New Microsoft Office Word Document

New Microsoft Office Word Document - Chapter 1—An...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 1—An Overview of Marketing TRUE/FALSE 1. Marketing is defined as producing, p romoting, and selling products. ANS: F Marketing means more than just producing, p romoting, and selling products. I t is a philosophy that stresses customer relationships as well as benefiting the organization and its stakeholders. PTS: 1 REF: 6 OBJ: 01-1 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Strategy 2. According to the A merican Marketing Association, marketing is an organizational function and a set of p rocesses for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and i ts stakeholders. ANS: T PTS: 1 REF: 6 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 01-1 TYPE: Def 3. An exchange cannot take place unless each party in the exchange has something that t he other party values. ANS: T PTS: 1 REF: 6 TOP: AACSB Reflective Thinking | TB &E M odel Strategy OBJ: 01-1 TYPE: Comp 4. Sara Lee Industr ies spent considerable money and t ime developing a crustless bread. Prior to the int roduction, the company had not conducted market research among its customers, but i t was confident that i ts science and t echnology department had produced a successful new product. Based on this example, Sara Lee is a good example of a production-oriented company. ANS: T PTS: 1 REF: 7 TOP: A ACSB Analytic | TB&E Model Research OBJ: 01-2 TYPE: App 5. World Championship W restling (WCW), a one-t ime competitor of the World Wrestling Federation (now known as World Wrestling Entertainment), failed primarily because i t set up i ts matches according to w hat its wrestlers wanted to do rather than what i ts fans wanted to see. Obviously, WCW had a market orientation. ANS: F A production orientation would be a more appropriate description for a fi rm that does not research consumer needs and wants but rather focuses on the internal capabilities of the fi rm. PTS: 1 REF: 7 OBJ: 01-2 TYPE: App TOP: AACSB A nalytic | TB&E Model Strategy 6. The marketing concept states that the social and economic justification for an organization's existence is the satisfaction of customers’ wants and needs while meeting organizational objectives. ANS: T PTS: 1 REF: 8 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 01-2 TYPE: Def 7. The societal m arketing concept considers society's long-term best interests along with the satisfaction of customers' wants and needs. ANS: T PTS: 1 REF: 9 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 01-2 TYPE: Def 8. Both production and sales orientations are focused inward on the organization's needs. ANS: T PTS: 1 REF: 9 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 01-3 TYPE: Comp 9. Customer value is the r elationship between company profits and company costs. ANS: F Customer value is the r elationship between benefits and the sacrifice necessary to obtain those benefits. PTS: 1 REF: 10 OBJ: 01-3 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Pricing 10. F i rms t ry to achieve customer satisfaction and value by ensuring customer expectations are met or exceeded. ANS: T PTS: 1 REF: 10 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 01-3 TYPE: Comp 11. 3D Systems is a company that uses computers to generate new product prototypes. I t has generated loyal business clients by providing the best customer support in the industry. The company also provides direct sales consultations t hat gives i ts salespeople intimate knowledge about what exactly i ts customers want. This partnership between 3D Systems and i ts customers entails relationship marketing. ANS: T PTS: 1 REF: 11 TOP: AACSB Analytic | TB &E Model Product 12. Only a fi rm's salespeople need to be customer-oriented. ANS: F All employees need to be customer-oriented because i n the customer's eyes, the employee (regardless of the position held in the organization) is t he fi rm and may be the only firm representative the customer ever sees. PTS: 1 REF: 11 O BJ: 01-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer 13. Retailers who give their sales clerks the authority to handle customer complaints without having to get approval from a supervisor are using empowerment. ANS: T PTS: 1 REF: 12 T OP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 01-3 TYPE: App OBJ: 013 TYPE: App 14. In the early 1920s, Ford promised i ts customers any color vehicle they wanted as long as i t was black. Ford's management assumed anyone buying a car would accept the color black, so it made products affordable by offering only one variety in large quantities. Ford is an example of a market-oriented fi rm. ANS: F By offering one variety of color, not offering choices in quanti ty, and not segmenting the market, Ford exemplified a p roduction-oriented fi rm. PTS: 1 REF: 13-14 OBJ: 01-3 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 15. The ultimate goal of most market-oriented fi rms is p rofitability that results from satisfying the wants and needs of its consumers. ANS: T PTS: 1 REF: 14 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 01-3 TYPE: Comp 16. While most marketing organizations rely on various forms of promotion to succeed, sales-oriented organizations make the most effective use of their entire marketing m ix. ANS: F Sales-oriented fi rms usually rely more heavily on promotion alone than do m arket-oriented fi rms. PTS: 1 REF: 14 OBJ: 01-3 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model Product 17. Salespeople who work for m arket-oriented organizations are generally perceived by their customers to be order t akers. ANS: F Salespeople who work for market-oriented organizations are generally perceived by their customers to be problem solvers. PTS: 1 REF: 15 OBJ: 01-3 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Customer 18. Marketing is a job that should be handled by marketers. People in management, accounting, and finance should focus on their own specialties. ANS: F People in all business areas, regardless of specialization or responsibility, should be familiar with the fundamentals of marketing. PTS: 1 REF: 16-17 OBJ: 01-4 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E M odel Strategy 19. Approximately 30 percent of the U.S. civilian work force performs m arketing activities. ANS: T Between one-fourth and one-third of the U.S. civilian work force performs marketing activities. PTS: 1 REF: 16 OBJ: 01-4 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Strategy M ULTIPLE CHOICE 1. The term marketing r efers to: a. new product concepts and improvements b. selling c. advertising and promotion activities d. a philosophy that stresses customer satisfaction e. planning sales campaigns A NS: D PTS: 1 REF: 6 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 01-1 T YPE: Def 2. A business is concerned with many day-to-day activities. Some of the most i mportant of these activities are the planning and development of a product, its pricing policy, and the distribution strategy. These activities are all a part of: a. a control system b. m arketing c. accounting d. production e. human resources ANS: B This description contains t hree of the four main activities included in the marketing function. Many students may m istakenly believe that marketing is only concerned with promotion. PTS: 1 REF: 6 OBJ: 01-1 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB &E Model P roduct | TB&E Model Distribution 3. _____ is a set of activities used to implement a m anagement orientation that stresses customer satisfaction. a. Planning strategy b. Customer management c. Marketing d. A control system e. Reciprocity ANS: C PTS: 1 REF: 6 T OP: AACSB Reflective Thinking | TB&E Model Product OBJ: 01-1 TYPE: Def 4. The A merican Marketing Association's definition of marketing: a. is limited to promotional activities b. focuses on the value of empowerment, teamwork, and customer value c. shows how marketing benefits the marketer d. relies on the synergy created by exchange e. i ncludes the processes marketers used to establish and maintain relationships with customers ANS: E According to the American Marketing Association, marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. PTS: 1 REF: 6 OBJ: 01-1 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product 5. _____ is a key ingredient in the philosophy of m arketing; it occurs when people give up something in order to receive something that they would rather have. a. Exchange b. Synergy c. Transformation d. Leveraging e. Reciprocity A NS: A PTS: 1 REF: 6 TOP: AACSB Reflective Thinking | TB &E Model Product OBJ: 01-1 T YPE: Def 6. In order for exchange to occur: a. a complex societal system must be involved b. organized marketing activit ies must also take place c. a profit-oriented organization must be involved in the process d. money or other legal tender is required e. each party must have something the other party considers to be valuable ANS: E Exchange involves the t rade of i tems of value, but does not necessarily involve formal organizations, profit, or money/legal t ender. PTS: 1 REF: 6 OBJ: 01-1 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E M odel Product 7. A problem facing the t imber industry is the absence of any effective way to p rove that rain forest t imber was legally harvested. In places like Indonesia as much as 80 percent of timber available for sale was illegally cut. Companies like The Home Depot do not want to sell timber from illegally logged forests even though the demand is great for t imber from rain forests. Which of the following conditions required for an exchange to occur is missing when a company t r ies to sell illegally acquired logs to The Home Depot? a. There a re more than two parties involved. b. Each party has something of value to bring to the exchange. c. One party is free to accept the exchange offer. d. Each party believes i t is appropriate to deal with the other party. e. Nobody sees the exchange as producing value. A NS: D For an exchange to occur, two or more parties must be involved. Both parties are f ree to accept or reject the exchange. If The Home Depot believes the t imber was illegally gotten, then i t will not want to deal with the loggers. PTS: 1 REF: 6 OBJ: 01-1 TYPE: App T OP: AACSB Ethics | TB&E Model Product 8. Domino's Pizza is offering racing fans a chance to earn points toward NASCAR-branded merchandise via the NASCAR RacePoints loyalty program. Consumers who buy $20 worth of Domino's Pizza will receive 100 N ASCAR RacePoints. Consumers save their box receipt and mail in their points slip. N ASCAR RacePoints will be credited to members' accounts. Racing fans can rack up points t o earn NASCAR merchandise, including apparel and hats or one-of-a-k ind experiences, such as driving a real racecar. A(n) _____ will occur when a NASCAR fan t rades in his or her points for a mug autographed by a favorite driver. a. b. c. d. e. synergy sublimation exchange entropy reciprocity ANS: C For an exchange to occur, two or more parties must be i nvolved. Both parties are free to accept or reject the exchange. Fur thermore, each party m ust have something that is of value to the other party. In this case, the value for Domino’s is customer loyalty. PTS: 1 REF: 6 OBJ: 01-1 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Customer 9. Indonesian logging companies harvest the rain forests for t imber and assume that a market exists for their products. The typical Indonesian logging company has a(n) _____ orientation. a. exchange b. product c. production d. sales e. environmental ANS: C The logging companies do not focus on the needs and desires of the m arketplace. PTS: 1 REF: 7 OBJ: 01-2 TYPE: App TOP: AACSB Ethics | TB&E Model P roduct 10. For an exchange to take place: a. there must be at least two parties involved b. money must be used in the t ransaction c. each party must feel obligated to accept the offer d. at least one party must have something of value that the other party desires e. neither party must communicate with the other ANS: A PTS: 1 REF: 6 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 01-1 TYPE: Def 11. The concept of exchange is i mportant to marketing because: a. if all the conditions for an exchange are in place, then t he exchange will be completed b. exchange provides money to marketers c. marketing activities help to create exchange d. marketing activities are a requirement for exchange to t ake place e. money is the only medium of exchange for business marketers ANS: C M arketing activities help the exchange to take place, but marketing can occur without an exchange. PTS: 1 REF: 6 OBJ: 01-1 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E M odel Product 12. Andi Li t tleton has inheri ted a Featherlite brand horse t railer from her r ecently deceased grandfather. A preliminary investigation has shown many people would be interested in owning a Featherlite brand horse t railer. She is considering placing an advertisement in a newspaper targeted to horse owners in the Cheyenne, Wyoming area. She has been told similar horse t railers are selling for about $14,000. Of the following, what condition is necessary for an exchange to occur between Li t t leton and a buyer? a. Her t railer should carry a low price. b. The t railer should be on display somewhere that people will see i t. c. She needs to practice negotiating. d. She needs to promote the t railer in t rade m agazines. e. Li t t leton and her buyer must be able to walk away from the deal if desired. A NS: E For an exchange to take place, each party must have something the other values; t he parties must be able to communicate; each party must believe that i t is appropriate to deal with the other; and each party must be free to accept or reject the exchange offer. PTS: 1 REF: 6 OBJ: 01-1 TYPE: App TOP: AACSB Analytic | TB&E Model Product | TB&E M odel Customer 13. To increase interest in rodeos, the local chapter of the National Rodeo Cowboys Association (NRCA) is offering free roping lessons to students in the sixth and seventh grades. An exchange will take place because: a. students and their parents can decide for themselves if the lessons have any value b. the NRCA does not have to communicate directly with participants in the free lessons c. the desirability of the exchange is questionable d. both the NRCA and the students taking the lessons will t rade something of value e. students who learn to rope will have to give nothing of value in return A NS: D If the course has no value, then an exchange cannot occur. Without communication, t he exchange of knowledge for time and energy cannot occur. In an exchange, each participant has something of value to the other. For an exchange to occur, each party must believe it is desirable. PTS: 1 REF: 6 OBJ: 01-1 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 14. Which of the following is NOT a marketing m anagement philosophy? a. sales orientation b. societal marketing orientation c. market o rientation d. profitabili ty orientation e. production orientation ANS: D PTS: 1 REF: 7 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 01-2 TYPE: Def 15. Fi rms w ith a _____ orientation focus on the internal capabilities of the fi rm rather than on the desires and needs of the marketplace. a. sales b. production c. market d. customer e. customer-benefit ANS: B PTS: 1 REF: 7 OBJ: 01-2 TYPE: Def TOP: AACSB Reflective T hinking | TB &E Model Product 16. A company that sets its goals and strategies based on w hat its current equipment can produce, what products engineering can design, and what t he company i tself can do best, has a(n) _____ orientation. a. marketplace b. sales c. market d. exchange e. production ANS: E PTS: 1 REF: 7 OBJ: 01-2 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Product 17. Researchers at PPG Industries spent considerable t ime, effort, and money developing a bluish windshield t hat would let in fil tered sunlight but block out the heat. Li t tle market research was done, but the scientists were convinced this new product would be significantly better than existing windshields even though it was more expensive and of a different color than the current models on the market. This scenario suggests PPG most likely has a(n) _____ o rientation. a. exchange b. production c. sales d. promotion e. customer ANS: B The questions they apparently asked before developing their windshield were "What can we do best?" and "What can we make with the equipment we already own?" This is a production o rientation. PTS: 1 REF: 7 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Research 18. A town of 50,000 has two maternity hospitals. A billboard for one of the hospitals reads, “We have the most modern delivery rooms,” and indicates a _____ o rientation. A billboard for the other hospital reads, “We love babies,” and indicates a _____ o rientation. a. sales; production b. product; customer c. market; sales d. customer; p roduction e. production; market ANS: E The first hospital is answering the production question, “What do we do best?” The second hospital is showing i ts concern for its customers. PTS: 1 REF: 7-8 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Strategy | TB&E Model Promotion 19. A fi rm with a production orientation is most likely to survive if: a. there are many small competitors in the marketplace b. demand for the product it produces exceeds supply c. the needs of the marketplace are constantly shifting d. supply for the product i t produces exceeds demand e. any of the above conditions exist ANS: B The production orientation can survive in the short term under a variety of conditions; however, if market needs change, long-term survival is difficult. PTS: 1 REF: 7 O BJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Strategy 20. A f i rm that adopts a(n) _____ orientation to marketing will fail to consider whether what the f i rm produces most efficiently also meets the needs of the marketplace. a. customer b. exchange c. product d. market e. production ANS: E The production orientation forces a company to build whatever i t builds best, that is, whatever it has the experience and expertise in doing. PTS: 1 REF: 7 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | T B&E Model Customer 21. M imi Couturier is a design company that specializes in formalwear for women. The company is known for challenging fashion mores. The company's fashion designers use computer-assisted design software to create what it thinks women should wear. The company regularly hires industry experts to examine its factories t o find waste and inefficiencies that can be eliminated. The company has expanded the n umber of products it offers for sale many times. However, for the last two years M imi Coutur ier has lost money, and i t has had to lay off some of i ts work force. To avoid this occurrence in the future, Mimi Couturier should: a. hire more retail efficiency experts to t race down any production problems b. increase i ts sales force to find more potential customers for the fi rm c. have someone study its target market to see what needs and wants should be met by M imi Couturier d. cut prices so that its prices will be at least 10 percent below those of its competitors e. design more sophisticated products that use the latest computer-aided techniques ANS: C M imi Couturier has been production-oriented. I t should develop a market orientation, which means the fi rm will produce only those items needed by i ts target market. PTS: 1 REF: 7 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Customer | TB&E Model Product 22. The _____ orientation assumes people w ill buy more if aggressive selling techniques are used. a. market b. sales c. customer d. p roduction e. exchange ANS: B The sales orientation assumes aggressive selling is what is needed to increase demand. PTS: 1 REF: 7 OBJ: 01-2 TYPE: Def TOP: AACSB Reflective T hinking | TB &E Model Pricing 23. A _____ orientation assumes marketing means selling t hings and collecting money. I t also assumes people will buy more goods and services if aggressive marketing techniques are used. a. sales b. production c. market d. customer e. m arketplace ANS: A PTS: 1 REF: 7 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 01-2 TYPE: Def 24. Colorado Silversmith creates and markets silver and t urquoise jewelry, which i t sells to retailers in the western states. The company’s m anagement believes its retail customers will stock more jewelry if its salespeople use aggressive marketing techniques. In other words, the company has a _____ orientation. a. p romotion b. production c. sales d. market e. customer ANS: C Only the sales orientation assumes aggressive sales techniques will sell more product, regardless of customer desires and needs. PTS: 1 REF: 7 OBJ: 01-2 TYPE: Def TOP: AACSB Reflective Thinking | TB&E M odel Customer 25. If a company uses a sales orientation, consumer complaints would most l ikely result in: a. a modification of the sales presentation b. product reinvention c. continuous market research d. philanthropy e. attempts to cut production costs ANS: A The sales orientation relies on aggressive sales techniques to fuel business. PTS: 1 REF: 7 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy 26. Fujifilm Computer Products has improved the efficiency and productivity of its plant, which m anufactures printing technology. For the new fiscal year, the company projects a p roduction increase of 25 percent. I t has instructed i ts sales force to aggressively distribute and promote i ts printers. The CEO is sure the market will absorb more product if the sales force is determined and assertive. Fujifilm appears to have a _____ orientation. a. market b. p roduction c. sales d. customer e. marketplace ANS: C A sales orientation is based on the belief that people will buy more goods and services if aggressive sales techniques are used. PTS: 1 REF: 7 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model S trategy | TB&E Model Product 27. Best Buy has become the nation's largest specialty retailer by focusing on the customer's needs and wants. This philosophy is at the heart of an _____ orientation. a. sales b. market c. retail d. production e. exchange ANS: B A marketoriented philosophy is based on the consumer's wants and needs, and the organization will focus i ts activities on satisfying these customers by listening to them and revising strategies as necessary. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Strategy 28. As it evolves from a credit-card company to one with greater emphasis on electronic payments, Visa is launching its first major re-branding campaign in 20 years. The company's new promotional slogan is "Life Takes Visa." Through the use of t his slogan, Visa shows how much it wants to become an integral part of its customers' every day lives. Visa is using a _____ orientation. a. t ransactional b. sales c. product d. societal e. market ANS: E A market-oriented philosophy is based on consumers’ wants and needs, and the organization will focus its activit ies on satisfying these customers by l istening to them and revising strategies as necessary. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Promotion 29. Companies that rely on the m arketing concept and that have implemented a market orientation strategy recognize that: a. price is the most important variable for customers b. sales depend predominantly on an aggressive sales force c. what the customer thinks he or she is buying is what is important d. a company has to apply scientific management techniques to survive e. selling and m arketing are essentially the same thing ANS: C The perceived product and perceived value are what the customer is buying, and the marketing concept and market orientation have endeavored to understand those perceptions. PTS: 1 REF: 8 OBJ: 01-2 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Customer 30. A company that has a m arket orientation and adheres to the marketing concept does NOT: a. integrate all the activities of the fi rm to satisfy customer wants b. focus on consumer needs and wants c. d ifferentiate the fi rm's products from its competitor's products d. fuel sales growth through t he application of aggressive sales techniques e. concentrate on long-term goal achievement (such as profits and growth) for the fi rm ANS: D Aggressive sales techniques are part of the sales orientation and are not needed if a company is meeting needs and wants of i ts customers. PTS: 1 REF: 8 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Strategy | TB&E Model Product 31. The statement, "Marketing should be i nt roduced at the beginning rather than the end of the production cycle and integrated into each phase of the business," is consistent with a(n) _____ orientation. a. production b. m arket c. retail d. sales e. enterprise ANS: B Understanding the competitive arena and competitors' strengths and weaknesses is a critical component of market orientation. PTS: 1 REF: 8 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 32. M inor League Baseball (MiLB) suffers from sluggish attendance. To attract more fans t o M i LB games, owners often resort to gimmicks--free hot dogs nights, events designed to get into the Guinness Book of Records, and celebrity visits. Since baseball fans are seldom asked what would make them want to attend more games, this suggests most Mi LB teams do not have an_____ orientation. a. sales b. empowerment c. community d. societal e. market A NS: E The marketing concept and a market-oriented philosophy is based on the consumer's wants and needs, and the organization will focus its activit ies on satisfying t hese customers by listening to them and revising strategies as necessary. PTS: 1 REF: 8 O BJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E M odel Product 33. An expert in library science stated in Library Journal, “I t should be fairly clear that librarians do not market and that they never have marketed." He concludes, " What librarians need to tell people is not how wonderful our public libraries are but rather how wonderful they could be." The library science expert is saying that libraries: a. should focus on satisfying the needs of their customers b. have not implemented the production concept c. need to adopt a sales orientation d. do not use empowerment e. have a customer o rientation ANS: A The marketing concept is based on satisfying the consumer's wants and needs. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer | TB&E Model Product 34. The manufacturer of Omega brand watches has a market orientation and adheres to the marketing concept. Which of the following describes the fi rst action the company would most likely take if i t learned its customers were dissatisfied with i ts watches? a. hire more salespeople b. decrease its organizational overhead c. increase i ts advertising to underserved markets d. increase the number of jewelry stores that carry Omega watches e. conduct research to determine if i ts customers' needs have changed ANS: E A marketing concept and market-oriented philosophy are based on the consumer's wants and needs, and the organization will focus its activities on satisfying these customers by listening to them and revising strategies as necessary. PTS: 1 REF: 8 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 35. Rose is a telephone order taker for Brylane, a catalog retailer of furnishings for bedrooms and baths. A customer called and asked if the sea green in a bedspread she had p urchased matched the green in a lamp offered in the newest Brylane catalog. Rose got the potential customer's phone number, went out to the warehouse, located the i tems, determined they did not match, and called the potential customer to tell her that i nformation. Rose’s actions illustrate a(n) _____ orientation. a. societal b. market c. sales d. p roduction e. one-to-one ANS: B A market-oriented philosophy is based on the consumer's wants and needs, and the dealer satisfied these needs by providing excellent customer service, which resulted in fur ther business. Building a relationship with this customer was an important key. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App TOP: AACSB Analytic | TB &E M odel Customer 36. The marketing concept involves: a. focusing on customers' wants so t hat the organization can distinguish its product (or products) from the competitors' p roducts b. satisfying management's needs and wants with the idea of maximizing profits i n the short run c. selling as much product as possible under the assumption people will buy more goods and services if aggressive selling techniques are used d. selling as much as possible under the assumption consumers will buy more at lower prices e. focusing on p roduction in order to increase product quality and lower prices ANS: A PTS: 1 REF: 8 T OP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 01-2 TYPE: Def 37. The m arketing concept includes a goal orientation to remind managers that: a. b. c. d. e. achieving long-term organizational goals is as important as satisfying customers customers m ust be satisfied no matter what the long-term effect on the fi rm the only reason for any business to exist is to make a profit the objective is to find a target market that differs from t hat of the competition functional integration of all departments is useful but not essential A NS: A The goal orientation refers to the company's goals, such as profit, growth, service, and survival. PTS: 1 REF: 8 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Customer 38. The marketing concept stresses that the social and economic j ustification for an organization's existence is the satisfaction of customer needs and wants w hile: a. producing a good or service at the lowest possible cost b. improving the general s tandard of living c. constantly increasing sales volumes d. applying scientific management t echniques to improve efficiency e. simultaneously meeting organization objectives ANS: E T he marketing concept holds that the needs and wants of both the customer and the fi rm be served. PTS: 1 REF: 8 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E M odel Customer 39. After hearing his company criticized for aggressive selling, the CEO of a company that manufactures products used to care for horses has determined that his company needs to adhere to the marketing concept and implement a market-oriented s trategy. Which of the following is the first action the company should take in order to achieve this goal? a. reorganize the company and make marketing its most important department b. hire new salespeople to find new customers for its horse care products c. expand the advertising budget to make potential customers more aware of i ts products and how they benefit horses d. create cross-functional teams and instruct them to focus on creating greater customer value e. hire a new product development manager and establish a marketing research department ANS: D Market-oriented companies are successful in getting all business functions working together to deliver customer value. PTS: 1 REF: 8 O BJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Marketing Plan 40. A n organization with a(n) _____ believes that it exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals' and society's longterm best interests. a. sales orientation b. market orientation c. ethical business mission d. focused target market strategy e. societal orientation ANS: E PTS: 1 REF: 9 TOP: AACSB Diversity | TB &E Model Customer OBJ: 01-2 TYPE: Def 41. Jacques Torres Chocolate is a factory and retail store in Brooklyn. I ts owner is willing to t ry to p roduce new products when his customers suggest them--such as chili-pepper-laced chocolate candy. His only condition is that when he adds new products, his customers have t he final say on whether the product is of any value. According to Torres, "If something doesn't move, that's the last t ime you see it." By focusing on customers' wants, the chocolate company exhibits an _____ orientation. a. exchange b. product c. production d. sales e. m arket ANS: E Torres understands that a sale occurs because a customer makes a decision t o buy. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer 42. Most companies become sensitized to community issues after they've done enough damage to draw the locals' anger. Dofasco, Inc., a highly successful steel company in Ontario, t r ies to get ahead of business and community issues by annually b ringing together representatives from the local area and deciding what projects to improve t he local environment will be implemented. This annual community-wide meeting indicates Dofasco has a _____ orientation. a. societal marketing b. sales c. reciprocal exchange d. p roduction e. product ANS: A Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals' and society's longterm best interests. PTS: 1 REF: 9 OBJ: 01-2 TYPE: App TOP: AACSB Diversity | TB &E Model Customer 43. Kinko's copy shops use the equivalent of 10.5 square miles of forest to produce all of the paper needed by the corporation annually. While the company is commit ted to making a profit, it is also commit ted to preserving the environment. In 1997, Kinko's wrote an environmental v ision in which it commit ted the company to conserving natural resources. With this 1997 environmental vision, Kinko's adopted a _____ orientation. a. societal marketing b. sales c. r eciprocal exchange d. production e. product ANS: A Societal marketing orientation is the i dea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals' and society's longterm best i nterests. PTS: 1 REF: 9 OBJ: 01-2 TYPE: App TOP: AACSB Ethics | TB&E Model S trategy 44. Procter & Gamble decided to address the fact that Hispanic women are more l ikely to die from breast cancer because they're reluctant to get mammograms or discuss screening. So P&G brought screening to the supermarket, parking mobile mammography vehicles in grocery store parking lots in Texas and inviting shoppers in for free x-rays. Tieins with local hospitals assured that women with suspicious films got follow-up care. P&G adopted a _____ orientation to achieve this goal. a. promotional b. societal marketing c. customer d. marketing e. product ANS: B Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals' and society's longterm best interests. PTS: 1 REF: 9 OBJ: 01-2 TYPE: App TOP: AACSB Diversity | TB &E Model Customer | TB &E M odel Promotion 45. Which of the following statements about the societal orientation is t rue? a. Companies that protect the environment by using all-natural materials in their p roducts are showing a societal marketing orientation. b. Marketers cannot deliver all benefits sought by customers because these benefits may not be in the long-term best i nterests of the customers. c. The societal marketing concept is an important refinement of t he market concept. d. Organizations have both a social and economic justification for their existence. e. All of these statements about the societal orientation are t rue. ANS: E PTS: 1 REF: 9 OBJ: 01-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Research | T B&E Customer 46. Due to consumer concerns about skin cancer and other negative outcomes associated with sun exposure, the t rend in sun-care products throughout most of t he 1990s was in favor of higher SPF sunscreens. This seems to be changing now, at least for some target segments. In response to the latest t rends of teenagers using baby oil, C risco, and even motor oil to enhance tanning effects, Coppertone and Hawaiian Tropic have int roduced new low-UV-protection products. While giving customers what they want i ndicates a _____ orientation, creating a potential problem (an increase in skin cancer) shows a potential absence of a _____ orientation. a. production; sales b. sales; market c. societal marketing; production d. market; societal marketing e. business; market ANS: D Selling low SPF products to satisfy the needs and wants of the teenage market is a market o rientation, while other suntan companies may be concerned with other market segments and society's long-term interests (societal orientation). PTS: 1 REF: 8-9 OBJ: 01-2 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model Ethics 47. For many years, Procter & Gamble (P&G) viewed its Ivory soap as just plain old soap--and not as a cleansing product that could provide other benefits as well. When it came to Ivory soap, P&G focused on how well it made the soap and not on what customers wanted from a bar of soap. I t had a _____ orientation. a. sales b. production c. market d. product e. customer ANS: B The production orientation forces a company to build whatever i t builds best, that is, whatever it has the experience and expertise in doing. PTS: 1 REF: 7 OBJ: 012 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Distribution 48. O rganizations that sell products that are often unsought (such as life insurance and retirement plans) may find themselves adopting a _____ orientation because the companies a re marketing products that most people do not want. a. sales b. production c. marketing d. p roduct e. customer ANS: A Aggressive selling is sometimes used by companies that sell p roducts their customers do not want to buy. PTS: 1 REF: 7 OBJ: 01-2 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Promotion 49. For years, the slogan used in all t he advertising done by Bri tish Ai rways has been "Putting people fi rst." In this short p hrase, Bri tish Ai rways has captured the idea of: a. the 80/20 rule b. Maslow's hierarchy of needs c. the marketing concept d. the sales orientation philosophy e. the societal concept A NS: C The marketing concept justifies a company's existence by its ability to satisfy customers. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Promotion 50. When a homeowner visited The Home Depot to buy what he thought he needed to fix a leaking toilet, he gathered up materials totaling almost $70. One his way t o checkout, an employee asked him what was he t rying to fix. After some discussion, the employee convinced the homeowner that a $5.99 replacement part would fix the problem better than the materials he thought he needed and with less t rouble. This sort of d iscussion between employees and customers is commonplace at The Home Depot and i ndicates the retail store has a(n) _____ orientation. a. sales b. market c. product d. exchange e. production ANS: B The marketing concept, the foundation of a market o rientation, holds that the needs and wants of both the customer and the fi rm be served. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App TOP: AACSB Analytic | TB &E Model Communication | T B&E Model Customer 51. World Wrestling Entertainment (formerly the World Wrestling Federation) is very focused on what its fans want in terms of product licensing and more i mportantly in terms of plot lines and character development. All of the company's activities a re integrated so that no employee ever loses sight of the company's desire to satisfy its fans. World Wrestling Entertainment has a _____ orientation. a. sales b. market c. product d. societal e. production ANS: B The marketing concept, the foundation of a market o rientation, holds that the needs and wants of both the customer and the fi rm be served. PTS: 1 REF: 8 OBJ: 01-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model Product 52. A company that wants to implement a market o rientation would need to: a. do research on i ts customers, competitors, and markets b. determine how to deliver superior customer value c. establish and maintain mutually satisfying relationships with customers d. implement actions that provide value to customers e. do all of the activities listed ANS: E PTS: 1 REF: 8 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 01-2 TYPE: Comp 53. Levi Strauss has developed t he Naturals line of jeans that do not use any chemical dyes to color the pants. Consumers l ike the look of the jeans, and Levi's use of all-natural dyes is good for the environment. The p roduction of the Naturals line would be consistent with a _____ orientation. a. societal m arketing b. supplier c. sales d. production e. philanthropic ANS: A Societal marketing o rientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals' and society's longterm best interests. PTS: 1 REF: 9 OBJ: 01-2 TYPE: App TOP: AACSB Ethics | TB &E M odel Strategy 54. There is a quandary facing the timber industry. There is no effective way to prove the legality of wood from places like Indonesia, where as much as 80 percent is cut illegally. Retailers like The Home Depot do not want to sell t imber from illegally logged forests even though the demand is great for t imber from rain forests. To prove an interest in p reserving rain forests, two Indonesian logging companies have developed a bar coding system, which proves the t imber was legally acquired. This focus on customers' needs i ndicates a _____ orientation. a. market b. supplier c. sales d. production e. philanthropic A NS: A The marketing concept, the foundation of a market orientation, holds that the needs and wants of both the customer and the fi rm be served. PTS: 1 REF: 8 OBJ: 01-2 TYPE: A pp TOP: AACSB Ethics | TB&E Model Product | TB&E Model Customer 55. Shoppers at an Ingles supermarket can request Smart Partner cards. Before their purchases are rung u p at the checkout, customers give the cards to the checkout person who swipes the cards. T hen a percentage of the amount of money each shopper spent is given to a school the customer has chosen. The more money customers spend, the larger the donation to local educational institut ions. By instituting the Smart Partner program to help local schools, I ngles has shown a _____ orientation. a. societal marketing b. supplier c. sales d. production e. philanthropic ANS: A Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals' and society's longterm best interests. PTS: 1 REF: 9 OBJ: 01-2 TYPE: App TOP: AACSB Ethics | TB&E Model Customer 56. Jewelry stores want to p rovide their customers with the highest quality of diamonds available at the lowest possible prices. Unfortunately, the lowest priced diamonds these days are sold by African r ebels who use the profits to engage in genocide. Human r ights organization have asked jewelers to buy diamonds that are "conflict-free," that is from South Africa, Australia, or Canada. LeeBrant is one retail jewelry store that sells only diamonds that are certified to be from these countries. One could say that LeeBrant has a _____ orientation while those t hat are not willing to sell the higher priced nonconflict diamonds have more of a _____ o rientation. a. production; sales b. sales; market c. societal marketing; market d. production; societal marketing e. sales; production ANS: C LeeBrant has a societal marketing o rientation because it is not only t rying to satisfy customers' wants but also t rying to enhance society's long-term best interests. The other jewelers that continue to sell d iamonds purchased from the rebels are more interested in satisfying their customers desire for lower prices than in serving society. PTS: 1 REF: 8-9 OBJ: 01-2 TYPE: App TOP: A ACSB Ethics | TB &E Model Product 57. _____ gives customers the feeling their concerns a re being addressed and at the same time gives employees the feeling their expertise m atters to management. a. Management-employee synergy b. Organizational entropy c. M anagerial reciprocity d. Empowerment e. Delegation ANS: D PTS: 1 REF: 12 TOP: A ACSB Reflective Thinking | TB&E Model Customer OBJ: 01-3 TYPE: Def 58. Marketoriented fi rms primarily focus their efforts upon: a. improving the technological skills and competitive advantages of the fi rm b. satisfying the organization's needs for low overhead c. achieving the company’s societal responsibilities inexpensively d. distributing goods and services e. satisfying the wants and needs of their customers ANS: E Market-oriented fi rms a re focused outward toward their customers. PTS: 1 REF: 9 OBJ: 01-3 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Customer 59. Which of the following s tatements about a typical sales-oriented business is t rue? a. The company develops its p roducts to meet the needs of specific groups of people. b. The primary goal of the company is profit through customer satisfaction. c. The company invests the majority of its resources i n promoting its products and services. d. The company is in business to satisfy customers' wants and needs and deliver superior value. e. All of these statements about a typical salesoriented business are t rue. ANS: C See Review Learning Outcome 3. PTS: 1 REF: 9 | 15 O BJ: 01-3 TYPE: Comp TOP: AACSB Analytic | TB&E Model Customer 60. _____ is defined as the relationship between benefits and the sacrifice necessary to obtain those benefits. a. Opportunity cost b. Marketing utility c. Market quality d. Satisfaction percentage e. Customer value ANS: E PTS: 1 REF: 10 OBJ: 01-3 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Customer 61. Marketers interested in offering customer value can: a. offer products that perform b. give the consumer facts c. offer organizationwide commitment to service and after-the-sale support d. avoid unrealistic pricing e. do all of these ANS: E PTS: 1 REF: 10 OBJ: 01-3 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Pricing | TB &E Model Product | TB &E Model Customer 62. An expert in l ibrary science stated in L ibrary Journal, "What librarians need to tell people is not how wonderful our public libraries are but rather how wonderful they could be." The library science expert is saying that libraries need to: a. be concerned with creating customer value b. assess what services are most convenient for libraries to offer c. determine where their t alents and abilities lie d. concentrate on what they can do best e. think in terms of their books rather than in terms of library patrons ANS: A The value customers perceive they can receive is determined by how well the service satisfies i ts customers’ needs. A lternatives b, c, d, and e describe characteristics of a production-oriented company. PTS: 1 REF: 10-11 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 63. A retail casket outlet that wishes to offer customer value should: a. use aggressive marketing techniques to sell pre-burial plans b. charge $300 for a pine casket i nstead of the inf lated price of $1,000 charged by many funeral homes c. tell customers f uneral homes like having competition d. require that all purchases be made with cash or money order e. provide customers with only a few choices and a minimum of information on caskets ANS: B A business interested in offering customer value should give customers more than they expect--and most would certainly expect delivery and some kind of credit p lan. This business should also give buyers the facts. No business likes competition. PTS: 1 REF: 10 OBJ: 01-3 TYPE: App TOP: AACSB Ethics | TB&E Model Customer 64. When customer expectations regarding product quality, service quality, and value-based price are met or exceeded, _____ is created. a. a value line b. a quality r if t c. planning excellence d. customer satisfaction e. expectation satisfaction ANS: D PTS: 1 REF: 10-11 OBJ: 01-3 T YPE: Def TOP: AACSB Reflective Thinking | TB &E Model Pricing | TB&E Model P roduct | TB&E Model Customer 65. Domino's Pizza is offering racing fans a chance to earn points toward NASCAR-branded merchandise via the NASCAR RacePoints loyalty p rogram. Consumers who buy $20 worth of Domino's Pizza will receive 100 NASCAR RacePoints. Consumers save their box receipt and mail in their points slip. NASCAR RacePoints will be credited to members' accounts. Racing fans can rack up points to earn N ASCAR merchandise, including apparel and hats or one-of-a-kind experiences, such as d riving a real racecar. Domino’s is engaging in: a. t ransactional marketing b. sports d istribution c. relationship marketing d. one-to-one marketing e. customer t ransformation A NS: C Relationship marketing is a strategy that entails forging long-term partnerships w ith customers. PTS: 1 REF: 11 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer | TB &E Model Promotion 66. _____ is a strategy that entails forging long-term partnerships with customers. a. Commitment selling b. Relationship m arketing c. Transactional marketing d. Market engineering e. Organization-customer synergy ANS: B PTS: 1 REF: 11 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 01-3 TYPE: Def 67. Frequent-flyer programs are an example of financial i ncentives to customers in exchange for their continuing patronage. After flying a certain n umber of miles or flying a specified number of t imes, the frequent-flyer program participant earns a free f l ight or some other award such as free lodging. Airlines that use f requent-flyer programs are practicing: a. commitment selling b. t ransaction marketing c. t ransformational marketing d. marketing engineering e. relationship marketing ANS: E T he strategy that entails forging long-term partnerships with customers is called r elationship marketing. PTS: 1 REF: 11 OBJ: 01-3 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 68. Shoppers at an Ingles supermarket can request Smart Partner cards. Before their purchases are rung up at the checkout, customers give t he cards to the checkout person who swipes the cards. Then a percentage of the amount of money each shopper spent is given to a school the customer has chosen. The more money customers spend, the larger the donation to local educational institutions. Ingles uses the Smart Partner cards as a part of i ts: a. commitment selling b. t ransaction marketing c. retailer-customer synergy d. marketing engineering e. relationship marketing ANS: E The s trategy that entails forging long-term partnerships with customers is called relationship m arketing. PTS: 1 REF: 11 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 69. Greenberg Smoked Turkey, Inc., is a nationwide mail-order business that operates without any advertising. I t does not accept credit cards and has no t oll-free number for customers to call. The company that is hopelessly old-fashioned is also a very profitably company with thousands of devoutly loyal customers--some of whom have ordered Greenberg smoked turkeys every year for the last fifty years. Greenberg more than l ikely uses _____ to maintain these long-term t ies to i ts customers. a. reactive marketing b. synergistic management c. relationship marketing d. a sales orientation e. management empowerment ANS: C Relationship management is a strategy that entails forging longterm partnerships with customers. PTS: 1 REF: 11 OBJ: 01-3 TYPE: App TOP: AACSB A nalytic | TB&E Model Customer 70. Many companies are jazzing up plant tours and m aking store visits more exciting to increase customer loyalty. For example, at the Crayola Factory, kids watch how crayons are made and then play with their favorite colors in a 20,000 square-foot discovery center. Employees circulate to ensure visitors have a wonderful t ime. _____ plays a key roll in Crayola’s implementation of the marketing concept. a. Customer-oriented personnel b. A sales orientation c. A societal marketing orientation d. Reciprocal exchange e. Customer outreach ANS: A Customer-oriented personnel strengthen t he positive image of an organization. PTS: 1 REF: 11 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 71. Which of the following measures would be t he best indicator of whether your organization's personnel have a customer orientation? a. Ask each employee's boss if that person is customer-oriented. b. Assess each employee's i mpact on the profitabili ty of the fi rm. c. Survey customers on how oriented the organization's personnel are to customer needs and desires. d. Assess how well each employee has contributed to the marketing success of the fi rm by examining every financial s tatement created by the organization. e. Test employees on their knowledge of customer service techniques. ANS: C The key to assessing how customer-oriented a fi rm's personnel a re is to ask the customer. Only the customer can provide this type of information. PTS: 1 REF: 11 OBJ: 01-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer 72. Taxi companies in many large metropolitan areas are requiring newly l icensed taxi drivers to undergo a two-day t raining seminar during which they learn basic etiquette and acquire a familiarity with common landmarks and street names. The purpose of this t raining is to: a. improve customer service b. give higher education benefits to employees c. promote the company image by increasing public awareness d. reduce the need of empowerment e. increase employment levels ANS: A Leading marketers recognize the r ole of employee t raining in customer service. PTS: 1 REF: 11 OBJ: 01-3 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Marketing Plan 73. Some m arket-oriented fi rms give employees expanded authority to solve customer problems on t he spot. This is known as: a. t raining b. deregulation c. empowerment d. commissioning e. mediating ANS: C PTS: 1 REF: 12 TOP: AACSB Communication | TB&E Model Customer O BJ: 01-3 TYPE: Def 74. The management at Canadian Pacific (CP) Hotels has authorized i ts hotels' staffs to provide whatever amenity--such as a special magazine or a hypoallergenic pillow--their frequent stayers request as quickly as possible. CP m anagement uses _____ to provide customer value. a. t raining b. deregulation c. empowerment d. commissioning e. mediating ANS: C CP management gave employees expanded authority to solve customer problems on the spot. PTS: 1 REF: 12 OBJ: 01-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 75. As part of i nstituting an empowerment program, a marketing director should: a. hire thi r ty new college graduates who have the latest t raining in marketing management techniques b. create a customer-service department and place a key staff person in charge of the department c. t rain the company's staff to judge the quality of the products the fi rm p roduces d. allow non-management employees to resolve problems on their own without p rior approval from their immediate supervisors e. conduct a survey of the company's m arketing staff to learn about employee morale ANS: D Empowerment refers to fi rms that g ive employees expanded authority to solve customer problems on the spot without having t o get management's permission first. PTS: 1 REF: 12 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 76. _____ is the collaborative efforts of people t o achieve common objectives. a. Effort t raining b. Teamwork c. Empowerment d. OJT t raining e. Mediation ANS: B PTS: 1 REF: 12 TOP: AACSB Reflective Thinking | TB &E M odel Strategy OBJ: 01-3 TYPE: Def 77. Dofasco, Inc. is a Canadian steel manufacturer. According to i ts CEO, "People can make a phenomenal difference if you stop telling them to come to work, put their brains in a box, and do whatever the supervisor says. We let our employees work in teams." This quote implies that by using teamwork, Dofasco: a. operates successfully using a production orientation b. provides its customer with a high level of satisfaction c. has a high employee tu rnover rate d. does not deliver superior customer service e. has a sales orientation ANS: B Teamwork is one way a company with a market o