion people, or approximately 15 percent of the world's

population, together with expanding middle and upper classes, India is one of the world's

fastest-growing markets. India has one of the youngest populations in the world, with a median age

of 27.9 years.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) Brazil is characterized by strong upper and lower classes, but the middle class has declined in

recent years.

Answer: FALSE

Explanation: Brazil's impressive economic growth in the 21st century largely can be attributed to

the expansion of its literate population and the impositions of social programs that have allowed

more than half of the 201 million Brazilians to enter the middle class.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) Russia lags behind most European countries in use of the Internet.

Answer: FALSE

Explanation: The number of Russian Internet users, presently at 83 million, is growing at a rate of

approximately 10 percent annually, and is already Europe's largest Internet market.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) Global expansion often begins when a firm receives an order for its product or service from

another country.

Answer: TRUE

Explanation: The receipt of an order from a foreign country is a common beginning of global

expansion for firms.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) Exporting refers to a situation where a company maintains ownership of its plants, operational

facilities, and offices in a foreign country in which it sells its products.

Answer: FALSE

Explanation: Exporting means producing goods in one country and selling them in another. This

entry strategy requires the least financial risk but also allows for only a limited return to the

exporting firm.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) In a joint venture, the burden of ownership, control, and profits is not shared.

Answer: FALSE

Explanation: A joint venture is formed when a firm entering a market pools its resources with

those of a local firm. As a consequence, ownership, control, and profits are shared. In addition to

sharing financial burdens, a local partner offers the foreign entrant greater understanding of the

market and access to resources such as vendors and real estate.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) Entering into a global franchise agreement exposes a company to higher risk than if the

company had entered into direct investment in the country.

Answer: FALSE

Explanation: Franchising is a contractual agreement between a firm, the franchisor, and another

firm or individual, the franchisee. In a global franchising agreement, this entails lower risks and

requires less investment than if entering into direct investment in a country.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) There is only one global product strategy: to sell a product or service similar to that sold in the

home country, but include minor adaptations.

Answer: FALSE

Explanation: There are three potential global product strategies: to sell the same product or

service in both the home country and the host country, to sell a product or service similar to that

sold in the home country but include minor adaptations, and to sell totally new products or services

in the host country.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) An effective global pricing strategy can be easily established by setting the same prices in

every market around the world.

Answer: FALSE

Explanation: Determining the selling price in the global marketplace is an extremely difficult

task. Many countries still have rules governing the competitive marketplace, including those that

affect pricing.

Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

18) Glocalization refers to a global marketing strategy in which each of the four Ps is customized

for each country.

Answer: FALSE

Explanation: One of the three potential global product strategies, glocalization refers to the

selling of the same product or service in both the home-country market and the host country.

Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

19) To maximize potential, segments and target markets can and should be defined by more than

just geography.

Answer: TRUE

Explanation: This is correct. Just as firms adjust their products and services to meet the needs of

national target markets, they must alter their marketing mix to serve the needs of global markets.

Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) In most European countries retailers can't sell below cost, and in others they can't advertise

"before" prices if the product hasn't been sold at that price for two weeks.

Answer: TRUE

Explanation: Many countries still have rules governing the competitive marketplace, including

those that affect pricing. For example, in most European countries retailers can't sell below cost,

and in others they can't advertise "before" prices if the product hasn't been sold at that price for two

weeks.

Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions and International Organizations

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

21) Firms with global appeal can run global advertising campaigns and simply translate the

wording in the advertisements and product labeling.

Answer: TRUE

Explanation: Many products and services serve the same needs and wants globally with little or

no adaptation in their form or message.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) Global distribution networks that involve wholesalers, exporters, importers, and different

transportation systems generally lower costs and prices for products.

Answer: FALSE

Explanation: Global distribution networks form complex value chains that involve wholesalers ,

exporters, importers, and different transportation systems. These additional intermediaries

typically add cost and ultimately increase the final selling price of a product.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) The number of firms with which the seller needs to deal to get its merchandise to the consumer

determines the complexity of a

A) global communication strategy.

B) channel.

C) currency exchange policy.

D) home-country market.

E) product strategy plan.

Answer: B

Explanation: The number of firms with which the seller needs to deal to get its merchandise to the

consumer determines the complexity of a channel. In most developing countries, manufacturers

must go through many types of distribution channels to get their products to end users.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) Cultural differences such as food preferences, language, and religion also play a role in

A) STP strategy.

B) domestic marketing strategy.

C) product strategy planning.

D) global communication strategy.

E) global marketing strategy.

Answer: C

Explanation: Cultural differences such as food preferences, language, and religion also play a

role in product strategy planning.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

25) ________ offers the firm complete control over its operations in the foreign country.

A) A joint venture

B) Franchising

C) A strategic alliance

D) Exporting

E) Direct investment

Answer: E

Explanation: Direct investment requires a firm to maintain 100 percent ownership of its plants,

operation facilities, and offices in a foreign country, often through the formation of wholly owned

subsidiaries.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) Globalization refers to the processes by which goods, services, capital, people, information,

and ideas

A) are onshored and offshored.

B) flow across national borders.

C) are integrated through IMF facilitation.

D) are similar in various markets.

E) affect corporate culture.

Answer: B

Explanation: Goods, services, capital, people, information, and ideas can all flow across national

boundaries due to globalization.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) The components of global market assessment include all of the following except

A) ethnic analysis.

B) infrastructure and technological analysis.

C) analysis of government actions.

D) sociocultural analysis.

E) economic analysis.

Answer: A

Explanation: The four components of a global market assessment are economic analysis,

infrastructure and technological analysis, an analysis of governmental actions or inactions, and

sociocultural analysis, and.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) Christopher is gathering information about the general economic environment in Nepal. In

doing so, he will look for information about the general economic environment, market size and

population growth rate, and

A) culture.

B) real income.

C) airport capabilities.

D) political status.

E) religious institutions.

Answer: B

Explanation: A firm conducting an economic analysis of a country market must look at three

major economic factors, using well-established metrics: the general economic environment, the

market size and population growth rate, and real income.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

29) To determine the market potential for its particular product or service, a firm should use

A) GDP data.

B) unemployment data.

C) purchasing power parity data.

D) inflation data.

E) as many metrics as it can obtain.

Answer: E

Explanation: The market potential for a firm depends on many variables and no one metric can

offer a complete picture of the economic environment in a country. To determine the market

potential for its particular product or service, a firm should use as many metrics as it can obtain.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) Manufacturers would prefer to produce in a country with a trade ________, because it signals

a greater opportunity to export products to more markets.

A) surplus

B) deficit

C) discrepancy

D) bonus

E) balance

Answer: A

Explanation: Firms would prefer to manufacture in a country that has a trade surplus, or a higher

level of exports than imports, because it signals a greater opportunity to export products to more

markets.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) The most common measure of market potential of an economy is a country's

A) GNI.

B) GDP.

C) PPP.

D) CPI.

E) APR.

Answer: B

Explanation: Gross domestic product (GDP), the most widely used of these metrics, is defined as

the market value of the goods and services produced by a country in a year.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) GDP is defined as

A) the value of a country's exports minus its imports.

B) the difference between two country's exchange rates.

C) the market value of goods and services produced in a country in a year.

D) national income minus national taxes.

E) the gross purchasing power of domestic goods and services plus international income.

Answer: C

Explanation: The most common way to gauge the size and market potential of an economy, and

therefore the potential the country has for global marketing, is to use standardized metrics of

output. Gross domestic product (GDP), the most widely used of these metrics, is defined as the

market value of the goods and services produced by a country in a year.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) Gross national income (GNI) consists of GDP

A) minus net consumer spending.

B) plus government spending on international trade.

C) minus purchasing power parity.

D) plus the net income earned from investments abroad (minus any payments made to

nonresidents who contribute to the domestic economy).

E) plus gross domestic international investment.

Answer: D

Explanation: Gross national income (GNI) consists of GDP plus the net income earned from

investments abroad (minus any payments made to nonresidents who contribute to the domestic

economy).

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) The Big Mac Index is a novel measure of

A) GDP.

B) purchasing power parity.

C) per capita GNI.

D) economic growth.

E) international trade surplus.

Answer: B

Explanation: A novel metric that employs purchasing power parity (PPP) to assess the relative

economic buying power among nations is The Economist's Big Mac Index, which suggests that

exchange rates should adjust to equalize the cost of a basket of goods and services, wherever it is

bought around the world.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) According to purchasing power parity theory, if ________ is(are) in equilibrium, products will

cost the same in each country.

A) imports and exports

B) consumer spending

C) interest rates

D) domestic products

E) exchange rates

Answer: E

Explanation: The purchasing power parity (PPP) theory states that if exchange rates of two

countries are in equilibrium, a product purchased in one will cost the same in the other, if

expressed in the same currency.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) Economic measures like GDP and GNI do not fully account for a country's economic health

because they measure only

A) material output.

B) international trade.

C) global expectations.

D) purchasing power parity.

E) poverty potential.

Answer: A

Explanation: These metrics help marketers understand the relative wealth of a particular country,

though they may not give a full picture of the economic health of a country because they are based

solely on material output.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) Today, many developed countries are experiencing ________ population growth.

A) slight

B) zero or negative

C) rapid

D) moderate

E) significant

Answer: B

Explanation: In general, developed countries are experiencing zero or negative population

growth, while most less developed nations are experiencing rapid population growth.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) Colin is working on a global marketing assessment team looking out well into the future to

help determine the most attractive market areas around the world. He is evaluating market sizes

and growth rates. Based on population growth rates in different regions, he should consider that

A) countries with high purchasing power today may not continue to show the same growth in the

future.

B) the United States and Western Europe will have dramatic increases in population growth

leading to overcrowding.

C) the middle class in India will continue to shrink as the rich get richer and the poor get poorer.

D) in places like India, urban population centers will become increasing unattractive and the rural

areas will experience major growth in population.

E) the global population is expected to grow at staggering rates indefinitely.

Answer: A

Explanation: Today, developed countries are experiencing zero or no population growth, while

most less developed nations are experiencing rapid population growth. The countries with the

highest purchasing power today may become less attractive in the future for many products and

services because of stagnated growth.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

39) The shift of population from rural to urban areas in countries such as India helps global

marketers by

A) decreasing pollution.

B) simplifying the supply chain needed to make goods and services available.

C) increasing the human development index.

D) decreasing competition for intellectual capital.

E) increasing nonmaterial GDP output.

Answer: B

Explanation: Long supply chains, in which goods pass through many hands, are often necessary

to reach rural populations in less developed countries and therefore add to the products' cost.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) When considering global marketing opportunities in Bangladesh, Thomas asked the question,

"How will we get it there?" Thomas is concerned about ________ capabilities in Bangladesh.

A) production capacity

B) pricing

C) advertising

D) infrastructure

E) cultural

Answer: D

Explanation: Transportation—or "How will we get it there?"—is one aspect of infrastructure.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

41) As part of efforts to stimulate economic development in Africa, the Gates Foundation

announced that it would provide cellular phones to farmer cooperatives. The Gates Foundation

recognized that problems in ________ exist in many African markets.

A) transportation

B) communication

C) distribution

D) commerce

E) population

Answer: B

Explanation: Communication is one aspect of infrastructure analysis. The communications

system, particularly media access, must be sufficiently developed to allow consumers to find

information about the products and services available in the marketplace.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) When Len evaluated the commercial infrastructure in Mauritius, he considered the island's

A) population control measures.

B) legal, banking, and regulatory systems.

C) retailing capabilities.

D) per capita income estimates.

E) climate and culture.

Answer: B

Explanation: The commercial infrastructure consists of systems—including legal, banking, and

regulatory systems—that allow markets to function.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Changes in tariffs and quotas are

A) business actions stimulating imports.

B) corporate strategies designed to maximize profits.

C) government actions that reduce competition from international firms.

D) efforts to stimulate choices among government agencies.

E) a means of slowing outsourcing.

Answer: C

Explanation: Tariffs and quotas are among the levers governments can activate to protect

domestic firms from foreign competition. A tariff, also called a duty, is a tax levied on a good

imported into a country, and a quota designates a minimum or maximum quantity of a product that

may be brought into a country during a specified time period.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) Tariffs protect domestic producers by

A) making imported products more expensive.

B) increasing brand recognition.

C) reducing the cost of production.

D) offering subsidies to exports.

E) avoiding regulation.

Answer: A

Explanation: A tariff, also called a duty, is a tax levied on a good imported into a country. In most

cases, tariffs are intended to make imported goods more expensive and thus less competitive with

domestic products, which in turn protects domestic industries from foreign competition.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) In most cases, countries use tariffs to reduce foreign competition, but tariffs are also used

A) to shorten supply chains.

B) as a response to perceived unfair trade practices.

C) to offer domestic discounts.

D) to stimulate consumer demand.

E) as a way to equalize quotas.

Answer: B

Explanation: A tariff, also called a duty, is a tax levied on a good imported into a country. In most

cases, tariffs are intended to make imported goods more expensive and thus less competitive with

domestic products, which in turn protects domestic industries from foreign competition. In other

cases, tariffs might be imposed to penalize another country for trade practices that the home

country views as unfair.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) A ________ limits the quantity of imported merchandise, thus minimizing competition faced

by domestic products.

A) tariff

B) duty

C) trading bloc

D) trade agreement

E) quota

Answer: E

Explanation: A quota designates a minimum or maximum quantity of a product that may be

brought into a country during a specified time period.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) When ________ are reduced, it is meant to bolster foreign trade.

A) comparative inflation rates

B) countertrade exchanges

C) quotas

D) tariffs

E) currency exchange rates

Answer: D

Explanation: When tariffs are reduced, it is meant to bolster foreign trade. For example, in 2017

many U.S. companies announced new deals with China totaling $250 billion. Later that year China

cut tariffs on U.S. consumer goods and medicine by almost 10 percent, indicating China wanted to

open up its markets more to American companies.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) When the value of the dollar declines in relation to other currencies, it benefits U.S. marketers

who

A) export goods to other countries.

B) import goods from other countries.

C) engage in countertrade.

D) enforce import quotas.

E) outsource labor.

Answer: A

Explanation: When the dollar falls, it has an effect on U.S. firms' ability to conduct global

business. Buyers in other countries find the costs of U.S. goods and services to be much lower than

they were before making exporting to other countries beneficial.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) All of the following are major trade agreements affecting global marketing except

A) NAFTA.

B) EU.

C) GNI.

D) ASEAN.

E) CAFTA.

Answer: C

Explanation: The GNI is the gross national income, a measure of a country's economic output.

The others are trade agreements.

Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions and International Organizations

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) Marketers considering operations and trade with a specific country must consider whether or

not the country belongs to a trading bloc. A trading bloc is a group of countries

A) that have established a formal agreement to manage trade activities.

B) using the same currency.

C) with similar cultural shopping patterns.

D) located next to each other.

E) with similar political views.

Answer: A

Explanation: A trading bloc consists of countries that have signed a cooperative trade agreement.

Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions and International Organizations

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) Which of these trade agreements represents the highest level of integration among

participating nations?

A) NAFTA

B) EU

C) GNI

D) ASEAN

E) CAFTA

Answer: B

Explanation: The European Union (EU) represents the highest level of integration.

Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions and International Organizations

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) Global businesses often find it particularly difficult to understand the ________ of a country's

culture.

A) symbols

B) underlying values

C) ceremonies

D) exhibited behavior

E) visible artifacts

Answer: B

Explanation: While symbols, ceremonies, and behavior are visible artifacts of a culture, the

underlying values (thought processes, beliefs, and assumptions) can be more difficult to observe

and understand.

Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions and International Organizations

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) Michael laughed at some of the cultural mistakes companies made in advertising and

promotion in international trade while he was in school. Now he was trying to determine what had

gone wrong with the campaign he had planned in Latin America for his company's product, and it

didn't seem quite as amusing. He narrowed the issues to sociocultural factors. He was looking at

both ________ and ________.

A) product uses; currency rates

B) language; trading blocs and social structure

C) potential tariffs; symbols

D) visible artifacts; underlying values

E) verbal communication; logistics

Answer: D

Explanation: Sociocultural factors include visible artifacts like symbols and dress; they also

include underlying values that can be more difficult to understand. Some of the other answers list

one sociocultural factor (language, symbols, verbal communication) along with something that is

not a sociocultural factor.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) Geert Hofstede's cultural dimensions concept focuses on six dimensions of ________ in a

country.

A) symbols

B) underlying values

C) buying patterns

D) personality

E) visible artifacts

Answer: B

Explanation: Hofstede's cultural dimensions attempt to classify underlying cultural values along

six dimensions.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

55) All of the following are included in Hofstede's cultural dimensions except

A) power distance.

B) certainty assurance.

C) masculinity.

D) individualism.

E) time orientation.

Answer: B

Explanation: Hofstede's six dimensions are power distance, uncertainty avoidance,

individualism, masculinity, time orientation, and indulgence.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) Marketers sometimes use Hofstede's cultural dimensions to design marketing campaigns

A) with low individualism symbolism when confronted with a time-oriented culture.

B) that use uncertainty avoidance to reduce power distance.

C) with significant power distance.

D) consistent with underlying cultural values in a country.

E) with more consistent time orientation.

Answer: D

Explanation: Marketers analyze cultures using Hofstede's six dimensions to help them to design

culturally appropriate marketing plans based on underlying cultural values. Hofstede's cultural

dimensions offer a foundation for most research into culture.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

57) Culture affects

A) how consumers decide to make their purchases.

B) what consumers decide to purchase.

C) when consumers decide to make their purchases.

D) where consumers decide to make their purchases.

E) every aspect of consumers' purchase decisions.

Answer: E

Explanation: Culture affects every aspect of consumer behavior: why people buy; who is in

charge of buying decisions; and how, when, and where people shop.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) Generally, firms entering foreign markets begin with

A) less risky strategies first.

B) direct investment.

C) importing.

D) decentralized production.

E) the riskiest, but most profitable endeavor.

Answer: A

Explanation: Many firms follow a progression in which they begin with less risky strategies to

enter their first foreign markets and move to increasingly risky strategies as they gain confidence

in their abilities and more control over their operations,

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

59) When entering a foreign market, the least risky strategy is

A) franchising.

B) exporting.

C) joint venture.

D) direct investment.

E) strategic alliance.

Answer: B

Explanation: Exporting means producing goods in one country and selling them in another. This

entry strategy requires the least financial risk. Global expansion often begins when a firm receives

an order for its product or service from another country, in which case it faces little risk because it

has no investment in people, capital equipment, buildings, or infrastructure.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) Global expansion often begins with

A) franchising.

B) exporting of goods.

C) joint ventures.

D) direct investment.

E) strategic alliances.

Answer: B

Explanation: Global expansion often begins when a firm receives an order for its product or

service from another country, in which case it faces little risk because it has no investment in

people, capital equipment, buildings, or infrastructure.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

61) Many of the best-known American retailers, like Starbucks and McDonald's, have contractual

agreements with another firm or individuals, allowing its businesses to operate overseas. These

companies expanded globally using

A) franchising.

B) exporting.

C) joint ventures.

D) direct investment.

E) strategic alliances.

Answer: A

Explanation: Franchising is a contractual agreement between a firm, the franchisor, and another

firm or individual, the franchisee. A franchising contract allows the franchisee to operate a

business—a retail product or service firm or a B2B provider—using the name and business format

developed and supported by the franchisor. Fast-food restaurant chains are one category in which

franchising is widely used.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Gerry is assessing global entry strategies for his gourmet sandwich business. He does not want

to take a lot of risk and he is willing to limit his control of international stores. Gerry will most

likely use a(n) ________ strategy.

A) franchising

B) exporting

C) joint venture

D) direct investment

E) strategic alliance

Answer: A

Explanation: Exporting is the lowest-risk strategy; however, for a food service business it

probably makes more sense to use franchising, another relatively low-risk global expansion

strategy. Franchising is a contractual arrangement between two companies, allowing one to use the

name and business format developed and supported by the other.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

63) Domestic firms developing a global entry strategy might consider franchising; however, the

disadvantages need to be considered. All of the following are disadvantages of franchising except

A) The franchisor has limited control over the market operations in a foreign country.

B) The franchisee might end up becoming a competitor.

C) Franchising limits profit potential, since profits will have to be split with the franchisee.

D) Franchising is the riskiest way to enter a foreign market.

E) The franchisee might break away.

Answer: D

Explanation: Franchising is actually among the lower-risk global expansion strategies.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) When a firm pools its resources with that of a local firm to enter a new market, they create a(n)

A) franchise.

B) export promotion.

C) joint venture.

D) direct investment.

E) strategic alliance.

Answer: C

Explanation: A joint venture is formed when a firm entering a market pools its resources with

those of a local firm. As a consequence, ownership, control, and profits are shared. In addition to

sharing financial burdens, a local partner offers the foreign entrant greater understanding of the

market and access to resources such as vendors and real estate.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

65) India, like some other countries, may require entering firms to create ________ when

expanding into their markets, limiting outsiders' control of businesses.

A) franchises

B) export promotions

C) joint ventures

D) direct investments

E) strategic alliances

Answer: C

Explanation: A joint venture is formed when a firm entering a market pools its resources with

those of a local firm. As a consequence, ownership, control, and profits are shared. In addition to

sharing financial burdens, a local partner offers the foreign entrant greater understanding of the

market and access to resources such as vendors and real estate.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Of the five strategies for entering new markets, direct investment creates the

A) least investment cost.

B) greatest potential risk.

C) most franchisee control.

D) best opportunity for strong strategic alliances.

E) greatest coordination of efforts of global and local partners.

Answer: B

Explanation: Direct investment requires a firm to maintain 100 percent ownership of its plants,

operation facilities, and offices in a foreign country, often through the formation of wholly owned

subsidiaries. This entry strategy requires the highest level of investment and exposes the firm to

significant risks, including the loss of its operating and/or initial investments.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

67) NCD Company wants to expand into the Mexican market. It has the financial resources, wants

to control business operations, and has had considerable success marketing to Hispanics in the

United States. NCD will likely use ________ to expand into the Mexican market.

A) franchising

B) exporting

C) a joint venture

D) direct investment

E) a strategic alliance

Answer: D

Explanation: Direct investment is a market entry strategy in which the firm directly owns

property and equipment in the foreign market. NCD has the resources and experience necessary

for a firm contemplating direct investment; in addition, direct investment offers NCD the control

of business operations that it seeks.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) Global segmentation, targeting, and positioning (STP) are more complicated than local STP, in

part because

A) consumers may view their roles differently in different countries.

B) there are fewer franchising opportunities in global markets.

C) global consumer markets are almost totally homogeneous, making segmentation difficult.

D) most governments have rules against targeting consumers.

E) positioning almost always fails when attempted in a foreign country.

Answer: A

Explanation: Global segmentation, targeting, and positioning (STP) are more complicated than

domestic STP for several reasons. First, firms considering a global expansion have much more

difficulty understanding the cultural nuances of other countries. Second, subcultures within each

country also must be considered. Third, consumers often view products and their role as

consumers differently in different countries.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) As noted in your text, global segmenting, targeting, and positioning are more complicated than

domestic segmenting and positioning because of cultural nuances, significant subcultures within

countries, and

A) currency differences.

B) antidiscrimination regulations prohibiting segmentation and targeting in developing countries.

C) differences in the way consumers see themselves and in the way they see products and services.

D) complications due to franchising issues.

E) the taxes imposed by some foreign countries on marketing activities.

Answer: C

Explanation: Global segmentation, targeting, and positioning (STP) are more complicated than

domestic STP for several reasons. First, firms considering a global expansion have much more

difficulty understanding the cultural nuances of other countries. Second, subcultures within each

country also must be considered. Third, consumers often view products and their role as

consumers differently in different countries.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) Cultural nuances, subcultures, and consumers' different views of their roles in different

countries can make ________ complicated.

A) purchasing power parity

B) segmentation, targeting, and positioning

C) trading bloc coordination

D) exchange control planning

E) reducing trade surpluses

Answer: B

Explanation: Global segmentation, targeting, and positioning (STP) are complicated because

differences in country culture, politics, or the economy may lead consumers to view their roles

differently, and these differences can be hard for an entering company to understand.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

71) Which of the following statements regarding global segmentation, targeting, and positioning is

true?

A) Companies must continually adjust products and marketing strategies to meet the changing

needs of global markets.

B) Global segmentation, targeting, and positioning activities are far less complicated than the same

activities in the domestic market.

C) When developing a global STP strategy, it is best to define segments by geography alone.

D) Segmentation, targeting, and positioning activities for global markets do not differ substantially

from that of domestic markets.

E) The "golden rule" for global STP activities for firms is to never alter a firm's marketing mix to

serve the needs of global markets.

Answer: A

Explanation: Global segmentation, targeting, and positioning (STP) activities are more

complicated than domestic STP. Companies must continually monitor economic and social trends

to protect their position within the market and adjust products and marketing strategies to meet the

changing needs of global markets.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) Which of the following are the two components of a global marketing strategy?

A) understanding foreign currency fluctuations and developing products that can be priced

accordingly

B) determining which target markets to pursue and developing a marketing mix to obtain a

competitive advantage

C) understanding the supply chain and distribution networks in foreign markets

D) developing culturally appropriate advertising messages and cultivating "domestic" habits

among foreign consumers

E) adapting to foreign regulations and targeting as many people as possible

Answer: B

Explanation: Just like any other marketing strategy, a global marketing strategy includes two

components: determining the target markets to pursue and developing a marketing mix that will

sustain a competitive advantage over time.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) The most important consideration when a firm chooses a global product strategy should be

A) opportunities for countertrade.

B) the effectiveness of the marketing team.

C) the needs of the target market.

D) the overall cost of the strategy.

E) WTO regulations.

Answer: C

Explanation: Just as with domestic marketing, all global marketing decisions should consider the

needs of the target market.

Difficulty: 1 Easy

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Tariffs, quotas, antidumping laws, and currency exchange policies affect global

A) offshore product design.

B) pricing strategies.

C) advertising.

D) logistics.

E) promotion.

Answer: B

Explanation: Tariffs, quotas, antidumping laws, and currency exchange policies are all

important issues that will impact the price consumers will pay for a product.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

75) Global pricing strategies should strive to be consistent with

A) offshore distribution facilities.

B) the cost of materials.

C) positioning strategies.

D) domestic pricing.

E) trade surplus guidelines.

Answer: C

Explanation: Competitive factors influence global pricing in the same way they do home country

pricing, but because a firm's products or services may not have the same positioning in the global

marketplace as they do in their home country, market prices must be adjusted to reflect the local

pricing structure.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) Global marketers are under constant pressure to simplify distribution channels in order to

A) improve promotion efficiency.

B) reduce trade deficits.

C) afford tariffs.

D) meet trade agreement guidelines.

E) reduce costs.

Answer: E

Explanation: Global distribution networks form complex value chains that involve wholesalers,

exporters, importers, and different transportation systems. These additional intermediaries

typically add cost and ultimately increase the final selling price of a product. As a result of these

cost factors, constant pressure exists to simplify distribution channels wherever possible.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

77) Global marketers typically find distribution in developing countries is more complex because

A) they must go through many different types of distribution channels.

B) distribution is more heavily regulated in developing countries.

C) most consumers in developing countries live in densely populated cities.

D) the infrastructure is more advanced in most developing countries.

E) consumers in developing countries have very specific preferences.

Answer: A

Explanation: The number of firms with which the seller needs to deal to get its merchandise to the

consumer determines the complexity of a channel. In most developing countries, manufacturers

must go through many types of distribution channels to get their products to end users.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) Gary had developed an extremely successful advertising and promotion campaign for a client

in the United States. The client wanted to roll out the same campaign to markets worldwide, but

Gary cautioned against doing this, most likely because

A) differences in languages, customs, and culture might make the campaign meaningless and

ineffective in some markets.

B) copyright and intellectual property concerns prevented him from wanting to share his good

ideas outside of the U.S. market.

C) he had not applied for or received international certification that was required for working

outside the United States.

D) he was unfamiliar with the code of ethics for advertising in other countries.

E) he did not have the budget for a global rollout.

Answer: A

Explanation: When designing communication strategies for global markets, differences in

languages, customs, and culture must be carefully considered. A campaign that works well in one

country might be ineffective or even offensive in another.

Difficulty: 3 Hard

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Communication

Accessibility: Keyboard Navigation

79) Referred to as ________, some firms standardize their products globally but use different

promotional campaigns to sell them.

A) glocalization

B) globalization

C) adaption

D) global communication strategy

E) marketing applications

Answer: A

Explanation: Referred to as glocalization, some firms standardize their products globally but use

different promotional campaigns to sell them. For example, the original Pringles potato chip

product remains the same globally, as do the images and themes of the promotional campaign,

with limited language adaptations for the local markets, although English is used whenever

possible. However, the company does change Pringles' flavors in different countries.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) Brands can be extremely valuable domestically, but challenging internationally. Companies

can help overcome language difficulties in using brands by

A) keeping the brand name the same in all languages, regardless of meanings, as long as the brand

logo and symbol are displayed prominently.

B) avoiding the use of the brand name in advertising and focusing on feature and benefits.

C) translating advertising copy for the entire ad except the brand name.

D) developing brand names that have no preexisting meaning in any known language.

E) adhering to the UN Convention on Naming Rights.

Answer: D

Explanation: To avoid the potential embarrassment that language confusion can cause, firms

spend millions of dollars to develop brand names that have no preexisting meaning in any known

language, such as Accenture (a management consulting firm) or Avaya (a subsidiary of Lucent

Technologies, formerly Bell Labs).

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

81) Which of the following is one of the global entry strategies?

A) direct investment

B) countertrade

C) offshoring

D) infrastructure development

E) trade agreements

Answer: A

Explanation: Direct investment is one of the global entry strategies.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) When a company decides to minimize risk and enter a global market by shipping its products

to buyers in other countries, this is known as

A) exporting.

B) franchising.

C) a strategic alliance.

D) a joint venture.

E) direct investment.

Answer: A

Explanation: Exporting means producing goods in one country and selling them in another. This

entry strategy requires the least financial risk but also allows for only a limited return to the

exporting firm.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) Which of the following best describes the direct investment global entry strategy?

A) With direct investment, a firm maintains total ownership of its plants, operation facilities, and

offices in a foreign country.

B) Direct investment occurs when a firm enters a new market by pooling its resources with those

of a local firm to form a new company in which ownership, control, and profits are shared.

C) Direct investment refers to depositing payroll funds in a foreign bank.

D) Direct investment designates the maximum quantity of a product that may be brought into a

country during a specified time period.

E) Direct investment occurs when a producer sells its offering in a foreign market at a price less

than its production cost.

Answer: A

Explanation: Direct investment requires a firm to maintain 100 percent ownership of its plants,

operation facilities, and offices in a foreign country, often through the formation of wholly owned

subsidiaries.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) The term trade deficit refers to

A) a country that exports more goods than it imports.

B) an indicator of the quality of life in a country.

C) a level of population growth that impacts exports.

D) the sum of all goods and services handled in a country.

E) higher levels of imports than exports.

Answer: E

Explanation: A trade deficit refers to a situation where a country imports more goods than it

exports.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

85) When shopping for a car you notice a significant price gap between domestic and imported

cars, with the imported cars being much more expensive. This could be the result of

A) a tariff.

B) a boycott.

C) overseas consolidation.

D) globalization.

E) franchising.

Answer: A

Explanation: A tariff, also called a duty, is a tax levied on a good imported into a country. In most

cases, tariffs are intended to make imported goods more expensive and thus less competitive with

domestic products, which in turn protects domestic industries from foreign competition.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) When entering into a franchise agreement, what term is used to refer to the firm that is granted

the right to operate a business using the franchise name and business concept?

A) franchisee

B) franchisor

C) franchise agent

D) franchise partner

E) franchised owner

Answer: A

Explanation: Franchising is a contractual agreement between a firm, the franchisor, and another

firm or individual, the franchisee. The franchisee can operate a business using the name and

business format developed and supported by the franchisor.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) Which of the following statements best describes global expansion through a strategic

alliance?

A) In a strategic alliance, a firm enters a new market and forms a new company with shared

ownership, profits, and controls.

B) A strategic alliance is a relationship in which two firms collaborate on a business opportunity,

but do not invest in each other.

C) In a strategic alliance, two firms enter into a franchise agreement.

D) In a strategic alliance, a firm in one country sends products to a firm in another country.

E) In a strategic alliance, a firm signs a trade agreement with a firm in another country.

Answer: B

Explanation: Strategic alliances refer to collaborative relationships between independent firms,

though the partnering firms do not create an equity partnership; that is, they do not invest in one

another.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) The XYZ Company is collaborating with a competitor on a globally based opportunity for

mutual benefit, but the two competitors are not investing in one another. This is an example of

A) franchising.

B) a joint venture.

C) a strategic alliance.

D) a direct investment.

E) an equity partnership.

Answer: C

Explanation: Strategic alliances refer to collaborative relationships between independent firms,

though the partnering firms do not create an equity partnership; that is, they do not invest in one

another.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

89) The United States imports more goods from China than it exports to China. This is known as

A) gross national income (GNI).

B) a trade surplus.

C) gross domestic product (GDP).

D) a trade deficit.

E) an import imbalance.

Answer: D

Explanation: A trade deficit means that a country imports more goods than it exports.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) When Ford Motor Company decided to sell the Fiesta—in the same form and design—around

the globe, instead of selling different versions in different countries, this was part of Ford's global

________ strategy.

A) communication

B) pricing

C) distribution

D) exchange

E) product

Answer: E

Explanation: For the Fiesta, Ford has decided to go with the global product strategy of selling the

same product or service in both the home-country market and the host country, referred to as

glocalization.

Difficulty: 3 Hard

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

91) When Cisco Systems Inc. of San Jose, California, and Tata Consultancy Services of Mumbai,

India, entered into a relationship, they both continued to develop market-ready infrastructure and

network solutions for customers, but they relied on each other to provide the training and skills that

one or the other might have lacked. This relationship is best described as

A) NAFTA.

B) a strategic alliance.

C) CAFTA.

D) an international partnership.

E) a joint venture.

Answer: B

Explanation: Strategic alliances refer to collaborative relationships between independent firms,

though the partnering firms do not create an equity partnership; that is, they do not invest in one

another.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) Ford Motor Company decided to sell the Fiesta around the globe. Which of the following

would be an example of glocalization of the Fiesta?

A) The same product design and features, and the same basic promotional campaign, used in all

countries.

B) Variations in the product design country by country, with the same basic promotional campaign

used in all countries.

C) The same product design and features in all countries, with variations in the promotional

campaigns country by country.

D) Variations in the product design and the promotional campaign country by country.

E) The same marketing mix for all of the four Ps used in all countries.

Answer: C

Explanation: Referred to as glocalization, some firms standardize their products globally but use

different promotional campaigns to sell them.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

93) The level of economic development, as well as differences in product and technical standards,

helps determine the need for and level of product

A) glocalization.

B) adaptation.

C) segmentation.

D) globalization.

E) regulation.

Answer: B

Explanation: The strategy a firm chooses depends on the needs of the target market. The level of

economic development, as well as differences in product and technical standards, helps determine

the need for and level of product adaptation.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) Despite multiple upturns and downturns in its economy, Russia's overall growth prospects

appear promising, especially as a consumer market. However, there are still multiple dilemmas for

firms trying to market their goods and services. These dilemmas include all of the following except

Russia's

A) aging population and low both rates.

B) widespread corruption.

C) international sanctions.

D) involvement in China.

E) fluctuations in oil prices.

Answer: D

Explanation: Russia faces an aging population and low birthrates. If these trends persist, Russia's

population could decline by one-third in the next half century. Corruption is widespread, creating

ethical dilemmas for firms trying to market their goods and services. Furthermore, international

sanctions on Russia, in response to its occupation of Ukraine and its involvement in the Middle

East, and fluctuations in oil prices threaten the country with a financial crisis.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

95) What do the BRIC countries have in common?

A) They participate together in a trading bloc.

B) They have suffered more than most other countries in the recent recession.

C) They are Asian countries experiencing explosive population growth.

D) They are the four countries known for the highest levels of bribery in business and government.

E) They are experiencing significant levels of economic growth.

Answer: E

Explanation: The BRIC countries are Brazil, Russia, India, and China. All are experiencing

significant economic growth.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) Which of the following is currently a negative factor for foreign investment in Russia?

A) The Russian population is poorly educated.

B) Russian consumers have little interest in online shopping.

C) Russia is known for corruption, creating ethical dilemmas for firms.

D) Russian consumer markets are saturated, offering few opportunities for goods from U.S.

companies to sell well.

E) Few Russians have access to the Internet due to heavy regulation.

Answer: C

Explanation: Corruption is widespread in Russia, creating ethical dilemmas for firms trying to

market their goods and services.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

97) Which of the following is currently a negative factor for foreign investment in India?

A) India's population is fairly old and aging fast.

B) India's retail environment lacks modern supply chain management facilities and systems.

C) India prevents foreign investors from entering into joint ventures.

D) India has no shopping malls or other large commercial centers.

E) India lacks a skilled workforce.

Answer: B

Explanation: India's retail environment is still dominated by millions of small stores and lacks

modern supply chain management facilities and systems.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) Which of the following is a potential negative factor for foreign investment in China?

A) China's population is aging and is likely to continue to do so for many years.

B) China drastically restricts the goods it allows U.S. companies to export to China.

C) China's standard of living has dropped over the past 30 years.

D) China has imported fewer goods from the United States each year for the past decade.

E) Chinese consumers are not interested in purchasing products from the United States.

Answer: A

Explanation: Government regulations limiting families to one child have negatively impacted the

Chinese population. As a result, growth of the 1.4 billion-strong Chinese population has slowed

and is therefore aging, but the median age is still slightly younger than in the United States at 37.4

years old. Although the Chinese government has amended the policy to allow for two children per

family, these trends will impact how products and services are purchased for many years.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

99) A company is assessing opportunities in the BRIC countr ies and determines that ________ is

one of the youngest populations in the world and is increasingly adopting global attitudes.

A) Russia

B) Brazil

C) India

D) Italy

E) China

Answer: C

Explanation: With a median age of 27.9 years, India has one of the youngest populations in the

world. Its young inhabitants increasingly are adopting global attitudes while living in growing

urban centers and shopping at large malls.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) Why should marketers be aware of the BRIC countries?

A) They are a microcosm of the rest of the world.

B) They represent almost half the world's population.

C) They are likely to be the source of most market growth.

D) They have had the most dramatic changes in culture and consumer buying patterns.

E) They have stable population growth, which makes them easier to study.

Answer: C

Explanation: The four BRIC nations seem to have the greatest potential for growth.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

101) Which statement about India's population is true?

A) With a median age of 61, India has one of the oldest populations in the world.

B) India's young people mostly live in rural areas in large families.

C) India's workforce is highly skilled, especially in technical fields.

D) India claims more than 25 percent of the world's population.

E) Most Indian citizens shop in large retail outlets.

Answer: C

Explanation: India's highly skilled workforce holds great attraction for firms that hope to expand

using local talent, especially in technical fields.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) A publishing company plans to outsource its production-related tasks to a BRIC country.

They are assessing opportunities and are attracted to this country due to its population of young,

well-educated, technically-skilled workers who are fluent in English.

A) Russia

B) China

C) Brazil

D) India

E) Chile

Answer: D

Explanation: The well-educated, modern generation of India is largely fluent in English, and the

highly skilled workforce holds great attraction for firms that hope to expand using local talent,

especially in technical fields.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Analyze

AACSB: Analytical Thinking; Knowledge Application

Accessibility: Keyboard Navigation

103) Which of the following statements is true with regard to growth in global markets?

A) A country's infrastructure does not impact growth in the global market.

B) The number of Russian Internet users is decreasing at a rate of 10 percent annually.

C) Russia's population is expected to increase by one-third in the next half century.

D) Changes in technology, especially communications, have been a driving force for growth in

global markets for decades.

E) Brazil does not welcome foreign investors.

Answer: D

Explanation: Changes in technology, especially communications, have been a driving force for

growth in global markets for decades. The telegraph, radio, television, computer, and Internet have

increasingly connected distant parts of the world.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) Which BRIC country's economic growth in the 21st century can largely be attributed to the

expansion of its literate population and the impositions of social programs that have allowed more

than half of its 201 million citizens to enter the middle class?

A) Brazil

B) Russia

C) India

D) China

E) Chile

Answer: A

Explanation: Brazil's impressive economic growth in the 21st century largely can be attributed to

the expansion of its literate population and the impositions of social programs that have allowed

more than half of the 201 million Brazilians to enter the middle class.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

105) Which country is Europe's largest Internet market, with Internet users growing at a rate of 10

percent annually?

A) Great Britain

B) Spain

C) France

D) Germany

E) Russia

Answer: E

Explanation: The number of Russian Internet users, presently at 83 million, is growing at a rate of

approximately 10 percent annually.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) A U.S. firm is analyzing its business prospects in China. Marketing executives understand

which of the following to be true of this potential market?

A) China's leadership, which maintains communist political ideals, has not embraced

market-oriented economic development, which has led to startlingly slow gains.

B) Recent developments in China have led to dramatically decreased living standards and levels of

personal freedom.

C) China struggles with unequal economic distribution.

D) China's economy has recently seen a substantial decrease in its Global Retail Development

Index (GRDI).

E) China's growth in its gross domestic market has increased.

Answer: C

Explanation: China continues to suffer from drastically unequal economic distribution, which

has led to a significant migrant workforce that subsists on part-time, low-paying jobs.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

107) Which country has embraced market-oriented economic development in spite of maintaining

communist political ideals?

A) Brazil

B) Russia

C) Iran

D) China

E) Afghanistan

Answer: D

Explanation: Since 1978, China's leadership, while maintaining communist political ideals, has

embraced market-oriented economic development, which has led to startlingly rapid gains.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) Which country has a rapidly aging population due to its one-child policy?

A) Brazil

B) Russia

C) India

D) China

E) Japan

Answer: D

Explanation: Government regulations limiting families to one child have negatively impacted the

Chinese population. As a result, growth of the 1.4 billion-strong Chinese population has slowed

and is therefore aging, but the median age is still slightly younger than in the United States at 37.4

years old. Although the Chinese government has amended the policy to allow for two children per

family, these trends will impact how products and services are purchased for many years.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

109) Once a firm has done an analysis of the most viable markets for its products, then it must next

A) determine the competition and develop strategies to overcome it.

B) conduct an internal assessment of its capabilities.

C) conduct an external analysis of the target market's economy, culture, and regulatory barriers.

D) develop a product to meet the needs of those markets.

E) achieve success with the product in its home market.

Answer: B

Explanation: It must next conduct an internal analysis of its capabilities. This analysis includes

an assessment of the firm's access to capital, the current markets it serves, its manufacturing

capacity, its proprietary assets, and the commitment of its management to the proposed strategy.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) Marsha wants to sell her products in Europe, since they are doing well in the United States.

She does not have a lot of capital and is risk-averse, so she most likely would choose to begin with

A) opening a franchise.

B) exporting her products.

C) forming a strategic alliance with another company.

D) entering a joint venture with a local firm.

E) making a direct investment in another country.

Answer: B

Explanation: Exporting is the least financially risky global entry strategy, so Marsha most likely

would choose this route.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

111) Frank, a former retailer, has been living in the United States for five years and wants to start a

business. He does not have an existing firm or a product, and he doesn't have a lot of capital, but

since he loves McDonald's food, he decides to

A) open a McDonald's franchise.

B) directly invest in McDonald's.

C) export McDonald's products to other countries.

D) form a strategic alliance with McDonald's.

E) form a joint venture with McDonald's.

Answer: A

Explanation: McDonald's is a global franchisor. A franchising contract allows the franchisee to

operate a business—a retail product or service firm or a B2B provider—using the name and

business format developed and supported by the franchisor.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) Sydney's Emporium has 59 stores in the United States and wants to expand globally.

Sydney's wants to achieve the highest possible returns, and is not concerned about pursuing a

high-risk strategy as long as it maintains complete control over its stores. The best global entry

strategy for Sydney's is most likely

A) exporting.

B) a strategic alliance.

C) a joint venture.

D) direct investment.

E) franchising.

Answer: D

Explanation: Direct investment requires a firm to maintain 100 percent ownership of its plants,

operation facilities, and offices in a foreign country. This strategy requires the highest level of

investment and exposes the firm to significant risks, but has the potential for high return.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

113) When Porsche filmed an advertisement in which its vehicles ran over the Great Wall of

China, Chinese consumers were left more confused than intrigued. To address or avoid such

issues, one important cultural classification scheme that firms can use is Geert Hofstede's cultural

dimensions concept. Hofstede proposes that cultures differ on all of the following dimensions

except

A) conservatism.

B) individualism.

C) masculinity.

D) time orientation.

E) indulgence.

Answer: A

Explanation: Hofstede's cultural dimensions offer a foundation for most research into culture:

power distance, uncertainty avoidance, individualism, masculinity, time orientation, and

indulgence.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) If you visit a Kentucky Fried Chicken restaurant in China, along with KFC's regular menu

items, you will find congee, a rice porridge that can feature pork, pickles, mushrooms, and

preserved egg, on the menu. This is an example of which global product strategy?

A) sell the same products in both the home country market and the host country

B) sell only products native to the home country

C) sell a product similar to that sold in the home country, but include minor adaptations

D) sell only products native to the various global markets

E) sell totally new products or services

Answer: E

Explanation: Congee would be a totally new product.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

115) According to Hofstede's cultural dimensions concept, which BRIC country posts high scores

in the dimension of power distance and low on individualism?

A) Russia

B) Brazil

C) India

D) China

E) Iran

Answer: B

Explanation: Several Latin American countries, including Brazil, post high scores on power

distance but low scores on individualism.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

116) Gandolph's Tires sells the same tire globally, but it uses different advertisements based on the

country and culture. This is an example of

A) cultural shift.

B) glocalization.

C) ethnic sensitivity.

D) promotional flex.

E) unethical marketing practices.

Answer: B

Explanation: Glocalization refers to the selling of the same product or service in both the

home-country market and the host country.

Difficulty: 3 Hard

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

117) Which of the BRIC nations is most literate?

A) Russia

B) South Africa

C) Brazil

D) India

E) China

Answer: A

Explanation: Literacy levels vary dramatically across the globe. Consider the BRIC nations: In

India, approximately 71 percent of the adult population is literate, compared with 86 percent in

Brazil, more than 90 percent in China, and more than 99 percent in Russia. South Africa in not one

of the BRIC nations.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

118) Core Publishing Company learned that when selling overseas, local fulfillment can be more

cost-effective, and it also can decrease delivery time and improve customer service. This is an

example of a global ________ strategy.

A) communication

B) product

C) promotion

D) distribution

E) pricing

Answer: D

Explanation: This is a global distribution strategy as it relates to the distribution channel chosen

by Core Publishing Company.

Difficulty: 3 Hard

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

119) In China, state control of media is high, so companies are challenged to find ways to get their

message to customers. This demonstrates one of the difficulties in crafting a global ________

strategy.

A) communication

B) product

C) cultural

D) distribution

E) pricing

Answer: A

Explanation: Developing a global communication strategy is hampered by media availability in

countries with state-controlled media.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

120) China has three main languages, and many more dialects. This presents a particular challenge

to developing a global ________ strategy.

A) communication

B) product

C) cultural

D) distribution

E) pricing

Answer: A

Explanation: Developing a global communication strategy is hampered within many countries as

there are multiple variants on a language or more than one language.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Communication

Accessibility: Keyboard Navigation

121) It seems that you cannot pick up a newspaper without reading about globalization. What

fundamental changes are contributing to the growth of global markets?

Answer: Global markets are the result of several fundamental changes such as reductions or

eliminations of trade barriers by country governments, the decreasing concerns of distance and

time with regard to moving products and ideas across countries, the standardization of laws across

borders, improvements in technology, and globally integrated production processes.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

122) You have been asked to evaluate the economic potential of a new global market. What

economic measures would you use? Explain each measure.

Answer: To evaluate the economic potential of a new global market, you would start with gross

domestic product (GDP) and gross national income (GNI). A country's GDP is a measure of the

total market value of final goods and services produced in a year. GNI consists of GDP plus the net

income earned from investments abroad (minus any payments made to nonresidents who

contribute to the domestic economy). A country's income is only part of the economic picture.

Purchasing power parity is a theory that states that if the exchange rates of two countries are in

equilibrium, a product purchased in one will cost the same in the other, if expressed in the same

currency. Although an understanding of the macroeconomic environment is crucial for managers

facing a market entry decision, of equal importance is the understanding of the general economic

environment, population growth rate, and real income.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

123) Assume you are advising the Nepalese government about trade policies. What options does

the government have? Which would you recommend to stimulate the domestic economy?

Answer: The trade policy choices include tariffs, quotas, and exchange controls. Quotas could be

reduced on things like trekking permits for Mount Everest to increase tourism revenues. Tariffs on

certain imported goods could be used to protect domestic producers. Exchange controls could be

used to reduce the cost of Nepalese exports.

Difficulty: 3 Hard

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

124) What are Geert Hofstede's six cultural dimensions concepts? What is the value of his cultural

dimensions concept to global marketers?

Answer: Hofstede's six cultural dimensions include power distance, uncertainty avoidance,

individualism, masculinity, time orientation, and indulgence. The value is in understanding

differences between a marketer's culture and that of a new target market. Hofstede's cultural

dimensions offer a foundation for most research into culture.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

125) What kinds of sociocultural concerns are raised in international marketing that go beyond

promotion and advertising?

Answer: Understanding another country's culture is crucial to the success of any global

marketing initiative. Students should be able to address how culture affects every aspect of

consumer behavior: why people buy; who is in charge of buying decisions; and how, when, and

where people shop. Students might also raise brand and packaging issues, concerns in business

relationships, and in business organization.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

126) You have been hired to pursue international marketing for a small manufacturing firm. The

owner, who is reaching retirement age, does not like to take on risky business ventures. Her son,

though, likes to take risks; he feels it's a good way to earn a greater return. What entry strategy

would the owner want to pursue, and what entry strategy would the son want to pursue? How

might you resolve the differences?

Answer: The owner would prefer exporting as the least risky, while the son would tend toward

direct investment. The student should be aware that a firm could begin at the exporting level as a

sort of "test" before moving toward riskier and more profitable ventures.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

127) Jerald is assessing global entry strategies for his gourmet sandwich business. He does not

have significant capital for expansion and does not want to take a lot of risk. He is also willing to

limit his control of international stores. What are his global entry options? Given his situation and

priorities, which option is most logical? Why?

Answer: Jerald's five options are franchising, exporting, a joint venture, direct investment, or a

strategic alliance. Franchising makes the most sense because he does not have the capital for direct

investment or a joint venture, he is willing to limit his control over international expansion, and

exporting gourmet sandwiches wouldn't make much sense.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

128) How could a marketer adapt a product to appeal to international markets? Give a specific

example.

Answer: Responses will vary widely, but students should recognize the importance of local tastes

and preferences while bearing in mind the importance of economics of scale that might be realized

through standardization.

Difficulty: 3 Hard

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

129) Explain why language can be particularly vexing to advertisers.

Answer: Differences in language, customs, and culture complicate marketers' ability to

communicate with customers in various countries. Language can be particularly vexing for

advertisers. For example, in the United Kingdom a thong is only a sandal, whereas in the United

States it can also be an undergarment. To avoid the potential embarrassment that language

confusion can cause, firms spend millions of dollars to develop brand names that have no

preexisting meaning in any known language, such as Accenture (a management consulting firm)

or Avaya (a subsidiary of Lucent Technologies, formerly Bell Labs).

Difficulty: 3 Hard

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Analyze

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

130) You have been asked to evaluate the economic potential of Gabon as a market for your

company's products. What three categories of economic factors will you assess?

Answer: You will assess Gabon's general economic environment, the market size and population

growth rate, and real income.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

131) What does purchasing power parity mean?

Answer: A frequently used metric of an overall economy is the purchasing power parity (PPP), a

theory that states that if the exchange rates of two countries are in equilibrium, a product purchased

in one will cost the same in the other, if expressed in the same currency.

Difficulty: 1 Easy

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

132) Why is a country's infrastructure an important consideration to global marketers?

Answer: Infrastructure is defined as the basic facilities, services, and installations needed for a

community or society to function, such as transportation and communications systems, water and

power lines, and public institutions such as schools, post offices, and prisons. Countries with

limited infrastructure make marketing efforts more difficult, time-consuming, and expensive.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

133) How do tariffs affect markets?

Answer: Tariffs artificially raise the price of imported products, reducing the quantity demanded.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) When and why do many American firms begin their global expansion efforts by exporting?

Answer: Global expansion often begins when a firm receives an order for its product or service

from another country, in which case it faces little risk because it has no investment in people,

capital equipment, buildings, or infrastructure.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

135) What is the difference between a strategic alliance and a joint venture?

Answer: Strategic alliances refer to collaborative relationships between independent firms,

though the partnering firms do not create an equity partnership; that is, they do not invest in one

another. A joint venture is formed when a firm entering a market pools its resources with those of

a local firm. As a consequence, ownership, control, and profits are shared.

Difficulty: 1 Easy

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

136) What are the pros and cons of a franchising agreement for global expansion?

Answer: A franchise contract allows the franchisee to operate a retail product or service business

using the name and business format developed and supported by the franchisor. However, the firm

has limited control over the market operations and its potential profit is reduced because it must be

split with the franchisee.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) Once a company has decided to sell in a foreign country, it must determine the best mode of

entry. List each mode of market entry and give an example for each.

Answer: Examples may vary, but the five modes of entry should all be included: exporting,

franchising, strategic alliances, joint ventures, and direct investment.

Difficulty: 3 Hard

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

138) Once a company has decided to pursue a global market, it will explore the four Ps. List the

potential global product strategies a firm can employ.

Answer: There are three potential global product strategies: (1) to sell the same product or service

in both the home-country market and the host country, referred to as glocalization; (2) to sell a

product or service similar to that sold in the home country, but to include minor adaptations; and

(3) to sell a totally new product or service in the host country.

Difficulty: 1 Easy

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

139) What would it mean if Oreo adopted a glocalization strategy for global sales of its cookies?

Answer: Referred to as glocalization, some firms also standardize their products globally but use

different promotional campaigns to sell them. So the cookie would be the same worldwide, but the

promotional strategy would focus on different things depending on the local culture and

preferences.

Difficulty: 3 Hard

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

140) The text states that even among English speakers, there can be significant differences in the

effectiveness of advertising campaigns. Why is this true?

Answer: Countries have social and cultural differences. For instance, an ad that is effective in the

United States might seem too tame for the United Kingdom.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

141) Give a reason and an example of why a product would require a more localized advertising

approach.

Answer: Products may require a more localized approach because of cultural and religious

differences. Examples will vary, however, an example in the text refers to classic advertisement

for Longines watches, a woman's bare arm and hand appear, with a watch on her wrist. The

advertisement was considered too risqué for Muslim countries, where women's bare arms are

never displayed in public, but the company simply changed the advertisement to show a gloved

arm and hand wearing the same watch.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

142) In what three ways are global segmentation, targeting, and positioning more complicated than

domestic STP?

Answer: Global segmentation, targeting, and positioning (STP) are more complicated than

domestic STP for several reasons. First, firms considering a global expansion have much more

difficulty understanding the cultural nuances of other countries. Second, subcultures within each

country also must be considered. Third, consumers often view products and their role as

consumers differently in different countries.

Difficulty: 2 Medium

Topic: Domestic Marketing Strategy vs. Global Marketing Strategy

Learning Objective: 08-04 Highlight the similarities and differences between a domestic

marketing strategy and a global marketing strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) What are the risks associated with global franchising?

Answer: The franchisor has limited control over the market operations in the foreign country, its

potential profit is reduced because it must be split with the franchisee, and, once the franchise is

established, there is always the threat that the franchisee will break away and operate as a

competitor under a different name.

Difficulty: 2 Medium

Topic: Market Entry Strategies

Learning Objective: 08-03 Identify the various market entry strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

144) How is the retail landscape in India changing?

Answer: Recent changes by the Indian government have the potential to significantly modernize

the retail landscape. Foreign retailers that carry multiple brands, like Walmart, are now allowed to

own up to 51 percent of joint ventures in India. Also, retailers that carry only their own brand, like

Adidas and Reebok, can now own 100 percent of their Indian businesses.

Difficulty: 2 Medium

Topic: Marketing Globalization

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

145) The United States, Australia, Canada, and the United Kingdom cluster high on individualism

but low on power distance on Hofstede's cultural dimensions graph. What does this mean to

someone looking to market a product in these countries?

Answer: Individualism relates to perceived obligation to and dependence on groups. Power

distance is the willingness to accept social inequality as natural. Using this information, firms

should expect that if they design a marketing campaign that stresses equality and individualism, it

will be well accepted in English-speaking countries, all other factors being equal, but not be as

well received in Latin American countries that scored high on power distance but low on

individualism.

Difficulty: 3 Hard

Topic: Marketing Globalization

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

146) Expanding into global markets is nearly a necessity for most modern companies, especially

those that seek to put their products and services in as many people's hands as possible. From the

example in the text, describe Apple's goals and how the company initially went about achieving

these goals.

Answer: Expanding into global markets is nearly a necessity for most modern companies,

especially those that seek to put their products and services in as many people's hands as possible.

Take Apple for example. The goal of the tech giant is essentially to drive every other technology

provider out of the market. It wants consumers to rely solely on iPhones for all their smartphone

needs (and Apple Watches for their connected timepieces, and iPads for their tablets, and so on).

To make that happen, Apple has had to pursue international markets almost from its beginning. Its

strong brand image and appealing advertising might appear in different languages—in a strategy

known as localizing—but the message remained similar across the board. It sought a reputation as

a sophisticated, tech-savvy, and cool product to own. If Apple is to become truly ubiquitous, it

needs to find new buyers in India, China, Brazil, throughout Africa, and so forth as there are not

many new customers in the United States or Europe to attract.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

147) What are the five major trade agreements that cover two-thirds of the world's international

trade?

Answer: The five major trade agreements include the European Union (EU), the North American

Free Trade Agreement (NAFTA), Central America Free Trade Agreement (CAFTA), Mercosur,

and the Association of Southeast Asian Nations (ASEAN).

Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions and International Organizations

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

148) Describe the process of exchange control, and explain how it affects a country's ability to

conduct global business.

Answer: Exchange control refers to the regulation of a country's currency exchange rate, the

measure of how much one currency is worth in relation to another. When the dollar falls, it has a

twofold effect on U.S. firms' ability to conduct global business. For firms that depend on imports

of finished products, raw materials that they fabricate into other products, or services from other

countries, the cost of doing business goes up dramatically. At the same time, buyers in other

countries find the costs of U.S. goods and services much lower than they were before.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

149) What is the difference between a trade deficit and a trade surplus? If a firm wants to

manufacture in another country, which of these trade situations would it prefer?

Answer: A trade deficit means that the country imports more goods than it exports. A trade

surplus indicates that the country has a higher level of exports than imports. Firms would prefer to

manufacture in a country that has a trade surplus, because it signals a greater opportunity to export

products to more markets.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

150) Briefly describe the four key elements of a country's infrastructure that would concern

marketers.

Answer: The elements of a country's infrastructure that marketers would focus on are:

• Transportation—a system (trains, roads, refrigeration) to transport goods throughout the

various markets and to consumers in geographically dispersed marketplaces.

• Distribution channels—channels to deliver products in a timely manner and at a reasonable

cost.

• Communications system, particularly media access—sufficiently developed to allow

consumers to find information about the products and services available in the marketplace.

• Commercial infrastructure—infrastructure consisting of the legal, banking, and regulatory

systems.

Difficulty: 2 Medium

Topic: Global Environmental Forces

Learning Objective: 08-01 Describe the components of a country market assessment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 9 Segmentation, Targeting, and Positioning

1) Of the various methods for segmenting, or breaking down, the market, demographic

segmentation is the one that delves into how consumers actually describe themselves.

Answer: FALSE

Explanation: Of the various methods for segmenting, or breaking down, the market,

psychographic segmentation is the one that delves into how consumers actually describe

themselves.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) When a marketer adjusts the marketing mix to give customers a clear, distinctive, desirable

understanding of what the product does, the marketer is engaging in psychographic segmentation.

Answer: FALSE

Explanation: The question describes market positioning, not psychographics.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) For products like pencils and paper clips, marketers should probably use an undifferentiated

targeting strategy.

Answer: TRUE

Explanation: An undifferentiated targeting strategy, also called mass marketing, is appropriate

when everyone can be considered a potential user of a product, and when the potential benefits are

similar for most consumers. An undifferentiated strategy is used for many basic commodities such

as salt or sugar or pencils and paper clips.

Difficulty: 1 Easy

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) When deciding how to promote his new medical oncology center, Dr. Smith decided that he did

not need to throw a large grand opening reception. Instead, he promoted the center to the internal

medicine doctors in the area, who were the doctors most likely to refer patients to the center. Dr.

Smith was engaged in a concentrated targeting strategy.

Answer: TRUE

Explanation: A concentrated targeting strategy is one where the organization selects a single,

primary target market and focuses all energies on providing a product to fit that market's needs. In

this case, the local internal medicine doctors make up a single target market.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) It would be logical for bathing suit marketers to use geographic segmentation.

Answer: TRUE

Explanation: Geographic segmentation makes sense since bathing suit demand is dependent

largely on weather patterns. Geographic segmentation organizes customers into groups on the

basis of where they live.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) NASCAR redirected its marketing efforts when a survey indicated that almost 50 percent of its

fans were female. This is an example of psychographic segmentation.

Answer: FALSE

Explanation: Segmentation by gender is demographic, not psychographic, segmentation.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) The Value and Lifestyle Survey (VALS) conducted by Strategic Business Insights (SBI) is a

widely used tool for geographic segmentation.

Answer: FALSE

Explanation: VALS is widely used for psychographic segmentation.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) Giant Food Stores in suburban Washington, DC, adjusts its ethnic food aisle offerings based on

the ethnic groups living near each store. Giant Foods is using geodemographic segmentation.

Answer: TRUE

Explanation: Geodemographic segmentation uses a combination of geographic, demographic,

and lifestyle characteristics to classify consumers.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) Positioning strategies generally focus either on how the product benefits the consumer or on

how it is better than competitors' products.

Answer: TRUE

Explanation: Positioning refers to communicating the unique value the product or service

provides to its customers, and how it is better than or different from competitive products.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) As it relates to positioning, a self-values map displays the position of products or brands in the

consumer's mind.

Answer: FALSE

Explanation: The question describes a perceptual map, not a self-values map. A perceptual map

displays, in two or more dimensions, the position of products or brands in the consumer's mind.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) Perceptual maps include positions of current brands as well as ideal points where a consumer

segment would want a product to be.

Answer: TRUE

Explanation: Perceptual maps include consumers' perceptions of the positions of current brands;

they also include ideal points. This makes it easy to visualize the distance between a brand's

position and the ideal point, as well as similarities and differences between the images of different

brands.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) The STP process is made up of strategy, targeting, and promotion.

Answer: FALSE

Explanation: The STP process is made up of segmentation, targeting, and positioning.

Difficulty: 1 Easy

Topic: Steps in Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) The first step in the segmentation process is to articulate the vision or objectives of the

company's marketing strategy clearly.

Answer: TRUE

Explanation: The first step in the segmentation process is to articulate the vision or objectives of

the company's marketing strategy clearly.

Difficulty: 2 Medium

Topic: Steps in Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) Automobile manufacturers could build cars specially designed for very tall people (for

example, over seven feet), but it is likely that this segment is not substantial.

Answer: TRUE

Explanation: Once the firm has identified its potential target markets, it needs to measure their

size. If a market is too small (as in this example) or its buying power insignificant, it won't generate

sufficient profits or be able to support the marketing mix activities.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) A complex product that is best described in writing will be difficult to explain to consumers

who are unable to read. For this reason, a segment in which many consumers could not read would

be considered unattractive because the consumers would not be responsive.

Answer: FALSE

Explanation: The problem here is not responsiveness, but reachability. The consumers might

respond very well to the offer if they could receive the message; however, their failure to read will

make it difficult to reach them with positioning messages. The best product or service cannot have

any impact, no matter how identifiable or substantial the target market is, if that market cannot be

reached (or accessed) through persuasive communications and product distribution.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) A company that sells only multigrain, low-calorie bread should use a(n) ________ targeting

strategy.

A) concentrated

B) differentiated

C) micromarketing

D) mass

E) undifferentiated

Answer: A

Explanation: If a company had a very specific product (such as multigrain, low-calorie bread)

then it would probably use a concentrated targeting strategy. When an organization selects a

single, primary target market and focuses all its energies on providing a product to fit that market's

needs, it is using a concentrated targeting strategy.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) ________ compares the price of a product to its benefits.

A) Market position

B) A mass marketing strategy

C) A perceptual map

D) Value

E) A concentrated targeting strategy

Answer: D

Explanation: The value proposition communicates the customer benefits to be received from a

product or service and thereby provides reasons for wanting to purchase it. Value represents the

comparison of benefits to price.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

18) Maintaining a unique ________ can be sustained in the long term only in monopoly situations

or monopolistic competition situations.

A) market position

B) value proposition

C) salient attribute

D) marketing communication

E) market segmentation

Answer: B

Explanation: The value proposition communicates the customer benefits to be received from a

product or service and thereby provides reasons for wanting to purchase it. It is likely not

sustainable, because competitors would attempt to copy the important product or service attributes

and therefore begin to encroach on the firm's value proposition.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

19) Susie is in the new marketing department of a midsized lawn and garden company. She is

working on the first marketing plan the firm has ever used. She has defined the mission and

objectives, and she just finished a situation analysis for the firm. The next step is to

A) develop an advertising plan to promote the upcoming sales.

B) find marketing interns or hire new staff to help with implementation.

C) create pro forma financial statements to complete the package.

D) identify and evaluate opportunities by conducting segmentation, targeting, and positioning

analysis.

E) use the Internet, catalogs, and vendor information to draw up a list of new products.

Answer: D

Explanation: The third step of the strategic marketing planning process, following defining the

mission and objectives and conducting a situation analysis, is the STP process.

Difficulty: 3 Hard

Topic: Steps in Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

20) Segmentation, targeting, and positioning

A) are terms that can be used interchangeably in developing marketing plans.

B) are part of a firm's marketing strategy.

C) should be done simultaneously so synergies can help streamline the effort.

D) are part of the marketing plan but bear little direct relationship to the marketing mix.

E) are optional elements of a marketing plan.

Answer: B

Explanation: The third step of the strategic marketing planning process, following defining the

mission and objectives and conducting a situation analysis, is the STP process. Segmentation,

targeting, and positioning can be both a linear and nonlinear decision making process.

Difficulty: 2 Medium

Topic: Steps in Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

21) Alexander has found that both commercial and residential real estate buyers respond positively

to his marketing communication message. Alexander has identified ________ that respond

similarly to his marketing efforts.

A) mass customization consumers

B) geographic segments

C) market segments

D) self-concept customers

E) geodemographic segments

Answer: C

Explanation: Commercial and residential real estate buyers are two different market

segments—groups of customers with similar wants and needs—that Alexander can target by

designing a marketing mix for each.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) For each target market, General Imaging Corporation, a manufacturer of imaging equipment,

will engage in positioning, adjusting its marketing mix variables in order to give customers

A) a more flexible supply chain strategy.

B) a perceptual map of the imaging landscape.

C) more product features than the competition offers.

D) lower prices than the competition offers.

E) a clear, distinctive, and desirable understanding of their products relative to competing

products.

Answer: E

Explanation: Market positioning is the process of defining marketing mix variables so that target

customers have a clear, distinctive, desirable understanding of what the product does or represents

in comparison with competing products.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

23) The first step in the STP process is to

A) identify the segmentation methods to be used.

B) produce a list of strengths and weaknesses of the firm's past marketing strategies.

C) establish the overall strategy or objectives.

D) select target markets.

E) develop a marketing mix, so that an appropriate segment can later be identified.

Answer: C

Explanation: The first step in the segmentation, targeting, and positioning process is to articulate

the vision or objectives of the company's marketing strategy clearly.

Difficulty: 1 Easy

Topic: Steps in Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) For products like clothes pins, which provide the same benefit for all consumers, marketers

should probably use a(n) ________ strategy.

A) concentrated targeting

B) lifestyle segmentation

C) benefit segmentation

D) undifferentiated targeting

E) differentiated segmentation

Answer: D

Explanation: An undifferentiated targeting strategy is appropriate for products for which almost

anyone can be a target customer, and where customer needs and wants are similar across all

groups. An undifferentiated strategy is used for many basic commodities such as salt or sugar or, in

this case, clothes pins.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

25) In a classic example of segmentation strategy, years ago Swift Meat Company transformed

turkey meat into "Butterball" turkeys. In doing so, the company

A) differentiated its product.

B) streamlined its delivery process.

C) created a new class of micromarketing.

D) defined consumers' basic needs.

E) redefined mass customization.

Answer: A

Explanation: Swift took an undifferentiated product—frozen turkeys—and differentiated its

turkeys by branding them "Butterball," enabling it to position its turkeys as something special.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) Adidas Group owns Reebok, Rockport, and TaylorMade brands. Adidas uses the different

brands to pursue a(n) ________ strategy.

A) concentrated targeting

B) micromarketing

C) benefit targeting

D) differentiated targeting

E) undifferentiated targeting

Answer: D

Explanation: Firms using a differentiated targeting strategy target several market segments with a

different offering for each.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) Adidas Group owns Reebok and Rockport—both of which offer different types of shoes.

Having a variety of brands allows Adidas to use a differentiated targeting strategy to

A) engage in micromarketing for hard-to-fit shoe customers.

B) obtain a bigger share of the shoe market.

C) use mass marketing techniques.

D) utilize geographic segmentation.

E) generate economies of scale in advertising expenditures.

Answer: B

Explanation: Adidas can adopt a differentiated targeting strategy, in which it builds a different

marketing mix around each of its brands to serve a different target market. By doing so, Adidas can

target a larger portion of the shoe market and gain a greater market share.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) One of the benefits of a differentiated targeting strategy is that it allows the firm to diversify its

business and

A) decrease advertising spending.

B) focus on a single market segment.

C) lower overall risk.

D) use undifferentiated strategies in micro markets.

E) more widely market basic commodities.

Answer: C

Explanation: Since a differentiated targeting strategy addresses multiple target markets, the firm

can diversify its approach and potentially lower overall risk by not relying entirely on one target

market. On the other hand, differentiated strategies can be expensive because of the need to

communicate with multiple market segments.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

29) A differentiated targeting strategy can allow a firm to obtain a bigger share of the overall

market; this strategy

A) is the cheapest option.

B) requires the use of advanced advertising techniques.

C) rarely works.

D) is likely more costly than an undifferentiated strategy.

E) is ineffective without multiple brand names.

Answer: D

Explanation: A differentiated targeting strategy can be extremely effective, since it allows the

firm to target multiple market segments. This can be done with a single brand or with multiple

brands, depending on the target markets and on the overall strategy. But because of the need to

communicate with multiple target markets, differentiated targeting strategies tend to be expensive.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) Firms use a differentiated targeting strategy because

A) it is easier than mass marketing.

B) it helps obtain a bigger share of the market.

C) it is better than focusing on individual or small groups of potential customers.

D) most market segments are too small to be profitable.

E) banks are more willing to extend credit to companies with this strategic approach.

Answer: B

Explanation: A differentiated targeting strategy builds a different marketing mix for each of

several market segments. This allows the firm to target a larger portion of the market and gain a

greater market share.

Difficulty: 1 Easy

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) When Penguin Catering Services first opened, the owner decided to target only events at

resorts in its geographic region. Penguin Catering was using a(n) ________ targeting strategy.

A) concentrated

B) micromarketing

C) benefit-driven

D) differentiated

E) undifferentiated

Answer: A

Explanation: When an organization selects a single, primary target market and focuses all its

energies on providing a product to fit that market's needs, it is using a concentrated targeting

strategy, such as the resorts in Penguin Catering's geographic region.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) ________ is an extreme form of a targeting strategy.

A) Macromarketing

B) Micromarketing

C) Benefit marketing

D) Differentiated targeting

E) Concentrated targeting

Answer: B

Explanation: When a firm tailors a product or service to suit an individual customer's wants or

needs, it is undertaking an extreme form of segmentation called micromarketing or one-to-one

marketing.

Difficulty: 1 Easy

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) An engaged couple is meeting with a bakery to order their wedding cake. They want a cake

that will represent their individual styles and tastes. Bakeries that cater to such unique requests are

pursuing what kind of targeting strategy?

A) macromarketing

B) micromarketing

C) benefit-based

D) differentiated

E) undifferentiated

Answer: B

Explanation: A bakery that makes wedding cakes to order is pursuing a micromarketing strategy

because they are making different flavors and designs to satisfy the unique needs of each customer.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) Many companies use the Internet to allow consumers to design customized products; for

example, Nike allows customers to order shoes with custom color combinations. This is a form of

A) micromarketing.

B) concentrated targeting.

C) psychographic segmentation.

D) differentiated targeting.

E) undifferentiated targeting.

Answer: A

Explanation: When a firm tailors a product or service to suit an individual customer's wants or

needs, it is undertaking an extreme form of segmentation called micromarketing or one-to-one

marketing.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

35) Four frequently used targeting strategies are the micromarketing, undifferentiated,

differentiated, and ________ targeting strategies.

A) geographic

B) benefit-based

C) economic

D) global

E) concentrated

Answer: A

Explanation: The four targeting strategies are micromarketing, undifferentiated, differentiated,

and concentrated.

Difficulty: 1 Easy

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) When Mr. How, a Pennsylvania-based discount lumber and hardware chain, sent snow

blowers to its Augusta, Georgia, store in April, it was engaged in

A) concentrated segmentation.

B) geodemographic segmentation.

C) benefit segmentation.

D) psychographic segmentation.

E) misguided geographic segmentation.

Answer: E

Explanation: This is an example of geographic segmentation—segmentation by geographic

region—but is misguided because snow blowers are not needed in Georgia in April.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) Differences in weather and climate create opportunities for

A) concentrated targeting.

B) geographic segmentation.

C) benefit segmentation.

D) psychographic segmentation.

E) demographic segmentation.

Answer: B

Explanation: Geographic segmentation organizes customers into groups on the basis of where

they live. Climate and weather are two factors that create geographic differences and thus

opportunities to segment a market by geographic region.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) Kellogg's marketing communications about its Special K cereal appeal almost exclusively to

women. This is an example of ________ segmentation.

A) geographic

B) psychographic

C) demographic

D) benefits

E) behavioral

Answer: C

Explanation: Demographic segmentation groups consumers according to easily measured,

objective characteristics such as age, gender, income, and education.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

39) ________ segmentation is the most common basis of consumer market segmentation because

these segments are easy to define and usually easy to reach.

A) Geographic

B) Psychographic

C) Behavioral

D) Benefits

E) Demographic

Answer: E

Explanation: Demographic segmentation tends to be easy to define because demographic factors

are widely collected and so tend to be readily available.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) Beer marketers know that high-school educated, working-class males from the ages of 25 to 40

make an attractive market for their products. This is a ________ segment of the beer market.

A) demographic

B) psychographic

C) behavioral

D) benefits

E) geographic

Answer: A

Explanation: Demographic segmentation groups consumers according to easily measured,

objective characteristics such as age, gender, income, and education.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

41) Television advertising has recently expanded to include "mini-ads," which are short ads lasting

five to ten seconds. These ads are most useful in advertising to men, since men are more likely than

women to channel surf during commercial breaks. Given this fact, this type of advertising will be

more useful to marketers engaged in ________ segmentation.

A) demographic

B) psychographic

C) behavioral

D) benefits

E) geographic

Answer: A

Explanation: Demographic segmentation groups consumers according to easily measured,

objective characteristics such as age, gender, income, and education.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) Demographic segmentation is segmentation based on all of the following except

A) age.

B) gender.

C) education.

D) income.

E) lifestyle.

Answer: E

Explanation: Demographic segmentation groups consumers according to easily measured,

objective characteristics such as age, gender, income, and education. Lifestyle is a psychographic

variable.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Psychographics is the segmentation method that delves into how consumers

A) adjust to demographic changes.

B) allocate scarce incomes to a variety of goods and services.

C) describe themselves.

D) value their livelihoods.

E) believe other people see them.

Answer: C

Explanation: Psychographic segmentation is the one that delves into how consumers actually

describe themselves. Usually marketers determine (through demographics, buying patterns, or

usage) into which segment an individual consumer falls.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) To develop psychographic segments, the marketer must understand consumers'

A) age, income, and education.

B) gender, race, and religion.

C) disposable personal income, benefit perceptions, and alternative egos.

D) self-values, self-concept, and lifestyles.

E) buying patterns and behaviors.

Answer: D

Explanation: Psychographics is related to the way we describe ourselves—our self-concept,

self-values, and lifestyle.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) Saul is considering psychographics as a way to segment the market for his small travel agency.

This approach to segmentation offers him an advantage because

A) it is based on underlying motivations of target customers.

B) it is easier to use than demographics.

C) the travel business doesn't respond well to other approaches to segmentation.

D) psychographics is the preferred method for service businesses.

E) psychographic segmentation is the least expensive method.

Answer: A

Explanation: Psychographics is related to the way we describe ourselves—our self-concept,

values, and lifestyle. Psychographics studies how people self-select, based on the characteristics of

how they choose to occupy their time (behavior) and what underlying psychological reasons

determine those choices.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) Education marketers know that the primary motivations of most nontraditional college

students are self-respect and self-fulfillment, so they craft their marketing message to emphasize

the benefits these consumers are looking for in a college education. What type of segmentation

method was used to segment this market?

A) psychographics

B) demographics

C) geographics

D) geodemographics

E) behavior

Answer: A

Explanation: Psychographics is related to the way we describe ourselves—our self-concept,

values, and lifestyle. Psychographics studies how people self-select, based on the characteristics of

how they choose to occupy their time (behavior) and what underlying psychological reasons

determine those choices.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) Baby Boomers represent a huge demographic segment for travel marketers. Baby Boomers are

also heavily motivated by self-fulfillment, which creates the possibility of ________

segmentation.

A) geographic

B) self-concept

C) psychographic

D) benefit

E) behavioral

Answer: C

Explanation: Segmentation based on self-values is a form of psychographic segmentation.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Beverage companies often use television commercials with images of young people laughing

and enjoying themselves on a beach or in a club. These images are designed to appeal to

consumers' ________, suggesting "be like me."

A) geographic choices

B) self-concepts

C) loyalty references

D) benefit perceptions

E) demographics

Answer: B

Explanation: Self-concept is the way we see ourselves. Beverage companies hope that consumers

will identify with the ads, seeing themselves (or the way they wish to be).

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

49) If values provide an end goal, and self-concept is the way one sees oneself in the context of that

goal, lifestyles are

A) visual images of how we should live our lives.

B) our underlying motivations.

C) how we live our lives to achieve our goals.

D) motivations turned into perceptual maps.

E) determined by demographics.

Answer: C

Explanation: Lifestyle (which is one aspect of psychographic segmentation) is the way we live

our lives—activities, interests, and so on.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) VALS is the most widely used ________ segmentation tool.

A) geographic

B) behavioral

C) psychographic

D) benefits

E) geodemographic

Answer: C

Explanation: Values and Lifestyles Survey (VALS) examines the intersection of psychology,

demographics, and lifestyles and is a psychographic segmentation tool.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) Marketers have found that ________ segmentation is often more useful for predicting

consumer behavior than ________ segmentation.

A) demographic; psychographic

B) geographic; geodemographic

C) psychographic; demographic

D) demographic; behavioral

E) demographic; benefit

Answer: C

Explanation: The most widely used psychographic segmentation is VALS, which examines the

intersection of psychology, demographics, and lifestyles. VALS is more useful than demographics

alone to predict consumer behavior particularly for not-yet-invented products and services.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) Although marketers have found that psychographics are often more useful for predicting

consumer behavior than demographics, psychographic segmentation

A) is available only in limited geographic areas.

B) is rarely used and unproven.

C) offers only one-to-one marketing potential.

D) involves knowing and understanding self-values, self-concept, and lifestyles. is.

E) is still an unproven area.

Answer: D

Explanation: Psychographic segmentation is by no means unproven, and can be used for many

applications unrelated to one-to-one marketing. Determining psychographics involves knowing

and understanding three components: self-values, self-concept, and lifestyles.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) ________ segmentation is the segmentation method most directly related to satisfying

consumers' needs and wants.

A) Geographic

B) Demographic

C) Psychographic

D) Benefit

E) Geodeomographic

Answer: D

Explanation: Benefit segmentation groups consumers on the basis of the benefits they derive

from products or services. Because marketing is all about satisfying consumers' needs and wants,

dividing the market into segments whose needs and wants are best satisfied by the product benefits

can be a very powerful tool.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) A university using benefit segmentation and targeting students who want to get a degree

quickly while still working full-time would most likely focus on

A) providing classes at convenient times and offering online courses.

B) discount pricing for students taking more than twelve credit hours.

C) the higher average salaries earned by college graduates.

D) the great variety of classes offered.

E) the number of Nobel Prize winners on the faculty.

Answer: A

Explanation: Benefit segmentation groups consumers on the basis of the benefits they derive

from products or services. The benefit sought by the target market is speed and convenience of

getting a degree; thus, convenient class times and the ability to take classes online would be

important criteria.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

55) The light beer commercial with the slogan "less filling, tastes great" was based on ________

segmentation.

A) geographic

B) geodemographic

C) psychographic

D) benefit

E) loyalty

Answer: D

Explanation: Benefit segmentation groups consumers on the basis of the benefits they derive

from products or services. The ad clearly sets out two benefits: the beer is less filling and yet still

tastes great.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) Toothpastes sold in supermarkets and pharmacies promise various results, such as whiter teeth,

protection against gum disease, tartar control, or fresh breath. Toothpaste marketers are using

________ segmentation.

A) benefit

B) geodemographic

C) psychographic

D) loyalty

E) demographic

Answer: A

Explanation: Benefit segmentation groups consumers on the basis of the benefits they derive

from products or services. These promised results are all benefits that a target market might seek.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

57) Golden Years Vitamin Corporation targets consumers living in Florida who are over age 65.

Golden Years is using ________ segmentation.

A) benefit

B) self-actualization

C) psychographic

D) loyalty

E) geodemographic

Answer: E

Explanation: Geodemographic segmentation uses a combination of geographic, demographic,

and lifestyle characteristics to classify consumers. This is an example of geodemographic

segmentation because it has an element of geographic segmentation (residence in Florida)

combined with demographic segmentation (age greater than 65).

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) The phrase "birds of a feather flock together" captures the idea of ________ segmentation.

A) geodemographic

B) benefit

C) psychographic

D) loyalty

E) geographic

Answer: A

Explanation: Based on the adage "birds of a feather flock together," geodemographic

segmentation uses a combination of geographic, demographic, and lifestyle characteristics to

classify consumers. Consumers in the same neighborhoods tend to buy the same types of cars,

appliances, and apparel and shop at the same types of retailers.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

59) The Tapestry™ Segmentation system divides and sorts small geographic areas into categories

using 65 or more demographic and lifestyle characteristics. This market research tool is an

example of ________ segmentation.

A) geodemographic

B) benefit

C) psychographic

D) loyalty

E) geographic

Answer: A

Explanation: Tapestry Segmentation classifies all U.S. residential neighborhoods into 65

distinctive segments based on detailed demographic data and lifestyles of people who live in each

U.S. block tract (zip code +4). Each block group then can be analyzed and sorted by many

characteristics, including income, home value, occupation, education, household type, age, and

several key lifestyle characteristics. This is an example of geodemographic segmentation.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) Lorie is opening an upscale women's clothing store in a growing suburban residential area.

Lorie knows her target market is upper-income women living within 20 miles of her store. She

can't afford to purchase Tapestry analysis, so she will most likely use ________ as a basis for

targeting her market.

A) voter registration lists

B) the city phone book

C) real estate values by subdivision

D) public school enrollment data

E) new construction data

Answer: C

Explanation: Real estate values by subdivision for neighborhoods near her store would give

Gloria an idea of the neighborhoods in which more affluent women lived. She could use this

information to identify potential customers to whom she could promote her store. Retailers

identify their best locations and determine what types of people live in the area surrounding those

stores, according to the geodemographic clusters. The other suggestions do not include financial

information that would be helpful in identifying customers by income level.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

61) Geodemographic segmentation can be particularly useful for ________, because customers

typically patronize stores close to their neighborhood.

A) Internet marketers

B) wholesalers

C) retailers

D) consumer goods manufacturers

E) cable TV networks

Answer: C

Explanation: Retailers can benefit from geodemographic segmentation because it can help define

the types of customers who live near stores. The other examples given are not particularly

dependent on geographic proximity.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Retail store chains often use ________ data to tailor each store's assortment to the preferences

of the local community.

A) geodemographic

B) benefit

C) psychographic

D) loyalty

E) geographic

Answer: A

Explanation: Geodemographic segmentation can be particularly useful for retailers, because

customers typically patronize stores close to their neighborhood. Thus, retailers can use

geodemographic segmentation to tailor each store's assortment to the preferences of the local

community.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

63) Marketers often create a special marketing mix for loyalty segments because these segments

are

A) too large to service with ordinary targeting.

B) difficult to identify.

C) costly to acquire.

D) generally profitable.

E) constantly changing.

Answer: D

Explanation: Loyal customers often maintain profitable relationships with companies. Today's

companies are using loyalty segmentation and investing in retention and loyalty initiatives to

retain their most profitable customers.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) When Ronald complained to his bank about the unprofessional behavior of one teller, the

branch manager added a code into his accounts alerting all tellers that Ronald was a valued

customer and to provide whatever service he requests. The branch management included Ronald

in its ________ segmentation.

A) benefit

B) geodemographic

C) psychographic

D) loyalty

E) geographic

Answer: D

Explanation: Firms have long known that it pays to retain loyal customers and Ronald has been

identified as a loyal customer to be handled via the marketing mix the bank has designed via

loyalty segmentation.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

65) When airlines created frequent-flyer programs, they were among the first retailers to embrace

A) geographic segmentation.

B) education segmentation.

C) lifestyle segmentation.

D) convenience segmentation.

E) loyalty segmentation.

Answer: E

Explanation: Airline frequent-flyer programs offer an example of using loyalty segmentation and

investing in retention and loyalty initiatives to retain their most profitable customers since only

those who fly on the airline frequently are eligible.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) One of the reasons marketers use loyalty segmentation is

A) the high cost of obtaining new customers.

B) government tax incentives.

C) accounting difficulties associated with identifying new customers.

D) rapid population increases.

E) the failure of micromarketing as a workable strategy.

Answer: A

Explanation: It is generally much more expensive to find obtain a new customer than to keep an

existing one; thus, it is in the best interests of a firm to retain current customers. For this reason,

many firms develop loyalty segmentation-based marketing incentives.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

67) While demographic and geographic segmentation of retail customers are relatively easy, these

characteristics do not help marketers determine

A) how old their customers are.

B) what their customers need.

C) where their customers live.

D) which customers have young children.

E) what income brackets their customers are in.

Answer: B

Explanation: Demographic and geographic segmentation of retail customers is fairly easy to do

with readily available data; however, translating segment membership to actual needs is more

complex. Firms often employ a combination of segmentation methods, using demographics and

geography to identify and target marketing communications to their customers, then using benefits

or lifestyles to design the product or service and the substance of the marketing message.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) Gloria's Kayak Tours initially identified active retirees living in the retirement community

nearby as one of its target markets. Gloria then tailored her service and marketing message to the

interests and schedules of that audience. Gloria initially used ________ segmentation and then

used ________ segmentation.

A) micromarketing; loyalty

B) lifestyle; macromarketing

C) geodemographic; lifestyle

D) geographic; loyalty

E) behavioral; geodemographic

Answer: C

Explanation: Gloria starts by identifying a geodemographic segment (active retirees in a nearby

community). She then moves on to design a marketing mix based on the lifestyle of her target

market. Firms often employ a combination of segmentation methods, using demographics and

geography to identify and target marketing communications to their customers, then using benefits

or lifestyles to design the product or service and the substance of the marketing message.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

69) Marketers often employ a combination of segmentation methods, using ________ to identify

and target their customers, and ________ to design products and messages to appeal to them.

A) loyalty segmentation; demographics

B) undifferentiated targeting; differentiated targeting

C) loyalty segmentation; geodemographics

D) demographics and geography; lifestyle or benefit segmentation

E) lifestyle segmentation; geographic segmentation

Answer: D

Explanation: Knowing what benefits customers are seeking or how the product or service fits a

particular lifestyle is important for designing an overall marketing strategy, but such segmentation

schemes present a problem for marketers attempting to identify specifically which customers are

seeking these benefits. Firms often employ a combination of segmentation methods, using

demographics and geography to identify and target marketing communications to their customers,

then using benefits or lifestyles to design the product or service and the substance of the marketing

message.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) Caren has identified four potential market segments for her Rent-A-Chef home meal catering

service. The next step is to

A) categorize each market segment by consumer demographics.

B) establish her overall objectives.

C) decide on a targeting strategy.

D) develop a positioning strategy.

E) evaluate the attractiveness of each segment.

Answer: E

Explanation: After identifying potential market segments, the next step is to evaluate the

attractiveness of each segment.

Difficulty: 2 Medium

Topic: Steps in Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

71) Caren has identified four potential market segments for her Rent-A-Chef home meal catering

service. She will now evaluate whether or not each segment is attractive relative to all of the

following except

A) substantial.

B) responsive.

C) profitable.

D) reachable.

E) realistic.

Answer: E

Explanation: When evaluating a segment's attractiveness, we consider whether the segment is

substantial, responsive, profitable, reachable, and identifiable.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) Juan has identified four potential market segments for his Rent-A-Nurse service. He will now

compare the segments to see if they are distinct from each other. Juan is evaluating whether or not

each segment is

A) identifiable.

B) responsive.

C) profitable.

D) reachable.

E) substantial.

Answer: A

Explanation: A segment is identifiable if the marketer can identify who is in the segment, and

distinguish it from other segments.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) Marta is concerned that one of the potential market segments she has identified for her dog

grooming service is too small and has too little income to have sufficient buying power. Marta is

concerned with whether the segment is

A) substantial.

B) responsive.

C) profitable.

D) reachable.

E) identifiable.

Answer: A

Explanation: A segment is substantial if it is large enough to be worth targeting, and if the

segment members have sufficient buying power. If a market is too small or its buying power

insignificant, it won't generate sufficient profits or be able to support the marketing mix activities.

"Substantial" is a better answer than "profitable" because even a small segment with few people

who can afford the product could be profitable in some circumstances, depending on price, margin,

and so on.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Bryan wants to sell personal website services to American soldiers in Afghanistan. Because of

the difficulty of communicating with people in a war zone, Bryan may have trouble with this

segment not being

A) substantial.

B) perceptive.

C) identifiable.

D) reachable.

E) quantifiable.

Answer: D

Explanation: The best product or service cannot have any impact, no matter how identifiable or

substantial the target market is, if that market cannot be reached (or accessed) through persuasive

communications and product distribution. The consumer must know that the product or service

exists, understand what it can do for him or her, and recognize how to buy it.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

75) With access to the Internet nearly universal in the United States, many potential market

segments have become more

A) substantial.

B) perceptive.

C) identifiable.

D) reachable.

E) quantifiable.

Answer: D

Explanation: A segment is reachable if it can be reached for marketing communication and

product distribution. Internet access has opened up many new ways to reach consumers.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) Talbots, an upscale women's clothing store, targets college-educated women between 35 and

55 years old with average household income of $75,000 or more. This is a form of ________

segmentation.

A) benefit

B) geodemographic

C) psychographic

D) demographic

E) geographic

Answer: D

Explanation: Demographic segmentation groups consumers according to easily measured,

objective characteristics such as age, gender, income, and education.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

77) When Talbots, an upscale women's clothing store, tries to portray an image of "traditional,

conservative, and with good taste," it is appealing to its target market's

A) lifestyle.

B) geodemographics.

C) demographics.

D) loyalty.

E) Tapestry segment.

Answer: A

Explanation: Determining psychographics involves knowing and understanding three

components: self-values, self-concept, and lifestyles. This is a lifestyle (psychographic) segment

because consumers are defined in terms of their lifestyle and self-concept.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) College students can be a less ________ market segment because students' media habits are

quite diverse and firms might have to use a wide variety of media to attract this segment.

A) substantial

B) perceptive

C) identifiable

D) reachable

E) quantifiable

Answer: D

Explanation: Although there are many potential ways to reach college students, their media

habits diverge so much that it can be difficult to reach them without using a wide variety of media.