rientation creates customer satisfaction. PTS: 1 REF: 12 OBJ: 01-3 TYPE: App TOP: A ACSB Analytic | TB&E Model Customer 78. Dofasco, Inc. is a Canadian steel m anufacturer. According to i ts CEO, "People can make a phenomenal difference if you stop t elling them to come to work, put their brains in a box, and do whatever the supervisor says. We let our employees work in teams." Teamwork would benefit Dofasco by: a. enhancing employee performance b. doing away with the need for empowerment c. creating m anagerial entropy d. refining the definition of customer value e. doing all of these ANS: A E nhanced employee performance leads to improved customer satisfaction. PTS: 1 REF: 12 O BJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 79. Redefining the business mission of a mattress manufacturer as "a good night's sleep," r ather than stating the mission as "the manufacture of high-quality matt resses," will: a. not s timulate an awareness of changes in consumer desires b. be too broad a statement to be of any real use in serving customers c. stifle creativity in discovering opportunities to serve customers d. help ensure the fi rm retains its focus on consumers and does not become p reoccupied with i ts products and internal needs e. ensure the core products will be retained ANS: D The broader business mission of "a good night sleep" will stimulate i nnovation and creativity because not all sleep aids are mattresses. I t will lead the company t o fur ther growth. PTS: 1 REF: 12-13 OBJ: 01-3 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 80. One of the reasons given for the decline of the passenger rail industry in the United States is that the industry defined i ts mission as t rains and not as t ransportation sources. The railroad industry failed to: a. define its m ission in terms of the benefits i ts customers seek b. ignore the marketing concept of serving customer needs and wants c. realize "customers only want what they know" d. have a sales orientation e. empower the consumer ANS: A A market-oriented firm defines i ts business in terms of the benefits i ts customers seek. Because of the limi ted way the railroad i ndustry defined its business, it missed an opportunity to define i tself in terms of the benefits customers were seeking. PTS: 1 REF: 12-13 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 81. When light bulbs were first int roduced, m anufacturers offered one size for all light fixtures. Today you can buy light bulbs in d ifferent shapes, different wattages, and different colors. They also differ as to how much electricity they use and how many hours of illumination they will provide before failing. L ight bulb manufacturers: a. miss sales by not concentrating on the average customer b. r ecognize different customer groups have different needs and wants c. are sales-oriented companies d. are companies that would state they are in the business of selling bulbs e. are a iming at a goal of profit through maximum sales volume ANS: B One way to implement t he marketing concept is to concentrate on the needs of specific groups of customers. PTS: 1 REF: 13-14 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 82. One way to identify the orientation of a fi rm is to examine i ts primary goal. If a fi rm seeks to achieve profitability through sales volume, i t would probably be: a. promotionoriented b. price-oriented c. sales-oriented d. production-oriented e. retail-oriented ANS: C PTS: 1 REF: 14 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 01-3 T YPE: Comp 83. Jacques Torres Chocolate is a factory and retail store in Brooklyn. I ts owner is willing to t ry to produce new products when his customers suggest them--such as chili-pepper-laced chocolate candy. H is only condition is that when he adds new products, h is customers have the final say on whether the product is of any value. According to Torres, "If something doesn't move, that's the last t ime you see it." The primary goal of Jacques Torres Chocolate is to: a. convince potential customers to buy b. achieve p rofitability through sales volume c. make a profit while providing customer satisfaction d. r educe reliance on empowerment e. build exchange relationships with its stakeholders ANS: C Jacques Torres Chocolate is an embodiment of the marketing concept. PTS: 1 REF: 14 O BJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E M odel Product 84. Jacques Torres Chocolate is a factory and retail store in Brooklyn. I ts owner is willing to t ry to produce new products when his customers suggest them--such as chili-pepper-laced chocolate candy. H is only condition is that when he adds new products, h is customers have the final say on whether the product is of any value. According to Torres, "If something doesn't move, that's the last t ime you see it." What marketing tools does the organization use to achieve its goals? a. advertising and personal selling only b. p roduction, promotion, and pricing c. the marketing mix d. aggressive promotion e. i ntensive personal selling ANS: C Jacques Torres Chocolate has a market orientation. A company with a market orientation has to make customer-related decisions in all four areas of the marketing mix. PTS: 1 REF: 14 OBJ: 01-3 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 85. FujiFilm Computer Products has improved the efficiency and productivity of its plant, which manufactures printing technology. For the new fiscal year, the company projects a production increase of 25 percent, and has i nstructed its sales force to aggressively distribute and promote the product. The CEO is sure the market will absorb more product if the sales force is determined and assertive. A pparently FujiFilm: a. has an outward organizational focus on i ts customers wants and p references b. seeks i ts goals primarily through the use of intensive promotion c. directs its p roducts to specific groups of people d. is in the business of satisfying customers e. profits t hrough customer satisfaction ANS: B FujiFilm definitely has a sales orientation. See Review Learning Outcome 3 for a diagram showing the differences between a market o rientation and a sales orientation. PTS: 1 REF: 14-15 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Promotion 86. Jacques Torres Chocolate is a factory and retail store in Brooklyn. I ts owner is willing to t ry to produce new products when his customers suggest them--such as chili-pepper-laced chocolate candy. His only condition is t hat when he adds new products, his customers have the final say on whether the product is of any value. According to Torres, "If something doesn't move, that's the last t ime you see i t." Apparently Jacques Torres Chocolate: a. directs i ts chocolates to the "average customer" b. seeks its goals primarily through the use of intensive promotion c. is in the business of selling chocolate d. profits through customer satisfaction e. has an inward focus on the organization's needs ANS: D Jacques Torres Chocolate has a market orientation. See Review Learning Objective 3 for a diagram showing the differences between a market o rientation and a sales orientation. PTS: 1 REF: 14-15 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 87. _____ is the primary tool used by a salesoriented organization to achieve i ts corporate goals. a. Price b. Promotion c. Product design d. Place (distribution) e. Production ANS: B A sales-oriented organization seeks to generate sales volume based upon intensive promotional activities. PTS: 1 REF: 14 OBJ: 01-3 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Promotion 88. For a market-oriented organization, the primary tool used to achieve its goals is: a. a blend of product, place, p romotion, and pricing decisions b. price c. product design d. place (distribution) e. p romotion ANS: A A market-oriented organization seeks to generate sales volume based on serving customer needs and wants, utilizing all of the elements of the marketing mix to do so. PTS: 1 REF: 14 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model D istribution | TB&E Model Pricing | TB&E Model Product | TB&E Model Promotion 89. T he manufacturer of Maine K itchen Ar t bowls, spoons, and cutting boards knows marketing can make his company a success. He wants to rely solely on promotion as the technique for a ttracting customers. He advertises extensively in cooking magazines, offers coupons, and p rovides retailers who carry his product with attractive displays. From this information, you know that Maine K i tchen Ar t has a _____ orientation. a. market b. societal c. p roduction d. sales e. product ANS: D A sales-oriented organization views promotions as the p rimary tool used to achieve its goals. PTS: 1 REF: 14 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Promotion 90. Th U.S. Postal Service (USPS) argues that its express service is comparable to what is offered by FedEx and that its prices are much lower. Yet, FedEx dominates with more than a 45 percent share of the express-delivery market. Which of the following statements describes t his situation? a. The USPS is perceived as offering greater customer value. b. FedEx is perceived as offering greater customer value. c. FedEx and the USPS offer the same customer value. d. Customer value is not an issue in deciding which express-delivery service to use. e. The USPS should lower i ts prices even further to increase market share. A NS: B Customer value is defined as the relationship between benefits and the sacrifice necessary to obtain those benefits. PTS: 1 REF: 10 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 91. Rose is a telephone order taker for B rylane, a catalog retailer of furnishings for bedrooms and baths. When a customer called and asked if the sea green in a bedspread she had purchased matched the green in a lamp offered in the newest Brylane catalog, Rose got the potential customer's phone number, went out to the warehouse, located the i tems, determined they did not match, and called the potential customer to tell her that information. The most likely result of Rose's efforts was: a. management empowerment b. retailer-customer synergy c. customer satisfaction d. t ransactional marketing e. disintermediation ANS: C When customer expectations r egarding product quality, service quality, and value-based price are met or exceeded, customer satisfaction is created. PTS: 1 REF: 10 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 92. Xerox emphasizes _____ by replacing at i ts own expense any dissatisfied customer's equipment within a period of three years after p urchase. a. management empowerment b. management-customer synergy c. customer satisfaction d. t ransactional marketing e. direct selling ANS: C When customer expectations r egarding product quality, service quality, and value-based price are met or exceeded, customer satisfaction is created. PTS: 1 REF: 10 OBJ: 01-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 93. Networkcar.com sells a plug-in device t hat connects to computer diagnostic ports that are standard on cars. The device beams signals to dealers who can remotely diagnose or spot t rouble. The device allows car dealerships to maintain a closer bond with their customers by offering maintenance before a p roblem leaves customers with an inoperable or possibly dangerous car. With the device, dealers can better engage in: a. management empowerment b. management-customer synergy c. relationship marketing d. t ransactional marketing e. direct selling ANS: C Relationship management is a strategy that entails forging long-term partnerships with customers. PTS: 1 REF: 11 OBJ: 01-3 TYPE: App TOP: AACSB Analytic | TB&E Model Customer 94. What is the fundamental objective of most businesses? a. employee empowerment, teamwork, and relationship marketing b. satisfied stakeholders c. low costs and high quality d. customer loyalty and retention e. survival, profits, and growth ANS: E T he use of marketing allows businesses to achieve this objective. PTS: 1 REF: 16 OBJ: 01-4 T YPE: Comp TOP: AACSB Analytic | TB &E Model Strategy 95. Which if the following is N OT a good reason to study marketing? a. Marketing teaches businesses how to sell p roducts that people do not need. b. Marketing plays an important role in society, coordinating the huge numbers of t ransactions needed to provide goods and services. c. M arketing is a key function in business. d. Marketing offers outstanding career opportunities. e. Marketing affects your day-to-day life as a consumer. ANS: A That m arketing enables companies to sell even bad and worthless goods is a myth. PTS: 1 REF: 16-17 OBJ: 01-4 TYPE: Comp TOP: AACSB Analytic | TB&E Model Strategy 96. Which of t he following statements contains one good reason for studying marketing? a. Marketing t eaches businesses how to sell products that people do not need. b. Marketing deals with t ransactions--not relationships. c. Marketing has li t tle impact on your day-to-day life. d. M arketing offers outstanding career opportunities. e. The study of marketing helps you to better understand why the job market is shrinking. ANS: D Marketing plays an important r ole in society, coordinating the huge numbers of t ransactions needed to provide goods and services. Marketing affects your day-to-day life as a consumer. PTS: 1 REF: 16-17 OBJ: 01-4 T YPE: Comp TOP: AACSB Analytic | TB &E Model Strategy 97. Wilson is an agriculture and dairy science major at a state university. After graduation, he hopes to modernize and expand his family's dairy farm in a scientific and efficient manner. H is adviser at school has suggested he take a marketing course in the school of business as an elective. Wilson thinks t his is an absurd idea. You are his friend and a marketing major. You advise: a. marketing k nowledge will help Wilson to understand that he must satisfy wholesalers, retailers, and consumers b. Wilson declare a finance major because he needs a backup career c. more b iology and agriculture classes will be most useful for Wilson d. the main reason to take m arketing is to teach Wilson how to advertise milk e. marketing is not relevant for a business like a family dairy farm ANS: A Marketing is an important conceptual base that w ill help Wilson to assess the needs and wants of his various business contacts and customers. Marketing is a key component of every business. PTS: 1 REF: 16 OBJ: 01-4 T YPE: App TOP: AACSB Communication | TB&E Model Strategy | TB&E Model C reativity 98. Jamie owns a small moving company in New York City. She has decided to t ake a few night school business courses because her company is growing fast and there are m any things she does not understand. Should Jamie enroll in a marketing course? a. Yes, because marketing is synonymous with selling, and Jamie will want to learn aggressive sales techniques to continue the growth of the company. b. Yes, because the concept of m arketing will help Jamie to better satisfy her customers. c. No, because marketing is a m inor function in business. d. No, because Jamie can hire an ad agency and will not need f irsthand marketing knowledge. e. Yes, because marketing helps businesses sell products t hat people don't need. ANS: B The marketing concept stresses the commitment to satisfying customer needs and wants with an entire range of marketing tools, not just selling or advertising. PTS: 1 REF: 16 OBJ: 01-4 TYPE: App TOP: AACSB Communication | A ACSB Analytic | TB &E Model Customer | TB &E Model Creativity Chrysler Minivans I n 1995, the Chrysler Corporation launched the first complete remake of its minivan category since the fi rm invented the vehicle category in 1984. The minivans were designed w ith more curves on the outside and more space on the inside. One of Chrysler's goals for r emaking the minivan was to broaden the minivan's appeal beyond the t raditional buyer base of practical families. Advertising showed minivans being used to cart everything from senior citizens to canoes. "A minivan is for any t ime, any place, everyone," was one of the p romotional slogans used. To reach other customer groups, Chrysler developed a sports version and a short-wheel-base version of the upscale Town and Country model for sophisticated buyers. Chrysler hoped the $2.6 billion vehicle development cost would pay off as the market expanded. However, competitors also began to offer a wider range of sophisticated models, and competition has become fierce. 99. Refer to Chrysler M inivans. W hen Chrysler first launched the minivan, the company offered only one version and was focused on generating sales volume through intensive advertising. This approach suggests t he company had a _____ orientation. a. sales b. market c. production d. societal e. p romotional ANS: A Sales-oriented organizations seek to generate sales volume based on i ntensive advertising, while market-oriented organizations recognize that promotion is only one of four basic marketing tools. PTS: 1 REF: 7 OBJ: 01-2 TOP: AACSB Reflective T hinking | TB &E Model Strategy 100. Refer to Chrysler M inivans. The minivans were developed through an extensive investment in research and development to completely r edesign the minivans and provide customers with new and updated features. This effort is designed to better meet consumers’ wants and needs, and suggests the company has adopted a _____ orientation. a. societal b. sales c. production d. market e. retail ANS: D A m arket-oriented philosophy is based on consumers’ wants and needs. PTS: 1 REF: 8 OBJ: 01-2 TOP: AACSB Analytic | TB&E Model Research | TB&E Model Customer 101. Refer to Chrysler Minivans. By int roducing sporty, value-priced, and upscale minivans, Chrysler hoped to forge a long-term relationship with customers as they replace their older minivan. Chrysler engaged in: a. empowerment b. customer valuation c. relationship marketing d. outward focus management e. primary goal making ANS: C Relationship marketing seeks t o forge long-term partnerships with customers. PTS: 1 REF: 11 OBJ: 01-3 TOP: AACSB Reflective Thinking | TB&E Model Customer 102. Refer to Chrysler Minivans. Chrysler set u p a team of special customer-service representatives who assist minivan buyers and who a re authorized to solve problems immediately. This employees were given: a. authority t raining b. customer value giving c. cross-utilization d. teamwork e. empowerment ANS: E Delegation of authority to employees is empowerment. PTS: 1 REF: 12 OBJ: 01-3 TOP: A ACSB Reflective Thinking | TB&E Model Strategy 103. Refer to Chrysler M inivans. In an established organization like Chrysler, recognizing minivan buyer needs and wants and switching to a customer-driven corporate culture probably required: a. teamwork b. establishing long-term relationships with customers c. an emphasis on creating customer value d. the implementation effective t raining programs e. all of the above ANS: E PTS: 1 REF: 11-12 TOP: AACSB Reflective Thinking | TB&E Model Strategy Circuses As recently as twenty years ago circuses came to town with tents, animals, clowns, and other performers. An advance man arrived about two weeks before the circus actually arrived, covered the community with posters, and gave out free t ickets to schoolchildren. If the advance man had done a good job, when the circus arrived and opened its tent doors, three h undred to six hundred people would fill i ts seats. When the largest circus organizations merged, the newly formed Ringling Bros. and Barnum & Bailey's Greatest Show on Earth began performing in 4,000-seat arenas. At tendance, however, has stagnated in recent years. People have stopped going to the circus because they miss the circus tent and the close i ntimate atmosphere it created. The newest thing in circuses is a return to the tent a tmosphere with an emphasis on the types of entertainment that were popular years ago. A ntique circus wagons, calliope music, and cotton candy are replacing the exotic animals and the prima donna performers. To satisfy the needs of this new audience, the tent circus now sells lattes and wine. 104. Refer to Circuses. The aggressive promotions used by advance men indicate that two decades ago the circuses probably had a _____ orientation. a. sales b. market c. production d. societal e. product ANS: A Sales-oriented organizations achieve their sales goals primarily through intensive promotion. PTS: 1 REF: 7 OBJ: 01-2 O BJ: 01-3 TOP: AACSB Reflective Thinking | TB &E Model Research 105. Refer to C ircuses. Now circuses are t rying to satisfy customers' needs and wants and to profit t hrough customer satisfaction. They have adopted a _____ orientation. a. societal b. selling c. production d. market e. retail ANS: D A market-oriented philosophy is based on consumers’ wants and needs PTS: 1 REF: 8 OBJ: 01-2 TOP: AACSB Reflective Thinking | T B &E Model Customer 106. Refer to Circuses. To exhibit a societal marketing orientation, circuses could: a. rely on publicity and avoid any promotions b. empower their employees to satisfy customer wants c. donate a percentage of their profits to local educational i nstitutions d. use relationship marketing e. emphasize customer value ANS: C The p hilosophy called the societal marketing orientation states that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to p reserve or enhance individuals' and society's long-term best interests. PTS: 1 REF: 9 OBJ: 01-2 TOP: AACSB Reflective Thinking | TB &E Model Strategy 107. Refer to Circuses. One of the tent venues is called Barnum's Kaleidoscape, and i t is in a permanent location with t he hopes that people who see the show will want to return and see it again as well as bring t heir friends and relatives to the production. Which of the following techniques would most l ikely advance this strategy of referrals and repeat business? a. relationship marketing b. empowerment c. a sales orientation d. authority to delegate e. t ransactional marketing A NS: A Relationship marketing is a strategy that entails forging long-term partnerships w ith customers. PTS: 1 REF: 11 OBJ: 01-3 TOP: AACSB Reflective Thinking | TB&E M odel Customer 108. Refer to Circuses. The circus's goal of redesigning the circus experience is being completed through the coordination of many marketing activit ies, such as value pricing, a product that includes exciting performances, tent venue locations, and p romotion. These activities make up the _____ for the circuses. a. opportunity analysis b. value of marketing c. marketing environment d. target market e. marketing mix ANS: E M arketing mix elements include product, place, promotion, and price. PTS: 1 REF: 14 OBJ: 01-3 TOP: AACSB Reflective Thinking | TB &E Model Distribution | TB&E Model Pricing | T B&E Model Promotion ESSAY 1. Explain how marketing is both a philosophy and a set of activities. ANS: The fi rst facet of marketing is its philosophy. This philosophy is an a tti tude, perspective, or management orientation that stresses the importance of customer satisfaction. The second facet of marketing is the set of activities used to implement this p hilosophy. These activities include (but are not limited to) planning, pricing, promotion, d istribution, selling, advertising, and inventory management. PTS: 1 REF: 6 OBJ: 01-1 T OP: AACSB Analytic | TB&E Model Strategy 2. The American Marketing Association ( AMA) has formulated a definit ion of marketing that encompasses the two perspectives of m arketing: the philosophy and the activities. What is the AMA definition of marketing? A NS: "Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer r elationships in ways that benefit the organization and its stakeholders." PTS: 1 REF: 6 O BJ: 01-1 TOP: AACSB Analytic | TB&E Model Strategy 3. Exchange is the key concept in t he definition of marketing. What is the concept of exchange? What are the five conditions of exchange that must be satisfied for exchange to occur? ANS: The concept of exchange simply means that people give up something in order to receive something that they would r ather have. Money, goods, or services may be the medium of exchange. The five conditions of exchange are: 1. 2. 3. 4. 5. There must be at least two parties. Each party has something t hat might be of value to the other party. Each party is capable of communication and delivery. Each party is free to accept or reject the exchange offer. Each party believes i t is appropriate or desirable to deal with the other party. PTS: 1 REF: 6 OBJ: 01-1 TOP: AACSB Reflective Thinking | TB&E Model Strategy 4. There are five conditions that must be satisfied for an exchange to take place. However, even if all of these conditions are met, exchange may not necessarily take place. Give an example of a situation in which all conditions are met, but exchange does not take place. Can marketing occur, even if an exchange does not take place? Why or why not? ANS: Many selling situations satisfy all five conditions for exchange, but unless a purchase or t rade actually takes place, exchange does not occur. The five conditions are necessary but not sufficient for final exchange. The text p rovides the example of advertising a used auto in the classified ads. Marketing can occur even if an exchange does not take place. Many of the activities of marketing (product development, planning, promotion, pricing, distribution, and so on) can take place without a f inal exchange. PTS: 1 REF: 6 OBJ: 01-1 TOP: AACSB Analytic | AACSB Reflective T hinking | TB &E Model Strategy 5. What is the marketing concept? According to the m arketing concept, what determines if a sale will actually occur? ANS: The marketing concept is a simple and intuitively appealing philosophy. I t states that the social and economic justification for an organization's existence is the satisfaction of customer wants and needs while meeting organizational objectives. I t is based on an understanding that a sale does not depend on an aggressive sales force but rather on a customer's decision to p urchase a product. PTS: 1 REF: 8 OBJ: 01-2 TOP: AACSB Analytic | TB &E Model S trategy 6. Four competing philosophies strongly influence the role of marketing and m arketing activities within an organization. Name and briefly describe each of these four p hilosophies. ANS: PRODUCTION ORIENTATION. This orientation focuses fi rms on their i nternal production capabilities rather than the desires and needs of the marketplace. SALES ORIENTATION. This orientation assumes that buyers will purchase more of any i tem if aggressive selling techniques are used. Again, this orientation does not address the needs and wants of the marketplace. MARKET ORIENTATION. This orientation is the foundation of contemporary marketing philosophy. I t recognizes that a sale is dependent on t he customer's decision to purchase a product and provides increased responsiveness to customer needs and wants. To market-oriented fi rms, marketing means building r elationships with customers. SOCIETAL ORIENTATION. This orientation refines the m arketing orientation by stating that the social and economic justification for an organization's existence is the satisfaction of customer wants and needs while meeting the organization's objectives and preserving or enhancing both individuals' and society's longterm best interests. PTS: 1 REF: 7-9 OBJ: 01-2 TOP: AACSB Analytic | AACSB Ethics | T B &E Model Product | TB&E Model Pricing | TB &E Model Promotion 7. If a fi rm has a p roduction orientation, what types of questions does management ask after assessing i ts r esources? How would these questions differ for a service organization? ANS: With a p roduction orientation, management focuses on the internal capabilities of the fi rm. M anagement might ask: "What can we do best?", "What can engineering design?", and/or " What is economical and easy to produce with our equipment?" Managers of a service organization might ask, "What services are most convenient for the fi rm to offer?" and/or " Where do our talents lie?" PTS: 1 REF: 7 OBJ: 01-2 TOP: AACSB Analytic | TB&E Model P roduct 8. An entrepreneur has set up a company to manufacture and market GPS systems for hunters. He has decided a sales orientation would best suit his new company. What are i mportant considerations for this fi rm when i t adopts this orientation? What are potential p itfalls of this orientation the owner needs to understand? ANS: The most important component for a sales orientation is an aggressive sales force. The sales force can push i ntermediaries to carry products, or push consumers to purchase. For the entrepreneur in question, this is important, as hunters rarely buy GPS equipment directly from the m anufacturer. Instead, GPS equipment is offered through specialty resellers. An aggressive sales force could help the entrepreneur sell his product in more outlets. However, despite a h igh-quality sales force, even aggressive salespeople cannot convince people to buy goods and services that are neither wanted nor needed. PTS: 1 REF: 7-8 OBJ: 01-2 TOP: AACSB A nalytic | AACSB Reflective Thinking | TB&E Model Strategy 9. A market-oriented organization may choose NOT to deliver the benefits sought by customers because these benefits are not in the best interests of the individual or society. This is termed the societal o rientation. What does this concept mean in terms of organizational justification? List three current issues where the societal orientation concept may need to be applied. ANS: The societal orientation refines the market orientation by stating that the social and economic j ustification for an organization's existence is the satisfaction of customer wants and needs w hile meeting the organization's objectives and preserving or enhancing both the i ndividual's and society's long-term best interests. Societal issues could include environmental protection, smoking in public places, promotion of highsugar content foods to children, seat belt laws, alcohol marketing, gun sales, and purchasing drugs that have not been approved by the Federal Drug Administration, and others. PTS: 1 REF: 9 OBJ: 01-2 T OP: AACSB Reflective Thinking | AACSB Ethics | TB &E Model Customer 10. Describe a r eal company that has a societal marketing orientation. ANS: Students' answers to this question will vary depending upon what commercials, advertisements, and publicity they have been exposed to. All should select a company that exists not only to satisfy customers' wants and needs and to meet organizational objectives but also to preserve or enhance i ndividuals' or society's long-term best interests. PTS: 1 REF: 9 OBJ: 01-2 TOP: AACSB A nalytic | TB&E Model Strategy 11. What is the philosophy of the marketing concept and m arket orientation? What three key areas are involved in the implementation of the m arketing concept and a market orientation? ANS: The philosophy of the marketing concept s tates that the social and economic justification for an organization's existence is the satisfaction of customer wants and needs while meeting organizational objectives. Market o rientation requires top management leadership, a customer focus, competitive intelligence, and interfunctional coordination to meet customer wants and needs and deliver superior value. I t also entails establishing and maintaining mutually rewarding relationships with customers. The marketing concept and market orientation involve: • • • focusing on consumer wants so the organization can distinguish its product(s) from competitors' offerings integrating all the organization's activities, including production, to satisfy these wants achieving long-term organization goals by satisfying customer wants and needs legally and responsibly PTS: 1 REF: 8 OBJ: 01-2 TOP: AACSB Reflective Thinking | TB &E M odel Strategy 12. What is customer value? How can marketers make sure customers perceive their companies/products as sources of value? ANS: Customer value is the r elationship between benefits and the sacrifice necessary to obtain those benefits. M arketers who want to be perceived by their customers as offering value can (1) offer p roducts that perform as they are expected to, (2) earn t rust, (3) avoid unrealistic pricing, and (4) give the buyer facts. PTS: 1 REF: 10 OBJ: 01-3 TOP: AACSB Analytic | TB&E M odel Customer 13. Discuss the differences between sales and market orientations using t he following five characteristics as guidelines: (1) organization's focus, (2) business the organization is in, (3) people to whom the product is directed, (4) the organization's primary goal, and (5) tools used to achieve that goal. ANS: ORGANIZATION'S FOCUS. With a sales o rientation, the fi rm's focus is inward upon the fi rm's own needs. With a market o rientation, the focus is outward on the wants and preferences of customers. In particular, m arket-oriented fi rms create customer value, maintain customer satisfaction, and build long-term relationships. BUSINESS. A fi rm with a sales orientation is in the business of selling goods and services. A fi rm with a market orientation is in the business of satisfying consumer wants and needs. CUSTOMERS. A sales orientation directs the fi rm's output at everybody, while a market orientation directs goods toward specific groups of people. PRIMARY GOAL. The primary goal of a fi rm with a sales orientation is to make profit t hrough maximizing sales volume. The primary goal of a fi rm with a market orientation is t o seek profit through customer satisfaction. TOOLS FOR GOAL ACHIEVEMENT. A sales o rientation seeks to achieve goals primarily through intensive promotion. A market o rientation achieves goals through coordinated use of a set of marketing activities. See Review Learning Outcome 3. PTS: 1 REF: 15 OBJ: 01-3 TOP: AACSB Analytic | TB&E M odel Strategy | TB &E Model Product 14. Is the following statement t rue? "A production o rientation is always harmful to relationship marketing." Explain your answer. ANS: A company with a production orientation concentrates on what it can do best--i ts internal capabilities. Sometimes what the company produces is exactly what the customer wants. I t is possible for a company to engage in relationship marketing (a strategy that entails forging long-term partnerships with customers) and still have a production orientation. PTS: 1 REF: 7 | 11 OBJ: 01-2 | 01-3 TOP: AACSB Analytic | TB &E Model Product 15. Defining the company's business in terms of the benefits customers seek, instead of in t erms of goods and services, has three important advantages. List them. ANS: (1) I t ensures t hat the fi rm keeps focusing on customers and avoids becoming preoccupied with goods, services, or the organization's internal needs. (2) I t encourages innovation and creativity by r eminding people there are many different ways to satisfy customer wants. (3) I t stimulates an awareness of changes in customer desires and preferences so product offerings are more l ikely to remain relevant. PTS: 1 REF: 13 OBJ: 01-3 TOP: AACSB Analytic | TB&E Model P roduct | TB&E Model Customer 16. There are several important reasons to study m arketing. Name three of these reasons. ANS: 1. Marketing plays an important role in society 2. Marketing is important to businesses 3. Marketing offers outstanding career opportunities 4. Marketing affects your life every day PTS: 1 REF: 15-17 OBJ: 01-4 TOP: A ACSB Reflective Thinking | TB&E Model Strategy 17. How is marketing important to business? ANS: Marketing contributes directly to the achievement of business objectives, i ncluding survival, profits, and growth. Marketing is concerned with assessing the wants and satisfactions of customers, designing and managing product offerings, determining p rices, developing distribution strategies, and communicating with customers. These activities are vital to business organizations. A fundamental understanding of marketing is i mportant to all businesspeople so that an organization can operate cohesively. PTS: 1 REF: 16 OBJ: 01-4 TOP: AACSB Reflective Thinking | TB&E Model Strategy 18. What types of m arketing careers are available? What is the current percentage of marketing employees in t he U.S. civilian work force? What is the future forecast for marketing employment? ANS: O ne-fourth to one-third of the U.S. civilian work force performs marketing activities in a reas such as professional selling, research, advertising, retail buying, distribution m anagement, product management and development, and wholesaling. Marketing career opportunities exist in both business and nonbusiness organizations. Demand for marketingeducated personnel is growing. Marketing employment is projected to grow at a faster rate t han that of all jobs. Additionally, marketing is now the fastest route to the top in today's corporate world. PTS: 1 REF: 16 OBJ: 01-4 TOP: AACSB Reflective Thinking | TB&E M odel Strategy | TB &E Model Research | TB &E Model Creativity 19. How does marketing a ffect your everyday life? How will the study of marketing enable you to be a better consumer? ANS: Every person participates in the marketing process as a consumer of goods and services. Approximately 50 cents of each dollar spent pays for marketing costs. By developing an understanding of marketing, one can better understand the buying process, negotiate more effectively with sellers, and demand corrective action when products do not meet performance standards. PTS: 1 REF: 16-17 OBJ: 01-4 TOP: AACSB Reflective T hinking | TB &E Model Strategy | TB&E Model Customer | TB&E Model Research Chapter 2—Strategic Planning for Competitive Advantage TRUE/FALSE 1. The m anufacturer of Macho brand martial arts products was implementing a strategic plan w hen it sponsored a local karate tournament for teenagers. ANS: F Such a short-range decision is typically a tactical plan or operating decision, not a strategic plan. PTS: 1 REF: 36 OBJ: 02-1 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 2. The m arketing plan is a writ ten document that acts as a guidebook of marketing activities for a m arketing manager. ANS: T PTS: 1 REF: 36 OBJ: 02-1 TYPE: Def TOP: AACSB Reflective T hinking | TB &E Model Marketing Plan 3. A fi rm's mission statement should answer the question, "What products do we produce best?" ANS: F M ission statements should not focus on specific product offerings but on the market or markets served. PTS: 1 REF: 38 OBJ: 022 TYPE: Def TOP: AACSB Analytic | TB &E Model Strategy 4. Marketing objectives should be consistent with organization objectives, they should be measurable, and they should specify the t ime frame during which they are to be achieved. ANS: T PTS: 1 REF: 39 TOP: A ACSB Analytic | TB&E Model Strategy OBJ: 02-3 TYPE: Comp 5. The company's objective is to spend 10 percent of this fiscal year's sales revenue on research and development in an effort to int roduce at least five new products in the next fiscal year. This is an example of a well-stated objective. ANS: T This objective is measurable and has a specific t ime frame. See Exhibit 2.3. PTS: 1 REF: 39-40 OBJ: 02-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 6. A situation analysis is a small part of the more all-encompassing SWOT analysis. ANS: F A common way to conduct a situation analysis is to perform a SWOT analysis, which means examining the company's environments for strengths, weaknesses, opportunities, and threats. PTS: 1 REF: 40 OBJ: 02-4 TYPE: Def TOP: AACSB Diversity | TB &E Model Strategy 7. A marketing audit is l imi ted to the collection and analysis of information about factors that may affect the organization as well as the identification of market opportunities and threats. ANS: F This is the definition of environmental scanning. PTS: 1 REF: 40-41 OBJ: 02-4 TYPE: Def TOP: A ACSB Diversity | TB&E Model Customer 8. A competitive advantage is some unique aspect of a fi rm's offering, or of the fi rm itself, that causes target customers to patronize the f i rm rather than i ts competition. ANS: T PTS: 1 REF: 41 TOP: AACSB Reflective Thinking | T B&E Model Customer OBJ: 02-5 TYPE: Def 9. Diamonds that come from rebel African t roops t rying to get money for weapons are much cheaper than diamonds from countr ies t hat are not in conflict. A diamond retailer that ignores the pleas of human r ights organizations not to sell the cheaper diamonds is creating a cost competitive advantage for i tself. ANS: T Having a cost competitive advantage means being the low-cost competitor in an industry while maintaining satisfactory profit margins. PTS: 1 REF: 41 OBJ: 02-5 T YPE: App TOP: AACSB Ethics | TB&E Model Pricing 10. Niche competitive advantages a re quite common. ANS: T The text lists several examples of how companies have created n iche competitive advantages. PTS: 1 REF: 43 OBJ: 02-5 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 11. Berkshire Hathaway Inc. is a large property i nsurance company, owns a large chain of jewelry stores, and has recently purchased Russell Corporation, a manufacturer of sporting goods. Berkshire Hathaway uses a market penetration strategy. ANS: F Berkshire Hathaway uses a diversification strategy. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 12. When the In ternet auction company eBay opened a version of the company called eBayfrance for the French market, that was an example of market penetration. ANS: F M arket penetration is the strategy of selling more to the existing customers. PTS: 1 REF: 44 O BJ: 02-6 TYPE: App TOP: AACSB Technology | TB&E Model Strategy 13. The Home Depot’s purchase of Hughes Supply Company allows i t to better meet the needs of i ts current business customers. This is an example of product development. ANS: T PTS: 1 REF: 44 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 02-6 TYPE: App 14. When a f lorist shop begins to sell burial caskets to its customers, i t is engaged in p roduct development. ANS: T Product development is the offering of new products to current markets. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 15. Simon needed to rent a t railer for the weekend. Then he learned t he rental company offered lower daily rates for 7-day rentals. The rental company is clearly using a market development strategy. ANS: F In this case, the pricing strategy does not determine the strategic alternative used. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Strategy 16. Thomas Office Supply has developed a clipboard design that will better fulfill the needs not only of i ts customers in the hospital market, but also of potential new customers in the educational market. This is an example of diversification. ANS: F This is an example of product development for the hospital market. One might argue that it is market development for the educational market, but unless the product is radically new to the company (which is extremely unlikely for an office supply company), it would not exemplify diversification. PTS: 1 REF: 44 OBJ: 02-6 T YPE: App TOP: AACSB Diversity | TB &E Model Customer 17. Marketing strategy i nvolves the activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with t arget markets. ANS: T PTS: 1 REF: 47 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 02-7 TYPE: Def 18. The development of a target market strategy begins with a market opportunity analysis (MOA). ANS: T PTS: 1 REF: 47 TOP: AACSB Analytic | T B &E Model Strategy OBJ: 02-7 TYPE: Comp 19. The four Ps of the marketing mix are p roduct, planning, promotion, and price. ANS: F The four Ps are product, place, promotion, and price PTS: 1 REF: 48 OBJ: 02-8 TYPE: Def TOP: AACSB Reflective Thinking | TB&E M odel Strategy 20. Typically, the development of the marketing mix starts with the study of consumer behavior. ANS: F The development of the marketing mix begins with the product. PTS: 1 REF: 48 OBJ: 02-8 TYPE: Def TOP: AACSB Reflective Thinking | TB &E Model P roduct 21. A marketing audit is a control device and is used primarily by large corporations to study past performance to identify market t rends. ANS: F A marketing audit is not preoccupied with past performance but instead looks to the future allocation of m arketing resources. PTS: 1 REF: 50 OBJ: 02-9 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Marketing Plan 22. Strategic planning is most effective when m anagers view i t as an annual exercise. ANS: F Strategic planning requires creativity and an ongoing commitment, not just going through the motions once a year. PTS: 1 REF: 51 O BJ: 02-10 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy | T B &E Model Creativity 23. The most critical element for successful strategic planning is t op management's support and participation. ANS: T PTS: 1 REF: 51 OBJ: 02-10 TYPE: Comp TOP: AACSB Analytic | TB&E Model Strategy | TB &E Model Marketing Plan M ULTIPLE CHOICE 1. Compaq Computer's decision to charge customers for phone t echnical support to defray the high cost of phone support and encourage customers to read documentation was a failure because consumers like the human touch. Customer rebellion forced Compaq to rethink this policy. As a result, Compaq decided to focus its resources on r eaching the inexpensive home computer market segment through enhanced customer service. This company engaged in: a. benchmarking b. tactical resource realignment c. a lternative selection d. portfolio evaluation e. strategic planning ANS: E Strategic planning p rovides a long-term vision and thus guides long-term commitment of resources. PTS: 1 REF: 36 OBJ: 02-1 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 2. With hospitals nationwide facing budget cuts and slimmer profit margins, Dekalb County's Medical Center decided to cash in on one of the most consistently profitable services--delivering babies. I t initiated a three-year project to build a $55 million state-ofthe-art women's center with 18 labor and delivery suites. When the hospital decided to commit its resources to obstetrics, i t was engaging in: a. benchmarking b. alternative p roblem solving c. strategic planning d. portfolio evaluation e. tactical control ANS: C S trategic planning provides a long-term vision and thus guides long-term commitment of r esources. PTS: 1 REF: 36 OBJ: 02-1 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Strategy 3. Strategic plans require: a. long-term resource commitments b. a change i n organizational structure c. the addition of new personnel d. new product development e. changes in prices ANS: A Strategic plans are long-range plans that involve developing, organizing, and controlling marketing activities. PTS: 1 REF: 36 OBJ: 02-1 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Strategy 4. _____ is the managerial p rocess of creating and maintaining a fit between the organization's objectives and r esources and evolving market opportunit ies. a. Tactical management b. The market audit c. Functional planning d. Environmental scanning e. Strategic planning ANS: E PTS: 1 REF: 36 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 02-1 TYPE: Def 5. I n 2004, Giorgio Armani, the I talian fashion group, announced plans to launch a $1 billion i nternational luxury hotel chain containing ten hotels and four resorts before the end of 2015. This _____ will take advantage of an international t rend toward luxury lifestyle consumerism and allow the company to achieve its growth objectives. a. tactical objectifying b. contingency plan c. strategic planning d. marketing implementation e. horizon planning A NS: C Strategic planning is the managerial process of creating and maintaining a fi t between the organization's objectives and evolving market opportunities. PTS: 1 REF: 36 O BJ: 02-1 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 6. Skoda is a carmaker in the Czech Republic. The auto manufacturer is launching a marketing drive designed to ultimately sell one million Skoda vehicles a year. I t has identified the main g rowth markets for automobiles as China, Russia, and India and has plans to build p roduction plants in each of those count ries. Skoda's _____ will be well into the i mplementation stage when the plant in Shanghai starts producing cars in 2007. a. tactical objectifying b. contingency plan c. strategic planning d. market integration e. horizon p lanning ANS: C Strategic planning is the managerial process of creating and maintaining a f i t between the organization's objectives and evolving market opportunities. PTS: 1 REF: 36 OBJ: 02-1 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy | T B &E In ternational Perspective 7. Which of the following statements about a marketing p lan is t rue? a. Marketing plans can exist as oral t raditions. b. The marketing plan should be viewed as a series of sequential steps. c. All marketing plans have basically the same content. d. A marketing plan is created so an organization can meet its marketing objectives. e. All of the statements about a marketing plan are t rue. ANS: D By definition, m arketing plans are wr it ten. Several steps of the marketing plan can be done at the same t ime. The content of marketing plans varies. PTS: 1 REF: 36-38 OBJ: 02-1 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Marketing Plan 8. _____ is the process of anticipating events and determining strategies to achieve organizational objectives. a. P lanning b. Portfolio evaluation c. Forecasting d. Implementation e. Evaluation ANS: A PTS: 1 REF: 36 OBJ: 02-1 TYPE: Def TOP: AACSB Reflective Thinking | TB &E Model M arketing Plan 9. Obstetrics is a the most lucrative service provided by most hospitals. A rea hospitals compete to make their delivery rooms the most profitable by designing m arketing activities that will allow them to reach their growth objectives. To reach their objectives, hospitals must rely on: a. strategic activation b. resource realignment c. m arketing planning d. a service-based mission statement e. t rend analysis ANS: C M arketing planning is designing activities relating to objectives and the marketing environment. PTS: 1 REF: 36 OBJ: 02-1 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Marketing Plan 10. Marketing plans should be writ ten to do all of the following EXCEPT: a. compare actual and expected performance b. provide clearly stated activities c. create common goals for employees to work toward d. allow managers to enter t he marketplace with an awareness of possibili ties and problems e. control the elements of t he external marketing environment ANS: E Marketing environment variables cannot be controlled. PTS: 1 REF: 37 OBJ: 02-1 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Marketing Plan 11. Which of the following is one of the elements of the m arketing plan? a. a business mission statement b. a situation analysis c. a target market s trategy d. the marketing mix e. all of the choices ANS: E See Exhibit 2.1. PTS: 1 REF: 37 O BJ: 02-1 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Marketing Plan 12. Physicians, nurses, and hospital administrators at Northside Hospital have recently a ttended a special meeting where they listened to discussions on establishing marketing objectives for the hospital and creating a new target market strategy for the hospital. There was also discussion of changing the hospital’s pricing strategies and offering new-to-thearea services. Northside Hospital is apparently engaged in: a. reengineering b. hierarchical r estructuring c. a financial analysis d. the development of a marketing plan e. strategic contingency planning ANS: D See Exhibit 2.1. All the listed activit ies are part of the m arketing planning process. PTS: 1 REF: 37 OBJ: 02-1 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Marketing Plan 13. The _____ answers the question, "What business are we in, and where are we going?" a. mission statement b. financial statement c. situation analysis d. market strategy e. strategic plan ANS: A PTS: 1 REF: 38 TOP: AACSB A nalytic | TB&E Model Strategy OBJ: 02-2 TYPE: Def 14. Thermo Electron Corporation, t he biggest maker of measurement instruments for medical laboratories, agreed to buy the r adiation-monitoring products unit of Compagnie de Saint-Gobain for $30 million to gain E uropean customers. Saint-Gobain (of France) is Europe's number one distr ibutor of building materials, and its radiation monitoring unit did not support the company's mission s tatement. This means that: a. Thermo Electron does not have a mission statement b. the r adiation monitoring unit was a cash cow c. Saint-Gobain's mission dealt with providing building materials to i ts customers, not radiation measuring equipment d. Thermo E lectron's mission statement was incomplete e. Saint-Gobain's mission statement was too b road ANS: C The diversification into radiation monitoring equipment did not let the company focus on the market it wished to serve. PTS: 1 REF: 38 OBJ: 02-2 TYPE: App T OP: AACSB Analytic | TB&E Model Strategy 15. In its stockholders' report, PepsiCo has a _____ that states "our business is to increase the value of our shareholder's investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the h ighest standards of integrity." a. marketing mix strategy b. quantifiable goal c. mission s tatement d. statement of economic potential e. market segmentation strategy ANS: C A m ission statement answers the question, "What business are we in?" PTS: 1 REF: 38 OBJ: 02-2 TYPE: App TOP: AACSB Analytic | TB&E Model Strategy 16. Copan I talia is a d istributor of laboratory products and manufacturer of laboratory commodities, including t ransfer pipettes and f lexible hematology cups used on a variety of automatic instruments t o count blood corpuscle elements. Copan's _____ says that the company’s business is to continually work to improve the quality of the collection and preservation of the m icrobiological sample in the “pre-analytical phase,” as the demand for better protection of t he specimen is growing day by day. a. market synergy b. product entropy c. marketing mix s trategy d. mission statement e. qualified objective ANS: D A mission statement answers t he question, "What business are we in?" PTS: 1 REF: 38 OBJ: 02-2 TYPE: App TOP: A ACSB Analytic | TB&E Model Strategy 17. The focus of an organization's mission s tatement should be on: a. the products i t wishes to sell b. the market i t wishes to serve c. i ts social responsibilities d. the desires of government regulators e. technologies it u nderstands well ANS: B The choice of the market to serve determines the product and t echnology decisions. PTS: 1 REF: 38 OBJ: 02-2 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Strategy 18. By defining its business as "printing books" instead of "empowering imaginations," a children’s book publishing company would more than likely experience: a. market synergy b. product entropy c. market harvesting d. nonspecific s trategic planning e. marketing myopia ANS: E Publishing books focuses on one product, r ather than a broad range of opportunities as found in "entertainment." PTS: 1 REF: 38-39 O BJ: 02-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 19. Railroads often offer their customers a t rucking service for local delivery or t railers for p iggybacking loads to their final destination. Which of the following statements justifies the addition of these services to their strategic plans? a. Their mission statements reflect their belief that they are t ransportation companies, not just railroads. b. Local delivery has high m arket att ractiveness. c. Diversification is needed to survive. d. New business units are needed to continue growth. e. Owning t rucks is probably cheaper and easier than using a local carrier. ANS: A A broad mission statement would recognize that the firm's business is total t ransportation service. PTS: 1 REF: 38 OBJ: 02-2 TYPE: App TOP: AACSB Analytic | T B &E Model Strategy 20. _____ occurs when a business is defined in terms of goods and services rather than by the benefits customers seek from it. a. A circle t rap b. A market barrier entry c. A reactive focus d. Unempowerment e. Marketing myopia ANS: E PTS: 1 REF: 38-39 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 02-2 TYPE: Def 21. A popular technique for managing a large organization with different technologies and m arkets is to divide i t into: a. strategic business units b. different technologies c. strategic t arget markets d. design mat rices e. tactical segments ANS: A PTS: 1 REF: 39 TOP: AACSB A nalytic | TB&E Model Strategy 22. The acronym SBU refers to: a. stock in business units b. strategic business unit c. standard business utilization d. strategic barter units e. samples by units ANS: B PTS: 1 REF: 39 TOP: AACSB Analytic | TB &E Model Strategy O BJ: 02-2 TYPE: Def OBJ: 02-2 TYPE: Def 23. Thermo Electron Corporation, the biggest m aker of measurement instruments for medical laboratories, agreed to buy the radiation- monitoring products unit of Compagnie de Saint-Gobain for $30 million to gain European customers. Saint-Gobain of France is Europe's number one distributor of building m aterials, and i ts radiation monitoring unit did not support the company's mission s tatement. SaintGobain sold one of its: a. strategic business units (SBUs) b. strategic a lliances c. action programs d. t ransactional units e. synergistic divisions ANS: A SBUs have separate business functions from one another and have their own mission statements, m arkets, and planning. PTS: 1 REF: 39 OBJ: 02-2 TYPE: App TOP: AACSB Analytic | T B &E Model Strategy 24. PPR, the French retail and luxury goods group, announced plans t o sell i ts Printemps department store chain. PPR will continue to hold onto to its other _____, including Gucci, Yves St. Laurent, Balenciaga, Conforma, its furniture store chain, FAAC, its books and music chain, and La Redoute, a catalog retailer. (All of PPR’s divisions a re operated as independent businesses.) a. strategic business units b. strategic alliances c. t ransactional units d. synergistic divisions e. action programs ANS: A SBUs have separate business functions from one another and have their own mission statements, markets, and p lanning. PTS: 1 REF: 39 OBJ: 02-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Strategy 25. An SBU: a. competes with the same companies as the other SBUs in the parent organization b. shares the same mission with all the other SBUs in the parent organization c. controls i ts business independent of other SBUs in the organization d. usually benefits from the combined corporate raw materials purchases e. still has strategic p lanning performed back at corporate headquarters ANS: C SBUs have separate business f unctions from one another and have their own mission statements, markets, and planning. PTS: 1 REF: 39 OBJ: 02-2 TYPE: Def TOP: AACSB Analytic | TB&E Model Strategy 26. O ne of the divisions of Procter & Gamble (P&G) manufactures and markets health and beauty aids. I t handles products like Olay lotions and Old Spice fragrances. This part of the business has its own accounting, engineering, manufacturing, and marketing departments, separate from the rest of the organization. This division also has i ts own mission statement, t arget markets, and planning commit tees. This segment of P&G would be termed a: a. p roduct market niche b. diversified division c. heterogeneous element d. strategic alliance e. s trategic business unit ANS: E An SBU usually has i ts own mission statement, target m arkets, and separate functional departments. PTS: 1 REF: 39 OBJ: 02-2 TYPE: App TOP: A ACSB Analytic | TB&E Model Strategy 27. After management agrees on a mission s tatement, it must set objectives. Which of the following is NOT a characteristic of a good objective? a. profitable b. realistic c. measurable d. t ime-specific e. consistent ANS: A Good objectives are not necessarily stated in terms of profit. PTS: 1 REF: 39-40 OBJ: 02-3 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Pricing 28. A _____ is defined as a s tatement of what is to be accomplished through marketing activities. a. mission statement b. business plan c. marketing objective d. goal-driven directive e. marketing criteria ANS: C PTS: 1 REF: 39 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 02-3 T YPE: Def 29. General Electric has a security division that builds equipment for screening passenger luggage checked in at airports. This division is composed of InVision Technologies which manufactures CT scanners, and Ion Track, which measures luggage for t race elements of drugs and explosives. GE's security division is an example of a(n): a. organizational level b. SWOT c. secure business unit d. business sales unit e. strategic business unit ANS: E An SBU is a subgroup of a single business or collection of related businesses within a larger organization. PTS: 1 REF: 39 OBJ: 02-3 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Strategy 30. When an organization creates a m ission statement that is too narrow, _____ results. a. marketing synergy b. marketing myopia c. directional marketing d. an internal threat e. sustainable competitive advantage A NS: B Marketing myopia defines a business in terms of goods and services rather than in t erms of benefits customers seek. See Review Learning Outcome 2. PTS: 1 REF: 39-40 OBJ: 02-2 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product 31. In 2004, G iorgio Armani, the I talian fashion group, announced plans to launch a $1 billion i nternational luxury hotel chain containing ten hotels and four resorts before the end of 2015. One of the major reasons for opening a hotel chain was an international t rend toward l uxury lifestyle consumerism. In terms of Armani’s situation analysis, the t rend toward l uxury lifestyle consumerism would be an example of a(n): a. opportunity because i t is part of Armani's external environment b. strength because it is part of Armani's external environment c. weakness because Armani cannot control the growth of the t rend d. advantage because i t gives Armani growth opportunities e. benefit because Armani's i nternal resources can be designed to make its external environment ANS: A A SWOT analysis looks at opportunities and threats (external to the organization) and strengths and weaknesses (internal to the organization). PTS: 1 REF: 40 OBJ: 02-4 TYPE: App TOP: A ACSBReflective Thinking | TB&E Model Research 32. Coca-Cola drink vending machines a re found all over the world. The newest machines have an interactive screen that runs advertisements and allows users to obtain free photos of themselves and r ingtones after t hey have bought a drink. The reason for the introduction of this new style vending machine is to "allow the company to interact more directly with i ts customers." According to a SWOT analysis, the technology used by these machines and the need to interact with customers a re both examples of: a. strengths because they are part of Coke’s external environment b. advantages because they are part of Coke’s marketing environment c. weaknesses because Coke cannot control technology or consumer behavior d. opportunities because they are part of Coke’s external environment e. benefits because Coke has the resources to make use of t he new technology and the changing consumer behavior ANS: D A SWOT analysis looks at opportunities and threats (external to the organization) and strengths and weaknesses ( internal to the organization). PTS: 1 REF: 40 OBJ: 02-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 33. Carefully specified marketing objectives should NOT be used as a: a. method to appeal to all market segments b. method for developing standards to gauge performance c. motivational tool for those charged with achieving the objectives d. way to force executives to sharpen their critical thinking skills e. method of developing, implementing, and evaluating a consistent marketing plan ANS: A M arketing objectives should be stated for each target market. PTS: 1 REF: 39-40 OBJ: 02-3 T YPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy 34. A U.S. textile m anufacturer concerned about its survival in the world marketplace has set as i ts goal, "To i ncrease t raining and educational opportunities for its employees during the next twentyfour months." Why is this corporate objective ineffective? a. The objective is time-restrictive. b. The objective is not quantifiable. c. The objective restricts the corporate priorities. d. The objective is not qualitative in nature. e. Nothing is wrong with this objective. ANS: B One of t he important criteria for an effective goal is for the goal to be measurable or quantifiable. “ Increase” is only a direction and does not state the amount of increase to be achieved. PTS: 1 REF: 39 OBJ: 02-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 35. For marketing objectives to be realized, they must meet all of the following criteria EXCEPT: a. be consistent with organization objectives b. be measurable c. be attainable d. be challenging e. be set within a one-year t ime frame ANS: E There is no one-year time f rame restriction for marketing objectives although specifying a particular t ime frame m akes an objective more clear and precise. PTS: 1 REF: 39-40 OBJ: 02-3 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Strategy 36. Tyler Dunoki works for Star C reek, a new start-up Australian wine producing company. He has been asked to submit r ecommendations for marketing objectives for the upcoming strategic planning period. W hich of the following marketing objectives would be most appropriate for the company? a. S tar Creek wants 30 percent of the market for Australian wines within 24 months of the l aunching of i ts new advertising campaign. This effort will be supported by a $20 million commitment from the company's owner and president. b. Star Creek seeks to sell more bottles of wine than its competitors during the next strategic planning period. c. Star Creek needs to develop some new wines to help i t gain market share. d. Star Creek wants to be n umber one in the marketplace for all Australian wines within one year. e. Star Creek wants to be recognized as an international winery. ANS: A Marketing objectives should be consistent with organization objectives, should be measurable, and should specify a time f rame. Objectives also should be carefully specified. For a new company to become number one in the marketplace in a single year isn’t reasonable. PTS: 1 REF: 39-40 OBJ: 02-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Promotion 37. A _____ is a formal study conducted by an organization to ascertain i ts current status and capabilities and its future expectations. a. situation analysis b. marketing audit c. t rend analysis d. s trategic alternative selection e. competitive advantage audit ANS: A PTS: 1 REF: 40 TOP: A ACSB Analytic | TB&E Model Research OBJ: 02-4 TYPE: Def 38. Baths From the Past is a small company that sells reproduction sinks, bathtubs, toilets, and faucets for people who a re t rying to make their bathroom more stylish. The company's management is currently conducting a formal study of its current strengths and weaknesses by looking at the company's profit and sales histories and searching for opportunities and threats by studying consumer t rends. Baths From the Past is conducting a(n): a. marketing audit b. SWOT analysis c. environmental scan d. market differentiation scan e. strategic window search A NS: B A SWOT analysis attempts to ascertain the present situation. PTS: 1 REF: 40 OBJ: 02-4 TYPE: App TOP: AACSB Analytic | TB&E Model Research 39. The SWOT acronym r efers to a fi rm’s analysis of its: a. sales, width of product mix, observations, and technology b. situations, wealth, organizational strengths, and target markets c. strengths, weaknesses, opportunities, and threats d. service levels, willingness to spend, organizational culture, and total revenues e. strategies, willingness to change, objectives, and t rends ANS: C PTS: 1 REF: 40 TOP: AACSB Reflective Thinking | TB&E Model S trategy OBJ: 02-4 TYPE: Def 40. Hustler Turf Equipment is a southeastern company that m akes landscaping equipment. The company is looking at customer t rends, i ts competitors, and the economy to see if there are any threats or opportunities on the horizon. I t has also examined its production policies and sales histories to determine i ts strengths and weaknesses. Hustler Turf Equipment is conducting a(n): a. environmental test b. market audit c. t rend analysis d. situation analysis e. competitive advantage search ANS: D A situation analysis contains the SWOT components. PTS: 1 REF: 40 OBJ: 02-4 TYPE: App T OP: AACSB Analytic | TB&E Model Strategy 41. Coca-Cola drink vending machines are found all over the world. The newest machines have an interactive screen that runs advertisements and allows users to obtain free photos of themselves and r ingtones after t hey have bought a drink. Critics of these new vending machines are concerned that entertaining technology is being used to market sugary products. In terms of a SWOT analysis, this concern would be an example of a(n): a. weakness b. strength c. advantage d. opportunity e. threat ANS: E A threat is an external condition that may lessen the success of the strategy. PTS: 1 REF: 40-41 OBJ: 02-4 TYPE: App TOP: AACSB Analytic | TB&E M odel Strategy 42. A U.S. soft drink company conducting a SWOT analysis of market potential in India should be aware that all the following are potential threats EXCEPT: a. r eligious differences that could led to terroristic acts b. strict governmental regulation of foreign businesses c. a low gross domestic product d. fierce competition dominated by T hums Up brand soft drink e. a high demand for U.S.-made products ANS: E A high demand for U.S.-made products would be an opportunity. PTS: 1 REF: 40-41 OBJ: 02-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 43. _____ is defined as the collection and interpretation of information about forces, events, and relationships t hat may affect the organization. a. Market sampling b. An internal audit c. Opportunity analysis d. Environmental scanning e. Stakeholder analysis ANS: D PTS: 1 REF: 40-41 T OP: AACSB Reflective Thinking | TB&E Model Research OBJ: 02-4 TYPE: Def 44. Skoda is a carmaker in the Czech Republic. The auto manufacturer is launching a marketing drive designed to ultimately sell one million Skoda vehicles a year. Through the use of _____, Skoda has identified the main growth markets for automobiles as China, Russia, and India and has plans to build production plants in each of those countries. a. market sampling b. an internal audit c. opportunity analysis d. environmental scanning e. stakeholder analysis A NS: D Environmental scanning s the collection and interpretation of information about forces, events, and relationships that may affect the organization. PTS: 1 REF: 40-41 OBJ: 02-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Research 45. All the following are environmental forces a Washington State fruit grower with both orchards and a packaging/shipping facility might consider when making marketing decisions. What factor is LEAST likely to impact i ts marketing decisions? a. working mothers who rely on their t eenagers to do the family grocery shopping b. the increase in foreign shipments to the U nited States of a similar product c. changes in the state laws concerning pollution control, waste disposal, and use of pesticides d. inflation and interest rates e. the number of employees of a Florida fruit grower ANS: E The number of employees of a non-key competitor has the least impact on a marketing decision. PTS: 1 REF: 40-41 OBJ: 02-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 46. As a customer entered the Hornady store, which sells muzzle loading r i f les, a salesperson approached her and said, "Hornady lead round balls are the musket balls you ought to buy. They are the most uniform in size and shape, and they are made of pure lead. Our shot is used by the M uzzle Loading World Champion." The salesperson was describing Hornady's: a. competitive advantage b. strategic strength c. tactical opportunity d. opportunity mission e. quality objective ANS: A A competitive advantage is a set of unique features of a company and its product that are perceived by the target market as significant and superior to the competition. PTS: 1 REF: 41 OBJ: 02-5 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 47. Each labor and delivery room at Dekalb County's new Medical Center has hardwood f loors, soft lighting, and mission-style furniture. The facility also features a stone fireplace in the lobby, a bistrostyle restaurant, and VIP suites for d iscerning mothers-to-be. This unique design and furnishings give the Medical Center a: a. p rofit-enhanced advantage b. competitive advantage c. quality objectivity d. strategic s trength e. tactical opportunity ANS: B A competitive advantage is a set of unique features of a company and i ts product that are perceived by the target market as significant and superior to the competition. PTS: 1 REF: 41 OBJ: 02-5 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model Strategy 48. Aldi is a no-frills grocery chain. I t sells grocery staples r ight out of crates and boxes with emphasis on low-priced, p rivate-label brands. Aldi stores are typically about one-third the size of the t raditional supermarket. By controlling expenses, Aldi enables its customers to save 30 to 50 percent compared to K roger customers. The chain targets bargain hunters who are willing to rent a cart and bag their own groceries. Aldi has a(n) a. market-homogeneous focus b. cost competitive advantage c. product aggregation strategy d. revenue-based competitive advantage e. profit-enhanced advantage ANS: B A ompetitive advantage is a set of unique features of a company and its product that are perceived by the target market as significant and superior to the competition. PTS: 1 REF: 41 OBJ: 02-5 TYPE: App TOP: AACSB Analytic | TB &E Model Pricing 49. Aldi is a nofrills grocery chain. I t sells grocery staples r ight out of crates and boxes with emphasis on low-priced, private-label brands. Aldi stores are typically about one-third the size of the t raditional supermarket. By controlling expenses, Aldi enables its customers to save 30 to 50 percent compared to K roger customers. The chain targets bargain hunters who are w illing to rent a cart and bag their own groceries. Aldi uses _____ to create i ts competitive advantage. a. demand and supply curves b. reengineering c. production innovation d. nofrills goods and services e. efficient labor ANS: D Reengineering entails fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical measures of performance. PTS: 1 REF: 41-42 OBJ: 02-5 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 50. Through the use of _____, Revlon identified the fact t hat its brand names (Revlon, Almay and Flex) had developed a poor image with both its customers and its retailers. a. marketing control b. environmental control c. environmental scanning d. social audit e. strategic analysis ANS: C Environmental scanning is the collection and interpretation of information gathered from the external environment. PTS: 1 REF: 40-41 OBJ: 02-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Research 51. Through the use of environmental scanning, Flexcar, a company that rents cars by the hour, could: a. learn why it needed to use a team m anagement structure b. determine why the market for short-term car rentals is growing c. benefit from experience curves d. periodically divest i tself of low-margin vehicles e. do none of these things ANS: B Environmental scanning is the collection and interpretation of i nformation gathered from the external environment. PTS: 1 REF: 40-41 OBJ: 02-4 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product | TB&E Model Research 52. PPR, the French retail and luxury goods group, announced plans to sell its Printemps department store chain. PPR will create a _____ advantage by restructur ing and selling off t he department chain that does not complement i ts luxury product lines. Through r eengineering the company hopes to increase i ts profit margins, improve inventory t urnover, and make itself more attractive to investors. a. brand name strategy b. niche competitive advantage c. cost competitive advantage d. marketing competitive advantage e. synergistic competitive advantage ANS: C Reengineering is one of the methods cost are r educed to create a cost competitive advantage. PTS: 1 REF: 41-42 OBJ: 02-5 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Pricing 53. Fujisawa is Japan's seventhlargest pharmaceutical company. I t sells drugs taken by organ t ransplant patients to i ncrease the probability the new organ will operate efficiently and not be rejected. Currently, the only products Fujisawa makes are these organ t ransplant drugs, which it sells worldwide. I ts patents protect i t from competitors. Fujisawa has a: a. brand name s trategy b. niche competitive advantage c. cost competitive advantage d. marketing competitive advantage e. sustainable competitive advantage ANS: B A niche competitive advantage is the advantage achieved when a fi rm seeks to target and effectively serve a small segment of the market, in this case people who need organ t ransplant drugs. I ts advantage is not sustainable because patents expire. PTS: 1 REF: 43 OBJ: 02-5 TYPE: App T OP: AACSB Diversity | TB &E Model Product | TB &E Model International Perspective 54. Beverly Morgan started her home-based business, K i tz 4-U Inc. in Hamil ton, Ontario, by selling First Aid K i ts to fundraising organizations. She has also developed three other a ffordable "Everything You Need In A Pinch" ki ts, the Bowling Ki t, the Golf Ki t, and the T ravel K it. She owns the only company in Canada that creates ki ts for fundraisers. K i tz 4-U I nc. has a: a. brand name strategy b. niche competitive advantage c. cost competitive advantage d. market advantage e. sustainable competitive advantage ANS: B A niche competitive advantage is the advantage achieved when a fi rm seeks to target and effectively serve a small segment of the market, in this case organizations that need to raise funds. I ts advantage is not sustainable because her business could be easily replicated. PTS: 1 REF: 43 OBJ: 02-5 TYPE: App TOP: AACSB Diversity | TB&E Model Product | TB&E Model I nternational Perspective 55. Yuengling is the oldest brewery in the United States. I t was founded in 1827 in a t ime when small breweries dotted the nation. I t has survived by severely limi ting sales of the beer and creating a mystique about the brand. In areas where t he beer is sold, its brand name is used the same as Kleenex is used by many to represent a ll types of t issues. I ts competitors all wanted to expand their markets. Yuengling's strategy was "To do nothing." For over 170 years, this strategy has given the brewery a: a. brand name strategy b. niche competitive advantage c. price differentiation advantage d. m arketing competitive advantage e. sustainable competitive advantage ANS: B Yuengling offers a product that is available only in a limited area. See Buddy Freddy's example in the text. PTS: 1 REF: 43 OBJ: 02-5 TYPE: App TOP: AACSB Analytic | TB&E Model Product 56. Arizona Tea is marketed by Vultaggio & Sons. Vultaggio & Sons took a basic drink and p ut i t into unusual bottles with elaborate designs. The wide-mouthed, long-necked bottles a re now considered to be t rendsetters in the new age beverage industry, and customers often buy the tea just for the bottle. The success of Arizona Tea is based on: a. supplydemand curves b. reengineering c. a product differentiation competitive advantage d. a cost competitive advantage e. a heterogeneous marketing strategy ANS: C A product d ifferentiation competitive advantage exists when a fi rm provides something unique that is valuable to buyers beyond simply offering a low price. PTS: 1 REF: 42-43 OBJ: 02-5 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 57. Flexcar is a car rental service found in many metropolitan areas. I t targets people who take mass t ransit or carpool to work but who occasionally need to run errands, visit the doctor, or check on a sick child. Flexcar is the only company currently providing cars that can be rented by the hour. F lexcar has created a(n) _____ advantage. a. reengineering b. experience curve c. service d ifferentiation competitive d. niche market e. sustainable competitive ANS: C A service d ifferentiation competitive advantage exists when a fi rm provides something unique that is valuable to buyers beyond simply offering a low price. PTS: 1 REF: 42-43 OBJ: 02-5 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 58. Technol Medical P roducts makes specialty face masks to shield health-care workers from infection. Because i t focuses on this narrow market, i t is able to outsell i ts primary competitors--3M and Johnson & Johnson. Technol Medical Products has a(n): a. aggregated positioning strategy b. demarketing focus c. heterogeneous target marketing d. cost competitive advantage e. n iche competitive advantage ANS: E PTS: 1 REF: 43 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 02-5 TYPE: App 59. There are many different kinds of cheese. According to i ts ads, only Jarlsberg Li te has 50 percent less fat, 60 percent less cholesterol, and 100 percent of the taste of other kinds of cheese. This advertising statement describes Jarlsberg Li te's: a. strategic edge b. competitive advantage c. tactical strength d. marketing m ix e. mission statement ANS: B PTS: 1 REF: 41 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 02-5 TYPE: App 60. Which of the following companies has a competitive advantage? a. World Wrestling Entertainment (formerly the World Wrestling Federation) holds the t rademark on the names of the wrestlers that participate in the company's wrestling matches. b. Netcentives holds the patent on software that allows merchants to distribute loyalty points online. c. DeBeers diamonds controls 90 percent of t he world's diamond mines. d. M ildred's Café makes the world's best pecan pie. e. All of the choices have a competitive advantage. ANS: E While not all have sustainable competitive advantage, all do have a unique feature that differentiates them from other businesses selling similar products. PTS: 1 REF: 41 OBJ: 02-5 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 61. _____ show costs declining at a predictable rate as experience with a product increases. a. Liquidity growth curves b. EOQ graphs c. B reakeven analyses d. Experience curves e. Supply/demand curves ANS: D PTS: 1 REF: 41 O BJ: 02-5 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E M odel Pricing 62. Which of the following is NOT a source of a cost competitive advantage? a. r eengineering b. experience curves c. break-even analyses d. efficient labor e. production i nnovation ANS: C PTS: 1 REF: 41-42 TOP: AACSB Reflective Thinking | TB&E Model P ricing OBJ: 02-5 TYPE: Comp 63. Everyone knows the brand name K leenex. Kleenex is w hat many consumers think of when they think of tissues. This widely recognized brand name is a source of: a. a product differentiation competitive advantage b. a cost advantage c. m arket augmentation d. a niche competitive advantage e. none of these things ANS: A The b rand name is unique and has a valued impression. PTS: 1 REF: 42 OBJ: 02-5 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 64. Bentley automobiles are extremely expensive and are designed to appeal to consumers who equate value and quality w ith price. The manufacturer of Bentley automobiles has created a _____ competitive advantage. a. value-enhanced b. mass-marketing c. functional d. niche e. social classoriented ANS: D A niche competitive advantage seeks to target and effectively serve a single segment of the market. PTS: 1 REF: 43 OBJ: 02-5 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 65. Patents on allergy relief medications like A llegra and Claritin give the pharmaceutical companies that own the patents a(n) _____ for 17 years until the patent expires. a. targeted market position b. sustainable competitive advantage c. strategic focus d. situational strength e. opportunistic privilege ANS: B A sustainable competitive advantage is one that cannot be copied by the competition, in this case at least until the patent expires. PTS: 1 REF: 43 OBJ: 02-5 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 66. Twenty years ago wine journalists m arveled at the innovative product technology the Australian wine industry used to make w ine of the highest quality. The determination of the Australian wine industry to exercise control over the winemaking process was perceived as revolutionary. The Australian wine i ndustry's continuing relentless quest for quality improvement established Australian wine as a market leader. This unique quest for superior quality that began two decades ago gives A ustralian wine a(n): a. targeted market position b. sustainable competitive advantage c. s trategic focus d. situational strength e. opportunistic privilege ANS: B A sustainable competitive advantage is one that cannot be copied by the competition. PTS: 1 REF: 43 OBJ: 02-5 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 67. Which of the following is a type of strategic alternative that matches products and markets? a. vertical i ntegration b. product penetration c. divestment d. horizontal integration e. market penetration ANS: E PTS: 1 REF: 44 OBJ: 02-6 TYPE: Def TOP: AACSB Reflective Thinking | T B&E Model Strategy 68. _____ is a strategy of increasing market share for present p roducts in existing markets. a. Market penetration b. Product development c. Market development d. Diversification e. Product penetration ANS: A PTS: 1 REF: 44 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 02-6 TYPE: Def 69. Knorr, a m anufacturer of soup, dip, and gravy mixes, printed on-package recipes, gave out coupons t o existing customers, and created a recipe booklet that could be ordered with three UPC codes from three different Knorr products. All of these activities would be representative of a _____ strategy. a. diversification b. product development c. market development d. market penetration e. product penetration ANS: D Selling more of the same product to existing m arkets is market penetration. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB A nalytic | TB&E Model Product | TB&E Model Strategy 70. _____ is a strategy that a ttracts new customers to existing products. a. Product development b. Market development c. Market penetration d. Product penetration e. Diversification ANS: B PTS: 1 REF: 44 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 02-6 TYPE: Def 71. Skoda is a carmaker in the Czech Republic. The auto manufacturer is launching a marketing drive designed to ultimately sell one million Skoda vehicles a year. Skoda has identified the main g rowth markets for automobiles as China, Russia, and India and has plans to market Skoda b rand automobiles in each of those countries. This would be an example of a _____ strategy. a. market penetration b. horizontal integration c. product development d. diversification e. m arket development ANS: E Market development is a strategy that attracts new customers t o existing products. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Marketing Plan | TB&E Model In ternational Perspective 72. P rocter & Gamble has a Web site, www.pg.com, that is designed to help customers with p roduct questions. While at the Web site, you can request free samples of Olay Radiance, Pert Plus, and Folgers Latte, all new P&G products. I t also offers "More Than a Card," a feature that allows customers to buy an assortment hamper of new P&G products for less t han $25. This is an example of how a company can implement a _____ strategy. a. market development b. product development c. market penetration d. product penetration e. d iversification ANS: B Product development is the int roduction of new products to present m arket. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Analytic | TB &E Model P roduct | TB&E Model Creativity 73. American Express offers a Cobaltcard, a pre-loaded credit card, to thi r teen- to twenty-two-year olds looking to make online purchases. While A merican Express had previously supplied credit cards only to many adults, this was a m arket that was not being served. The Cobaltcard program is an example of a _____ s trategy. a. market development b. product development c. market penetration d. product penetration e. divestment ANS: A Market development finds new uses for a product to s timulate sales among new customers. This product is a credit card (a long-time AmEx p roduct) aimed at a market. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 74. Clay Market began as a retailer of terra cotta pots and garden figures imported from Turkey and Mexico. I t has since added Turkish rugs and fabrics, leather t r immed purses, and a line of women's clothes for its customers. This activities is indicative of a _____ strategy. a. vertical integration b. market penetration c. d iversification d. product development e. market development ANS: D Product development s timulates new sales to existing markets. Since the question states the items are for the f i rm’s customers, they are aimed at existing markets (buyers). PTS: 1 REF: 44 OBJ: 02-6 T YPE: App TOP: AACSB Diversity | TB &E Model Product 75. _____ is a strategy that creates new products for present markets. a. Product penetration b. Market penetration c. P roduct development d. Market development e. Diversification ANS: C PTS: 1 REF: 44 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 02-6 TYPE: Def 76. _____ is the strategy of increasing sales by int roducing new products into new markets. a. Product penetration b. Product development c. Market penetration d. Market development e. D iversification ANS: E PTS: 1 REF: 44 OBJ: 02-6 TYPE: Def TOP: AACSB Diversity | T B &E Model Strategy | TB&E Model In ternational Perspective 77. Research has shown t hat people below the age of fif teen do not use the familiar red ketchup. To capture this m arket, Heinz markets blue-, purple- and green-colored ketchup. The ketchups have an exotic look, which Heinz hopes will appeal to this market. I t still tastes like the old red variety. Since this is not really a new product, just an attempt to reach a new target market, i t exemplifies a _____ strategy. a. market development b. product development c. market penetration d. diversification e. product expansion ANS: A Market development is the i nt roduction and sale of present products to new markets. PTS: 1 REF: 44 OBJ: 02-6 TYPE: A pp TOP: AACSB Analytic | TB&E Model Research 78. Due to recent hur r icanes, orange g rowers in Florida have lost millions of dollars. As a result, some growers have decided to bulldoze their orange groves and put in freshwater lakes for raising shrimp, a product that has a strong populari ty and is more weather-resistant. Former orange growers who are now r aising shrimp are pursuing a _____ strategy. a. market penetration b. product development c. diversification d. market development e. product penetration ANS: C Diversification is defined as selling a new product to a new market. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App T OP: AACSB Diversity | TB &E Model Product | TB &E Model International Perspective 79. The company that manufactures Molson beer simultaneously launched Arctic brand in O ntario and Tornade brand in Quebec with the intention of gaining a share of the rapidly expanding alcoholic lemonade segment of the beverage indust ry. The separate launch s trategies for the products are due to different market conditions in the two Canadian p rovinces. Molson used _____ strategies to reach existing markets with i ts new product. a. m arket development b. market penetration c. product penetration d. product development e. d iversification ANS: D Molson has developed a new product for people who are already d rinkers of Molson's other products. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB A nalytic | TB&E Model Strategy 80. The television network HBO produces the drama The Sopranos about a New Jersey mob family. I t is publishing The Sopranos Family Cookbook: As Compiled by Ar tie Bucco, a collection of southern I talian-style recipes. Bucco is the name of a fictional restaurateur in the show. The creation of the cookbook to appeal to fans of the show is an example of a _____ strategy. a. market development b. market penetration c. p roduct penetration d. product development e. diversification ANS: D HBO has created a new product for existing viewers. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Creativity 81. U.S.-based T hermo Electron Corporation, the biggest maker of measurement instruments for medical l aboratories, agreed to buy the radiation-monitoring products unit of Compagnie de SaintGobain for $30 million to gain European customers. Saint-Gobain of France is Europe's n umber one distributor of building materials, and i ts radiation monitoring unit did not support the company's mission statement. Thermo Electron engaged in a _____ strategy. a. building b. divesting c. diversification d. penetration e. market development ANS: E PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | T B&E Model Distribution 82. The Hallmark Company was inspired by the populari ty of Jan Karon's best-selling novels about M i tford, a fictional town in the mountains of North Carolina, to develop a new line of products for Hallmark Gold Crown Stores nationwide. H allmark created hundreds of M i tford-inspired products that authentically bring "the lit t le town with the big heart" into tangible reality. The products include greeting cards, partyware and gift wrap, mugs, and puzzles for Hallmark's existing customers. Hallmark used a _____ strategy. a. market development b. market penetration c. product penetration d. product development e. diversification ANS: D Hallmark created new Mi tford-based i tems for its regular customers. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB A nalytic | TB&E Model Product 83. For most American consumers, the brand name Benetton brings to mind a retail clothing store that carries many products that bear the Benetton brand. But the Benetton Group also owns a chain of restaurants, several toll r oads in I taly, and a telecommunications company. The list of the company's holdings i ndicates that the company's managers believe in growth through: a. market integration b. d iversification c. market development d. product penetration e. market penetration ANS: B D iversification is defined as selling a new product to a new market. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Marketing Plan | TB&E M odel In ternational Perspective 84. Juniper Group, which operates film distribution, health care, and In ternet businesses, purchased shoemaker Tags Golf (Tags makes Bobby Jones brand golf shoes) to create its sports division. Juniper Group used a _____ strategy. a. m arket development b. market penetration c. product penetration d. product development e. d iversification ANS: E Juniper entered a new market with a new product. PTS: 1 REF: 44 O BJ: 02-6 TYPE: App TOP: AACSB Diversity | TB&E Model Strategy | TB &E Model I nternational Perspective 85. To market i ts ice cream to Chinese consumers, Unilever entered into a joint venture with Sumstar, a state-owned Chinese investment company. U nilever provided the product know-how, and Sumstar helped Unilever gain all the approvals needed from a complex Chinese bureaucracy. Unilever used a _____ strategy to r each the Chinese market. a. market development b. market penetration c. product penetration d. product development e. diversification ANS: A Unilever wanted to sell an existing product (ice cream) to a new market (China). PTS: 1 REF: 44 OBJ: 02-6 TYPE: App T OP: AACSB Diversity | TB &E Model Customer | TB &E Model In ternational Perspective 86. Shortly after the start of the new century, Wrigley, the largest chewing gum m anufacturer in the world, bid $12 billion for Hershey, the chocolate company. Wrigley was u nable to acquire Hershey, but its acquisition would have expanded Wrigley's product lines t o include many forms of baking and eating chocolate. Since Wrigley did not produce any chocolate at the t ime of the takeover bid, this acquisition would have been an example of: a. d ivestment b. segment development c. target marketing d. diversification e. directed growth A NS: D Wrigley, which makes chewing gum, would also be making chocolate, a completely d ifferent product. Also the market for chocolate differs significantly from the market for chewing gum. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Diversity | TB&E Model P roduct | TB&E Model In ternational Perspective 87. Market penetration occurs when: a. a supermarket chains adds another brand of ice cream to i ts inventory b. a U.S.-based company begins to sell its products in South America c. a French company develops a new cement for orthopedic surgery d. a Mexican distillery offers rebates to its current customers e. a hosiery manufacturer begins manufacturing wigs ANS: D Market penetration is the m arketing of the same product to current customers. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App T OP: AACSB Diversity | TB &E Model Customer | TB &E Model In ternational Perspective 88. In order to expand its sales into the U.S. market, BRL, an Australia-based winemaker, agreed to a merger with a U.S.-based wine distribution company. According to Ansoff's S trategic Opportunity Mat r ix, BRL would be implementing a _____ strategy. a. d iversification b. market development c. product development d. divestment e. product penetration ANS: B Market development refers to the attracting of new markets (U.S. consumers) to existing products. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB D iversity | TB&E Model Distribution | TB &E Model In ternational Perspective 89. Anbac F inancial Group, Inc. is the second-largest insurer of municipal bonds in the world. Anbac is expanding its insurance services from governmental accounts to include private developers of sports stadiums and similar large multi-use facilities. According to Ansoff's S trategic Opportunity Mat r ix, Anbac would be implementing a _____ strategy. a. d iversification b. market development c. product development d. divestment e. product penetration ANS: B Market development refers to the attracting of new markets (private developers) to existing products. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB D iversity | TB&E Model Strategy | TB&E Model In ternational Perspective 90. In 2004, G iorgio Armani, the I talian fashion group, announced plans to launch a $1 billion i nternational luxury hotel chain containing ten hotels and four resorts before the end of 2015. Since this was Armani's fi rst venture into the hotel industry, i t would be an example of: a. diversification b. market development c. product development d. divestment e. product penetration ANS: A Diversification is a strategy of increasing sales by int roducing a new p roduct to a different market. PTS: 1 REF: 44 OBJ: 02-6 TYPE: App TOP: AACSB Diversity | T B&E Model Distribution | TB&E Model International Perspective 91. The _____ is a tool for allocating resources among products or strategic business units on the basis of relative m arket share and market growth rate. a. market audit b. portfolio matrix c. experience m at r ix d. market development analysis e. market opportunity analysis ANS: B PTS: 1 REF: 45 TOP: AACSB Reflective Thinking | TB &E Model Strategy OBJ: 02-6 TYPE: Def 92. Before Heinz sold its 9-Lives brand cat food unit, the company identified the product as having a low market share in a high-growth market. The portfolio mat rix would classify 9Lives as a(n): a. star b. exclamation point c. question mark d. cash cow e. widow ANS: C A question market, also called a problem child, shows rapid growth but has poor profit m argins. PTS: 1 REF: 46 OBJ: 02-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Product 93. John R. Harland Company is best known for printing checks. I ts F inancial Solutions division develops software for mortgage companies. This division is currently producing much less than the desired level of profitabili ty in what has been i dentified as a high-growth industry. According to the portfolio matr ix, Harland would label i ts Financial Solutions division as a(n): a. widow b. exclamation point c. problem child d. s tar e. dog ANS: C A problem child, also called a question mark, has a low market share in a r apidly growing industry. PTS: 1 REF: 46 OBJ: 02-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 94. Russell Athleticwear was a market leader in the sports apparel industry, an industry that is growing rapidly. With Berkshire Hathaway, I nc.’s recent purchase of Russell Corporation, i t becomes an SBU, but it is still an example of a(n) _____ according to the portfolio mat rix. a. star b. question mark c. problem child d. exclamation point e. widow ANS: A A star has a large market share in a rapidly growing i ndustry. PTS: 1 REF: 45 OBJ: 02-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Strategy 95. Thermo Electron Corporation, the biggest maker of measurement i nstruments for medical laboratories, agreed to buy the radiation-monitoring products unit of Cie de Saint-Gobain for $30 million to gain European customers. Saint-Gobain of France is Europe’s number one distributor of building materials, and its radiation monitoring unit d id not support the company’s mission statement. Saint-Gobain engaged in a _____ strategy. a. building b. divesting c. diversification d. integration e. penetration ANS: B Divesting means getting r id of SBUs with low market share. PTS: 1 REF: 47 OBJ: 02-6 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy 96. John R. Harland Company is best known for printing checks. I ts Financial Solutions division develops software for mortgage companies, a growing industry. This division is currently not producing at the desired level of profitability, but Harland plans to turn the division into a success by acquiring other companies that develop similar software. Harland would be engaging in a _____ strategy. a. harvesting b. diversification c. divesting d. holding e. building ANS: E If an organization has an SBU that it believes has potential to be a star, building would be an appropriate strategy. PTS: 1 REF: 46 OBJ: 02-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 97. In 2004, Giorgio Armani, the I talian fashion group, announced plans to launch a $1 billion international luxury hotel chain containing ten hotels and four resorts before the end of 2015. Through conducting a _____, Armani i dentified a large and growing segment of the market that wanted a luxury lifestyle. a. m arket diversification analysis b. market audit c. social audit d. market opportunity analysis e. niche analysis ANS: D An MOA is the description and estimation of the size and sales potential of market segments that are of interest to the fi rm. Armani produces luxury goods; therefore, luxury hotels seem to have excellent potential. PTS: 1 REF: 47 OBJ: 02-7 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 98. Skoda is a carmaker in the Czech Republic. The auto manufacturer wants to ultimately sell one m illion Skoda vehicles a year. Skoda could have used a _____ to identify the fact that China, Russia, and India have growing middle classes who are most likely to be new car buyers. As a result, Skoda is building production plants in each of the count ries. a. market d iversification analysis b. market audit c. social audit d. market opportunity analysis e. n iche analysis ANS: D An MOA is the description and estimation of the size and sales potential of market segments that are of interest to the fi rm. PTS: 1 REF: 47 OBJ: 02-7 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 99. CentralPulse is E urope's largest manufacturer of hip and knee replacement joints. The company's _____ s trategy would identify the surgeons and hospitals as two market segments on which the CentralPulse will focus its marketing efforts. a. target market b. marketing sample c. sales u nit d. strategic business unit e. target sample ANS: A A target market is one or more m arket segments on which a company focuses. PTS: 1 REF: 47 OBJ: 02-7 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Strategy 100. C-Ice is a canned beverage made f rom tea and cannabis that is marketed in Europe as a nut r i tional drink that can boost a user's immune system. The _____ for C-Ice is people who want to improve or maintain their health. a. b. c. d. e. target market marketing sample sales unit strategic business unit target sample ANS: A A target market is one or more market segments on which a company focuses. PTS: 1 REF: 47 OBJ: 02-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Strategy | TB &E Model In ternational Perspective 101. Flexcar is a car rental agency t hat is geared for people who take mass t ransit or carpool to work but occasionally need to r un errands, visit the doctor, or check on a sick child during the work day. The preceding s tatement describes the _____ for Flexcar. a. exchange mixers b. target market c. diversified m arket d. t ransactionalists e. sustainable market ANS: B A target market is one or more m arket segments on which a company focuses. PTS: 1 REF: 47 OBJ: 02-7 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model Strategy 102. Fit, a health and fi tness magazine, describes its readers as being female, 18 to 25 years of age, single, high school graduates, and earners of above-average income. The magazine's _____ would have identified this market segment. a. environmental audit b. statement of purpose c. market development strategy d. target market strategy e. environmental mission s tatement ANS: D The target market strategy identifies the market segment on which to focus. PTS: 1 REF: 47 OBJ: 02-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Customer | TB&E Model Strategy 103. A(n) _____ describes and estimates the size and sales potential of market segments of interest to the fi rm and assesses key competitors i n these market segments. a. marketing orientation b. environmental scan c. marketing mix audit d. target market strategy e. market opportunity analysis ANS: E PTS: 1 REF: 47 TOP: A ACSB Reflective Thinking | TB&E Model Strategy OBJ: 02-7 TYPE: Def 104. Ocean Spray's development of Craisins sweetened dried cranberr ies to compete against raisins most directly affected the _____ element of the company's marketing mix. a. b. c. d. e. place p roduction product distribution target market OBJ: 02-8 TYPE: App ANS: C PTS: 1 REF: 48 TOP: AACSB Reflective Thinking | TB &E Model Product 105. Canadian discount retail g iant Zellers hopes to strengthen its position as one of the count ry's leading sellers of infant p roducts with a sixty-page catalog that offers buyers the ability to purchase products via t he phone or Internet. This new strategy reflects a change in the _____ element of its m arketing mix. a. price b. production c. product d. distribution e. target market ANS: D PTS: 1 REF: 48-49 OBJ: 02-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model D istribution 106. The _____ is the unique blend of product, distribution, promotion, and p ricing strategies designed to produce mutually satisfying exchanges with a target market. a. internal environmental mix b. marketing mix c. product mix d. product line e. market portfolio ANS: B PTS: 1 REF: 48 TOP: AACSB Reflective Thinking | TB &E Model Strategy O BJ: 02-8 TYPE: Def 107. The starting point of any fi rm's marketing mix is the: a. analysis of what production equipment is available and owned by the company b. design of the p romotion campaign to be used for the product c. selection of the places through which the good or service will be sold d. determination of the product's price, enabling future revenues and budgets to be estimated e. development of the good or service to be sold ANS: E The p roduct is the starting point for any marketing mix. Without it, pricing, distribution, and p romotion are i r relevant. The production capacity can be changed to fi t the proposed p roduct. PTS: 1 REF: 48 OBJ: 02-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E M odel Strategy 108. Solitude Nurseries is a retailer that helps homeowners create backyard sanctuaries for pondering the wonders of nature. I ts owner believes he maintains the loyalty of the store's customers by stocking only the highest quality merchandise and offering a customer satisfaction guarantee. With which element of the marketing mix is the m anager most concerned? a. price b. distribution c. personalization d. promotion e. product A NS: E The product element of the marketing mix includes guarantees and quality. PTS: 1 REF: 48 OBJ: 02-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 109. Golden Valley M icrowave Foods, Inc. is the manufacturer of ACT I I popcorn. In its early years, the company had t rouble financing the development and marketing of products for the microwave, so it chose to participate in a financial arrangement in which it agreed t hat it would not sell ACT I I popcorn in supermarkets or grocery stores. Which element of t he marketing mix was most inf luenced by this arrangement? a. product b. place c. price d. p ublic relations e. promotion ANS: B Where a product is sold is part of the place (distribution) element of its marketing mix. PTS: 1 REF: 48-49 OBJ: 02-8 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Distribution 110. Making sure products are available when and where customers want them is the job of which element of the m arketing mix? a. advertising strategies b. production strategies c. product strategies d. p romotion strategies e. distribution strategies ANS: E Distribution strategies make p roducts available when and where customers want them. PTS: 1 REF: 48-49 OBJ: 02-8 T YPE: Def TOP: AACSB Reflective Thinking | TB &E Model Distribution | TB&E Model P roduct 111. The promotion strategy of the marketing mix deals exclusively with: a. personal selling and advertising b. advertising and public relations c. personal selling, advertising, sales promotion, and public relations d. advertising, publicity, and pricing e. personal selling and purchased mass media t ime or space ANS: C PTS: 1 REF: 49 TOP: A ACSB Reflective Thinking | TB&E Model Promotion OBJ: 02-8 TYPE: Def 112. SoBe n ut r it ional beverages uses twin lizards on every bottle of its products and in all of its p romotion efforts. I t even has i ts own Team Lizard made up of skateboarders, mountain b ike r iders, and inline skaters that it sponsors. The lizard is used to remind consumers of t he product and i ts benefits. To which of the four Ps does this strategy relate? a. promotion b. price c. publicity