The consumer must know that the product or service exists, understand what it can do for him or

her, and recognize how to buy it.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

79) For a segmentation strategy to be successful, the customers in the segment must react similarly

and positively to the firm's offering. In other words, the market segment must be

A) substantial.

B) perceptive.

C) identifiable.

D) reachable.

E) responsive.

Answer: E

Explanation: A segment is responsive if its members react similarly and positively to the

marketing offering.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) When Starbucks first opened, many critics suggested, "No one will pay $4 for a cup of coffee."

Starbucks's critics suggested consumers would not be ________ to the company's offerings.

A) responsive

B) perceptive

C) identifiable

D) reachable

E) quantifiable

Answer: A

Explanation: A segment is responsive if its members react similarly and positively to the

marketing offering. Early critics did not believe that consumers would respond positively to the

offer of a $4 cup of coffee.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

81) The manager of Plantation River Country Club wanted members of the very upscale club to

use the bar and dining facilities more frequently. He offered a two-for-one "happy hour" special,

but few members showed up. The manager did not have a grasp of what would make his target

market

A) substantial.

B) responsive.

C) identifiable.

D) reachable.

E) quantifiable.

Answer: B

Explanation: A segment is responsive if its members react similarly and positively to the

marketing offering. The country club members did not respond positively to the happy hour

special.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) Carol is assessing market growth, market competitiveness, and market access for each segment

she has identified. Carol is assessing the ________ of each potential market segment.

A) substance

B) responsiveness

C) identification

D) reach

E) profitability

Answer: E

Explanation: Evaluation of profitability considers market growth, market competitiveness, and

market access, along with focusing the assessments on the potential profitability of each segment,

both current and future.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) After assessing the market growth potential in Mexico for his company's baby products,

Harold wanted to evaluate market competitiveness. To do this, Harold would consider

A) mass marketing of distribution potential and logistical support.

B) the current size of the market and the expected growth rate.

C) ease of pricing control and number of promotional outlets.

D) the number of competitors, entry barriers, and product substitutes.

E) profitability and customer buying behavior.

Answer: D

Explanation: Evaluation of profitability considers market growth, market competitiveness, and

market access, along with focusing the assessments on the potential profitability of each segment,

both current and future. Market competitiveness includes the number of competitors, entry

barriers, and product substitutes.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) After assessing the market growth potential and market competitiveness in Mexico for his

company's baby products, Harold wanted to evaluate market access. To do this, Harold would

consider

A) ease of accessing or developing distribution channels and brand familiarity.

B) the current size of the market and the expected growth rate.

C) ease of pricing control and number of promotional outlets.

D) the number of competitors, entry barriers, and product substitutes.

E) profitability and customer buying behavior.

Answer: A

Explanation: Evaluation of profitability considers market growth, market competitiveness, and

market access, along with focusing the assessments on the potential profitability of each segment,

both current and future. Market access includes ease of developing or accessing distribution

channels and brand familiarity.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

85) Which of the following would not be used in calculating the profitability of a segment?

A) segment perceptions

B) segment size

C) segment adoption percentage

D) profit margin percentage

E) fixed costs

Answer: A

Explanation: A calculation of segment profitability uses segment size, estimated segment

adoption percentage, purchase behavior (frequency and price), profit margin percentage, and fixed

costs.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) Lorna is looking to expand her pet grooming business and wants to evaluate the profitability of

a potential new market. The area she is looking at has 2,000 homes and Lorna estimates that 20

percent of them would be likely to use her service. She charges $45 per grooming and on average

customers groom their pets six times a year. Lorna estimates her variable costs to expand her

business will be $10 per grooming and her fixed costs are $10,000. How much profit would Lorna

make on this new segment?

A) $72,240

B) $98,000

C) $108,000

D) $128,000

E) $410,000

Answer: A

Explanation: Segment profitability = (Segment size × Segment adoption percentage × Purchase

behavior × Profit margin percentage) − Fixed costs.

Segment profitability = (Segment size × Segment adoption percentage × Purchase behavior ×

Profit margin percentage) − Fixed costs.

Segment size = Number of people in the segment

Segment adoption percentage = Percentage of customers in the segment who are likely to adopt the

product/service

Purchase behavior = Purchase price × Number of times the customer would buy the

product/service in a year

Profit margin percentage = (Selling price − Variable costs) ÷ Selling price

Fixed costs = Advertising expendure, rent, utilities, insurance, and administrative salaries for

managers

Calculations based on our example are as follows:

Segment profitability = (2,000 × 20% × (45 × 6) × (45 − 10) ÷ 45) − $10,000

Segment profitability = (400 × (270) × (35) ÷ 45)) − $10,000

Segment profitability = (108,000 × $0.78) − $10,000

Segment profitability = $82,240 − $10,000

Segment profitability = $72,240

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

87) Fiona is trying to determine whether the segments she is considering for her day care center

will be profitable. Which of the following will not specifically help her in this analysis?

A) the number of children needing day care in the immediate area

B) the fixed costs of operating the center

C) the percentage of parents in the area who can both afford to send their child or children to day

care and who are willing to do so

D) the average number of school-age children in families sending a child to the day care center

E) the price she would charge minus the variable cost of providing service to each child

Answer: D

Explanation: The number of children needing day care and the percentage of parents able and

willing to send a child to day care are factors that will help determine the segment size. The fixed

costs and price minus variable cost will help determine costs and profit margin. School-age

siblings of day care center children are not relevant to the calculation unless the day care center

also has an after-school program of some sort, and the question does not mention any such

program.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

88) Ron wants to develop an Internet auction-based business and is working through the STP

process. After establishing his objectives, describing potential market segments, and evaluating

the attractiveness of each segment, Ron now has to

A) differentiate his product line.

B) consider future customer loyalty.

C) create a perceptual map.

D) select a target market.

E) divide geographic segments into lifestyle groups.

Answer: D

Explanation: After setting objectives, forming segments, and evaluating segment attractiveness,

the next step of the STP process is to select one or more target markets.

Difficulty: 2 Medium

Topic: Steps in Market Segmentation

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

89) When selecting a target market, firms will be most successful if they

A) decide between demographic and geographic segmentation methods.

B) seek out opportunities to customize products.

C) develop a strong communication plan.

D) match the firm's competencies with a market segment's attractiveness.

E) reposition the brand.

Answer: D

Explanation: Firms will usually find the most success if they choose attractive segments whose

needs match the firm's competencies.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

90) ________ involves defining the firm's marketing mix variables so that target customers have a

clear, distinctive, desirable understanding of the firm's offerings relative to competitors' offerings.

A) Processing

B) Perceptualizing

C) Positioning

D) Proportioning

E) Prospecting

Answer: C

Explanation: Market positioning involves a process of defining the marketing mix variables so

that target customers have a clear, distinctive, desirable understanding of what the product does or

represents in comparison with competing products.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

91) Whenever Don calls on potential pest control customers, he emphasizes the fact that, unlike the

national franchise competitors, he is a local business person and has been in business over 20

years. Don is ________ his business relative to his competition.

A) segmenting

B) packaging

C) positioning

D) pricing

E) targeting

Answer: C

Explanation: Don is positioning his business relative to the competition by focusing on his

investment in the local neighborhood and his years of experience serving local customers.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

92) Regina wants to position her financial services company. Regina can position her services

according to all of the following except

A) the value proposition.

B) product attributes.

C) symbols.

D) competitive comparisons.

E) profitability.

Answer: E

Explanation: Each of these is an option to consider when positioning a product except

profitability.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

93) Whenever the president of the local public university promotes the institution, he emphasizes

the university's price (much lower than neighboring private colleges) and high quality. He is

positioning the institution based primarily on

A) the value proposition.

B) product attributes.

C) symbols.

D) competitive comparisons.

E) profitability.

Answer: A

Explanation: Value is a popular positioning method because the relationship of price to quality is

among the most important considerations for consumers when they make a purchase decision. By

emphasizing the low price and high quality, the university president is focusing on value.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

94) We often see advertisements touting a product as being made with natural ingredients, or being

long-lasting. Marketers using these types of promotions are positioning their products based

primarily on

A) the value proposition.

B) product attributes.

C) symbols.

D) competitive comparisons.

E) profitability.

Answer: B

Explanation: Natural ingredients and long-lasting effects are examples of attributes that may be

salient (important) to the target market.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

95) Marc was assigned to help create a positioning strategy for his employer's products based on

product attributes. He should consider

A) the features the engineers feel are most important.

B) the ways the sales representatives have been positioning the firm's products.

C) the characteristics that helped his firm win a statewide award for excellence in manufacturing.

D) what the target market would consider the most important features.

E) the safety record of the firm and its products.

Answer: D

Explanation: Positioning should be done with the target market's needs in mind. What matters is

which attributes are salient (important) to potential customers.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

96) Almost all U.S. political candidates use some combination of red, white, and blue in their

campaign posters. They are trying to position themselves in voters' minds using

A) the value proposition.

B) salient attributes.

C) symbols.

D) the competition.

E) perceptual maps.

Answer: C

Explanation: A well-known symbol can also be used as a positioning tool. Red, white, and blue

colors serve as symbols in this context because they call to mind the U.S. flag.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

97) Jimmy wants to position his firm against his competitors. In doing so he should

A) never select a competitor in the same neighborhood.

B) avoid making the competitor's product look undesirable.

C) avoid looking too much like the competitor so as not to confuse the target segment.

D) avoid discussing the strengths of his product so that competitors won't be aware of his product

quality.

E) avoid discussing the weaknesses of his competitors so they won't retaliate.

Answer: C

Explanation: Marketers must be careful that they don't position their product too closely to their

competition. One danger in positioning against competitors is that the firm may end up confusing

customers unless a clear distinction is made between the firm's products and those of competitors.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

98) A ________ is often used to illustrate the position of a firm's products or brands in consumers'

minds.

A) mass marketing analysis

B) psychographic profile

C) perceptual map

D) loyalty timeline

E) Tapestry analysis

Answer: C

Explanation: Perceptual maps show the position of a firm's products and those of competitors in

the minds of consumers.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

99) Within a perceptual map, a(n) ________ represents where a particular market segment's

desired product would lie.

A) point of parity

B) strategic target

C) Tapestry cluster

D) ideal point

E) benefit centroid

Answer: D

Explanation: The ideal point is the point representing the target market's "perfect" product

offering.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

100) "Why create a perceptual map?" asked Dave. Andrea, the senior marketing manager, gave

him four reasons. All of the following are valid reasons except

A) "It's a quick way for senior managers to see not only our product but each of our competitors'

products, all at once."

B) "It's a way to demonstrate the dimensions that our customers think are important."

C) "It shows where we aren't—and where our competitors aren't—in our customers' and prospects'

minds."

D) "It's a way to show the position of the company throughout the product's life cycle."

E) "We can easily show where we are positioned and how large the market is."

Answer: D

Explanation: A perceptual map shows the current position of a company's products, not a future

position.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

101) The perceptions of ________ are being measured in a perceptual map.

A) competitors

B) strategic planners

C) the company's executive team

D) the current R&D team

E) consumers

Answer: E

Explanation: Perceptual maps measure perceptions of consumers, not of competitors or members

of the firm.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

102) Which of the following segmentation methods is being used when M&M's offers special

wedding-themed packaging for customized M&M's (imprinted with the names of the bride and

groom)?

A) occasion segmentation

B) geographic segmentation

C) lifestyle segmentation

D) benefit segmentation

E) loyalty segmentation

Answer: A

Explanation: Behavioral segmentation based on when a product or service is purchased or

consumed is called occasion segmentation.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

103) Godiva Chocolates produces specially decorated boxes of candies for Valentine's Day,

Easter, and Christmas. This is an example of ________ segmentation.

A) occasion

B) loyalty

C) geographic

D) psychographic

E) demographic

Answer: A

Explanation: Behavioral segmentation based on when a product or service is purchased or

consumed is called occasion segmentation.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

104) Which of the following defines a value proposition?

A) the unique value that a product or service provides to customers

B) a special discount offer dropping the price

C) an advertisement that talks about value

D) a display of the position of products or brands in the consumer's mind

E) the one feature that will prompt a customer to buy the product

Answer: A

Explanation: A value proposition defines the unique value the product or service provides its

customers, how it differs from those of competitors, and communicates the customer benefits to

be received from a product or service and thereby provides reasons for wanting to purchase it.

Difficulty: 1 Easy

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

105) Overriding desires that drive how we live our lives are called

A) self-values.

B) self-concept.

C) self-esteem.

D) self-confidence.

E) self-control.

Answer: A

Explanation: Self-values are goals for life, not just the goals one wants to accomplish in a day.

They are the overriding desires that drive how a person lives his or her life.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

106) When Kellogg's offers different cereals, such as Cocoa Krispies and Special K, it is

segmenting the market by ________ segmentation methods.

A) demographic.

B) geographic.

C) loyalty.

D) geodemographic.

E) occasion.

Answer: A

Explanation: Kellogg's uses different cereals to appeal to different demographic segments.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

107) When evaluating the attractiveness of the segment, if a segment is expected to react positively

to the firm's offering, we say that the segment is

A) responsive.

B) identifiable.

C) reachable.

D) substantial.

E) reactive.

Answer: A

Explanation: For a segmentation strategy to be successful, the customers in the segment must

react similarly and positively to the firm's offering. This is referred to as a responsive segment.

Difficulty: 1 Easy

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

108) What is the best situation in the Circles for a Successful Value Proposition framework?

A) The firm's benefits overlap with both customer needs/wants and competitors' benefits.

B) The firm's offering overlaps with customer needs/wants but not with competitors' offerings.

C) The firm's offering overlaps with competitors' benefits but not with customer needs/wants.

D) Customer needs/wants overlap with both the firm's benefits and competitors' benefits.

E) None of the three circles overlaps.

Answer: B

Explanation: The best situation is if a firm's product or service offering overlaps with customer

needs and wants but suffers no overlap with competitors' offerings.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

109) In the Circles for a Successful Value Proposition framework, the value proposition is

represented by

A) the intersection between customer needs/wants and competitors' benefits.

B) the intersection between the firm's benefits and competitors' benefits.

C) the intersection between customer needs/wants and the firm's product's benefits.

D) the intersection between all three of the circles.

E) the part of the firm's benefits that doesn't overlap with anything.

Answer: C

Explanation: The value proposition is the intersection between customer needs/wants and the

benefits offered by the firm. This is the area in which customer needs/wants match the benefits the

firm can offer.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

110) In the Circles for a Successful Value Proposition framework, the portion of the customer

needs/wants circle that doesn't overlap with anything else represents

A) the firm's value proposition.

B) competitors' value propositions.

C) low-priority needs and wants that customers are willing to give up.

D) unmet customer needs/wants.

E) unknown customer needs/wants that the firm does not understand.

Answer: D

Explanation: The portion of the customer needs/wants circle that doesn't overlap with anything

represents customer needs/wants that are at present unmet by any offering. These represent an

opportunity to serve the customers by meeting these needs.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

111) All of the following are one of the main components of a value proposition except

A) the target market.

B) the name of the product or brand being offered.

C) the product/service category or concept being offered.

D) the price of the product or service being offered.

E) the unique point of difference or benefits offered.

Answer: D

Explanation: The value proposition consists of a brand/product name, a category or concept, and

a unique point of difference or benefit. The price captures the value to the consumer.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

112) Let's Dish is a meal-preparation service operating in three states. Customers visit a Let's Dish

store to select and partially prepare their meals, which are then packaged for the freezer. At home,

the customer can pull a meal out of the freezer and warm it in the oven or microwave. If Let's Dish

wanted to expand into new areas of the United States, what segmentation method would probably

be most useful in choosing new locations?

A) loyalty segmentation

B) benefit segmentation

C) psychographic segmentation

D) geodemographic segmentation

E) demographic segmentation

Answer: D

Explanation: Geodemographic segmentation is the best choice because Let's Dish needs to be

located near its customers. It could compare demographic profiles for neighborhoods near

successful current locations, and seek out similar neighborhoods in other geographic areas.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

113) Social networking sites that compete directly with Facebook have a difficult time surviving;

however, LinkedIn has survived by focusing on the needs of business professionals, who seek to

network with colleagues, share their expertise, post online résumés, and look for new jobs. What

segmentation method is LinkedIn using?

A) loyalty segmentation

B) benefit segmentation

C) psychographic segmentation

D) geodemographic segmentation

E) demographic segmentation

Answer: B

Explanation: This is benefit segmentation, which groups consumers on the basis of the benefits

they derive from products or services. Many LinkedIn users also have a Facebook account, but

LinkedIn offers them the opportunity to network with their colleagues and contacts in a

professional environment. It might seem like demographic segmentation, but LinkedIn spans a

very wide range of ages, occupations, and income levels.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

114) You are employed at a hotel near Boston University, and want to increase the hotel's appeal to

the parents of university students. How could the hotel market itself to these parents?

Answer: Answers will vary, but might include: present the hotel as a virtual extension of the

school (e.g., keep sports memorabilia in the front lobby); pitch offers to parents that are valuable

enough to encourage them to keep coming back for all four (or five or six) years that their students

are enrolled in the school; hand out cards, preprinted with the dates of key events for the upcoming

year, such as homecoming or graduation, so that parents can book their next trips well in advance;

and address the customer experience in an effort to enhance customer loyalty.

Difficulty: 2 Medium

Topic: Steps in Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

115) Why must a firm's STP strategy be consistent with and derived from the firm's mission and

objectives?

Answer: Segmentation, targeting, and positioning begin with the recognition that no firm has

sufficient resources to be all things to all customers. When a firm's STP strategy is consistent with

and derived from its mission and objectives, it focuses the firm toward opportunities that grow out

of what the firm is doing well and not in a random direction. Focused STP strategy acknowledges

weaknesses and threats and builds upon strengths and opportunities (SWOT).

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

116) In theory, why is micromarketing the ultimate in STP strategy? What is the weakness

associated with micromarketing?

Answer: Micromarketing (or one-to-one marketing) is tailoring a firm's products or services to

suit an individual customer's wants or needs. Micromarketing then creates value on an individual

basis, adjusting the product or service to meet the particular needs of each customer.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

117) Assume you are the marketing consultant for your university, which wants to focus its

marketing efforts on retention of current students. You have a choice of segmenting the

undergraduate student market on either a geographic or psychographic basis. What is the

difference between the two? Which would you recommend, and why?

Answer: Answers will vary, by the type of institution. Geographic segmentation organizes

customers on the basis of where they live. University students could be divided geographically into

on-campus and off-campus segments or in-state and out-of-state basis. Psychographic

segmentation divides students based on how students see themselves, including self-values,

self-concept, and lifestyles. For example, students could be divided into groups such as "nerds,"

"jocks," "socialites," and "partygoers." Which to recommend will vary but, since the university is

focusing on retention, psychographics may be more appropriate since it addresses why people

attend the school.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

118) Assume you are the marketing consultant for your university, which wants to focus its

marketing efforts on recruiting new students. You have a choice of segmenting the undergraduate

student market on either a demographic or benefit basis. What is the difference between the two?

Which would you recommend, and why?

Answer: Answers will vary, by the type of institution. Potential students could be segmented

demographically by age, gender, or income. Knowing what past students valued by demographic

characteristics would allow the university to create targeted messages for each demographic

group. Benefit segmentation would divide students on the basis of what they expect or want from

an education: jobs, prestige, social interaction, entry into graduate school, etc. While this would be

useful in developing a marketing campaign, it might be difficult to identify potential students who

seek the various benefits. If possible, a combination of the two strategies could be used to develop

a strong marketing campaign.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

119) Choose a fast-food restaurant chain that does business in your area. Describe the company's

target market, and explain how its marketing mix is designed to appeal to this target market.

Answer: Answers will vary, Professors may want to substitute the name of the nearest fast-food

restaurant chain. For instance, McDonald's: The Golden Arches clearly are designed to attract the

attention of young children. Even kids who cannot read recognize the McDonald's symbol. The

colorful playgrounds and frequent promotional tie-ins with Disney are also targeted toward young

children. Ronald McDonald is another effort to target young children. Food, the company's

product, is in many ways secondary.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

120) Develop a lifestyle segmentation scheme for students at your university, and label and

describe three segments. You can think of this as developing your own version of the VALS tool,

but specifically for college students.

Answer: Answers will vary, but creative students will have fun with this. Applying the VALS

dimensions (resources and motivation) to college students might produce segments like Workers

(middle- or lower-income students with high energy levels and motivation) and Floaters (middle-

or upper-income students with low energy levels and low motivation).

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

121) Marketers find psychographics a valuable segmentation approach. What are some of the

limitations of psychographic segmentation and what can marketers do to offset those limitations?

Answer: Psychographics are not as objective as demographics and not as easy to develop as

geographic segmentation. As a result, marketers will often combine psychographics with other

segmentation methods. Students should be able to contrast various segmentation methods.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

122) The text states that "geodemographic segmentation can be particularly useful for retailers."

Use a local retailer to describe how geodemographic segmentation could be useful.

Answer: Answers will vary, Professors might want to substitute the name of a local retailer

students are familiar with. Responses should include a definition of geodemographic segmentation

as segmentation based both on where people live and on demographics. Geodemographic

segmentation is particularly useful to brick-and-mortar retailers because customers typically

patronize stores close to their neighborhoods.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

123) Why does loyalty segmentation make so much sense? Describe how a local pizza restaurant

could employ loyalty segmentation.

Answer: Loyalty segmentation makes sense because loyal customers make repeat purchases,

create word-of-mouth referrals, and are usually a firm's most profitable segment. A local pizza

restaurant could reinforce loyalty by a punch card with the tenth pizza free. It could also have an

annual private pizza party for regulars. Simply remembering regular customers' names and

preferences reinforces loyalty. Loyal customers are the most profitable in the long term.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

124) Gloria's Kayak Tours identified active retirees living in the retirement community nearby as

one of her potential target markets. She knows she can tailor her service and marketing message to

the schedules and interests of this audience. How will Gloria evaluate the attractiveness of this

segment?

Answer: She has already identified the segment; active retirees in a local retirement community.

Next, she will assess if the segment is substantial. That can be done by finding an estimate of the

number of people living in the community, and by estimating the percentage that are active and

healthy enough to engage in kayaking. The next question is, is the segment reachable? Can she

access this group with marketing messages, or does the retirement community control access (or

perhaps already provides outdoor recreational services like kayaking)? Her next criterion is

responsiveness. Are the people in this segment likely to react similarly and positively to her

marketing efforts? Do they want to go kayaking? Last, she will assess profitability—can she make

a profit leading these types of tours for this audience?

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

125) Jerry is looking to expand his lawn-mowing business and wants to evaluate the profitability

of a potential new market. The area he is looking at has 400 homes and Jerry estimates that 10

percent of them would be likely to use his service. He charges $25 per mowing and on average

customers mow their lawns 20 times a year. Jerry estimates the variable costs to expand his

business will be $5 per mowing and his fixed costs are $2,000. How much profit would Jerry make

on this new segment?

Answer: Segment profitability = (Segment size × Segment adoption percentage × Purchase

behavior × Profit margin percentage) − Fixed costs.

Segment size = Number of people in the segment

Segment adoption percentage = Percentage of customers in the segment who are likely to

adopt the product/service

Purchase behavior = Purchase price × Number of times the customer would buy the

product/service in a year

Profit margin percentage = (Selling price − Variable costs) ÷ Selling price

Fixed costs = Advertising expenditure, rent, utilities, insurance, and administrative salaries for

managers

Calculations based on our example are as follows:

Segment profitability = (400 × 10% × (25 × 20) × (25 − 5) ÷ 25) − $2,000

Segment profitability = (40 × (500) × (20) ÷ 25)) − $2,000

Segment profitability = (20,000 × $0.8) − $2,000

Segment profitability = $16,000 − $2,000

Segment profitability = $14,000

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

126) Segment profitability asks marketers to consider segment size, segment adoption percentage,

purchase behavior, profit margin percentage, and fixed costs. Select three of these five elements

and explain where marketers will find solid quantifiable information to make the calculations.

Answer: Students' answers will depend on the choice they make. They should be able to identify

internal and external sources. Their answers should also explore the nature of the data and how

reliable it might be. New products will challenge the students.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

127) Ronald is developing an Internet auction-based business. After establishing his objectives,

describing potential market segments, and evaluating the attractiveness of each segment, Ronald

now has to choose which target market to focus his efforts on. What factors should influence his

decision?

Answer: His ability to pursue each target segment is a key factor. Since it is an Internet

auction-based business, Ronald should be able to access information about past sales of similar

products, number of bidders, and prices. This will help determine the attractiveness of each

segment. He should also consider his strengths and weaknesses relative to the other competitors

and look for opportunities and potential threats. He will also want to consider whether to adopt an

undifferentiated, differentiated, concentrated, or micromarketing targeting strategy.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

128) Create a positioning strategy for your school's business program. How do you want potential

students to view your program?

Answer: Answers will vary, but should start with the goal of providing potential students with a

clear, distinctive, and desirable understanding of what the business program is about and how it

compares with other programs both on campus and at nearby competing institutions. A positioning

strategy for the business program will likely include persuasive communication about the value

proposition and product attributes, probably focusing on career opportunities, salaries, and

reputation of the program.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

129) UPS, FedEx, DHL, and the United States Postal Service are four major competitors in the

private package delivery market. Choose one of the four firms and describe its positioning efforts.

Answer: This question can be changed to address a different industry with which students would

be more familiar if necessary. All four firms offer an array of delivery services, times, and prices

with none of the competitors having a distinct position.

• UPS uses its distinctive brown color both on trucks and delivery personnel. It acts as a strong

symbol. UPS also enforces strict rules about professional dress and even facial hair for their

employees.

• Similarly, FedEx uses its red, white, and blue colors and more recently a green, white, and blue

combination. FedEx also acquired Kinko's, creating added convenience as a positioning strategy.

Both FedEx and UPS emphasize global distribution. FedEx frequently uses placement advertising

(think Tom Hanks in Cast Away) to promote its services.

• DHL is less known in the U.S. market but well known in Europe. Its yellow and red trucks are

distinctive and eye-catching.

• USPS, of course, has a government-created monopoly for mail delivery. USPS is generally

known for universal delivery compared to the others (who, for example, do not deliver to PO

boxes).

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

130) You are the marketing manager of a company that sells indoor lighting fixtures. When

developing the company's positioning strategy, you choose to position the company's offerings

against the offerings of your competitors. What would you expect your competitors to do?

Answer: Students should identify the dynamic nature of competition and expect the competition

will respond accordingly. Some competitors will retaliate. Others may simply choose a different

position. Others might engage in legal action if they feel sufficiently threatened.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand; Apply

AACSB: Analytical Thinking; Knowledge Application

Accessibility: Keyboard Navigation

131) Imagine that you are a marketing executive at a toothpaste manufacturing company. How

would you create and use a perceptual map? What positioning criteria might you use in creating it?

Answer: Creating a perceptual map involves six steps:

• Determining consumers' perceptions and evaluations of a product in relation to competitors'

• Identifying the market's ideal points and size

• Identifying competitors' positions

• Determining consumer preferences

• Selecting a position

• Monitoring the positioning strategy

Toothpaste manufacturers might include criteria such as tartar control, gum disease prevention,

helping bad breath, teeth whitening, taste, health, or safety.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

132) In a perceptual map of two dimensions, how are these dimensions determined?

Answer: Students should identify the marketing research component, but they should also stress

the importance of customers' perceptions. Some may focus on the competitors' positions, but the

key is the consumer.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

133) Segmentation, targeting, and positioning involve a number of processes, many decisions, and

many different options. With all that effort, why are marketers so concerned with STP?

Answer: Students should demonstrate an overall understanding of STP, and they should reflect

on the importance of leveraging resources, working with customers' needs, establishing value, and

creating the kinds of competitive advantages based on building relationships with customers.

Difficulty: 3 Hard

Topic: Steps in Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) Imagine that you are a marketing executive for a company that manufactures office supplies,

including pens and pencils. What type of marketing strategy would you consider for these

products, and why?

Answer: An undifferentiated targeting strategy is appropriate for commodities and products that

provide the same benefits to everyone.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

135) Create an example of geodemographic segmentation.

Answer: Answers will vary, but should combine geographic and demographic bases for

segmentation.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Create

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

136) Your business is best described as an entrepreneurial start-up venture with limited resources.

It sells basketball sneakers for women. Describe the marketing strategy that is most beneficial for

your company.

Answer: Entrepreneurial start-up ventures often benefit from using a concentrated strategy,

which allows them to employ their limited resources more efficiently.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) Which of the segmentation attractiveness criteria is addressed when Magnolia Café asks the

question, "Are there enough employees in the government center to justify targeting the center for

lunch delivery service?"

Answer: Are there enough employees in the government center to justify targeting the center for

lunch delivery service?" addresses the question of whether the segment is substantial.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

138) Which of the segmentation attractiveness criteria is addressed when Magnolia Pizzeria asks

the question, "Are private food service companies allowed to deliver pizzas on the military base?"

Answer: "Are private food service companies allowed to deliver pizzas on the military base?"

addresses the question of whether the segment is reachable.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

139) Which of the segmentation attractiveness criteria is assumed by the statement, "Build it, and

they will come"?

Answer: "Build it, and they will come" assumes the segment will be responsive.

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

140) Why do marketers often use perceptual maps when developing positioning strategies?

Answer: Perceptual maps help marketers visualize their product's position relative to

competitors' offerings.

Difficulty: 2 Medium

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

141) List the steps in the segmentation, targeting, and positioning process.

Answer:

• Segmentation: step 1, establish overall strategy or objectives; step 2, use segmentation methods

• Targeting: step 3, evaluate segment attractiveness; step 4, select target market

• Positioning: step 5, identify and develop positioning strategy

Difficulty: 1 Easy

Topic: Steps in Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

142) As the marketing manager of your firm, you are responsible for evaluating segments based on

their attractiveness. Identify the five criteria and explain how your firm would use this information

to determine if a segment is worth pursuing.

Answer:

• Identifiable: A firm must be able to identify who is in a segment to be able to design products or

services to meet their needs. It is also important that segments are distinct from one another.

• Substantial: A firm should measure the size of the potential market and identify if the size and

buying power are sufficient to justify targeting the segment.

• Reachable: Products or services will not have any impact, no matter how identifiable or

substantial the target market is, if the market cannot be reached both for marketing

communications and for product distribution.

• Responsive: A customer should react positively to the firm's offering. If a company feels that it

cannot provide products or services that will be attractive to the segment, it should not target it.

• Profitable: A firm should assess the potential profitability of each segment, both current and

future. Included in this analysis should be market growth, market competitiveness, and market

access.

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) Identify two methods used in segmenting markets and give an example of a situation where

each might be used.

Answer: Answers will vary, the student should correctly apply each of the two selected methods

to an example (geographic, demographic, psychographic, and behavioral).

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-01 Outline the different methods of segmenting a market.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

144) Isabel is the marketing manager of a company that manufactures salt. How can Isabel use a

differentiated targeting strategy?

Answer: Answers will vary, Although basic table salt may seem undifferentiated, we can still

target several market segments with a different offering for each segment (i.e., kosher salt,

crystalline sea salt, flaked sea salt, rock salt, pickling salt) for different needs in terms of how

finely (or coarsely) the salt is ground. Salt providers also promote flavor differences based on

additional minerals in the salt.

Difficulty: 3 Hard

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

145) Evaluate why a company would use a micromarketing strategy versus an undifferentiated

strategy.

Answer: A company would choose to use a micromarketing strategy if it would need to tailor its

product or service to suit customers' wants or needs, either on an individual basis or serving very

small segments. An undifferentiated strategy would consider everyone to be a potential user of its

product or service, with similar needs.

Difficulty: 2 Medium

Topic: Target Markets

Learning Objective: 09-03 Articulate the differences among targeting strategies:

undifferentiated, differentiated, concentrated, or micromarketing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

146) A laptop manufacturer is considering designing and marketing a left-handed laptop, with the

keyboard rearranged to better suit left-handed people. The CEO is left-handed, and has pointed out

to senior management that over 10 percent of the population is left-handed. It will be expensive to

design this new model, so the laptop manufacturer wants to make sure that this is an attractive

segment. For each of the five criteria of segment attractiveness, list a question the laptop

manufacturer will want to consider in evaluating the attractiveness of "left-handed laptop users" as

a segment.

Answer: Answers will vary, however, here are some possibilities:

• Identifiable—Can we identify who left-handed laptop users are? Are they distinct from other

laptop users? (At present, they are not treated as a distinct segment.)

• Substantial—Are there enough left-handed laptop users, and do they have sufficient buying

power? Based on the CEO's information, there is a fairly large potential market.

• Reachable—Can we reach the members of the segment?

• Responsive—Do left-handed people want a specialized laptop, or are they satisfied with

"normal" laptops?

• Profitable—Can the company sell enough left-handed laptops to make up for the design costs?

Difficulty: 3 Hard

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

147) Write a value proposition for your favorite restaurant.

Answer: Answers will vary, but should identify a target market, a restaurant name, a description

of the category or concept for the restaurant, and identification of a unique point of difference or

benefit offered by the restaurant.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-04 Determine the value proposition.

Bloom's: Create

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

148) Social networking sites that compete directly with Facebook have a difficult time surviving;

however, LinkedIn has survived by focusing on the needs of business professionals, who seek to

network with colleagues, share their expertise, post online résumés, and look for new jobs. Write a

value proposition for LinkedIn.

Answer: The answer should be something like this: to business professionals (target market),

LinkedIn (name of service) offers a social network (category of service), providing a professional

environment in which to network with colleagues, share your expertise, and advance your career.

Difficulty: 3 Hard

Topic: Positioning

Learning Objective: 09-05 Define positioning, and describe how firms do it.

Bloom's: Create

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

149) Healthcare Options markets health-care aids such as walkers, crutches, and portable oxygen

tanks. It is located in a large city with branches in neighboring suburbs. It needed to determine if

one of its stores was profitable or if it should close it. What is the formula for determining

profitability?

Answer: Segment profitability = (Segment size × Segment adoption percentage × Purchase

behavior × Profit margin percentage) − Fixed costs

Difficulty: 2 Medium

Topic: Methods of Market Segmentation

Learning Objective: 09-02 Describe how firms determine whether a segment is attractive and

therefore worth pursuing.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 10 Marketing Research

1) One of the benefits of marketing research that it reduces the uncertainty under which managers

make decisions.

Answer: TRUE

Explanation: This is the primary point of marketing research—to provide information on which

to base successful decision making.

Difficulty: 1 Easy

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) Marketing research should be used only to produce favorable recommendations for senior

management to consider.

Answer: FALSE

Explanation: This is not at all the case; in fact, if there is reason to believe that senior

management will listen only to results that confirm currently held views, there is no point in

conducting marketing research. Marketers must ask questions such as, Will the research be useful?

Will it provide insights beyond what the managers already know and reduce uncertainty associated

with the project? Is top management committed to the project and willing to abide by the results of

the research?

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) The marketing research process follows five steps, and to be effective they must be followed in

order without omitting any steps.

Answer: FALSE

Explanation: Researchers may go back and forth between the five steps as needed, perhaps using

results from one study to guide the design of another study related to the same objectives and

needs.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) Before conducting marketing research, it is important to establish in advance exactly what

problem needs to be solved.

Answer: TRUE

Explanation: The first task in marketing research is to clearly define the objectives and

understand what problem needs to be solved—what information is required, and what questions

need to be answered.

Difficulty: 1 Easy

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) Briana is looking at the results of a syndicated study conducted two years ago. Briana is looking

at primary data.

Answer: FALSE

Explanation: Data collected in advance of the current project is secondary data.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) Primary data include external as well as internal data sources.

Answer: FALSE

Explanation: Secondary data include external as well as internal data sources.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) In the marketing research process, data collection happens after research design.

Answer: TRUE

Explanation: Before data are collected, the research should be designed to ensure that data

collection is conducted in a way that will suit the research needs and objectives. Based on the

design of the project, data can be collected from secondary or primary data sources.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) Lee is conducting a marketing research project. He is not sure what questions to ask or what

types of consumers he should talk to. Therefore, Lee should begin by conducting quantitative

research.

Answer: FALSE

Explanation: Lee should start with qualitative research to gain insights into the research

questions before attempting quantitative research. Qualitative research uses broad, open-ended

questions to understand the phenomenon of interest and provides initial information that helps the

researcher more clearly formulate the research objectives.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) Warren is in a group of 8 to 12 people and is being asked questions by a trained moderator.

Warren is part of an in-depth interview group.

Answer: FALSE

Explanation: Warren is part of a focus group. In focus group interviews, a small group of people

(usually 8 to 12) come together for an intensive discussion about a particular topic. Using an

unstructured method of inquiry, a trained moderator guides the conversation according to a

predetermined, general outline of topics of interest.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) Don is analyzing and interpreting data. In the process, he is converting data into information.

Answer: TRUE

Explanation: Information results from organizing, analyzing, and interpreting data and putting

them into a form that is useful for decision makers.

Difficulty: 1 Easy

Topic: Information Technology and Data Mining

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) Data that have been collected prior to the start of the current research project are considered

primary data.

Answer: FALSE

Explanation: Secondary data are pieces of information that have been collected prior to the start

of the focal research project. Secondary data include both external and internal data sources.

Difficulty: 1 Easy

Topic: Secondary Data

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) The terms external secondary data and syndicated data mean the same thing.

Answer: FALSE

Explanation: While syndicated data are one form of external secondary data, they are not the only

form. Firms generally pay for syndicated data; however, there are also free sources of external

secondary data (such as census data).

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) When companies store information on customers' purchase histories in large computer files,

this is known as data warehousing.

Answer: TRUE

Explanation: Firms store large amounts of customer data in data warehouses, for use in reporting

and data mining.

Difficulty: 1 Easy

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) Panel data are always secondary data.

Answer: FALSE

Explanation: Panel data are information collected from a group of consumers, organized into

panels, over time. The data collected from the panelists may be a record of their purchases

(secondary data) or responses to a survey that the client has hired the firm to conduct (primary

data).

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) Neuromarketing is the process of examining consumers' brain patterns to determine their

responses to marketing communications, products, or services for the purpose of developing

marketing tactics or strategies.

Answer: TRUE

Explanation: Neuromarketing is the process of examining consumers' brain patterns to determine

their responses to marketing communications, products, or services for the purpose of developing

marketing tactics or strategies. Such insights would be invaluable for marketers to discover what

truly appeals to consumers.

Difficulty: 1 Easy

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) An example of sentiment mining is when survey data are analyzed in depth to determine

consumer attitudes toward a product.

Answer: FALSE

Explanation: Sentiment mining analyzes consumer comments on social media sites in order to

gain insights about consumers' thoughts and preferences.

Difficulty: 1 Easy

Topic: Marketing Metrics

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) A disadvantage to using secondary data is that they might not be precisely relevant to the

information needed.

Answer: TRUE

Explanation: Primary data can be tailored to the information needed; secondary data are not

always precisely relevant.

Difficulty: 1 Easy

Topic: Secondary Data

Learning Objective: 10-04 Summarize the differences between secondary data and primary data.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

18) ________ plays an important part in protecting privacy and requires companies to disclose

their privacy practices to customers on an annual basis.

A) The Center for Democracy & Technology

B) Google

C) The Electronic Privacy Information Center

D) The Federal Trade Commission

E) Amazon

Answer: D

Explanation: Several organizations, including the Center for Democracy & Technology (CDT)

and the Electronic Privacy Information Center (EPIC), have emerged as watchdogs over data

mining of consumer information. In addition, the Federal Trade Commission plays an important

part in protecting privacy and requires companies to disclose their privacy practices to customers

on an annual basis.

Difficulty: 1 Easy

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

19) ________ is the process of examining consumers' brain patterns to determine their responses

to marketing communications, products, or services for the purpose of developing marketing

tactics or strategies.

A) Data mining

B) Neuromarketing

C) Facial recognition

D) Scanning

E) Qualitative research

Answer: B

Explanation: Neuromarketing is the process of examining consumers' brain patterns to determine

their responses to marketing communications, products, or services for the purpose of developing

marketing tactics or strategies.

Difficulty: 1 Easy

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Remember

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

20) Companies are legally required to disclose their privacy practices to customers on an

________ basis.

A) monthly

B) quarterly

C) annual

D) biannual

E) weekly

Answer: C

Explanation: The Federal Trade Commission plays an important part in protecting privacy and

requires companies to disclose their privacy practices to customers on an annual basis.

Difficulty: 1 Easy

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Remember

AACSB: Ethics

Accessibility: Keyboard Navigation

21) Marketing research includes all of the following except

A) collecting data.

B) creating data.

C) recording data.

D) interpreting data.

E) analyzing data.

Answer: B

Explanation: Marketing research involves the collection, recording, analysis, and interpretation

of data. It does not, however, engage in the creation of data.

Difficulty: 1 Easy

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

22) Political consultants have been using marketing research for decades to help their candidates

understand

A) who makes up the voting public and how to reach them.

B) what ethical lapses they can get away with.

C) which consumers spend the most money.

D) how large their campaign signs should be.

E) how to buy the votes they need.

Answer: A

Explanation: Nonprofit organizations and governments use research to serve their constituencies

better. Politicians want to understand who makes up the voting public to determine how to reach

them.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) Paul subscribes to an Internet service that alerts him whenever other firms in his industry are

quoted in the media. Paul is using this type of marketing research primarily to

A) provide a link between him and his production center.

B) help him understand the needs of his customers.

C) monitor his competitors.

D) increase profits through the sale of syndicated data.

E) decide how to price his new products.

Answer: C

Explanation: Since Paul's service is informing him of quotes from managers of others in his

industry, he is monitoring his competition, which allows him to anticipate and respond quickly to

competitive moves.

Difficulty: 3 Hard

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) Every month, Dr. Combahee takes her staff to lunch and asks them to share patients' comments

and concerns. Dr. Combahee uses the lunches as an informal marketing research effort intended

primarily to

A) provide a link between herself and her profession.

B) help her understand the needs of her customers.

C) monitor her competitors.

D) decrease the uncertainty associated with decision making.

E) improve profitability.

Answer: B

Explanation: Dr. Combahee is asking specifically about comments and concerns of her

customers, thus she is primarily seeking to better understand their needs.

Difficulty: 3 Hard

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

25) Through analysis of sales data, Price-Cutters retail store found that customers who bought

peanut butter also tended to buy bananas. Price-Cutters was engaged in

A) syndicated surveying.

B) focus group analysis.

C) behavioral analysis.

D) data mining.

E) structured sampling.

Answer: D

Explanation: Data mining uses a variety of statistical analysis tools to uncover previously

unknown patterns in the data or relationships among variables. In this case, the connection

between peanut butter and banana purchases was discovered.

Difficulty: 2 Medium

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) Walmart is known for its efficient logistical systems. Every time consumers buy something,

that purchase is recorded and sent to company headquarters, where it is used to generate reorders to

vendors. In addition, customers' billions of purchases are analyzed to uncover patterns of

consumers' purchasing behavior. This is an example of

A) data isolation.

B) data mining.

C) secondary data collection.

D) sentiment mining.

E) qualitative research.

Answer: B

Explanation: Data mining uses a variety of statistical analysis tools to uncover previously

unknown patterns in the data or relationships among variables. In this case, Walmart uses the data

to reorder products and to uncover customers' purchase patterns.

Difficulty: 3 Hard

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

27) If a firm has demographic and purchasing information about its customers, the firm can use

data mining techniques to

A) understand psychographic motivations.

B) create marketing mixes based on consumer self-values.

C) build separate marketing programs for different demographic segments.

D) determine which syndicated data warehouse services to purchase.

E) find out which competitors its customers purchase from.

Answer: C

Explanation: Some retailers try to customize their product and service offerings to match the

needs of their customers. In this case, data mining could be used to identify common purchasing

patterns within demographic segments, and then design marketing programs according to these

patterns and what they reveal about customer needs.

Difficulty: 2 Medium

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) From charitable giving to medical records to Internet tracking, consumers are more anxious

than ever about

A) secondary data retrieval systems.

B) exploitation by foreign marketers.

C) their ability to get credit cards.

D) their fundamental right to privacy.

E) the unstructured nature of marketing research.

Answer: D

Explanation: From charitable giving to medical records to Internet tracking, consumers are more

anxious than ever about preserving their fundamental right to privacy. They also demand

increasing control over the information that has been collected about them.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

29) When conducting a survey about choosing vacation destinations, Megan should ________ in

order to get reluctant respondents to provide honest information.

A) choose only highly verbal consumers

B) assure consumers that their individual responses will be kept confidential

C) use only focus group interviews

D) ask unstructured questions

E) create an efficient data warehouse

Answer: B

Explanation: Many firms voluntarily notify their customers that any information provided to

them will be kept confidential and not given or sold to any other firm.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) The marketing research process follows five steps, and researchers

A) may not always go through them in the exact sequence if the situation changes or new

information is discovered.

B) should maintain the integrity of the process by following each step sequentially and thoroughly.

C) often collect data before defining the research objectives.

D) should be prepared to present the results before completing the analysis if they are under a great

deal of pressure to meet a deadline.

E) may follow the process by completing all steps at once instead of planning the process first.

Answer: A

Explanation: In some cases, marketing researchers may move back and forth between the steps of

the process, perhaps designing follow-up studies based on earlier data collection.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) The first question a marketing researcher should ask before embarking on a research study is

A) Who will pay for it?

B) Will the research be useful?

C) What is the due date?

D) What sample size will be needed?

E) Should we use structured or unstructured questions?

Answer: B

Explanation: If research will not guide or influence decision making, there is little point in

conducting the research.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) Assuming that a marketing research study will answer important questions and reduce

uncertainty associated with the proposed project, a major question that needs to be addressed

before starting the study is

A) How will the results be presented?

B) Will observational research be considered intrusive?

C) Is top management committed to the project and willing to abide by the results of the research?

D) How will the questions be defined?

E) Who will manage the research?

Answer: C

Explanation: In addition to ensuring that the research will guide or influence decision making, it

is also important to ensure that top management is committed to the project and willing to abide by

the results of the research.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) Just as marketers create value by meeting the needs and wants of consumers, marketing

researchers create value if

A) the research is expensive.

B) all participants like the research design.

C) the research does not cost too much.

D) the results will be used in making management decisions.

E) the research is finished quickly.

Answer: D

Explanation: Marketing research can be very expensive, and if the results won't be useful or

management does not abide by the findings, it represents a waste of money. Marketing research

creates value if it can assist in management decision making.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) All of the following are considered qualitative research except

A) experiments.

B) observation.

C) focus groups.

D) social media.

E) in-depth interviews.