d. place e. product ANS: A Promotion covers a wide range of communication vehicles. PTS: 1 REF: 49 OBJ: 02-8 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Promotion | TB &E Model Creativity 113. CFM Corporation of Canada learned that many of i ts Sequoia brand wood burning stoves had insufficient i nsulation and posed fire threats. Which one of the marketing mix strategies should the s tove manufacturer use to alert buyers to this problem? a. product b. promotion c. p roduction d. pricing e. distribution ANS: B Promotion includes all actions a fi rm takes to b ring about mutually satisfying exchanges with target markets by informing, educating, persuading, and/or reminding them about the organization’s offerings. PTS: 1 REF: 49 OBJ: 02-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Promotion 114. Which of t he marketing mix strategies is the most f lexible? a. product b. promotion c. publicity d. p lace e. pricing ANS: E The only element that is often subject to quick and easy change is p rice. PTS: 1 REF: 49 OBJ: 02-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E M odel Strategy | TB &E Model Pricing 115. C-Ice is a canned beverage made from tea and cannabis that is marketed in Europe as a nut ri t ional drink that can boost the user's i mmune system. I t can only be purchased at health food stores. This limitation on the _____ element of its marketing mix strategy supports the product’s competitive advantage. a. p lanning b. product c. promotion d. distr ibution e. production ANS: D Distribution s trategies make products available when and where customers want them. PTS: 1 REF: 4849 OBJ: 02-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Distribution | T B &E Model Product 116. There is an overabundance of apartments in Atlanta. Post P roperties, the owner many of the metropolitan area's largest apartment complexes, has r educed its rent so it can fill vacant apartments. Which of the following types of strategies d id Post Properties use to create more demand for i ts apartments? a. production strategies b. personnel strategies c. distribution strategies d. product strategies e. pricing strategies A NS: E The fi rm t r ied to increase demand by altering its pricing strategies. This is often t he only element of the marketing mix that is capable of quick and easy change. PTS: 1 REF: 49 OBJ: 02-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Pricing 117. _____ is the process that tu rns marketing plans into action assignments and ensures t hese assignments are executed in a way that accomplishes the plans' objectives. a. M echanistic control b. Strategic analysis c. Implementation d. Strategic planning e. S trategic design ANS: C PTS: 1 REF: 49 TOP: AACSB Reflective Thinking | TB&E Model S trategy OBJ: 02-9 TYPE: Def 118. Argosy Ar ts Institute is a small private technological college with declining enrollment. I t has put together a committee to put into action m arketing plans that were developed by a consulting company. The goal of the committee is t o increase enrollments at the college and attract donations. The commit tee is involved in: a. product planning b. mechanistic organization c. synergistic control d. strategic d iversification e. implementation ANS: E Implementation involves all the steps listed in the question. PTS: 1 REF: 49 OBJ: 02-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Strategy 119. After an organization implements i ts strategic plan, management: a. m ust t rack results, monitor the external environment, and adjust the plan as necessary b. should then concentrate on developing internal information systems c. can be assured the p lan will work for the t ime frame specified d. must make sure no part of the plan is changed, lest the plan fail e. can stop work on this strategic plan, take a rest, and begin work on the next one ANS: A Because the strategic environment continually changes, plans m ust be monitored and altered. PTS: 1 REF: 51 OBJ: 02-9 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Research 120. John R. Harland Company is best known for printing checks. I ts Financial Solutions division develops software for mortgage companies. This division is currently not producing at the desired level of profitability, but Harland plans to tu rn the division into a success by acquiring other companies that develop similar software. _____ will tu rn this marketing plan into action assignments in a manner that accomplishes the company's stated objectives. a. I mplementation b. Entrepreneurship c. Marketing mix maintenance d. Marketing plan control e. Market strategizing ANS: A Implementation is the process that tu rns a marketing p lan into action assignments and ensures that these assignment are executed in a way that accomplishes the plan’s objectives. PTS: 1 REF: 49 OBJ: 02-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Marketing Plan 121. Enzo Fierro has just finished constructing the marketing plan for a new line of low-carb salad dressings. After selecting h is target market and specifying the elements of the marketing mix, he next should: a. set m arketing objectives that are realistic and in a t ime frame b. get employees to do the work necessary to put the marketing strategy into action c. plan every action program and contingency plan d. research the magnitude of the low-carb t rend e. examine similar m anufacturers in the area to determine baseline productions ANS: B After construction of a m arketing plan, implementation takes place, including gaining compliance from employees. PTS: 1 REF: 49-50 OBJ: 02-9 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E M odel Marketing Plan 122. Compass is the name of a United Kingdom-based catering company that has developed a marketing plan designed to make it the largest caterer in China within the next two decades. As part of i ts marketing _____, it has already begun serving meals on t rains that run between Shanghai and Beijing. a. policy b. implementation c. evaluation d. control e. strategy ANS: B Implementation is the process that tu rns m arketing plans into action assignments. PTS: 1 REF: 49 OBJ: 02-9 TYPE: App TOP: A ACSB Diversity | TB&E Model Marketing Plan | TB&E Model In ternational Perspective 123. ConAgra Foods, Inc. has decided to sell all of its meat-processing plants and get totally out of i ts meatprocessing business in order to raise the company's net profits. Which of the following statements describes how the sale of the processing plants will affect ConAgra's m arketing mix? a. b. c. d. e. I t will only affect the product element of ConAgra's marketing m ix. I t will only affect ConAgra's four Ps--not its marketing mix. I t will affect all of ConAgra's marketing mix elements, either directly or indirectly. I t will not affect the p romotion or distribution elements of the ConAgra marketing mix. I t will have no affect on ConAgra's marketing mix. ANS: C The sale will directly change the company's product mix and indirectly affect i ts promotion, pricing, and distribution elements. The emphasis of i ts p romotion will change because i t will no longer need to advertise its meat products. I ts d istribution will change because i t will no longer need the freezer t rucks to t ransport frozen meat. I t is reducing its losses by dumping an inefficient unit. If it wants to, i t can lower p rices temporarily to keep distributors who will need to change their ordering methods happy. PTS: 1 REF: 48-49 OBJ: 02-8 TYPE: Comp TOP: AACSB Analytic | TB &E Model P ricing 124. _____ is the process of gauging the extent to which marketing objectives have been achieved during a specified time period. a. Implementation b. Control c. Heuristic measurement d. Evaluation e. Mechanistic compliance ANS: D PTS: 1 REF: 50 TOP: A ACSB Reflective Thinking | TB&E Model Research OBJ: 02-9 TYPE: Def 125. _____ p rovides the mechanism for evaluating marketing results in light of the marketing plan’s goals and for correcting actions that do not help the marketing organization reach these objectives within the budget guidelines. a. Control b. Implementation c. Reengineering d. P lanning e. Budgeting ANS: A PTS: 1 REF: 50 OBJ: 02-9 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Marketing Plan | TB&E Model Strategy 126. An i nternational company that needs to develop a way to compare its actual marketing results w ith planned results would need to engage in: a. external market research b. i mplementation c. comparative analyses d. planning e. control ANS: E Control involves that mechanism for evaluating results and correcting actions in the planning and i mplementation phases. PTS: 1 REF: 50 OBJ: 02-9 TYPE: Comp TOP: AACSB Analytic | A ACSB Diversity | TB&E Model Strategy | TB&E Model Marketing Plan 127. Which of the following is NOT a common reason why companies fail to achieve a marketing objective? a. u nrealistic marketing objectives b. poor implementation c. lack of capital d. inappropriate m arketing strategy e. changes in the environment after the objective was specified and the s trategy implemented ANS: C Although lack of capital is a common reason for small business failure, it is not one of the four stated common reasons for failing to achieve m arketing objectives. PTS: 1 REF: 50 OBJ: 02-9 TYPE: Comp TOP: AACSB Analytic | T B &E Model Strategy 128. A marketing audit is a(n): a. thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization b. financial examination of the fi rm's marketing performance c. financial examination of the fi rm's accounting records performed by outside consultants d. evaluation of the effectiveness of advertising e. evaluation of pricing strategies across all the relevant competitors in an industry ANS: A PTS: 1 REF: 50 OBJ: 02-9 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Research 129. Compass is the name of a United Kingdom-based catering company that has developed a marketing plan designed to make it the largest caterer in China within the next two decades. To evaluate how successful its efforts have been at the end of the first decade, Compass could use a(n): a. SWOT analysis b. environmental scan c. competitive analysis d. marketing audit e. comprehensive sales analysis ANS: D A market audit is a thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of a marketing organization. PTS: 1 REF: 50 OBJ: 02-9 TYPE: App TOP: AACSB Diversity | TB &E Model Research | TB &E Model In ternational Perspective 130. A planning manager visiting a company's health and beauty aids division discovers the division has no effective method for a llocating resources, nor for evaluating actual results against planned results. He suggests t he division should prepare a: a. marketing audit b. contingency plan c. service audit d. m arket share analysis e. series of tactical evaluations ANS: A A marketing audit is a t horough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization. A marketing audit will evaluate the past, p resent, and future performance of all aspects of the marketing department. PTS: 1 REF: 50 OBJ: 02-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy | T B &E Model Research 131. Which of the following statements about marketing audits is t rue? a. Marketing audits only need to be performed once. b. The main purpose of the m arketing audit is to develop a full profile of a company's marketing effort. c. Marketing audits should only be performed after a major crisis. d. Marketing audits simply examine t he external environment in which a company operates. e. The marketing audit should only be performed by outside accounting fi rms. ANS: B Marketing audits should be performed periodically by an inside or outside party who is independent enough to have top m anagement's confidence and to be objective. Marketing audits examines all facets of an organization's internal and external marketing environments. PTS: 1 REF: 50-51 OBJ: 02-9 T YPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Research 132. The marketing audit: a. should only be performed by an outside accounting f i rm b. only looks at potential threats the organization has identified c. is a rather r estr icted, specialized tool for marketing managers d. is a good tool with which to i mplement marketing plans e. is an excellent way to raise the level of marketing consciousness within an organization ANS: E A marketing audit can be performed by i nternal employees as well as an external organization. A marketing audit is systematic and looks at all facets of the organization. The marketing audit is a control tool--not i mplementation. PTS: 1 REF: 51 OBJ: 02-9 TYPE: Comp TOP: AACSB Reflective Thinking | T B&E Model Strategy | TB&E Model Research 133. Which of the following statements about strategic planning is t rue? a. I t is a real t ime-saver for marketing managers because once it has been completed, the plan can be left unchanged for years. b. Effective strategic p lanning creates plans that are unaffected by environmental changes. c. Top-management participation in and commitment to strategic planning should be limited to hi ring the r ight subordinates. d. I t allows a fi rm to replace creativity with careful analysis. e. None of these s tatements about strategic planning are t rue. ANS: E This chapter emphasizes that s trategic planning is an ongoing process that needs creativity and topmanagement i nvolvement. The reason strategic planning should be ongoing is due to the dynamic nature of the environment. PTS: 1 REF: 51 OBJ: 02-10 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Strategy 134. Effective strategic planning requires: a. the planner t o challenge existing company assumptions b. no management involvement c. a designated single t ime frame during the year d. a tactical mission statement e. a stringent and narrow m ission statement for the creation of effective guidelines ANS: A Planners need to stretch t heir imaginations and search for creative solutions to problems. Planning is a constant p rocess and should include top management. PTS: 1 REF: 51 OBJ: 02-10 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Strategy 135. Larkspur Pottery used to sell f inished pots and figurines by local artists when i ts owner noticed many of her customers were asking if they could make and personalize their own pieces. Now, she sells pottery b lanks, and customers create pieces that exactly suit their needs. This is an example of: a. p lanning with the intent to challenge existing company assumptions b. strategic planning based on creativity c. a designated single time frame during the year d. the use of a BCG portfolio matrix e. a stringent and narrow mission statement ANS: B Managers and owners should challenge assumptions about the fi rm and the environment and establish new s trategies. PTS: 1 REF: 51 OBJ: 02-10 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Strategy | TB&E Model Creativity Eastman Kodak Company As the head of Eastman Kodak Company, George M. C. Fisher devised a plan to save Kodak from being t rapped in the slow growth photography industry, hobbled by huge debts, a dysfunctional m anagement culture, and a dispiri ted workforce. At the time of his takeover of Kodak, the p roduct development and sales functions for the company were scattered among divisions, and the business mission was ill-focused. Fisher envisioned a long-term strategy in which Kodak focused on i ts core competencies. By evaluating the pros and cons associated with i ts various businesses, Fisher decided imaging was the key to the future. He then sold Kodak's health and household-products arms. He also assembled most of the corporate talent into one division and hired an experienced computer marketing executive to head it. Fur ther, by s tressing accountability, quality, and cycle t ime, Fisher began to t ransform Kodak's slow moving culture. Fisher believes Kodak could double i ts growth rate in photography, a tough challenge in a slow-growing market, by becoming more global and by challenging Fujifilm in China. 136. Refer to Eastman Kodak Company. As Kodak actively redefined i ts business m ission, organization culture, global strategy, and so on, i t was engaged in: a. market p lanning b. wri ting the mission statement c. financial analysis d. the strategic planning p rocesses e. strategic contingency planning ANS: D All the listed activities are part of the s trategic planning process PTS: 1 REF: 36 OBJ: 02-1 TOP: AACSB Reflective Thinking | T B &E Model Strategy 137. Refer to Eastman Kodak Company. By redefining the business t o focus on imaging technology, Fisher created a new: a. mission statement b. financial analysis c. situational analysis d. market strategy e. strategic planning ANS: A Kodak's m ission statement answers the question, "What business are we in?" PTS: 1 REF: 38 OBJ: 02-2 TOP: AACSB Reflective Thinking | TB&E Model Strategy 138. Refer to Eastman Kodak Company. Fisher evaluated Kodak's current status based on core capabilit ies and f uture expectations. This evaluation process is called a(n): a. situation analysis b. market audit c. environmental scan d. profit and loss assessment e. strategic window search ANS: A W hen a company pursues a formal study to ascertain i ts current status and capabilities and its future expectations, it is conducting a situation analysis. PTS: 1 REF: 40 OBJ: 02-4 T OP: AACSB Analytic | TB&E Model Research 139. Refer to Eastman Kodak Company. By p runing product lines and assembling the corporate talent into one division, Fisher engaged i n _____, which often results in a cost competitive advantage. a. reverse engineering b. s trategic implosion c. augmented production d. reengineering e. production diversification A NS: D Reengineering is used to make fi rms more efficient. Reverse engineering is the p rocess of disassembling a product piece by piece to gain an understanding of its components. PTS: 1 REF: 42 OBJ: 02-5 TOP: AACSB Reflective Thinking | TB&E Model S trategy 140. Refer to Eastman Kodak Company. Fisher realized the market for p hotography is growing slowly, so he planned to expand into China. Which growth strategy is Fisher practicing? a. vertical integration b. market penetration c. diversification d. p roduct development e. market development ANS: E Market development stimulates new sales by expanding into new markets. PTS: 1 REF: 44 OBJ: 02-6 TOP: AACSB Reflective T hinking | TB &E Model Distribution FFRS Patricia Curt is has been running the Ferrets F irst Rescue and Shelter (FFRS) since 1996. FFRS is in the business of ferret pickup and r escue, as well as ferret boarding and t raining, and education for ferret owners. She would l ike to expand her operations, and has been asked to wri te a marketing plan in order to apply for a bank loan. Cur tis knows she can better serve ferrets and ferret owners if she can expand her target audience to schools, animal control officers at city facilities, and pet s tores. To do this, she must increase marketing communications. 141. Refer to FFRS. "Serving ferrets and their owners in a 5-county area" would be an example of a: a. mission s tatement b. business arena c. situation analysis d. market strategy e. strategic plan ANS: A T his mission statement answers the question, "What business are we in?" PTS: 1 REF: 38 O BJ: 02-2 TOP: AACSB Reflective Thinking | TB &E Model Strategy 142. Refer to FFRS. Curtis is short of capital and labor and overcrowded with ferrets because they are not adopted out fast enough. She also knows she has superior ferret knowledge and an excellent facility for housing ferrets, and hopes to increase her capacity to 100 ferrets. This assessment process in which she learned this about her environment is called a(n): a. m arket audit b. situation analysis c. environmental scan d. profit and loss assessment e. s trategic window search ANS: B When a company pursues a study to ascertain i ts current s tatus and capabilities and its future expectations, it is conducting a situation analysis. PTS: 1 REF: 40 OBJ: 02-4 TOP: AACSB Reflective Thinking | TB &E Model Strategy 143. Refer to FFRS. The fact that FFRS is the only shelter of i ts kind in the state of Texas to have a "nokill" policy, to offer pickup services in a 5-county area, and to have exclusive r ights in the region to market Totally Ferret Food makes up the company's: a. sustained w indow of opportunity b. comparative edge c. competitive advantage d. marketing alliance e. penetration strategy ANS: C These facets could be a competitive advantage or sustainable competitive advantage. PTS: 1 REF: 41 OBJ: 02-5 TOP: AACSB Reflective Thinking | T B &E Model Strategy 144. Refer to FFRS. By marketing its existing ferret services to people who work with ferrets (such as educators, city officers, and pet store managers) in addition to ferret owners, FFRS would be engaged in: a. expanding her strategic window b. m arket penetration c. product development d. diversification e. market development ANS: E M arket development entails marketing current products to new target markets. PTS: 1 REF: 44 OBJ: 02-6 TOP: AACSB Reflective Thinking | TB&E Model Strategy 145. Refer to F FRS. Curtis will be exploring aspects of what her service offers, her central location and mobile pickup offering, the price of ferret adoptions, and promotions to increase awareness and expand donations. These elements in the marketing plan make up the service's: a. m arketing mix b. target marketing plan c. strategic goals d. situation analysis e. environmental audit ANS: A Product/service, place/distribution, price, and promotion make u p the marketing mix. PTS: 1 REF: 48 OBJ: 02-8 TOP: AACSB Reflective Thinking | T B &E Model Promotion 146. Refer to FFRS. Curtis should know effective strategic p lanning for the Ferrets First Rescue and Shelter requires all of the following EXCEPT: a. continual attention b. sound planning based on creativity c. top management's support and participation d. marketing information systems e. an ongoing process ANS: D Although a m arketing information system is used to support the plan, it is not usually a formal part of t he broad approach to strategic planning. PTS: 1 REF: 51 OBJ: 02-10 TOP: AACSB Technology | TB&E Model Strategy | TB&E Model Online/Computer Delta Faucet Company Masco is the name of a well-recognized company in the construction industry. I t p roduces cabinetry, furniture, lighting, and plumbing fixtures for the upper-end homeowner and builder. One of the divisions of Masco is the Delta Faucet Company, which is the leader i n the faucet industry. Delta Faucet was founded in 1955. Over the decades, it has developed a legacy based on well-crafted, highquality products. Since the 1970s, Delta has focused i ts energies on building loyalty with the builder marketplace. Research in 2002 showed that while builders respect the Delta faucet for its quality, durability, and dependability, household consumers were not enamored with Delta products. Due to the n umber of new magazines and television programs devoted to home style, homeowners wanted faucets that were chic and stylish. This was not the image of the Delta Faucet. To change i ts image, Delta Faucet began a marketing program in which i t committed i tself to developing new products to appeal to homeowners. I t adopted a new slogan, "Beautifully E ngineered." 147. Refer to Delta Faucet Company. The marketing program, which Delta designed to develop new products to appeal to homeowners, is an example of: a. strategic p lanning b. a mission statement c. mass marketing d. production-oriented marketing e. t actical planning ANS: A PTS: 1 REF: 36 OBJ: 02-1 TOP: AACSB Reflective Thinking | T B &E Model Marketing Plan | TB&E Model Strategy 148. Refer to Delta Faucet Company. T he Delta Faucet Company is a _____ of Masco. a. target market b. t ransactional division c. s trategic business unit (SBU) d. share-bearing unit (SBU) e. situational business usage (SBU) ANS: C PTS: 1 REF: 39 TOP: AACSB Reflective Thinking | TB &E Model Strategy O BJ: 02-3 149. Refer to Delta Faucet Company. Delta Faucet would most likely have gathered the information about how homeowners perceive i ts products through the use of a(n): a. break-even analysis b. correlation analysis c. sales potential assessment d. situation analysis e. economic forecast ANS: D PTS: 1 REF: 40 TOP: AACSB Reflective Thinking | T B &E Model Strategy OBJ: 02-4 150. Refer to Delta Faucet Company. The reputation the Delta faucet has for its quality, durability, and dependability among builders is an example of a(n): a. tactical threat b. competitive advantage c. experience curve d. economy of scale e. m arket differentiator ANS: B PTS: 1 REF: 41 TOP: AACSB Reflective Thinking | TB&E M odel Product OBJ: 02-5 151. Refer to Delta Faucet Company. Since Delta was already m arketing to homeowners (although not very successfully), its development of new styles of faucets to appeal to this underserved market would be an example of a _____ strategy. a. m arket penetration b. product diversification c. market development d. product development e. product penetration ANS: D PTS: 1 REF: 44 OBJ: 02-6 TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Strategy 152. Refer to Delta Faucet Company. Delta's decision to make more stylish faucets represents a change in the _____ element of its marketing mix. a. product b. promotion c. place d. production e. d istribution ANS: A PTS: 1 REF: 48 TOP: AACSB Reflective Thinking | TB&E Model P roduct OBJ: 02-7 153. Refer to Delta Faucet Company. Delta's development of a new slogan represents a change in the _____ element of its marketing mix. a. product b. p romotion c. place d. production e. distribution ANS: B PTS: 1 REF: 49 TOP: AACSB Reflective Thinking | TB&E Model Promotion OBJ: 02-7 154. Refer to Delta Faucet Company. While new home construction is not growing as rapidly as it once did, the number of homeowners who are remodeling bathrooms and ki tchens is growing. According to the portfolio matrix, Masco would consider Delta a(n): a. question mark b. exclamation point c. s tar d. cash cow e. problem child ANS: D A cash cow is an SBU that usually generates more cash than it needs to maintain i ts market share. PTS: 1 REF: 45 OBJ: 02-6 TOP: AACSB Reflective Thinking | TB&E Model Strategy ESSAY 1. What is the difference between p lanning, strategic planning, and marketing planning? ANS: Planning is the process of anticipating future events and determining strategies to achieve organizational objectives i n the future. Strategic planning is the managerial process of creating and maintaining a fi t between the organization's objectives and resources and the evolving market opportunities. T he goal of strategic planning is long-run profitability and growth. Thus, strategic decisions r equire long-term commitments of resources. Marketing planning involves designing activities relating to marketing objectives and the changing marketing environment. M arketing planning is the basis for all marketing strategies and decisions. Issues such as p roduct lines, distr ibution channels, marketing communications, and pricing are all delineated in the marketing plan. PTS: 1 REF: 36 OBJ: 02-1 TOP: AACSB Analytic | TB&E M odel Strategy | TB &E Model Marketing Plan 2. What is marketing myopia? If a movie t heater company had a myopic orientation, how might i t state i ts business purpose? If the movie theater company avoided a myopic orientation, how would i ts business purpose change? ANS: Defining a business in terms of goods and services rather than in terms of t he benefits customers seek is called marketing myopia, which implies a narrow, short-term o rientation. This orientation can threaten the survival of an organization. If a movie t heater had a myopic orientation, it might state its business as "selling tickets to movies." A better business statement for the theater would be "to provide convenient entertainment." PTS: 1 REF: 38-39 OBJ: 02-2 TOP: AACSB Analytic | T B &E Model Strategy | TB&E Model Marketing Plan 3. What is an SBU? If properly created, what characteristics should an SBU have? ANS: SBU is an acronym for strategic business unit. A popular technique for managing large, heterogeneous organizations is to d ivide the fi rm into strategic business units. When properly created, an SBU will have the following characteristics: • • • • • • A distinct mission and a specific target market Control over its own resources I ts own competitors A single business or collection of related businesses Plans independent of other businesses of the total organization I ts own basic business functions PTS: 1 REF: 39 OBJ: 02-2 TOP: AACSB Analytic | TB&E Model S trategy 4. What is a marketing objective? Name three criteria for good marketing objectives. Use the criteria to wri te an objective for a business with which you are familiar. A NS: A marketing objective is a statement of what is to be accomplished through marketing activities. For marketing objectives to be realized, they must meet several criteria. They m ust: • • • • be consistent with organizational objectives be measurable specify the time f rame during which they are to be achieved be attainable and challenging The example objective should fulfill the above criteria and be stated in terms of actions expected by the t arget consumers. PTS: 1 REF: 39-40 OBJ: 02-3 TOP: AACSB Analytic | TB &E Model S trategy 5. What is a SWOT analysis? How does i t relate to strategic planning? ANS: The SWOT acronym represents the four components of a situation analysis, the second step in s trategic business planning. SWOT stands for strengths, weaknesses, opportunities, and t hreats. Strengths and weaknesses are internal components of the organization that should be analyzed, while opportunities and threats are characteristics of the external environment that should be analyzed. With the SWOT analysis, the company is determining i ts present status, its current capabilities, and its future expectations. PTS: 1 REF: 40-41 O BJ: 02-4 TOP: AACSB Analytic | TB &E Model Strategy 6. What is environmental scanning? Name four environmental forces that affect marketing decisionmaking. ANS: E nvironmental scanning is the collection and interpretation of information about external forces, events, and relationships that may affect the future of the organization. I t helps i dentify market opportunities and threats and provides guidelines for the design of m arketing strategy. Important forces include: • • • • • • social forces demographic forces economic forces technological forces political and legal forces competitive forces PTS: 1 REF: 40-41 OBJ: 02-4 TOP: AACSB Analytic | AACSB Diversity | TB&E Model Research 7. S tump’s Hot Olives are manufactured in Wisconsin. The company’s owner is Jim H aakinson. He sells his products at midwestern grocery stores and through mail order. He a lso sells some to local restaurants. The company has been in operation since 1998. The company relies on labor from Jim’s family and friends to produce and package olives. His olives are packaged in attractive, reusable glass containers. He uses store demonstrations t o int roduce his spicy olives to new customers. Discuss how this company can establish or m aintain at least one of the three types of competitive advantage. ANS: Student answers to t his question will vary. Their answers should include a cost competitive advantage, which can be achieved through no-frills goods and customer service, efficient labor, production i nnovations (such as new products not currently on the market), and the experience curve. A p roduct differentiation competitive advantage might be achieved by the use of the value i mpression (this possibility is implied in the description of the containers). The company m ight also t ry selling an augmented product-offering bundled pickles and pepper products w ith its olives. The niche competitive advantage is probably not appropriate for this company. Some students may suggest targeting gourmets or some other single market. PTS: 1 REF: 41-43 OBJ: 02-5 TOP: AACSB Analytic | TB &E Model Strategy 8. What is a competitive advantage? What makes a competitive advantage sustainable? ANS: A competitive advantage is defined as one or more unique aspects of an organization that cause target consumers to patronize that fi rm rather than competitors. Seeking a competitive advantage over other fi rms in the market is an excellent means of examining opportunities. A sustainable competitive advantage is one that cannot be copied by the competition. Without this, a competitive advantage could be easily copied and the advantage lost. PTS: 1 REF: 41-43 OBJ: 02-5 TOP: AACSB Analytic | TB &E Model S trategy 9. One method for conceptualizing alternative strategic opportunities is through t he use of a strategic opportunity matrix. Fill in the mat rix below with the appropriate names of alternatives. For each of the four opportunity alternatives, also give a specific example of a fi rm following that strategy. Present Product Present Market New Market A NS: Present Market New Market Present Product Market Penetration Market Development New Product Product Development Diversification New Product Text examples given for the four alternatives are as follows: MARKET PENETRATION. K raft Foods using heavy promotional expenditures in the form of aggressive advertising and cents-off coupons for Maxwell House coffee. MARKET DEVELOPMENT. McDonald's opening restaurants in Russia, China, and I taly; colleges and universities expanding to executive development and continuing education. PRODUCT DEVELOPMENT. Brooks B rothers has int roduced a line of poplin suits with polyester fibers that move moisture away f rom the body. DIVERSIFICATION. LTV entering the monorail business; Sony's acquisition of Columbia Pictures; Coca-Cola manufacturing water t reatment equipment. PTS: 1 REF: 44-45 OBJ: 02-6 TOP: AACSB Analytic | AACSB Diversity | TB&E Model Strategy | T B &E Model Product 10. List the four basic strategies used once an organization has i dentified i ts SBUs in terms of the portfolio mat rix. Describe when each is used. ANS: The four basic strategies are (1) Build is used when an organization has identified an SBU it believes has the potential to be a star. Most likely the SBU has been identified as a problem child. (2) Hold is used when the SBU has been identified as a very successful cash cow. (3) H arvest is used with all SBU classifications except stars. The basic goal with this strategy is to increase short-term cash return. (4) Divest means to get r id of SBUs with low market share. Divestment strategy may be used with either dogs or problem children (also called question marks). PTS: 1 REF: 46-47 OBJ: 02-6 TOP: AACSB Reflective Thinking | TB &E M odel Strategy 11. An essential part of marketing strategy is target market strategy. Selection of target market(s) drives marketing objectives and selection of the marketing mix ( the four Ps). What are the three general strategies for selecting target markets? ANS: The s trategies are to: • • • appeal to the entire market with a single marketing mix concentrate on only one segment of the market appeal to multiple market segments using multiple m arketing mixes PTS: 1 REF: 47 OBJ: 02-7 TOP: AACSB Analytic | AACSB Diversity | T B &E Model Strategy | TB&E Model Product 12. The marketing mix refers to a unique b lend of marketing variables known as the four Ps. Name and briefly describe each of the 4 Ps. ANS: PRODUCT. The fi rm's product offerings are the heart of the marketing mix. The P roduct P includes product development, production assistance, packaging, warranties, servicing, branding, company image, and other components in addition to the physical unit. P LACE (or DISTRIBUTION). Distribution strategies make products available when and w here customers want them. Products move through a channel of distribution that may i nclude wholesalers and retailers. Physical distribution (stocking and t ransportation logistics) is also part of the Place P. PROMOTION. Promotion includes personal selling, advertising, sales promotion, and public relations. Promotion serves to inform, educate, persuade, and remind target markets about product benefits. PRICE. Price strategies are an important competitive weapon. Pricing is an important component of the marketing mix because i t is f lexible and allows revenue to be estimated and measured. PTS: 1 REF: 48-49 O BJ: 02-8 TOP: AACSB Analytic | TB &E Model Strategy 13. Perhaps, the broadest control device available to marketing management is the marketing audit. Describe this tool and its characteristics. ANS: A marketing audit incorporates both financial and nonfinancial r eporting, is mainly futuristic in nature, and is largely strategy-oriented. The marketing audit is designed to aid management in allocating marketing resources efficiently. I t may be defined as a thorough, systematic, periodic evaluation of the goals, strategies, organization, and performance of the marketing organization. The marketing audit looks to the future a llocation of marketing resources. All companies should use the audit system to uncover potential weaknesses and identify cost-cutting opportunities. The marketing audit should be comprehensive, systematic, independently conducted, and run periodically. PTS: 1 REF: 50-51 OBJ: 02-9 TOP: AACSB Analytic | TB&E Model Research | TB &E Model Strategy 14. The manufacturer of Gifts of Nature All-Purpose Gluten-Free Flour is unaware of all t he many tools available that will let marketers examine a fi rm's processes, and identify potential areas for improvement. This fi rm wants to examine all of its goals, strategies and s tructure, to ensure i t's on the r ight t rack, and doing things well. Gifts of Nature has hired you as an outside consultant to recommend a plan of action. What do you suggest, and why? A NS: Perhaps, the broadest control device available to marketing management is the m arketing audit. A marketing audit is a thorough, systematic, periodic evaluation of the goals, strategies, structure, and performance of the marketing organization. This would address all of the issues this fi rm wants more information about. PTS: 1 REF: 50-51 OBJ: 02-9 TOP: AACSB Analytic | TB&E Model Marketing Plan 15. Name and describe the t hree requirements for effective strategic planning ANS: CONTI NUAL PROCESS. Strategic p lanning should be an ongoing process because the environment is continually changing and the fi rm's resources and capabilities are continually evolving. CREATIV ITY. Sound p lanning is based on creativity. Existing assumptions about the fi rm and the environment should be challenged, and new rules of the game should be established. Developing unique and visionary strategies that defy conventional wisdom also prevents managers from locking into static and predictable options. MANAGEMENT COMM ITMENT. Perhaps the most critical element of successful strategic planning is top management's support and participation. Without the involvement of top management, no strategic plan can be effectively implemented. PTS: 1 REF: 51 OBJ: 02-10 TOP: AACSB Reflective Thinking | A ACSB Analytic | TB&E Model Marketing Plan | TB&E Model Strategy Chapter 3—Social Responsibili ty, Ethics, and the Marketing Environment TRUE/FALSE 1. ExxonMobil was f ulfilling its philanthropic responsibility when i t partnered with the National Fish and W ildlife Foundation to save the world’s remaining tigers by donating more than $11 million t o establish the Save the Tiger Fund. ANS: T PTS: 1 REF: 69 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 03-1 TYPE: App 2. The foundation for the pyramid of corporate social responsibility is economic responsibility. ANS: T PTS: 1 REF: 68 OBJ: 03-1 TYPE: Def TOP: AACSB Reflective Thinking | AACSB Ethics | TB&E Model Strategy 3. Morals are rules people develop as a result of cultural values and norms. ANS: T PTS: 1 REF: 70 OBJ: 03-2 TYPE: Def TOP: AACSB Reflective Thinking | AACSB Ethics | TB &E M odel Strategy 4. Fortunately, most businesspeople have progressed beyond the selfcentered and manipulative actions of preconventional morality. ANS: T PTS: 1 REF: 70 O BJ: 03-2 TYPE: Comp TOP: AACSB Reflective Thinking | AACSB Ethics | TB&E Model S trategy 5. Many companies have found issuing a policy on ethical behavior is the only action necessary to ensure employees will comply with expected standards. ANS: F Simply issuing such a policy is only the beginning; marketing managers must then put the policy i nto action. PTS: 1 REF: 72 OBJ: 03-2 TYPE: Comp TOP: AACSB Reflective Thinking | A ACSB Ethics | TB &E Model Strategy 6. When writing codes of ethics, businesses must ensure their codes deal with every possible situation. ANS: F Codes that are too detailed encourage employees to substitute rules for judgment. PTS: 1 REF: 72 OBJ: 03-2 TYPE: Comp TOP: AACSB Reflective Thinking | AACSB Ethics | TB &E Model Strategy 7. While a single fi rm cannot control the elements in the external environment, a fi rm can sometimes influence that environment. ANS: T PTS: 1 REF: 74 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 03-3 TYPE: Comp 8. Marketers can control the external environment in which their organizations operate. ANS: F Although marketers can control the marketing mix, they cannot control the external environment in which their organizations operate. PTS: 1 REF: 73 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Strategy 9. Champion Lyte is a sugar-free sports drink designed to r eplenish electrolytes lost during activity or illness. Since the product was designed p rimarily for diabetics, health care professionals who t reat diabetics would be the product's p rimary target market. ANS: F The target market is people with diabetes for whom the p roduct was designed. PTS: 1 REF: 73 OBJ: 03-3 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 10. Social factors in the m arketing environment influence the products people buy, the prices paid for products, the effectiveness of specific promotions, and how, where, and when people expect to purchase p roducts. ANS: T PTS: 1 REF: 74 OBJ: 03-4 TYPE: Comp TOP: AACSB Reflective Thinking | T B&E Model Promotion | TB &E Model Distribution | TB &E Model Customer | TB &E M odel Price 11. Consumers today do not necessarily fi t into t raditional stereotypes, but may i nstead choose products and services that meet a variety of needs. Such diverse purchasing habits reflect component lifestyles. ANS: T PTS: 1 REF: 75 OBJ: 03-4 TYPE: Def TOP: A ACSB Diversity | TB&E Model Product | TB &E Model Customer 12. The phenomenon of working women has probably had a greater effect on marketing than has any other social change. ANS: T PTS: 1 REF: 75 TOP: AACSB Diversity | TB &E Model Customer OBJ: 03-4 T YPE: Comp 13. Psychography is the study of people's vital statistics such as their ages and locations. ANS: F Demography is the study of such vital statistics. PTS: 1 REF: 77 OBJ: 035 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Customer 14. Marketers can best reach Generation Y members through television and magazine advertising. ANS: F Gen Yers respond best to ads in nontraditional media. PTS: 1 REF: 79 OBJ: 03-5 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model P romotion 15. Asian Americans, who represent less than 5 percent of the U.S. population, have the highest average income of all groups. ANS: T PTS: 1 REF: 84 TOP: AACSB D iversity | TB&E Model Customer OBJ: 03-6 TYPE: Comp 16. Multiculturalism occurs w hen all major ethnic groups in an area are roughly equally represented. ANS: T PTS: 1 REF: 85 TOP: AACSB Diversity | TB &E Model Customer OBJ: 03-6 TYPE: Def 17. I n f lation is a measure of the decrease in the value of money, expressed as the percentage r eduction in value since the previous year. ANS: F In f lation is characterized by a general r ise in prices without a corresponding increase in wages. PTS: 1 REF: 88 OBJ: 03-7 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Pricing 18. U.S. companies excel at applied research and are weak when i t comes to basic research. ANS: F The United States excels at both basic and applied research. PTS: 1 REF: 89 OBJ: 03-8 TYPE: Comp TOP: A ACSB Analytic | TB&E Model Research 19. Champion Lyte is a sugar-free sports drink. I n developing the new product, i ts manufacturer thoroughly studied the legal restrictions on the drink's ingredients, packaging, manufacturing, and labeling and has abided by all such restrictions. In this way, the manufacturer of Champion Lyte drinks conducted i ts examination of all political and legal factors that might affect the product's marketing. A NS: F Legal restrictions govern decisions in ALL areas of the marketing mix, not just in t he areas the manufacturer checked. PTS: 1 REF: 91 OBJ: 03-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 20. Marketers need a thorough understanding of the laws established by the federal government, state governments, and regulatory agencies. ANS: T PTS: 1 REF: 91 TOP: AACSB Reflective Thinking | TB &E Model Research OBJ: 03-9 TYPE: Comp 21. After Hal L i purchased and installed a woodburning s tove to heat his family home, the stove caught on fire and damaged much of the house. He believes the stove had inadequate insulation. Li should voice his concerns to the Federal T rade Commission (FTC). ANS: F The Consumer Product Safety Commission is designed to p rotect the health and safety of consumers. PTS: 1 REF: 92 OBJ: 03-9 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 22. The competitive environment of a business encompasses the number of competitors the fi rm must face, the relative size of the competitors, regulatory agencies, and the degree of interdependence within the industry. A NS: F Regulatory agencies are part of the political and legal factors. PTS: 1 REF: 95 OBJ: 03-10 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Research 23. Flexcar is a car rental agency that will rent cars by the hour. Her tz and Avis are part of Flexcar's competitive environment. ANS: T PTS: 1 REF: 95 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 03-10 TYPE: App 24. An obese man in New York sued M cDonald's, Burger K ing, Wendy's, and KFC because he claims the fast-food giants caused h is diabetes and other health problems. The suit is an example of a problem caused by competitive factors. ANS: F This problem is the result of political and legal factors. PTS: 1 REF: 93 OBJ: 03-10 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy M ULTIPLE CHOICE 1. _____ is the concern of business for the long-range welfare of both t he company and its relationships to the society within which i t operates. a. Consumerism b. Corporate social responsibility c. Cultural sensitivity d. Conventional morality e. E nvironmental consideration ANS: B PTS: 1 REF: 68 TOP: AACSB Ethics | TB&E Model S trategy OBJ: 03-1 TYPE: Def 2. Novartis created the Novartis Research Institute for T ropical Diseases in Singapore. The institute is unique because i t is a not-for-profit organization that focuses on the discovery of new drugs for the t reatment of neglected d iseases, such as dengue fever and tuberculosis. Not only is this good business, i t is also: a. m andated by Supreme Court rulings b. socially responsible c. unrelated to any ethical motivation d. demonstrating a lack of concern for diversity e. environmental marketing A NS: B Social responsibility is the duty that business feels for the welfare of society. By helping developing nations, Novartis is helping to meet the needs of society. PTS: 1 REF: 68 O BJ: 03-1 TYPE: App TOP: AACSB Ethics | TB&E Model Strategy 3. Corporate social r esponsibility is defined as the: a. belief that the legal system defines ethical behavior b. development of inclusive codes of ethics c. rules by which social rewards are attained d. concern for social welfare by businesses e. coordination of social programs for publicity p urposes ANS: D PTS: 1 REF: 68 TOP: AACSB Ethics | TB&E Model Strategy OBJ: 03-1 T YPE: Def 4. The pyramid of corporate social responsibilities contains all of the following components EXCEPT: a. economic responsibilities b. ethical responsibilities c. cultural r esponsibilities d. legal responsibilities e. philanthropic responsibili ties ANS: C See Review Learning Outcome 1. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: Def TOP: AACSB Ethics | TB&E M odel Strategy 5. One of the favorite foods in Thailand is shark fin soup. A San Franciscobased organization claimed the soup made by i ts leading producer contained mercury poison, yet the leading producer of shark fin soup wanted to continue selling the soup because i t believes it has a responsibility to its investors to be profitable. This indicates that t he soup manufacturer was operating at a(n) _____ responsibility level. a. legal b. p hilanthropic c. ethical d. economic e. cultural ANS: D The company believed its mission was to be profitable. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 6. Japanese law prohibits the storage of more than 50 pounds of explosive at any single site in the nation. Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation w hen allegations were made that the park was detonating more than 50 pounds of explosives in i ts nightly fireworks displays. If the allegations are t rue, then Universal S tudios Japan is not operating at a(n) _____ responsibili ty level. a. legal b. philanthropic c. ethical d. economic e. cultural ANS: A Universal Studios Japan is not obeying the letter of t he law. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 7. Pacific Gas and Electric (PG&E) Company has donated almost $300,000 to 58 local governments and community-based organizations for local economic development projects. Recipients of these grants include the San Benito County Economic Development Corporation's Business Outreach Program, the San Jose Conservation Corps' Hennessy Place Affordable Single-Family Housing Project, and Mar iposa County's Business Development Training Program. This sort of donation indicates PG&E was operating at a(n) _____ responsibility level. a. legal b. philanthropic c. ethical d. economic e. cultural A NS: B By supporting local economic development projects, PG&E was being a good corporate citizen. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 8. In the future, electrical power may come from quantum nucleonics, a form of nuclear power that produces no residual radiation. The ability to use this form of power will require equipment adaptations, but it will solve the world's need for clean and efficient power. Companies that replace inefficient sources of power with quantum nucleonics only after they are required to by the Environmental P rotection Agency (EPA) are operating at a(n) _____ responsibility level. a. legal b. p hilanthropic c. ethical d. economic e. cultural ANS: A PTS: 1 REF: 68-69 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 03-1 TYPE: App 9. Girls between the ages of 8 and 15 are one of the growing markets for high-end shoe manufacturers, and podiat rists say the t rend is leading to many stylish young girls with grown-up foot p roblems. Shoe manufacturers who develop and market adult-styled shoes to this group are not operating at a(n) _____ responsibility level. a. legal b. philanthropic c. ethical d. economic e. cultural ANS: C The companies are not doing what is r ight, just and fair and so a re not operating ethically. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 10. Corporate social r esponsibility: a. is mandated by federal law b. c. d. e. requires companies to sacrifice economic performance for the sake of their stakeholders does not in fluence competition may not always result in profit and growth is unaffected by environmental changes OBJ: 03-1 T YPE: Comp ANS: D PTS: 1 REF: 69 TOP: AACSB Ethics | TB&E Model Strategy 11. For every home built by Habitat for Humanity, Whirlpool Corporation has given and continues t o give free ki tchen appliances to the deserving family. This donation of appliances is an example of how companies assume their: a. corporate social responsibility b. ethical conveyance c. a duty to engage in cause marketing d. a r ight to engage in social marketing e. multiculturalism ANS: A Corporate social responsibility is a business's concern for society's welfare, in this case deserving families selected by the Habitat organization. PTS: 1 REF: 68 OBJ: 03-1 TYPE: App TOP: AACSB Ethics | TB&E Model Strategy 12. NSTAR Gas & Electric Company in Boston provides continuing financial support for an injury p revention program run by the Children's Hospital Boston. This funding is an example of: a. corporate social responsibility b. ethical conveyance c. a duty to engage in cause m arketing d. a r ight to engage in social marketing e. multiculturalism ANS: A Corporate social responsibility is a business's concern for society's welfare, in this case an injury p revention program. PTS: 1 REF: 68 OBJ: 03-1 TYPE: App TOP: AACSB Analytic | AACSB E thics | TB&E Model Strategy 13. Which of the following statements about corporate social r esponsibility is t rue? a. Marketers universally agree on the importance of corporate social r esponsibility. b. According to marketers, corporate social responsibility is successful because i t focuses solely on economic performance. c. Skeptics of the concept of corporate social responsibility believe in the importance of sustainabili ty. d. Corporate social r esponsibility can derive from a situational analysis. e. All of the statements about corporate social responsibility are t rue. ANS: D There are skeptics and proponents of corporate social responsibility. Skeptics believe that corporate social responsibili ty does not focus on economic performance. Proponents of the theory believe in sustainability. Corporate social responsibility encourages companies to view social needs as opportunities-opportunities are revealed through situational analyses. PTS: 1 REF: 68-69 OBJ: 03-1 T YPE: Comp TOP: AACSB Ethics | TB &E Model Strategy 14. _____ is the idea that socially r esponsible companies will outperform their peers by focusing on the world's social p roblems and viewing them as opportunities to build profit and help the world at the same t ime. a. Sustainability b. Philanthropy c. Cause marketing d. Creative ethics e. I nternational ethics ANS: A PTS: 1 REF: 68 TOP: AACSB Ethics | TB&E Model Strategy O BJ: 03-1 TYPE: Def 15. Which of the following statements about the theory of sustainability is t rue? a. Sustainability is an internal process in which companies match r esources and objectives. b. Sustainability is the idea that socially responsible companies w ill outperform their peers when they focus on the world's problems as marketing opportunities. c. According to the theory of sustainability, a company cannot be socially r esponsible without a code of ethics and managerial support of that code. d. According to t he theory of sustainabili ty, ethical behavior should never be viewed as the means of obtaining a competitive advantage. e. Sustainability is only successful if it focuses on organizational strengths. ANS: B Sustainability is the idea that socially responsible companies will outperform their peers by focusing on the world's social problems and v iewing them as opportunities to build profit and help the world at the same t ime. PTS: 1 REF: 68 OBJ: 03-1 TYPE: Comp TOP: AACSB Ethics | TB&E Model Strategy 16. The four components of the pyramid of corporate social responsibility are: a. sustainability, creativity, profit, and culture b. organizational culture, creativity imagery, economic performance, and objectivity c. organizational, financial, social, and cultural responsibilit ies d. sustainability, legality, creativity, and competition e. economic, legal, ethical, and p hilanthropic responsibilities ANS: E PTS: 1 REF: 68-69 TOP: AACSB Ethics | TB&E M odel Strategy OBJ: 03-1 TYPE: Def 17. Which of the following statements describes ethics? a. Ethics are the moral principles or values that generally govern the conduct of an i ndividual. b. Ethics is the standard of behavior by which conduct is judged. c. Morals are a foundation for ethical behavior. d. Ethical values are situation specific and t ime oriented. e. A ll of the statements describe ethics. ANS: E PTS: 1 REF: 69-70 TOP: AACSB Ethics | T B &E Model Strategy OBJ: 03-2 TYPE: Comp 18. Which of the following sayings best describes how people with conventional morality act? a. Don't put all of your eggs in one basket. b. c. d. e. When in Rome, do as the Romans do. Be wary of strangers bearing gifts. A r olling stone gathers no moss. Don't count your chickens before they hatch. OBJ: 03-2 T YPE: Comp ANS: B PTS: 1 REF: 70 TOP: AACSB Ethics | TB&E Model Strategy 19. Cheetera Johnson is a calculating, self-centered salesperson. She never engages in r elationship marketing. She looks on any sales situation as a "win-lose" situation, and she believes any legal method she can use is justified when she wins. Johnson is most likely at t he _____ stage of ethical development. a. preconventional morality b. t ransformationalism c. conventional morality d. egocentrism e. basic morality ANS: A Preconventional morality is the most basic level of morality. PTS: 1 REF: 70 OBJ: 03-2 TYPE: App TOP: AACSB A nalytic | TB&E Model Research 20. Shannon Ross is a sales manager for Pampered Chef, a company that sells ki tchen tools and other aids for cooking through party plans. She is very concerned about making sure her salespeople understand the importance of t reating each customer fairly and developing long-term relationships with them. She asks that before a sale is made, the salesperson should make sure customers can afford the i tems and a re not buying due to social pressures. Ross is most likely at the _____ stage of ethical development. a. preconventional morality b. t ransformationalism c. conventional morality d. postconventional morality e. actualized morality ANS: D Postconventional morality is that of the mature adult. At this level, the individual is more concerned about others than about h imself or herself. PTS: 1 REF: 70 OBJ: 03-2 TYPE: App TOP: AACSB Ethics | TB &E M odel Strategy 21. The use of ethical decision making: a. can be in fluenced by top m anagers b. is in fluenced by the probability of harmful outcomes c. depends on the number of people to be affected d. depends on the magnitude of possible consequences e. is accurately described by all of the choices ANS: E PTS: 1 REF: 71 TOP: AACSB Ethics | T B &E Model Strategy OBJ: 03-2 TYPE: Comp 22. Like many other professional organizations and businesses, the American Society of Civil Engineers has developed a formal, writ ten guideline to help its members make better ethical decisions. This document is a: a. b. c. d. e. behavioral practice moral ruling code of ethics direction of value principled r egulation ANS: C While codes of ethics are most often defined as guidelines for businesses, t hey are also important moral guides for professional organizations. PTS: 1 REF: 71 OBJ: 03-2 TYPE: Def TOP: AACSB Ethics | TB &E Model Product 23. Which of the following factors does NOT tend to in fluence ethical decision making and judgments? a. probability of a harmful outcome b. length of t ime between decision and the onset of consequences c. level of multiculturalism d. number of people to be affected e. potential magnitude of the consequences ANS: C PTS: 1 REF: 71 OBJ: 03-2 TYPE: Comp TOP: AACSB Ethics | A ACSB Diversity | TB&E Model Strategy 24. Which of the following statements about the creation of a code of ethics is t rue? a. A writ ten code helps employees avoid confusion when determining whether their decisions are ethical. b. A code can be an effective internal control on behavior. c. The process of formulating the code facilitates discussions that u ltimately create better decisions. d. A code helps employees identify what their fi rm r ecognizes to be acceptable business practices. e. All of the statements about the creation of a code of ethics are t rue. ANS: E PTS: 1 REF: 71-72 TOP: AACSB Ethics | TB&E Model S trategy OBJ: 03-2 TYPE: Comp 25. A human resources manager is creating a code of ethics for the employees of the retirement home she works for. Which of the following is N OT an ethics principle she should keep in mind as she creates this code? a. The principles should not upset current retirement home workers and future job applicants. b. Any decisions should be fair to all concerned: retirement home nurses, cleaning personnel, and administrative staff. c. Input on the code should be gained from other knowledgeable i ndividuals or groups. d. Principles can deviate from common practices because of the p restigious nature of the facility. e. She should not have to pull rank or use coercion to i mplement her ethics code. ANS: D An unethical code would presume that the company is an exception to a common practice in the industry. See Exhibit 3.2. PTS: 1 REF: 72 OBJ: 032 TYPE: Comp TOP: AACSB Ethics | TB&E Model Strategy 26. A(n) _____ is a defined g roup that managers feel is most likely to buy a fi rm's product. a. b. c. d. e. target market buying center aggregated unit consumer cluster demographic sample OBJ: 03-3 TYPE: Def A NS: A PTS: 1 REF: 73 TOP: AACSB Reflective Thinking | TB&E Model Customer 27. Johnson Publishing Company, the world’s largest African American-owned publishing company and home of Ebony magazine, has forged an alliance with Dan River, Inc., to create luxury bed and bath products for the newly developed Ebony Home brand. Ebony Home will use the publisher’s long history and expertise to market to various demographics of the African American market. This describes the _____ for the Ebony Home brand. a. t arget market b. buying center c. aggregated unit d. consumer cluster e. demographic sample ANS: A A target market is a defined group that managers feel is most likely to buy a f i rm's product. PTS: 1 REF: 73 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 28. Which of the following statements best describes the typical t arget market? a. A target market will remain stable over t ime, with the same group of consumers. b. Target markets change over t ime as consumers drop in or out of the market, and as tastes change. c. Target markets are not strongly affected by changes in the external environment. d. Target markets only change when the features and benefits of the product offering change. e. Target markets cannot be specifically defined according to age, income, or location because these factors are continually changing. ANS: B Target markets are defined and described, but they are always changing in response to environmental changes. PTS: 1 REF: 73 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 29. Assume you are in charge of the politically mandated process of converting t he economy of a developing Afr ican nation from state-controlled to market-driven business ventures. Your ability to control _____ will most likely determine the future success of the count ry and i ts government. a. the culture b. technology c. marketing d. the competitive environment e. the natural environment ANS: C Marketing is concerned with managing controllable variables (the marketing mix) within an uncontrollable environment. Because t here has been a politically mandated process of economic change from state-controlled to m arket-driven, marketing issues would be of paramount concern. PTS: 1 REF: 73 OBJ: 03-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 30. Colorific is a r elatively new competitor for Crayola coloring products. At the beginning of the new year for elementary students, the _____ for Colorific products is people buying school supplies. a. t arget market b. buying center c. mass market d. consumer sample e. aggregated demography ANS: A A target market is a defined group that managers feel is most likely to buy i ts products. PTS: 1 REF: 73 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Marketing Plan 31. The newest Coca-Cola vending machines have interactive screens that run advertisements and allow users to obtain free photos of themselves and r ingtones after they have bought a drink. The reason for the int roduction of this new style vending machine is to "allow the company to interact more directly with its digital-age customers." Around the world, Coke and junk food, in general, are facing television advertising bans. By developing this machine, Coke has engaged in _____ by modifying i ts external environment through the use of technology. a. reengineering b. environmental m anagement c. social machinations d. technology diversity e. synergistic research and development ANS: B When a company implements strategies that attempt to shape the external environment within which it operates, it is engaging in environmental m anagement. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Promotion | TB &E Model Distribution | TB &E Model Product 32. Cigarette m anufacturers have had to eliminate the use of vending machines due to the machine's i nability to check the buyers' ages. A cigarette manufacturer has developed a vending m achines that operates only after the user inserts a card verifying his or her age. By developing this machine, the cigarette manufacturer has engaged in _____ by modifying its external environment through the use of technology. a. reengineering b. environmental m anagement c. social machinations d. technology diversity e. synergistic research and development ANS: B When a company implements strategies that attempt to shape the external environment within which it operates, it is engaging in environmental m anagement. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 33. Ashley K reeger is the director of marketing for a company that operates several assisted-living centers. The company is developing a marketing plan to cover the next five years of business. K reeger must be sure she considers which of the following uncontrollable factors in her plan? a. place or distribution factors b. media buying factors c. demographic factors d. inventory factors e. pricing for repair and maintenance services ANS: C All but demographic factors are controllable factors. See also Review Learning Outcome 3. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Analytic | TB&E M odel Marketing Plan 34. Marketing managers cannot control ____, but they can at times i n fluence i t. a. where advertising is placed b. the external environment c. the sales force d. t he distribution strategy e. how products are priced ANS: B The external environment is basically uncontrollable, but the other four answers are part of the marketing mix. PTS: 1 REF: 73-74 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model S trategy 35. As technology continues to offer more different methods for shopping on the I nternet, manufacturers and t raditional retailers are finding themselves in direct competition with each other. In this case, unless marketing managers understand _____, m anufacturers and retailers cannot intelligently plan for the future. a. their competitors' s trategies b. the economic conditions that inf luence the growth of technology c. how consumers are assimilating new technology d. changing social attitudes toward technology e. all of these ANS: E PTS: 1 REF: 74 TOP: AACSB Technology | TB&E Model O nline/Computer OBJ: 03-3 TYPE: App 36. What is apparently the most difficult external variable for marketing managers to forecast, in fluence, or integrate into marketing plans? a. technology b. social factors c. demography d. competition e. economic conditions ANS: B Social factors and changes are difficult to foresee, because they are usually slow and/or small changes. Also, it is very difficult for one company to affect social factors in any appreciable manner. PTS: 1 REF: 74 OBJ: 03-4 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Marketing Plan 37. Many people in the United States choose to d rink light beer because Americans value thin and fit bodies. In Europe, light beers have had li t t le success because f lavor is valued more highly. For international beer m anufacturers, this difference illustrates how _____ in fluence marketing. a. demography b. competition c. social factors d. economic conditions e. technology ANS: C Values are an example of social factors and influence what products people buy. PTS: 1 REF: 74-75 OBJ: 03-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model In ternational Perspective 38. The external environment: a. can be controlled in much the same manner as t he internal marketing mix b. cannot be inf luenced by marketing managers c. does not change over time d. does not have an impact on Fortune 500 companies e. must be continually monitored by marketing managers ANS: E PTS: 1 REF: 73 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 03-3 TYPE: Comp 39. The external environment is a strong in fluence on a target market and can be a source of _____ for the m arketing manager. a. opportunities and threats b. threats and strengths c. environmental loopholes d. opportunities and weaknesses e. product myopia ANS: A The external environment can provide opportunities to serve new and changing needs, as well as warnings about changes that could threaten the current position of the fi rm. Students will need to remember what a SWOT analysis is to answer this question. PTS: 1 REF: 73 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 40. When a company engages in _____, it is implementing strategies that attempt to shape the external environment in which i t operates. a. synergistic control b. environmental management c. t ransactional management d. market control e. reactive management ANS: B PTS: 1 REF: 74 TOP: AACSB Reflective Thinking | TB &E Model Strategy OBJ: 03-3 TYPE: Def 41. The M ichigan State Legislature t r ied to pass a bill requiring concert promoters and venue operators to print parental warnings on t ickets and advertisements for concerts and shows by performers whose recordings have already been given content advisory labels. Promoters and venue operators prevented the passage of this bill that would have required them to m ake value judgments they felt ill-equipped to make. The concert promoters and venue operators engaged in: a. internal marketing b. illegal practices c. environmental m anagement d. reengineering e. corporate espionage ANS: C Attempting to influence external environmental factors is known as environmental management. PTS: 1 REF: 74 O BJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Promotion 42. Consumers buying lumber are increasingly asking the retailers from whom they are buying t he products if they are from a nation that is destroying its environment. As a result commercial buyers are asking Indonesian suppliers the same questions. Approximately 80 percent of the lumber produced in Indonesia is illegally logged. Two logging companies in I ndonesia are putt ing computerized bar codes on their logs to show they were legally harvested. The companies hope this coding will provide evidence that they are engaging in: a. proactive evaluation b. t ransactional control c. synergistic control d. downsizing e. environmental management ANS: E Attempting to inf luence external environmental factors is environmental management. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 43. _____ factors are the environmental factors concerned with the changes in people's values, lifestyles, and family roles. a. Social b. Economic c. Political d. Competitive e. Demographic ANS: A PTS: 1 REF: 74 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 03-4 TYPE: Comp 44. China’s new 5 percent tax on disposable wooden chopsticks, reflecting concerns about deforestation, has been praised by environmentalists. The move is hit ting hard at the Japanese who consumer 25 billion sets of wooden chopsticks annually. Almost all of the chopsticks used in Japan come from China. The price of wooden chopsticks in Japan has increased by almost 50 percent. Due to _____ factors, the Japanese will not use reusable plastic chopsticks when t hey eat out at restaurants. a. social b. economic c. legal d. demographic e. technological A NS: A Social factors include our attitudes, values, and lifestyles. PTS: 1 REF: 74 OBJ: 03-4 T YPE: App TOP: AACSB Diversity | TB &E Model Customer 45. In Asia, Procter & Gamble (P&G) discovered consumers like to experiment with different brands of shampoos, so most shoppers shy away from the family-size bottles so popular with Americans. Now most of the shampoo the company sells in the Far East is packaged in single-use sachets. P&G r esponded to _____ factors when i t changed its Asian packaging. a. demographic b. competitive c. technological d. social e. component lifestyle ANS: D PTS: 1 REF: 74 TOP: A ACSB Reflective Thinking | TB&E Model Customer OBJ: 03-4 TYPE: App 46. One of the favorite foods in Thailand is shark fin soup. A San Francisco-based organization claimed t he soup made by i ts leading producer contained mercury poison. As a result, sales for this company plummeted. The popularity of this soup in Thailand represents a(n) _____ factor w hile claims of mercury poisoning relate to lax enforcement of environmental protection and consumer protection regulations by the Thai government, a(n) _____ factor. a. economic; t echnological b. social; technological c. social; political and legal d. competitive; economic e. social; technological ANS: C Food preferences are a cultural issue, and the lax enforcement of environmental protection laws is a legal/political factor. PTS: 1 REF: 74 | 91 OBJ: 03-4 T YPE: App | 03-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 47. Coolsavings.com is one of the largest online distributors of in-store coupons, sales announcements, and mail-in rebates offered by national retailers and In ternet commerce sites. I ts marketing department keeps t rack of current external environmental changes. A lthough some information is relatively easy to collect, analyzing and forecasting _____ is extremely difficult, and i t is the most important factor for a company to understand. a. demographic t rends b. economic t rends c. legislative t rends d. technological t rends e. social t rends ANS: E Managers have the least amount of information available about social t rends. PTS: 1 REF: 74 OBJ: 03-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Promotion 48. Consumer preference for low-carb diets has greatly modified the way food is being marketed. This concern with health issues is an example of a(n) _____ factor. a. economic b. political and legal c. technological d. demographic e. social ANS: E PTS: 1 REF: 75 OBJ: 03-4 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E M odel Customer 49. Quaker Oats and other cereal manufacturers have developed what they call "breakfast-with-one-hand" products, which are breakfast bars and drinks that can be consumed on the way to work without leaving any mess. This type of food that can be eaten on the go is largely the result of changes in _____ factors. a. natural environmental b. demographic c. technological d. social e. political ANS: D The food i tems were developed in r esponse to time poverty. PTS: 1 REF: 77 OBJ: 03-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 50. If you were to ask most Americans what they most desired to make their life easier, a surprising number of them will say more t ime. This perception of “time poverty” has led to the use of high-tech communications everywhere. I t is almost as if there are no boundaries between work and the rest of our lives. This feeling t hat there are not enough hours in a day is an example of a(n) _____ factor that has strongly i n fluenced the marketing environment. a. social b. economic c. legal d. demographic e. component lifestyle ANS: A Research shows the number of people who say they never have enough time is growing. This number is in fluenced by the growing number of working mothers. PTS: 1 REF: 77 OBJ: 03-4 TYPE: Comp TOP: AACSB Technology | TB&E Model S trategy | TB&E Model Customer 51. What do self-sufficiency, upward mobility, and conformity have in common? a. These are no longer valued atti tudes. b. They are atti tudes t hat can easily be changed. c. These are three perceptions that Americans have of the Asian l ifestyle. d. These are three of the core values that have influenced lifestyles in the United S tates. e. They are the determinants of a component lifestyle. ANS: D The fourth value is work ethic. PTS: 1 REF: 74 OBJ: 03-4 TYPE: Def TOP: AACSB Reflective Thinking | TB &E M odel Customer 52. A(n) _____ is the practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, t raditional lifestyle. a. aggregated lifestyle b. component lifestyle c. psychographic mode of living d. demographically defined lifestyle e. targeted lifestyle ANS: B PTS: 1 REF: 75 TOP: AACSB D iversity | TB&E Model Product OBJ: 03-4 TYPE: Def 53. More and more U.S. citizens are enjoying _____, piecing together a variety of interests, products, and services and not conforming to t raditional stereotypes. a. well-defined segments b. component lifestyles c. simple multipurpose products d. conformity and cohesiveness e. modular market mixes A NS: B PTS: 1 REF: 75 OBJ: 03-4 TYPE: Def TOP: AACSB Reflective Thinking | TB &E M odel Product | TB&E Model Customer 54. Donna Lassiter is a college teacher in Georgia. She is also a rock climbing expert, a foster parent, and an accomplished violinist. Her other i nterests include glass blowing, gourmet cooking, and classic movies. Marketers would categorize Lassiter as: a. fit t ing into a caregiver segment b. a member of the typical education-based target segment c. not belonging to any target market d. having a component lifestyle e. having a conforming lifestyle ANS: D A component lifestyle pieces t ogether products and services that fit a variety of interests and needs, and does not conform to a certain stereotype. PTS: 1 REF: 75 OBJ: 03-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 55. Anderson owns three dogs, loves to cook, is a member of a the civic arts commission, enjoys talk radio, likes to r ide motorcycles, and is a rodeo competitor. All of these diverse needs and interests influence his choices of the goods and services he buys. Anderson has a: a. component lifestyle b. demographically o riented lifestyle c. multicultural demography d. fragmented market orientation e. segmented buying process ANS: A Component lifestyles are the practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, t raditional lifestyle. PTS: 1 REF: 75 OBJ: 03-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 56. Why has the component lifestyle of many of today's consumers proven to be such a challenge to marketers? a. People with component lifestyles expect multi-t iered pricing. b. The needs of people with component lifestyles are in constant f lux. c. Communication with people who have component lifestyles is very difficult. d. There a re no specialized magazines that reach small segments of markets. e. A consumer is defined by his or her lifestyle, which is defined by level of education attained and occupation. ANS: C Communication with complex and diverse consumers is the challenge p resented by component lifestyles. PTS: 1 REF: 75 OBJ: 03-4 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 57. The growth of dual-income families has r esulted in: a. burnout b. a sense of entitlement c. decreased discretionary income d. decreased GNP e. increased purchasing power ANS: E PTS: 1 REF: 75 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 03-4 TYPE: Def 58. Which of the following events has had a greater effect on marketing than any other social change? a. the g rowing number of one-child families b. the increasing number of immigrants from Northern Europe c. the growing number of people on the Internet d. the increasing number of working women e. the growing number of people of retirement age who are continuing work ANS: D PTS: 1 REF: 75 TOP: AACSB Reflective Thinking | TB &E Model Customer O BJ: 03-4 TYPE: Comp 59. Zimmer Centralpulse is the world's largest producer of r eplacement hips and knees for orthopedic surgery. I t is particularly interested in controlling the market in the southwestern United States, where a large aging population l ives. Which external environmental element most directly influences i ts continued growth? a. economic conditions b. political conditions c. culture d. demography e. social forces ANS: D Demography considers the age of the target market. PTS: 1 REF: 77 OBJ: 03-5 TYPE: A pp TOP: AACSB Diversity | TB&E Model Distr ibution | TB&E Model Customer 60. The s tudy of people's vital statistics, such as their ages, births, deaths, and locations, is called: a. cultural sociology b. psychometrics c. ecology d. ethnography e. demography ANS: E PTS: 1 REF: 77 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 03-5 TYPE: Def 61. Which of the following is NOT a demographic characteristic of a population? a. i ncome level b. age c. values d. education e. bir thrate ANS: C Values are a social factor. PTS: 1 REF: 77 OBJ: 03-5 TYPE: Comp TOP: AACSB Diversity | TB&E Model Customer 62. Field Entertainment was given the task of distilling 75 years of Disney Magic into a t wo-hour show. While the task was formidable, the company described the results as multigenerational (meaning the newly created show appeals to children, parents, and g randparents). Field Entertainment relied heavily on _____ factors to develop a new show t hat would be appreciated by potential audiences of all ages. a. technological b. cultural c. demographic d. competitive e. legal ANS: C Age is a demographic characteristic. PTS: 1 REF: 77 OBJ: 03-5 TYPE: App TOP: AACSB Diversity | TB&E Model Customer 63. Riot M edia is a media and toy company that capitalizes on the "gross-out" humor factor that boys between the ages of 8 and 14 so love. In other words, i t targets: a. members of Generation X b. a cohort generation c. tweens d. members of Generation Y e. part of the baby bridging generation ANS: C Tweens are described as pre- and early adolescents. PTS: 1 REF: 77 OBJ: 03-5 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 64. Girls between the ages of 8 and 14 are one of the growing markets for highend shoe manufacturers. But doctors are finding that many of these girls are developing g rown-up foot problems that once only affected women over 50. These girls who are experiencing problems because they wanted to be fashionable are: a. members of Generation X b. a cohort generation c. tweens d. members of Generation Y e. part of the baby bridging generation ANS: C Tweens are described as pre- and early adolescents. PTS: 1 REF: 77 OBJ: 03-5 TYPE: App TOP: AACSB Diversity | TB &E Model Customer 65. W hich of the following statements about Generation Y is t rue? a. I ts members are people w ho were born between 1965 and 1978. b. I t is more than three times as large as Generation X. c. The members of Generation Y are pressed for time and spend more on personal services than any other age group. d. Members of Generation Y are the first generation of latchkey kids. e. All of the statements about Generation Y are t rue. ANS: B T he other descriptions are of Generation X. PTS: 1 REF: 78 OBJ: 03-5 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Customer 66. _____ are strongly attached to t echnology, tend to be skeptical consumers, and demand the latest fashion t rends in record t ime. a. Generation Xers b. The cohort generation c. The baby boomer generation d. Generation Yers e. The baby bridging generation ANS: D PTS: 1 REF: 78-79 TOP: AACSB D iversity | TB&E Model Customer OBJ: 03-5 TYPE: Def 67. Carissa Ty designs and sells clothes for young working women. She has recently been told that unless she starts designing more to suit the style of the Gen Y market, she is likely to be in financial t rouble soon. Why would someone tell her that? a. Gen Yers don't have a style that they prefer. b. Gen Yers are more multicultural. c. Baby boomers provide all of the disposable income for Gen Y members. d. Demographically, Gen Yers are an extremely large group of consumers. e. Gen Yers are easily swayed by t raditional promotion media. ANS: D The size of this group is what makes them especially important to all marketers. PTS: 1 REF: 78 OBJ: 03-5 T YPE: Comp TOP: AACSB Diversity | TB &E Model Customer 68. Consumers born between 1965 and 1978 form a group called: a. tweens b. yuppies c. cohort markets d. A merica's mass market e. Generation X ANS: E PTS: 1 REF: 80 TOP: AACSB Diversity | T B &E Model Customer OBJ: 03-5 TYPE: Def 69. You are a marketing consultant to a fi rm w ho would like to target members of Generation X. Your advice is for it to: a. emphasize f reedom from work and commitment b. develop a personal service that will appeal to these t ime-poor consumers c. avoid topics dealing with materialistic possessions d. emphasize the baby boom culture e. clearly state to the audience that Generation X is the intended target of all marketing communications ANS: B This is a generation notoriously difficult to market t o because they are so cynical and savvy. PTS: 1 REF: 80 OBJ: 03-5 TYPE: Comp TOP: A ACSB Diversity | TB&E Model Promotion | TB&E Model Customer 70. The large group of people in the United States who were born between 1946 and 1964 are known as: a. Generation Xers b. gray markets c. synergistic cohorts d. the baby bust generation e. baby boomers ANS: E PTS: 1 REF: 81 TOP: AACSB Diversity | TB&E Model Customer OBJ: 035 TYPE: Def 71. Which of the following is NOT one of the four segments into which baby boomers have been subdivided? a. “at ease” boomers b. “confident and living well” boomers c. “looking for balance” boomers d. “age-defying” boomers e. “overwhelmed” boomers ANS: D PTS: 1 REF: 81-82 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 03-5 T YPE: Def 72. A multicultural society is characterized by: a. a population of recent i mmigrants that are closely related by custom and t radition b. a conglomeration of small and large ethnic groups that have lit tle in common c. even distribution of all ethnic groups i n a geographic region d. effective mass-marketing techniques e. one large dominating r acial or ethnic group in a geographic area ANS: C PTS: 1 REF: 85 OBJ: 03-6 TYPE: Def T OP: AACSB Diversity | TB &E Model Distribution | TB &E Model Customer 73. Consider a southern town where almost half the residents are African Americans and the rest w hites. Nearly all of the residents can t race their ancestors' arrivals in the community back a t least four generations. This town is an example of a: a. market aggregation b. mass m arket c. psychographic target market d. metropolitan statistical area e. mult icultural society ANS: E Multiculturalism occurs when all major ethnic groups in an area are roughly equally represented. PTS: 1 REF: 85 OBJ: 03-6 TYPE: App TOP: AACSB Diversity | TB&E M odel Customer 74. A furniture retailer that specializes in selling entire rooms of furniture has hired you to identify 25 geographic target markets that can be described as m ulticultural societies. What types of locations should you offer this fi rm? a. cities that have historically had low immigration rates b. t raditional test markets c. regions that are dominated by one ethnic group and that have multiple smaller ethnic groups d. u nindustrialized areas e. locations in which all major ethnic groups in the area are equally r epresented ANS: E Mul ticultural societies are not defined by geography, history, or p roducts produced, but by the racial and ethnic composition of the population. PTS: 1 REF: 85 OBJ: 03-6 TYPE: App TOP: AACSB Diversity | TB&E Model Customer 75. _____ has been described as a method for preserving a "cultural mosaic" of separate but equally sized ethnic groups and is contrasted to a "melting pot" that mixes them. This has also been described as the "salad bowl" model. a. Market aggregation b. Market segregation c. A psychographic target market d. Mul ticulturalism e. Cultural role-playing ANS: A M ulticulturalism occurs when all major ethnic groups in an area are roughly equally r epresented. PTS: 1 REF: 85 OBJ: 03-6 TYPE: Comp TOP: AACSB Diversity | TB &E Model Customer 76. Which of the following statements characterizes the growing ethnic markets i n the United States today? a. Marketers are modifying products to appeal to different ethnicities. b. The United States is becoming a mult icultural society. c. The United States is moving away from being a society dominated by whites and rooted in Western culture. d. T he percentage of whites in the United States' population will decline relative to other m inority groups. e. All of the statements characterize the demographic t ransition in the U nited States today. ANS: E Immigration is not expected to slow to a t r ickle, although the d iversity of the U.S. population is projected to stabilize in the next century as the birthrate among minorities plateaus. PTS: 1 REF: 82-86 OBJ: 03-6 TYPE: Comp TOP: AACSB A nalytic | TB&E Model Marketing Plan 77. Prudential Financial, Inc. has int roduced two commercials targeted to African American and Hispanic audiences. Referred to as "This M uch" and "Happy Bir thday," the television commercials capture family activit ies that take p lace in households across America and show how life has lit t le ways of reminding families of the importance of having life insurance protection. In this way, the insurance provider is r esponding to changing _____ factors in its market. a. social b. component lifestyle c. economic d. demographic e. cultural ANS: D Ethnicity is a demographic factor. PTS: 1 REF: 77 | 82-84 OBJ: 03-5 TYPE: App | 03-6 TYPE: App TOP: AACSB Diversity | TB&E Model Customer 78. The higher your _____, the higher your purchasing power: a. gross income b. social class c. disposable income d. cost of living e. inflation index ANS: C Purchasing power is measured by comparing income to the relative cost of a set standard of goods an services. I t is a aligned with net income, or income minus a standard set of expenses. Assuming a constant income, the higher the cost of living (the expenses), the lower the purchasing power. PTS: 1 REF: 86-87 OBJ: 03-7 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Customer 79. China’s new 5 percent tax on disposable wooden chopsticks, r eflecting concerns about deforestation, has been praised by environmentalists. The move is h it ting hard at the Japanese who consumer 25 billion sets of wooden chopsticks annually. A lmost all of the chopsticks used in Japan come from China. The price of wooden chopsticks i n Japan has increased by almost 50 percent. The price increase influences which factor of t he external environment of restaurant owners in Japan? a. economic b. technological c. demographic d. social e. ethnicity ANS: A Purchasing power may be diminished, especially for restaurants. PTS: 1 REF: 86-87 OBJ: 03-7 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Customer 80. Factors, such as interest rates, in flation, and consumer i ncome that influence the marketing environment, are called _____ factors. a. economic b. socio-demographic c. political d. government e. consumption ANS: A PTS: 1 REF: 86 TOP: A ACSB Reflective Thinking | TB&E Model Customer OBJ: 03-7 TYPE: Def 81. _____ is measured by comparing the relative cost of a standard of goods and services in different geographic areas. a. Gross individual profit b. Purchasing power c. Net profit d. Relative p ricing e. Price escalation ANS: B PTS: 1 REF: 87 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 03-7 TYPE: Def 82. When income is high relative to the cost of l iving, consumers _____. a. have more discretionary income b. begin anticipating a period of p rice deceleration c. stop buying luxury goods and services d. have significantly less d isposable income e. anticipate price escalation by stockpiling ANS: A PTS: 1 REF: 87 TOP: A ACSB Reflective Thinking | TB&E Model Customer 83. _____ is the primary determinant of a person's earnings. a. Mult iculturalism b. Lifestyle c. Education d. The aging of the baby boomers e. Global competition ANS: C PTS: 1 REF: 86 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 03-7 TYPE: Def OBJ: 03-7 TYPE: Comp 84. ____ is measure of t he decrease in the value of money, expressed as the percentage reduction in value since the p revious year. a. In f lation b. Recession c. Depression d. Consumer break-even e. Price escalation ANS: A PTS: 1 REF: 88 TOP: AACSB Reflective Thinking | TB &E Model Pricing O BJ: 03-7 TYPE: Def 85. When planning marketing strategies during t imes of inflation, m arketers must be aware in flation causes consumers to: a. purchase more goods and services to support their psychological selves, such as counseling and stress management t raining b. consume more meals away from home c. buy in small quantities u t il in flation is over d. decrease their brand loyalty to products they have t raditionally used e. put more money into savings accounts because prices are too high ANS: D In times of i n flation, consumers are more price conscious and less brand-loyal. PTS: 1 REF: 88 OBJ: 03-7 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Pricing 86. A period of economic activity when income, production, and employment tend to fall, reducing overall demand, is called: a. stagnation b. an inflation c. a recession d. price escalation e. a depression ANS: C PTS: 1 REF: 88 TOP: AACSB Reflective Thinking | TB&E Model P ricing OBJ: 03-7 TYPE: Def 87. The main product for Zamperla Industries is gondola cars for amusement park r ides and ski lifts. I ts marketing department constantly monitors t rends in the external environment that might affect the fi rm. Which economic factor may pose a major threat to this company? a. few competitors in this industry b. technological i mprovements that are automating production of cars c. a decline in disposable income d. i ncreasing interest in the environment and recycling e. existing legislation requiring l icensing of all amusement park r ides ANS: C Amusement parks and ski resorts rely on t heir customers having disposable income. A decline in business for them will produce a decline in demand for the gondola cars. PTS: 1 REF: 86 | 88 OBJ: 03-7 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Pricing 88. Shabby Chic fashion boutique has r esponded to economic t rends by placing an emphasis on improving the quality of merchandise i t offers, improving customer service, and reducing its cost of goods sold. Shabby Chic is apparently dealing with which level of economic activity? a. depression b. r ecession c. inflation d. stagnation e. distension ANS: B All the described techniques are used to counter the effects of reduced demand during recession. PTS: 1 REF: 89 OBJ: 03-7 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Pricing 89. Which of the following strategies is appropriate for a marketer to use during a time of economic r ecession? a. Promote product value. b. Maintain and improve customer services. c. E mphasize top-of-the-line products in promotions. d. Offer products that are economical and efficient. e. Do all of these. ANS: E PTS: 1 REF: 89 TOP: AACSB Technology | TB &E M odel Pricing OBJ: 03-7 TYPE: Comp 90. Which of the following is sometimes an effective weapon for fighting inflation and recession? a. technology b. line extensions c. increased capital gains taxes d. introducing product-line extensions e. reducing R&D expenditures A NS: A PTS: 1 REF: 89 TOP: AACSB Reflective Thinking | TB&E Model Research OBJ: 03-8 TYPE: Def 91. Research that attempts to expand the frontiers of knowledge rather t han solving a specific, pragmatic problem is called: a. technical diversity b. reactive r esearch c. applied research d. experiential research e. basic research ANS: E PTS: 1 REF: 89 TOP: AACSB Reflective Thinking | TB &E Model Research OBJ: 03-8 TYPE: Def 92. _____ would be used to prove or disprove Goldbach's conjecture that every even integer g reater than 2 can be wri t ten as the sum of two (not necessarily distinct) primes. a. Applied r esearch b. Technological integration c. Data mining d. A data information system e. Basic r esearch ANS: E Basic research attempts to expand the frontiers of knowledge rather than solving a specific, pragmatic problem. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Reflective Thinking | AACSB Analytic | TB&E Model Strategy 93. Scientists are r esearching the possibility of computer-aided telekinesis with the idea that some day your b rain will be linked with a computer, similar to the brain-plug interfaces used in the movie T he Mat r ix. This is an example of _____ because scientists are not engaged in solving any specific, pragmatic problem. a. technological diversity b. t ransactional creativity c. applied r esearch d. t ransformational research e. basic research ANS: E Basic research attempts to expand the frontiers of knowledge rather than solving a specific, pragmatic problem. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Analytic | TB &E Model Research 94. Zimmer Centralpulse is the world's largest producer of replacement hips and knees for orthopedic surgery. I t has developed a new sturdier joint that will extend the life of the average r eplacement joint by five years. This longer-lasting joint resulted from: a. applied research b. experiential study c. demographically oriented research d. basic research e. value-added r esearch ANS: A Applied research is an attempt to develop new or improved products. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Research 95. The scientists at Motorola want to create I r idium, a constellation of 66 satelli tes that will offer telephone service anywhere on the globe. This is an example of: a. t echnical diversity b. t ransactional research c. applied research d. synergistic research e. basic research ANS: C Applied research attempts to develop new or improved products. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 96. Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation when allegations were made that the park was detonating more than 50 pounds of explosives in i ts nightly fireworks displays. ( Under Japanese law, no more than 50 pounds can be located at one site at the same time.) D iscovering a way to produce grand fi reworks displays with smaller amounts of explosives would require: a. technological diversity b. t ransactional creativity c. applied research d. synergistic research e. basic research ANS: C Applied research attempts to develop new or i mproved products. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Analytic | TB &E M odel Research 97. _____ enables automated, seamless delivery of updated news content or m arketing messages to blog sites or mobile phones. a. RSS (Real Syndicated Signaling) b. RSS (Really Seamless Signaling) c. RSS (Readily Simple Signaling) d. RSS (Readily Secure Signaling) e. RSS (Really Simple Syndication) ANS: E PTS: 1 REF: 90 TOP: AACSB Technology | TB&E Model Online/Computer OBJ: 03-8 TYPE: Def 98. Blogs created by consumers can be used to assess customer atti tudes toward new products as well as customer perceptions of new products. Marketers’ ability to search for key words used in the b logs is an example of a change in the _____ factor of the external environment. a. psychographic b. technological c. competitive d. demographic e. economic ANS: B Blogging exists in the technological environment. PTS: 1 REF: 90 OBJ: 03-8 TYPE: App TOP: A ACSB Technology | TB&E Model Online/Computer 99. In the future, electrical power may come from quantum nucleonics, a form of nuclear power that produces no residual r adiation. The ability to use this form of power will require equipment adaptations, but it w ill solve the world's need for clean and efficient power. When quantum nucleonics is developed, i t will be an example of how _____ factors can affect an organization. a. t echnological b. competitive c. economic d. cultural e. demographic ANS: A PTS: 1 REF: 89 T OP: AACSB Technology | TB&E Model Strategy OBJ: 03-8 TYPE: App 100. Almost any p roduct in India, from tap water to milk, has t races of toxins due to the overuse and misuse of insecticides by Indian farmers, but the government expects mult inational corporations ( MNCs) operating in India to produce food that is toxin-free. In this way both _____ factors i n fluence the operating environments of MNCs. a. social and technological b. legal and t echnological c. economic and legal d. economic and social e. technological and demographic A NS: B I t is technological in that the insecticides are a product of technology. The expectations for MNCs are a product of the legal environment. PTS: 1 REF: 89 | 91 OBJ: 03-8 TYPE: App | 03-9 TYPE: App TOP: AACSB Analytic | TB &E Model Marketing Plan 101. When Universal Studios Japan opened, health inspectors discovered the theme park had piped industrial use water not suitable for drinking into its drinking fountains. The p roblem was unanticipated and costly to repair. This is primarily an example of how _____ factors can cause a business to incur unexpected costs. a. social b. economic c. competitive d. cultural e. political and legal ANS: E PTS: 1 REF: 91 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 03-9 TYPE: App 102. Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation w hen allegations were made that the park was detonating more than 50 pounds of explosives in i ts nightly fireworks displays. In the small nation, the use of explosives is s tringently controlled. This is an example of how _____ factors can in fluence a business. a. competitive b. legal and political c. economic d. technological e. cultural ANS: B PTS: 1 REF: 91 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 03-9 TYPE: App 103. One of the results of the Americans with Disabilit ies Act is increased t ravel by disabled people. Publications like Emerging Horizons, a California-based, 25,000-circulation m agazine focusing on accessible t ravel, and businesses such as Mobility Challenged Vacations L td. see that disabled tourists are a growing market. One can argue the increase i n tourism by the disabled was due to: a. controllable elements within corporate structures b. legal forces that changed the attractiveness of vacation options c. macroeconomic conditions that made U.S. destinations non-competitive relative to international spots d. a shift in regulatory controls from the public sector to the private sector e. competitive forces t hat changed how disabled tourists perceive vacations. ANS: B Changes in the legal environment can have a dramatic effect on marketing strategy. PTS: 1 REF: 91 OBJ: 03-9 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 104. Laws and r egulations of various governments and their ongoing development and change are an example of _____ factors and are part of all organizations' external environment. a. economic investment b. c. d. e. political and legal research and development competitive demographic OBJ: 03-9 TYPE: Def ANS: B PTS: 1 REF: 91 TOP: AACSB Technology | T B &E Model Strategy 105. China’s new 5 percent tax on disposable wooden chopsticks, r eflecting concerns about deforestation, has been praised by environmentalists. The move is h it ting hard at the Japanese who consumer 25 billion sets of wooden chopsticks annually. A lmost all of the chopsticks used in Japan come from China. The requirement for Chinese m anufacturers of wooden chopsticks to pay the 5 percent tax is a _____ factor in their external environment. a. competitive b. social c. demographic d. technological e. legal ANS: E T he tax is an example of government regulation. PTS: 1 REF: 91 OBJ: 03-9 TYPE: App T OP: AACSB Analytic | TB&E Model Strategy 106. The _____ Act strengthened the C layton Act to prevent corporate acquisitions that reduce competition. a. Har t-Scott-Rodino b. Lanham-Scott c. Celler-Kefauver Antimerger d. Robinson-Patman e. Sherman ANS: C See Exhibit 3.5. The Celler-Kefauver Act bolstered the Clayton Act's provision dealing with i nterlocking directorates and closed another loophole that had allowed corporate takeovers. PTS: 1 REF: 91 OBJ: 03-9 TYPE: Def TOP: AACSB Analytic | TB &E Model Strategy 107. T he _____ Act requires large companies to notify the government of their intent to merge. a. H ar t-Scott-Rodino b. Sherman c. Celler-Kefauver Antimerger d. Robinson-Patman e. L anham ANS: A See Exhibit 3.5. PTS: 1 REF: 91 OBJ: 03-9 TYPE: Def TOP: AACSB A nalytic | TB&E Model Strategy 108. _____ is a governmental body that has the power to p rescribe mandatory safety standards for almost all products consumers use. a. Health and Welfare Agency b. c. d. e. Federal Trade Commission Food and Drug Administration Federal Communications Commission Consumer Product Safety Commission ANS: E The sole purpose of the Consumer Product Safety Commission is to protect the health and safety of consumers in and around their homes. The commission has the power to prescribe m andatory safety standards for almost all products consumers use. PTS: 1 REF: 92 OBJ: 03-9 TYPE: Def TOP: AACSB Analytic | TB &E Model Strategy 109. Jack Gomez purchased a p ressure cooker. The fi rst time Gomez used the cooker, i t exploded. The hot liquid contents burned 30 percent of his body. He has determined the incident was the result of a poorly designed steam regulator, and he would like to lodge a complaint about the cooker's deficiency. To which federal agency should he complain? a. Labor Department b. Food and D rug Administration c. Federal Trade Commission d. Department of Trade e. Consumer P roduct Safety Commission ANS: E The sole purpose of the Consumer Product Safety Commission is to protect the health and safety of consumers in and around their homes. T he commission has the power to prescribe mandatory safety standards for almost all p roducts consumers use. PTS: 1 REF: 92 OBJ: 03-9 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 110. Many consumers thought t hat the promise in Blockbuster’s commercials of, “The end of late fees" was an example of deceptive advertising. In actuality, there was no late fee when you kept a movie a few extra days, but if you didn’t return the movie within 7 days, you were forced to buy it at the current retail price. The movie you "purchased" could still be returned within 30 days for “a r estocking fee plus applicable taxes.” After that, the movie was permanently yours. To w hich organization should the consumers who thought this promotion was misleading complain? a. Consumer Product Safety Commission b. state attorneys general c. Federal T rade Commission d. Federal Communications Commission e. Consumer Protection Agency A NS: C The FTC is charged with preventing corporations from using deceptive advertising and unfair methods of competition in commerce. PTS: 1 REF: 93 OBJ: 03-9 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 111. The _____ is an agency that p revents the use of unfair methods of competition in commerce. a. Federal Communications Commission b. Commerce Department c. Commission for Fair Trade d. Federal Trade Commission e. Sherman Anti t rust Agency ANS: D PTS: 1 REF: 93 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 03-9 TYPE: Def 112. Some consumers accused J uno, an Internet service provider, of making it "unreasonably difficult for them to cancel i ts 'free' t r ial period for i ts Premium In ternet Service." The Internet service provider failed t o notify customers that it would only allow cancellations through a single, unpublished t elephone number. Which federal agency would have jurisdiction over this deceptive and m isleading advertising? a. Food and Drug Administration b. Federal Communications Commission c. Department of Education d. National Association of Broadcasters e. Federal T rade Commission ANS: E The FTC prevents persons or corporations from using unfair methods of competition in commerce. PTS: 1 REF: 93 OBJ: 03-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Strategy 113. When the Federal T rade Commission (FTC) issues a final directive to a fi rm to stop engaging in an activity t he FTC considers illegal, this directive is a(n): a. order to remand b. stopgap measure c. order of cessation d. cease-and-desist order e. corrective action order ANS: D See Exhibit 3.7. A final order by the FTC is a cease-and-desist order. I t may be challenged by the fi rm in court. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | TB&E M odel Strategy 114. The Federal Trade Commission (FTC) accused Campbell Soup of deceptive advertising because the soup company's advertising showed bowls of soup that appeared to be full of meat, vegetables, and noodles. The appearance of the soup was a ltered by the placing of glass marbles in the bottom of the bowl, which caused the i ngredients to r ise to the top of the bowl. The FTC would have issued a(n) _____ to make Campbell stop running the deceptive ad. a. affi rmation order b. cease-and-desist order c. order to remand the promotion d. order of cessation e. stopgap measure ANS: B See Exhibit 3.7. A final order by the FTC is a cease-and-desist order. I t may be challenged by the fi rm in court. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | TB&E M odel Promotion 115. Sometimes the Federal Trade Commission (FTC) will require an advertiser to include in its advertisements additional information about the products being p romoted. This is to clarify past statements the FTC believes were misleading or unfairly p resented to consumers. This practice is called: a. nonfinancial restitution b. affi rmative d isclosure c. a mandated promotion d. corrective advertising e. a decree of consensus ANS: D See Exhibit 3.7. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | T B&E Model Promotion 116. When the Federal Trade Commission (FTC) uses the term “ restitution,” i t means: a. all advertisements must be restored to a t ruthful, nondeceptive format b. refunds must be made to consumers who were misled by deceptive advertising c. a certain portion of the advertising budget must be allocated to advertisements that explain w hy previous ads were misleading d. the manufacturer must delete the offending product f rom i ts product mix e. new, corrected products must be sent to the consumers ANS: B See E xhibit 3.7. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | T B &E Model Customer 117. The _____ is the federal government agency charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous products of a specific type. a. Federal Trade Commission b. Consumer Product P rotection Commission c. U.S. Justice Department d. Food and Drug Administration e. A merican Safety League ANS: D PTS: 1 REF: 93 TOP: AACSB Reflective Thinking | TB &E M odel Product OBJ: 03-9 TYPE: Def 118. The Gramm-Leach-Bliley Act and the Health I nsurance Portabili ty and Accountability Act are both important laws designed to: a. protect t he channels of commerce b. restrict alcohol and tobacco advertising c. eliminate certain p roducts from being advertised on children’s television programs d. protect consumers from i dentity theft e. penalize marketers selling merchandise with counterfeit brand names A NS: D PTS: 1 REF: 95 TOP: AACSB Analytic | TB&E Model Strategy OBJ: 03-9 TYPE: Def 119. The number of fi rms a company must face, the relative size of these fi rms, and the degree of interdependence within the industry are all part of i ts _____ environment. a. demographic b. c. d. e. economic political competitive social OBJ: 03-10 TYPE: Def ANS: D PTS: 1 REF: 95 TOP: AACSB Reflective Thinking | TB&E Model Strategy 120. Fri to-Lay is considered the king of the salty snack industry with its distr ibution network of 42 plants, 12,800 delivery people, and more than 900 t ractor t railers formed into a retail delivery powerhouse. Smaller manufacturers of salty snacks find that monitoring the activities of F ri to-Lay is an effective way to monitor the _____ factors within their external environments. a. bureaucratic b. marketing mix c. competitive d. social e. demographic A NS: C PTS: 1 REF: 95 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 0310 TYPE: App 121. Advanced Base Camp, Black Diamond Equipment, and Misty Mountain a re all marketers of ropes, carabiners, climbing holds, harnesses, helmets, and ice gear as well as other equipment needed for rock climbing. They are _____ factors in each other's external environments. a. component lifestyle b. competitive c. economic d. social e. legal and regulatory ANS: B The competitive environment encompasses the competition a fi rm m ust face. PTS: 1 REF: 95 OBJ: 03-10 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 122. In the past, foreign fi rms penetrated U.S. markets by concentrating on _____, but today the emphasis has been switched to product _____. a. availability; image b. quality; promotion c. new distribution outlets; value d. promotion; p rice e. price; quality ANS: E PTS: 1 REF: 96 TOP: AACSB Reflective Thinking | TB&E M odel Product OBJ: 03-10 TYPE: Comp 123. When many consumers think of adhesives, t hey think of 3M because i t makes so many kinds of adhesives used in the home. However, t he world's largest adhesive producer is Henkel Consumer Adhesive, maker of Loctite and D uct tape. 3M and Henkel are part of each other's _____ environment a. competitive b. economic c. social d. marketing mix e. legal and political ANS: A PTS: 1 REF: 95 TOP: A ACSB Reflective Thinking | TB&E Model Product Vi r tual Impregnation OBJ: 03-10 T YPE: App K r isten Clingan's boyfriend had never even mentioned mar r iage when she r eceived an e-mail announcing her boyfriend had e-impregnated her. The e-mail from w ww.bunintheoven.com included a positive pregnancy "test" and was followed by a half dozen subsequent messages, including the audio file of the baby's heartbeat and the u ltrasound image. The whole process took three months and cost $29.95. At the end of the v ir tual pregnancy, she received a mug bearing the newborn's photograph. Vir tual i mpregnation is the brainchild of Adam Corsi. He sees the vir tual impregnation as a good conversation starter for topics that may not have been broached by a couple before. 124. Refer to Vi r tual Impregnation. Vi r tual Impregnation is designed for people who are in longterm relationships that seem to be either evolving slowly or not at all. This group r epresents the company's: a. target market b. buying center c. consumer cluster d. demographic sample e. mass market ANS: A A target market is a defined group that m anagers feel is most likely to buy a fi rm's product. PTS: 1 REF: 73 OBJ: 03-3 TOP: A ACSB Reflective Thinking | TB&E Model Customer 125. Refer to Vi r tual Impregnation. T he willingness of couples to participate in this vi r tual pregnancy results from a fear of m aking a mistake and not being ready for a baby. The environmental factors most r esponsible for the company's success are: a. political factors b. economic factors c. competitive factors d. demographic factors e. social factors ANS: E Fear of making a m istake is a social factor. PTS: 1 REF: 74 OBJ: 03-4 TOP: AACSB Reflective Thinking | T B &E Model Product 126. Refer to Vir tual Impregnation. Describing couples that participate in a vir tual pregnancy as professionals between the ages of 25 to 34 who earn at least $50,000 annual income uses _____ characteristics. a. psychographic b. demographic c. anthropologic d. geographic e. sociologic ANS: B Vital statistics such as age and income are demographic characteristics. PTS: 1 REF: 77 OBJ: 03-5 TOP: AACSB Diversity | TB&E M odel Customer 127. Refer to Vi r tual Impregnation. Innovations in the _____ environment a re most responsible for the success of Corsi's Web site. a. economic b. political c. t echnological d. government e. competitive ANS: C Without technology, vir tual i mpregnation could not occur. PTS: 1 REF: 89 OBJ: 03-8 TOP: AACSB Technology | TB&E M odel Strategy 128. Refer to Vi r tual Impregnation. One problem facing Corsi was the potential that one of the women who received the e-mail would sue the sender as well as the Web site for sexual harassment. Such concerns are part of the _____ environment. a. political and legal b. technological c. economic d. demographic e. competitive ANS: A Sexual harassment is an issue that is carefully watched by federal agencies. PTS: 1 REF: 91 OBJ: 03-9 TOP: AACSB Reflective Thinking | TB&E Model Customer Indian Restaurant Thani Jambulingham wants to open a restaurant that features the finest in Indian and M iddle Eastern delicacies. To determine the feasibility of his restaurant, he hired FoodFacts m arketing research consultants. The experts at FoodFacts studied all the market i nformation available and determined that consumers aged 30 to 45 who love spicy cuisine were most interested in the proposed restaurant. In examining the restaurant environment, FoodFacts researchers found the west side of the city offered the best options for opening t he restaurant. Jambulingham was told the biggest obstacle in opening the restaurant r elated to obtaining the necessary permits from the city and state. 129. Refer to Indian Restaurant. The group of consumers identified by FoodFacts as most likely to visit the new r estaurant is called a: a. target market b. buying center c. mass market d. consumer cluster e. demography ANS: A A defined group of consumers that is most likely to buy a fi rm's p roduct is a target market. PTS: 1 REF: 73 OBJ: 03-3 TOP: AACSB Reflective Thinking | T B &E Model Customer 130. Refer to Indian Restaurant. Jambulingham is developing a m arketing plan to cover the first five years of the restaurant's business. He must be sure to consider which of the following uncontrollable factors in his plan? a. place or distribution factors b. media buying factors c. demographic factors d. dining area layout factors e. p ricing for services ANS: C All but demographic factors are controllable marketing mix factors. PTS: 1 REF: 74 OBJ: 03-3 TOP: AACSB Reflective Thinking | TB&E Model M arketing Plan | TB&E Model Customer 131. Refer to Indian Restaurant. Describing the m arket for Jambulingham 's new restaurant in terms of ages of the members of its target m arket is referr ing to _____ characteristics. a. psychographic b. demographic c. anthropological d. geographic e. sociological ANS: B Vital statistics such as age, race, i ncome, and location are demographic characteristics. PTS: 1 REF: 77 OBJ: 03-5 TOP: A ACSB Reflective Thinking | TB&E Model Customer 132. Refer to Indian Restaurant. The success of Jambulingham's restaurant is most closely related to: a. the values of Generation X members b. a huge increase in the Indian immigrant population expected during the next decade c. the growing importance of multiculturalism in the United States d. political deregulation of the restaurant industry e. a lack of disposable income that would favor cheap food offerings ANS: C Increased multiculturalism is the most promising t rend for Jambulingham. PTS: 1 REF: 88-86 OBJ: 03-6 TOP: AACSB Diversity | TB&E Model Customer 133. Refer to Indian Restaurant. The uncontrollable environmental factors Jambulingham faces in terms of obtaining permits for the new restaurant represent _____ factors. a. economic b. political and legal c. research and development d. cultural e. demographic ANS: B The laws and regulations of various governments represent u ncontrollable political and legal factors. PTS: 1 REF: 91 OBJ: 03-9 TOP: AACSB Reflective T hinking | TB &E Model Strategy Dateline NBC and GM In their desire to boost ratings, t elevision news programs have done just about anything. One famous example is the Dateline NBC segment about General Motors’ 1973-1987 pickup t rucks, which was entitled "Waiting to Explode?" The 15-minute segment contained a short, dramatic portion that featured two side-impact tests that NBC had run to purportedly demonstrate what could happen when the GM pickup t rucks were struck in the side. GM sued NBC alleging defamation and damage to i ts reputation. GM argued that the Dateline segment was an u nscientific demonstration, was inappropriate, and did not support the position that GM's t rucks were defective. NBC admit ted that the crash was r igged and apologized to GM and t he Dateline viewers. 134. Refer to Dateline NBC and GM. When people tune in to a t elevision news show, they expect to be told the t ruth about events covered on the news. The moral principles or values that should generally govern the conduct of the news media are called: a. ethics b. legal standards c. manners d. governances e. social responsibility ANS: A E thics refers to moral principles or values generally governing the conduct of an individual or group. PTS: 1 REF: 69 OBJ: 03-2 TOP: AACSB Ethics | TB&E Model Product | TB &E M odel Customer 135. Refer to Dateline NBC and GM. NBC felt it had an obligation to its v iewers to warn them about the possible defects in GM pickup t rucks. NBC is operating on a level of: a. conventional morality b. social responsibility c. preconventional morality d. postconventional morality e. consumerism ANS: A NBC is operating on a level of conventional morality because it is concerned with the expectations of society. Loyalty and obedience to the organization and the consumer become paramount. PTS: 1 REF: 70 OBJ: 03-2 TOP: AACSB Ethics | TB &E Model Product | TB &E Model Customer 136. Refer to Dateline NBC and GM. NBC apologized and concluded that "unscientific demonstrations should have no place in hard news stories at NBC. That's our new policy." This new policy should be incorporated into NBC's: a. legal standards b. code of ethics c. manners d. governances e. consumerism ANS: B A code of ethics is a guideline to help managers and employees make better and ethical decisions. PTS: 1 REF: 71 OBJ: 03-2 TOP: AACSB E thics | TB&E Model Product 137. Refer to Dateline NBC and GM. NBC executives have to be concerned with the long-range welfare of the network and i ts relationships with viewers. T his concern is called: a. consumerism b. corporate social responsibility c. ethical dilemma d. conventional morality e. environmental consideration ANS: B Corporate social r esponsibility is the concern of business for social welfare. This concern is demonstrated by m anagers considering the long-range best interests of the company and i ts relationship to t he society within which i t operates. PTS: 1 REF: 68 OBJ: 03-1 TOP: AACSB Ethics | T B &E Model Product 138. Refer to Dateline NBC and GM. By admitting i ts error and p roviding a formal apology, NBC achieved which level of the pyramid of corporate social r esponsibility? a. philanthropic b. legal c. economic d. moral e. ethical ANS: E By apologizing, NBC did what was r ight. PTS: 1 REF: 68-69 OBJ: 03-1 TOP: AACSB Ethics | T B &E Model Strategy ESSAY 1. According to Celia Moore, an IBM corporate manager, corporate social responsibility is "a core business issue for IBM." What does she mean by t his statement? ANS: Corporate social responsibili ty is the concern of business for social welfare. This concern is demonstrated by managers who consider the long-range best i nterests of the company and the company's relationship to the society within which it operates. Moore simply means all IBM managers realize that being socially responsible is good business, and all are commit ted to this mission. PTS: 1 REF: 68 OBJ: 03-1 TOP: A ACSB Analytic | AACSB Ethics | TB &E Model Strategy 2. For every home built by H abitat for Humanity, Whirlpool Corporation has given and continues to give free ki tchen appliances to the deserving family. After giving the appliances with no promotion, W hirlpool began talking about its philanthropy in i ts advertising campaigns. Is this u nethical behavior according to the pyramid of social responsibility? ANS: Students' answers to this question may vary, but the better students will understand that economic performance is the foundation of the pyramid. If Whirlpool’s advertising of i ts donations i ncreases profit, then it is not wrong. The company has not abandoned i ts efforts to improve t he quality of life. PTS: 1 REF: 68-69 OBJ: 03-1 TOP: AACSB Analytic | AACSB Ethics | T B &E Model Strategy | TB&E Model Promotion 3. Describe the pyramid of corporate social r esponsibility. Include a description of the pyramid theory and all of its components. ANS: T he pyramid of corporate social responsibili ty portrays four kinds of responsibility: economic, legal, ethical, and philanthropic. Economic performance is the foundation for the s tructure, because if the company does not make a profit, then the other three r esponsibilities are moot. While maintaining a profit, business is expected to obey the law, do what is ethically r ight, and be a good corporate citizen. • • • • Philanthropic r esponsibilities are to be a good corporate citizen, contribute resources to the community, and improve the quality of life. Ethical responsibili ties are to be ethical; to do what is r ight, j ust, and fair; and to avoid harm. Legal responsibilities are to obey the law, which is society's codification of r ight and wrong, and play by the rules of the game. Economic r esponsibilities are to be profitable, because profit is the foundation on which all other r esponsibilities rest. PTS: 1 REF: 68-69 OBJ: 03-1 TOP: AACSB Analytic | AACSB Ethics | T B &E Model Strategy 4. A recent study of marketing professionals found their ethical j udgments were influenced by several factors. List four of these factors. How do these factors contribute to the ethical environment of a marketing organization? ANS: Ethical j udgments were influenced by these factors: 1. 2. The extent of ethical problems within the organization The healthier the ethical environment, the greater the likelihood that m arketers will take a strong stand against questionable practices. Top-management actions on ethics Top management can have a profound inf luence on the ethical behavior of m arketing professionals by performing actions that encourage ethical behavior or d iscourage unethical behavior. Setting an example communicates an ethical philosophy. Potential magnitude of the consequences The greater the harm, the more likely marketers w ill recognize that the action is unethical. Social consensus The greater the degree of agreement among other marketers that an action is harmful, the more likely that m arketers will recognize i t as unethical. Probability of harmful outcomes H igher p robabilities of harmful outcomes mean that marketers are more likely to realize that the actions are unethical. Length of time between the decision and the onset of consequences T he shorter the t ime frame between the action and the onset of negative consequence, the more likely the marketer is to realize it was unethical. Number of people to be affected 3. 4. 5. 6. 7. The more people affected by a negative outcome, the more likely that marketers will r ecognize the decision as unethical. PTS: 1 REF: 71 OBJ: 03-2 TOP: AACSB Analytic | A ACSB Ethics | TB &E Model Strategy 5. You are an ethics consultant, and a group of m anagers have asked you for some guidelines to determine the ethicality of a decision. You t ell the managers that one cannot guarantee the r ightness of a decision, but a checklist can i mprove the chances of a decision being ethical. What are six questions you would tell the m anagers to put on this checklist? ANS: Students' answers may vary. Here are questions found in the text in Exhibit 3.2. Does my decision t reat me or my company as an exception t o a common practice or convention? Do I think I have the authority to break a rule? Would I offend customers by telling them about my decision? Would I offend qualified job applicants by telling them about my decision? Have I made this decision without input from others, so important issues might be overlooked? Does my decision benefit one person or g roup but hur t or not benefit other individuals or groups? Will my decision create conflict between people or groups in the company? Will I have to pull rank (use coercion) to enact my decision? Would I prefer to avoid the consequences of this decision? Did I avoid t ruthfully answering any of the above questions by telling myself that I could get away with i t? PTS: 1 REF: 72 OBJ: 03-2 TOP: AACSB Analytic | AACSB Ethics | TB&E Model S trategy 6. Marketing managers create a marketing mix of product, place, promotion, and p rice strategies aimed at a target market. While managers can control the mix, they cannot control the elements in the external environment that continually mold and reshape the t arget market. List six variables of the external environment that are not directly under the control of marketing managers. ANS: Demographics Technology Competition Social Change Economic Conditions Political and Legal Factors PTS: 1 REF: 74 OBJ: 03-3 TOP: AACSB A nalytic | TB&E Model Product | TB&E Model Pricing | TB&E Model Promotion | TB&E M odel Dist ribution 7. What is environmental scanning? Give an example of an opportunity and a threat that environmental scanning might identify for a suntan lotion company. ANS: E nvironmental scanning occurs when a company creates a team of specialists to collect and evaluate environmental information. This process allows marketing managers to u nderstand the external environment so that plans for the future can be made. The objective of gathering environmental data is to identify future market opportunities and t hreats. Threats that might be identified for a suntan lotion company include fear of skin cancer by sunbathers, other health concerns, or lack of leisure time to spend in the sun. Opportunities might include the need for sun-blockers, waterproof formulas, or children's skin protection products. Another opportunity might be the status element associated with a t an. PTS: 1 REF: 73 OBJ: 03-3 TOP: AACSB Reflective Thinking | TB&E Model Strategy 8. An organization is not completely at the mercy of the external environmental. Give an example how a whiskey distillery might use environmental management. ANS: When a company implements strategies that attempt to shape the external environment within w hich i t operates, i t is engaging in environmental management. For example, extensive political lobbying may inf luence laws that affect domestic legal restrictions, international competition, or product acceptance. Working together in t rade associations would allow the company to influence the competitive environment. Developing new drinks might modify its social environment. Students' answers will of course vary. PTS: 1 REF: 74 OBJ: 03-3 TOP: A ACSB Reflective Thinking | AACSB Analytic | TB &E Model Strategy 9. What is a component lifestyle? Describe how a college student follows a component lifestyle. Use specific examples. ANS: Component lifestyles mean that U.S. citizens are choosing products and services that meet diverse needs and interests rather than conforming to t raditional s tereotypes. Component lifestyles increase the complexity of consumers' buying habits. A lthough the stereotypical student adopts a "student lifestyle" and makes purchases related t o this lifestyle (textbooks, school supplies, pizzas, and so on), each student may also p urchase according to alternative lifestyles. These may include hobbies, outside jobs, a family situation, or other interests. The student may also be a gourmet cook, fitness enthusiast, skier, or computer buff. PTS: 1 REF: 75 OBJ: 03-4 TOP: AACSB Reflective T hinking | AACSB Analytic | TB&E Model Strategy 10. What are baby boomers? List and describe the four groups into which baby boomers have been subdivided. ANS: Baby boomers are defined as people born between 1946 and 1964. They are the largest demographic segment in the population today, but their inf luence varies depending upon f ur ther segmentation within the baby boomer segment. The four segments are “looking for balance” boomers, “confident and living well” boomers, “at ease” boomers, and “overwhelmed” boomers. “Looking for balance” boomers represent an excellent market for companies that can offer them t ime-saving products. Companies engaged in t ravel-related food-service and businesses will find key opportunities in this segment. “Confident and l iving well” boomers have the highest income and relish the chance to be the first to p urchase a new product. They are technologically oriented and care about what is t rendy. T ravel is one of their favorite activities. “At ease” boomers do not worry about the future. T hey express the least interest in luxury products and don’t t ravel much. The segment is p rimarily home-centric. They are not interested in new products. “Overwhelmed” boomers have the lowest income. They worry about the future. Health is a big concern for them. They a re also the least sociable segment. They do not readily accept new technology. PTS: 1 REF: 81-82 OBJ: 03-5 TOP: AACSB Diversity | AACSB Analytic | TB &E Model Customer | T B &E Model Strategy 11. Define multiculturalism and discuss its impact on the marketing f unction. ANS: A multicultural society is characterized by two or more large racial and ethnic groups as opposed to one dominant racial or ethnic group. Mul ticulturalism occurs w hen all ethic groups in an area are roughly equally represented. I t means that various ethnic groups can no longer be expected to assimilate into existing national culture. This means that marketers must create specialized programs to target specific ethnic groups. F rom a marketing perspective, multiculturalism increases the complexity of the marketing f unction. Demand for goods and services will often be culture-driven. Within the large ethnic markets, the marketing mix will be fur ther complicated by many submarkets. PTS: 1 REF: 85-86 OBJ: 03-6 TOP: AACSB Diversity | AACSB Analytic | TB&E Model Customer | T B&E Model Strategy 12. One component of the external environment marketing m anagers must understandand react to is the economic environment. Br iefly describe the four economic areas of greatest concern to U.S. marketers and the marketing implications of t rends in these four areas. ANS: RISING INCOMES. Incomes are r ising in the United S tates, primarily due to dual-income families. Increases in disposable and discretionary i ncome allow families and individuals to afford the "good life." Marketers can now concentrate efforts on higher-quality, higher-priced goods and services. PURCHASING POWER: This is also known as the cost of living. When income is higher than the cost of l iving, people have more discretionary income to spend on non-essential i tems. I NF LATION. In recent years, the United States has not experienced high inf lation; instead, p rices do not r ise quickly, employment levels are high, and purchasing power is up. Again, t his allows marketers to concentrate efforts on higher-priced goods and services. During periods of inflation, marketers should be aware that brand loyalty decreases and consumers s tock up on bargain products; consequently, pricing strategies should be monitored carefully. RECESSION. This period of economic activity is when income, production, and employment fall, which reduces demand. Marketers can counter these effects with value- i mproved products, customer service, replacement parts, and price freezes. PTS: 1 REF: 8689 OBJ: 03-7 TOP: AACSB Analytic | TB&E Model Strategy 13. Describe inflation and r ecession. Present a marketing strategy that would allow a company to continue operating i n an inf lationary period and in a recessionary period. ANS: In f lation is a measure of the decrease in the value of money, expressed as the percentage reduction in value since the p revious year. I t may result in decreased purchasing power. Marketers should be aware b rand loyalty will decrease, and consumers will tend to stock up. This means short-term p romotions (coupons and sales) will be effective. Additionally, marketers should carefully evaluate pricing strategies because consumers will t ry to make the most economical p urchases possible. A recession is a period of economic activity when income, production, and employment tend to fall, all of which reduce demand. Marketers can t ry to improve existing products, because a recession increases demand for products and services that (1) a re economic and efficient, (2) offer value, (3) help organizations streamline p ractices/procedures, and (4) improve customer service. Marketers can also offer r eplacement parts to postpone purchasing new equipment and materials. Finally, m arketers should stabilize prices and promote the product's value. PTS: 1 REF: 88-89 OBJ: 03-7 TOP: AACSB Reflective Thinking | AACSB Analytic | TB &E Model Strategy 14. M i racle Sealant Company is a business that makes and sells environmentally safe products t o preserve the beauty of ti le and stone used on f loors, in bathrooms, and on ki tchen countertops. Assume Mi racle Sealant is operating in an economic recession. What three m arketing strategies can i t use to survive this decline in economic activity? Give examples of specific actions the company can take for each of the strategies. ANS: Students' examples w ill vary. (1) M i racle Sealant can improve its existing products by offering promotional v ideos for do-i t-yourselfers. I t can add new products to i ts product lines, such as grout, b rushes, and paint specifically designed for use on t ile and stone. (2) The company can m aintain and expand its customer service by offering financial incentives to i ts retailers to order more or by extending more credit. (3) The company can emphasize top-of-the-line p roducts and promote product value. I t can emphasize the fact that its products are not harmful to the environment. PTS: 1 REF: 88-89 OBJ: 03-7 TOP: AACSB Analytic | TB&E M odel Strategy | TB &E Model Product 15. You are a young entrepreneur who has recently r eceived a multimillion dollar research grant for studying ways to improve urban life in the U nited States. Discuss the difference between basic and applied research, and give specific examples of each type of research your new company will conduct. ANS: Basic research (or p ure research) attempts to expand the frontiers of knowledge but is not aimed at a specific, p ragmatic problem. This type of research would explore broad issues of defining the good and bad points of life in the United States. This research could also explore values as well as social or demographic change, or issues in any of the variables of the external environment. Applied research attempts to develop new or improved products. Students could provide specific examples of products that can help improve life in the United States, such as solar cars, energy-efficient or nonpolluting motors, products that work faster to save t ime, or nonfat products to save calories. Many products would be high-tech in nature. PTS: 1 REF: 89 OBJ: 03-8 TOP: AACSB Reflective Thinking | AACSB Analytic | TB&E Model Research 16. There are three general categories of federal laws that affect marketing. They a re (1) regulation of the competitive environment, (2) regulation of pricing practices, and (3) control of false advertising. Name and briefly describe one federal law that has been created for each category. ANS: REGULATION OF THE COMPETIT IVE ENVIRONMENT. The Sherman Act (1890) outlaws t rusts, conspiracies, restraint of t rade, and monopolies. The C layton Act (1914) outlaws price discrimination and tying contracts. The Federal Trade Commission Act (1914) created the FTC to deal with antit rust matters and outlaws unfair methods of competition. The Lanham Act of 1946 is the United States' primary t rademark legislation. The Celler-Kefauver Antimerger Act prevents corporate acquisitions that reduce competition. The Har t-Scott-Rodino Act requires large companies to notify the government of their intent to merge. REGULATION OF PRICING PRACTICES. The Robinson-Patman Act (1936) prohibits charging different prices to different competing buyers and requires sellers to make services/allowances available to all purchasers on a proportionately equal basis. Also, the Clayton Act outlaws discrimination in prices to different buyers. CONTROL O F FALSE ADVERTISING. The Wheeler-Lea Amendment to the FTC Act (1938) broadens F TC powers and outlaws false and deceptive advertising. PTS: 1 REF: 91 OBJ: 03-9 TOP: A ACSB Reflective Thinking | TB&E Model Strategy 17. The Federal Trade Commission ( FTC) has many regulatory powers that govern the action of persons and corporations. Name and briefly describe four FTC powers. ANS: Cease-and-desist order: A final order to cease an illegal practices. Consent decree: Business consents to stop the questionable p ractice without admit ting illegality. Affi rmative disclosure: Requires the advertiser to p rovide additional information about products in its advertisements. Corrective advertising: Requires advertising to correct the past effects of misleading advertising. Restitution: Requires refunds to consumers misled by deceptive advertising. Counteradvertising: The Federal Communications Commission (FCC) permits advertisements in broadcast media to counteract advertising claims, plus a proviso for free t ime under certain conditions. PTS: 1 REF: 93 OBJ: 03-9 TOP: AACSB Reflective Thinking | TB&E Model Strategy 18. What is t he CPSC? How does i t affect marketing? ANS: The Consumer Product Safety Commission (CPSC) is a federal regulatory agency that directly affects the marketing environment. The sole purpose of the CPSC is to protect the health and safety of consumers in and around t heir homes. The commission has the power to prescribe mandatory safety standards for a lmost all products consumers use. The CPSC has the power to ban dangerous products f rom the marketplace and levy heavy fines on offending fi rms. Marketers should be aware of t he health and safety needs of consumers when making and distributing products. PTS: 1 REF: 92 OBJ: 03-9 TOP: AACSB Reflective Thinking | TB&E Model Strategy Chapter 3— Social Responsibility, Ethics, and the Marketing Environment TRUE/FALSE 1. ExxonMobil was fulfilling its philanthropic responsibility when i t partnered with the National Fish and W ildlife Foundation to save the world’s remaining tigers by donating more than $11 million t o establish the Save the Tiger Fund. ANS: T PTS: 1 REF: 69 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 03-1 TYPE: App 2. The foundation for the pyramid of corporate social responsibility is economic responsibility. ANS: T PTS: 1 REF: 68 OBJ: 03-1 TYPE: Def TOP: AACSB Reflective Thinking | AACSB Ethics | TB&E Model Strategy 3. Morals are rules people develop as a result of cultural values and norms. ANS: T PTS: 1 REF: 70 OBJ: 03-2 TYPE: Def TOP: AACSB Reflective Thinking | AACSB Ethics | TB &E M odel Strategy 4. Fortunately, most businesspeople have progressed beyond the selfcentered and manipulative actions of preconventional morality. ANS: T PTS: 1 REF: 70 O BJ: 03-2 TYPE: Comp TOP: AACSB Reflective Thinking | AACSB Ethics | TB&E Model S trategy 5. Many companies have found issuing a policy on ethical behavior is the only action necessary to ensure employees will comply with expected standards. ANS: F Simply issuing such a policy is only the beginning; marketing managers must then put the policy i nto action. PTS: 1 REF: 72 OBJ: 03-2 TYPE: Comp TOP: AACSB Reflective Thinking | A ACSB Ethics | TB &E Model Strategy 6. When writing codes of ethics, businesses must ensure their codes deal with every possible situation. ANS: F Codes that are too detailed encourage employees to substitute rules for judgment. PTS: 1 REF: 72 OBJ: 03-2 TYPE: Comp TOP: AACSB Reflective Thinking | AACSB Ethics | TB &E Model Strategy 7. While a single fi rm cannot control the elements in the external environment, a fi rm can sometimes influence that environment. ANS: T PTS: 1 REF: 74 OBJ: 03-3 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Strategy 8. Marketers can control the external environment in which their organizations operate. ANS: F Although marketers can control the marketing mix, they cannot control the external environment in which their organizations operate. PTS: 1 REF: 73 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Strategy 9. Champion Lyte is a sugar-free sports drink designed to r eplenish electrolytes lost during activity or illness. Since the product was designed p rimarily for diabetics, health care professionals who t reat diabetics would be the product's p rimary target market. ANS: F The target market is people with diabetes for whom the p roduct was designed. PTS: 1 REF: 73 OBJ: 03-3 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 10. Social factors in the m arketing environment influence the products people buy, the prices paid for products, the effectiveness of specific promotions, and how, where, and when people expect to purchase p roducts. ANS: T PTS: 1 REF: 74 OBJ: 03-4 TYPE: Comp TOP: AACSB Reflective Thinking | T B&E Model Promotion | TB &E Model Distribution | TB &E Model Customer | TB &E M odel Price 11. Consumers today do not necessarily fi t into t raditional stereotypes, but may i nstead choose products and services that meet a variety of needs. Such diverse purchasing habits reflect component lifestyles. ANS: T PTS: 1 REF: 75 OBJ: 03-4 TYPE: Def TOP: A ACSB Diversity | TB&E Model Product | TB &E Model Customer 12. The phenomenon of working women has probably had a greater effect on marketing than has any other social change. ANS: T PTS: 1 REF: 75 TOP: AACSB Diversity | TB &E Model Customer OBJ: 03-4 T YPE: Comp 13. Psychography is the study of people's vital statistics such as their ages and locations. ANS: F Demography is the study of such vital statistics. PTS: 1 REF: 77 OBJ: 035 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Customer 14. Marketers can best reach Generation Y members through television and magazine advertising. ANS: F Gen Yers respond best to ads in nontraditional media. PTS: 1 REF: 79 OBJ: 03-5 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model P romotion 15. Asian Americans, who represent less than 5 percent of the U.S. population, have the highest average income of all groups. ANS: T PTS: 1 REF: 84 TOP: AACSB D iversity | TB&E Model Customer OBJ: 03-6 TYPE: Comp 16. Multiculturalism occurs w hen all major ethnic groups in an area are roughly equally represented. ANS: T PTS: 1 REF: 85 TOP: AACSB Diversity | TB &E Model Customer OBJ: 03-6 TYPE: Def 17. I n f lation is a measure of the decrease in the value of money, expressed as the percentage r eduction in value since the previous year. ANS: F In f lation is characterized by a general r ise in prices without a corresponding increase in wages. PTS: 1 REF: 88 OBJ: 03-7 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Pricing 18. U.S. companies excel at applied research and are weak when i t comes to basic research. ANS: F The United States excels at both basic and applied research. PTS: 1 REF: 89 OBJ: 03-8 TYPE: Comp TOP: A ACSB Analytic | TB&E Model Research 19. Champion Lyte is a sugar-free sports drink. I n developing the new product, i ts manufacturer thoroughly studied the legal restrictions on the drink's ingredients, packaging, manufacturing, and labeling and has abided by all such restrictions. In this way, the manufacturer of Champion Lyte drinks conducted i ts examination of all political and legal factors that might affect the product's marketing. A NS: F Legal restrictions govern decisions in ALL areas of the marketing mix, not just in t he areas the manufacturer checked. PTS: 1 REF: 91 OBJ: 03-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 20. Marketers need a thorough understanding of the laws established by the federal government, state governments, and regulatory agencies. ANS: T PTS: 1 REF: 91 TOP: AACSB Reflective Thinking | TB &E Model Research OBJ: 03-9 TYPE: Comp 21. After Hal L i purchased and installed a woodburning s tove to heat his family home, the stove caught on fire and damaged much of the house. He believes the stove had inadequate insulation. Li should voice his concerns to the Federal T rade Commission (FTC). ANS: F The Consumer Product Safety Commission is designed to p rotect the health and safety of consumers. PTS: 1 REF: 92 OBJ: 03-9 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 22. The competitive environment of a business encompasses the number of competitors the fi rm must face, the relative size of the competitors, regulatory agencies, and the degree of interdependence within the industry. A NS: F Regulatory agencies are part of the political and legal factors. PTS: 1 REF: 95 OBJ: 03-10 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Research 23. Flexcar is a car rental agency that will rent cars by the hour. Her tz and Avis are part of Flexcar's competitive environment. ANS: T PTS: 1 REF: 95 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 03-10 TYPE: App 24. An obese man in New York sued M cDonald's, Burger K ing, Wendy's, and KFC because he claims the fast-food giants caused h is diabetes and other health problems. The suit is an example of a problem caused by competitive factors. ANS: F This problem is the result of political and legal factors. PTS: 1 REF: 93 OBJ: 03-10 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy M ULTIPLE CHOICE 1. _____ is the concern of business for the long-range welfare of both t he company and its relationships to the society within which i t operates. a. Consumerism b. Corporate social responsibility c. Cultural sensitivity d. Conventional morality e. E nvironmental consideration ANS: B PTS: 1 REF: 68 TOP: AACSB Ethics | TB&E Model S trategy OBJ: 03-1 TYPE: Def 2. Novartis created the Novartis Research Institute for T ropical Diseases in Singapore. The institute is unique because i t is a not-for-profit organization that focuses on the discovery of new drugs for the t reatment of neglected d iseases, such as dengue fever and tuberculosis. Not only is this good business, i t is also: a. m andated by Supreme Court rulings b. socially responsible c. unrelated to any ethical motivation d. demonstrating a lack of concern for diversity e. environmental marketing A NS: B Social responsibility is the duty that business feels for the welfare of society. By helping developing nations, Novartis is helping to meet the needs of society. PTS: 1 REF: 68 O BJ: 03-1 TYPE: App TOP: AACSB Ethics | TB&E Model Strategy 3. Corporate social r esponsibility is defined as the: a. belief that the legal system defines ethical behavior b. development of inclusive codes of ethics c. rules by which social rewards are attained d. concern for social welfare by businesses e. coordination of social programs for publicity p urposes ANS: D PTS: 1 REF: 68 TOP: AACSB Ethics | TB&E Model Strategy OBJ: 03-1 T YPE: Def 4. The pyramid of corporate social responsibilities contains all of the following components EXCEPT: a. economic responsibilities b. ethical responsibilities c. cultural r esponsibilities d. legal responsibilities e. philanthropic responsibili ties ANS: C See Review Learning Outcome 1. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: Def TOP: AACSB Ethics | TB&E M odel Strategy 5. One of the favorite foods in Thailand is shark fin soup. A San Franciscobased organization claimed the soup made by i ts leading producer contained mercury poison, yet the leading producer of shark fin soup wanted to continue selling the soup because i t believes it has a responsibility to its investors to be profitable. This indicates that t he soup manufacturer was operating at a(n) _____ responsibility level. a. legal b. p hilanthropic c. ethical d. economic e. cultural ANS: D The company believed its mission was to be profitable. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 6. Japanese law prohibits the storage of more than 50 pounds of explosive at any single site in the nation. Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation w hen allegations were made that the park was detonating more than 50 pounds of explosives in i ts nightly fireworks displays. If the allegations are t rue, then Universal S tudios Japan is not operating at a(n) _____ responsibili ty level. a. legal b. philanthropic c. ethical d. economic e. cultural ANS: A Universal Studios Japan is not obeying the letter of t he law. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 7. Pacific Gas and Electric (PG&E) Company has donated almost $300,000 to 58 local governments and community-based organizations for local economic development projects. Recipients of these grants include the San Benito County Economic Development Corporation's Business Outreach Program, the San Jose Conservation Corps' Hennessy Place Affordable Single-Family Housing Project, and Mar iposa County's Business Development Training Program. This sort of donation indicates PG&E was operating at a(n) _____ responsibility level. a. legal b. philanthropic c. ethical d. economic e. cultural A NS: B By supporting local economic development projects, PG&E was being a good corporate citizen. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 8. In the future, electrical power may come from quantum nucleonics, a form of nuclear power that produces no residual radiation. The ability to use this form of power will require equipment adaptations, but it will solve the world's need for clean and efficient power. Companies that replace inefficient sources of power with quantum nucleonics only after they are required to by the Environmental P rotection Agency (EPA) are operating at a(n) _____ responsibility level. a. legal b. p hilanthropic c. ethical d. economic e. cultural ANS: A PTS: 1 REF: 68-69 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 03-1 TYPE: App 9. Girls between the ages of 8 and 15 are one of the growing markets for high-end shoe manufacturers, and podiat rists say the t rend is leading to many stylish young girls with grown-up foot p roblems. Shoe manufacturers who develop and market adult-styled shoes to this group are not operating at a(n) _____ responsibility level. a. legal b. philanthropic c. ethical d. economic e. cultural ANS: C The companies are not doing what is r ight, just and fair and so a re not operating ethically. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 10. Corporate social r esponsibility: a. is mandated by federal law b. requires companies to sacrifice economic performance for the sake of their stakeholders c. does not in fluence competition d. may not a lways result in profit and growth e. is unaffected by environmental changes ANS: D PTS: 1 REF: 69 TOP: AACSB Ethics | TB&E Model Strategy OBJ: 03-1 TYPE: Comp 11. For every home built by Habitat for Humanity, Whirlpool Corporation has given and continues to give f ree ki tchen appliances to the deserving family. This donation of appliances is an example of how companies assume their: a. corporate social responsibility b. ethical conveyance c. a d uty to engage in cause marketing d. a r ight to engage in social marketing e. m ulticulturalism ANS: A Corporate social responsibility is a business's concern for society's welfare, in this case deserving families selected by the Habitat organization. PTS: 1 REF: 68 OBJ: 03-1 TYPE: App TOP: AACSB Ethics | TB &E Model Strategy 12. NSTAR Gas & E lectric Company in Boston provides continuing financial support for an injury prevention p rogram run by the Children's Hospital Boston. This funding is an example of: a. corporate social responsibility b. ethical conveyance c. a duty to engage in cause marketing d. a r ight t o engage in social marketing e. multiculturalism ANS: A Corporate social responsibility is a business's concern for society's welfare, in this case an inju ry prevention program. PTS: 1 REF: 68 OBJ: 03-1 TYPE: App TOP: AACSB Analytic | AACSB Ethics | TB&E Model S trategy 13. Which of the following statements about corporate social responsibility is t rue? a. Marketers universally agree on the importance of corporate social responsibili ty. b. According to marketers, corporate social responsibili ty is successful because it focuses solely on economic performance. c. Skeptics of the concept of corporate social responsibility believe i n the importance of sustainability. d. Corporate social responsibility can derive from a situational analysis. e. All of the statements about corporate social responsibility are t rue. A NS: D There are skeptics and proponents of corporate social responsibility. Skeptics believe that corporate social responsibili ty does not focus on economic performance. P roponents of the theory believe in sustainability. Corporate social responsibility encourages companies to view social needs as opportunities--opportunit ies are revealed t hrough situational analyses. PTS: 1 REF: 68-69 OBJ: 03-1 TYPE: Comp TOP: AACSB E thics | TB&E Model Strategy 14. _____ is the idea that socially responsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profit and help the world at the same time. a. Sustainabili ty b. Philanthropy c. Cause marketing d. Creative ethics e. In ternational ethics ANS: A PTS: 1 REF: 68 TOP: AACSB Ethics | TB&E Model Strategy OBJ: 03-1 TYPE: Def 15. Which of t he following statements about the theory of sustainability is t rue? a. Sustainabili ty is an i nternal process in which companies match resources and objectives. b. Sustainability is the i dea that socially responsible companies will outperform their peers when they focus on the world's problems as marketing opportunities. c. According to the theory of sustainability, a company cannot be socially responsible without a code of ethics and managerial support of t hat code. d. According to the theory of sustainability, ethical behavior should never be v iewed as the means of obtaining a competitive advantage. e. Sustainability is only successful if i t focuses on organizational strengths. ANS: B Sustainability is the idea that socially re ponsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profit and help the world at the same t ime. PTS: 1 REF: 68 OBJ: 03-1 TYPE: Comp TOP: AACSB Ethics | TB&E Model Strategy 16. The four components of the pyramid of corporate social responsibility are: a. sustainability, creativity, profit, and culture b. organizational culture, creativity imagery, economic performance, and objectivity c. organizational, financial, social, and cultural responsibilit ies d. sustainability, legality, creativity, and competition e. economic, legal, ethical, and p hilanthropic responsibilities ANS: E PTS: 1 REF: 68-69 TOP: AACSB Ethics | TB&E M odel Strategy OBJ: 03-1 TYPE: Def 17. Which of the following statements describes ethics? a. Ethics are the moral principles or values that generally govern the conduct of an i ndividual. b. Ethics is the standard of behavior by which conduct is judged. c. Morals are a foundation for ethical behavior. d. Ethical values are situation specific and t ime oriented. e. A ll of the statements describe ethics. ANS: E PTS: 1 REF: 69-70 TOP: AACSB Ethics | T B &E Model Strategy OBJ: 03-2 TYPE: Comp 18. Which of the following sayings best describes how people with conventional morality act? a. Don't put all of your eggs in one basket. b. When in Rome, do as the Romans do. c. Be wary of strangers bearing gifts. d. A r olling stone gathers no moss. e. Don't count your chickens before they hatch. ANS: B PTS: 1 REF: 70 TOP: AACSB Ethics | TB&E Model Strategy OBJ: 03-2 TYPE: Comp 19. Cheetera Johnson is a calculating, self-centered salesperson. She never engages in r elationship marketing. She looks on any sales situation as a "win-lose" situation, and she believes any legal method she can use is justified when she wins. Johnson is most likely at t he _____ stage of ethical development. a. preconventional morality b. t ransformationalism c. conventional morality d. egocentrism e. basic morality ANS: A Preconventional morality is the most basic level of morality. PTS: 1 REF: 70 OBJ: 03-2 TYPE: App TOP: AACSB A nalytic | TB&E Model Research 20. Shannon Ross is a sales manager for Pampered Chef, a company that sells ki tchen tools and other aids for cooking through party plans. She is very concerned about making sure her salespeople understand the importance of t reating each customer fairly and developing long-term relationships with them. She asks that before a sale is made, the salesperson should make sure customers can afford the i tems and a re not buying due to social pressures. Ross is most likely at the _____ stage of ethical development. a. preconventional morality b. t ransformationalism c. conventional morality d. postconventional morality e. actualized morality ANS: D Postconventional morality is that of the mature adult. At this level, the individual is more concerned about others than about h imself or herself. PTS: 1 REF: 70 OBJ: 03-2 TYPE: App TOP: AACSB Ethics | TB &E M odel Strategy 21. The use of ethical decision making: a. can be in fluenced by top m anagers b. is in fluenced by the probability of harmful outcomes c. depends on the number of people to be affected d. depends on the magnitude of possible consequences e. is accurately described by all of the choices ANS: E PTS: 1 REF: 71 TOP: AACSB Ethics | T B &E Model Strategy OBJ: 03-2 TYPE: Comp 22. Like many other professional organizations and businesses, the American Society of Civil Engineers has developed a formal, writ ten guideline to help its members make better ethical decisions. This document is a: a. behavioral practice b. moral ruling c. code of ethics d. direction of value e. principled r egulation ANS: C While codes of ethics are most often defined as guidelines for businesses, t hey are also important moral guides for professional organizations. PTS: 1 REF: 71 OBJ: 03-2 TYPE: Def TOP: AACSB Ethics | TB &E Model Product 23. Which of the following factors does NOT tend to in fluence ethical decision making and judgments? a. probability of a harmful outcome b. length of t ime between decision and the onset of consequences c. level of multiculturalism d. number of people to be affected e. potential magnitude of the consequences ANS: C PTS: 1 REF: 71 OBJ: 03-2 TYPE: Comp TOP: AACSB Ethics | A ACSB Diversity | TB&E Model Strategy 24. Which of the following statements about the creation of a code of ethics is t rue? a. A writ ten code helps employees avoid confusion when determining whether their decisions are ethical. b. A code can be an effective internal control on behavior. c. The process of formulating the code facilitates discussions that u ltimately create better decisions. d. A code helps employees identify what their fi rm r ecognizes to be acceptable business practices. e. All of the statements about the creation of a code of ethics are t rue. ANS: E PTS: 1 REF: 71-72 TOP: AACSB Ethics | TB&E Model S trategy OBJ: 03-2 TYPE: Comp 25. A human resources manager is creating a code of ethics for the employees of the retirement home she works for. Which of the following is N OT an ethics principle she should keep in mind as she creates this code? a. The principles should not upset current retirement home workers and future job applicants. b. Any decisions should be fair to all concerned: retirement home nurses, cleaning personnel, and administrative staff. c. Input on the code should be gained from other knowledgeable i ndividuals or groups. d. Principles can deviate from common practices because of the p restigious nature of the facility. e. She should not have to pull rank or use coercion to i mplement her ethics code. ANS: D An unethical code would presume that the company is an exception to a common practice in the industry. See Exhibit 3.2. PTS: 1 REF: 72 OBJ: 032 TYPE: Comp TOP: AACSB Ethics | TB&E Model Strategy 26. A(n) _____ is a defined g roup that managers feel is most likely to buy a fi rm's product. a. target market b. buying center c. aggregated unit d. consumer cluster e. demographic sample ANS: A PTS: 1 REF: 73 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 03-3 TYPE: Def 27. Johnson Publishing Company, the world’s largest African American-owned publishing company and home of Ebony magazine, has forged an alliance with Dan River, Inc., to create luxury bed and bath products for the newly developed Ebony Home brand. Ebony Home will use the publisher’s long history and expertise to market to various demographics of the African American market. This describes the _____ for the Ebony Home brand. a. t arget market b. buying center c. aggregated unit d. consumer cluster e. demographic sample ANS: A A target market is a defined group that managers feel is most likely to buy a f i rm's product. PTS: 1 REF: 73 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 28. Which of the following statements best describes the typical t arget market? a. A target market will remain stable over t ime, with the same group of consumers. b. Target markets change over t ime as consumers drop in or out of the market, and as tastes change. c. Target markets are not strongly affected by changes in the external environment. d. Target markets only change when the features and benefits of the product offering change. e. Target markets cannot be specifically defined according to age, income, or location because these factors are continually changing. ANS: B Target markets are defined and described, but they are always changing in response to environmental changes. PTS: 1 REF: 73 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 29. Assume you are in charge of the politically mandated process of converting t he economy of a developing Afr ican nation from state-controlled to market-driven business ventures. Your ability to control _____ will most likely determine the future success of the count ry and i ts government. a. the culture b. technology c. marketing d. the competitive environment e. the natural environment ANS: C Marketing is concerned with managing controllable variables (the marketing mix) within an uncontrollable environment. Because t here has been a politically mandated process of economic change from state-controlled to m arket-driven, marketing issues would be of paramount concern. PTS: 1 REF: 73 OBJ: 03-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 30. Colorific is a r elatively new competitor for Crayola coloring products. At the beginning of the new year for elementary students, the _____ for Colorific products is people buying school supplies. a. t arget market b. buying center c. mass market d. consumer sample e. aggregated demography ANS: A A target market is a defined group that managers feel is most likely to buy i ts products. PTS: 1 REF: 73 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Marketing Plan 31. The newest Coca-Cola vending machines have interactive screens that run advertisements and allow users to obtain free photos of themselves and r ingtones after they have bought a drink. The reason for the int roduction of this new style vending machine is to "allow the company to interact more directly with its digital-age customers." Around the world, Coke and junk food, in general, are facing television advertising bans. By developing this machine, Coke has engaged in _____ by modifying i ts external environment through the use of technology. a. reengineering b. environmental m anagement c. social machinations d. technology diversity e. synergistic research and development ANS: B When a company implements strategies that attempt to shape the external environment within which it operates, it is engaging in environmental m anagement. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Promotion | TB &E Model Distribution | TB &E Model Product 32. Cigarette m anufacturers have had to eliminate the use of vending machines due to the machine's i nability to check the buyers' ages. A cigarette manufacturer has developed a vending m achines that operates only after the user inserts a card verifying his or her age. By developing this machine, the cigarette manufacturer has engaged in _____ by modifying its external environment through the use of technology. a. reengineering b. environmental m anagement c. social machinations d. technology diversity e. synergistic research and development ANS: B When a company implements strategies that attempt to shape the external environment within which it operates, it is engaging in environmental m anagement. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 33. Ashley K reeger is the director of marketing for a company that operates several assisted-living centers. The company is developing a marketing plan to cover the next five years of business. K reeger must be sure she considers which of the following uncontrollable factors in her plan? a. place or distribution factors b. media buying factors c. demographic factors d. inventory factors e. pricing for repair and maintenance services ANS: C All but demographic factors are controllable factors. See also Review Learning Outcome 3. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Analytic | TB&E M odel Marketing Plan 34. Marketing managers cannot control ____, but they can at times i n fluence i t. a. where advertising is placed b. the external environment c. the sales force d. t he distribution strategy e. how products are priced ANS: B The external environment is basically uncontrollable, but the other four answers are part of the marketing mix. PTS: 1 REF: 73-74 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model S trategy 35. As technology continues to offer more different methods for shopping on the I nternet, manufacturers and t raditional retailers are finding themselves in direct competition with each other. In this case, unless marketing managers understand _____, m anufacturers and retailers cannot intelligently plan for the future. a. their competitors' s trategies b. the economic conditions that inf luence the growth of technology c. how consumers are assimilating new technology d. changing social attitudes toward technology e. all of these ANS: E PTS: 1 REF: 74 TOP: AACSB Technology | TB&E Model O nline/Computer OBJ: 03-3 TYPE: App 36. What is apparently the most difficult external variable for marketing managers to forecast, in fluence, or integrate into marketing plans? a. technology b. social factors c. demography d. competition e. economic conditions ANS: B Social factors and changes are difficult to foresee, because they are usually slow and/or small changes. Also, it is very difficult for one company to affect social factors in any appreciable manner. PTS: 1 REF: 74 OBJ: 03-4 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Marketing Plan 37. Many people in the United States choose to d rink light beer because Americans value thin and fit bodies. In Europe, light beers have had li t t le success because f lavor is valued more highly. For international beer m anufacturers, this difference illustrates how _____ in fluence marketing. a. demography b. competition c. social factors d. economic conditions e. technology ANS: C Values are an example of social factors and influence what products people buy. PTS: 1 REF: 74-75 OBJ: 03-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model In ternational Perspective 38. The external environment: a. can be controlled in much the same manner as t he internal marketing mix b. cannot be inf luenced by marketing managers c. does not change over time d. does not have an impact on Fortune 500 companies e. must be continually monitored by marketing managers ANS: E PTS: 1 REF: 73 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 03-3 TYPE: Comp 39. The external environment is a strong in fluence on a target market and can be a source of _____ for the m arketing manager. a. opportunities and threats b. threats and strengths c. environmental loopholes d. opportunities and weaknesses e. product myopia ANS: A The external environment can provide opportunities to serve new and changing needs, as well as warnings about changes that could threaten the current position of the fi rm. Students will need to remember what a SWOT analysis is to answer this question. PTS: 1 REF: 73 OBJ: 03-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 40. When a company engages in _____, it is implementing strategies that attempt to shape the external environment in which i t operates. a. synergistic control b. environmental management c. t ransactional management d. market control e. reactive management ANS: B PTS: 1 REF: 74 TOP: AACSB Reflective Thinking | TB &E Model Strategy OBJ: 03-3 TYPE: Def 41. The M ichigan State Legislature t r ied to pass a bill requiring concert promoters and venue operators to print parental warnings on t ickets and advertisements for concerts and shows by performers whose recordings have already been given content advisory labels. Promoters and venue operators prevented the passage of this bill that would have required them to m ake value judgments they felt ill-equipped to make. The concert promoters and venue operators engaged in: a. internal marketing b. illegal practices c. environmental m anagement d. reengineering e. corporate espionage ANS: C Attempting to influence external environmental factors is known as environmental management. PTS: 1 REF: 74 O BJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Promotion 42. Consumers buying lumber are increasingly asking the retailers from whom they are buying t he products if they are from a nation that is destroying its environment. As a result commercial buyers are asking Indonesian suppliers the same questions. Approximately 80 percent of the lumber produced in Indonesia is illegally logged. Two logging companies in I ndonesia are putt ing computerized bar codes on their logs to show they were legally harvested. The companies hope this coding will provide evidence that they are engaging in: a. proactive evaluation b. t ransactional control c. synergistic control d. downsizing e. environmental management ANS: E Attempting to inf luence external environmental factors is environmental management. PTS: 1 REF: 74 OBJ: 03-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 43. _____ factors are the environmental factors concerned with the changes in people's values, lifestyles, and family roles. a. Social b. Economic c. Political d. Competitive e. Demographic ANS: A PTS: 1 REF: 74 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 03-4 TYPE: Comp 44. China’s new 5 percent tax on disposable wooden chopsticks, reflecting concerns about deforestation, has been praised by environmentalists. The move is hit ting hard at the Japanese who consumer 25 billion sets of wooden chopsticks annually. Almost all of the chopsticks used in Japan come from China. The price of wooden chopsticks in Japan has increased by almost 50 percent. Due to _____ factors, the Japanese will not use reusable plastic chopsticks when t hey eat out at restaurants. a. social b. economic c. legal d. demographic e. technological A NS: A Social factors include our attitudes, values, and lifestyles. PTS: 1 REF: 74 OBJ: 03-4 T YPE: App TOP: AACSB Diversity | TB &E Model Customer 45. In Asia, Procter & Gamble (P&G) discovered consumers like to experiment with different brands of shampoos, so most shoppers shy away from the family-size bottles so popular with Americans. Now most of the shampoo the company sells in the Far East is packaged in single-use sachets. P&G r esponded to _____ factors when i t changed its Asian packaging. a. demographic b. competitive c. technological d. social e. component lifestyle ANS: D PTS: 1 REF: 74 TOP: A ACSB Reflective Thinking | TB&E Model Customer OBJ: 03-4 TYPE: App 46. One of the favorite foods in Thailand is shark fin soup. A San Francisco-based organization claimed t he soup made by i ts leading producer contained mercury poison. As a result, sales for this company plummeted. The popularity of this soup in Thailand represents a(n) _____ factor w hile claims of mercury poisoning relate to lax enforcement of environmental protection and consumer protection regulations by the Thai government, a(n) _____ factor. a. economic; t echnological b. social; technological c. social; political and legal d. competitive; economic e. social; technological ANS: C Food preferences are a cultural issue, and the lax enforcement of environmental protection laws is a legal/political factor. PTS: 1 REF: 74 | 91 OBJ: 03-4 T YPE: App | 03-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 47. Coolsavings.com is one of the largest online distributors of in-store coupons, sales announcements, and mail-in rebates offered by national retailers and In ternet commerce sites. I ts marketing department keeps t rack of current external environmental changes. A lthough some information is relatively easy to collect, analyzing and forecasting _____ is extremely difficult, and i t is the most important factor for a company to understand. a. demographic t rends b. economic t rends c. legislative t rends d. technological t rends e. social t rends ANS: E Managers have the least amount of information available about social t rends. PTS: 1 REF: 74 OBJ: 03-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Promotion48. Consumer preference for low-carb diets has greatly modified the way food is being marketed. This concern with health issues is an example of a(n) _____ factor. a. economic b. political and legal c. technological d. demographic e. social ANS: E PTS: 1 REF: 75 OBJ: 03-4 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E M odel Customer 49. Quaker Oats and other cereal manufacturers have developed what they call "breakfast-with-one-hand" products, which are breakfast bars and drinks that can be consumed on the way to work without leaving any mess. This type of food that can be eaten on the go is largely the result of changes in _____ factors. a. natural environmental b. demographic c. technological d. social e. political ANS: D The food i tems were developed in r esponse to time poverty. PTS: 1 REF: 77 OBJ: 03-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 50. If you were to ask most Americans what they most desired to make their life easier, a surprising number of them will say more t ime. This perception of “time poverty” has led to the use of high-tech communications everywhere. I t is almost as if there are no boundaries between work and the rest of our lives. This feeling t hat there are not enough hours in a day is an example of a(n) _____ factor that has strongly i n fluenced the marketing environment. a. social b. economic c. legal d. demographic e. component lifestyle ANS: A Research shows the number of people who say they never have enough time is growing. This number is in fluenced by the growing number of working mothers. PTS: 1 REF: 77 OBJ: 03-4 TYPE: Comp TOP: AACSB Technology | TB&E Model S trategy | TB&E Model Customer 51. What do self-sufficiency, upward mobility, and conformity have in common? a. These are no longer valued atti tudes. b. They are atti tudes t hat can easily be changed. c. These are three perceptions that Americans have of the Asian l ifestyle. d. These are three of the core values that have influenced lifestyles in the United S tates. e. They are the determinants of a component lifestyle. ANS: D The fourth value is work ethic. PTS: 1 REF: 74 OBJ: 03-4 TYPE: Def TOP: AACSB Reflective Thinking | TB &E M odel Customer 52. A(n) _____ is the practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, t raditional lifestyle. a. aggregated lifestyle b. component lifestyle c. psychographic mode of living d. demographically defined lifestyle e. targeted lifestyle ANS: B PTS: 1 REF: 75 TOP: AACSB D iversity | TB&E Model Product OBJ: 03-4 TYPE: Def 53. More and more U.S. citizens are enjoying _____, piecing together a variety of interests, products, and services and not conforming to t raditional stereotypes. a. well-defined segments b. component lifestyles c. simple multipurpose products d. conformity and cohesiveness e. modular market mixes A NS: B PTS: 1 REF: 75 OBJ: 03-4 TYPE: Def TOP: AACSB Reflective Thinking | TB &E M odel Product | TB&E Model Customer 54. Donna Lassiter is a college teacher in Georgia. She is also a rock climbing expert, a foster parent, and an accomplished violinist. Her other i nterests include glass blowing, gourmet cooking, and classic movies. Marketers would categorize Lassiter as: a. fit t ing into a caregiver segment b. a member of the typical education-based target segment c. not belonging to any target market d. having a component lifestyle e. having a conforming lifestyle ANS: D A component lifestyle pieces t ogether products and services that fit a variety of interests and needs, and does not conform to a certain stereotype. PTS: 1 REF: 75 OBJ: 03-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 55. Anderson owns three dogs, loves to cook, is a member of a the civic arts commission, enjoys talk radio, likes to r ide motorcycles, and is a rodeo competitor. All of these diverse needs and interests influence his choices of the goods and services he buys. Anderson has a: a. component lifestyle b. c. d. e. demographically oriented lifestyle multicultural demography fragmented market o rientation segmented buying process ANS: A Component lifestyles are the practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, t raditional lifestyle. PTS: 1 REF: 75 OBJ: 03-4 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer 56. Why has the component lifestyle of many of today's consumers proven to be such a challenge to marketers? a. People with component lifestyles expect multi-tiered pricing. b. The needs of people with component l ifestyles are in constant f lux. c. Communication with people who have component lifestyles is very difficult. d. There are no specialized magazines that reach small segments of m arkets. e. A consumer is defined by his or her lifestyle, which is defined by level of education attained and occupation. ANS: C Communication with complex and diverse consumers is the challenge presented by component lifestyles. PTS: 1 REF: 75 OBJ: 03-4 T YPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 57. The growth of d ual-income families has resulted in: a. burnout b. a sense of entitlement c. decreased d iscretionary income d. decreased GNP e. increased purchasing power ANS: E PTS: 1 REF: 75 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 03-4 TYPE: Def 58. W hich of the following events has had a greater effect on marketing than any other social change? a. the growing number of one-child families b. the increasing number of i mmigrants from Northern Europe c. the growing number of people on the Internet d. the i ncreasing number of working women e. the growing number of people of retirement age w ho are continuing work ANS: D PTS: 1 REF: 75 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 03-4 TYPE: Comp 59. Zimmer Centralpulse is the world's l argest producer of replacement hips and knees for orthopedic surgery. I t is particularly i nterested in controlling the market in the southwestern United States, where a large aging population lives. Which external environmental element most directly in fluences its continued growth? a. economic conditions b. political conditions c. culture d. demography e. social forces ANS: D Demography considers the age of the target market. PTS: 1 REF: 77 O BJ: 03-5 TYPE: App TOP: AACSB Diversity | TB&E Model Distribution | TB&E Model Customer 60. The study of people's vital statistics, such as their ages, bir ths, deaths, and locations, is called: a. cultural sociology b. psychometrics c. ecology d. ethnography e. demography ANS: E PTS: 1 REF: 77 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 03-5 TYPE: Def 61. Which of the following is NOT a demographic characteristic of a population? a. income level b. age c. values d. education e. birthrate ANS: C Values are a social factor. PTS: 1 REF: 77 OBJ: 03-5 TYPE: Comp TOP: AACSB Diversity | T B&E Model Customer 62. Field Entertainment was given the task of distilling 75 years of Disney Magic into a two-hour show. While the task was formidable, the company described the results as multi-generational (meaning the newly created show appeals to children, parents, and grandparents). Field Entertainment relied heavily on _____ factors to develop a new show that would be appreciated by potential audiences of all ages. a. t echnological b. cultural c. demographic d. competitive e. legal ANS: C Age is a demographic characteristic. PTS: 1 REF: 77 OBJ: 03-5 TYPE: App TOP: AACSB Diversity | TB &E Model Customer 63. Riot Media is a media and toy company that capitalizes on the "gross-out" h umor factor that boys between the ages of 8 and 14 so love. In other words, i t targets: a. members of Generation X b. a cohort generation c. tweens d. members of Generation Y e. part of the baby bridging generation ANS: C Tweens are described as pre- and early adolescents. PTS: 1 REF: 77 OBJ: 03-5 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 64. Girls between the ages of 8 and 14 are one of the growing m arkets for high-end shoe manufacturers. But doctors are finding that many of these girls a re developing grown-up foot problems that once only affected women over 50. These girls w ho are experiencing problems because they wanted to be fashionable are: a. members of Generation X b. a cohort generation c. tweens d. members of Generation Y e. part of the baby bridging generation ANS: C Tweens are described as pre- and early adolescents. PTS: 1 REF: 77 OBJ: 03-5 TYPE: App TOP: AACSB Diversity | TB &E Model Customer 65. W hich of the following statements about Generation Y is t rue? a. I ts members are people w ho were born between 1965 and 1978. b. I t is more than three times as large as Generation X. c. The members of Generation Y are pressed for time and spend more on personal services than any other age group. d. Members of Generation Y are the first generation of latchkey kids. e. All of the statements about Generation Y are t rue. ANS: B T he other descriptions are of Generation X. PTS: 1 REF: 78 OBJ: 03-5 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Customer 66. _____ are strongly attached to t echnology, tend to be skeptical consumers, and demand the latest fashion t rends in record t ime. a. Generation Xers b. The cohort generation c. The baby boomer generation d. Generation Yers e. The baby bridging generation ANS: D PTS: 1 REF: 78-79 TOP: AACSB D iversity | TB&E Model Customer OBJ: 03-5 TYPE: Def 67. Carissa Ty designs and sells clothes for young working women. She has recently been told that unless she starts designing more to suit the style of the Gen Y market, she is likely to be in financial t rouble soon. Why would someone tell her that? a. Gen Yers don't have a style that they prefer. b. Gen Yers are more multicultural. c. Baby boomers provide all of the disposable income for Gen Y members. d. Demographically, Gen Yers are an extremely large group of consumers. e. Gen Yers are easily swayed by t raditional promotion media. ANS: D The size of this group is what makes them especially important to all marketers. PTS: 1 REF: 78 OBJ: 03-5 T YPE: Comp TOP: AACSB Diversity | TB &E Model Customer 68. Consumers born between 1965 and 1978 form a group called: a. tweens b. yuppies c. cohort markets d. A merica's mass market e. Generation X ANS: E PTS: 1 REF: 80 TOP: AACSB Diversity | T B &E Model Customer OBJ: 03-5 TYPE: Def 69. You are a marketing consultant to a fi rm w ho would like to target members of Generation X. Your advice is for it to: a. emphasize f reedom from work and commitment b. develop a personal service that will appeal to these t ime-poor consumers c. avoid topics dealing with materialistic possessions d. emphasize the baby boom culture e. clearly state to the audience that Generation X is the intended target of all marketing communications ANS: B This is a generation notoriously difficult to market t o because they are so cynical and savvy. PTS: 1 REF: 80 OBJ: 03-5 TYPE: Comp TOP: A ACSB Diversity | TB&E Model Promotion | TB&E Model Customer 70. The large group of people in the United States who were born between 1946 and 1964 are known as: a. Generation Xers b. gray markets c. synergistic cohorts d. the baby bust generation e. baby boomers ANS: E PTS: 1 REF: 81 TOP: AACSB Diversity | TB&E Model Customer OBJ: 035 TYPE: Def 71. Which of the following is NOT one of the four segments into which baby boomers have been subdivided? a. “at ease” boomers b. “confident and living well” boomers c. “looking for balance” boomers d. “age-defying” boomers e. “overwhelmed” boomers ANS: D PTS: 1 REF: 81-82 TOP: AACSB Reflective Thinking | TB&E Model Customer 72. A m ulticultural society is characterized by: OBJ: 03-5 TYPE: Def a. b. c. d. e. a population of r ecent immigrants that are closely related by custom and t radition a conglomeration of small and large ethnic groups that have li t t le in common even distribution of all ethnic g roups in a geographic region effective mass-marketing techniques one large dominating r acial or ethnic group in a geographic area ANS: C PTS: 1 REF: 85 OBJ: 03-6 TYPE: Def T OP: AACSB Diversity | TB &E Model Distribution | TB &E Model Customer 73. Consider a southern town where almost half the residents are African Americans and the rest w hites. Nearly all of the residents can t race their ancestors' arrivals in the community back a t least four generations. This town is an example of a: a. market aggregation b. mass m arket c. psychographic target market d. metropolitan statistical area e. mult icultural society ANS: E Multiculturalism occurs when all major ethnic groups in an area are roughly equally represented. PTS: 1 REF: 85 OBJ: 03-6 TYPE: App TOP: AACSB Diversity | TB&E M odel Customer 74. A furniture retailer that specializes in selling entire rooms of furniture has hired you to identify 25 geographic target markets that can be described as m ulticultural societies. What types of locations should you offer this fi rm? a. cities that have historically had low immigration rates b. t raditional test markets c. regions that are dominated by one ethnic group and that have multiple smaller ethnic groups d. u nindustrialized areas e. locations in which all major ethnic groups in the area are equally r epresented ANS: E Mul ticultural societies are not defined by geography, history, or p roducts produced, but by the racial and ethnic composition of the population. PTS: 1 REF: 85 OBJ: 03-6 TYPE: App TOP: AACSB Diversity | TB&E Model Customer 75. _____ has been described as a method for preserving a "cultural mosaic" of separate but equally sized ethnic groups and is contrasted to a "melting pot" that mixes them. This has also been described as the "salad bowl" model. a. Market aggregation b. Market segregation c. A psychographic target market d. Mul ticulturalism e. Cultural role-playing ANS: A M ulticulturalism occurs when all major ethnic groups in an area are roughly equally r epresented. PTS: 1 REF: 85 OBJ: 03-6 TYPE: Comp TOP: AACSB Diversity | TB &E Model Customer 76. Which of the following statements characterizes the growing ethnic markets i n the United States today? a. Marketers are modifying products to appeal to different ethnicities. b. The United States is becoming a mult icultural society. c. The United States is moving away from being a society dominated by whites and rooted in Western culture. d. T he percentage of whites in the United States' population will decline relative to other m inority groups. e. All of the statements characterize the demographic t ransition in the U nited States today. ANS: E Immigration is not expected to slow to a t r ickle, although the d iversity of the U.S. population is projected to stabilize in the next century as the birthrate among minorities plateaus. PTS: 1 REF: 82-86 OBJ: 03-6 TYPE: Comp TOP: AACSB A nalytic | TB&E Model Marketing Plan 77. Prudential Financial, Inc. has int roduced two commercials targeted to African American and Hispanic audiences. Referred to as "This M uch" and "Happy Bir thday," the television commercials capture family activit ies that take p lace in households across America and show how life has lit t le ways of reminding families of the importance of having life insurance protection. In this way, the insurance provider is r esponding to changing _____ factors in its market. a. social b. component lifestyle c. economic d. demographic e. cultural ANS: D Ethnicity is a demographic factor. PTS: 1 REF: 77 | 82-84 OBJ: 03-5 TYPE: App | 03-6 TYPE: App TOP: AACSB Diversity | TB&E Model Customer 78. The higher your _____, the higher your purchasing power: a. gross income b. social class c. disposable income d. cost of living e. inflation index ANS: C Purchasing power is measured by comparing income to the relative cost of a set standard of goods an services. I t is a aligned with net income, or income minus a standard set of expenses. Assuming a constant income, the higher the cost of living (the expenses), the lower the purchasing power. PTS: 1 REF: 86-87 OBJ: 03-7 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Customer 79. China’s new 5 percent tax on disposable wooden chopsticks, r eflecting concerns about deforestation, has been praised by environmentalists. The move is h it ting hard at the Japanese who consumer 25 billion sets of wooden chopsticks annually. A lmost all of the chopsticks used in Japan come from China. The price of wooden chopsticks i n Japan has increased by almost 50 percent. The price increase influences which factor of t he external environment of restaurant owners in Japan? a. b. c. d. e. economic t echnological demographic social ethnicity ANS: A Purchasing power may be diminished, especially for restaurants. PTS: 1 REF: 86-87 OBJ: 03-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 80. Factors, such as interest rates, inf lation, and consumer income that influence the marketing environment, are called _____ factors. a. economic b. socio-demographic c. political d. government e. consumption ANS: A PTS: 1 REF: 86 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 03-7 TYPE: Def 81. _____ is measured by comparing the relative cost of a standard of goods and services in d ifferent geographic areas. a. Gross individual profit b. Purchasing power c. Net profit d. Relative pricing e. Price escalation ANS: B PTS: 1 REF: 87 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 03-7 TYPE: Def 82. When income is high relative t o the cost of living, consumers _____. a. have more discretionary income b. begin anticipating a period of price deceleration c. stop buying luxury goods and services d. have significantly less disposable income e. anticipate price escalation by stockpiling ANS: A PTS: 1 REF: 87 TOP: AACSB Reflective Thinking | TB &E Model Customer 83. _____ is the p rimary determinant of a person's earnings. a. Mul ticulturalism b. Lifestyle c. Education d. T he aging of the baby boomers e. Global competition ANS: C PTS: 1 REF: 86 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 03-7 TYPE: Def OBJ: 03-7 TYPE: Comp 84. ____ is measure of the decrease in the value of money, expressed as the percentage r eduction in value since the previous year. a. In f lation b. Recession c. Depression d. Consumer break-even e. Price escalation ANS: A PTS: 1 REF: 88 TOP: AACSB Reflective T hinking | TB &E Model Pricing OBJ: 03-7 TYPE: Def 85. When planning marketing s trategies during times of inf lation, marketers must be aware inflation causes consumers t o: a. purchase more goods and services to support their psychological selves, such as counseling and stress management t raining b. consume more meals away from home c. buy i n small quantities until inflation is over d. decrease their brand loyalty to products they have t raditionally used e. put more money into savings accounts because prices are too high A NS: D In times of inflation, consumers are more price conscious and less brand-loyal. PTS: 1 REF: 88 OBJ: 03-7 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Pricing 86. A period of economic activity when income, production, and employment tend to fall, r educing overall demand, is called: a. stagnation b. an inflation c. a recession d. price escalation e. a depression ANS: C PTS: 1 REF: 88 TOP: AACSB Reflective Thinking | T B &E Model Pricing OBJ: 03-7 TYPE: Def 87. The main product for Zamperla Industr ies is gondola cars for amusement park r ides and ski lifts. I ts marketing department constantly monitors t rends in the external environment that might affect the fi rm. Which economic factor may pose a major threat to this company? a. few competitors in this industry b. t echnological improvements that are automating production of cars c. a decline in d isposable income d. increasing interest in the environment and recycling e. existing legislation requiring licensing of all amusement park r ides ANS: C Amusement parks and ski resorts rely on their customers having disposable income. A decline in business for them w ill produce a decline in demand for the gondola cars. PTS: 1 REF: 86 | 88 OBJ: 03-7 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Pricing 88. Shabby Chic fashion boutique has responded to economic t rends by placing an emphasis on improving t he quality of merchandise it offers, improving customer service, and reducing its cost of goods sold. Shabby Chic is apparently dealing with which level of economic activity? a. depression b. recession c. inf lation d. stagnation e. distension ANS: B All the described t echniques are used to counter the effects of reduced demand during recession. PTS: 1 REF: 89 OBJ: 03-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Pricing 89. W hich of the following strategies is appropriate for a marketer to use during a t ime of economic recession? a. Promote product value. b. Maintain and improve customer services. c. Emphasize top-of-the-line products in promotions. d. Offer products that are economical and efficient. e. Do all of these. ANS: E PTS: 1 REF: 89 TOP: AACSB Technology | TB &E M odel Pricing OBJ: 03-7 TYPE: Comp 90. Which of the following is sometimes an effective weapon for fighting inflation and recession? a. technology b. line extensions c. increased capital gains taxes d. introducing product-line extensions e. reducing R&D expenditures A NS: A PTS: 1 REF: 89 TOP: AACSB Reflective Thinking | TB&E Model Research OBJ: 03-8 TYPE: Def 91. Research that attempts to expand the frontiers of knowledge rather t han solving a specific, pragmatic problem is called: a. technical diversity b. reactive r esearch c. applied research d. experiential research e. basic research ANS: E PTS: 1 REF: 89 TOP: AACSB Reflective Thinking | TB &E Model Research OBJ: 03-8 TYPE: Def 92. _____ would be used to prove or disprove Goldbach's conjecture that every even integer g reater than 2 can be wri t ten as the sum of two (not necessarily distinct) primes. a. Applied r esearch b. Technological integration c. Data mining d. A data information system e. Basic r esearch ANS: E Basic research attempts to expand the frontiers of knowledge rather than solving a specific, pragmatic problem. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Reflective Thinking | AACSB Analytic | TB&E Model Strategy 93. Scientists are r esearching the possibility of computer-aided telekinesis with the idea that some day your b rain will be linked with a computer, similar to the brain-plug interfaces used in the movie T he Mat r ix. This is an example of _____ because scientists are not engaged in solving any specific, pragmatic problem. a. technological diversity b. t ransactional creativity c. applied r esearch d. t ransformational research e. basic research ANS: E Basic research attempts to expand the frontiers of knowledge rather than solving a specific, pragmatic problem. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Analytic | TB &E Model Research 94. Zimmer Centralpulse is the world's largest producer of replacement hips and knees for orthopedic surgery. I t has developed a new sturdier joint that will extend the life of the average r eplacement joint by five years. This longer-lasting joint resulted from: a. applied research b. experiential study c. demographically oriented research d. basic research e. value-added r esearch ANS: A Applied research is an attempt to develop new or improved products. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Research 95. The scientists at Motorola want to create I r idium, a constellation of 66 satelli tes that will offer telephone service anywhere on the globe. This is an example of: a. t echnical diversity b. t ransactional research c. applied research d. synergistic research e. basic research ANS: C Applied research attempts to develop new or improved products. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Research 96. Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation when allegations were made that the park was detonating more than 50 pounds of explosives in i ts nightly fireworks displays. ( Under Japanese law, no more than 50 pounds can be located at one site at the same time.) D iscovering a way to produce grand fi reworks displays with smaller amounts of explosives would require: a. technological diversity b. t ransactional creativity c. applied research d. synergistic research e. basic research ANS: C Applied research attempts to develop new or i mproved products. PTS: 1 REF: 89 OBJ: 03-8 TYPE: App TOP: AACSB Analytic | TB &E M odel Research 97. _____ enables automated, seamless delivery of updated news content or m arketing messages to blog sites or mobile phones. a. RSS (Real Syndicated Signaling) b. RSS (Really Seamless Signaling) c. RSS (Readily Simple Signaling) d. RSS (Readily Secure Signaling) e. RSS (Really Simple Syndication) ANS: E PTS: 1 REF: 90 TOP: AACSB Technology | TB&E Model Online/Computer OBJ: 03-8 TYPE: Def 98. Blogs created by consumers can be used to assess customer atti tudes toward new products as well as customer perceptions of new products. Marketers’ ability to search for key words used in the b logs is an example of a change in the _____ factor of the external environment. a. psychographic b. technological c. competitive d. demographic e. economic ANS: B Blogging exists in the technological environment. PTS: 1 REF: 90 OBJ: 03-8 TYPE: App TOP: A ACSB Technology | TB&E Model Online/Computer 99. In the future, electrical power may come from quantum nucleonics, a form of nuclear power that produces no residual r adiation. The ability to use this form of power will require equipment adaptations, but it w ill solve the world's need for clean and efficient power. When quantum nucleonics is developed, i t will be an example of how _____ factors can affect an organization. a. t echnological b. competitive c. economic d. cultural e. demographic ANS: A PTS: 1 REF: 89 T OP: AACSB Technology | TB&E Model Strategy OBJ: 03-8 TYPE: App 100. Almost any p roduct in India, from tap water to milk, has t races of toxins due to the overuse and misuse of insecticides by Indian farmers, but the government expects mult inational corporations ( MNCs) operating in India to produce food that is toxin-free. In this way both _____ factors i n fluence the operating environments of MNCs. a. social and technological b. legal and t echnological c. economic and legal d. economic and social e. technological and demographic A NS: B I t is technological in that the insecticides are a product of technology. The expectations for MNCs are a product of the legal environment. PTS: 1 REF: 89 | 91 OBJ: 03-8 TYPE: App | 03-9 TYPE: App TOP: AACSB Analytic | TB &E Model Marketing Plan 101. When Universal Studios Japan opened, health inspectors discovered the theme park had piped industrial use water not suitable for drinking into its drinking fountains. The p roblem was unanticipated and costly to repair. This is primarily an example of how _____ factors can cause a business to incur unexpected costs. a. social b. economic c. competitive d. cultural e. political and legal ANS: E PTS: 1 REF: 91 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 03-9 TYPE: App 102. Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation w hen allegations were made that the park was detonating more than 50 pounds of explosives in i ts nightly fireworks displays. In the small nation, the use of explosives is s tringently controlled. This is an example of how _____ factors can in fluence a business. a. competitive b. legal and political c. economic d. technological e. cultural ANS: B PTS: 1 REF: 91 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 03-9 TYPE: App 103. One of the results of the Americans with Disabilit ies Act is increased t ravel by disabled people. Publications like Emerging Horizons, a California-based, 25,000-circulation m agazine focusing on accessible t ravel, and businesses such as Mobility Challenged Vacations L td. see that disabled tourists are a growing market. One can argue the increase i n tourism by the disabled was due to: a. controllable elements within corporate structures b. legal forces that changed the attractiveness of vacation options c. macroeconomic conditions that made U.S. destinations non-competitive relative to international spots d. a shift in regulatory controls from the public sector to the private sector e. competitive forces t hat changed how disabled tourists perceive vacations. ANS: B Changes in the legal environment can have a dramatic effect on marketing strategy. PTS: 1 REF: 91 OBJ: 03-9 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 104. Laws and r egulations of various governments and their ongoing development and change are an example of _____ factors and are part of all organizations' external environment. a. economic investment b. political and legal c. research and development d. competitive e. demographic ANS: B PTS: 1 REF: 91 TOP: AACSB Technology | TB&E Model Strategy O BJ: 03-9 TYPE: Def 105. China’s new 5 percent tax on disposable wooden chopsticks, r eflecting concerns about deforestation, has been praised by environmentalists. The move is h it ting hard at the Japanese who consumer 25 billion sets of wooden chopsticks annually. A lmost all of the chopsticks used in Japan come from China. The requirement for Chinese m anufacturers of wooden chopsticks to pay the 5 percent tax is a _____ factor in their external environment. a. competitive b. social c. demographic d. technological e. legal ANS: E T he tax is an example of government regulation. PTS: 1 REF: 91 OBJ: 03-9 TYPE: App T OP: AACSB Analytic | TB&E Model Strategy 106. The _____ Act strengthened the C layton Act to prevent corporate acquisitions that reduce competition. a. Har t-Scott-Rodino b. Lanham-Scott c. Celler-Kefauver Antimerger d. Robinson-Patman e. Sherman ANS: C See Exhibit 3.5. The Celler-Kefauver Act bolstered the Clayton Act's provision dealing with i nterlocking directorates and closed another loophole that had allowed corporate takeovers. PTS: 1 REF: 91 OBJ: 03-9 TYPE: Def TOP: AACSB Analytic | TB &E Model Strategy 107. T he _____ Act requires large companies to notify the government of their intent to merge. a. H ar t-Scott-Rodino b. Sherman c. Celler-Kefauver Antimerger d. Robinson-Patman e. L anham ANS: A See Exhibit 3.5. PTS: 1 REF: 91 OBJ: 03-9 TYPE: Def TOP: AACSB A nalytic | TB&E Model Strategy 108. _____ is a governmental body that has the power to p rescribe mandatory safety standards for almost all products consumers use. a. Health and Welfare Agency b. Federal Trade Commission c. Food and Drug Administration d. Federal Communications Commission e. Consumer Product Safety Commission ANS: E The sole p urpose of the Consumer Product Safety Commission is to protect the health and safety of consumers in and around their homes. The commission has the power to prescribe m andatory safety standards for almost all products consumers use. PTS: 1 REF: 92 OBJ: 03-9 TYPE: Def TOP: AACSB Analytic | TB &E Model Strategy 109. Jack Gomez purchased a p ressure cooker. The fi rst time Gomez used the cooker, i t exploded. The hot liquid contents burned 30 percent of his body. He has determined the incident was the result of a poorly designed steam regulator, and he would like to lodge a complaint about the cooker's deficiency. To which federal agency should he complain? a. Labor Department b. Food and D rug Administration c. Federal Trade Commission d. Department of Trade e. Consumer P roduct Safety Commission ANS: E The sole purpose of the Consumer Product Safety Commission is to protect the health and safety of consumers in and around their homes. T he commission has the power to prescribe mandatory safety standards for almost all p roducts consumers use. PTS: 1 REF: 92 OBJ: 03-9 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 110. Many consumers thought t hat the promise in Blockbuster’s commercials of, “The end of late fees" was an example of deceptive advertising. In actuality, there was no late fee when you kept a movie a few extra days, but if you didn’t return the movie within 7 days, you were forced to buy it at the current retail price. The movie you "purchased" could still be returned within 30 days for “a r estocking fee plus applicable taxes.” After that, the movie was permanently yours. To w hich organization should the consumers who thought this promotion was misleading complain? a. Consumer Product Safety Commission b. state attorneys general c. Federal T rade Commission d. Federal Communications Commission e. Consumer Protection Agency A NS: C The FTC is charged with preventing corporations from using deceptive advertising and unfair methods of competition in commerce. PTS: 1 REF: 93 OBJ: 03-9 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 111. The _____ is an agency that p revents the use of unfair methods of competition in commerce. a. Federal Communications Commission b. Commerce Department c. Commission for Fair Trade d. Federal Trade Commission e. Sherman Anti t rust Agency ANS: D PTS: 1 REF: 93 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 03-9 TYPE: Def 112. Some consumers accused J uno, an Internet service provider, of making it "unreasonably difficult for them to cancel i ts 'free' t r ial period for i ts Premium In ternet Service." The Internet service provider failed t o notify customers that it would only allow cancellations through a single, unpublished t elephone number. Which federal agency would have jurisdiction over this deceptive and m isleading advertising? a. Food and Drug Administration b. Federal Communications Commission c. Department of Education d. National Association of Broadcasters e. Federal T rade Commission ANS: E The FTC prevents persons or corporations from using unfair methods of competition in commerce. PTS: 1 REF: 93 OBJ: 03-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Strategy 113. When the Federal T rade Commission (FTC) issues a final directive to a fi rm to stop engaging in an activity t he FTC considers illegal, this directive is a(n): a. order to remand b. stopgap measure c. order of cessation d. cease-and-desist order e. corrective action order ANS: D See Exhibit 3.7. A final order by the FTC is a cease-and-desist order. I t may be challenged by the fi rm in court. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | TB&E M odel Strategy 114. The Federal Trade Commission (FTC) accused Campbell Soup of deceptive advertising because the soup company's advertising showed bowls of soup that appeared to be full of meat, vegetables, and noodles. The appearance of the soup was a ltered by the placing of glass marbles in the bottom of the bowl, which caused the i ngredients to r ise to the top of the bowl. The FTC would have issued a(n) _____ to make Campbell stop running the deceptive ad. a. affi rmation order b. cease-and-desist order c. order to remand the promotion d. order of cessation e. stopgap measure ANS: B See Exhibit 3.7. A final order by the FTC is a cease-and-desist order. I t may be challenged by the fi rm in court. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | TB&E M odel Promotion 115. Sometimes the Federal Trade Commission (FTC) will require an advertiser to include in its advertisements additional information about the products being p romoted. This is to clarify past statements the FTC believes were misleading or unfairly p resented to consumers. This practice is called: a. nonfinancial restitution b. affi rmative d isclosure c. a mandated promotion d. corrective advertising e. a decree of consensus ANS: D See Exhibit 3.7. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | T B&E Model Promotion 116. When the Federal Trade Commission (FTC) uses the term “ restitution,” i t means: a. all advertisements must be restored to a t ruthful, nondeceptive format b. refunds must be made to consumers who were misled by deceptive advertising c. a certain portion of the advertising budget must be allocated to advertisements that explain w hy previous ads were misleading d. the manufacturer must delete the offending product f rom i ts product mix e. new, corrected products must be sent to the consumers ANS: B See E xhibit 3.7. PTS: 1 REF: 93 OBJ: 03-9 TYPE: Def TOP: AACSB Reflective Thinking | T B &E Model Customer 117. The _____ is the federal government agency charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous products of a specific type. a. Federal Trade Commission b. Consumer Product P rotection Commission c. U.S. Justice Department d. Food and Drug Administration e. A merican Safety League ANS: D PTS: 1 REF: 93 TOP: AACSB Reflective Thinking | TB &E M odel Product OBJ: 03-9 TYPE: Def 118. The Gramm-Leach-Bliley Act and the Health I nsurance Portabili ty and Accountability Act are both important laws designed to: a. protect t he channels of commerce b. restrict alcohol and tobacco advertising c. eliminate certain p roducts from being advertised on children’s television programs d. protect consumers from i dentity theft e. penalize marketers selling merchandise with counterfeit brand names A NS: D PTS: 1 REF: 95 TOP: AACSB Analytic | TB&E Model Strategy OBJ: 03-9 TYPE: Def 119. The number of fi rms a company must face, the relative size of these fi rms, and the degree of interdependence within the industry are all part of i ts _____ environment. a. demographic b. economic c. political d. competitive e. social ANS: D PTS: 1 REF: 95 TOP: A ACSB Reflective Thinking | TB&E Model Strategy OBJ: 03-10 TYPE: Def 120. Fri to-Lay is considered the king of the salty snack industry with its distribution network of 42 plants, 12,800 delivery people, and more than 900 t ractor t railers formed into a retail delivery powerhouse. Smaller manufacturers of salty snacks find that monitoring the activities of F ri to-Lay is an effective way to monitor the _____ factors within their external environments. a. bureaucratic b. marketing mix c. competitive d. social e. demographic A NS: C PTS: 1 REF: 95 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 0310 TYPE: App 121. Advanced Base Camp, Black Diamond Equipment, and Misty Mountain a re all marketers of ropes, carabiners, climbing holds, harnesses, helmets, and ice gear as well as other equipment needed for rock climbing. They are _____ factors in each other's external environments. a. component lifestyle b. competitive c. economic d. social e. legal and regulatory ANS: B The competitive environment encompasses the competition a fi rm m ust face. PTS: 1 REF: 95 OBJ: 03-10 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 122. In the past, foreign fi rms penetrated U.S. markets by concentrating on _____, but today the emphasis has been switched to product _____. a. availability; image b. quality; promotion c. new distribution outlets; value d. promotion; p rice e. price; quality ANS: E PTS: 1 REF: 96 TOP: AACSB Reflective Thinking | TB&E M odel Product OBJ: 03-10 TYPE: Comp 123. When many consumers think of adhesives, t hey think of 3M because i t makes so many kinds of adhesives used in the home. However, t he world's largest adhesive producer is Henkel Consumer Adhesive, maker of Loctite and D uct tape. 3M and Henkel are part of each other's _____ environment a. competitive b. economic c. social d. marketing mix e. legal and political ANS: A PTS: 1 REF: 95 TOP: A ACSB Reflective Thinking | TB&E Model Product Vi r tual Impregnation K r isten C lingan's boyfriend had never even mentioned mar r iage when she received an e-mail announcing her boyfriend had e-impregnated her. The e-mail from www.bunintheoven.com i ncluded a positive pregnancy "test" and was followed by a half dozen subsequent messages, i ncluding the audio file of the baby's heartbeat and the ult rasound image. The whole p rocess took three months and cost $29.95. At the end of the vir tual pregnancy, she received a m ug bearing the newborn's photograph. Vir tual impregnation is the brainchild of Adam Corsi. He sees the vir tual impregnation as a good conversation starter for topics that may not have been broached by a couple before. 124. Refer to Vir tual Impregnation. Vir tual I mpregnation is designed for people who are in long-term relationships that seem to be either evolving slowly or not at all. This group represents the company's: a. target market b. buying center c. consumer cluster d. demographic sample e. mass market ANS: A A target m arket is a defined group that managers feel is most likely to buy a fi rm's product. PTS: 1 REF: 73 OBJ: 03-3 TOP: AACSB Reflective Thinking | TB&E Model Customer 125. Refer t o Vi r tual Impregnation. The willingness of couples to participate in this vir tual pregnancy r esults from a fear of making a mistake and not being ready for a baby. The environmental factors most responsible for the company's success are: a. political factors b. economic factors c. competitive factors d. demographic factors e. social factors ANS: E Fear of making a m istake is a social factor. PTS: 1 REF: 74 OBJ: 03-4 TOP: AACSB Reflective Thinking | T B &E Model Product 126. Refer to Vir tual Impregnation. Describing couples that participate in a vir tual pregnancy as professionals between the ages of 25 to 34 who earn at least $50,000 annual income uses _____ characteristics. OBJ: 03-10 TYPE: App a. b. c. d. e. psychographic demographic anthropologic geographic sociologic ANS: B Vital statistics such as age and income are demographic characteristics. PTS: 1 REF: 77 OBJ: 03-5 TOP: AACSB D iversity | TB&E Model Customer 127. Refer to Vi r tual Impregnation. Innovations in the _____ environment are most responsible for the success of Corsi's Web site. a. economic b. political c. technological d. government e. competitive ANS: C Without technology, vir tual i mpregnation could not occur. PTS: 1 REF: 89 OBJ: 03-8 TOP: AACSB Technology | TB&E M odel Strategy 128. Refer to Vi r tual Impregnation. One problem facing Corsi was the potential that one of the women who received the e-mail would sue the sender as well as the Web site for sexual harassment. Such concerns are part of the _____ environment. a. political and legal b. technological c. economic d. demographic e. competitive ANS: A Sexual harassment is an issue that is carefully watched by federal agencies. PTS: 1 REF: 91 OBJ: 03-9 TOP: AACSB Reflective Thinking | TB&E Model Customer Indian Restaurant Thani Jambulingham wants to open a restaurant that features the finest in Indian and M iddle Eastern delicacies. To determine the feasibility of his restaurant, he hired FoodFacts m arketing research consultants. The experts at FoodFacts studied all the market i nformation available and determined that consumers aged 30 to 45 who love spicy cuisine were most interested in the proposed restaurant. In examining the restaurant environment, FoodFacts researchers found the west side of the city offered the best options for opening t he restaurant. Jambulingham was told the biggest obstacle in opening the restaurant r elated to obtaining the necessary permits from the city and state. 129. Refer to Indian Restaurant. The group of consumers identified by FoodFacts as most likely to visit the new r estaurant is called a: a. target market b. buying center c. mass market d. consumer cluster e. demography ANS: A A defined group of consumers that is most likely to buy a fi rm's p roduct is a target market. PTS: 1 REF: 73 OBJ: 03-3 TOP: AACSB Reflective Thinking | T B &E Model Customer 130. Refer to Indian Restaurant. Jambulingham is developing a m arketing plan to cover the first five years of the restaurant's business. He must be sure to consider which of the following uncontrollable factors in his plan? a. place or distribution factors b. media buying factors c. demographic factors d. dining area layout factors e. p ricing for services ANS: C All but demographic factors are controllable marketing mix factors. PTS: 1 REF: 74 OBJ: 03-3 TOP: AACSB Reflective Thinking | TB&E Model M arketing Plan | TB&E Model Customer 131. Refer to Indian Restaurant. Describing the m arket for Jambulingham 's new restaurant in terms of ages of the members of its target m arket is referr ing to _____ characteristics. a. psychographic b. demographic c. anthropological d. geographic e. sociological ANS: B Vital statistics such as age, race, i ncome, and location are demographic characteristics. PTS: 1 REF: 77 OBJ: 03-5 TOP: A ACSB Reflective Thinking | TB&E Model Customer 132. Refer to Indian Restaurant. The success of Jambulingham's restaurant is most closely related to: a. the values of Generation X members b. a huge increase in the Indian immigrant population expected during the next decade c. the growing importance of multiculturalism in the United States d. political deregulation of the restaurant industry e. a lack of disposable income that would favor cheap food offerings ANS: C Increased multiculturalism is the most promising t rend for Jambulingham. PTS: 1 REF: 88-86 OBJ: 03-6 TOP: AACSB Diversity | TB&E Model Customer 133. Refer to Indian Restaurant. The uncontrollable environmental factors Jambulingham faces in terms of obtaining permits for the new restaurant represent _____ factors. a. economic b. c. d. e. political and legal research and development cultural demographic ANS: B The laws and regulations of various governments represent u ncontrollable political and legal factors. PTS: 1 REF: 91 OBJ: 03-9 TOP: AACSB Reflective T hinking | TB &E Model Strategy Dateline NBC and GM In their desire to boost ratings, t elevision news programs have done just about anything. One famous example is the Dateline NBC segment about General Motors’ 1973-1987 pickup t rucks, which was entitled "Waiting to Explode?" The 15-minute segment contained a short, dramatic portion that featured two side-impact tests that NBC had run to purportedly demonstrate what could happen when the GM pickup t rucks were struck in the side. GM sued NBC alleging defamation and damage to i ts reputation. GM argued that the Dateline segment was a u nscientific demonstration, was inappropriate, and did not support the position that GM's t rucks were defective. NBC admit ted that the crash was r igged and apologized to GM and t he Dateline viewers. 