Answer: A

Explanation: Experiments are a type of qualitative research.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) Lana and James are working on a research project to anticipate customer attitudes toward a

proposed new product line for their company. They have worked with the marketing manager to

determine the answers that are needed and have created a detailed design of the project. Their next

logical step will be to

A) develop a budget.

B) begin to collect data.

C) summarize their preliminary conclusions to present to managers.

D) begin recommending changes to the new product line.

E) analyze the data.

Answer: B

Explanation: After defining the research objectives and designing the research, the next step is to

collect data.

Difficulty: 3 Hard

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) Academic researchers often jump at the opportunity to conduct a research study, curious to

learn more and address unanswered questions for the sake of general knowledge. Businesspeople

tend to be more cautious before embarking on a marketing research study, recognizing that

primary research is often

A) beyond most managers' ability to comprehend.

B) expensive and time-consuming.

C) an academic exercise of little real value.

D) an impediment to decisive management.

E) of little use in real marketing situations.

Answer: B

Explanation: Marketing research can be very expensive and time-consuming, and if the results

won't be useful or management does not abide by the findings, it represents a waste of money.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) When Betsy decided to open up a tea shop in the center of town, she chose a group of

customers who represent her customers of interest. This group is called a

A) sample.

B) focus group.

C) target market.

D) demographic.

E) potential customer.

Answer: A

Explanation: A sample is a group of customers who represent the customers of interest in a

research study.

Difficulty: 1 Easy

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) You work for a company that sells baby products. Your manager asks you to conduct research

on automotive sales in your area. The problem with this research objective is that

A) it is irrelevant to the baby products company.

B) the information is available from external sources.

C) it will lead to a set of unstructured questions.

D) it probably can't be determined with any level of accuracy.

E) the research will be costly.

Answer: A

Explanation: Because research is both expensive and time-consuming, it is important to establish

in advance exactly what problem needs to be solved. The sale of baby products would not seem to

be related to the automotive sales in your area. If the company wanted to sell automobile parts or

services, the market research would then be potentially relevant information.

Difficulty: 3 Hard

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

39) The manager of a company selling cellular phones in rural U.S. markets asks you to conduct

survey research into the question, "What percentage of people in Kansas live in communities of

fewer than 10,000 people?" The problem with this research objective is that

A) it is irrelevant to the cellular company.

B) it is already known and available from the U.S. Census Bureau.

C) it will lead to a set of unstructured questions

D) it probably can't be determined with any level of accuracy.

E) the research will be costly.

Answer: B

Explanation: The U.S. Census Bureau can provide a great deal of demographic information,

including the answer to this question. Since secondary data are available, there is no need to

conduct research to get the answer.

Difficulty: 3 Hard

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) After defining objectives and research needs, the next step in the marketing research process

involves

A) research evaluation.

B) data collection.

C) data analysis.

D) research design.

E) report writing.

Answer: D

Explanation: The second step in the research process, after defining objectives, is to design the

research.

Difficulty: 1 Easy

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

41) During the research design step of the marketing research process, researchers identify the type

of data needed and

A) the statistical software to be used.

B) the dates when data will be collected.

C) the forum in which the data will be presented.

D) the identities of research participants in the project.

E) the type of research necessary to collect the data.

Answer: E

Explanation: Once the objectives of a research project have been defined, the research can be

designed, identifying the type of data needed and the type of research needed to collect the data.

Difficulty: 1 Easy

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) Vic's custom auctioneering service provides online auction selling assistance. Vic plans to

conduct marketing research to determine which auction site is best for his customers. His next step

is to

A) identify the type of data he needs.

B) determine the statistical software he will use.

C) outline the presentation format he will use.

D) collect data.

E) define his privacy policy.

Answer: A

Explanation: Once Vic has defined his research objectives—to determine which auction site is

best—he will move on to design the research, identifying the type of data he needs and the research

method he should use.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Company sales invoices, census data, and trade association statistics are examples of

A) primary data.

B) data mines.

C) secondary data.

D) tertiary data.

E) qualitative data.

Answer: C

Explanation: These are all examples of secondary data—data that were collected for another

purpose but that can be helpful in answering questions. Some secondary data can come from

internal sources such as a company's sales invoices, while other secondary data can come from

external sources such as census data and trade association statistics.

Difficulty: 1 Easy

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) Commercial research firms such as IRI, the National Purchase Diary Panel, and Nielsen are

sources of

A) primary data.

B) internal secondary data.

C) data mining.

D) syndicated data.

E) public data.

Answer: D

Explanation: These are sources of syndicated data—secondary data that can be purchased from

firms that collect it.

Difficulty: 1 Easy

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) Jaleel is the marketing manager for a moderately well-known rock band. He wants to know

more about industry trends including sales by different musical styles, online downloads, and

concert attendance. Jaleel will most likely use ________ to gather this type of data.

A) focus groups

B) observation

C) syndicated data

D) sales invoices

E) census data

Answer: C

Explanation: Of the options listed, syndicated data are the best choice. Jaleel can look for a data

provider who can supply industry sales information. Focus groups and observation are research

methods that would not offer comprehensive sales data. Sales invoices could summarize results for

Jaleel's band but not for the industry, and census data do not provide the needed information.

Difficulty: 3 Hard

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) Once a marketing researcher is ready to move beyond preliminary insights to specific,

informed questions, the researcher is ready to conduct

A) quantitative research.

B) data warehousing.

C) syndicated marketing surveys.

D) qualitative research.

E) research design.

Answer: A

Explanation: Qualitative research is often done in part to obtain preliminary insights. Once the

firm has gained insights from doing qualitative research, it is likely to engage in quantitative

research, which are structured responses that can be statistically tested. Quantitative research

provides information needed to confirm insights and hypotheses generated via qualitative research

or secondary data.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) A marketing research project often begins with a review of the relevant ________ data.

A) primary

B) secondary

C) quantitative

D) unfocused

E) structured

Answer: B

Explanation: Projects often start with a review of relevant secondary data in order to obtain

preliminary insights quickly and at minimal cost.

Difficulty: 1 Easy

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Joseph is reviewing secondary data his company collected about seasonal variations in

consumer spending because he is thinking about developing a new product line. The advantages of

using these data include

A) they are new and can be used to project overall demand.

B) they can be quickly accessed at a relatively low cost.

C) they are historical data that can be used to accurately predict future trends.

D) they have been collected specifically for the purpose Joe is using it for.

E) their high cost can be justified by the results.

Answer: B

Explanation: Projects often start with a review of relevant secondary data in order to obtain

preliminary insights quickly and at minimal cost.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) Omar is responsible for marketing and marketing research for a midsized manufacturer of

assemblies for the housing market. His boss has asked him to cut back expenses, especially in

marketing research: "Why can't you just use information off the Internet? There's plenty out there."

What is Omar's best response to try to get his boss to change his mind?

A) "We can try, but if it's wrong it's not my fault."

B) "Those are secondary data, and they may not be as timely, accurate, and relevant as what we

need."

C) "I'd rather not use any data at all than use secondary data."

D) "This is a matter of principle. I quit."

E) "You should never use any information from the Internet in marketing research."

Answer: B

Explanation: Projects often start with a review of relevant secondary data in order to obtain

preliminary insights quickly and at minimal cost; however, secondary data are not tailored to a

specific research need and may not provide the answers sought.

Difficulty: 3 Hard

Topic: Secondary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) Marv is looking for data to help with a new marketing research study. When reviewing

existing secondary data from a past research study, Marv should pay careful attention to

A) how the secondary data were collected.

B) where the data were warehoused.

C) whether or not the Census Bureau has certified the research.

D) whether the data were transformed into information.

E) how often primary data were substituted for secondary data.

Answer: A

Explanation: To use secondary data appropriately, it is important to understand how and when

they were collected. Although readily accessible, these inexpensive sources may not be specific or

timely enough to solve the marketer's research needs and objectives.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) After reviewing the existing data on seasonal spending by his company's customers, Marv

decided he needed new information collected to address his research questions. Marv will need

________ data to address the questions in his marketing research study.

A) primary

B) secondary

C) mined

D) syndicated

E) warehoused

Answer: A

Explanation: Because existing secondary data do not answer his questions, Marvin may need to

collect primary data. Primary data are collected to address specific research needs.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) A major advantage of primary data collection is

A) it can be easily accessed through syndicated databases.

B) it offers behavioral insights generally not available from secondary research.

C) it takes less time to collect than secondary data.

D) it is general enough to meet many different researchers' needs.

E) it is less expensive to collect than secondary data.

Answer: B

Explanation: Primary data collection, though it can be expensive and time-consuming, can also

be tailored to the precise needs of the research.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-04 Summarize the differences between secondary data and primary data.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) A major disadvantage of primary data collection is

A) it can be accessed only through syndicated databases or unstructured data mines.

B) it cannot be tailored to meet specific research needs.

C) it requires more sophisticated training and experience to design the study and collect data.

D) it is too general to meet researcher's and manager's needs.

E) it does not offer behavioral insights that can be obtained from secondary data.

Answer: C

Explanation: A major disadvantage of primary data collection is that it requires more

sophisticated training and experience to design the study and collect the data.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-04 Summarize the differences between secondary data and primary data.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) Carol needs to find information about income and age distribution in Orange County,

California. The best source of secondary research of use to Carol is likely to be

A) door-to-door surveys.

B) focus group interviews.

C) syndicated data.

D) sales invoices at public libraries.

E) U.S. Census data.

Answer: E

Explanation: She could purchase syndicated data, but census data should be able to address

Carol's need for income and age distribution information. The U.S. Census is a great source of

demographic data about a particular market area, and it can be easily accessed at a low cost.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

55) Data collection begins

A) only after completing the research design process.

B) after determining whether there are any objections.

C) whenever the researcher wants to.

D) after creating the presentation format.

E) after analyzing the data.

Answer: A

Explanation: It is important to design the research before data collection begins to ensure that the

correct data are collected using appropriate methods.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) When the marketing research problem is not clearly defined, a researcher will likely engage in

________ research.

A) data mining

B) qualitative

C) survey

D) quantitative

E) experimental

Answer: B

Explanation: Qualitative research can be conducted to investigate the research problem in order

to gain preliminary insights; it provides initial information that helps the researcher more clearly

formulate the research objectives.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

57) Recently, the number of students enrolled in the marketing program dropped while enrollment

in the psychology program increased. The chair of the marketing department will probably use

________ as a first step to gain a better understanding of why enrollments are changing.

A) experimental research

B) data warehousing

C) syndicated data

D) qualitative research

E) structured questionnaires

Answer: D

Explanation: Qualitative research can be conducted to investigate the research problem in order

to gain preliminary insights and more clearly formulate the research objectives.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) Quantitative research offers a means to confirm ideas through

A) surveys or experiments.

B) in-depth interviews.

C) data mining.

D) qualitative research.

E) informal analysis.

Answer: A

Explanation: Quantitative research produces data that can be used to confirm ideas through

statistical testing.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

59) Jill's discount home furnishings store is in a strip mall. She wants to know what other

businesses in the strip mall her customers visit when they come to her store. To collect information

for this objective, Jill will most likely use

A) door-to-door surveys.

B) focus group interviews.

C) observation.

D) sales invoices.

E) census data.

Answer: C

Explanation: Jill can hire someone to observe foot traffic to the stores in the strip mall, to see

which customers visit her store as well as others. Sales invoices and census data would not reveal

the answers, and door-to-door surveys and focus groups would have a problem in that you would

be able to approach only a small percentage of shoppers. Observation entails examining purchase

and consumption behaviors.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) Which of the following is true about quantitative research?

A) It is always conducted using primary data collection.

B) It revises the research objective based on data mining.

C) It confirms insights and hypotheses generated via qualitative research.

D) It offers conclusions that are always correct.

E) It includes focus group interviews.

Answer: C

Explanation: Quantitative research provides information needed to confirm insights and

hypotheses generated via qualitative research or secondary data. It also helps managers pursue

appropriate courses of action.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

61) The purpose of ________ is that it provides information needed to confirm insights and

hypotheses generated and helps managers pursue appropriate courses of action.

A) primary data collection

B) data mining

C) qualitative research

D) quantitative research

E) statistical sourcing

Answer: D

Explanation: Quantitative research provides information needed to confirm insights and

hypotheses generated via qualitative research or secondary data.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) When consumers are ________, observation becomes particularly useful in understanding

consumers' preferences.

A) unwilling to participate in research

B) confused by questionnaires

C) unable to articulate their experiences

D) interviewed too frequently

E) highly educated

Answer: C

Explanation: Observation is especially helpful if people are unable to explain their experiences

and preferences. Instead of asking them to think about these issues, people's actual behavior can be

observed.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

63) When consumers are unable to articulate their experiences, ________ becomes particularly

useful in understanding consumers' preferences.

A) observation

B) surveying

C) in-depth interviewing

D) primary data mining

E) a focus group

Answer: A

Explanation: Observation is especially helpful if people are unable to explain their experiences

and preferences. Instead of asking them to think about these issues, people's actual behavior can be

observed.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) Using ________, trained researchers ask questions, listen to and record the answers, and then

pose additional questions to clarify or expand on a particular issue.

A) questionnaires

B) experiments

C) in-depth interviews

D) primary data mining

E) observation

Answer: C

Explanation: In-depth interviews allow participants to give detailed responses, and allow

researchers to ask follow-up questions based on initial responses to planned questions.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

65) Social media monitoring, in-depth interviews, and focus groups are all ________ research

methods.

A) quantitative

B) data warehousing

C) syndicated marketing

D) qualitative

E) structured

Answer: D

Explanation: Qualitative research methods include observation, in-depth interviewing, focus

groups, and social media monitoring.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Jan wants to collect considerable information about the current opinions of his ten most

important customers. Jan will probably use the ________ research method.

A) social media monitoring

B) experimental

C) in-depth interview

D) primary data mining

E) observation

Answer: C

Explanation: In-depth interviews are a good way to collect detailed opinions from a small

number of individuals.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

67) Which of the following research methods would be best in helping a marketer understand how

people feel about a product or service on an individual, detailed level?

A) focus groups

B) surveys

C) social media monitoring

D) primary data mining

E) in-depth interviews

Answer: E

Explanation: In-depth interviews are a good way to collect detailed opinions from a small

number of individuals.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) When the detailed opinions of a few industry experts or experienced consumers are needed,

________ is(are) often the best qualitative research method.

A) observation

B) surveys

C) social media studies

D) in-depth interviews

E) secondary data mining studies

Answer: D

Explanation: In-depth interviews are a good way to collect detailed opinions from a small

number of individuals.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) Randy wants to do an online survey of college professors about the factors that influence their

textbook selection. He would like to use a structured survey but is not sure what responses to

include for each question. Randy could use ________ to help him develop his survey.

A) in-depth interviews

B) experiments

C) surveys

D) observation

E) primary data mining

Answer: A

Explanation: In-depth interviews are a good way to collect detailed opinions from a small

number of individuals.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) Marjorie manages an upscale women's clothing store. She wants more information about her

customers' general feelings about upcoming fall fashions. Marjorie will most likely use ________

to gather this type of data.

A) door-to-door surveys

B) focus group interviews

C) syndicated data

D) sales invoices

E) census data

Answer: B

Explanation: In focus group interviews, a small group of people (usually 8 to 12) come together

for an intensive discussion about a particular topic.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

71) A(n) ________ is a small group of people brought together for an intensive discussion of a

topic.

A) focus group

B) social media site

C) experiment

D) data mining session

E) in-depth interview

Answer: A

Explanation: In focus group interviews, a small group of people (usually 8 to 12) come together

for an intensive discussion about a particular topic. Using an unstructured method of inquiry, a

trained moderator guides the conversation according to a predetermined, general outline of topics

of interest.

Difficulty: 1 Easy

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) In a focus group, researchers usually videotape or audiotape the session in order to

A) evaluate the potential for in-depth interviews.

B) catch any patterns of verbal or nonverbal responses.

C) post the videos on the corporate website.

D) avoid asking repetitive questions.

E) create survey instruments to send to the participants.

Answer: B

Explanation: Researchers usually record the interactions by videotape or audiotape so they can

carefully comb through the interviews later to catch any patterns of verbal or nonverbal responses.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) Tyree is concerned about a competitor's new line of outdoor barbeque grills that provide most

of the same features as his products. Tyree might consider using ________ to gather qualitative

information from consumers about the competitor's offerings.

A) industry surveys

B) experiments

C) focus groups

D) observation

E) primary data mining

Answer: C

Explanation: In focus group interviews, a small group of people (usually 8 to 12) come together

for an intensive discussion about a particular topic.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Marty has hired a marketing research company to bring together a small group of soft drink

consumers and get feedback on the three new advertising slogans his firm is considering. The

marketing research firm might conduct a(n) ________ to provide the information Mary has

requested.

A) industry survey

B) experiment

C) focus group

D) observational study

E) primary data mining analysis

Answer: C

Explanation: In focus group interviews, a small group of people (usually 8 to 12) come together

for an intensive discussion about a particular topic.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

75) In the infamous Coke-New Coke taste test, 54 percent of consumers, using a blind taste test,

preferred the New Coke formula to the existing formulation. This is an example of a(n) ________

marketing research method.

A) qualitative

B) quantitative

C) observational

D) syndicated

E) invalid

Answer: B

Explanation: Quantitative research is numeric/statistical in nature, as in this case where the

precise percentage of consumers preferring one option to the other was measured. Formal studies

such as specific experiments, scanner and panel data, or some combination of these are

quantitative in nature.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) Jamie is the campaign manager for a congressional candidate. He wants to know how voters

across his district feel about recent sexual harassment scandals involving politicians. Jamie will

most likely use ________ to gather this type of data.

A) surveys

B) observation

C) experiments

D) voter registration data

E) census data

Answer: A

Explanation: A survey—a systematic means of collecting information from people using a

questionnaire—would be an efficient way to determine voters' feelings in this case.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

77) When conducting a research study attempting to understand what features were most

important to automobile consumers, Cary's Research Company used a questionnaire containing

________ questions, with a predetermined set of response options.

A) structured

B) in-depth interview

C) open-ended

D) free-form

E) unstructured

Answer: A

Explanation: Structured questions are closed-ended questions for which a discrete set of response

alternatives, or specific answers, is provided for respondents to evaluate.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) Malcolm had no idea how consumers would respond to a survey about attitudes toward a

program opening up space travel to private citizens. He could use ________ to allow respondents

to answer in their own words.

A) secondary data

B) an observational study

C) an experiment

D) a structured questionnaire

E) a survey with open-ended questions

Answer: E

Explanation: A survey with open-ended questions allows people to answer in their own words.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

79) The owner of A. C. Flora Ford Dealership wanted to know why consumers chose his company

to purchase a car. He was fairly sure that most customers had one of three reasons—service,

reputation, or location—but wanted to know which was revealed as the most frequent reason for

purchasing. A. C. Flora will probably use a survey with ________ questions to address his

research problem.

A) observation-based

B) open-ended

C) experimental

D) closed-ended

E) unstructured

Answer: D

Explanation: A structured questionnaire consists of closed-end questions for which a discrete set

of response alternatives, or specific answers, is provided for respondents to evaluate. In this case,

A. C. Flora simply wants to compare among three possible reasons for choosing a company, so

closed-ended questions are an appropriate format.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) All of the following are guidelines for developing a marketing research questionnaire except

A) The layout should be professional and easy to follow.

B) Questions should address only one issue at a time.

C) Questions should be sequenced appropriately.

D) Questions should use vocabulary respondents are familiar with.

E) Sensitive questions should be asked first.

Answer: E

Explanation: Sensitive questions should be avoided altogether unless they are absolutely

necessary.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

81) In questionnaire design, a question such as "When was the first time you went to a dentist?"

A) is a question that respondents cannot easily or accurately answer.

B) is a question that respondents are reluctant to answer because the information is sensitive.

C) leads respondents to a particular response.

D) asks two questions at once.

E) is complex and something respondents may be unfamiliar with.

Answer: A

Explanation: It may be difficult for a respondent to remember his or her first dentist office visit,

which means that responses to the question will probably not be reliable.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) In questionnaire design, a question such as "Marketing is the best part of the business program,

isn't it?"

A) is a question that respondents cannot easily or accurately answer.

B) is a question that respondents are reluctant to answer because the information is sensitive.

C) leads respondents to a particular response.

D) asks two questions at once.

E) is complex and something respondents may be unfamiliar with.

Answer: C

Explanation: Questionnaires should avoid leading questions that steer respondents to a particular

response. This question suggests the answer "Yes" by its wording.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

83) In questionnaire design, a question such as "Do you like Wendy's hamburgers and fries?"

A) is a question that respondents cannot easily or accurately answer.

B) is a question that respondents are reluctant to answer because the information is sensitive.

C) steers respondents to a particular response.

D) asks two questions at once.

E) is complex and something respondents may be unfamiliar with.

Answer: D

Explanation: This should be split into two questions—one about Wendy's hamburgers and one

about the fries.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) In questionnaire design, a question such as "Do anti-lock braking systems reduce car

accidents?"

A) is a question that respondents cannot easily or accurately answer.

B) is a question that respondents are reluctant to answer because the information is sensitive.

C) steers respondents to a particular response.

D) asks two questions at once.

E) is one sided, presenting only one side of an issue.

Answer: A

Explanation: Respondents are unlikely to have sufficient information to answer the question.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

85) Charlie wants to survey recent customers about the quality of service they received at his small

auto service dealership. He has customers' mailing and email addresses. Charlie will likely use an

online survey primarily because it offers

A) relatively low response rates.

B) the ability to share video with respondents.

C) the ability to ask sensitive questions with anonymity.

D) fast responses at a lower cost.

E) the opportunity to survey both existing and potential customers.

Answer: D

Explanation: The response rates for online surveys are relatively high. Typical response rates run

from 1 to 2 percent for mail and 10 to 15 percent for phone surveys. For online surveys, in contrast,

the response rate can reach 30 to 35 percent or even higher in business-to-business research. It also

is inexpensive.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) ________ research is a type of quantitative research that manipulates variables to help

determine cause and effect.

A) Descriptive

B) Syndicated

C) Manipulative

D) Focus group

E) Experimental

Answer: E

Explanation: Experimental research (an experiment) is a type of quantitative research that

systematically manipulates one or more variables to determine which variables have a causal

effect on other variables.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) Each time you go to the grocery store and have your purchases scanned while using a loyalty or

bonus reward card, you are contributing to a database that can help marketers determine all of the

following except

A) what a typical shopping list looks like.

B) whether changes in prices affect buying.

C) marketplace trends.

D) what kinds of promotions might be attractive to you.

E) other stores where you buy similar products.

Answer: E

Explanation: Data mining uses a variety of statistical analysis tools to uncover previously

unknown patterns in the data or relationships among variables. Some retailers try to customize

their product and service offerings to match the needs of their customers. The use of the grocery

loyalty or bonus card allows the grocer to save a list of everything you bought on a given occasion,

and to compare your behavior on different occasions. The impact of price changes and promotions

can be studied, as can trends across many customers.

Difficulty: 2 Medium

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) Supermarkets collect information about individual customers through their use of loyalty

cards, and then analyze the data to look for patterns in purchases. This is an example of

A) data mining.

B) data recovery.

C) data entry.

D) data analysis.

E) data modeling.

Answer: A

Explanation: Data mining uses a variety of statistical analysis tools to uncover previously

unknown patterns in the data or relationships among variables. Some retailers try to customize

their product and service offerings to match the needs of their customers.

Difficulty: 2 Medium

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

89) When a research team has gathered data for specific research needs, this is known as

A) primary data.

B) data mining.

C) secondary data.

D) data recovery.

E) data modeling.

Answer: A

Explanation: Primary data are those data collected to address specific research needs. Secondary

data are data that were originally obtained for another purpose but that may assist in answering the

research question.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) Which of the following statements best describes secondary data?

A) Secondary data are pieces of information that have been collected prior to the start of the focal

research project.

B) Secondary data are those data collected to address specific research needs.

C) Secondary data collection is always extremely time-consuming and expensive.

D) Secondary data will always meet the researchers' needs.

E) Secondary data include only qualitative research.

Answer: A

Explanation: Secondary data are pieces of information that have been collected prior to the start

of the focal research project. Secondary data include external as well as internal data sources and

might come from free or very inexpensive external sources.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) Which of the following types of research would be considered quantitative research?

A) experimental research

B) observational research

C) focus group research

D) social media monitoring

E) in-depth interviews

Answer: A

Explanation: Experimental research (an experiment) is a type of quantitative research that

systematically manipulates one or more variables to determine which variables have a causal

effect on other variables.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) Imagine that you currently operate a clothing boutique, and you want to add another boutique

in a new location. You need to obtain data to determine the size of your potential market. Which

data source would you use?

A) U.S. Bureau of the Census

B) J.D. Power and Associates

C) NOP World

D) Mediamark Research Inc.

E) National Purchase Diary Channel

Answer: A

Explanation: The U.S. Bureau of the Census provides data about businesses by county and zip

code. If you wanted to open a new location for a business you are already operating, such data

might help you determine the size of your potential market.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

93) With more than 310 million active customers and billions of pieces of shopping data, Amazon

qualifies as a

A) big data user.

B) syndicated data user.

C) mining data user.

D) panel data user.

E) survey data user.

Answer: A

Explanation: With more than 310 million active customers and billions of pieces of shopping

data, Amazon certainly qualifies as a big data user. To specify this explosion of data, which firms

have access to but cannot handle using conventional data management and data mining software,

the term big data has arisen in the popular media.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) All of the following are guidelines provided by the American Marketing Association for

conducting marketing research except

A) personal information about research participants should not be shared, except with a designated

member of senior management.

B) selling or fundraising should not be conducted under the guise of conducting research.

C) researchers should not misrepresent data.

D) clients and suppliers should be treated fairly.

E) researchers should not omit pertinent data.

Answer: A

Explanation: Sharing of personal information without a participant's explicit permission is

unethical and should not take place under any circumstances. However, this is not in the AMA's

guidelines as are the other responses.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

95) The number of participants who discontinue their use of a service divided by the average

number of total participants is called

A) churn.

B) customer retention.

C) customer lifetime value.

D) cancellation cost.

E) customer loyalty.

Answer: A

Explanation: Churn is the number of participants who discontinue their use of a service divided

by the average number of total participants.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) All of the following data sources would be considered external secondary data except

A) U.S. Census data.

B) syndicated data.

C) newspaper articles.

D) scanner data.

E) a survey.

Answer: E

Explanation: Secondary data might come from free or very inexpensive external resources such

as census data or newspaper articles, or can be purchased for a fee (for example, syndicated data).

A survey is primary data.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

97) Which of the following types of data would be the best choice for Wendy's fast-food

restaurants if the headquarters office wants to know how many hamburgers versus chicken

sandwiches it has sold in past years?

A) internal secondary data

B) external secondary data

C) survey responses

D) focus group data

E) primary data

Answer: A

Explanation: Internal secondary data can be derived from internal company records such as sales,

customer lists, and other company reports and are analyzed using data mining and big data

software.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) A restaurant chain is working on improving the quality of its food and service. To track its

progress it recruits customers who agree to respond to customer satisfaction surveys once every

three months over the next two years. What kind of data is the restaurant chain collecting?

A) panel data

B) internal secondary data

C) focus group data

D) external secondary data

E) scanner data

Answer: A

Explanation: This is an example of using a panel—a group of consumers who provide

information over a period of time. These are primary, not secondary, data because the survey data

are being collected specifically to measure progress in improving satisfaction.

Difficulty: 3 Hard

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

99) Which of the following is an unstructured question?

A) "What are the most important characteristics for choosing a brand of shampoo?"

B) "How satisfied were you with your last shampoo purchase: very unsatisfied, unsatisfied,

neutral, satisfied, or very satisfied?"

C) "Were you happy with the quality of the shampoo you purchased (Yes/No)?"

D) "On a scale from 1 to 5 (with 1 being very unimportant and 5 being very important), how

important is fragrance when choosing a shampoo?"

E) "How many brands of shampoo have you purchased in the past year: 0, 1, 2, 3, 4, 5, or more than

5?"

Answer: A

Explanation: Unstructured questions are open-ended and allow respondents to answer in their

own words.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) Which of the following provides the information needed to confirm insights and hypotheses

and help managers pursue appropriate courses of action?

A) quantitative research

B) qualitative research

C) observation research

D) in-depth interviews

E) social media monitoring

Answer: A

Explanation: Quantitative research provides information needed to confirm insights and

hypotheses generated via qualitative research or secondary data and helps managers pursue

appropriate courses of action.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

101) Kellogg's used ________ to record participants' faces as they watched three different ads for

its Crunchy Nut cereal. It then assessed when they smiled or frowned and their overall positive

versus negative response.

A) facial recognition software

B) data mining

C) social media monitoring

D) illegal surveillance methods

E) sentiment mining

Answer: A

Explanation: Kellogg's used facial recognition software to record participants' faces as they

watched three different ads for its Crunchy Nut cereal. It then assessed when they smiled or

frowned and their overall positive versus negative response—but only after those participants have

agreed to be recorded. Kellogg's was then able to promote the ad that was most widely liked.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) What is neuromarketing?

A) the analysis of consumer comments on social media in order to understand consumers' thoughts

and opinions

B) the use of psychological principles to design marketing research studies

C) the process of examining consumers' brain patterns to determine their responses to marketing

communications, products, or services for the purpose of developing marketing tactics or

strategies

D) the use of neural networks to perform data mining and develop marketing insights

E) the use of in-depth interviews to map detailed networks of information storage in the brain

Answer: C

Explanation: Neuromarketing is the process of examining consumers' brain patterns to determine

their responses to marketing communications, products, or services for the purpose of developing

marketing tactics or strategies.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

103) McDonald's introduced a Favorites Under 400 Calorie Menu as part of an attempt to reverse

the perception that McDonald's sells only unhealthy food. Suppose that McDonald's, as a

follow-up, collects and analyzes social media posts from Facebook, Twitter, and similar sites,

hoping to understand whether or not consumer perceptions are improving. This would be an

example of

A) quantitative research.

B) an online focus group.

C) sentiment mining.

D) neuromarketing.

E) an experiment.

Answer: C

Explanation: Using a technique known as sentiment mining, firms collect consumer comments

about companies and their products on social media sites such as Facebook, Twitter, and online

blogs. The data are then analyzed to distill customer attitudes toward and preferences for products

and advertising campaigns.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) How might a book publisher use blogs in its marketing research efforts?

A) as a place to report marketing research results to top management

B) as a source of reviews of its latest releases

C) as a location for holding online focus groups about its books

D) as a location for conducting online experiments about book purchasing patterns

E) as a substitute for large-scale surveys about future book topics

Answer: B

Explanation: Bloggers often review products. Blogs represent valuable sources of marketing

research insights. Marketers are paying attention to online reviews about everything from

restaurants to running shoes to recycling, and in this case, to books.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

105) What type of interview contains a small group of participants and a trained moderator that

guides the conversation?

A) panel

B) syndicated

C) observational

D) focus group

E) sentiment

Answer: D

Explanation: In focus group interviews, a small group of persons (usually 8 to 12) come together

for an intensive discussion about a particular topic. Using an unstructured method of inquiry, a

trained moderator guides the conversation, according to a predetermined, general outline of topics

of interest.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) Which of the following is an example of secondary research?

A) surveys

B) observed customer behavior

C) experiments

D) journal articles

E) focus group interviews

Answer: D

Explanation: Journal articles are an example of secondary research.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

107) Kellogg's used ________ software to assess when they smiled or frowned and their overall

positive versus negative responses as they watched three different ads for its Crunchy Nut cereal.

A) social media

B) neuromarketing

C) facial recognition

D) Internet tracking

E) data mining

Answer: C

Explanation: Kellogg's used facial recognition software to record participants' faces as they

watched three different ads for its Crunchy Nut cereal. It then assessed when they smiled or

frowned and their overall positive versus negative response—but only after those participants have

agreed to be recorded. Kellogg's was then able to promote the ad that was most widely liked.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) Maria's Bakery is trying to determine what price to charge for its cookies, so Maria places a

low price on them and raises it each week, keeping track of how many she sells. Then she

determines what her cost was for the cookies and determines which price was the most profitable.

What form of research was Maria conducting?

A) observation

B) survey

C) scanner-based

D) an experiment

E) a panel

Answer: D

Explanation: Experimental research (an experiment) is a type of quantitative research that

systematically manipulates one or more variables to determine which variables have a causal

effect on other variables.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

109) Qualtrics, SurveyMonkey, and SurveyGizmo are examples of

A) online survey software.

B) biometric data companies.

C) data warehouses.

D) syndicated data companies.

E) focus group programs.

Answer: A

Explanation: Diverse online survey software, such as Qualtrics, SurveyMonkey, and

SurveyGizmo, makes it easy to draft an online survey using questions from existing survey

libraries.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) Which of the following is an example of an unstructured question?

A) "Would you buy this product (Yes/No)?"

B) "Would you buy this product (A. definitely, B. maybe, C. definitely not)?"

C) "What would convince you to buy this product (A. lower price, B. larger packaging, C. better

taste)?"

D) "Please rate the attributes of this product that are important to you (rate 1–5, with 1 being most

important and 5 being least important)."

E) "Why did you buy this product?"

Answer: E

Explanation: Unstructured questions are open-ended and allow respondents to answer in their

own words. Structured questions are closed-ended questions for which a discrete set of response

alternatives, or specific answers, is provided for respondents to evaluate.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

111) A typical focus group has ________ members.

A) 2 to 4

B) 4 to 6

C) 6 to 8

D) 8 to 12

E) 12 to 15

Answer: D

Explanation: In focus group interviews, a small group of persons (usually 8 to 12) come together

for an intensive discussion about a particular topic.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) Nadira stood outside the mall and asked people which stores they visited and if they bought

anything. If they said yes, she asked them what they bought and how they came to the decision to

buy that item. What form of research was Nadira most likely conducting?

A) questionnaire

B) in-depth interviews

C) experiment

D) focus group

E) biometrics

Answer: B

Explanation: In an in-depth interview, trained researchers ask questions, listen to and record the

answers, and then pose additional questions to clarify or expand on a particular issue.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

113) Firms that are engaged in sentiment mining are analyzing data collected from

A) experiments.

B) in-depth interviews.

C) focus groups.

D) social media sites.

E) observations.

Answer: D

Explanation: Using a technique known as sentiment mining, firms collect consumer comments

about companies and their products on social media sites such as Facebook, Twitter, and online

blogs. The data are then analyzed to distill customer attitudes toward and preferences for products

and advertising campaigns.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) The term ________ refers to the enormous amount of information that firms now have access

to but cannot handle using conventional data management and data mining software.

A) big data

B) churn

C) data mining

D) data dump

E) information overload

Answer: A

Explanation: To specify the explosion of data that firms have access to but cannot handle using

conventional data management and data mining software, the term big data has arisen in the

popular media.

Difficulty: 2 Medium

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Technology

Accessibility: Keyboard Navigation

115) Mattel wanted to determine if a new toy would appeal to preschoolers, so it put six

4-year-olds in a room with several toys and waited to see which ones they played with. What form

of research is this?

A) experiment

B) focus group

C) observation

D) neuromarketing

E) panel

Answer: C

Explanation: They observed the children and drew conclusions based on their preferences, which

is indicative of observation.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

116) If a cable television company had 100 million subscribers at the end of the year, and 2 million

of its subscribers left its service, it would have a churn rate of

A) 1 percent.

B) 2 percent.

C) 5 percent.

D) 10 percent.

E) 20 percent.

Answer: B

Explanation: Churn is the number of participants who discontinue use of a service, divided by the

average number of total participants. Therefore, 2 million ÷ 100 million = 2%.

Difficulty: 2 Medium

Topic: Marketing Metrics

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

117) Before deciding on a new promotional campaign, Jeffrey's Muffins looked at its customers'

buying patterns over a 15-year period as determined by their use of a loyalty card. What method

did Jeffrey's use to make sense of the data that were available?

A) biometrics

B) neuromarketing

C) data mining

D) data warehousing

E) panel data

Answer: C

Explanation: Jeffrey's used data mining to analyze customer buying patterns by analyzing the

data that were captured from loyalty cards. Data mining uses a variety of statistical analysis tools

to uncover previously unknown patterns in the data or relationships among variables.

Difficulty: 3 Hard

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

118) Scanner data are used in quantitative research obtained from scanner readings of Universal

Product Code (UPC) labels at checkout counters. The data from these purchases are likely to be

acquired by leading marketing research firms such as ________, which use this information to

help leading consumer packaged-goods firms (e.g., Kellogg's, Pepsi, Kraft) assess what is

happening in the marketplace.

A) MediaMark Research and NOP World

B) NOP World and Yankelovich

C) Roper Center for Public Research and Research and Markets

D) Yankelovich and Research and Markets

E) IRI and Nielsen

Answer: E

Explanation: Scanner data are used in quantitative research obtained from scanner readings of

Universal Product Code (UPC) labels at checkout counters. Whenever you go into your local

grocery store, your purchases are rung up using scanner systems. The data from these purchases

are likely to be acquired by leading marketing research firms such as IRI or Nielsen, which use this

information to help leading consumer packaged-goods firms (e.g., Kellogg's, Pepsi, Kraft) assess

what is happening in the marketplace.

Difficulty: 3 Hard

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

119) Both major political parties have developed proprietary databases that contain vast

information about voters, broken down by demographic and geographic information. This kind of

information is

A) primary data.

B) secondary data.

C) syndicated data.

D) neuromarketing.

E) qualitative research.

Answer: B

Explanation: In political settings, such secondary data can be critical for candidates running for

office.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

120) Marketing executives at Diet Pepsi want to analyze the number of Diet Coke customers who

switch to its product when Diet Pepsi is offered at a deep discount. What data would likely show

this information?

A) secondary panel data

B) internal secondary data

C) primary panel data

D) primary internal data

E) scanner data

Answer: A

Explanation: Panel data are information collected from a group of consumers, organized into

panels, over time. Data collected from panelists often include their records of what they have

purchased (i.e., secondary data) as well as their responses to survey questions that the client gives

to the panel firm to ask the panelists (i.e., primary data). Secondary panel data thus might show

that when Diet Pepsi is offered at a deep discount, 80 percent of usual Diet Coke consumers switch

to Diet Pepsi.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

121) ________ is a disadvantage of secondary research, while ________ is a disadvantage of

primary research.

A) Cost; outdated information

B) Time required for collection; sources not original

C) Potential bias; cost

D) Outdated information; information not relevant to data needs

E) Sophisticated training required to obtain it; potential bias

Answer: C

Explanation: Both primary data and secondary data have certain inherent and distinct advantages

and disadvantages. Exhibit 10.9 summarizes the advantages and disadvantages of each type of

research.

Difficulty: 2 Medium

Topic: Primary Data; Secondary Data

Learning Objective: 10-04 Summarize the differences between secondary data and primary data.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

122) During a recent budget cutting session, the finance manager at Eastern Shore Bank proposed

eliminating the marketing research budget. You are the marketing director. What general

arguments would you use to defend expenditures on marketing research?

Answer: The three general benefits of marketing research are:

• It reduces uncertainty associated with decision making. Without marketing research, what

information would be available for management to use in making major decisions?

• Marketing research provides a crucial link between the bank and the banking environment.

How would the bank keep track of and anticipate changes in the marketing environment?

• Marketing research is often used to monitor competitors. To survive and prosper, Eastern Shore

Bank needs to know what competitors are doing.

Difficulty: 3 Hard

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

123) Marketing researchers have access to a great deal of information about consumers. What

kinds of pressure might be brought to bear on a marketing researcher that might cause ethical

dilemmas?

Answer: Student answers might focus on the access to confidential information and who has

control over that information. Another key issue is how information is obtained. The AMA

provides three guidelines:

1. It prohibits selling or fund-raising under the guise of conducting research.

2. It supports maintaining integrity by avoiding misrepresentation or the omission of pertinent

data.

3. It encourages the fair treatment of clients and suppliers.

Difficulty: 3 Hard

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

124) Why would a researcher want to change the sequence of steps in the marketing research

process?

Answer: Although the stages of the marketing research process are presented in a step-by-step

progression, research does not always, or even usually, happen that way. Researchers go back and

forth from one step to another as the need arises. Taking a nonlinear approach may be appropriate

when new information, new insights, or new opportunities arise, as the sequence of steps does not

need to happen in order. It is unlikely, however, that the final step will occur before others.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

125) In 2005, a new federal law allowed consumers once-a-year free access to their credit reports.

Many consumers who accessed their credit reports were surprised by the amount of information

collected. What can marketers and marketing researchers do to minimize consumers' privacy

fears?

Answer: Marketers can minimize these fears by respecting and protecting consumers' right to

privacy. They must be vigilant to avoid abusing their access to data. Marketing research should be

used only to produce unbiased, factual information, and companies must adhere to legal

requirements to disclose their privacy practices to customers on an annual basis.

Difficulty: 3 Hard

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

126) Marketing researchers should assess the costs and benefits of conducting research as they

define objectives and research needs. What are key benefits and costs?

Answer: Students will probably have a good picture of the costs, which are highlighted

throughout the chapter. Benefits may be a little more difficult and should include reduction of

uncertainty in decision making; improving the quality of decision making; and determining the

best product, price, place, and promotion options available to the marketer. A final benefit is the

ability to anticipate and respond quickly to competitive moves.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

127) The CEO of a bank in Montana approaches the marketing director, explaining that the bank is

considering expanding into Wyoming. The CEO asks the marketing director to design a research

project to collect demographic data about Wyoming residents by county and zip code. What is an

inexpensive option for collecting this data?

Answer: This information is already known and is available on the U.S. Census Bureau website,

available at a low cost. The one concern is that census data are collected only at the beginning of

each decade, so they can become outdated.

Difficulty: 3 Hard

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

128) The text lists a number of major syndicated data services including Nielsen and IRI.

Obviously, these firms provide value to marketers or they would go out of business. What

advantages do syndicated data services provide relative to marketers conducting primary research

to address their research needs? What are the disadvantages associated with using syndicated data

services?

Answer: The first advantage is that syndicated data already exist and can be accessed quickly.

Second, since syndicated services sell information to a number of client companies, the cost of

syndicated data is likely to be less than the cost of primary research. The disadvantages are the data

might not adequately address the researcher's needs, they might not be timely, and the

methodology might not be relevant and might contain bias.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

129) What kinds of internal information might be of value to a marketing researcher?

Answer: Secondary sources can be accessed through internal sources, including the company

advantages and disadvantages. Exhibit 10.9 summarizes the advantages and disadvantages.

Students should discuss purchase information (quantity, frequency, etc.), return information,

possible credit information, customer service complaints, and profitability information.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

130) With a huge influx of Hispanic consumers into his marketplace, Will Deal, owner of

Columbia Ford Motor Dealership, wants to know if Hispanic consumers make car purchase

decisions differently from his other customers. Assuming that the information does not already

exist, which primary data collection method would you recommend and why?

Answer: Answers will vary. Students could most easily justify either observation or focus group

interviews. Surveys may not be appropriate since he is trying to understand how and why people

make decisions, and consumers cannot articulate how they shop.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

131) What are some of the problems with using secondary data?

Answer: Information may not be precisely relevant to information needs, timely, or original. The

methodology for collecting the information may not be appropriate, and data sources may be

biased. If the data are external secondary data, they are also available to competitors.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

132) In what type of research situations would marketing researchers use in-depth interviews?

Answer: In-depth interviews provide insights that help managers better understand the nature of

their industry as well as important trends and consumer preferences, which can be invaluable for

developing marketing strategies. Specifically, they can establish a historical context for the

phenomenon of interest, particularly when they include industry experts or experienced

consumers. They also can communicate how people really feel about a product or service at the

individual level. Finally, marketers can use the results of in-depth interviews to develop surveys.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

133) Tomas has just conducted a focus group for Apple, asking participants their opinions

regarding new features Apple is considering for its iPhone. Apple's marketing manager wants to

use the results of this focus group to justify immediate product changes and new promotional

strategies. As the marketing researcher, how would you respond?

Answer: First, a focus group is qualitative research. It generates the opinions of 8 to 12 people.

To make major product and promotion strategy decisions based on the opinions of a few

consumers could be risky, if the opinions and needs of the target market segment are not similar to

this small sample group.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

134) How can developing a questionnaire be part art and part science?

Answer: The questions must be carefully designed to address the specific set of research

questions. Moreover, for a questionnaire to produce meaningful results, its questions cannot be

misleading in any fashion (e.g., open to multiple interpretations), and they must address only one

issue at a time. They also must be worded in vocabulary that will be familiar and comfortable to

those being surveyed. The questions should be sequenced appropriately: general questions first,

more specific questions next, and demographic questions at the end. Finally, the layout and

appearance of the questionnaire must be professional and easy to follow, with appropriate

instructions in suitable places.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

135) Why are more and more marketing researchers using online surveys?

Answer: Response rates are relatively high; they are inexpensive; and the results can be collected

and processed quickly.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

136) What are the most important elements in the presentation of marketing research results?

Answer: Students should list the executive summary; the body of the report (discussing research

objectives, methodology, and detailed findings); the conclusions; the limitations; and appropriate

supplemental tables, figures, and appendixes.

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) Rob was extremely embarrassed. He was giving a presentation on the research findings to the

senior executives of the company. The CEO of the company stopped him in the middle of the

presentation and said, "This is not what I asked for or needed. This meeting is over. Reschedule the

meeting when you're prepared." What do you suppose could have gone wrong, and what should

Rob do?

Answer: There are two likely reasons for the CEO's comments. First, it could have been Rob's

presentation, which may not have been precise or targeted to the executives' needs. This would be

relatively easy to fix with a new presentation format. The second likely reason is that the research

objectives did not match the CEO's needs. This will require reevaluation of the entire process and

the work done to date. It may require starting over. Rob should collect his thoughts, look at the

presentation objectively, and work with a member of the executive team to determine what could

be salvaged or needs to be redone.

Difficulty: 3 Hard

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

138) Marketers often have huge amounts of information about their customers. What ethical issue

should marketers include in their decisions regarding how to use this information?

Answer: They need to respect and protect the privacy of individual customers, and vigilantly

guard access to data. This is best accomplished by following the AMA guidelines for conducting

marketing research, which focus on conducting marketing research only to produce unbiased,

factual information.

Difficulty: 2 Medium

Topic: Ethical Issues in Marketing Research

Learning Objective: 10-05 Examine the circumstances in which collecting information on

consumers is ethical.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

139) If senior management already has made its decision, should marketing research be

conducted? What questions should be considered?

Answer: It depends. If you are directed to do the research, you will need to produce something.

However, if management has made up its mind, in theory there is no need for research. Marketers

should ask themselves these three questions: (1) Will the research provide insights beyond what

managers already know? (2) Is management committed to the project and willing to abide by the

results? (3) Should the research project be small or large?

Difficulty: 2 Medium

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

140) If your manager asked you to review invoice data for the last six months to look for any trends

or changes, what kind of marketing research activity would you be engaged in? List and fully

define the process.

Answer: Data mining uses a variety of statistical analysis tools to uncover previously unknown

patterns in the data or relationships among variables.

Difficulty: 1 Easy

Topic: Information Technology and Data Mining

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

141) Chesnee is analyzing census data, looking for demographic segments that she can target for

her new insurance products. For Chesnee, what are the advantages of using census data?

Answer: Census data (a form of external secondary data) can be quickly accessed at little or no

cost.

Difficulty: 2 Medium

Topic: Secondary Data

Learning Objective: 10-02 Describe the various secondary data sources.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

142) What is the major advantage of primary data collection, compared to the use of secondary

data?

Answer: It can be tailored to fit the pertinent research questions, and offers more insights not

usually available from secondary research.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-04 Summarize the differences between secondary data and primary data.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) In-depth interviews are expensive and time-consuming. Why do marketing researchers

sometimes use in-depth interviews in spite of these disadvantages?

Answer: In-depth interviews provide insights that help managers better understand the nature of

their industry as well as important trends and consumer preferences, which can be invaluable for

developing marketing strategies. Specifically, they can establish a historical context for the

phenomenon of interest, particularly when they include industry experts or experienced

consumers. They also can communicate how people really feel about a product or service at the

individual level. Finally, marketers can use the results of in-depth interviews to develop surveys.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

144) Arlene is putting together a focus group to discuss students' concerns about the business

curriculum. What should her focus group include?

Answer: It will likely include 8 to 12 students, a trained moderator, and video or audio equipment

to capture the verbal and nonverbal responses. It should also include a predetermined outline of

specific topics to be discussed.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

145) What is the difference between data and information?

Answer: Data can be defined as raw numbers or other factual information that, on their own, have

limited value to marketers. However, when the data are interpreted, they become information,

which results from organizing, analyzing, and interpreting data and putting them into a form that is

useful to marketing decision makers.

Difficulty: 1 Easy

Topic: Marketing Research Process

Learning Objective: 10-01 Identify the five steps in the marketing research process.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

146) Define qualitative research and list two examples of qualitative data collection techniques.

Answer: It provides initial information that helps the researcher more clearly formulate the

research objectives. Qualitative research is more informal than quantitative research methods and

includes observation, following social media sites, in-depth interviews, and focus groups.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

147) A creative use of social media for marketing research involves building online communities

for companies. What are the advantages of an online community?

Answer: A creative use of social media for marketing research involves building online

communities for companies. Student answers will vary but an example for the text would be

Sephora's virtual community (an online network of people who communicate about specific

topics), Beauty Talk, is a massive beauty forum. It allows customers to ask questions, join groups,

live chat with other customers, get advice, and post pictures wearing products. Uploaded customer

photos are then linked to the product pages of the featured products. Customers can also filter

information based on their interests. This community gives Sephora a lot of data about customer

preferences and where they need help, and allow them to address many customer service issues.

Therefore, the community lowers customer service costs, and heightens customer engagement.

Difficulty: 2 Medium

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

148) How might Dell Computer use sentiment mining to identify ways to improve its customer

service?

Answer: Using a technique known as sentiment mining, firms collect consumer comments about

companies and their products on social media sites such as Facebook, Twitter, and online blogs.

The data are then analyzed to distill customer attitudes toward and preferences for products and

advertising campaigns. By collecting social media posts related to Dell, and then analyzing them

to identify consumers' positive and negative feelings as revealed by the posts, Dell could obtain

insights into what customers think of its service and how it might be improved.

Difficulty: 3 Hard

Topic: Marketing Metrics

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

149) McDonald's introduced its Favorites Under 400 Calories menu, attempting to change

consumers' negative views of McDonald's as a seller of unhealthy food. It would like to survey

customers to see if attitudes are changing, but it would like to collect some qualitative data first.

Suggest two approaches—one offline, and one online—that McDonald's could use to collect

qualitative data before designing a survey.

Answer: Possibilities include sentiment mining (online), focus groups (online and offline), and

in-depth interviews.

Difficulty: 3 Hard

Topic: Primary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

150) George decided to open a health club. His girlfriend Linda, a marketing manager at a small

company, tried to convince him to do some marketing research, but he said, "I know what I don't

like about health clubs; that's all the information I need. Besides, I can't afford an expensive

research project." He opened the club in a shopping center about 15 miles from his home. Six

months later, his club had very few members and he was running out of cash. List some key types

of primary and secondary data George could have collected before opening his club that might

have helped him be more successful, keeping in mind his limited budget.

Answer: Answers will vary, but might include low-cost secondary data about the demographics

of the area where he was considering opening his club—income, age, and so on. In addition, he

needed to research his competition in the area. He could have looked for posts on Twitter and

Facebook about his competitors, and perhaps also about health clubs in general, to find out

whether or not his likes and dislikes seemed to be generally shared. George might have organized

a couple of focus groups, if he could find people in the area who were part of his target market, and

would talk about their interest in health clubs and the features they'd like to see. All of these

options are available at little or no cost.

Difficulty: 3 Hard

Topic: Primary Data; Secondary Data

Learning Objective: 10-03 Describe the various primary data collection techniques.

Bloom's: Create

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 11 Product, Branding, and Packaging Decisions

1) A product is anything that is of value to a consumer and can be offered through a voluntary

marketing exchange.

Answer: TRUE

Explanation: This is true. product is anything that is of value to a consumer and can be offered

through a voluntary marketing exchange.

Difficulty: 1 Easy

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) Effective packaging and labels send consumers the signal "Buy me!"

Answer: TRUE

Explanation: Whether primary or secondary, packaging plays several key roles: It attracts the

consumers' attention, it enables products to stand out from their competitors, and it offers a

promotional tool.

Difficulty: 1 Easy

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) A company's product line consists of its various product mixes.

Answer: FALSE

Explanation: The product mix typically consists of various product lines, which are groups of

associated items that consumers tend to use together or think of as part of a group of similar

products or services.

Difficulty: 1 Easy

Topic: Product Line

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) Brands enable customers to quickly differentiate one firm or product from another.

Answer: TRUE

Explanation: As consumers become familiar with brands, they can more quickly differentiate

between various offerings.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) Brand equity is calculated by subtracting sales of generic brands from the sales of branded items

in a category.

Answer: FALSE

Explanation: Brand equity is the set of assets and liabilities linked to a brand that add to or

subtract from the value provided by the product or service.

Difficulty: 2 Medium

Topic: Brand Equity

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) The more familiar customers are with a brand, the harder their decision-making process will be.

Answer: FALSE

Explanation: Familiarity with a brand makes the decision making easier, not harder.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) Harry is a loyal Coca-Cola customer. Loyal customers like Harry require lower marketing

expenditures, benefiting businesses like Coca-Cola.

Answer: TRUE

Explanation: The costs of reaching loyal customers are lower, and their positive word of mouth

reaches potential customers and reinforces the perceived value of current customers, all at no cost

to the firm.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) Private-label brands are imitations often sold by street vendors.

Answer: FALSE

Explanation: Private-label brands are developed and marketed by a retailer and available only

from that retailer. They are also referred to as store brands.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) For a company like Pepsi-Cola, brand dilution occurs when it sells more product than the

competition.

Answer: FALSE

Explanation: Brand dilution occurs when the brand extension adversely affects consumer

perceptions about the attributes the core brand is believed to hold.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) In entertainment licensing, the major risk to licensees is that the brand will become

overexposed.

Answer: FALSE

Explanation: The licensor is the party granting the license, while the licensee is the one using the

license to produce products using the licensed characters. For licensors, the major risk is the

dilution of the brand.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) A product label is just a required sticker on a package.

Answer: FALSE

Explanation: A label is much more than a sticker on a package. It is a communication tool and

many of the elements on the label are required by laws and regulations.

Difficulty: 1 Easy

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) When purchasing a mobile phone, the product you are buying is more than just the phone.

Answer: TRUE

Explanation: The three components of a product are the core customer value, the actual product,

and the associated services. In this case the associated services include the cellular service.

Difficulty: 2 Medium

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) A customized carved cedar wood sign for your house is an example of a convenience product.

Answer: FALSE

Explanation: A convenience product is a product for which the consumer is not willing to expend

any effort to evaluate prior to purchase. A customized product such as the cedar sign is a specialty

product, which is a product toward which customers show a strong preference, such that they will

spend time and effort searching for the best suppliers.

Difficulty: 2 Medium

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) For the average college student, a retirement account would be a shopping product.

Answer: FALSE

Explanation: Most college students are not thinking of preparing for retirement, so a retirement

account would be an unsought product. Unsought products are those that consumers either do not

normally think of buying or do not know about.

Difficulty: 2 Medium

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) Kellogg's sells many different breakfast cereals, including Corn Flakes, Rice Krispies, Frosted

Flakes, Raisin Bran, and Special K. This is an example of the breadth of the Kellogg's product mix.

Answer: FALSE

Explanation: Product line depth (not breadth) equals the number of products within a product

line, as in this question.

Difficulty: 3 Hard

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) If Microsoft decided to sell mobile phones under the Xbox brand (which it uses for its gaming

systems), this would be an example of a line extension.

Answer: FALSE

Explanation: This is a brand extension, not a line extension. A brand extension is the use of the

same brand name in a different product line. Phones and gaming systems are different product

lines.

Difficulty: 3 Hard

Topic: Line Extensions and Product Modifications

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

17) Sales of private-label brands continue to increase, particularly in big-box stores such as Costco

and Trader Joe's.

Answer: TRUE

Explanation: In recent years, as the size of retail firms has increased through growth and

consolidation, more retailers have the scale economies to develop private-label merchandise and

use this merchandise to establish a distinctive identity. Walmart's Jet.com launched its first

private-label brand, Uniquely J, in 2017, which offers a range of products from thyme basil

cleaning wipes to organic teriyaki sauce, to compete against Amazon's popular private label,

AmazonBasics. Both Costco and Trader Joe's have based their brand identities around their store

brands.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

18) When Jacky selects a case of Sprite at the grocery store for her party, she is attracted by the

holiday-themed box featuring green and white bells. What Jacky is seeing is referred to as the

secondary package.

Answer: TRUE

Explanation: The secondary package is the wrapper or exterior carton that contains the primary

package and provides the UPC label used by retail scanners. The packaging is used to attract the

consumer's attention.

Difficulty: 3 Hard

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

19) Jen traded in her old car for her heart's desire, a new Lexus sedan. The Lexus is considered a

specialty product.

Answer: TRUE

Explanation: Luxury cars are specialty products because customers are willing to spend more

effort to select just the right one.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

20) Nike sells shoes, clothing, and athletic gear. These products represent the breadth of Nike's

products.

Answer: TRUE

Explanation: A firm's product mix breadth represents a count of the number of product lines

offered by the firm.

Difficulty: 2 Medium

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

21) A decrease in a company's product depth will always hurt its marketing efforts.

Answer: FALSE

Explanation: From time to time, it is necessary to delete products within a product line to realign

the firm's resources. Firms often must prune their product lines to eliminate unprofitable or

low-margin items and refocus their marketing efforts on their more profitable items.

Difficulty: 2 Medium

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

22) A familiar brand name always helps the sales of a product.

Answer: FALSE

Explanation: Even if the overall brand name is familiar, it won't help sales of individual products

unless consumers know what products are available under that name and the brand has a positive

image.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) Clare always liked Lands' End raincoats, so when she was shopping for a winter coat, she

ordered one from Lands' End without thinking too much about it. This demonstrates how

________ facilitate purchases.

A) private labels

B) brands

C) actual products

D) core customer values

E) associated services

Answer: B

Explanation: Brands are often easily recognized by consumers, and because they signify a certain

quality level and contain familiar attributes, brands help consumers make quick decisions,

especially about their purchases.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

24) Brands are assets that can be legally protected through

A) brand equity.

B) the Fair Packaging and Labeling Act of 1967.

C) trademarks.

D) the Federal Trade Commission Act of 1914.

E) brand associations.

Answer: C

Explanation: Brands are assets that can be legally protected through trademarks and copyrights

and thus constitute a unique form of ownership.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

25) When Mars manufactures M&M's, Snickers, and other confectionary products, or when Trek

designs bicycles, each company's core question is

A) How do we know how good a brand is or how much equity it has?

B) What makes a brand?

C) How do we produce this product in the least expensive manner?

D) What are the different branding strategies firms use?

E) What are customers looking for?

Answer: E

Explanation: When Mars manufactures M&M's, Snickers, and other confectionary products, or

when Trek designs bicycles, each company's core question is: What are customers looking for?

Difficulty: 2 Medium

Topic: Product Line

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

26) A product is ________ that can be offered through a voluntary marketing exchange.

A) the combination of a firm's marketing mix

B) the brand associations

C) the category depth

D) a tangible item

E) anything of value to consumers

Answer: E

Explanation: This is the definition of a product. In addition to goods, products might be places,

ideas, organizations, people, or communities that create value for consumers in their respective

competitive marketing arenas.

Difficulty: 1 Easy

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) The complete set of all products offered by a firm is called its

A) product line.

B) product categories.

C) product mix.

D) product breadth.

E) product line depth.

Answer: C

Explanation: The product mix is the complete set of all the firms' offerings.

Difficulty: 1 Easy

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

28) A ________ is a group of associated items that consumers tend to use together or think of as

part of a group of similar products.

A) product line

B) product mix

C) product mix breadth

D) line extension

E) brand extension

Answer: A

Explanation: The product mix typically consists of various product lines, which are groups of

associated items that consumers tend to use together or think of as part of a group of similar

products or services.

Difficulty: 1 Easy

Topic: Product Line

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

29) For a major university, undergraduate studies, graduate studies, and professional programs

would be ________ within the university's product mix.

A) brand associations

B) family brands

C) co-brands

D) product lines

E) private-label brands

Answer: D

Explanation: For the university, these would be product lines. Within each product line would be

specific majors. Product lines are groups of associated items that consumers tend to use together or

think of as part of a group of similar products or services.

Difficulty: 3 Hard

Topic: Product Line

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

30) It is almost impossible to watch a sporting event on television without seeing Nike's "swoosh"

check mark, which is Nike's

A) name.

B) symbol.

C) design.

D) term.

E) theme.

Answer: B

Explanation: The "swoosh" is a brand symbol associated with Nike. Most consumers know the

Nike swoosh and would recognize it even if the word Nike did not appear on the product or in an

advertisement.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

31) A long-standing staple of ________ has been major league sports teams that play in the MLB,

NBA, NFL, or NHL as well as various collegiate sports teams. rights.

A) branding

B) licensing

C) product line

D) rebranding

E) repositioning

Answer: B

Explanation: Brand licensing is a contractual arrangement between firms whereby one firm

allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated

fee.

Difficulty: 2 Medium

Topic: Brand Licensing

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

32) Zappos is a successful online shoe company. One of the difficulties in running a shoe company

is the need to have significant ________, a large number of items in each product line.

A) brand equity

B) product line breadth

C) product line depth

D) product mix depth

E) product mix breadth

Answer: C

Explanation: Product line depth is the number of items in a product line. Zappos promises its

customers a huge selection, and so must maintain great product line depth.

Difficulty: 2 Medium

Topic: Product Line

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) Marketers with successful brands sometimes hesitate to expand their brands because

A) Federal Trade Commission regulations limit the number of products that can be marketed under

an individual brand name.

B) it is costly to maintain many product lines, and it might weaken the brand's meaning.

C) it is often difficult to get additional marketing communications coverage for the brand.

D) manufacturing divisions usually control brand expansion and are often in conflict with the

marketing division.

E) the current economy can support only a limited number of product options.

Answer: B

Explanation: Each product line involves some additional cost, and if too many product lines are

associated with the same brand it can weaken the brand's meaning and reputation.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

34) All of the following scenarios illustrate a reason why a firm would eliminate an item within a

product line except

A) the firm decided to refocus marketing efforts elsewhere.

B) the firm must respond to evolving markets.

C) the product undermined its own brand.

D) the product being eliminated is unprofitable.

E) the firm has decided to capture new markets.

Answer: E

Explanation: All of these are reasons why firms might decide to delete a product from a product

line, except the desire to capture new markets.

Difficulty: 2 Medium

Topic: Product Line

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) For many years, General Electric had a corporate strategy of being among the top three firms in

any market in which it operated; if it could not achieve a top-three position, it would exit the

market. This strategy often resulted in the company ________ when certain product lines failed to

meet this expectation.

A) increasing product line depth

B) decreasing product line depth

C) decreasing product mix breadth

D) increasing product mix breadth

E) introducing brand extensions

Answer: C

Explanation: The product mix reflects the breadth and depth of the company's product lines. A

firm's product mix breadth represents a count of the number of product lines offered by the firm. If

GE could not achieve first, second, or third place in a market, it would eliminate a product line,

which decreases the product mix breadth.

Difficulty: 3 Hard

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

36) The decision to delete a product is never taken lightly because, generally, manufacturers

A) have offered the product line to other firms for purchase.

B) have made substantial investments in product development and manufacturing.

C) have promised consumers they will maintain the product.

D) have used brand repositioning to improve results.

E) must meet federal standards when taking products off the market.

Answer: B

Explanation: Firms invest in developing new products, and they will not walk away from that

investment lightly.

Difficulty: 1 Easy

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) A university that has separate graduate and undergraduate admission offices recognizes that

these are distinct

A) brand associations.

B) product lines.

C) product mixes.

D) brands.

E) augmented services.

Answer: B

Explanation: Product lines are groups of associated items that consumers tend to use together or

think of as part of a group of similar products or services. Graduate and undergraduate programs at

most universities are distinct product lines, with each product line including multiple degrees.

Difficulty: 3 Hard

Topic: Product Line

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

38) One important purpose of a brand is to

A) sell advertising space.

B) minimize product line depth needed to be effective.

C) increase consumer recognition and awareness of product offerings.

D) reduce product packaging.

E) meet government regulations.

Answer: C

Explanation: Brands are often easily recognized by consumers and, because brands signify a

certain quality level and contain familiar attributes, they help consumers make quick decisions,

especially about their purchases. Brands help consumers know what products are available under

that name.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

39) In addition to extensive online and outdoor advertising, Under Armour has intensified its

________ efforts by signing Washington Nationals baseball star Bryce Harper to the biggest

endorsement deal for an MLB player.

A) logo

B) branding

C) social media

D) value

E) differentiation

Answer: B

Explanation: In addition to extensive online and outdoor advertising, Under Armour has

intensified its branding efforts by signing Washington Nationals baseball star Bryce Harper to the

biggest endorsement deal for an MLB player.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

40) For a brand name to be effective, it needs to be

A) easy for consumers to recognize and remember.

B) a catchy, tongue-twisting phrase.

C) a visual image containing human characters.

D) generic, so it can be applied to as many products as possible.

E) associated with a sports or movie superstar.

Answer: A

Explanation: A brand name should be memorable and easy to recognize, in general.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Remember

AACSB: Communication

Accessibility: Keyboard Navigation

41) One key feature of the value of a strong brand is that

A) it can protect the firm from competition.

B) it no longer needs to be supported by advertising and promotion.

C) if it becomes a generic name, the brand is worth even more.

D) it cannot be successfully imitated by a retailer's own brand.

E) competitors will typically abandon a sector altogether rather than compete.

Answer: A

Explanation: Over time and with continued use, consumers learn to trust certain brands. They

know, for example, that they wouldn't consider switching brands and, in some cases, feel a strong

affinity to certain brands.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

42) When consumers associate a brand with a certain level of quality and familiar attributes,

allowing consumers to make quick decisions, the brand

A) establishes novelty.

B) is the only one the consumer will consider.

C) reduces delivery costs.

D) facilitates purchasing.

E) creates brand dilution.

Answer: D

Explanation: A brand can facilitate purchasing because the customer can quickly recognize it and

decide whether or not to purchase it based on brand associations.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Which of the following would be considered a logo without words?

A) jingle

B) slogan

C) symbol

D) product line

E) brand

Answer: C

Explanation: Visual branding elements can stand for corporate trademarks and can be symbols,

which are logos without words. An example would include the McDonald's golden arches.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

44) Firms that use the same brand name for new products can spend relatively less on marketing

costs for the new product because

A) brands protect corporate copyrights.

B) consumer loyalty can be bought for less now compared to the past.

C) brand equity can be obtained only by means of product line depth.

D) people already know what the brand means.

E) well-known brands are less likely to introduce brand extensions.

Answer: D

Explanation: Because the brand name is already well established, the firm can spend less in

developing consumer brand awareness and brand associations for the new product.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) The XYZ car manufacturing company is advertising its new hybrid vehicle. It understands that

its competition, Toyota's hybrid car, the Prius, is known for being economical, a good value,

stylish, and good for the environment. Toyota has the advantage of

A) copyrights and trademarks.

B) brand awareness.

C) brand extensions.

D) generic branding.

E) brand associations.

Answer: E

Explanation: Brand associations reflect the mental and emotional links that consumers make

between a brand and its key product attributes, such as a logo and its color, slogan, or famous

personality. These brand associations often result from a firm's advertising and promotional

efforts. Toyota's hybrid car, the Prius, is known for being economical, a good value, stylish, and

good for the environment.

Difficulty: 2 Medium

Topic: Brand Equity

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

46) When Mandy shops for lipstick, she always buys Really Red by Cover Girl. This is an example

A) brand loyalty.

B) brand awareness.

C) brand association.

D) brand equity.

E) perceived value.

Answer: A

Explanation: Brand loyalty occurs when a consumer buys the same brand's product or service

repeatedly over time rather than buying from multiple suppliers within the same category.

Difficulty: 2 Medium

Topic: Brand Equity

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) The value of a brand is often calculated by assessing the

A) difference between brand equity and brand liability.

B) corporate profitability divided by the monthly brand earnings.

C) earning potential of the brand over the next 12 months.

D) effect of brand dilution if it occurred.

E) average product line depth.

Answer: C

Explanation: The value of a brand can be defined as the earning potential of that brand over the

next 12 months.

Difficulty: 2 Medium

Topic: Brand Equity

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

48) Marketing expenditures allocated carefully can result in greater brand recognition, awareness,

perceived value, and consumer loyalty for the brand, which all enhance the brand's

A) positioning.

B) licensing.

C) association.

D) equity.

E) solvency.

Answer: D

Explanation: Brand equity is the set of assets and liabilities linked to a brand that add to or

subtract from the value provided by the product or service. Marketing expenditures allocated

carefully can result in greater brand recognition, awareness, perceived value, and consumer loyalty

for the brand, which all enhance the brand's equity.

Difficulty: 2 Medium

Topic: Brand Equity

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) The Doritos advertising effort of "Live Mas," which is Spanish for "Live More," is meant to

suggest a lifestyle aspiration. If consumers make a connection between the Doritos brand and this

promotional effort, then Doritos has created

A) brand ownership.

B) a brand extension.

C) brand loyalty.

D) brand dilution.

E) a brand association.

Answer: E

Explanation: Brand associations reflect the mental and emotional links that consumers make

between a brand and its key product attributes, such as a logo and its color, slogan, or famous

personality.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

50) Firms spend millions of dollars annually to build brand equity, recognizing that brand equity

contributes to

A) product mix breadth.

B) corporate stakeholder relations.

C) profitability.

D) brand liability.

E) perceived brand personality.

Answer: C

Explanation: Brands are assets that can produce profits if brand equity is built successfully.

Difficulty: 2 Medium

Topic: Brand Equity

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) All of the following are included in the main criteria used for determining how "good" a brand

is, or how much equity it has except

A) brand awareness.

B) brand loyalty.

C) brand associations.

D) brand conceptualization.

E) perceived value.

Answer: D

Explanation: Brand awareness, brand loyalty, brand associations, and perceived value are the

four primary criteria used to evaluate brand equity.

Difficulty: 1 Easy

Topic: Brand Equity

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

52) If many consumers in the marketplace are familiar with a brand and what it stands for and have

an opinion about the brand, the brand has considerable

A) awareness.

B) equity.

C) extension.

D) integration.

E) depth.

Answer: A

Explanation: Brand awareness measures how many consumers in a market are familiar with the

brand and what it stands for and have an opinion about it. The more aware of or familiar with it

they are, the easier their decision-making process is, which improves the chances of purchase.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

53) Whether they like them or not, most U.S. automobile customers are familiar with and have an

opinion about American-made cars. This familiarity makes it easier for consumers to

A) meet their self-actualization needs.

B) make purchase decisions.

C) consider repositioning their opinions.

D) pursue generic alternatives.

E) negotiate discounts.

Answer: B

Explanation: Brand awareness measures how many consumers in a market are familiar with the

brand and what it stands for and have an opinion about it. The more aware of or familiar with it

they are, the easier their decision-making process is, which improves the chances of purchase.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

54) Sometimes brand names become synonymous with a product itself. If that happens, the brand

A) has achieved brand stabilization.

B) could lose its trademark status.

C) should try co-branding to avoid brand dilution.

D) should consider a new packaging strategy.

E) easily eliminates all competition.

Answer: B

Explanation: Companies whose brand names become synonymous with the product—like

Kleenex tissues, Clorox bleach, Band-Aid adhesive bandages, and the Google search

engine—must be vigilant in protecting their brand names because if they are used so generically,

over time the brand itself can lose its trademark status.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

55) In the case of Band-Aid adhesive bandages, the brand name has

A) successfully employed private-label branding.

B) distinctive brand substitutability.

C) grown through private-label branding.

D) become synonymous with the product itself.

E) avoided brand extensions.

Answer: D

Explanation: Brand names that become synonymous with the product must protect against the

use of the brand name in a generic fashion, or they may lose their trademark on the name.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

56) Salina is working to create greater brand awareness for her company's new line of fitness

trackers. All of the following except ________ are important for increasing brand awareness.

A) brand name

B) logo

C) packaging

D) slogan

E) product history

Answer: E

Explanation: The brand name, logo, packaging, and slogan are all important in creating brand

awareness.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

57) Why would a firm spend over $2 million for a 30-second ad on television during the Super

Bowl?

A) because of the annual competition for the most creative Super Bowl ad

B) because the Super Bowl offers an opportunity to create significant brand awareness

C) because the Super Bowl is a significant opportunity to be associated with global marketing

D) because Super Bowl ads generate brand loyalty

E) None of the answers is correct.

Answer: B

Explanation: Brand awareness measures how many consumers in a market are familiar with the

brand and what it stands for and have an opinion about it. The more aware of or familiar with it

they are, the easier their decision-making process is, which improves the chances of purchase.

Some firms might agree that it doesn't make sense to spend so much money on a Super Bowl ad;

however, the Super Bowl offers a huge TV audience and, with it, a major opportunity to build

brand awareness.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

58) Relatively few consumers like to go to the dentist. Dental insurance plans that pay for regular

checkups increase the ________ of dental care by reducing the cost to the consumer.

A) perceived value

B) brand awareness

C) brand loyalty

D) generic positioning

E) brand extension

Answer: A

Explanation: The perceived value of a good or service is the relationship between its benefits and

its costs. By reducing the cost, the value will be seen to be greater.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

59) In a competitive market, perceived value is determined by consumers mostly

A) by quantitative analysis of brand personalities.

B) in relation to the value of its close competitors.

C) by weighing primary versus secondary benefits.

D) by trying out different products.

E) through brand association and brand licensing.

Answer: B

Explanation: The perceived value of a brand is the relationship between a product's or service's

benefits and its cost. Customers usually determine the offering's value in relation to the value of its

close competitors.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

60) Noreen is deciding whether to purchase brand-name sneakers or a less expensive store brand.

She has purchased other shoes with the same brand name in the past but was only marginally

satisfied. In this situation, Noreen is likely to purchase the store-brand sneakers because they offer

A) more brand awareness.

B) higher degrees of brand loyalty.

C) greater perceived value.

D) a better brand image.

E) more product line depth.

Answer: C

Explanation: Since Noreen's past experience with name brands has been marginal, she might

prefer to buy the store brand, which is less expensive and might therefore provide better value.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

61) Matthew was passionate about Hollister. It was the only place he'd buy his clothes. If anyone

asked him about clothes, he would talk for what seemed like hours about why he shopped only

there. From a strictly marketing perspective, this word of mouth is an element of

A) social marketing.

B) brand loyalty.

C) self-actualization.

D) motivation.

E) brand extension.

Answer: B

Explanation: Matthew's word-of-mouth behavior is an outcome of his brand loyalty.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

62) Jenny always buys Stacy's brand pita chips. She does not even consider alternatives. Jenny is a

________ customer.

A) price-sensitive

B) brand-persuasion-oriented

C) brand-association-oriented

D) brand-extension-oriented

E) brand-loyal

Answer: E

Explanation: Since Jenny does not consider other brands, she is brand loyal.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

63) All of the following statements regarding brand loyalty are true except

A) the marketing costs of reaching loyal customers are typically very high.

B) brand-loyal customers are unlikely to switch to competitor's brands.

C) brand-loyal customers generate positive word of mouth.

D) firms tend to reward brand loyal customers with extra benefits.

E) brand-loyal customers do not need persuasion to buy the firm's brands.

Answer: A

Explanation: The marketing costs of reaching loyal consumers are much lower because the firm

does not have to spend money on advertising and promotion campaigns to attract brand loyal

customers. Loyal consumers simply do not need persuasion or an extra push to buy the firm's

brands.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

64) For marketers, one of the benefits of having achieved brand loyalty is

A) recognition through industry awards.

B) lower marketing costs associated with reaching loyal customers.

C) increased price sensitivity among loyal customers.

D) greater concern about competitors' actions.

E) few worries about copyright infringement.

Answer: B

Explanation: Brand-loyal customers are already convinced of the brand's value. It is not

necessary to spend large sums of money to build awareness and preference for the brand among

these customers.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

65) For luxury carmakers, the lowest-end models in their product lines often represent only a small

portion of their sales. Yet these models are critically important when it comes to attracting new

customers and, potentially, establishing their lifelong

A) awareness of the brand.

B) perceived value of the brand.

C) loyalty to the brand.

D) product identification of the brand.

E) association of the brand.

Answer: C

Explanation: Over time and with continued use, consumers learn to trust certain brands. For

luxury carmakers, the lowest-end models in their product lines often represent only a small portion

of their sales. Yet these models are critically important when it comes to attracting new customers

and, potentially, establishing their lifelong loyalty to the brand.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

66) Imagine that you are the marketing manager of a hotel chain that wants to implement a

customer reward and loyalty program. You research the firm Sabre Hospitality Solutions, which

offers its services to global and boutique hotel chains to develop and execute these types of

programs. Sabre Hospitality Solutions is a company that focuses on

A) customer relationship management.

B) building brand awareness.

C) building brand associations.

D) increasing perceived value.

E) increasing brand equity.

Answer: A

Explanation: Brand-loyal customers are an important source of value for firms. Firms such as

airlines, hotels, long-distance telephone providers, credit card companies, and retailers reward

loyal consumers with loyalty or customer relationship management (CRM) programs, such as

points customers can redeem for extra discounts or free services, advance notice of sale items, and

invitations to special events sponsored by the company.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

67) Frequent buyer/user award programs are used to

A) increase price sensitivity.

B) decrease co-branding costs.

C) lower licensing fees.

D) expand product line depth.

E) maintain contact with loyal customers.

Answer: E

Explanation: Frequent buyer programs and similar loyalty programs are often part of a CRM

(customer relationship management) program.

Difficulty: 1 Easy

Topic: CRM

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

68) A tablet programmed with key customers' birthdates, wine preferences, and food allergies is

a(n) ________ tool.

A) SKU

B) PDQ

C) IMF

D) CRM

E) GATT

Answer: D

Explanation: Keeping track of customers' preference enhances the relationship and increases

brand loyalty, all part of customer relationship management (CRM).

Difficulty: 2 Medium

Topic: CRM

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

69) Brands can be owned by

A) manufacturers only.

B) any firm in the supply chain.

C) retailers only.

D) wholesalers and retailers only.

E) private-label generic retailers only.

Answer: B

Explanation: Brands can be owned by any firm in the supply chain, whether manufacturers,

wholesalers, or retailers. There are two basic brand ownership strategies: manufacturer brands and

retailer/store brands.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

70) Kraft, Nike, Coca-Cola, KitchenAid, and Sony are considered famous ________ brands

because they are owned and managed by the manufacturer.

A) national

B) retailer

C) international

D) premium

E) family

Answer: A

Explanation: Manufacturer brands, also known as national brands, are owned and managed by

the manufacturer.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

71) Which of the following is the best example of a family brand?

A) Cadillac, GMC, and Chevrolet

B) Kraft Singles and Kraft Mayo

C) Kellogg's Special K and Famous Amos Chocolate Chip Cookies

D) Lifesavers Soda, Coca-Cola, and Diet Coke

E) KFC/Taco Bell fast foods

Answer: B

Explanation: A firm can use its own corporate name to brand all its product lines and products,

referred to as a family brand.

Difficulty: 3 Hard

Topic: Product Line

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

72) The basic reason manufacturers spend time and money building their own brands is to

A) create brand awareness.

B) build brand equity.

C) offset the power of private-label manufacturers.

D) create positioning possibilities for their generic product lines.

E) maximize product line depth.

Answer: B

Explanation: Companies invest in brands to build brand equity, which is a corporate asset.

Difficulty: 2 Medium

Topic: Brand Equity

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

73) Procter & Gamble is a huge national brand manufacturer. By owning its brands like Tide and

Crest, P&G

A) can monopolize store brands.

B) has greater opportunity to dictate retail pricing.

C) has greater control over its marketing strategy.

D) can increase brand dilution.

E) can eliminate any local competition.

Answer: C

Explanation: By owning their brands, manufacturers retain more control over their marketing

strategy, are able to choose the appropriate market segments and positioning for the brand, and can

build the brand and thereby create their own brand equity.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

74) Brands that are owned by ________ are called private-label brands.

A) manufacturers

B) wholesalers

C) supply chain specialists

D) retailers

E) manufacturer's reps

Answer: D

Explanation: Retailer/store brands, also called private-label brands, are products developed by

retailers. In some cases, retailers manufacture their own products; in other cases, they develop the

design and specifications for their retailer/store brands and then contract with manufacturers to

produce those products.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

75) ________ is another term for private-label brands.

A) Store brands

B) Off brands

C) Manufacturer's brands

D) National brands

E) Experiential brands

Answer: A

Explanation: Private-label brands are also referred to as retailer or store brands.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

76) Private-label brands are developed and managed by

A) manufacturers.

B) wholesalers.

C) supply chain specialists.

D) manufacturer's representatives.

E) retailers.

Answer: E

Explanation: Private-label brands are brands developed by retailers.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

77) Consumers might not realize that Philadelphia cream cheese and Jell-O products are made by

the same company—Kraft. Philadelphia cream cheese and Jell-O are known as

A) individual brands.

B) family brands.

C) corporate brands.

D) traditional brands.

E) umbrella brands.

Answer: A

Explanation: Philadelphia cream cheese and Jell-O are individual brands, separate brand names

for different product lines.

Difficulty: 3 Hard

Topic: Product Line

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) When Procter & Gamble added teeth-whitening products under the Crest brand, the firm was

engaged in

A) corporate branding.

B) brand extension.

C) brand licensing.

D) brand association.

E) perceived value branding.

Answer: B

Explanation: This was a brand extension, using the Crest brand name for a new product line. A

brand extension refers to the use of the same brand name in a different product line. It is an

increase in the product mix's breadth.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

79) Why is brand extension a popular marketing strategy?

A) It separates out the cost of brand extension from brand intention.

B) It allows the firm to discontinue complementary products.

C) It allows the firm to spend less on creating brand awareness and associations.

D) It avoids the problem of brand dilution.

E) It guarantees success for a new product.

Answer: C

Explanation: Since consumers are already familiar with the brand name, existing awareness and

associations will transfer to the new product.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) All of the following are potential benefits of brand extension except

A) allowing the perception of a brand with a quality image to be carried over to the new product.

B) lowering marketing costs.

C) boosting sales of the core brand.

D) spending less on creating brand awareness and associations.

E) eliminating competition.

Answer: E

Explanation: Since consumers are already familiar with the brand name, existing awareness and

associations will transfer to the new product. In addition, benefits may transfer back to the core

brand and increase its sales.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

81) One of the categories of products for which brand extension is especially logical is

A) generic goods.

B) generic services.

C) commodities.

D) complementary goods.

E) licensed brands.

Answer: D

Explanation: Complementary products are those which are used together—for example, chips

and dip, or toothbrushes and toothpaste. It can often make sense to extend a brand to offer a

complementary product under the same brand name.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) Jack developed a toothpaste using only natural ingredients, and he has been quite successful

selling the product in health food stores and some grocery stores. He has recently developed a

toothbrush using bamboo and natural components. Jack is considering a ________, giving the

toothbrush the same brand name as the toothpaste in order to create greater brand awareness.

A) co-brand

B) brand extension

C) premium brand

D) joint brand

E) natural brand

Answer: B

Explanation: If Jack gives the toothbrush the same brand name as his existing toothpaste, this is a

brand extension, adding a new product line (toothbrushes) to his existing brand.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

83) Ferrari is well known as a brand of luxury sports cars; accordingly, it has leveraged its brand

name to introduce clothing offerings emblazoned with its horse logo. It has also licensed its logo to

68 different products, from sunglasses to guitars. Ferrari might be at risk of which of the

following?

A) brand awareness

B) perceived value

C) brand extension

D) brand dilution

E) line extension

Answer: D

Explanation: Brand dilution occurs when the brand extension adversely affects consumer

perceptions about the attributes the core brand is believed to hold. Ferrari might be at risk of this

effect, because it has gone far past clothing to offer brand licenses for sunglasses, perfume and

cologne, skis, hotel suites, guitars, phones, LEGOs, leather bags, watches, jewelry boxes, and

dice—among other things. It has licensed its logo to 68 different products, prompting Ferrari's

chief executive to admit that cars are "almost incidental" to the brand.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) Marc tried a new fruit-flavored beverage and thought it was awful. He was especially

disappointed because he had liked the dried fruit snacks marketed under the same brand name.

Now he wasn't sure he even wanted to buy the snacks he had liked before. This highlights a

problem in branding known as

A) brand dilution.

B) comingled brands.

C) undifferentiated brands.

D) approximated brands.

E) unlicensed brands.

Answer: A

Explanation: This is an example of brand dilution—the weakening of the core brand due to

extensive or inappropriate extensions.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

85) Harley-Davidson's cake decorating kit tried to appeal to the brand's unparalleled consumer

loyalty, but it was considered too tame by their consumer base. This is an example of

A) corporate branding.

B) brand extraction.

C) brand collusion.

D) brand personality destruction.

E) brand dilution.

Answer: E

Explanation: Brand dilution occurs when the brand extension adversely affects consumer

perceptions about the attributes the core brand is believed to hold.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) A ________ refers to the use of the same brand in a different product line.

A) line extension

B) brand extension

C) product mix extension

D) co-brand

E) brand license

Answer: B

Explanation: A brand extension refers to the use of the same brand name in a different product

line. It is an increase in the product mix's breadth.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) Marketers with luxury brands use brand extension cautiously in order to avoid

A) brand licensing fees.

B) exclusive co-branding arrangements.

C) diluting the core brand.

D) private-label branding disputes.

E) product line extension limitations.

Answer: C

Explanation: If brand extensions are not executed carefully, they can dilute the core brand by

damaging its associations and equity.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) Shell MasterCard, created cooperatively by Shell Oil Company and MasterCard, is an example

A) co-branding.

B) brand extraction.

C) brand collusion.

D) a generic brand.

E) brand dilution.

Answer: A

Explanation: Co-branding is the practice of marketing two or more brands together on the same

package, promotion, or store. Co-branding can enhance consumers' perceptions of product quality

by signaling unobservable product quality through links between the firm's brand and a

well-known quality brand.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

89) Efforts to change a brand's focus to target new markets or change the image of a brand are

called

A) co-branding.

B) brand extraction.

C) brand collusion.

D) brand repositioning.

E) brand dilution.

Answer: D

Explanation: Brand repositioning, or rebranding, refers to a strategy in which marketers change a

brand's focus to target new markets or realign the brand's core emphasis with changing market

preferences.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) When Disney flooded retail stores with products based on its movie Frozen, this illustrated

A) strategic brand alteration.

B) rebranding.

C) brand licensing.

D) brand repositioning.

E) brand scaling.

Answer: C

Explanation: One very popular form of licensing is the use of characters created in books and

other media. Such entertainment licensing has generated tremendous revenues for movie studios.

Disney, for instance, flooded retail stores with products based on its movie Frozen.

Difficulty: 2 Medium

Topic: Brand Licensing

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) Elaine had been using an imported brand of shampoo for several years, but she could no longer

find it anywhere. As she was considering what kind of shampoo to try, she was surprised to see ads

for Procter & Gamble's Head and Shoulders being promoted as a glamorous health-oriented

product. She had always thought of Head & Shoulders as an antidandruff shampoo. The new ads

suggest that Head & Shoulders has most likely been

A) rebranded.

B) reformulated.

C) licensed to a premium shampoo manufacturer.

D) extended as a brand.

E) co-branded.

Answer: A

Explanation: Head & Shoulders has been rebranded to give it a health-oriented image. Brand

repositioning, or rebranding, refers to a strategy in which marketers change a brand's focus to

target new markets or realign the brand's core emphasis with changing market preferences.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) All of the following statements regarding secondary packaging are true except

A) It can provide information to consumers not found on the primary packaging.

B) It is important to the retailer in terms of convenience in handling.

C) It can be an important positioning tool to convey the brand image.

D) It can allow for cost efficiencies due to larger order and shipment sizes.

E) It is of little value to the average consumer.

Answer: E

Explanation: Secondary packaging—the wrapper or exterior carton that contains the primary

package—fills many roles, including all of those listed here. It is therefore of value to the

consumer.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

93) A ________ package is the one a consumer uses. A ________ package is used by retailers to

display and sell the product.

A) secondary; primary

B) generic; private-label

C) primary; secondary

D) corporate; manufacturer's

E) co-branded; licensed

Answer: C

Explanation: The primary package is the package the consumer uses (for example, a toothpaste

tube), while the secondary package is used by retailers to display the product (for example, the box

the toothpaste tube comes in).

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) All of the following are considered an important function of labels on products and packages

except

A) protecting against damage to the product.

B) providing consumer information to assist in purchasing.

C) identifying the brand and building brand image.

D) promoting the brand or complementary brands.

E) listing the ingredients.

Answer: A

Explanation: The package might protect against damage to the product, but that is not a function

of the label.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

95) What U.S. government agency has the primary responsibility in reviewing food and package

labels to ensure claims made by the manufacturer about the product are true?

A) Federal Trade Commission

B) Federal Communications Commission

C) Consumer Product Safety Administration

D) Food and Drug Administration

E) Interstate Commerce Commission

Answer: D

Explanation: The Food and Drug Administration is the primary federal agency that reviews food

and package labels and ensures that the claims made by the manufacturer are true.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) Kendra is taking a backpacking trip across Europe. She wants to make sure that the backpack

she chooses is the best one for her adventure, so she is spending a considerable amount of time

comparing alternatives to make sure she selects the best one. For Kendra, this backpack represents

what type of product?

A) convenience

B) unsought

C) shopping

D) luxury

E) routine

Answer: C

Explanation: Shopping products/services are products or services for which consumers will

spend a fair amount of time comparing alternatives.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

97) Zappos, an online shoe company, knows shoes are typically a(n) ________ good, with

consumers often spending time comparing alternatives. It overcomes that aspect of consumers'

search process by offering a free, no-questions-asked return policy.

A) specialty

B) shopping

C) convenience

D) ritual

E) impulse

Answer: B

Explanation: Shopping products/services are products or services for which consumers will

spend a fair amount of time comparing alternatives, of which hoes are typically a shopping good.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) Marketers selling milk, bread, and other consumer staples know that most customers do not

spend much time searching or comparing alternatives. For most consumers, these are ________

goods.

A) specialty

B) shopping

C) convenience

D) ritual

E) impulse

Answer: C

Explanation: Convenience products/services are those products or services for which the

consumer is not willing to expend any effort to evaluate prior to purchase. They are frequently

purchased commodity items, usually bought with very little thought, such as common beverages,

bread, or soap.

Difficulty: 2 Medium

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

99) Andrew likes gourmet popcorn, and will spend time trying to find his favorite brand. His

girlfriend, Joanne, loves popcorn but doesn't care about brands. For Andrew, popcorn is a

________ good while for Joanne it is a ________ good.

A) shopping; specialty

B) convenience; shopping

C) convenience; specialty

D) specialty; convenience

E) unique; universal

Answer: D

Explanation: For Andrew, popcorn is a specialty product—he is willing to spend time finding his

favorite brand. For Joanne, it is a convenience good—she doesn't care about brands and so is

unlikely to comparison shop.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) Marketers need to think about the product offer on three levels. Which of the following levels

includes associated services such as warranties, financing, support, and after-sale service?

A) augmented product

B) core customer value

C) actual product

D) modified product

E) core product

Answer: A

Explanation: The associated services, also called the augmented product line, include the

nonphysical aspects of the product, such as product warranties, financing, product support, and

after-sale service.

Difficulty: 1 Easy

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

101) All of the following are considered part of the actual product level of the product offer except

A) product warranty.

B) features.

C) design.

D) quality.

E) brand name.

Answer: A

Explanation: The actual product is made up of the brand name, quality level, packaging, and

features and design. The product warranty is one of the associated services included in the

augmented product.

Difficulty: 1 Easy

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) When manufacturers try to understand what customers are looking for, they are thinking

about the ________ component of the product offer.

A) core customer value

B) associated services

C) augmented products

D) product support

E) quality level

Answer: A

Explanation: Marketers involved with the development, design, and sale of products think of

physical characteristics and service functions in an interrelated fashion. At the center is the core

customer value, which defines the basic problem-solving benefits that consumers are seeking.

Difficulty: 2 Medium

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

103) Suppose that Walgreens (a major drug store chain) wants to introduce its own brand of cough

medicine that is similar in contents and packaging to a national brand, but at a lower cost. What

kind of brand would Walgreens be introducing?

A) private-label brand

B) counterfeit brand

C) premium brand

D) national brand

E) manufacturer's brand

Answer: A

Explanation: Private-label brands are products developed by retailers.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) When a company launches a new product line with an existing brand name, this is known as

A) a brand extension.

B) a line extension.

C) a multi-brand.

D) a new brand.

E) co-branding.

Answer: A

Explanation: A brand extension refers to the use of the same brand name for a new product line.

Difficulty: 1 Easy

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

105) Which of the following brand strategies is being used when the local ice cream shop decides

to add a new flavor to its menu?

A) a line extension

B) a brand extension

C) a copycat brand

D) a premium brand

E) a multi-brand

Answer: A

Explanation: A line extension is the use of the same brand name within the same product line and

represents an increase in a product line's depth.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) When a restaurant chain, Big Burgers, launches its own brand of frozen meals, this is an

example of a

A) brand extension.

B) line extension.

C) licensed brand.

D) copycat brand.

E) premium brand.

Answer: A

Explanation: A brand extension refers to the use of the same brand name in a different product

line.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

107) Which of the following best describes when Johnson & Johnson introduces a travel-sized

package for its existing baby oil product?

A) line extension

B) brand extension

C) brand dilution

D) rebranding

E) co-branding

Answer: A

Explanation: A line extension is the use of the same brand name within the same product line and

represents an increase in a product line's depth.

Difficulty: 2 Medium

Topic: Line Extensions and Product Modifications

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) What aspect of the product is being described when a used-car salesperson explains that each

car comes with a one-year extended warranty and a two-year maintenance plan?

A) actual product

B) associated services

C) product style

D) product position

E) product concept

Answer: B

Explanation: Associated services are the nonphysical aspects of the product, such as product

warranties.

Difficulty: 2 Medium

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

109) Some credit cards provide free liability insurance, funded by the bank issuing the card, when

a customer pays for a rental car using the card. This extra insurance is an example of

A) product style.

B) the actual product.

C) an associated service.

D) the product position.

E) the core value.

Answer: C

Explanation: Associated services are related to the nonphysical aspects of the product, such as

product warranties.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) When a salesperson calls you to sell a cemetery plot, this is most likely what type of product?

A) unsought product

B) shopping product

C) convenience product

D) line extension

E) secondary product

Answer: A

Explanation: An unsought product or service is a product consumers either do not normally think

of buying or do not know about.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

111) Where on a product's packaging would one most likely find nutrient content and country of

origin?

A) inside the secondary package

B) inside the primary package

C) on the company website

D) on the label

E) on the store shelf display

Answer: D

Explanation: Product labels may highlight specific ingredients, vitamin content, nutrient content,

and country of origin.

Difficulty: 1 Easy

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) Returnable packaging, use of 3D printing, and flexible packaging are examples of

A) recycled packaging.

B) environmental packaging.

C) responsible packaging.

D) sustainable packaging.

E) green packaging.

Answer: D

Explanation: Sustainable packaging is product packaging that has less of a negative impact on

the environment. Returnable packaging, use of 3D printing, and flexible packaging are all

examples of sustainable packaging.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

113) When Kraft's Philadelphia cream cheese changed its packaging from round to oval to ensure

front-facing displays that can't spin and to fit more into the same shelf space, this was a subtle way

in which the firm ________ its product.

A) repositioned

B) branded

C) sustained

D) individualized

E) privatized

Answer: A

Explanation: Firms occasionally change or update their packaging as a subtle way of

repositioning the product. As an example, Philadelphia cream cheese has changed its packaging

from round to oval to ensure front-facing displays that can't spin and to fit more into the same shelf

space.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) Which of the following can help suppliers save on the cost of a product?

A) rebranding

B) labeling

C) repositioning

D) branding

E) packaging

Answer: A

Explanation: When the costs of producing a product rise significantly, manufacturers are faced

with either raising prices—something customers don't usually like—or reducing the amount of

product sold in a package.

Difficulty: 1 Easy

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

115) A toothpaste tube is an example of a ________ package.

A) primary

B) secondary

C) brand positioning

D) private-label

E) convenience

Answer: A

Explanation: The primary package is the one the consumer uses, such as the toothpaste tube.

From the primary package, consumers typically seek convenience in terms of storage, use, and

consumption.

Difficulty: 1 Easy

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

116) When Meghan planned her trip to Australia, she spent months evaluating packages, airfares,

and hotel accommodations. Meghan's trip is an example of a(n) ________ product.

A) specialty

B) convenience

C) unsought

D) shopping

E) sought

Answer: D

Explanation: Shopping products/services are products or services for which consumers will

spend a fair amount of time comparing alternatives, such as furniture, apparel, fragrances,

appliances, and travel. Since Meghan spent significant time comparing alternatives, this would be

considered a shopping product.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

117) Though most universities are nonprofit organizations, they are engaged in marketing strategy

choices, just like businesses. For example, universities must decide if they should increase or

decrease product mix breadth, or increase or decrease product line depth. Using your university,

describe a real or plausible example of each of these four potential changes.

Answer: Answers will vary, but an increase in product mix breadth involves adding a new

product line. Depending on the size of the university and the number of degrees, this might involve

adding a new department or a new school. An increase in product line depth might be to add a new

major in a department or school, or a new program within a department (such as a degree that can

be earned online).

Difficulty: 3 Hard

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

118) What are the brand components used by your university?

Answer: Answers will vary, but for the University of South Carolina they include:

The name and abbreviation: which is a problem given the USC in Southern California. South

Carolina now uses the abbreviation SC. Also, SC grads refer to themselves as "Carolina" but UNC

also uses that name.

The URL: sc.edu—unfortunately, Southern Cal registered usc.edu first!

The logo and symbol: the 1801 insignia.

Characters: A "Gamecock."

Slogan: "Go Cocks"—yes, that is the slogan!

Jingle: South Carolina used the music from 2001: A Space Odyssey as its jingle. There is also "We

Hail Thee, Carolina," but no one knows the words.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

119) What are the ways that brands add value?

Answer: Brands facilitate purchasing, establish loyalty, protect from competition and price

competition, are assets, and affect market value.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

120) Believe it or not, Walmart's first designer label clothing brand is called George. Few

Americans know the George brand, but in Britain it is well regarded and sold in stand-alone

George stores. What would be the benefits to Walmart if the George brand of clothing became

recognized and desired in the United States?

Answer: The benefits to Walmart would likely include:

Facilitating purchasing if consumers recognized and perceived it as a quality brand.

Increased consumer loyalty if consumers trust the brand.

Some protection from competition if consumers seek out the brand.

Reduced marketing costs if consumers become familiar with the brand.

Asset value and profit if George became a valued brand, creating the possibility of brand extension

too.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

121) How do marketers measure the value of a brand?

Answer: Brand value is calculated by assessing the earning potential of a brand over the next 12

months.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

122) Creating brand awareness is the first step in creating brand equity. Political candidates know

name recognition is critical to success—particularly for incumbents to get reelected. If you were a

marketing adviser to a challenger for the congressional seat in your district, what would you

recommend the candidate do to create brand/name awareness?

Answer: Answers will vary, but the text states, "Marketers create brand awareness through

repeated exposures of the various brand elements (brand name, logo, symbol, character,

packaging, or slogan) in the firm's communications to consumers through advertising, publicity, or

other methods." Students' responses should include some of these.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

123) Almost every business wants brand loyal customers. Why?

Answer: Brand loyalty provides a wealth of benefits to marketers including reduced consumer

sensitivity to price, lower marketing costs to reach loyal customers, a degree of insulation from the

actions of competitors, and more profitability from loyal customers.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

124) Helen was surprised to learn that the car and home insurance agency she was just hired by

does not have a CRM program. Why should the agency have a CRM program, and what CRM

efforts should Helen recommend?

Answer: CRM is customer relationship management. CRM can be used to reward loyal

customers and maintain contact with current customers. For a car and home insurance company,

reminder advertising like calendars, hats, or other specialty items could be appropriate. An Internet

alert system to inform customers about changing insurance laws or a thank-you system for

customer referrals could all be part of a CRM program.

Difficulty: 3 Hard

Topic: CRM

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

125) Why would a huge retailer like Walmart carry national brand products?

Answer: National brands are manufacturer brands. Walmart carries national brands because its

customers want them. The branding efforts by manufacturers create perceived value leading

consumers to choose national brands over private-label choices.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

126) The company Jorge works for has just acquired a regional grocery store chain. The chain has

a very strong reputation among consumers in the states in which it operates. The acquired

company owns several private-label brands. Jorge has been asked to prepare a brief about the

options for retaining the private-label brands that the chain had been selling. What are the key

points Jorge should include?

Answer: In addition to all the considerations about brands, he should examine whether any of the

private brands would provide increased profit margins and loyalty. He will also want to consider

whether the chain is going to retain its own name and identity or be merged into the parent

company.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

127) Why do manufacturers like Kraft spend millions of dollars annually creating and maintaining

their brands? Why don't they just manufacture their products and sell them under store brand

labels?

Answer: Creating and maintaining national brands allows manufacturers like Kraft to retain

greater control of their marketing strategy; segmentation, positioning, and building brand equity.

Some manufacturers do not have their own brands, reducing marketing costs, but Kraft has

established brand equity that would be lost if it did not maintain its efforts.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

128) A currently popular trend in the wine industry is house-labeled wine. Restaurants, hotel

chains, and even universities now sell wine under their brand name. Is this type of brand extension

a good marketing strategy? Defend your answer.

Answer: Answers will vary, but should include discussion of the advantages and caveats

associated with brand extension. For restaurants and hotel chains with quality images, the brand

extension may be logical. For a university, it may result in novelty sales, but does not seem logical.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

129) Walt Disney Company announced it would no longer allow its characters to be used in

promoting unhealthy foods. In branding strategy, what does this change? From both ethical and

marketing perspectives, does this change make sense?

Answer: This change means Disney is restricting co-branding with food companies. From an

ethical perspective the company was quoted as saying, "A company such as ours, with the reach

we have, has a responsibility because of how much we can influence people's opinions and

behavior." From a marketing perspective, the company will lose some brand licensing fees but

benefit from supporting its brand image as a wholesome entertainment company.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

130) Why would a company like Walmart have a difficult time repositioning itself as a retailer of

quality, stylish clothing?

Answer: Repositioning involves changing a brand's focus to target new markets, adjust to

changing market conditions, or to change the quality image of a brand. Walmart is known for its

"everyday low prices," which indicates good value, but it is not necessarily known for quality or

style.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

131) Distinguish between primary and secondary packaging.

Answer: The primary package is the one the consumer uses. The secondary package is the outer

wrapper or carton. Secondary packaging has uses for the consumer as well as the retailer.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

132) Effective marketers recognize that a label is much more than just a sticker on a package. What

can a label do for a marketer?

Answer: Product labels provide information to consumers. While many labeling requirements

stem from laws, a label is a communication tool that can focus on benefits or emphasize what is or

is not in the product.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

133) Colgate, like any major consumer products company, is always looking for opportunities to

expand its product lines. What two industry factors often influence product line expansion

decisions?

Answer: Firms expand product lines when it is relatively easy to enter a specific market, and/or

when there is substantial market opportunity.

Difficulty: 2 Medium

Topic: Line Extensions and Product Modifications

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) Strong brands can reduce marketing costs. How do they accomplish that?

Answer: The brand sells the products and as people become more comfortable and

knowledgeable, the marketer does not need to spend as much money explaining who the company

is or what it does.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-04 Identify the advantages that brands provide firms and consumers.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

135) What do the following brands have in common: Band-aids, Kleenex tissues, and Clorox

bleach?

Answer: They are all examples of brands that have become synonymous with a product category.

If the terms become generic, the companies could lose their trademark status.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

136) What are consumers likely to do if they perceive an inexpensive brand to have about the same

quality as a premium brand?

Answer: The perceived value, which is consumer's relationship between price and quality, will

be greater for the inexpensive brand, leading to increased demand for the less expensive brand.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) Provide a real-world example of a national brand and a private-label brand.

Answer: Answers will vary, but the national brand should be a manufacturer brand like Levi

Strauss or Porsche, and the private-label brand should be a retailer's brand like Kirkland (Costco)

or Uniquely J (Walmart).

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

138) What is the advantage of a corporate or family brand? Provide an example of one.

Answer: All products sold under the corporate or family brand benefit from the overall brand

awareness associated with the family name. Kraft is a family brand listed in the text.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

139) What is brand extension? Provide an example of brand extension.

Answer: A brand extension is use of the same brand name in a different product line. Examples

will vary: Dell monitors and printers, Frito-Lay and Tostitos dips to go with the chips, and Colgate

and Crest sell toothpaste, toothbrushes, and other dental hygiene products.,

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

140) What is co-branding? Provide an example of co-branding.

Answer: Co-branding is the practice of marketing two or more brands together on the same

package, promotion, or store. Yum! Brands frequently combines two or more of its restaurant

chains, including A&W, KFC, Long John Silver's, Pizza Hut, and Taco Bell, into one store space.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

141) Burger King and Häagen-Dazs ice cream once attempted to use co-branding. What is a likely

reason that it failed?

Answer: The customer profiles for each brand were too different.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

142) If Eddie Bauer stores allowed a travel company to market adventure travel using the Eddie

Bauer brand name, what would Eddie Bauer be doing?

Answer: Eddie Bauer would be involved in brand licensing. Brand licensing is a contractual

arrangement between firms whereby one firm allows another to use its brand name, logo, symbols,

and/or characters in exchange for a negotiated fee.

Difficulty: 2 Medium

Topic: Brand Licensing

Learning Objective: 11-07 Distinguish between brand extension and line extension.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) Natalie is designing a primary package for her new peanut butter popcorn. From a consumer's

perspective, what should the packaging provide?

Answer: From a consumer's perspective packaging should facilitate consumption, storage, and

use.

Difficulty: 3 Hard

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

144) When personal computers were new, people spent considerable time and energy learning

about and investigating choices and options. Now, many consumers replace old computers with

little research or investigation. In terms of types of products (specialty, shopping, convenience,

and unsought goods), how have personal computers changed?

Answer: Students could argue that personal computers were initially either specialty or shopping

goods, depending on the level of expertise of the buyers. Now, the purchase of computers could be

considered either shopping or even a convenience good.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

145) When looking to purchase a mobile phone, describe the components that make up the total

product.

Answer: A product is made up of the core customer value, actual product, and associated

services/augmented product. The core customer value is that the phone provides on-the-go

communication either via telephone, email, or Internet. The actual product is the phone, and the

augmented product is the customer service along with any warranties that are offered by the

company.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-01 Describe the components of a product.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

146) Define convenience, shopping, and, unsought products and give an example of each.

Answer: Convenience products/services are those products or services for which the consumer is

not willing to spend any effort to evaluate prior to purchase. They are frequently purchased

commodity items, usually purchased with very little thought, such as common beverages, bread, or

soap.

Shopping products/services are products or services for which consumers will spend a fair amount

of time comparing alternatives, such as furniture, apparel, fragrances, appliances, and travel

alternatives. When people need new sneakers, for instance, they will go from store to store

shopping—trying on shoes, comparing alternatives, and chatting with salespeople.

Unsought products/services are products consumers either do not normally think of buying or do

not know about; an example would be a gravestone.

Difficulty: 3 Hard

Topic: Components and Classifications of Products and Services

Learning Objective: 11-02 Identify the types of consumer products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

147) What are some of the benefits provided by product labels?

Answer: Labels on products and packages provide information the consumer needs for purchase

decisions and for consumption of the product. Since they identify the product and brand, labels are

also an important element of branding and can be used for promotion. The information required on

them must comply with general and industry-specific laws and regulations, including the

components or ingredients contained in the product, where the product was made, directions for

use, and/or safety precautions.

Difficulty: 2 Medium

Topic: Packaging

Learning Objective: 11-08 Indicate the advantages of a product's packaging and labeling

strategy.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

148) Differentiate between breadth and depth of a firm's product mix by choosing a familiar

company and explaining how its products exemplify these two concepts.

Answer: Answers will vary depending on the company chosen. Students should demonstrate

understanding of the terms breadth (number of product lines offered by the firm) and depth

(number of products within a product line).

Difficulty: 3 Hard

Topic: Product Mix

Learning Objective: 11-03 Explain the difference between a product mix's breadth and a product

line's depth.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

149) Think of the car you are currently driving, or an article of clothing you are wearing. Name

three brand associations that are common with this car or clothing. Explain how these associations

might influence someone's decision to buy these products.

Answer: Students should demonstrate an understanding of brand associations and how they can

impact purchase decisions. Brand associations reflect the mental and emotional links that

consumers make between a brand and its key product attributes, such as a logo and its color,

slogan, or famous personality.

Difficulty: 3 Hard

Topic: Branding Strategy

Learning Objective: 11-05 Explain the various components of brand equity.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

150) Imagine you are stopping at the grocery store on your way home from class to buy food for

lunches for the rest of the week. Make a shopping list, and designate which items are manufacturer

brands and which are private-label brands.

Answer: Not all of the food items will be either type of brand, but students should be able to

demonstrate understanding of the two types of brand ownership.

Difficulty: 2 Medium

Topic: Branding Strategy

Learning Objective: 11-06 Determine the various types of branding strategies used by firms.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 12 Developing New Products

1) New product development adds value to a firm's products and services through innovation.

Answer: TRUE

Explanation: Without innovation and its resulting new products and services, firms would have

only two choices: continue to market current products to current customers or take the same

product to another market with similar customers. New product development opens up greater

opportunities.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) Although innovation strategies may not work in the long run, overriding short-term reasons

compel firms to introduce new products and services.

Answer: FALSE

Explanation: Although innovation strategies may not always work in the short run—some

estimates indicate that only about 3 percent of new products actually succeed—various overriding

and long-term reasons compel firms to continue introducing new products and services.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) New-to-the-world products that create new markets can add tremendous value to firms.

Answer: TRUE

Explanation: Although new-to-the-world products can carry with them some risk, they also offer

tremendous opportunities to add value.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) The failure rate for new products is high.

Answer: TRUE

Explanation: This is true. One of the main reasons the failure rate for new products is so high is

the failure to assess the market properly by neglecting to do appropriate product testing, targeting

the wrong segment, and/or poor positioning. Firms may also overextend their abilities or

competencies by venturing into products or services that are inconsistent with their brand image

and/or value proposition.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) Even if products succeed, not all consumers adopt new-to-the-world products at the same time.

Answer: TRUE

Explanation: The number of users of an innovative product or service spreads through the

population over a period of time and generally follows a bell-shaped curve (called the diffusion of

innovation curve).

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) One of the key characteristics of brainstorming sessions is that bad ideas should be immediately

rejected so the group can focus its attention on good ideas.

Answer: FALSE

Explanation: One of the key characteristics of a brainstorming session is that no idea can be

immediately accepted or rejected.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) Test marketing refers to customers who modify existing products according to their own ideas to

suit their specific needs.

Answer: FALSE

Explanation: A method of determining the success potential of a new product, test marketing

introduces the offering to a limited geographical area (usually a few cities) prior to a national

launch. Lead users are customers who modify existing products according to their own ideas to

suit their specific needs.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

8) When Ben asked a few of his regular customers to test his prototype surfboard, he was engaging

in alpha testing.

Answer: FALSE

Explanation: In alpha testing, the firm attempts to determine whether the product will perform

according to its design and whether it satisfies the need for which it was intended. This is an

example of beta testing.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) To determine if a new product is commercially viable, a firm can conduct premarket testing.

Answer: TRUE

Explanation: Firms conduct premarket tests before they actually bring a product or service to

market to determine how many customers will try and then continue to use the product or service

according to a small group of potential consumers.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) The introduction stage of the product life cycle is characterized by negative or low profits.

Answer: TRUE

Explanation: The introduction stage is characterized by initial losses to the firm due to its high

start-up costs and low levels of sales revenue as the product begins to take off.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) The maturity phase of the product life cycle is characterized by greatly reduced competition.

Answer: FALSE

Explanation: Competition intensifies in the maturity phase, because the only way a firm can gain

customers is typically to take them away from the competition.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) The most challenging part of applying the product life cycle concept is that managers do not

know exactly what shape each product's life cycle will take.

Answer: TRUE

Explanation: The product life cycle is a general model of the life of a product; however, there is

no way to know precisely what stage a product is in.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) On the diffusion of innovation curve, the first group of buyers who want to be the first on the

block to have the new product are known as early adopters.

Answer: FALSE

Explanation: Early adopters are the second group of adopters of an innovation; innovators come

first.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) On the diffusion of innovation curve, the late majority is the final group of buyers who like to

avoid change and rely on traditional products until they are no longer available.

Answer: FALSE

Explanation: Laggards are the last group of consumers to adopt a new product. They are

consumers who like to avoid change and rely on traditional products until they are no longer

available.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) The diffusion of innovation curve follows the following sequence: innovators, early majority,

early adopters, late majority, and laggards.

Answer: FALSE

Explanation: The diffusion of innovation curve generally follows a bell-shaped curve made up of

innovators, early adopters, early majority, late majority, and laggards.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) The fact that the Apple iPad is easy to try—demo units are available at Apple stores as well as

other retail stores—is helping it diffuse more quickly.

Answer: TRUE

Explanation: This refers to trialability, the ability to easily try a product for yourself. Trialability

helps a product be adopted more quickly (i.e., to diffuse faster).

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) When consumers see their friends using an innovation, it often persuades them to try it too.

Answer: TRUE

Explanation: This refers to observability. When products are easily observed, their benefits or

uses are easily communicated to others, which enhances the diffusion process.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

18) As personal computers became popular, the sale of typewriters decreased significantly and

now typewriters are only used by a very small segment of consumers. Typewriters are in the

________ stage of the product life cycle.

A) maturity

B) evaluation

C) growth

D) decline

E) introduction

Answer: D

Explanation: Typewriters are in the decline stage. Firms with products in the decline stage either

position themselves for a niche segment of diehard consumers or those with special needs or they

completely exit the market.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

19) Fashion trends tend to experience ________ product life cycles.

A) long

B) annual

C) sequential

D) competitive

E) short

Answer: E

Explanation: Fashion trends tend to experience short product life cycles. Consequently, fashion

designers produce entirely new product selections a few times per year.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) When the iPad Mini came out, Sasha spent the night in front of the store so she could get one

before any of her friends. According to the diffusion of innovation, Sasha is a(n)

A) innovator.

B) early majority.

C) early adopter.

D) late majority.

E) laggard.

Answer: A

Explanation: Innovators are those buyers who want to be the first on the block to have the new

product or service.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

21) ________ is the process by which ideas are transformed into new products and services that

will help firms grow.

A) Beta testing

B) Concept testing

C) Innovation

D) Reverse engineering

E) Competition

Answer: C

Explanation: Without innovation, firms would have only two choices: to continue to market

current products to current customers, or to take the same products to other markets. New product

development opens up greater opportunities.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

22) Erik is a sales representative for an established building materials manufacturer. Business is

good, but he is concerned that the company has spent little on new product development and has

not created a new product in over five years. Without new products, Erik can market his current

products only to his current customers or

A) diversify.

B) intensify his prototyping.

C) expand his early adopter market segment.

D) market the same products to similar customers.

E) focus on concept testing.

Answer: D

Explanation: Without innovation, firms would have only two choices: to continue to market

current products to current customers, or to take the same products to other markets. New product

development opens up greater opportunities.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

23) Many restaurants offer daily specials, appetizers, entrees, and desserts not listed on their

standard menu. These daily specials primarily provide the new product benefit of

A) keeping up in a market where sales come mostly from new products.

B) satisfying the changing needs of current and new customers.

C) avoiding market saturation from products that have been on the market for a long time.

D) creating diversification and reducing risk.

E) reduction in cost of ingredients.

Answer: B

Explanation: Customers' tastes change, both over time and depending on the situation. By

offering specials that offer variety, the restaurant seeks to satisfy these changing needs.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

24) By adding new product lines beyond its core business of computer software, like the Surface

Pro tablet and Xbox 360 game system, Microsoft primarily benefits by

A) keeping up in a market where sales come mostly from new products.

B) satisfying the changing needs of the technological research staff.

C) avoiding market saturation from products that have just been introduced to the market.

D) creating diversification and reducing risk.

E) spreading out production costs.

Answer: D

Explanation: If Microsoft were totally dependent on software sales, a shift away from Windows

would damage its sole market. By diversifying into game systems and tablets players, Microsoft

seeks to be less dependent on any one market. Firms with multiple products can better withstand

external shocks like changes in consumer preferences or intensive competitive activity.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

25) Computer game companies constantly monitor computer game-related blogs keeping track of

the latest hot products, because they know that their customers crave the "latest and greatest"

games. They use this information to create new products that primarily provide the benefit of

A) keeping up in a market where sales come mostly from new products.

B) satisfying the changing needs of former customers.

C) avoiding market penetration from products that have been on the market for a long time.

D) creating diversification and reducing risk.

E) taking advantage of a long product cycle.

Answer: A

Explanation: Since customers crave the "latest and greatest," this indicates that most sales come

from new products, requiring game manufacturers to keep up with that trend. In industries that rely

on fashion trends and experience short product life cycles—including apparel, arts, books, and

software markets—most sales come from new products.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

26) All of the following are benefits of new product development to a firm except

A) reducing the costs of production.

B) satisfying the changing needs of current and new customers.

C) avoiding market saturation from products that have been on the market for a long time.

D) creating diversification and reducing risk.

E) keeping up in a market with short product life cycles where sales come mostly from new

products.

Answer: A

Explanation: Production costs are actually likely to rise due to new product development. The

remaining items are potential benefits of new product development.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

27) Pioneer or breakthrough products

A) will likely result in late maturity buying.

B) can change consumer preferences.

C) incorporate reverse engineering outputs.

D) require the use of concept testing services.

E) must be geographically centered.

Answer: B

Explanation: Pioneer products establish a completely new market or radically change both the

rules of competition and consumer preferences in a market.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

28) All of the following were considered a new-to-the-world product or service when introduced

except

A) iTunes.

B) the Mercedes mini sport utility vehicle, a smaller version of its larger SUVs.

C) the Walkman portable cassette player.

D) Blu-ray.

E) the Internet browser.

Answer: B

Explanation: The Mercedes mini SUV was a variant on an existing product.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

29) One of the potential benefits to a firm of introducing new-to-the-world products or services is

A) cost savings.

B) late majority marketing.

C) establishment of a completely new market.

D) the ability to avoid paying pioneers for new product development.

E) the ability to capitalize on existing consumer preferences.

Answer: C

Explanation: These new products can establish a completely new market or radically change both

the rules of competition and consumer preferences in a market.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

30) Successful first movers create a market or a product category. They often benefit from being

readily recognizable to consumers and

A) not having to pay advertising expenses.

B) using prototypes to dominate the market.

C) not needing to do test marketing.

D) establishing an early market share lead.

E) motivating laggards to buy their products.

Answer: D

Explanation: Pioneers have the advantage of being first movers; as the first to create the market

or product category, they become readily recognizable to consumers and thus establish a

commanding and early market share lead. Studies also have found that market pioneers can

command a greater market share over a longer time period than later entrants can.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

31) In many cases, pioneers lose their market lead and initial market share to imitators who

A) capitalize on the pioneers' weaknesses.

B) create similar products with reduced value to consumers.

C) utilize alpha-beta testing.

D) ignore patents and copyrights.

E) target late maturity consumers.

Answer: A

Explanation: Although pioneers often obtain an initial market lead, later entrants into the market

can sometimes overtake the pioneers' lead by focusing on the pioneers' weaknesses.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

32) All of the following are reasons for the high failure rate of new products except

A) failing to assess the market properly.

B) neglecting to do appropriate product testing.

C) targeting the wrong segment.

D) overextending a firm's abilities.

E) failing to introduce lower-priced alternatives.

Answer: E

Explanation: Why is the failure rate for new products so high? One of the main reasons is the

failure to assess the market properly by neglecting to do appropriate product testing, targeting the

wrong segment, and/or poor positioning. Firms may also overextend their abilities or

competencies by venturing into products or services that are inconsistent with their brand image

and/or value proposition.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

33) Even if they succeed, new-to-the-world products are

A) generally not profitable.

B) not adopted by everyone at the same time.

C) not capable of creating new markets.

D) not subject to the law of first movers.

E) typically very short-lived.

Answer: B

Explanation: The adoption of an innovative product or service spreads through the population

over a period of time and generally follows a bell-shaped curve (called the diffusion of innovation

curve). Purchasers can be divided into five groups according to how soon they buy the product

after it has been introduced: innovators, early adopters, early majority, late majority, and laggards.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

34) The process by which the use of a new product or service spreads throughout a market group is

referred to as

A) new product introduction.

B) lead user dispersion.

C) diffusion of innovation.

D) the product life cycle.

E) product development diffusion.

Answer: C

Explanation: The adoption of an innovative product or service spreads through the population

over a period of time and generally follows a bell-shaped curve (called the diffusion of innovation

curve).

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

35) The diffusion of innovation theory focuses on

A) the geographic boundaries of innovation.

B) the relationship between pioneer brands and imitators.

C) the psychological traits of innovators.

D) the rate at which consumers are likely to adopt a new product or service.

E) the way a product moves through the product life cycle.

Answer: D

Explanation: The adoption of an innovative product or service spreads through the population

over a period of time and generally follows a bell-shaped curve (called the diffusion of innovation

curve).

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

36) All of the following groups are included in the diffusion of innovation curve except

A) innovators.

B) nonadopters.

C) late majority.

D) early majority.

E) early adopters.

Answer: B

Explanation: The five groups in the diffusion of innovation curve are innovators, early adopters,

early majority, late majority, and laggards.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

37) Innovators are a critical group of new product adopters because they

A) are the major source of innovation.

B) act as reverse engineering consultants.

C) help with test marketing.

D) help the product gain market acceptance.

E) extend the product life cycle.

Answer: D

Explanation: As the first group to adopt a new product, innovators help the product gain initial

market acceptance.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

38) Whenever Andy considers upgrading his personal computer system, he consults with Jeremy,

a knowledgeable friend who always has the newest technology. For Andy, Jeremy is a(n)

________ in the diffusion of innovation curve.

A) innovator

B) laggard

C) late majority adopter

D) early majority adopter

E) early adopter

Answer: A

Explanation: Jeremy, who always has the latest computer technology, is likely to be among the

first group to adopt a new type of computer. This makes him part of the innovator group.

Typically, innovators keep themselves very well informed about the product category by

subscribing to trade and specialty magazines, talking to other experts, visiting product-specific

blogs and forums that describe the coolest new products.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

39) In the diffusion of innovation process, innovators enjoy taking risks and are regarded as highly

knowledgeable. Marketers want to identify innovators because

A) they prefer products from established market leaders.

B) other consumers defer to their judgment, creating the opportunity for word-of-mouth referrals.

C) they are especially price conscious.

D) they are easily influenced by reminder advertising.

E) they encourage competitors to enter the market.

Answer: B

Explanation: As the first group to adopt a new product, innovators help the product gain initial

market acceptance. Innovators may recommend the product to friends, creating word-of-mouth

referrals.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

40) Bryan is trying to sell a new line of ultrasound imaging equipment. Unlike existing technology,

these machines are compact, creating the potential for general practice physicians to have and use

them in their offices. Bryan is trying to identify innovators in his market, knowing these customers

will most likely

A) spread positive word of mouth to other physicians.

B) buy one for each office in their practices.

C) reposition his products.

D) create demand among the late majority.

E) not need any service or support when using the product.

Answer: A

Explanation: As the first group to adopt a new product, innovators help the product gain initial

market acceptance. Innovators may recommend the product to friends, creating word-of-mouth

referrals.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

41) For new product marketers, early adopters are important because they tend to be

A) few in number.

B) the first to adopt a new product.

C) opinion leaders.

D) fond of prototypes.

E) alpha testing enthusiasts.

Answer: C

Explanation: Early adopters, who are not the very first buyers of a new product (those are the

innovators) but who still buy very early in the product's life, are important to the diffusion of the

products because they are often opinion leaders.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

42) Robyn recently bought Voice over Internet Protocol (VoIP) phone service. A few of Robyn's

friends bought VoIP before she did, but many other friends were interested in Robyn's opinions of

the new phone service. Robyn is a(n) ________ in this product category.

A) innovator

B) laggard

C) late majority adopter

D) early majority adopter

E) early adopter

Answer: E

Explanation: Early adopters, who are not the very first buyers of a new product (those are the

innovators) but who still buy very early in the product's life, are important to the diffusion of the

products because they are often opinion leaders.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

43) As it pertains to the diffusion of innovation, if the ________ group is relatively small, the

number of people who ultimately adopt the innovation likely will also be small.

A) innovator

B) laggard

C) late majority

D) early majority

E) early adopter

Answer: E

Explanation: Early adopters, who are not the very first buyers of a new product (those are the

innovators) but who still buy very early in the product's life, are important to the diffusion of the

products because they are often opinion leaders. If the early adopter group is relatively small, the

number of people who ultimately adopt the innovation likely will also be small.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

44) The ________ diffusion of innovation group is crucial because few new products can be

profitable until this large group buys them.

A) innovator

B) laggard

C) late majority

D) early majority

E) early adopter

Answer: D

Explanation: The early majority, which represents approximately 34 percent of the population, is

crucial because few new products and services can be profitable until this large group buys them. If

the group never becomes large enough, the product or service typically fails.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

45) As soon as she saw one, Hilary wanted a flat-screen television, but she was worried about

making the wrong choice. She waited until there were alternatives in the market with lower prices

and improved quality. Hilary is part of the ________ diffusion of innovation group.

A) innovator

B) laggard

C) late majority

D) early majority

E) early adopter

Answer: D

Explanation: Hilary has waited for a more competitive market with lower prices. The early

majority group members don't like to take as much risk and therefore tend to wait until the bugs are

worked out of a particular product or service.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

46) When microwaves were new, they often cost over $300, were huge, and had numerous settings

and options. Brenda and Garth waited, concerned about potential health hazards and wishing for

more choices in the market. By the time they purchased a microwave, sales of microwaves had

leveled off and prices had declined significantly. Brenda and Garth were part of the ________

diffusion of innovation group.

A) innovator

B) laggard

C) late majority

D) early majority

E) early adopter

Answer: C

Explanation: The late majority is the last big group to enter a new product market. By the time the

late majority enters the market, sales tend to level off or may be in decline.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

47) When the sequel to a movie eventually shows up on their regular television networks, this

group might watch it.

A) laggards

B) early majority

C) late majority

D) early adopters

E) innovators

Answer: A

Explanation: Laggards make up roughly 16 percent of the market. These consumers like to avoid

change and rely on traditional products until the products are no longer available. When the sequel

to eventually shows up on their regular television networks, they might watch it.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

48) By the time BMW got into the mini-SUV market, sales had leveled off and were even starting

to decline. BMW had to target its marketing efforts toward the ________ diffusion of innovation

group.

A) innovator

B) laggard

C) late majority

D) early majority

E) early adopter

Answer: C

Explanation: By the time the late majority enters the market, sales tend to level off or may be in

decline.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

49) Robert and George live in the United States. Robert recently asked for George's cell phone

number, but George said he didn't own a cell phone. George would probably be considered a(n)

________ in the diffusion of innovation process.

A) innovator

B) laggard

C) late majority adopter

D) early majority adopter

E) early adopter

Answer: B

Explanation: Cell phones are almost fully diffused through U.S. consumer markets. Anyone who

does not have at least a basic cell phone at this point would probably be considered a laggard, a

member of the last group of adopters of new products.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

50) When Jon began helping his favorite uncle Burt with his finances, he discovered his uncle was

still renting a rotary-dial telephone from the phone company. Uncle Burt had paid thousands of

dollars in rental fees over the previous 40 years. Uncle Burt is a(n) ________ in the diffusion of

innovation process for telephones.

A) innovator

B) laggard

C) late majority

D) early majority

E) early adopter

Answer: B

Explanation: Uncle Burton is a laggard—a consumer who either adopts the innovation long after

nearly the entire population has done so, or who never adopts it at all—when it comes to telephone

technology.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

51) The diffusion of innovation theory is useful to marketers in helping them

A) adjust to the performance life cycle.

B) avoid the cost of concept testing.

C) predict which types of customers will buy their product immediately and later.

D) predict how long it will take for a new product to gain market acceptance.

E) determine a target market.

Answer: C

Explanation: The diffusion of innovation theory sheds light on the types of customers who buy

products during different stages. With this knowledge, the firm can develop effective promotion,

pricing, and other marketing strategies to push acceptance among each customer group.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

52) Early personal computer users remember the cumbersome, user-unfriendly DOS system.

When Apple introduced System 1 and Microsoft introduced Windows, both of which were much

easier to use, these new products diffused rapidly because of their

A) relative advantage.

B) compatibility.

C) observability.

D) associated services.

E) trialability.

Answer: A

Explanation: If a product or service is perceived to be better than substitutes, then the diffusion

will be relatively quick. These operating systems enjoyed a substantial relative advantage

compared to DOS.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

53) Inkjet printers were a big improvement over the dot-matrix printers they replaced. Inkjet

printers gained rapid acceptance in the marketplace primarily because of their

A) relative advantage.

B) compatibility.

C) observability.

D) complexity.

E) trialability.

Answer: A

Explanation: If a product or service is perceived to be better than substitutes, then the diffusion

will be relatively quick. Inkjet printers offered a substantial relative advantage compared to

dot-matrix printers.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

54) When automobile manufacturers introduced SUVs, they distributed and promoted them in the

United States, but not in Europe, where gasoline is heavily taxed and roads are much smaller. Car

manufacturers recognized that this new line of cars

A) provided equivalent relative advantage for both European and U.S. customers.

B) were not compatible with European market conditions.

C) did not provide benefits that were observable.

D) involved technology that was too complex.

E) could not be easily tried by consumers.

Answer: B

Explanation: SUVs were compatible with U.S. drivers' behavior and lifestyles, but the high cost

of gas and the smaller roads made them incompatible under European standards. A diffusion

process may be faster or slower, depending on various consumer features, including international

cultural differences.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

55) Laptop computers, personal digital assistants, and cellular phones were all readily accepted

and diffused in U.S. markets where business and personal lifestyles tend to be faster-paced,

compared to many other areas in the world. These products offered ________ with consumers'

needs and priorities.

A) relative positioning

B) compatibility

C) observability

D) complexity

E) trialability

Answer: B

Explanation: A diffusion process may be faster or slower, depending on various consumer

features, including international cultural differences. The fast pace of business in the United States

makes mobile computing devices compatible with U.S. consumers' lifestyles.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

56) Many home design businesses volunteer to provide their latest products for tours-of-homes

fundraisers because they know their new products will benefit from

A) relative advantage.

B) compatibility.

C) observability.

D) complexity.

E) trialability.

Answer: C

Explanation: Observability refers to when products are easily observed, their benefits or uses are

easily communicated to others, which enhances the diffusion process. Home tours would be one

way for potential customers to see a new product installed in a house.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

57) As a promotion technique, samples are often used for new products when ________ will

influence the diffusion of the product.

A) relative advantage

B) compatibility

C) observability

D) complexity

E) trialability

Answer: E

Explanation: Trialability refers to a consumer's ability to try a new product before buying it.

Samples make this process easier.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

58) Zappos.com, an online shoe store, offers an easy, no-hassle return procedure. This relates to

the ________ of its products.

A) relative advantage

B) compatibility

C) observability

D) complexity

E) trialability

Answer: E

Explanation: Trialability refers to a consumer's ability to try a new product before buying it. By

making returns easy, consumers are able to try the shoes with the confidence that they can return

them if they do not fit.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

59) Which of the following is least likely to be a source of ideas for new products?

A) R&D efforts

B) licensing agreements

C) consumer research

D) geodemographic segmentation

E) brainstorming

Answer: D

Explanation: All of these but geodemographic segmentation are common sources of new product

ideas.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

60) In the product development process, what takes place between concept testing and market

testing?

A) securing financial backing

B) conducting marketing research

C) brainstorming

D) determining potential ROI

E) performing product development

Answer: E

Explanation: The third stage of the product development process, between concept testing and

market testing, is the actual development of the product.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

61) Many restaurants roll out new ideas first in Orlando, Florida, a location that attracts a vast

range of diverse tourists and thus might offer insights into what various consumer groups will like.

This is an example of

A) target marketing.

B) test marketing.

C) product marketing.

D) product launching.

E) premarket testing.

Answer: B

Explanation: A method of determining the success potential of a new product, test marketing

introduces the offering to a limited geographical area (usually a few cities) prior to a national

launch.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

62) When a global firm turns to its subsidiaries in less developed markets for new product ideas,

such as when Unilever's Pureit water purifier was initially developed for the Indian population and

it is now available in 13 countries including China, Brazil, and Mexico the firm is engaged in

A) a consortia.

B) reverse innovation.

C) competitive engineering.

D) pioneering.

E) beta testing.

Answer: B

Explanation: Some global firms take an approach called reverse innovation. This is when

companies turn to subsidiaries in less developed markets for new product ideas.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

63) Suppose that you work for an advertising agency and are brought into a meeting where

everyone is asked to generate ideas for names for a new beach resort. You are engaged in

________, a form of new idea generation.

A) R&D

B) licensing technology

C) consumer research

D) geodemographic analysis

E) brainstorming

Answer: E

Explanation: A brainstorming session is a meeting whose objective is to generate as many ideas

as possible.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

64) One of the key characteristics of brainstorming sessions is

A) no idea is immediately accepted or rejected.

B) everyone must come up with ideas.

C) the first idea is almost always the best idea.

D) only the marketing team is included in these sessions.

E) the manager should always make the final decision.

Answer: A

Explanation: A brainstorming session is a meeting whose objective is to generate as many ideas

as possible. For this reason, no idea is immediately accepted or rejected.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

65) At the end of a brainstorming session, participants are often asked to

A) identify the worst ideas.

B) defer to management for the final decision.

C) identify which ideas each person proposed.

D) vote on the best ideas.

E) propose one more new idea each.

Answer: D

Explanation: Brainstorming sessions often end with a vote to identify the best ideas or

combination of ideas among those that were proposed. Those ideas that receive the most votes are

carried forward to the next stage of the product development process.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

66) ________ involves taking apart a product, analyzing it, and creating an improved product that

does not infringe on the competitor's patents.

A) Reverse innovation

B) Reverse engineering

C) Selective dissection

D) Redistribution

E) Creative destruction

Answer: B

Explanation: A new product entry by a competitor may trigger a market opportunity for a firm,

which can use reverse engineering to understand the competitor's product and then bring an

improved version to market. Reverse engineering involves taking apart a product, analyzing it, and

creating an improved product that does not infringe on the competitor's patents, if any exist.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

67) Companies that develop customized business software often work closely with their users

when installing their products. This close contact often creates new product ideas through

A) reverse engineering.

B) licensing technology.

C) customer input.

D) R&D consortia.

E) clinical trials.

Answer: C

Explanation: Listening to the customer is essential for successful idea generation and throughout

the product development process.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

68) Ronald sells commercial-grade tools to building contractors. Whenever he visits his

customers, he looks to see if they are using his tools for other tasks or have modified the tools for

some other purpose. These customers are ________, who can provide ideas for new and improved

products.

A) laggards

B) market testers

C) lead users

D) reverse engineers

E) concept testers

Answer: C

Explanation: Ronald is looking for lead users, who modify existing products according to their

own ideas to suit their needs.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

69) The National Institutes of Health (NIH) sponsors medical foundations to conduct research to

treat rare diseases. The research is then disseminated to the medical community, thus encouraging

the development of drugs and therapies more quickly and at a lower cost than would be possible if

the research were privately funded. This is an example of

A) early adopters.

B) market testers.

C) an R&D consortia.

D) reverse engineers.

E) concept testers.

Answer: C

Explanation: To develop new product ideas, more and more firms have been joining an R&D

consortia, or groups of other firms and institutions, possibly including government and educational

institutions, to explore new ideas or obtain solutions for developing new products.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

70) A company has a new concept for a lightweight electric scooter that can be easily folded and

taken with you inside a building or on public transportation. The company is currently engaged in

concept testing. The most important question during this phase of product development pertains to

A) the cost of research and development.

B) the price of the final product.

C) the cost to manufacture the product.

D) marketing and advertising costs.

E) the respondent's purchase intentions if the product were made available.

Answer: E

Explanation: The most important question pertains to the respondent's purchase intentions if the

product or service were made available.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

71) When conducting concept testing for her firm's new Internet antipiracy software, which is the

most important question that Diane should ask?

A) How long will it take to bring the software to market?

B) Will respondents purchase the software if it becomes available?

C) Who will determine the price to be charged?

D) Where should the product be sold?

E) Which computer trade show will be used to introduce the product?

Answer: B

Explanation: The most important goal of concept testing is to gauge consumers' interest in

purchasing the product, should it become available.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

72) Cristina created a virtual prototype of her new line of swimwear on a website to show to

consumers. Cristina will ask consumers what they think of the clothing. Which is the most

important question that Cristina should ask?

A) What retailers should be used to sell the swimwear?

B) Will retailers purchase the swimwear if it becomes available?

C) What wholesale price should be charged?

D) What promotional plan will work best?

E) In which season should we introduce the product?

Answer: B

Explanation: The most important goal of concept testing is to gauge consumers' interest in

purchasing the product, should it become available.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

73) If a new product concept gets positive evaluations from potential customers during concept

testing, the next step for a firm is

A) market testing.

B) product development.

C) brainstorming.

D) reverse engineering.

E) launching of the product.

Answer: B

Explanation: After concept testing, the next step in the product development process is the actual

product development.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

74) Hollywood studios typically release movies targeted toward general audiences (G- or PG-rated

movies) during the summer when children are out of school. The timing of the release pertains to

the product's

A) premarket test.

B) launch.

C) evaluation.

D) research and development.

E) test marketing.

Answer: B

Explanation: The timing of the launch may also be important, depending on the product.

Hollywood studios typically release movies targeted toward general audiences (G- or PG-rated

movies) during the summer when children are out of school.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

75) Barb is using a test model of her firm's new inline skates to see if they work according to the

design specifications. Barb is involved in

A) test marketing.

B) product launch.

C) alpha testing.

D) target marketing.

E) concept testing.

Answer: C

Explanation: In alpha testing, the firm attempts to determine whether the product will perform

according to its design and whether it satisfies the need for which it was intended.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

76) Before Segway manufactured its two-wheeled people movers, it built a prototype and had staff

engineers test it for performance and stability. At this stage, Segway was involved in

A) alpha testing.

B) product launch.

C) test marketing.

D) beta testing.

E) concept testing.

Answer: A

Explanation: In alpha testing, the firm attempts to determine whether the product will perform

according to its design and whether it satisfies the need for which it was intended.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

77) YouEye is developing eye tracking technology that works with an individual's webcam.

Instead of needing to spend thousands of dollars on eye tracking equipment and having customers

come into labs, firms will be able to utilize everyday webcams to track not only what a person

attends to on a computer screen but also his or her emotional reactions to these products. Firms

such as YouEye are automating the

A) premarket testing process.

B) alpha testing process.

C) beta testing process.

D) evaluation process.

E) concept testing process.

Answer: C

Explanation: Beta testing uses potential consumers who examine the product prototype in a

real-use setting to determine its functionality, performance, potential problems, and other issues

specific to its use. The advent of the Internet has made recruiting beta testers easier than ever. To

further automate the beta testing process, YouEye is developing eye tracking technology that

works with an individual's webcam. Instead of needing to spend thousands of dollars on eye

tracking equipment and having customers come into labs, firms will be able to utilize everyday

webcams to track not only what a person attends to on a computer screen but also his or her

emotional reactions to these products.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

78) Golf ball manufacturers use "Iron Mike," a machine that swings a golf club at a constant

velocity, to test the distance for new golf ball designs. When using Iron Mike, the manufacturers

are engaged in

A) concept testing.

B) market testing.

C) premarket testing.

D) product development.

E) alpha testing.

Answer: E

Explanation: Iron Mike is a form of alpha testing because it is done within the company, taking

the place of a human who might hit the ball repeatedly.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

79) One reason auto companies spend millions on racing cars is that they offer the opportunity to

test new designs and technology under extreme conditions. Using the cars in a real-use setting

provides an opportunity for ________ the product.

A) pretesting

B) beta testing

C) test marketing

D) alpha testing

E) concept testing

Answer: B

Explanation: Beta testing uses potential consumers who examine the product prototype in a

real-use setting to determine its functionality, performance, potential problems, and other issues

specific to its use. Participation in NASCAR and other racing organizations offers auto companies

a chance to do this.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

80) Lorraine belongs to a national consumer panel created by a market research company. She

regularly receives samples of new products from a variety of firms and fills out questionnaires

about the products. The national consumer panel Lorraine is part of is engaged in

A) premarket testing.

B) product launch.

C) test marketing.

D) product development.

E) concept testing.

Answer: A

Explanation: Panels of this type are often used for premarket testing, which often combines

product sampling with surveys collecting consumers' reactions to the product.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

81) A marketing professor in Ithaca, New York, maintains a museum of failed consumer products.

Most new products in this museum failed during the ________ stage of new product development,

when they are introduced to a limited geographic area.

A) pretesting

B) product launch

C) test marketing

D) product development

E) concept testing

Answer: C

Explanation: Test marketing introduces the offering to a limited geographical area (usually a few

cities) prior to a national launch and is a strong predictor of product success because the firm can

study actual purchase behavior, which is more reliable than a simulated test.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

82) When McDonald's comes up with a new drink or sandwich for its restaurants, it often markets

it in a dozen or so of its outlets. When the company does this, it is engaged in

A) pretesting.

B) product launch.

C) test marketing.

D) product development.

E) concept testing.

Answer: C

Explanation: Test marketing introduces the offering to a limited geographical area (usually a few

cities) prior to a national launch and is widely used by fast-food chains.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

83) The ________ step in the product development process is critical, requiring tremendous

resources and extensive coordination of all aspects of the marketing mix.

A) pretesting

B) product launch

C) posttesting

D) product development

E) evaluation of results

Answer: B

Explanation: The product launch is the most critical step in the new product introduction and

requires tremendous financial resources and extensive coordination of all aspects of the marketing

mix. For any firm, if the new product launch is a failure, it may be difficult for the product—and

perhaps the firm—to recover.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

84) Which of the following reflects the maturity stage of the product life cycle?

A) Sales: low; Profits: negative or low; Typical consumers: innovators; Competitors: one or few

B) Sales: rising; Profits: rapidly rising; Typical consumers: early adopters and early majority;

Competitors: few but increasing

C) Sales: declining; Profits: declining; Typical consumers: laggards; Competitors: low number of

competitors and products

D) Sales: peak; Profits: peak to declining; Typical Consumers: late majority; Competitors: high

number of competitors and competitive products

E) Sales: peak; Profits: increase; Typical Consumers: laggards; Competitors: low number of

competitors

Answer: D

Explanation: Characteristics of the maturity product life cycle are: Sales: peak; Profits: peak to

declining; Typical consumers: late majority; and Competitors: high number of competitors and

products.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

85) All of the following would be part of the launch of a new product except

A) determining the marketing budget for the first year of the product.

B) finalizing the marketing mix variables.

C) determining the price for the product.

D) making decisions regarding positioning the product.

E) starting to make preliminary decisions about the target market.

Answer: E

Explanation: The target market should already have been identified before the product launch

stage; at this point the firm might confirm the target market choice.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

86) Because a market is saturated, firms may attempt to enter new geographical markets that may

be less saturated. For example, pharmaceutical companies are realizing that they need to turn to

________ for continued growth in the coming years.

A) BRIC countries

B) third-world countries

C) communist countries

D) Germany

E) France

Answer: A

Explanation: Because a market is saturated, firms may attempt to enter new geographical

markets, including international markets, that may be less saturated. For example, pharmaceutical

companies are realizing that they need to turn to BRIC countries for continued growth in the

coming years. While the U.S. and European markets are fairly saturated, the BRIC countries are

expected continue to grow. China currently has the fastest-growing market, valued at over $86

billion in 2017.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

87) The Apple iPod changed the way people listen to music but it also created an entirely new

industry devoted to accessories such as cases, ear buds, docking stations, and speakers. The Apple

iPod is considered a

A) pioneer product.

B) introductory product.

C) mature product.

D) diffused product.

E) early adopted product.

Answer: A

Explanation: Truly new product introductions, that is, new-to-the-world products that create new

markets, can add tremendous value to firms. These new products, also called pioneers or

breakthroughs, establish completely new markets or radically change the rules of competition as

well as consumer preferences in a market.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

88) Bev is assessing the results of a new product launch of a series of e-books for her bookstore.

When evaluating the results, Bev will likely consider all of the following except

A) why it took her so long to consider the new product line.

B) if the e-books are generating the expected level of profit.

C) if the e-books are generating the expected level of sales.

D) if her customers are interested in the new books.

E) if the e-books function as expected.

Answer: A

Explanation: The reasons behind any delays in introducing e-books would not be an important

issue to consider during evaluation of results. All the others are good questions to ask.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

89) All of the following are included in the four product life cycle stages except

A) introduction.

B) stagnation.

C) maturity.

D) growth.

E) decline.

Answer: B

Explanation: The four stages of the product life cycle are introduction, growth, maturity, and

decline.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

90) Microsoft's Windows operating system continues to dominate the market, even though it has

been around for over 20 years. Windows will likely remain in the maturity stage of the product life

cycle

A) indefinitely.

B) until it rules the world.

C) until a superior product comes along to replace it.

D) unless Microsoft repositions Windows as an introductory stage product.

E) as long as the company doesn't change it.

Answer: C

Explanation: Products can stay in the maturity stage for a very long time, until a superior product

comes along as a replacement.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

91) During the ________ stage of the product life cycle, sales are low and profits are small or

negative.

A) introduction

B) leveling

C) maturity

D) growth

E) decline

Answer: A

Explanation: The introduction stage is characterized by initial losses to the firm due to its high

start-up costs and low levels of sales revenue as the product begins to take off.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

92) When Dr. Putt invented his Eye-Over-the-Ball (EOB) golf putting device, he knew during the

introductory stage

A) sales would rise quickly, profits would jump, and even laggards would buy his product.

B) sales would level off, profits would decline, and mature golfers would be attracted to his

product.

C) sales would slow down, profits would peak, and early adopters of golf equipment would be his

major customers.

D) sales would be low and profits nonexistent, but he would attract golf equipment innovators.

E) sales would be low, profits would be high, and all potential golfers would jump at the

opportunity to buy his product.

Answer: D

Explanation: The introduction stage is characterized by initial losses to the firm due to its high

start-up costs and low levels of sales revenue as the product begins to take off.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

93) During the ________ stage of the product life cycle, sales rise, profits rise rapidly, and there

are an increasing number of competitors.

A) introduction

B) leveling

C) maturity

D) growth

E) decline

Answer: D

Explanation: The growth stage of the product life cycle is marked by a growing number of

product adopters, rapid growth in industry sales, and increases in both the number of competitors

and the number of available product versions.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

94) When Toyota introduced hybrid cars, there were waiting lists to buy them. Then Honda and a

few other manufacturers entered the market, shifting the product life cycle for hybrid cars into the

________ stage of the product life cycle.

A) introduction

B) leveling

C) maturity

D) growth

E) decline

Answer: D

Explanation: As a few additional competitors moved into the hybrid car market, opening up

production capacity for additional buyers, the hybrid market moved into the growth stage. The

market becomes more segmented and consumer preferences more varied, which increases the

potential for new markets or new uses of the product or service during the growth stage.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

95) Some products may stay comfortably in the maturity phase of the product life cycle until a new

product emerges to replace them. An example of such a mature product is

A) e-books.

B) refrigerators.

C) the VCR.

D) smartphones.

E) None of these; no product can stay in the maturity phase and survive for very long.

Answer: B

Explanation: Refrigerators have been in the maturity phase for decades and are likely to stay that

way for quite some time. E-books and smartphones have not yet reached maturity. The VCR is in

the decline stage, having been mostly replaced by DVDs, DVD writers, and DVRs.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

96) The growth phase of the product life cycle is always dynamic. All of the following occur

during this phase except

A) profits increase as sales increase.

B) profits increase as economies of scale are attained.

C) some new competitors may enter the market with similar products.

D) some competitors will exit in an industry shakeout.

E) price competition with protracted price wars erodes profits.

Answer: E

Explanation: The growth stage of the product life cycle is marked by a growing number of

product adopters, rapid growth in industry sales, and increases in both the number of competitors

and the number of available product versions.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

97) All of the following are characteristics of products in the maturity stage of the product life

cycle except

A) laggards are a major focus of marketing efforts.

B) price competition is intense.

C) marketing costs increase as firms defend their market share.

D) the market may become saturated because nearly all potential customers have adopted the

product.

E) to increase the customer base, firms consider entry into new markets and new market segments.

Answer: A

Explanation: The late majority, not laggards, should be the focus of marketing efforts in the

maturity stage.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

98) During the ________ stage of the product life cycle, sales peak and profits begin to decline as

competition becomes intense.

A) introduction

B) leveling

C) maturity

D) growth

E) decline

Answer: C

Explanation: Intense competition can lead to a decline in profits in the maturity stage.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

99) By the time BMW and Mercedes-Benz entered the mini-SUV market, there were many

competitors, sales had peaked, and profits were declining. These firms entered the market during

the ________ stage of the product life cycle.

A) introduction

B) leveling

C) maturity

D) growth

E) decline

Answer: C

Explanation: BMW and Mercedes delayed entry into the mini-SUV market, with the result that

they did not enter until this market was already mature.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

100) During the ________ stage of the product life cycle, firms either position themselves for a

niche segment of diehard consumers or they completely exit the market.

A) introduction

B) leveling

C) maturity

D) growth

E) decline

Answer: E

Explanation: Firms with products in the decline stage either position themselves for a niche

segment of diehard consumers or those with special needs or they completely exit the market.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

101) The CEO of Dave's firm just came back from a business seminar. He called Dave into his

office and stated, "I just found out about the product life cycle curve in a strategy seminar. This is

a great tool. I want you to drop whatever you're doing and inventory all of our products to

determine exactly where they are in the product life cycle." Dave needs to think fast for a good

answer because he knows that

A) the product life cycle is not a useful concept.

B) it is often impossible to identify with precision where a product is in the product life cycle.

C) the product life cycle is not helpful in companies like his that pay attention to diffusion of

innovation.

D) the idea has been discredited by recent research.

E) the product life cycle works only for certain types of firms.

Answer: B

Explanation: Although the product life cycle concept can be useful in guiding marketing

strategy, the most challenging part of applying the product life cycle concept is that managers do

not know exactly what shape each product's life cycle will take, so there is no way to know

precisely what stage a product is in.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

102) Which of the following is the correct sequence of new product adopters in the diffusion of

innovation curve?

A) innovators, early adopters, early majority, late majority, laggards

B) early adopters, early majority, innovators, late majority, laggards

C) innovators, early majority, early adopters, late majority, laggards

D) early majority, late majority, early adopters, innovators, laggards

E) innovators, late majority, early adopters, early majority, laggards

Answer: A

Explanation: The diffusion of innovation curve spreads through the population over a period of

time and generally follows a bell-shaped curve made up of innovators, early adopters, early

majority, late majority, and laggards.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

103) Which of the following adopter categories refers to the last large group of buyers to enter a

new product market?

A) late majority

B) early majority

C) laggards

D) early adopters

E) innovators

Answer: A

Explanation: Late majority is the last large group of buyers to enter a new product market.

Laggards buy after the late majority, but they are not a large group, and some of them never enter

the market at all.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

104) During the ________ stage of the product life cycle, there are few but an increasing number

of competitors.

A) growth

B) introduction

C) maturity

D) decline

E) innovation

Answer: A

Explanation: The growth stage of the product life cycle is marked by a growing number of

product adopters, rapid growth in industry sales, and increases in both the number of competitors

and the number of available product versions.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

105) If a few of Nintendo's customers are asked to try out a new video game that has not yet been

released on the market, this is an example of

A) beta testing.

B) market testing.

C) premarket tests.

D) test marketing.

E) concept testing.

Answer: A

Explanation: Beta testing uses potential consumers who examine the product prototype in a

real-use setting to determine its functionality, performance, potential problems, and other issues

specific to its use.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

106) A product in the ________ stage of the product life cycle has a high number of competitors

and competitive products.

A) introduction

B) growth

C) decline

D) development

E) maturity

Answer: E

Explanation: A product in the maturity stage of the product life cycle has a high number of

competitors and competitive products.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

107) Which of the following is true of profits in the maturity stage of the product life cycle?

A) They are negative.

B) They are low.

C) They peak or are declining.

D) They are rapidly rising.

E) They are slowing rising.

Answer: C

Explanation: In the maturity stage of the product life cycle, profits peak or are declining.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

108) The Apple iPod is a ________ product.

A) blockbuster

B) early adopter

C) pioneer

D) market tester

E) concept tester

Answer: C

Explanation: Pioneer firms establish completely new markets or radically change both the rules

of competition and consumer preferences in a market. The Apple iPod is a pioneer product. Not

only did it change the way people listen to music but it also created an entirely new industry

devoted to accessories such as cases, ear buds, docking stations, and speakers.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

109) In one test before product launch, customers try a sample product and are then surveyed to

understand whether or not they would buy/use the product again. This is known as

A) premarket testing.

B) market testing.

C) alpha testing.

D) concept testing.

E) prelaunch testing.

Answer: A

Explanation: Firms conduct premarket tests before they actually bring a product or service to

market to determine how many customers will try and then continue to use the product or service

according to a small group of potential consumers.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

110) All of the following are stages in the product life cycle except

A) introduction.

B) growth.

C) evaluation.

D) maturity.

E) decline.

Answer: C

Explanation: The product life cycle is made up of introduction, growth, maturity, and decline.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

111) On the basis of the research it has gathered on consumer perceptions, the tests it has

conducted, and competitive considerations, the XYZ firm confirms its target market (or markets)

and decides how its product will be positioned. Then the firm finalizes the remaining marketing

mix variables for the new product, including the marketing budget for the first year. This process

illustrates

A) the product launch.

B) the company's evaluation of results.

C) premarket demonstrations.

D) alpha testing.

E) beta testing.

Answer: A

Explanation: If the market testing returns with positive results, the firm is ready to introduce the

product to the entire market. First, on the basis of the research it has gathered on consumer

perceptions, the tests it has conducted, and competitive considerations, the firm confirms its target

market (or markets) and decides how the product will be positioned. Then the firm finalizes the

remaining marketing mix variables for the new product, including the marketing budget for the

first year.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

112) The product life cycle is theoretically ________ with regard to sales and profits.

A) U shaped

B) Y shaped

C) bell shaped

D) circular

E) flat lined

Answer: C

Explanation: In theory, the product life cycle curve is bell shaped with regard to sales and profits.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

113) In the United States, most consumer packaged goods found in grocery and discount stores are

already in the ________ stage of the product life cycle.

A) growth

B) pioneer

C) introduction

D) decline

E) maturity

Answer: E

Explanation: In the United States, most consumer packaged goods found in grocery and discount

stores are already in the maturity stage.

Difficulty: 1 Easy

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

114) During the introduction stage of a product's life cycle, typical consumers are

A) early adopters.

B) innovators.

C) pioneers.

D) early majority.

E) laggards.

Answer: B

Explanation: During the introduction stage, innovators are the ones to try the new product.

Difficulty: 1 Easy

Topic: Consumer Adoption Process

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

115) How is consumer panel data collected during the test marketing phase of a new product

introduction?

A) Panelists complete a questionnaire about the product.

B) Panelists scan their receipts on a home scanning device.

C) Stores provide sales data to companies.

D) Consumers voluntarily go to a website to record their preferences.

E) Focus groups are held in key markets.

Answer: B

Explanation: The consumer panel data are collected by panelists scanning in their receipts using

a home scanning device.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

116) After a product has been launched, marketers must undertake a critical postlaunch review to

determine whether the product and its launch were a success or failure and what additional

resources or changes to the marketing mix are needed, if any. For a product that does move on, the

firms can measure the success of the new product by interrelated factors that include all of the

following except

A) its satisfaction of technical requirements.

B) its satisfaction of performance.

C) customer acceptance.

D) its satisfaction of the firm's financial requirements.

E) its satisfaction of the firm's manufacturing requirements.

Answer: E

Explanation: For those products that do move on, firms can measure the success of a new product

by three interrelated factors: (1) its satisfaction of technical requirements, such as performance;

(2) customer acceptance; and (3) its satisfaction of the firm's financial requirements, such as sales

and profits. If the product is not performing sufficiently well, poor customer acceptance will result,

which in turn leads to poor financial performance.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

117) Paul listens to music on his iPod and iPhone, but he still buys vinyl records at his local music

store on occasion, although they are getting harder to find. Vinyl records are in the ________ stage

of the product life cycle.

A) introduction

B) growth

C) evaluation

D) maturity

E) decline

Answer: E

Explanation: Firms with products in the decline stage either position themselves for a niche

segment of diehard consumers or those with special needs or they completely exit the market. In an

age of Internet-downloaded music files, it may seem surprising that vinyl records are still made

and sold. Sales of vinyl LPs had long been declining, but they have enjoyed a resurgence in just the

past few years as diehard music lovers demand the unique sound of a vinyl record rather than the

digital sound of CDs and music files.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

118) Kathy has used Olay beauty products for years, even though there are many competitors on

the market. She plans to purchase a recently introduced micro-sculpting cream from Olay's

Regenerist line. Olay is in the ________ stage of the product life cycle.

A) introduction

B) growth

C) evaluation

D) maturity

E) decline

Answer: D

Explanation: Although P&G does come out with new variations of the Olay product, it is in the

maturity stage as P&G must defend its market share against fierce competition.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

119) When a product is successful in the introductory stage of the product life cycle,

A) it moves directly into the maturity stage.

B) it is most likely to begin to launch spinoffs.

C) competition becomes less important.

D) it may start to see profits toward the end of this stage.

E) marketing costs increase significantly.

Answer: D

Explanation: The introduction stage is characterized by initial losses to the firm due to its high

start-up costs and low levels of sales revenue as the product begins to take off. If the product is

successful, firms may start seeing profits toward the end of this stage.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

120) Firms can measure the success of a new product by all of the following factors except

A) satisfaction of its technical requirements.

B) fewer competitors in the market.

C) satisfactory sales and profits.

D) customer acceptance.

E) satisfactory performance.

Answer: B

Explanation: Firms can measure the success of a new product by three interrelated factors: (1) its

satisfaction of technical requirements, such as performance; (2) customer acceptance; and (3) its

satisfaction of the firm's financial requirements, such as sales and profits.

Difficulty: 1 Easy

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

121) Think back to a time when you have said, "This is great idea. How come nobody thought of

this before?" Assuming no one has thought of it before, what would be the first steps to take to

develop a new product idea?

Answer: Student answers will vary considerably, but they should show an understanding of the

processes and challenges that turn ideas into products. The focus should be on the process rather

than the quality of the idea.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

122) Respond to the statement "Create or die" from a new product innovation perspective.

Answer: While innovation may not help a firm in the short run, in the long run, a firm that does

not create new products or services is limited to marketing its existing products to existing or

similar consumers. New products create the opportunity to provide more value to customers. They

help a firm avoid market saturation. They add diversification, reducing the risk associated with

having only a few products. Last, new products are especially important in markets where

consumers expect innovation and change.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

123) A good friend of yours wonders why you always seem to have the latest technology, long

before anyone else. He then says, "I always want to wait until the bugs have been worked out. It

saves me money and aggravation." Use diffusion of innovation theory to explain how you differ as

consumers, and what this means to marketers.

Answer: Student responses should be able to identify how diffusion of innovation works, as well

as suggesting the differences between innovators and the early majority. Better answers will

explain how strategy and tactics will differ depending on which group is the marketing focus.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

124) Many car manufacturers have developed prototypes of alternative energy vehicles like

hydrogen-fueled cars. When developing their marketing strategies, how can these firms use the

diffusion of innovation curve in the early stages of product development?

Answer: They need to identify and promote their cars to innovators. They can use what they

learned from the early electrical cars, especially the fact that many celebrities bought them,

creating significant publicity. Innovators will also include consumers who are heavily involved in

following the latest technology, subscribe to auto magazines, attend car shows, and participate in

auto technology blogs.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

125) What is the difference between an innovator and an early adopter?

Answer: An innovator is the first to try new products. They tend to be risk takers. Early adopters

are slightly less risk oriented, and engage in careful review of products before they purchase them.

They are often regarded as opinion leaders.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

126) Around 2006, hybrid cars moved from the early adopter to the early majority stage. What did

this mean for marketers of hybrid cars?

Answer: It means sales were taking off; the early majority stage typically includes 34 percent of

the population. Also, early majority consumers waited to make sure the earlier models performed

as expected. More competitors entered the market, creating price and quality pressure on existing

marketers.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

127) Using the diffusion of innovation theory, what factors contributed to the rapid adoption and

success of Amazon.com?

Answer: Some answers may vary, but will likely include:

Relative advantage: Amazon is often cheaper than brick-and-mortar bookstores and more

accessible since books can be ordered 24 hours per day.

Compatibility: Amazon grew with the Internet age, and therefore was compatible with the

changing way consumers were making purchases.

Trialability/complexity: Amazon made it relatively easy to make online purchases, and overcame

consumers' security fears.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

128) General Electric is developing a new magnetic resonance imaging (MRI) device to be

marketed to family practice physicians. These new machines will be much smaller and less

expensive than the existing MRI machines now in most hospitals. What factors will probably

affect the diffusion of these new machines?

Answer: First, the relative advantage is significant. Physicians will be able to use MRI

technology in their offices rather than sending patients to a hospital. Family practice physicians are

increasingly doing tests in their offices, so the new product is compatible with changing practices.

The new machine will be small enough to demonstrate; however, trialability might be complex and

require training.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

129) Marketing is a dynamic practice. While you are watching your competitors, they are

watching you. Assume that you have just redesigned a product that is in the maturity phase of the

product life cycle and have identified some new market segments. How do you think your

competitors will respond?

Answer: Students should take the discussion of monitoring the competition and reverse

engineering and apply those concepts. Better answers will address the implications inherent in the

product life cycle.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

130) What is the difference between alpha testing and beta testing?

Answer: Alpha testing involves determining whether the prototype will perform according to its

design and whether it satisfies the need for which it was intended. Beta testing uses potential

consumers who examine the product prototype in a real-use setting and assess its functionality,

performance, and potential problems.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

131) When they add products, services, and processes to their offerings, firms can create and

deliver value more effectively by satisfying the changing needs of their current and new customers

or by keeping customers from getting bored with the current product or service offering. How did

Steve Jobs, the Apple company's founder and visionary leader, change the phone, camera,

communication, and technology markets?

Answer: When Apple first introduced its handheld smartphone with advanced camera

capabilities; virtually no market research provided any hint that consumers wanted one. But with

the fervent belief that people would enjoy the convenience of snapping and reviewing a photo or

getting online at any particular moment, the company's founder and visionary leader, Steve Jobs,

insisted on developing the iPhone as an easily accessible, affordable, easy-to-use tool that

consumers could enjoy—and thus changed the phone, camera, communication, and technology

markets forever.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

132) Carmen is ready to launch her company's new product, a line of chocolate for diabetics, based

on her instincts and knowledge from 30 years of marketing. Her staff is encouraging her to delay

the launch until test marketing can be done. What are the advantages and disadvantages of each

approach?

Answer: Carmen probably has considerable knowledge and good instincts about what new

products will work or not work. By going straight into product launch she can save money, time,

and not alert her competitors, giving her more of a first mover advantage. Test marketing,

however, provides an opportunity to learn more about consumer behavior and the potential to

assess market demand, in addition to the chance to test the planned marketing mix.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

133) Laura is about to launch a new product: herself! She is running for a local political office.

First-time candidates quickly learn the importance of marketing. She has consulted with various

experts, tested her campaign themes and messages with focus groups, and now is ready to do a

full-scale product launch. Why is her product launch the most critical step? What will she need to

do?

Answer: The product/candidate launch is the most critical step because it requires significant

financial resources. Even running for city or county council can involve thousands of dollars and a

huge commitment of the candidate's time. Laura will need to coordinate all aspects of her product

launch, particularly promotion, getting her message out to voters. This will likely involve signs,

publicity, direct mail, and even door-to-door direct marketing.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

134) A year after expanding his celebrity golf photography business to include golf course

photography, Cliff decided it was time to evaluate results. What three interrelated factors will Cliff

consider when evaluating the success of his new product?

Answer: First, he will consider technical requirements. Are the photographs meeting his

quality-control expectations? Shooting golf courses requires different lenses and consideration of

both weather and course conditions to meet his quality standards. Second, Cliff will assess

customer acceptance. Are customers happy? Are they making repeat purchases? Are they referring

him to other golf courses? Third, he will evaluate whether or not this new service is meeting his

financial requirements.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

135) Why is it important for marketers to understand the product life cycle?

Answer: Product strategies and tactics will vary depending on the stage in the life cycle. Students

should understand and demonstrate that inappropriate strategies can also be detrimental.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

136) Many marketers think personal computers in the United States are in the maturity stage of the

product life cycle. What does this mean for manufacturers of personal computers? What can they

do about it?

Answer: During the maturity stage of the product life cycle, sales have peaked, profits have

peaked and/or are declining, and there are many competitors in the market. For personal computer

firms, the maturity stage is a time to consider entering new markets, develop new products,

increase marketing to defend their share of the market, and control costs to maintain profits and

outlast the competition.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

137) In new product development, what advantage do first movers have?

Answer: Pioneers have the advantage of being first movers; as the first to create the market or

product category, they become readily recognizable to consumers and thus establish a

commanding and early market share lead. Studies also have found that market pioneers can

command a greater market share over a longer time period than later entrants can.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

138) Describe your actions (or someone you know) in a situation where you (or they) were an

innovator in the diffusion of innovation curve.

Answer: Answers will vary, but should include a description of someone who takes risks, is well

informed, and participates in learning and discussing the latest products and changes through

subscribing to trade and specialty magazines, talking to other experts, visiting product-specific

blogs and forums that describe the coolest new products, 18 and attending product-related forums,

seminars, and special events.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

139) Robin carefully studies her options before buying new products. She enjoys new things,

especially electronic games, and is very knowledgeable about them. Other people often ask her

opinion. In the diffusion of innovation curve, which category does Robin fit in?

Answer: Robin is an early adopter as she doesn't like to take as much risk as innovators do but

instead she will wait and purchase the product after careful review.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

140) Describe a product that is in the early majority stage of the new product diffusion curve.

Answer: Answers will vary, but should include a product for which sales are taking off, new

competitors are entering the market, and where consumers waited for the "bugs" to be worked out

from earlier versions.

Difficulty: 3 Hard

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

141) Why do you think that many biotechnology firms license their new products?

Answer: Biotechnology firms specialize in new product creation, but they often lack the

resources and expertise to market their innovations. In the search for new products, firms buy the

rights to use a technology or ideas from other firms through a licensing agreement. This approach

saves the high costs of in-house R&D, but it means that the firm is banking on a solution that

already exists but has not been marketed.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

142) Why do marketers take the time and cost associated with test marketing?

Answer: Test marketing allows firms to assess consumer responses to new products without

incurring the full cost of a product launch. Test marketing is a strong predictor of product success

because the firm can study actual purchase behavior, which is more reliable than a simulated test.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

143) Which step in the new product development process is the most critical to the survival of a

firm, and why?

Answer: The product launch is the most critical step because it typically requires tremendous

financial resources and extensive coordination of all factors in the marketing mix.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

144) Jenny has just taken over a line of organic teas for her company. She looks at the company

records and sees sales have peaked, profit margins are declining, and there are many new

competitors in that category. Which stage of the product life cycle are her teas in?

Answer: Her teas are in the maturity stage.

Difficulty: 3 Hard

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

145) Define and describe the product life cycle stage in which laggards begin to purchase products.

Answer: Most laggards begin to purchase during the decline stage of the product life cycle when

sales, profits and competition are declining. Laggards make up about 16 percent of the market, and

these consumers like to avoid change and rely on traditional products until they are no longer

available.

Difficulty: 2 Medium

Topic: Product Life Cycle

Learning Objective: 12-04 Explain the product life cycle.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

146) Explain the concept of outsourcing product development, and give an example of when this

would be a good idea.

Answer: Students' answers will vary, but should demonstrate knowledge of the stages of product

development and the demands of each as relevant to outsourcing to another firm, which is a

practice in which they hire an outside firm to help generate ideas and develop new products and

services.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-03 Describe the various stages involved in developing a new product or

service.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

147) What is a "pioneer" product, and how does this type of product impact markets and consumer

preferences? Use an example to explain this concept.

Answer: New-to-the-world, or pioneer, products create new markets and can add tremendous

value to a firm. They can also radically change the rules of competition and consumer preferences

in a market. Examples will vary.

Difficulty: 3 Hard

Topic: New-product Development

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

148) Why is the failure rate for new products so high?

Answer: One of the main reasons is the failure to assess the market properly by neglecting to do

appropriate product testing, targeting the wrong segment, and/or poor positioning. Firms may also

overextend their abilities or competencies by venturing into products or services that are

inconsistent with their brand image and/or value proposition.

Difficulty: 2 Medium

Topic: New-product Development

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

149) Why are innovators important to marketers?

Answer: Innovators are crucial to the success of any new product or service because they help the

product gain market acceptance. Through talking about and spreading positive word of mouth

about the new product, they prove instrumental in bringing in the next adopter category, early

adopters.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-02 Describe the different groups of adopters articulated by the diffusion

of innovation theory.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

150) What happens when a product has been in the marketplace for a long time? How can this be

avoided?

Answer: It is likely that the market will become saturated. In addition, changing customer needs

may make the product obsolete. Without new products, the value of the firm will likely decline. To

avoid this, companies need to innovate and bring out new products to replace the old ones.

Difficulty: 2 Medium

Topic: Consumer Adoption Process

Learning Objective: 12-01 Identify the reasons firms create new products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

Marketing, 7e (Grewal)

Chapter 13 Services: The Intangible Product

1) Firms that primarily sell products view service as a method to maintain a sustainable

competitive advantage.

Answer: TRUE

Explanation: Services play a role in almost every firm's strategy, even those that primarily sell

products.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) The marketing of services differs from the marketing of products because services are tangible

and separable from the service provider.

Answer: FALSE

Explanation: Products are tangible and separable; services are not. A service is any intangible

offering that involves a deed, performance, or effort that cannot be physically possessed.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) Many services marketers use training and standardization to reduce service perishability.

Answer: FALSE

Explanation: Services are perishable in that they cannot be stored for use in the future. It is often

addressed by offering discounts designed to shift demand to less busy periods. Training and

standardization are used to reduce heterogeneity.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

4) The Service Gaps Model encourages the systematic examination of all aspects of the product

creation process.

Answer: FALSE

Explanation: The Service Gaps Model is designed to encourage the systematic examination of all

aspects of the service delivery process and prescribes the steps needed to develop an optimal

service strategy.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

5) A delivery gap is the difference between the firm's service standards and the actual service it

provides to customers.

Answer: TRUE

Explanation: The delivery gap is the difference between the firm's service standards and the

actual service it provides to customers. This gap can be closed by getting employees to meet or

exceed service standards when the service is being delivered by empowering service providers,

providing support and incentives, and using technology where appropriate.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) Procedural fairness pertains to a customer's perception of the benefits he or she received

compared with the costs (inconvenience or loss).

Answer: FALSE

Explanation: Distributive fairness pertains to a customer's perception of the benefits he or she

received compared with the costs (inconvenience or loss).

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

7) When Buffalo Bank required all customers to use its online banking services, over 20 percent of

its customers closed their accounts. In this scenario, Buffalo Bank's service fell outside customers'

zone of tolerance.

Answer: TRUE

Explanation: The zone of tolerance refers to the area between customers' expectations regarding

their desired service and the minimum level of acceptable service—that is, the difference between

what the customer really wants and what he or she will accept before going elsewhere. The fact

that so many customers closed their accounts suggests that Buffalo Bank no longer offered service

falling within most customers' zones of tolerance.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

8) In training service providers, service quality goals should be general to allow for the various

needs of consumers.

Answer: FALSE

Explanation: Service quality goals should be specific in order to deliver consistently services that

meet customers' expectations.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) The knowledge gap is where "the rubber meets the road," where the customer directly interacts

with the service provider.

Answer: FALSE

Explanation: The delivery gap, not the knowledge gap, is where the rubber meets the road, where

the customer directly interacts with the service provider.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

10) In the service context, empowerment means allowing employees to make decisions about how

service is provided to customers.

Answer: TRUE

Explanation: In the service context, empowerment means allowing employees to make decisions

about how service is provided to customers. Empowerment becomes more important when the

service is more individualized.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) The communication gap can be reduced by managing customer expectations.

Answer: TRUE

Explanation: The communication gap refers to the difference between service promises and

customer perceptions of delivered service. The communication gap can be reduced by managing

customer expectations and by promising only what you can deliver, or possibly even a little less.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

12) Distributive fairness pertains to a customer's perception of the benefits received compared to

the costs of the inconvenience or loss.

Answer: TRUE

Explanation: This is a definition of distributive fairness. Procedural fairness refers to the

perceived fairness of the process used to resolve them.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

13) All products and services are intangible.

Answer: FALSE

Explanation: The most fundamental difference between a product and a service is that services

are intangible—they cannot be touched, tasted, or seen like a pure product can

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) The building blocks of service quality are reliability, assurance, tangibles, empathy, and

responsiveness.

Answer: TRUE

Explanation: This is correct. Customers generally use five distinct service dimensions to

determine overall service quality: reliability, assurance, tangibles, empathy, and responsiveness.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) The zone of tolerance refers to the area between customers' expectations regarding their

desired service and the minimum level of acceptable service.

Answer: TRUE

Explanation: Pertaining to the area between customers' expectations regarding their desired

service and the minimum level of acceptable service, the zone of tolerance is the difference

between what the customer really wants and what he or she will accept before going elsewhere.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

16) Listening to the customer is the first step in service recovery.

Answer: TRUE

Explanation: The three key service recovery strategies are listening to the customer, providing a

fair solution, and resolving problems quickly.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) Hilton Hotels trains its front desk employees to dress neatly and conservatively to project a

professional image. This relates to the service dimension of tangibles.

Answer: TRUE

Explanation: The category of tangibles would include the appearance of facilities, equipment,

personnel, and communication materials.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

18) Latosha was employee of the month at Jersey Mike's Subs, primarily because she provided

excellent customer service by serving food quickly. This relates to the reliability service

dimension.

Answer: FALSE

Explanation: Helping customers and providing prompt service relates to responsiveness.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

19) When managers understand what their service providers are facing on a day-to-day basis by

directly observing them and talking to customers, it is called management by

A) empowerment.

B) marketing research.

C) high expectations.

D) walking around.

E) being responsive.

Answer: D

Explanation: Unless the managers who make the service quality decisions know what their

service providers are facing on a day-to-day basis, and unless they can talk directly to the

customers with whom those service providers interact, any customer service program they create

will not be as good as it could be. This is known as management by walking around.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) A ________ gap always results in a service failure.

A) recovery

B) standards

C) knowledge

D) communication.

E) delivery

Answer: E

Explanation: Even if there are no other gaps, a delivery gap always results in a service failure and

they can be reduced when employees are empowered to spontaneously act in the customers' and

the firm's best interests when problems or crises are experienced.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

21) Sometimes all that needs to be done to satisfy a customer complaint is to

A) listen to the customer.

B) demonstrate loyalty.

C) empower the customer.

D) respond in a straightforward manner.

E) get management involved.

Answer: A

Explanation: In many cases, the customer may just want to be heard, and the service provider

should give the customer all the time he or she needs to "get it out."

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

22) A service is any intangible offering that involves a deed, performance, or effort that

A) cannot be physically possessed.

B) is high-priced.

C) is supported solely through advertising.

D) can be transformed into a physical product.

E) offers benefits but not costs.

Answer: A

Explanation: Services are intangible—they cannot be physically touched or possessed, as a pure

product can.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

23) By providing good customer service, firms ________ their products.

A) eliminate the communication gap for

B) add value to

C) reduce the assurance for

D) reduce the empowerment cost associated with

E) increase the perishability of

Answer: B

Explanation: Customer service can add value to almost any product or service offered to

consumers.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

24) Along the service-product continuum, which of the following would be considered the most

service dominant?

A) grocery store

B) apparel specialty store

C) doctor's office

D) bookstore

E) restaurant

Answer: C

Explanation: All the businesses on the list except the doctor's office involve some tangible

component—groceries, clothing, books, and food. In the doctor's office, the only tangible elements

delivered are things such as samples of drugs, X-rays, and prescription slips (and even those are

often submitted electronically).

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

25) Along the service-product continuum, which of the following would be considered the most

product dominant?

A) grocery store

B) auto repair shop

C) doctor's office

D) cell phone service provider

E) restaurant

Answer: A

Explanation: A grocery store's services involve service at the fish counter, the deli, the checkout,

and so on, but the grocery store tends to offer less service and more products (the groceries

themselves) than do the other options.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

26) Many product-dominant firms use quality service

A) as a way to minimize the cost of production.

B) to support a standards gap.

C) as a way to increase the perishability of their products.

D) to install a voice of the customer program.

E) to maintain a sustainable competitive advantage.

Answer: E

Explanation: Customer service can add value to almost any product or service offered to

consumers. Even those firms that are engaged primarily in selling a good, such as a fast-food

restaurant, typically view service as a method to maintain a sustainable competitive advantage.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

27) In countries like the United States, services

A) have almost all been replaced by technology.

B) are a small portion of GDP relative to manufacturing.

C) are replacing property taxes as a source of government revenue.

D) will decrease in demand as the population ages.

E) account for an increasing share of jobs.

Answer: E

Explanation: Economies of developed countries such as of the United States have become

increasingly dependent on services. Services account for nearly 80 percent of the U.S. gross

domestic product (GDP), a much higher percentage than was true 50, 20, or even 10 years ago.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

28) Food preparation, lawn maintenance, and housecleaning services are all examples of

A) services shifted abroad because costs are lower in developing countries.

B) services an aging population will decrease the demand for.

C) household maintenance activities that people increasingly pay others to perform.

D) the price elasticity effect on services demand.

E) the ability of empowerment to create tangible service products.

Answer: C

Explanation: People place a high value on convenience and leisure. For instance, household

maintenance activities, which many people performed themselves in the past, have become more

popular and quite specialized.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

29) Medical services and assisted living care are examples of

A) services shifted abroad because costs are lower in developing countries.

B) services an aging population will increase the demand for.

C) household maintenance activities that people increasingly pay others to perform.

D) the price elasticity effect on services demand.

E) the ability of empowerment to create tangible service products.

Answer: B

Explanation: The aging population in particular has increased the need for health care specialists,

including doctors, nurses, and caregivers in assisted living facilities and nursing homes, and many

of those consumers want their specialists to provide personalized, dedicated services.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

30) The marketing of services differs from product marketing because services are all of these

except

A) intangible.

B) inseparable.

C) heterogeneous.

D) renewable.

E) perishable.

Answer: D

Explanation: The marketing of services differs from product marketing because of the four

fundamental differences involved in services: Services are intangible, inseparable, heterogeneous,

and perishable.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

31) When marketers say that services are ________, they are referring to the fact that services

cannot be touched, tasted, or seen, like a pure product can.

A) intangible

B) inseparable

C) heterogeneous

D) perishable

E) replenishable

Answer: A

Explanation: Intangibility refers to the fact that, unlike products, services cannot be touched,

tasted, seen, or possessed.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

32) Because services are ________, it is often difficult for marketers to convey the benefits to

consumers.

A) heterogeneous

B) inseparable

C) intangible

D) perishable

E) substantial

Answer: C

Explanation: Intangibility refers to the fact that, unlike products, services cannot be touched,

tasted, seen, or possessed. This often makes it more difficult to make the benefits clear to

consumers.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

33) Which of the following refers to variability in a service's quality?

A) heterogeneity

B) perishability

C) service gap

D) delivery gap

E) communications gap

Answer: A

Explanation: Heterogeneity refers to variability in the service's quality.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

34) When marketers state that services are ________, they are referring to the fact that services are

produced and consumed at the same time.

A) intangible

B) inseparable

C) heterogeneous

D) perishable

E) peripheral

Answer: B

Explanation: Unlike products, services cannot be produced at one time and consumed later; the

two happen at the same time. This is referred to as inseparability.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

35) The owners of hotels whose services are produced and consumed at the same time know that

consumers do not have the opportunity to try out their service before purchasing. Many hotels use

________ to overcome the problem of inseparability of services.

A) promotional discounts

B) zone of tolerance allowances

C) perishability gap analysis

D) point-of-purchase displays

E) satisfaction guarantees

Answer: E

Explanation: Inseparability refers to the fact that services are produced and consumed at the same

time. This makes trial in advance of purchase difficult and often impossible. One solution is to

offer satisfaction guarantees to minimize the risk of an initial purchase.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

36) Sean relocated to take a new job, and when he got sick he needed to find a doctor. He

discovered during the visit that he didn't like the one he had chosen, and he knew he'd never go

back to that doctor. From a marketing perspective, his situation highlights one of the key

differences between products and services, known as

A) intangibility.

B) professional competence.

C) perishability.

D) inseparability.

E) heterogeneity.

Answer: D

Explanation: Because medical services are inseparable, the doctor's service was "produced" at

the time of the visit, and Sean did not have the option of trying out different doctors before

choosing the one to treat him. He therefore learned that he didn't like the doctor after he had

already received treatment.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

37) Martha had several unpleasant experiences trying to find the merchandise she needed at a large

lumber yard and hardware store. The employees—when she could find them—rarely seemed to

know where anything was outside of their own departments. But on her most recent visit, she was

pleasantly surprised to find that the store had installed kiosks where she could get directions

quickly and accurately. The store had found a technological solution to the services marketing

issue of

A) intangibility.

B) part-time employees.

C) perishability.

D) inseparability.

E) heterogeneity.

Answer: E

Explanation: Martha has been experiencing problems with service heterogeneity, or

variability—the employees are not consistently able to assist her. The kiosks provide a solution by

offering comprehensive store information.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

38) When marketers state that services are ________, they are referring to the fact that services are

not always of the same quality from one time period to another or from one service provider to

another.

A) intangible

B) inseparable

C) heterogeneous

D) perishable

E) viable

Answer: C

Explanation: Heterogeneity refers to the problem that services tend to vary by time, location, or

the person providing the service. The more humans are needed to provide a service, the more likely

there is to be heterogeneity or variability in the service's quality.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

39) The old restaurant saying "You are only as good as the last meal served" reflects the fact that

services are

A) intangible.

B) perishable.

C) heterogeneous.

D) portable.

E) viable.

Answer: C

Explanation: This saying refers to the heterogeneity, or variability, of services—the fact that they

tend to vary by time, location, or service provider.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

40) Marketers can take advantage of the variable nature of services by

A) merging services with products.

B) customizing services to meet customers' needs exactly.

C) offering to expedite intangibles.

D) expanding the standards gap.

E) using strict standardization.

Answer: B

Explanation: Marketers can use the variable nature of services to their advantage. A

micromarketing segmentation strategy can customize a service to meet customers' needs exactly.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

41) One approach marketers are using to reduce service ________ is to replace people with

machines whenever appropriate.

A) intangibility

B) inseparability

C) spendability

D) perishability

E) heterogeneity

Answer: E

Explanation: By replacing people with technology, service delivery tends to become more

standardized, which reduces the variability, or heterogeneity, of delivery. Of course, this assumes

that the machines don't break down!

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

42) Dave's marketing research returned the finding that customers were staying away from his

bookstore because of a lack of services like gift cards, return policies, and special orders. Dave was

shocked. "Nobody ever asks about that stuff! If it were that important, people would ask about it."

Dave is likely suffering from a(n) ________ gap.

A) knowledge

B) standards

C) ethics

D) delivery

E) communications

Answer: A

Explanation: Dave thinks he knows what his customers expect, but the marketing research

suggests something different. A knowledge gap reflects to the difference between customers'

expectations and the firm's understanding of these expectations.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

43) The customers at Marielle's coffee shop want to grab a quick cup of coffee before boarding the

commuter train into the city. The sign in the window promises "Quick, In-and-Out Service," and

usually Marielle's keeps that promise. But one morning, customers were frustrated when the staff

behind the counter showed more interest in gossiping about their social lives than in waiting on

customers. Marielle's shop is suffering from a ________ gap.

A) knowledge

B) standards

C) social expectations

D) delivery

E) communications

Answer: D

Explanation: Marielle's has standards in place to offer fast service, and this is what its customers

expect, so we are not dealing with a knowledge or standards gap. And on most days, this promise is

kept, so we are not dealing with a communication gap. But on this particular day, service does not

match the standards. This is a delivery gap, which is the difference between the firm's service

standards and the actual service it provides to customers.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

44) When there is a significant difference between the service customers receive and the service

the firm promotes, the firm has a ________ gap.

A) knowledge

B) standards

C) social expectations

D) delivery

E) communications

Answer: E

Explanation: The communication gap refers to the difference between the actual service provided

to customers and the service that the firm's promotion program promises.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

45) When marketers state that services are ________, they are referring to the fact that services

cannot be stored for use in the future.

A) intangible

B) inseparable

C) heterogeneous

D) durable

E) perishable

Answer: E

Explanation: Services are perishable in that they cannot be stored for use in the future. This can

make matching of demand and supply difficult.

Difficulty: 1 Easy

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

46) Because services like airline flights and hotel beds are ________, many marketers attempt to

match demand with supply using pricing strategies.

A) intangible

B) inseparable

C) heterogeneous

D) perishable

E) accountable

Answer: D

Explanation: Perishability refers to the fact that services cannot be for use in the future. This

can make matching of demand and supply difficult. Airlines offer discount tickets at less popular

flying times, and hotels offer cheaper rooms at times when they are less busy.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

47) Yolanda manages a Best Sleep Inn along an interstate highway. She knows from experience

that 5 to 10 last-minute customers will call after 8 p.m. each evening looking for a room and asking

the price. Yolanda has empowered her staff to offer discounts when the motel is largely vacant,

and to quote the standard price when the motel is close to full. She knows her service is ________,

meaning that if no one stays in the room, it generates no revenue that evening.

A) intangible

B) inseparable

C) heterogeneous

D) durable

E) perishable

Answer: E

Explanation: Perishability refers to the fact that services cannot be stored for use in the

future. This can make matching of demand and supply difficult. It makes sense to offer rooms at a

discount when the hotel is relatively empty, as a smaller payment for use of the room is better than

having the room sit empty with no payment.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

48) Because services like cruises and car rentals are perishable, many marketers use

A) pricing strategies to match supply with demand.

B) service quality to extend the life of the product.

C) incentives to encourage staff to deliver according to standards.

D) training to standardize delivery.

E) machines to replace people for standard transactions.

Answer: A

Explanation: Perishability refers to the fact that services cannot be stored for use in the future.

This can make matching of demand and supply difficult. Cruise lines will offer last-minute

discounts for cruises with available capacity.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

49) The Service Gaps Model is designed to highlight those areas where

A) service providers provide the best possible service.

B) manufacturers are cutting corners on product quality.

C) customers believe they are getting less or poorer service than they should.

D) service providers know more than their customers.

E) delivered service exceeds expected service.

Answer: C

Explanation: The Service Gaps Model is designed to encourage the systematic examination of all

aspects of the service delivery process and prescribes the steps needed to develop an optimal

service strategy.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

50) When the delivery of a service fails to meet customers' expectations, a ________ gap exists.

A) service

B) knowledge

C) standards

D) production

E) procedural

Answer: A

Explanation: The Gaps Model identifies four service gaps: the knowledge, standards, delivery,

and communication gaps. In any given situation, one or more of these service gaps may be causing

deficiencies in delivered service.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

51) A ________ gap reflects the difference between customers' expectations and the firm's

perception of those customer expectations.

A) seniority

B) knowledge

C) standards

D) delivery

E) communication

Answer: B

Explanation: This is the definition of knowledge gap, which is the difference between customers'

expectations and the firm's perception of those customer expectations.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

52) Firms can close the ________ gap by matching customer expectations with actual service

through use of marketing metrics.

A) seniority

B) knowledge

C) standards

D) delivery

E) communication

Answer: B

Explanation: Firms can close the knowledge gap by determining what customers really want by

doing research using marketing metrics such as service quality and the zone of tolerance.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

53) The ________ gap can be closed by getting employees to meet or exceed service standards

when the service is being delivered by empowering service providers, providing support and

incentives, and using technology where appropriate.

A) communications

B) knowledge

C) standards

D) delivery

E) acceptance

Answer: D

Explanation: The delivery gap can be closed by getting employees to meet or exceed service

standards when the service is being delivered by empowering service providers, providing support

and incentives, and using technology where appropriate.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

54) When Mary booked a room at the Pleasant Valley Hotel, she expected that her room would be

ready when she got there, the swimming pool would be heated, the advertised singer would be able

to sing, and the breakfast would be fresh. When she arrived, she had to wait for her room, found the

swimming pool to be 50 degrees, realized the singer could not carry a tune, and the free continental

breakfast was stale. The Pleasant Valley Hotel was experiencing a severe ________ gap.

A) communications

B) knowledge

C) standards

D) delivery

E) expectations

Answer: B

Explanation: The knowledge gap reflects the difference between customers' expectations and the

firm's perception of those customer expectations.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

55) If there is a difference between the firm's perceptions of customers' expectations and the

service standards the firm has set, a ________ gap exists.

A) seniority

B) knowledge

C) standards

D) delivery

E) communication

Answer: C

Explanation: A lack of care in setting specific service standards can lead to a standards gap,

which is the difference between the firm's perceptions of customers' expectations and the service

standards it sets.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

56) By setting appropriate service standards and measuring service performance, firms can attempt

to close a ________ gap.

A) seniority

B) knowledge

C) standards

D) delivery

E) communication

Answer: C

Explanation: A lack of care in setting specific service standards can lead to a standards gap,

which is the difference between the firm's perceptions of customers' expectations and the service

standards it sets. By setting appropriate service standards, training employees to meet and exceed

those standards, and measuring service performance, firms can attempt to close this gap.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

57) The Broadmoor Hotel in Colorado Springs, Colorado, maintains its five-star rating by focusing

on five service characteristics: reliability, responsiveness, assurance, empathy, and tangibles. The

hotel has been updating rooms built in the early part of the 20th century to meet the needs of

21st-century visitors. To accomplish this, it spent millions in improvements, renovating rooms,

and adding a new outdoor pool complex. These renovations focus on the ________ service

characteristic.

A) empathy

B) reliability

C) assurance

D) tangibles

E) responsiveness

Answer: D

Explanation: One of the greatest challenges for the Broadmoor in recent years has been updating

rooms built in the early part of the 20th century to meet the needs of 21st-century visitors. To

accomplish this, it spent millions in improvements, renovating rooms, and adding a new outdoor

pool complex. This relates to the tangibles service characteristic.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

58) The Broadmoor Hotel in Colorado Springs, Colorado, maintains its five-star rating by focusing

on five service characteristics: reliability, responsiveness, assurance, empathy, and tangibles.

Employees are instructed to always address a guest by name, if possible. To accomplish this,

employees are trained to listen and observe carefully to determine a guest's name. Which service

characteristic is this an example of?

A) empathy

B) tangibles

C) responsiveness

D) assurance

E) reliability

Answer: A

Explanation: One approach used by the Broadmoor Hotel to demonstrate empathy is

personalizing communications. Employees are instructed to always address a guest by name, if

possible. To accomplish this, employees are trained to listen and observe carefully to determine a

guest's name.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

59) For years, the Mogul Sheraton, a four-star hotel overlooking the Taj Mahal in India, offered

free elephant and camel rides to hotel visitors. Few customers took advantage of this service. This

is an example of a ________ gap in services marketing.

A) seniority

B) knowledge

C) standards

D) delivery

E) communication

Answer: B

Explanation: The Mogul Sheraton believed that customers wanted elephant and camel rides, but

in reality customers were evidently not interested in the service. This misunderstanding of

customer expectations is an example of a knowledge gap.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

60) Jack manages an upscale French restaurant in the Washington, DC, area. His restaurant offers

a few specials each evening in addition to its regular menu. Jack has trained his servers to report

comments and requests for items that have previously been offered only as specials. Jack uses this

information to reduce the ________ gap in services marketing.

A) seniority

B) knowledge

C) standards

D) delivery

E) communication

Answer: B

Explanation: By collecting information about special requests, Jackson seeks to learn more about

his customers' expectations. This should help close the knowledge gap. Firms need to match

customer expectations with actual service through research.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

61) To meet or exceed customers' expectations, marketers must

A) know where customers live.

B) know how often consumers buy their products.

C) determine what those expectations are.

D) recognize that expectations are tangible.

E) empower customers to meet their own expectations.

Answer: C

Explanation: To meet or exceed customers' expectations, marketers must determine what those

expectations are. Customers generally use five distinct service dimensions to determine overall

service quality: reliability, assurance, tangibles, empathy, and responsiveness.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

62) Collin has been directed by his boss to determine if the company is meeting customers' service

quality expectations. One of Collin's problems is that services are ________, making evaluation of

service quality difficult.

A) quantifiable

B) substantial

C) unequally distributed

D) intangible

E) inconsequential to customers

Answer: D

Explanation: To meet or exceed customers' expectations, marketers must determine what those

expectations are. Yet because of their intangibility, the service quality, or customers' perceptions

of how well a service meets or exceeds their expectations, is often difficult for customers to

evaluate.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

63) All of the following are included in the five dimensions used by consumers to determine

overall service quality except

A) assurance.

B) reliability.

C) acceptability.

D) responsiveness.

E) empathy.

Answer: C

Explanation: The five dimensions of service quality are reliability, assurance, responsiveness,

empathy, and tangibles.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

64) Sherry will let only Martiné cut her hair. She has tried other stylists, but she knows from

experience that Martiné cuts her hair well every time. For Sherry, ________ is the most important

of the five service quality dimensions.

A) assurance

B) reliability

C) tangibles

D) responsiveness

E) empathy

Answer: B

Explanation: Martiné cuts Sherry's hair right every time. She might have other

weaknesses—perhaps she is rude, or always runs behind schedule, or perhaps she doesn't do a

good job of keeping her station neat, but she gives good haircuts. Reliability is the service quality

dimension that refers to doing the job dependably and accurately.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

65) Students regularly seek out Professor Guillory to advise them. She has an exceptional manner,

and students are confident in her and trust her advice. For these students, ________ is the most

important of the five service quality dimensions.

A) assurance

B) reliability

C) tangibles

D) responsiveness

E) empathy

Answer: A

Explanation: Assurance is the dimension of service quality that refers to inspiring trust and

confidence in others, which is Professor Guillory's strength. Note that the question doesn't actually

say that her advice is always good (which would refer to reliability), but rather that students

believe that her advice is good.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

66) Gerry's Tire Service provides each employee with a clean, sharp-looking uniform. It also

instructs employees to put all tools back where they belong and keep the work area clean and

uncluttered. Gerry's Tire Service emphasizes ________ in the five service quality dimensions.

A) assurance

B) reliability

C) tangibles

D) responsiveness

E) empathy

Answer: C

Explanation: Gerry's is focusing on tangibles, which are the factors that regarding the appearance

of physical facilities, equipment, personnel, and communication materials—in this case, uniforms

and the cleanliness of the work area.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

67) Because services are intangible, it is often difficult for customers to determine how a service

meets their expectations, which marketers call

A) service perceptions.

B) service efforts.

C) service quality.

D) service aspirations.

E) service feedback.

Answer: C

Explanation: Service quality is the customer's perception of how well delivered service meets

expectations.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

68) A systematic ________ program collects customer inputs and integrates them into managerial

decisions.

A) quality gap analysis

B) empowerment

C) zone of tolerance

D) standards analysis

E) voice-of-customer

Answer: E

Explanation: Today, most service firms have developed voice-of-customer programs and employ

ongoing marketing research to assess how well they are meeting their customers' expectations. A

systematic voice-of-customer (VOC) program collects customer inputs and integrates them into

managerial decisions.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

69) Bank of America uses a complex polling system coupled with a customer response

measurement system to assess consumers' responses to new products and services. Bank of

America is using a(n) ________ program to improve service quality and service offerings.

A) quality gap analysis

B) empowerment

C) zone of tolerance

D) standards analysis

E) voice-of-customer

Answer: E

Explanation: Bank of America is using a voice-of-customer program, which seeks to incorporate

customer input into management decision making in a systematic way.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

70) When choosing where to eat lunch, Veronica's major service criterion is speed: being seated

promptly and served her meal quickly. For Veronica, ________ is the most important of the five

service quality dimensions.

A) assurance

B) reliability

C) tangibles

D) responsiveness

E) empathy

Answer: D

Explanation: Responsiveness is the service quality dimension that considers promptness and the

willingness to help customers.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

71) To define the zone of tolerance, firms ask a series of questions about each service quality

dimension that relate to all of the following except

A) the desired and expected level of service for each dimension, from low to high.

B) customers' perceptions of how well the focal service performs, from low to high

C) customers' perceptions of how well a competitive service performs, from low to high.

D) the importance of each quality service dimension.

E) the desired and expected level of service for each dimension, from high to low.

Answer: E

Explanation: To define the zone of tolerance, firms ask a series of questions about each service

quality dimension that relate to the desired and expected level of service for each dimension, from

low to high; customers' perceptions of how well the focal service performs and how well a

competitive service performs, from low to high; and the importance of each service quality

dimension.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

72) Nicky knows her restaurant is understaffed today. She is hoping to get through the day without

falling below her customers'________, the difference between what her customers want and what

they will accept before going elsewhere.

A) voice-of-customer quotient

B) empowerment standard

C) tangibles gap

D) zone of tolerance

E) quality gap

Answer: D

Explanation: The difference between what customers desire and their minimum acceptable level

of service is the zone of tolerance. Nicky knows her service will probably fall below its highest

levels today, but hopes that it will stay within her customers' zones of tolerance.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

73) Customers have a defined ________ when it comes to waiting in line at a retail checkout

counter. The amount of time consumers are willing to wait varies with the type of store.

A) voice-of-customer quotient

B) empowerment standard

C) tangibles gap

D) zone of tolerance

E) quality gap

Answer: D

Explanation: The difference between what customers desire and their minimum acceptable level

of service is the zone of tolerance. Customers might be willing to wait longer for service at a busy

grocery store than at a convenience store.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

74) An excellent, inexpensive, and readily accessible method for assessing customers' service

expectations is

A) customer complaints.

B) syndicated data services.

C) employee empowerment programs.

D) distributive fairness analysis.

E) management by objective programs.

Answer: A

Explanation: An excellent method for assessing customers' expectations is making effective use

of customer complaint behavior. Even if complaints are handled effectively to solve customers'

problems, the essence of the complaint is too often lost on managers.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

75) Training service providers to know exactly what a "good job" entails is setting service

A) knowledge.

B) quality.

C) delivery.

D) standards.

E) empowerment.

Answer: D

Explanation: Service providers generally want to do a good job as long as they know what is

expected of them. The manager needs to set an example of high service standards, which will

permeate throughout the organization and the goals should be specific.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

76) Layla is the new manager of a resort hotel. She knows from reviewing customer complaints

that service quality at the hotel is not consistently meeting customers' expectations, and she

believes that the biggest problem is that her employees are not sure what is expected of them. To

improve service quality, Layla will

A) empower customers to meet their own service needs.

B) establish a broad zone of intolerance to reduce customer complaints.

C) narrowly define a knowledge gap.

D) separate intangibles from tangibles.

E) set specific, measurable goals based on customers' expectations.

Answer: E

Explanation: By setting specific service standards and measurable goals based on customer

expectations, Kayla can help her employees deliver the level of service that customers expect.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

77) Services marketing managers have learned that more employees will support a

quality-oriented process if

A) they are involved in setting the goals.

B) perishable services are replaced with tangible services.

C) they are required to diverge from existing standards.

D) customers are responsible for setting service quality standards.

E) the process involves both part-time and full-time employees.

Answer: A

Explanation: By involving employees in goal-setting, managers can make it much more likely

that employees will buy into the standards and deliver service according to the standards

established.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

78) When corporate headquarters announced new service quality standards for pizza franchise

owners, Ron knew he would have trouble gaining employees' support because

A) they were not involved in setting the goals.

B) perishable services were being replaced with tangible services.

C) they were not allowed to diverge from existing standards.

D) customers were required to create service quality standards.

E) the process involved both part-time and full-time employees.

Answer: A

Explanation: By involving employees in goal-setting, managers can make it much more likely

that employees will buy into the standards and deliver service according to the standards

established. In this case, standards were established by headquarters with no employee

involvement.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

79) What is the problem associated with service quality standards such as "be nice" or "do what the

customers want"?

A) They create low expectations.

B) They are not specific.

C) They do not allow for the voice-of-customer process.

D) Most employees are unwilling to do what customers want.

E) They create a delivery gap.

Answer: B

Explanation: Service providers cannot meet the firm's standards if provided with only general

instructions (as in "do a good job"). Specific standards must be provided.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

80) By changing a standard from "be nice to customers" to "greet every customer, and if possible

by name," a services marketing manager has created a(n) ________ goal.

A) insurmountable

B) invisible

C) empowerment

D) measurable

E) inseparable

Answer: D

Explanation: "Be nice" is not a measurable goal because it is vague, whereas "greet every

customer" is specific and measurable.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

81) In services marketing, the saying "where the rubber meets the road" refers to whether or not

a(n) ________ gap exists.

A) knowledge

B) quality

C) delivery

D) standards

E) empowerment

Answer: C

Explanation: This refers to a delivery gap, a situation in which the employee knows what

customers expect but fails to deliver to these expectations.

Delivery gaps can be reduced when employees are empowered to spontaneously act in the

customers' and the firm's best interests when problems or crises are experienced.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

82) Saltdust Grill is known as the premier restaurant in town. With its elegant dining area,

extensive wine list, and gourmet chef, residents and tourists flock to the restaurant. Recently, Trey

took a large group to the Saltdust Grill and almost every diner sent their entrée back to the kitchen.

The Saltdust Grill was experiencing a(n) ________ gap in service quality.

A) knowledge

B) communication

C) standards

D) delivery

E) empowerment

Answer: D

Explanation: Saltdust Grill, which ordinarily provides an excellent dining experience, has failed

to do so on this occasion, creating a delivery gap (a gap between service standards and actual

delivered service).

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

83) A(n) ________ gap exists when a firm knows what it needs to do to meet customers' service

expectations, but sometimes fails to do it.

A) knowledge

B) communication

C) standards

D) empowerment

E) delivery

Answer: E

Explanation: A delivery gap is a gap between service standards and actual delivered service.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

84) ________ means allowing employees to make decisions about how service is provided to

customers.

A) Endorsement

B) Quality control

C) Standardization

D) Empowerment

E) Authorization

Answer: D

Explanation: In the service context, empowerment means allowing employees to make decisions

about how service is provided to customers. When frontline employees are authorized to make

decisions to help their customers, service quality generally improves.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

85) Empowerment is when ________ are authorized to make decisions to help their customers

and, as a result, service quality generally improves.

A) consultants

B) middle managers

C) corporate executives

D) production control managers

E) frontline employees

Answer: E

Explanation: In the service context, empowerment means allowing employees to make decisions

about how service is provided to customers. When frontline employees are authorized to make

decisions to help their customers, service quality generally improves.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

86) Using technology and ________ are two ways a delivery gap can be reduced in size.

A) empowering employees

B) variability analysis

C) voice-of-customer analysis

D) zone of tolerance analysis

E) public relations

Answer: A

Explanation: In the service context, empowerment means allowing employees to make decisions

about how service is provided to customers. When frontline employees are authorized to make

decisions to help their customers, service quality generally improves.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

87) Empowerment of employees helps address the delivery gap because

A) employees directly involved with the customer can respond effectively at the moment the

problem occurs.

B) customers appreciate feeling empowered.

C) management then doesn't need to devote time and energy to resolving service delivery

problems.

D) employees spend less time resolving problems than managers would.

E) it ultimately contributes to employee knowledge and retention.

Answer: A

Explanation: In the service context, empowerment means allowing employees to make decisions

about how service is provided to customers. When frontline employees are authorized to make

decisions to help their customers, service quality generally improves.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

88) When Dr. Morton checked in at the Ritz-Carlton, it was 3 a.m. He had been traveling for over

12 hours and was exhausted. His suit, which he needed for a speech that morning, looked like he

had slept in it. Caren, the night clerk, offered to find a 24-hour dry cleaner and have the suit

cleaned while Dr. Morton got a few hours of sleep. Caren's actions are an example of

A) the variability associated with service quality performance.

B) empowerment of employees to meet customers' needs.

C) procedural fairness.

D) specific service standards.

E) public relations to increase puffery.

Answer: B

Explanation: Caren went above and beyond the specific requirements of her job in offering to

provide this special service to Dr. Morton. She was able to do this because the Ritz-Carlton

empowers its employees to take extra steps in order to meet customers' needs.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

89) Empowerment becomes more important when the service is

A) institutionalized.

B) repetitive.

C) individualized.

D) routine.

E) standardized.

Answer: C

Explanation: When service is individualized, standards cannot predict every adjustment that

might be needed for a specific situation. This is where empowering employees to determine the

best way to meet customer needs is particularly important.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

90) The old cliché "Service with a smile" recognizes the fact that

A) service providers need to be pleasant even if the customer is not.

B) smiling is contagious.

C) service providers should smile and not think.

D) life is too short to be ugly.

E) services are perishable but a smile is forever.

Answer: A

Explanation: A service provider's job can often be difficult, especially when customers are

unpleasant or less than reasonable. But the service provider cannot be rude or offensive just

because the customer is. The old cliché "Service with a smile" remains the best approach, but for

this to work, employees must feel supported.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

91) Service providers often encounter rude and unreasonable consumers. Services marketing

managers can reduce the delivery gap, even for these customers, by

A) empowering consumers.

B) providing support and incentives for their employees.

C) directing zone of tolerance limits for employees.

D) doing effective customer screening.

E) forcing rude customers to use technology.

Answer: B

Explanation: One reason service jobs can be difficult is that service employees must remain

pleasant and courteous even when customers are not. Managers can help frontline employees

manage angry customers with courtesy by providing emotional support and incentives.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

92) After observing a customer verbally abuse a server, the first thing a manager can do to ensure

quality service is to

A) throw the customer out of the restaurant.

B) assume the server provoked the attack and respond accordingly.

C) provide emotional support to the server.

D) review the delivery support system.

E) make sure services delivery expectations are consistent and coherent throughout the

organization.

Answer: C

Explanation: One reason service jobs can be difficult is that service employees must remain

pleasant and courteous even when customers are not. Managers can help frontline employees

manage angry customers with courtesy by providing emotional support and incentives.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

93) Managers of fast-food restaurants struggle with a rapid turnover of personnel. Employee

turnover rates of 100 to 200 percent annually are common. The work environment is difficult and

customers can often be demanding. One of the first steps managers can take to help workers

deliver quality service is to

A) ban abusive customers from their restaurants.

B) reward service providers based solely on the speed of service.

C) provide emotional support and concern for their employees.

D) review the delivery support system.

E) make sure services delivery expectations are consistent and coherent throughout the

organization.

Answer: C

Explanation: One reason service jobs can be difficult is that service employees must remain

pleasant and courteous even when customers are not. Managers can help frontline employees

manage angry customers with courtesy by providing emotional support and incentives.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

94) ________ provides the equipment or systems needed to perform a task in a job setting.

A) Service infrastructure

B) Quality mechanics

C) Instrumental support

D) Dynamic support

E) Customer interface architecture

Answer: C

Explanation: Service providers require instrumental support—the systems and equipment to

deliver the service properly.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

95) Robert was complaining to another member of the lawn crew, "I don't know how they expect

me to do an adequate job. The mower doesn't work right, the trimmers are so dull they don't cut

anything, and the rest of the equipment is so old that we can't get parts." Robert's company lacks

the ________ workers need to be able to do a good job.

A) maintenance schedule

B) instrumental support

C) emotional support

D) service infrastructure

E) customer expectation mechanisms

Answer: B

Explanation: Robert is experiencing a lack of proper instrumental support—the systems and

equipment required to deliver the service properly.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

96) Today, almost every sales representative can immediately check the company's inventory and

production schedule electronically. This allows sales reps to sell what is available and make

promises to customers that they can keep. This technology has improved service delivery through

A) access to a wide variety of services.

B) greater control by customers over service delivery.

C) increased zone of tolerance.

D) greater ability to obtain information.

E) saving customers time.

Answer: D

Explanation: Technology has become an increasingly important facilitator for delivering

services. Using technology to facilitate service delivery can provide many benefits, such as access

to a wider variety of services, a greater degree of control by the customer over the services, and the

ability to easily obtain information.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

97) Although firms such as restaurants have difficulty controlling service quality from day to day,

they do have control over

A) how they communicate the services they promise.

B) the price of ingredients.

C) the attitudes of customers.

D) the way customers view them compared to competitors.

E) the knowledge gap consumers create.

Answer: A

Explanation: Restaurants cannot control the prices they pay for ingredients or their customers'

attitudes, but they can control their communication with customers, which will influence

expectations and perceptions. Although firms have difficulty controlling service quality because it

can vary from day to day and provider to provider, they have nearly constant control over how they

communicate their service package to their customers.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

98) If a firm promises more than it can deliver,

A) it has created an empowerment gap.

B) consumers will have a knowledge gap.

C) it creates a communication gap.

D) it needs to enact a voice-of-customer program.

E) perishability becomes a problem.

Answer: C

Explanation: A communication gap refers to the difference between the actual service provided

to customers and the service that the firm's promotion program promises.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

99) The ________ gap can be reduced by managing consumers' expectations and promising only

what can be delivered or possibly even a little less.

A) knowledge

B) communication

C) delivery

D) standards

E) empowerment

Answer: B

Explanation: A communication gap is the difference between promised and actual service. By

making realistic promises, the firm can manage expectations.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

100) Physicians regularly overstate the expected recovery time from surgery, knowing that

managing patients' expectations will reduce the ________ gap associated with their service.

A) knowledge

B) empowerment

C) delivery

D) standards

E) communication

Answer: E

Explanation: A communication gap is the difference between promised and actual service. By

making pessimistic predictions for recovery time, doctors can manage patients' expectations.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

101) Dopson's Hardware was in bad financial shape. It owed so much money that vendors put the

store on a cash-only delivery basis. As a result, the store had a dwindling inventory of goods to

sell. Whenever a customer asked about an unavailable item, the owner directed the sales staff to

say that it was on backorder and would be in stock next week. When the customer returned, the

item was still unavailable. The owner's policy created a(n) ________ gap.

A) knowledge

B) empowerment

C) communication

D) standards

E) tangibility

Answer: C

Explanation: Dopson's Hardware was making promises it could not keep by saying that things

would be in stock next week when that was not the case. This difference between promised service

and actual service created a communication gap.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

102) Effective service recovery entails all of the following except

A) listening to the customer.

B) estimating the damage.

C) providing a fair solution.

D) resolving the problem quickly.

E) involving customers in the service recovery where possible.

Answer: B

Explanation: Effective service recovery includes listening to the customer and involving them in

the service recovery, providing a fair solution, and resolving the problem quickly.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

103) Effective service recovery efforts can lead to all of the following except

A) increased purchase intentions.

B) increased positive word of mouth.

C) increased customer satisfaction.

D) lower levels of satisfaction than prior to the service failures.

E) increased dependence on technology to prevent future service failures.

Answer: E

Explanation: Effective service recovery can positively influence purchase intentions, positive

word of mouth, and customer satisfaction; however, satisfaction may still be lower than it was

before the service failure.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

104) Samuel was called in to meet with his boss, Alicia. He was afraid he was going to be fired for

the mistake he had made dealing with an important customer of the store. Instead, Alicia explained

that he had handled the situation well, listening to the customer and finding a fair solution. Alicia

told him that, even more important, working the way he did to correct the error could result in

A) a smaller empowerment gap.

B) increased customer purchases and positive word of mouth.

C) a full refund for the customer.

D) a larger service gap.

E) less instrumental support.

Answer: B

Explanation: Samuel's effective service recovery could have saved the relationship with the

customer, leading to increased levels of purchasing and positive word of mouth.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

105) When confronted with an angry and emotional customer, the best first step toward service

recovery is to

A) call security in case it is necessary to escort the person from the building.

B) match the person's voice in intensity and volume to gain control of the confrontation.

C) gently but firms tell the person you will not tolerate being addressed in that tone of voice and

turn away until he or she calms down.

D) listen carefully and with empathy until the customer feels he or she has been heard.

E) ask a coworker to take over handling the complaint to get a neutral perspective.

Answer: D

Explanation: The best first step with an angry customer is to listen carefully and give the

customer a chance to be heard.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

106) Service employees at the airlines' flight cancellation desks frequently encounter travelers

who get emotional about canceled or delayed flights. The first thing these employees should do is

A) listen to the customer.

B) contact a supervisor.

C) estimate the damage.

D) provide a fair solution.

E) resolve the problem quickly.

Answer: A

Explanation: The best first step with an angry customer is to listen carefully and give the

customer a chance to be heard.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

107) When travelers are bumped from overbooked flights, they are frequently offered vouchers

good for future travel. The dollar value of the voucher is the airline's estimate of

A) perishable value.

B) distributive fairness.

C) empowerment.

D) procedural justice.

E) the size of the knowledge gap.

Answer: B

Explanation: Distributive fairness pertains to a customer's perception of the benefits he or she

received compared with the costs (inconvenience or loss). Customers want to be compensated a

fair amount for a perceived loss that resulted from a service failure.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

108) Because customers have different needs and expectations, the key to distributive fairness in

service recovery is to

A) listen to the customer.

B) contact a supervisor quickly.

C) estimate the damage.

D) provide a fair solution.

E) resolve the problem quickly.

Answer: A

Explanation: Distributive fairness pertains to a customer's perception of the benefits he or she

received compared with the costs (inconvenience or loss). Customers want to be compensated a

fair amount for a perceived loss that resulted from a service failure. The key to distributive fairness

is listening carefully to the customer.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

109) Randy arrived at the hotel to find that, although he had a guaranteed reservation, the hotel had

no rooms available. He became angry when the hotel made him a reservation at a more expensive

hotel but refused to pay the difference in room rates. Randy was upset because, in his opinion, the

hotel's solution did not incorporate

A) intangible fairness.

B) distributive fairness.

C) procedural fairness.

D) service fairness.

E) empowerment fairness.

Answer: B

Explanation: Distributive fairness pertains to a customer's perception of the benefits he or she

received compared with the costs (inconvenience or loss). In this case, Randy did not feel that he

was compensated for the additional cost he had to bear due to the problem with his reservation.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

110) Most customers want to achieve a fair solution following a service failure. All of the

following factors affect a person's perceptions of "fairness" in these kinds of situations except

A) materials they have read.

B) the customer's experience with other firms.

C) the firm's policy on service recovery.

D) observed treatment of other customers.

E) stories of service recovery told by friends and family.

Answer: C

Explanation: Customers do not care much about firm's policies, if these policies seem

unreasonable. The other factors, though, will affect customers' perceptions of fairness.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

111) ________ fairness refers to the perceived fairness of the process with which a firm handles

customer complaints.

A) Procedural

B) Intangible

C) Distributive

D) Service

E) Empowerment

Answer: A

Explanation: With regard to complaints, procedural fairness refers to the perceived fairness of the

process used to resolve them. Customers want efficient complaint procedures over whose

outcomes they have some influence.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

112) Because of ________, many companies have altered their "no questions asked" return

policies to include time limits, "restocking" fees, and store-credit-only refunds.

A) government regulations

B) Better Business Bureau guidelines

C) high costs

D) accounting concerns

E) well-publicized liability cases

Answer: C

Explanation: Costs involved in returns have led some retailers to restrict customers' ability to

return merchandise.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

113) One of the reasons service failures need to be addressed quickly is to

A) minimize the zone of tolerance.

B) increase empowerment zones.

C) avoid negative word of mouth from upset customers.

D) avoid a situational ethics conflict.

E) keep management from finding out what happened.

Answer: C

Explanation: The longer a service problem remains unresolved, the more likely customers will

complain to others.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

114) The service dimension called ________ refers to the ability of the firm's employees to convey

trust and confidence.

A) assurance

B) reliability

C) responsiveness

D) empathy

E) tangibles

Answer: A

Explanation: Assurance refers to employees' knowledge and courtesy and their ability to convey

trust and confidence.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

115) The new hotel manager asked the chef, "Are you sure you know how to cook Beef

Wellington?" Which of the service dimensions was the hotel manager expressing concern about?

A) reliability

B) responsiveness

C) assurance

D) empathy

E) tangibles

Answer: A

Explanation: Reliability is the ability to perform the service dependably and accurately.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

116) Monica was looking for a venue for her wedding reception. When she visited one potential

location, she noticed that the landscaping was not complete, and there was stained carpet in the

lobby. Which of the service quality building blocks caused Monica to select an alternative venue?

A) tangibles

B) reliability

C) responsiveness

D) assurance

E) empathy

Answer: A

Explanation: The "tangibles" building block of service quality refers to the appearance of

physical facilities, equipment, personnel, and communication materials.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

117) When Jon checked into his Orlando hotel, the front desk clerk informed Jon that his room

would not be ready for another 20 minutes. Jon didn't mind waiting; he had arrived well ahead of

the standard check-in time and this wait time fell within his ________, the area between his

expectations regarding desired service and the minimum level of service he will accept.

A) zone of tolerance

B) delivery gap

C) zone of intolerance

D) service gap

E) patience zone

Answer: A

Explanation: The zone of tolerance is the difference between what a customer really wants and

what the person will accept before going elsewhere.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

118) When Jane arrived at her hotel room and saw that the bed sheets had not been changed from

the last hotel guest and there were cockroaches in the bathroom, she chose to go elsewhere. An

undone, bug-infested room was not in Jane's ________, which is the difference between what she

really wants and what she will accept before looking for another hotel.

A) zone of tolerance

B) delivery gap

C) zone of intolerance

D) service gap

E) patience zone

Answer: A

Explanation: The zone of tolerance is the difference between what a customer really wants and

what the person will accept before going elsewhere.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

119) All of the following are recommended strategies for service recovery except

A) listening to the customer.

B) finding a fair solution.

C) resolving problems quickly.

D) silencing an irate customer before the individual makes any angry outbursts.

E) following procedural fairness when solving problems.

Answer: D

Explanation: Customers often need to be heard; the best policy is to listen with empathy, even if

the customer is angry.

Difficulty: 1 Easy

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

120) Barnes & Noble bookstores have computers available for associates to use to search for books

requested by customers and to place special orders. These computers are an example of

A) instrumental support.

B) employee incentives.

C) emotional support.

D) line extensions.

E) the delivery gap.

Answer: A

Explanation: Instrumental support refers to systems and equipment needed by service employees

to deliver the service properly.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Technology

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

121) One afternoon, the clerk at the customer service desk of a large retail store got bored and

started stating different return policies to each customer. Customers waiting in line and

overhearing the different policies would probably feel that the store's handling of returns lacked

A) procedural fairness.

B) variability.

C) organizational fairness.

D) intangibility.

E) explanatory fairness.

Answer: A

Explanation: Procedural fairness refers to the perceived fairness of the process used to resolve

issues. In this case, since each customer was hearing a different process description, customers

would perceive that procedural fairness did not exist.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

122) Which service gap is the Ritz-Carlton Hotel trying to address when it takes time and spends

up to $1,700 to train a new employee?

A) standards gap

B) knowledge gap

C) performance gap

D) communication gap

E) recovery gap

Answer: A

Explanation: The standards gap pertains to the difference between the firm's perceptions of

customers' expectations and the service standards it sets. By setting appropriate service standards

and measuring service performance, firms can attempt to close this gap.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

123) Why is it important for marketers to pay special attention to providing excellent customer

service?

Answer: Students may respond with the growing importance of the service sector, the need for

firms with products to include customer service elements as a way to differentiate themselves,

and/or a discussion of the continuum suggesting service is almost always a part of the product.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

124) Dentists know most consumers are hesitant to use their services, in part because what they

provide can be painful or uncomfortable at best, but also because much of what they provide is

intangible. What is intangibility? How can dentists attempt to overcome intangibility aspects of

their service?

Answer: Intangibility refers to the fact that many services cannot be touched, tasted, or seen like

a pure product. Dentists and other professionals can attempt to overcome the problem of

intangibility by creating images of the results and benefits of their services. Images of whitened or

straightened teeth, or images of the problems associated with tooth decay can be used to convey

the benefits of their services.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

125) What are the potential gaps in the Service Gaps Model? What is it designed to do?

Answer: The four potential gaps are knowledge, standards, delivery, and communication gaps.

The Service Gaps Model is designed to encourage the systematic examination of all aspects of the

service delivery process and prescribes the steps needed to develop an optimal service strategy.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

126) Garrett was impressed with the service he received at a local wine store. He thought the

salesperson was attentive and knowledgeable. His friend Juanita, who was with him and is very

knowledgeable about wine, thought the salesperson was pushy and not well informed. What does

this example suggest about customers' service expectations?

Answer: It suggests that customer expectations vary with knowledge and experience. Because he

knows little about wine, Garrett had different expectations from Juanita, who knows a lot more and

has had more experience buying wine.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

127) Online reviews of the Paradise Motel by its customers indicate that the motel offered stale

food, it advertised babysitting services that were not readily available, and had an assistant

manager with a poor attitude. If you were the new manager of the Paradise Motel, how would you

use the five dimensions of service quality to identify and correct the problems?

Answer: The stale food problem is both a tangible and a reliability problem. The advertised

babysitting service is a reliability and responsiveness problem. If the service is to be advertised, the

motel should be prepared to respond and to provide it when needed. The assistant manager's

attitude is an empathy, assurance, and responsiveness problem.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

128) Florence wants to develop a zone of tolerance analysis for her veterinary practice. What is a

zone of tolerance in service quality? What types of questions would she need to ask to conduct her

analysis?

Answer: A zone of tolerance refers to the area between customers' expectations regarding their

desired service quality and the minimum level of acceptable service before they will go elsewhere.

She should ask about consumers' desired level of service for each of the five service quality

dimensions, consumers' expected levels of service for each of the five service quality dimensions,

how well the firm performs in each service quality dimension, and the importance of each service

quality dimension.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

129) The Federal Aviation Administration posts monthly percentage on-time arrival data for all

the major airlines on its website. Some airlines are regularly on the top of the list, while others are

frequently on the bottom of the list. What type of service gap does this list illustrate? What can

airlines on the bottom of the list do to address this gap?

Answer: The list illustrates a delivery gap; the difference between the firm's service standards

and the actual service it provides to customers. To reduce delivery gaps, firms can empower

employees, allowing passenger handling staff greater latitude in making decisions regarding

loading the plane, or allowing pilots to adjust routes and speed to meet arrival times. Technology

can be used to predict frequent bottlenecks at various airports and adjust schedules to reflect

realistic arrival times.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

130) Most retail stores in the United States do 60 percent or more of their business in the period

between Thanksgiving and Christmas. What can these stores do to get sales staff to provide

"service with a smile" during this stressful part of the year?

Answer: To ensure that employees provide excellent customer service, at retail stores first need

to provide empathy and support by demonstrating concern for the well-being of their staff and

standing behind their decisions. Second, managers need to provide technical support that will help

sales staff deliver quality service during peak demand periods. Third, support needs to be

consistent and coherent. If the firm hires additional staff to provide behind-the-counter support,

that support needs to be there when the sales staff needs it. Fourth, management needs to reward

excellent service.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

131) Airline passengers in Europe receive much greater monetary compensation when they are

bumped due to overbooking than do passengers in the United States. How do airline passengers

determine what is "fair" when there is a service failure?

Answer: Consumers use a variety of factors to determine what they think is a fair resolution to a

service failure. Past experience when they have been bumped is one factor. Treatment of other

passengers is a second factor. What they have read and stories from their friends will also influence

what consumers consider a fair resolution.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

132) Many states have enacted "lemon" laws providing rights to consumers who purchase cars that

need an excessive number of repairs. Service departments at auto dealerships quickly figure out

which new models are going to create problems and often what the problems will be. If you were

the service manager at a dealership, what would you do to address service problems like these?

Answer: First, set clear policies letting the service staff know how to address problems quickly.

Second, train service and repair staff regarding known problems and how to fix them. Third,

empower employees to do what is needed to meet the needs of their customers.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

133) In Europe it is common for hotel guests to ask to see the room before they agree to rent it for

the night. Which difference between a service and a product does this custom help overcome?

Answer: This helps overcome inseparability, the fact that the service and consumption of it are

inseparable. Viewing a room allows consumers to try or check out a service before purchasing it.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

134) One professor was known for never teaching the same course the same way twice. Which

difference between a product and a service does this represent? How could the professor use this to

his or her advantage?

Answer: It represents the fact that services are heterogeneous (or variable). The professor can

continually change and improve the class based on feedback from current and previous students.

Difficulty: 3 Hard

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

135) How do airlines and movie theaters overcome the perishability of their services?

Answer: Airlines and movie theaters use pricing to match supply with demand for each period of

time.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

136) Jackson manages a men's styling salon in the Buckhead area of Atlanta. He has trained his

sales staff to report comments and requests for services the store currently does not offer. Which

services gap might this information help reduce?

Answer: Jackson will use this information to reduce the knowledge gap.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

137) The school Linda attends has an advising and registration day where students go to a large

hall to sign up for classes. The school Terry attends assigns each student to an individual faculty

member who advises each student through their course of study. Terry's school is most likely

emphasizing which of the five dimensions of service quality?

Answer: It is emphasizing empathy—caring, individualized attention.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

138) How can services marketers use customer complaints to better understand customer

expectations?

Answer: Customer complaints are one way to identify customers' zone of tolerance; the

minimum level of service they will accept before they will go elsewhere.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

139) What is the difference between a service standard of "be nice to customers" as compared to a

service standard of "greet every customer, and if possible by name"?

Answer: The first standard is general while the second is more specific and measurable.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

140) Bob's Motel shows photos of a wide, sandy beach on its website, leading visitors to assume

the motel is located on or near the beach. However, in reality Bob's Motel is located half a mile

from the beach. Which of the service quality gaps does this demonstrate?

Answer: This is an example of the communication gap: the difference between promised service

and actual service delivered. If firms are more realistic about the services they can provide and at

the same time manage customer expectations effectively, they can generally close this gap.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

141) The Crystal Beach Resort has a five-star rating and wants to keep it that way. The resort has

specific standards for service and has trained its employees to deliver service according to these

standards, but even one unhappy customer could endanger the resort's reputation. What can the

manager do to ensure that frontline employees offer consistent, excellent service to every visitor?

Answer: A hotel can reduce the delivery gap by following three methods.

1. Empower employees—allow employees to individualize service as needed to meet customer

needs.

2. Use technology—provide instrumental support in the form of systems and equipment needed to

deliver high-quality service.

3. Provide support and incentives consistently throughout the organization, and provide rewards to

employees for excellent service.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

142) When visiting a museum, you would expect to find knowledgeable museum guides who

would be able to give you historical information on the museum's collections and special

exhibitions. If you did not find any trained museum guides to assist you, then the museum has what

type of gap? Explain why you chose your answer.

Answer: The best two answers are a knowledge gap or a standards gap; however, students might

also make a case for a delivery gap.

• Knowledge gap: Perhaps the museum director is not aware that visitors want to find guides. The

museum might have invested in extensive printed maps and signs, thinking that this would be

sufficient.

• Standards gap: The museum might know that visitors want guides, but either it lacks the budget

to provide them, or it has not trained its employees to perform this function.

• Delivery gap: Perhaps on most days, knowledgeable guides are available, but on this particular

day several guides called in sick.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Apply

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

143) Explain the concepts of distributive fairness and procedural fairness. Give an example of

each.

Answer: Distributive fairness pertains to a customer's perception of the benefits he or she

received compared with the costs (inconvenience or loss). With regard to complaints, procedural

fairness refers to the perceived fairness of the process used to resolve them. Examples will vary.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

144) What should a service provider do when a customer gets emotional about the service failure?

Answer: The provider should listen attentively and be eager to rectify the situation to ensure it

doesn't happen again.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-05 Identify three service recovery strategies.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

145) What are some of the outcomes that result from a communication gap?

Answer: If a firm promises more than it can deliver, customers' expectations won't be met. An

advertisement may lure a customer into a service situation once, but if the service doesn't deliver

on the promise, the customer will never return. Dissatisfied customers also are likely to tell others

about the underperforming service, using word of mouth or, increasingly, the Internet, which has

become an important channel for dissatisfied customers to vent their frustrations.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

146) Explain the concepts of emotional support and instrumental support. When are they

important?

Answer: Managers and coworkers should provide emotional support to service providers by

demonstrating a concern for their well-being and standing behind their decisions. This is

especially important when dealing with difficult customers. Service providers also require

instrumental support—the systems and equipment to deliver the service properly.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-04 Explain the zone of tolerance.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

147) Name three ways a firm can evaluate service quality, and give examples of each.

Answer: Customers generally use five distinct service dimensions to determine overall service

quality: reliability, responsiveness, assurance, empathy, and tangibles. Examples will vary.

Difficulty: 2 Medium

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-03 Examine the five service quality dimensions.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

148) Deb spoke to the customer service representative at Sprint Cellular and was told her text

messages would be unlimited on her plan. However, when she got her bill, she had been charged

extra for text messages. She called the company back and was told that since she didn't record the

conversation, they couldn't verify what she was told and she'd have to pay the bill. Explain which

service gap(s) occurred in this instance.

Answer: This is primarily a communication gap, since the service that was promised was not the

one that was provided. It also represents a standards gap, since the customer service reps had

different information about what was included in the plan. There was also a delivery gap, which

would have been avoided if the second customer service rep had been empowered to extend the

text messaging offer to the customer.

Difficulty: 3 Hard

Topic: Enhancing Customer Satisfaction

Learning Objective: 13-02 Discuss the four gaps in the Service Gaps Model.

Bloom's: Analyze

AACSB: Communication

Accessibility: Keyboard Navigation

written consent of McGraw-Hill Education.

149) What does it mean to say that a service is perishable? Name three services that would be

considered perishable.

Answer: Services are perishable in that they cannot be stored for use in the future. Examples may

vary, but could include a one-year membership at a gym, a dental cleaning, or a nonrefundable

airfare.

Difficulty: 2 Medium

Topic: Services Marketing

Learning Objective: 13-01 Describe how the marketing of services differs from the marketing of

products.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

150) Name a profession in which it might be considered unethical to market one's services based

on the service quality of assurance. Explain why.

Answer: Professional service providers such as doctors, lawyers, accountants, and consultants

depend heavily on consumers' perceptions of their integrity and trustworthiness, but they also need

to market their offerings using promotional campaigns. Not so long ago it was illegal for lawyers

to advertise their services, and some people might still feel that way, particularly in the case of

personal injury attorneys.