134. Refer to Dateline NBC and GM. When people tune in to a t elevision news show, they expect to be told the t ruth about events covered on the news. The moral principles or values that should generally govern the conduct of the news media are called: a. ethics b. legal standards c. manners d. governances e. social responsibility ANS: A E thics refers to moral principles or values generally governing the conduct of an individual or group. PTS: 1 REF: 69 OBJ: 03-2 TOP: AACSB Ethics | TB&E Model Product | TB &E M odel Customer 135. Refer to Dateline NBC and GM. NBC felt it had an obligation to its v iewers to warn them about the possible defects in GM pickup t rucks. NBC is operating on a level of: a. conventional morality b. social responsibility c. preconventional morality d. postconventional morality e. consumerism ANS: A NBC is operating on a level of conventional morality because it is concerned with the expectations of society. Loyalty and obedience to the organization and the consumer become paramount. PTS: 1 REF: 70 OBJ: 03-2 TOP: AACSB Ethics | TB &E Model Product | TB &E Model Customer 136. Refer to Dateline NBC and GM. NBC apologized and concluded that "unscientific demonstrations should have no place in hard news stories at NBC. That's our new policy." This new policy should be incorporated into NBC's: a. b. c. d. e. legal standards code of ethics manners governances consumerism ANS: B A code of ethics is a guideline to help managers and employees make better and ethical decisions. PTS: 1 REF: 71 OBJ: 03-2 TOP: AACSB E thics | TB&E Model Product 137. Refer to Dateline NBC and GM. NBC executives have to be concerned with the long-range welfare of the network and i ts relationships with viewers. T his concern is called: a. consumerism b. corporate social responsibility c. ethical dilemma d. conventional morality e. environmental consideration ANS: B Corporate social r esponsibility is the concern of business for social welfare. This concern is demonstrated by m anagers considering the long-range best interests of the company and i ts relationship to t he society within which i t operates. PTS: 1 REF: 68 OBJ: 03-1 TOP: AACSB Ethics | T B &E Model Product 138. Refer to Dateline NBC and GM. By admitting i ts error and p roviding a formal apology, NBC achieved which level of the pyramid of corporate social r esponsibility? a. philanthropic b. legal c. economic d. moral e. ethical ANS: E By apologizing, NBC did what was r ight. PTS: 1 REF: 68-69 OBJ: 03-1 TOP: AACSB Ethics | T B &E Model Strategy ESSAY 1. According to Celia Moore, an IBM corporate manager, corporate social responsibility is "a core business issue for IBM." What does she mean by t his statement? ANS: Corporate social responsibili ty is the concern of business for social welfare. This concern is demonstrated by managers who consider the long-range best i nterests of the company and the company's relationship to the society within which it operates. Moore simply means all IBM managers realize that being socially responsible is good business, and all are commit ted to this mission. PTS: 1 REF: 68 OBJ: 03-1 TOP: A ACSB Analytic | AACSB Ethics | TB &E Model Strategy 2. For every home built by H abitat for Humanity, Whirlpool Corporation has given and continues to give free ki tchen appliances to the deserving family. After giving the appliances with no promotion, W hirlpool began talking about its philanthropy in i ts advertising campaigns. Is this u nethical behavior according to the pyramid of social responsibility? ANS: Students' answers to this question may vary, but the better students will understand that economic performance is the foundation of the pyramid. If Whirlpool’s advertising of i ts donations i ncreases profit, then it is not wrong. The company has not abandoned i ts efforts to improve t he quality of life. PTS: 1 REF: 68-69 OBJ: 03-1 TOP: AACSB Analytic | AACSB Ethics | T B &E Model Strategy | TB&E Model Promotion 3. Describe the pyramid of corporate social r esponsibility. Include a description of the pyramid theory and all of its components. ANS: T he pyramid of corporate social responsibili ty portrays four kinds of responsibility: economic, legal, ethical, and philanthropic. Economic performance is the foundation for the s tructure, because if the company does not make a profit, then the other three r esponsibilities are moot. While maintaining a profit, business is expected to obey the law, do what is ethically r ight, and be a good corporate citizen. • • • • Philanthropic r esponsibilities are to be a good corporate citizen, contribute resources to the community, and improve the quality of life. Ethical responsibili ties are to be ethical; to do what is r ight, j ust, and fair; and to avoid harm. Legal responsibilities are to obey the law, which is society's codification of r ight and wrong, and play by the rules of the game. Economic r esponsibilities are to be profitable, because profit is the foundation on which all other r esponsibilities rest. PTS: 1 REF: 68-69 OBJ: 03-1 TOP: AACSB Analytic | AACSB Ethics | T B &E Model Strategy 4. A recent study of marketing professionals found their ethical j udgments were influenced by several factors. List four of these factors. How do these factors contribute to the ethical environment of a marketing organization? ANS: Ethical j udgments were influenced by these factors: 1. 2. The extent of ethical problems within the organization The healthier the ethical environment, the greater the likelihood that m arketers will take a strong stand against questionable practices. Top-management actions on ethics Top management can have a profound inf luence on the ethical behavior of m arketing professionals by performing actions that encourage ethical behavior or d iscourage unethical behavior. Setting an example communicates an ethical philosophy. Potential magnitude of the consequences The greater the harm, the more likely marketers w ill recognize that the action is unethical. Social consensus The greater the degree of agreement among other marketers that an action is harmful, the more 3. 4. 5. 6. 7. likely t hat marketers will recognize it as unethical. Probability of harmful outcomes H igher p robabilities of harmful outcomes mean that marketers are more likely to realize that the actions are unethical. Length of time between the decision and the onset of consequences T he shorter the t ime frame between the action and the onset of negative consequence, the more likely the marketer is to realize it was unethical. Number of people to be affected The more people affected by a negative outcome, the more likely that marketers will recognize t he decision as unethical. PTS: 1 REF: 71 OBJ: 03-2 TOP: AACSB Analytic | AACSB Ethics | T B&E Model Strategy 5. You are an ethics consultant, and a group of managers have asked you for some guidelines to determine the ethicality of a decision. You tell the m anagers that one cannot guarantee the r ightness of a decision, but a checklist can improve t he chances of a decision being ethical. What are six questions you would tell the managers t o put on this checklist? ANS: Students' answers may vary. Here are questions found in the text in Exhibit 3.2. Does my decision t reat me or my company as an exception to a common p ractice or convention? Do I think I have the authority to break a rule? Would I offend customers by telling them about my decision? Would I offend qualified job applicants by t elling them about my decision? Have I made this decision without input from others, so i mportant issues might be overlooked? Does my decision benefit one person or group but h urt or not benefit other individuals or groups? Will my decision create conflict between people or groups in the company? Will I have to pull rank (use coercion) to enact my decision? Would I prefer to avoid the consequences of this decision? Did I avoid t ruthfully answering any of the above questions by telling myself that I could get away with i t? PTS: 1 REF: 72 OBJ: 03-2 TOP: AACSB Analytic | AACSB Ethics | TB&E Model Strategy 6. M arketing managers create a marketing mix of product, place, promotion, and price s trategies aimed at a target market. While managers can control the mix, they cannot control the elements in the external environment that continually mold and reshape the t arget market. List six variables of the external environment that are not directly under the control of marketing managers. ANS: Demographics Technology Competition Social Change Economic Conditions Political and Legal Factors PTS: 1 REF: 74 OBJ: 03-3 TOP: AACSB A nalytic | TB&E Model Product | TB&E Model Pricing | TB&E Model Promotion | TB&E M odel Dist ribution 7. What is environmental scanning? Give an example of an opportunity and a threat that environmental scanning might identify for a suntan lotion company. ANS: E nvironmental scanning occurs when a company creates a team of specialists to collect and evaluate environmental information. This process allows marketing managers to u nderstand the external environment so that plans for the future can be made. The objective of gathering environmental data is to identify future market opportunities and t hreats. Threats that might be identified for a suntan lotion company include fear of skin cancer by sunbathers, other health concerns, or lack of leisure time to spend in the sun. Opportunities might include the need for sun-blockers, waterproof formulas, or children's skin protection products. Another opportunity might be the status element associated with a t an. PTS: 1 REF: 73 OBJ: 03-3 TOP: AACSB Reflective Thinking | TB&E Model Strategy 8. An organization is not completely at the mercy of the external environmental. Give an example how a whiskey distillery might use environmental management. ANS: When a company implements strategies that attempt to shape the external environment within w hich i t operates, i t is engaging in environmental management. For example, extensive political lobbying may inf luence laws that affect domestic legal restrictions, international competition, or product acceptance. Working together in t rade associations would allow the company to influence the competitive environment. Developing new drinks might modify its social environment. Students' answers will of course vary. PTS: 1 REF: 74 OBJ: 03-3 TOP: A ACSB Reflective Thinking | AACSB Analytic | TB &E Model Strategy 9. What is a component lifestyle? Describe how a college student follows a component lifestyle. Use specific examples. ANS: Component lifestyles mean that U.S. citizens are choosing products and services that meet diverse needs and interests rather than conforming to t raditional s tereotypes. Component lifestyles increase the complexity of consumers' buying habits. A lthough the stereotypical student adopts a "student lifestyle" and makes purchases related t o this lifestyle (textbooks, school supplies, pizzas, and so on), each student may also p urchase according to alternative lifestyles. These may include hobbies, outside jobs, a family situation, or other interests. The student may also be a gourmet cook, fitness enthusiast, skier, or computer buff. PTS: 1 REF: 75 OBJ: 03-4 TOP: AACSB Reflective T hinking | AACSB Analytic | TB&E Model Strategy 10. What are baby boomers? List and describe the four groups into which baby boomers have been subdivided. ANS: Baby boomers are defined as people born between 1946 and 1964. They are the largest demographic segment in the population today, but their inf luence varies depending upon f ur ther segmentation within the baby boomer segment. The four segments are “looking for balance” boomers, “confident and living well” boomers, “at ease” boomers, and “overwhelmed” boomers. “Looking for balance” boomers represent an excellent market for companies that can offer them t ime-saving products. Companies engaged in t ravel-related food-service and businesses will find key opportunities in this segment. “Confident and l iving well” boomers have the highest income and relish the chance to be the first to p urchase a new product. They are technologically oriented and care about what is t rendy. T ravel is one of their favorite activities. “At ease” boomers do not worry about the future. T hey express the least interest in luxury products and don’t t ravel much. The segment is p rimarily home-centric. They are not interested in new products. “Overwhelmed” boomers have the lowest income. They worry about the future. Health is a big concern for them. They a re also the least sociable segment. They do not readily accept new technology. PTS: 1 REF: 81-82 OBJ: 03-5 TOP: AACSB Diversity | AACSB Analytic | TB &E Model Customer | T B &E Model Strategy 11. Define multiculturalism and discuss its impact on the marketing f unction. ANS: A multicultural society is characterized by two or more large racial and ethnic groups as opposed to one dominant racial or ethnic group. Mul ticulturalism occurs w hen all ethic groups in an area are roughly equally represented. I t means that various ethnic groups can no longer be expected to assimilate into existing national culture. This means that marketers must create specialized programs to target specific ethnic groups. F rom a marketing perspective, multiculturalism increases the complexity of the marketing f unction. Demand for goods and services will often be culture-driven. Within the large ethnic markets, the marketing mix will be fur ther complicated by many submarkets. PTS: 1 REF: 85-86 OBJ: 03-6 TOP: AACSB Diversity | AACSB Analytic | TB&E Model Customer | T B&E Model Strategy 12. One component of the external environment marketing m anagers must understand and react to is the economic environment. Briefly describe the four economic areas of greatest concern to U.S. marketers and the marketing implications of t rends in these four areas. ANS: RISING INCOMES. Incomes are r ising in the United S tates, primarily due to dual-income families. Increases in disposable and discretionary i ncome allow families and individuals to afford the "good life." Marketers can now concentrate efforts on higher-quality, higher-priced goods and services. PURCHASING POWER: This is also known as the cost of living. When income is higher than the cost of l iving, people have more discretionary income to spend on non-essential i tems. I NF LATION. In recent years, the United States has not experienced high inf lation; instead, p rices do not r ise quickly, employment levels are high, and purchasing power is up. Again, t his allows marketers to concentrate efforts on higher-priced goods and services. During periods of inflation, marketers should be aware that brand loyalty decreases and consumers s tock up on bargain products; consequently, pricing strategies should be monitored carefully. RECESSION. This period of economic activity is when income, production, and employment fall, which reduces demand. Marketers can counter these effects with valueimproved products, customer service, replacement parts, and price freezes. PTS: 1 REF: 8689 OBJ: 03-7 TOP: AACSB Analytic | TB&E Model Strategy 13. Describe inflation and r ecession. Present a marketing strategy that would allow a company to continue operating i n an inf lationary period and in a recessionary period. ANS: In f lation is a measure of the decrease in the value of money, expressed as the percentage reduction in value since the p revious year. I t may result in decreased purchasing power. Marketers should be aware b rand loyalty will decrease, and consumers will tend to stock up. This means short-term p romotions (coupons and sales) will be effective. Additionally, marketers should carefully evaluate pricing strategies because consumers will t ry to make the most economical p urchases possible. A recession is a period of economic activity when income, production, and employment tend to fall, all of which reduce demand. Marketers can t ry to improve existing products, because a recession increases demand for products and services that (1) a re economic and efficient, (2) offer value, (3) help organizations streamline p ractices/procedures, and (4) improve customer service. Marketers can also offer r eplacement parts to postpone purchasing new equipment and materials. Finally, m arketers should stabilize prices and promote the product's value. PTS: 1 REF: 88-89 OBJ: 03-7 TOP: AACSB Reflective Thinking | AACSB Analytic | TB &E Model Strategy 14. M i racle Sealant Company is a business that makes and sells environmentally safe products t o preserve the beauty of ti le and stone used on f loors, in bathrooms, and on ki tchen countertops. Assume Mi racle Sealant is operating in an economic recession. What three m arketing strategies can i t use to survive this decline in economic activity? Give examples of specific actions the company can take for each of the strategies. ANS: Students' examples w ill vary. (1) M i racle Sealant can improve its existing products by offering promotional v ideos for do-i t-yourselfers. I t can add new products to i ts product lines, such as grout, b rushes, and paint specifically designed for use on t ile and stone. (2) The company can m aintain and expand its customer service by offering financial incentives to i ts retailers to order more or by extending more credit. (3) The company can emphasize top-of-the-line p roducts and promote product value. I t can emphasize the fact that its products are not harmful to the environment. PTS: 1 REF: 88-89 OBJ: 03-7 TOP: AACSB Analytic | TB&E M odel Strategy | TB &E Model Product 15. You are a young entrepreneur who has recently r eceived a multimillion dollar research grant for studying ways to improve urban life in the U nited States. Discuss the difference between basic and applied research, and give specific examples of each type of research your new company will conduct. ANS: Basic research (or p ure research) attempts to expand the frontiers of knowledge but is not aimed at a specific, p ragmatic problem. This type of research would explore broad issues of defining the good and bad points of life in the United States. This research could also explore values as well as social or demographic change, or issues in any of the variables of the external environment. Applied research attempts to develop new or improved products. Students could provide specific examples of products that can help improve life in the United States, such as solar cars, energy-efficient or nonpolluting motors, products that work faster to save t ime, or nonfat products to save calories. Many products would be high-tech in nature. PTS: 1 REF: 89 OBJ: 03-8 TOP: AACSB Reflective Thinking | AACSB Analytic | TB&E Model Research 16. There are three general categories of federal laws that affect marketing. They a re (1) regulation of the competitive environment, (2) regulation of pricing practices, and (3) control of false advertising. Name and briefly describe one federal law that has been created for each category. ANS: REGULATION OF THE COMPETIT IVE ENVIRONMENT. The Sherman Act (1890) outlaws t rusts, conspiracies, restraint of t rade, and monopolies. The C layton Act (1914) outlaws price discrimination and tying contracts. The Federal Trade Commission Act (1914) created the FTC to deal with antit rust matters and outlaws unfair methods of competition. The Lanham Act of 1946 is the United States' primary t rademark legislation. The Celler-Kefauver Antimerger Act prevents corporate acquisitions that reduce competition. The Har t-Scott-Rodino Act requires large companies to notify the government of their intent to merge. REGULATION OF PRICING PRACTICES. The Robinson-Patman Act (1936) prohibits charging different prices to different competing buyers and requires sellers to make services/allowances available to all purchasers on a proportionately equal basis. Also, the Clayton Act outlaws discrimination in prices to different buyers. CONTROL O F FALSE ADVERTISING. The Wheeler-Lea Amendment to the FTC Act (1938) broadens F TC powers and outlaws false and deceptive advertising. PTS: 1 REF: 91 OBJ: 03-9 TOP: A ACSB Reflective Thinking | TB&E Model Strategy 17. The Federal Trade Commission ( FTC) has many regulatory powers that govern the action of persons and corporations. Name and briefly describe four FTC powers. ANS: Cease-and-desist order: A final order to cease an illegal practices. Consent decree: Business consents to stop the questionable p ractice without admit ting illegality. Affi rmative disclosure: Requires the advertiser to p rovide additional information about products in its advertisements. Corrective advertising: Requires advertising to correct the past effects of misleading advertising. Restitution: Requires refunds to consumers misled by deceptive advertising. Counteradvertising: The Federal Communications Commission (FCC) permits advertisements in broadcast media to counteract advertising claims, plus a proviso for free t ime under certain conditions. PTS: 1 REF: 93 OBJ: 03-9 TOP: AACSB Reflective Thinking | TB&E Model Strategy 18. What is t he CPSC? How does i t affect marketing? ANS: The Consumer Product Safety Commission (CPSC) is a federal regulatory agency that directly affects the marketing environment. The sole purpose of the CPSC is to protect the health and safety of consumers in and around t heir homes. The commission has the power to prescribe mandatory safety standards for a lmost all products consumers use. The CPSC has the power to ban dangerous products f rom the marketplace and levy heavy fines on offending fi rms. Marketers should be aware of t he health and safety needs of consumers when making and distributing products. PTS: 1 REF: 92 OBJ: 03-9 TOP: AACSB Reflective Thinking | TB&E Model Strategy Chapter 5— Consumer Decision Making TRUE/FALSE 1. If consumer behavior is not well understood, a m arketer will have difficulty creating an appropriate marketing mix. ANS: T PTS: 1 REF: 146 OBJ: 05-1 TYPE: Comp TOP: AACSB Diversity | TB&E Model Strategy | TB&E Model Customer 2. A restaurant gourmet who enjoyed eating sushi, veal, and snails would likely experience a need recognition for Whole Foods brand vegetarian cookies when he realized t he cookies were made without any milk or eggs. ANS: F One way that need recognition occurs is when there is a felt imbalance between actual and desired state. The gourmet m ight be curious, but he would feel no need. PTS: 1 REF: 146 OBJ: 05-2 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer 3. A stimulus is a unit of input from either an external or internal source that can affect sight, smell, taste, touch, or hearing A NS: T PTS: 1 REF: 146 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 05-2 TYPE: Def 4. When Alan buys rock-climbing equipment, he will only buy Black D iamond, Petzl, Edelweiss, or Wild Count ry brands even though other brands exist. These l isted brands make up Alan’s consideration set. ANS: T PTS: 1 REF: 150 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 05-2 TYPE: App 5. Once an individual's evoked set has been established, evaluation of those alternatives will determine what i nformation must be obtained during the information search. ANS: F The information search stage usually yields an evoked set and precedes evaluation of alternatives. PTS: 1 REF: 150 OBJ: 05-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer 6. There are several tools marketing managers can use to mitigate the effects of cognitive dissonance. ANS: T Marketing managers can also reduce dissonance. PTS: 1 REF: 151 OBJ: 05-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer 7. T he purchase of products like soft drinks, cleaning products, and gasoline generally exemplify routine response behavior. ANS: T PTS: 1 REF: 152-153 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 05-4 TYPE: Comp 8. Sunny has been a vegetarian for more than ten years and would like her husband to enjoy the vegetarian lifestyle, but he w ill not give up ice cream, cake, and candy, which contain milk and eggs. She has found a new line of soy-based ice cream that promises to be better than milk-based ice cream and is t hinking about buying it even though it costs three times more than regular ice cream does. Sunny has engaged in extensive decision making. ANS: F Acquiring information about an u nfamiliar brand in a familiar product category is called limi ted decision making. PTS: 1 REF: 153 OBJ: 05-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 9. Noah perceives the purchase of a tat too to be a socially r isky decision because he thinks people will judge him unfairly if he has a tat too. Hayley, however, does not perceive getting a t at too as particularly r isky behavior. As far as social r isk is concerned, getting a tat too w ill be a higher-involvement activity for Noah than for Hayley. ANS: T PTS: 1 REF: 153-154 T OP: AACSB Reflective Thinking | TB&E Model Product OBJ: 05-4 TYPE: App 10. In general, detailed, informative advertisements are most effective for high-involvement p roducts because consumers actively search for additional information prior to making their decisions. ANS: T PTS: 1 REF: 154 OBJ: 05-4 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model Product 11. The United States, unlike some other countr ies, does not have a status structure or social class system. ANS: F The U nited States has a social class system. PTS: 1 REF: 160 OBJ: 05-5 TYPE: Def TOP: A ACSB Reflective Thinking | TB&E Model Customer 12. A newly hired employee at a advertising agency chose the clothes she purchased for work by observing the clothes she saw worn in The Apprentice, a popular television reality show. In this example, the women hoping to work for Donald Trump served as primary reference groups. ANS: F The newly h ired employee is not interacting with the apprentices face-to-face. PTS: 1 REF: 163 OBJ: 05-6 TYPE: App TOP: AACSB Technology | TB &E Model Product 13. Opinion leaders are often the fi rst to t ry new products and services. ANS: T PTS: 1 REF: 165 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 05-6 TYPE: Def 14. The socialization p rocess involves adopting the values of the culture in which a person was raised and is usually strongly inf luenced by the family. ANS: T PTS: 1 REF: 166 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 05-6 TYPE: Comp 15. Hata perceives herself as shy, socially awkward, and unpopular. This would be considered her real self-image. ANS: T Because this is how Hata perceives herself, this is her real self-image. PTS: 1 REF: 169 O BJ: 05-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 16. W hile lifestyle research is useful for describing individual consumers, it is not useful for segmenting consumer groups. ANS: F Lifestyle analysis, unlike personality research, has p roven valuable in segmentation and targeting. PTS: 1 REF: 170 OBJ: 05-7 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Research 17. Selective exposure occurs when consumers change information that conflicts with their feelings or beliefs. ANS: F Selective distortion occurs when consumers change information t hat conflicts with their feelings or beliefs. PTS: 1 REF: 171 OBJ: 05-8 TYPE: Def TOP: A ACSB Reflective Thinking | TB&E Model Customer 18. Maslow's hierarchy of needs categorizes human needs into five levels: physiological needs, safety needs, social needs, esteem needs, and self-actualization. ANS: T PTS: 1 REF: 173 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 05-8 TYPE: Def 19. Listening to someone describe how boring it was to be a movie extra is an example of experiential learning. ANS: F L istening to the experiences of others, not undergoing the experience yourself, is an example of conceptual learning. I t is a key part of social learning theory (also known as observational learning). PTS: 1 REF: 175 TOP: AACSB Reflective Thinking OBJ: 05-8 T YPE: Def 20. If the product element of the four P's provides no reinforcement (positive or negative), activity in some other aspect of the marketing mix may be required to encourage f ur ther consumption. ANS: T PTS: 1 REF: 175 TOP: AACSB Reflective Thinking | TB&E M odel Product OBJ: 05-8 TYPE: Comp 21. By keeping the blue t r iangle in the corner and t he Nabisco name on several similar Nabisco snack products, Nabisco is attempting to capitalize on stimulus generalization. ANS: T PTS: 1 REF: 175 TOP: AACSB Reflective T hinking | TB &E Model Product M ULTIPLE CHOICE 1. The processes individuals use w hen making a purchase decision are called _____. This is also the reason individuals r ecognize and respond to the distinctive lettering used on Coca-Cola cans, the shape of the N ike swoosh, and the color of a can of Campbell soup. a. consumer behavior b. marketing c. consumerism d. perceptual mapping e. database mining ANS: A Consumer behavior describes how consumers make purchase decisions. PTS: 1 REF: 146 OBJ: 05-1 TYPE: Def T OP: AACSB Analytic | TB&E Model Customer 2. Marketers often study _____, the p rocesses used and the factors that inf luence the consumer when making purchase decisions. a. psychographics b. business buying behavior c. consumerism d. consumer behavior e. perceptual mapping ANS: D PTS: 1 REF: 146 TOP: AACSB Reflective Thinking | T B&E Model Customer OBJ: 05-1 TYPE: Def OBJ: 05-8 TYPE: App 3. The steps of the consumer decision-making process in order are: a. need recognition, alternative aggregation, reevaluation, purchase decision, postpurchase behavior b. need positioning, s timulus response reactions, evaluation of alternatives, purchase decision, postpurchase behavior c. need positioning, alternative aggregation and divestment, purchase decision, postpurchase evaluation d. information search, need positioning, evaluation of alternatives, p roduct t r ial, purchase decision, postpurchase satisfaction e. need recognition, information search, evaluation of alternatives, purchase, and postpurchase evaluation ANS: E PTS: 1 REF: 146 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 05-2 TYPE: Def 4. As a result of hearing the adventures of returning soldiers, Monroe decided to enlist in t he U.S. Army. These stories he heard from the soldiers acted as: a. affective states b. external stimuli c. internal stimuli d. purchase outcomes e. a dissonance creator ANS: B T he adventures he heard were stimuli that were not physiological. PTS: 1 REF: 146 OBJ: 05-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model In ternational Perspective 5. Hector loves cola and is always on a diet. He will only drink Diet Coke. When offered a Diet Pepsi one afternoon as an alternative, he refused to even consider i t as part of h is evoked set even though he generally drinks a soft drink about the time of day the offer was made. This illustrates that Hector: a. is satisfying a want b. is satisfying a need c. is satisfying a belief d. has a physiological drive e. has a need motivator ANS: A A want is often brand specific, whereas a need is something an individual depends on to function efficiently. A person may need food but wants specific brands. PTS: 1 REF: 146-147 OBJ: 052 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model P roduct 6. Which of the following is the BEST example of an internal stimulus that would create need recognition? a. a fr iend comments on how shabby your coat looks b. a radio s tation runs an ad for a new video game rental store c. a headache d. an invitation to a g raduation for which you need a gift e. a billboard promoting a new national In ternet service provider ANS: C Aches and pains are generated internally by your body without outside inputs from anything or anyone. PTS: 1 REF: 146 OBJ: 05-2 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer 7. After a need or want is recognized, a consumer may be motivated to clarify the options available and generate an evoked set of b rands. This occurs during which part of the consumer decision-making process? a. evaluation of alternatives b. information search c. cognitive dissonance d. consideration s tage e. product identification ANS: B PTS: 1 REF: 148 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 05-2 TYPE: Def 8. While Mar tin was looking at the DVDs at Wal-Mar t, he was t rying to remember the name of the horror movie he saw that starred B ruce Campbell so he could buy the DVD. This is likely to occur during which part of the consumer decision-making process? a. antecedent state b. need recognition c. external i nformation search d. alternative evaluation e. internal information search ANS: E After a need or want is recognized, a consumer may be motivated to search for information. In this case, the information was already stored in his memory. PTS: 1 REF: 148 OBJ: 05-2 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Customer 9. The types of products people purchase using only an internal search are typically: a. frequently purchased, lowcost i tems b. frequently purchased, high-cost i tems c. infrequently purchased, low-cost i tems d. infrequently purchased, high-cost i tems e. all types of i tems, regardless of price or f requency of purchase ANS: A Information about frequently purchased, low-cost i tems is s tored in an individual's memory and is sufficient knowledge for the purchase decision. PTS: 1 REF: 148-149 OBJ: 05-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E M odel Customer 10. Which of the following products would most likely require the p urchaser to use only an internal information search? a. a veterinarian for a new puppy b. a day-care facility for a two-month-old infant c. a wedding gown d. a tube of toothpaste e. an anniversary gift ANS: D Internal information search is used with frequently purchased, low-cost i tems; the only i tem on the list that meets this criterion is the toothpaste. PTS: 1 REF: 148 OBJ: 05-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 11. An external information search is especially important when: a. there is a great deal of past experience b. there are high cost associated with making an incorrect decision c. the cost of gathering information is high d. buying frequently purchased, low-cost i tems e. there is li t t le r isk of making an incorrect decision ANS: B If a consumer perceives a purchase to i nvolve high r isk (financial, social, etc.), an external search will lower the r isk by providing more information. PTS: 1 REF: 149 OBJ: 05-2 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Customer 12. For which of the following products is the purchaser most likely to rely on an external information source? a. a toothbrush b. a copy of People m agazine c. a Big Mac d. a new prescription e. a box of t issues ANS: D PTS: 1 REF: 149 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 05-2 TYPE: App 13. P regnant Niceae has been shopping for a baby crib. She has visited several sites on the I nternet that provide information about cribs and has consulted a book on how to keep her baby safe by a consumer group. Niceae has also asked several new mothers for r ecommendations. In her decision-making process, Niceae has been using: a. marketingcontrolled information sources b. demographic information sources c. nonmarketingcontrolled information sources d. secondary data sources e. internal search sources ANS: C Public sources of information, such as Web sites and consumer groups, are known as nonmarketingcontrolled information sources. PTS: 1 REF: 148 OBJ: 05-2 TYPE: App TOP: A ACSB Technology | TB&E Model Product | TB&E Model Online/Computer 14. Which of t he following is NOT an example of a marketing-controlled information system? a. a t elevision ad for Geico insurance b. a NASCAR automobile sponsored by the U.S. Army c. a $1-off coupon for Campbell’s soup d. an article in Bicycling magazine about the newest Shimano brand shoes e. a real estate agent ANS: D The article in Bicycling would NOT have originated with the Shimano organization. PTS: 1 REF: 148 OBJ: 05-2 TYPE: App T OP: AACSB Technology | TB&E Model Online/Computer 15. While Robinson was looking a t the CDs at Wal-Mar t, he was t rying to remember the name of the group that sang the song he liked on last night's episode of Smallville, so he could buy i t. Since recording companies pay to have their CDs promoted on television shows that air on the WB, the source of information Robinson is t rying to recall is: a. a fortui tously evoked set b. m arketing-controlled c. nonmarketing-controlled d. unitary data e. a credible consideration set ANS: B PTS: 1 REF: 148 TOP: AACSB Technology | TB&E Model Customer OBJ: 05-2 T YPE: App 16. Warren loves to go to the beach on his vacation but hates to have to worry about the possibility of hur r icanes. As Warren looked for where he should go on vacation t his summer, he consulted a publication called Smart Money and learned the islands of A ruba, Bonaire and Curacao are not in the hur ricane belt. Now he will only consider these island resorts as possible vacation destinations. This group of resort islands is called Warren’s: a. involvement set b. evaluative set c. evolved set d. evoked set e. intuitive set A NS: D An evoked set is the set of brands a consumer recalls and would consider as possible p urchase choices. PTS: 1 REF: 150 OBJ: 05-2 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Product 17. Melyssa has been given a horse and needs to buy a new Western saddle. She has narrowed the brands of saddles she is considering down to Dale Chavez, A betta, and Big Horn. These three brands of Western saddles represent Melyssa's: a. evaluative criteria b. dissonance suppressors c. discretionary discriminators d. d iscriminatory set e. evoked set ANS: E PTS: 1 REF: 150 TOP: AACSB Reflective Thinking | T B&E Model Product OBJ: 05-2 TYPE: App 18. Zoran wants to buy a pair of sunglasses he can wear when he is r iding his bicycle in competitions. He wants sunglasses with a r ubberized nose piece, built-in anti-fogging technology, and the ability to block light from all angles. The criteria for his decision appear to be based on: a. marketing-controlled i nformation sources b. evoked set finalists c. routine response behavior d. atti tudes of others e. product att r ibutes ANS: E Physical characteristics and t raits used in decision making are called product att r ibutes. PTS: 1 REF: 150 OBJ: 05-2 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 19. Another name for evoked set is: a. called array b. r eminder assortment c. induced memory d. consideration set e. reminder induction ANS: D PTS: 1 REF: 150 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 05-2 T YPE: Def 20. People tend to be more satisfied with a purchase if: a. they obtain additional i nformation that reinforces their decision b. they feel less competent in their daily lives c. cognitive dissonance develops d. there is inconsistency among opinions and values e. there is no fur ther contact with the seller ANS: A New information that reinforces positive ideas about the purchase tends to reduce cognitive dissonance and increases satisfaction. PTS: 1 REF: 151 OBJ: 05-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model Product 21. Cecelia is a receptionist and just spent $347 on a new r iding saddle for her boyfriend Claude, a weekend cowboy. When she got home with the saddle, she experienced a high level of anxiety about whether she has made the r ight p urchase decision. Cecelia experienced: a. selective dissatisfaction b. temporal distortion c. perceptual disharmony d. cognitive dissonance e. self-actualization involvement ANS: D Cognitive dissonance is the term for postpurchase tension and anxiety. PTS: 1 REF: 151 O BJ: 05-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Pricing | TB&E M odel Product 22. Miller has just purchased a new Allez A1 Specialized bicycle for $1,000. M iller realizes that the Allez A1 costs more than most bikes, and even at that price i t doesn't come with a set of pedals. Even though other brands of bicycles cost much less than t he Allez A1, M iller tells himself that the Allez A1 is more comfortable and has greater d urability than most road bikes. As Miller wonders if he made the r ight purchase decision, he is experiencing: a. att r ibute remorse b. cognitive dissonance c. evaluation distortion d. consumer cognition e. perceptual disharmony ANS: B Cognitive dissonance involves the r ealization of the advantages and disadvantages of the purchased product. PTS: 1 REF: 151 O BJ: 05-3 TYPE: App TOP: AACSB Analytic | TB&E Model Product 23. _____ is the amount of t ime and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior. a. Economic value b. c. d. e. Involvement Opportunity cost Temporal cost Perceived level of personal r isk OBJ: 05-4 TYPE: Def ANS: B PTS: 1 REF: 152 TOP: A ACSB Reflective Thinking | TB&E Model Strategy 24. When the secretary restocks office supplies each month, he places an order for paper, pens, folders, and printer cart r idges. Each month the order is the same. This type of buying behavior is called: a. buyer's harmony b. situational convenience c. routine response behavior d. limited decision making e. consistent decision making ANS: C The buying of frequently purchased, low-cost goods is t ypically routine response behavior. PTS: 1 REF: 152 OBJ: 05-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 25. Which of the following activities is most l ikely to be an example of routine response behavior? a. the purchase of a three-week vacation cruise b. a homeowner’s purchase of a new grill for $6,000 c. the first-time p urchase of a copy machine for your home office d. the purchase of toilet paper e. the p urchase of a infant car seat ANS: D Only the toilet paper is an example of a lowinvolvement purchase. PTS: 1 REF: 152 OBJ: 05-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 26. _____ is characterized by low involvement, a short t ime frame, an internal-only information search, and low costs. a. Limi ted decision making b. Routine response behavior c. Emotional buying d. Intensive decision making e. Temporally-limited behavior ANS: B See Exhibit 5.2. PTS: 1 REF: 152 OBJ: 05-4 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Customer 27. Jackson has moved to a new community and can no longer attend his old church. He is currently visiting churches to m ake a decision about which one best serves his needs. In making his decision, Jackson will engage in _____ consumer decision making. a. limi ted b. extended c. habitual d. classical e. r outine ANS: A Jackson is familiar with churches and the services they provide, but he is u nfamiliar with the ones in his new community. PTS: 1 REF: 153 OBJ: 05-4 TYPE: App T OP: AACSB Analytic | TB&E Model Customer 28. The electricity for lighting outdoor b illboards is powered by t ransformers. The operator of a company that installs and manages b illboards has purchased many such t ransformers. Today he plans to buy a replacement for one that was destroyed by a recent hur r icane. Before making this purchase, he will look at cost and also see if he can find one that is more weatherproof. He wants to make sure he buys the best t ransformer for the job and that he does not pay more money than he should. I n other words, he will engage in _____ decision making. a. limited b. extended c. habitual d. classical e. routine ANS: A The billboard operator is familiar with the product, but he is not i mmediately knowledgeable about the products currently on the market. PTS: 1 REF: 153 O BJ: 05-4 TYPE: App TOP: AACSB Analytic | TB&E Model Customer 29. When a consumer is purchasing an unfamiliar or expensive product, the consumer often uses the ____ process. a. extensive decision making b. cognitive harmonizing c. limi ted problem solving d. strategic behavior e. stimulus discrimination ANS: A PTS: 1 REF: 153 OBJ: 05-4 T YPE: Def TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model P roduct 30. Nellie's boss sells merchandise through In ternet auctions. He needs to mail a $1,500 hexagonal antique picture frame. He has instructed Nellie to buy packaging that w ill make sure the oddly shaped frame arrives at its new owner's home undamaged, but he has not told her how or where she will find such packaging. Given that she frequently has t o purchase packaging supplies, what kind of purchase decision process would she most l ikely employ? a. low-involvement problem solving b. low-involvement decision making c. extensive decision making d. limited decision making e. routine response behavior ANS: D She will most likely use limi ted because she is familiar with packaging products, but not w ith one that meets the exact size and protective criteria. PTS: 1 REF: 153 OBJ: 05-4 T YPE: App TOP: AACSB Analytic | TB &E Model Customer 31. Leah and Jackson Tidwell a re thinking about buying a hybrid car, such as the Honda Accord or the Toyota Camry. T hey will need to evaluate such product att r ibutes as size of engine, r iding space, ease of m aintenance, and costs as well as their own feelings about environmental protection before m aking the purchase. The purchase of this type of car will most likely involve: a. lowinvolvement problem solving b. low-involvement decision making c. extensive decision m aking d. limi ted decision making e. dedicated cognitive behavior ANS: C Customers p ractice extensive decision making when purchasing an unfamiliar or infrequently used p roduct. PTS: 1 REF: 153 OBJ: 05-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer | TB&E Model Product 32. A marketing manager would expect his or her p roduct to be a high-involvement product for most consumers if it: a. is a product adaptation of a market leader b. is a necessity c. has not been purchased before d. has low social v isibility e. requires substantial financial investment ANS: E PTS: 1 REF: 153-154 TOP: A ACSB Reflective Thinking | TB&E Model Product OBJ: 05-4 TYPE: Comp 33. All of the following factors directly inf luence consumers' level of involvement in the purchase process EXCEPT: a. consumer’s level of education b. previous experience with the product c. f inancial r isk associated with the product d. social visibility of the purchased i tem e. perceived r isk of negative consequences as a result of the purchase ANS: A PTS: 1 REF: 153-154 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 05-4 TYPE: Comp 34. Your best friend has sought your advice on what type of clothing she should buy for a job interview. If she gets the job, she will be assistant to the producer of her favorite t elevision program. She really wants this job and considers i t a once in a lifetime opportunity. By asking your help with her wardrobe, your friend is most likely t rying to: a. eliminate cognitive dissonance b. eliminate the low involvement in the decision c. reduce perceived r isk of negative consequences d. increase the chances of selective exposure e. i ncrease the motivation involved in the decision ANS: C What is being sought is a reduction i n the anxieties felt, because the best friend cannot anticipate the outcomes, but believes t here may be negative consequences. PTS: 1 REF: 153-154 OBJ: 05-4 TYPE: App TOP: A ACSB Analytic | TB&E Model Customer | TB&E Model Product 35. Ralph played mediocre golf for over twenty years. Then he retired and vowed to improve his golf game by buying one of the new golf clubs that promise increased distance and have a $700 price tag. According to the text, which of the following factors has determined Ralph's level of i nvolvement in the purchase of a new technologically advanced golf club? a. desire for negative consequences b. interest and previous experience c. self-concept and perception d. self-concept and perceived r isk of positive consequences e. situation and self-concept ANS: B T he text lists previous experiences, interests, perceived r isk of negative consequences, situation and social visibility as factors that determine the level of consumer involvement. PTS: 1 REF: 153-154 OBJ: 05-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Product 36. A marketer for minor league baseball (MiLB) wants to keep fans who normally attend her team’s games from switching to another sport or source of entertainment. To reduce the likelihood that fans will seek out another activity, the m arketer might: a. create a feeling of postpurchase anxiety for fans purchasing M i LB t ickets b. offer incentives to get baseball fans to repeatedly purchase t ickets for the games u ntil they do it out of habit c. increase the social visibility of baseball d. raise the price of game t ickets relative to the price of similar events to reduce the level of consumer i nvolvement e. switch t icket distribution to different outlets ANS: B Repeated exposure to a b rand or product will make subsequent purchase become routine. PTS: 1 REF: 153 OBJ: 054 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 37. When Avril went to purchase a birthday card for her new boyfriend, she went to three stores and spent four hours reading over five hundred cards before selecting the perfect one. This card ( which cost $3.25) is properly designated a high-involvement product because of: a. brand loyalty b. situational factors c. financial r isk d. cognitive dissonance e. t r ial investment A NS: B Because of the situational factors (high emotional r isk), this low-cost card is a highinvolvement i tem in this case. PTS: 1 REF: 154 OBJ: 05-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 38. Wanda approaches the purchase decision of m ilk with much lower level of human involvement than the purchase of a new handbag due t o: a. opportunity costs b. the fear of cognitive dissonance c. situational factors d. the social v isibility of the two products e. none of the choices inf luence involvement ANS: D I nvolvement increases as social visibility of a product increases. PTS: 1 REF: 154 OBJ: 05-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 39. Marketing m anagers often use in-store promotions to stimulate sales of: a. technical products b. highinvolvement products c. high-priced products d. industrial products e. low-involvement p roducts ANS: E Because a low-involvement product has low potential r isk for the consumer, it is easier to inf luence the consumer at the point of purchase. Marketing m anagers can use attention-getting devices to induce t r ial purchases. PTS: 1 REF: 154-155 O BJ: 05-4 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Promotion 40. _____ is the set of values, norms, attitudes, and other meaningful symbols that shape h uman behavior and is t ransmit ted from one generation to the next. a. Socialization b. Customerization c. Consumerism d. Lifestyle e. Culture ANS: E PTS: 1 REF: 156 TOP: A ACSB Diversity | TB&E Model Customer 41. Culture plays an important role in shaping and communicating: a. economic power b. class stratification c. self-concepts d. values e. i ndividual differences ANS: D Human interaction from one generation to the next shapes t he values held by society. This shaping of societal values is culture. PTS: 1 REF: 156 OBJ: 05-5 TYPE: Def TOP: AACSB Diversity | TB &E Model Customer OBJ: 05-5 TYPE: Def 42. T he fact that mothers in Japan feed their babies freeze-dried sardines and r ice and most mothers in the United States would not eat a freeze-dried sardine, much less feed it to their babies, indicates how _____ influences the consumer decision-making process. a. culture b. perception c. motivation d. family life-cycle stage e. reference group membership ANS: A H uman interaction from one generation to the next shapes the habits of a society. This shaping of habits is a function of culture. PTS: 1 REF: 156 OBJ: 05-5 TYPE: App TOP: A ACSB Analytic | AACSB Diversity | TB&E Model Customer 43. Physicians need to be aware of how _____ influences consumer behavior. For example with Chinese patients the doctor should remember the Chinese believe foods can assist in healing disease so he or she would need to inquire about food choices and preferences. When dealing with Muslim patients, a doctor may need to share asmall bit of personal information about himself or herself to gain the patient's t rust. When dealing with a Russian patient, bad news is given t o accompanying friends and relatives, not the patient. a. culture b. perception c. motivation d. family life-cycle stage e. reference group membership ANS: A Human interaction from one generation to the next shapes the habits of a society. This shaping of habits is a f unction of culture. PTS: 1 REF: 156 OBJ: 05-5 TYPE: App TOP: AACSB Analytic | AACSB D iversity | TB&E Model Customer 44. An enduring belief that a specific mode of conduct is personally or socially preferable to an alternative mode of conduct is called a(n): a. lifestyle b. self-concept c. attitude d. value e. perception ANS: D PTS: 1 REF: 157 TOP: AACSB D iversity | TB&E Model Customer OBJ: 05-5 TYPE: Def 45. Homogeneous groups within a culture that share elements of the overall culture as well as have elements that are unique t o that group are called: a. autonomous personal units b. probability samples c. subcultures d. normative groups e. dissociative groups ANS: C PTS: 1 REF: 159 OBJ: 05-5 TYPE: Def T OP: AACSB Diversity | TB &E Model Customer 46. Which of the following statements about culture as an inf luence on consumer buying behavior is t rue? a. A fi rm that u nderstands the culture it is selling to has just as great a probability of selling i ts product as a firm that has no understanding of the culture. b. Some fear the proliferation of the I nternet will increase cultural heterogeneity. c. Language is an important aspect of culture. d. Core values remain the same for all cultures. e. All of the statements about culture as an i n fluence on consumer buying behavior are t rue. ANS: C Without understanding a culture, a f i rm has li t t le chance of selling its products in it. Some fear widespread use of the I nternet will increase cultural homogeneity. Core values differ among cultures. PTS: 1 REF: 159 OBJ: 05-5 TYPE: Comp TOP: AACSB Diversity | TB&E Model Product | TB&E Model Customer 47. Which of the following is LEAST likely to be described as a subculture? a. electrical engineers b. Vietnamese Americans c. college students d. residents of the M ississippi delta e. Quakers ANS: A Electrical engineers are a professional group and do not share demographic characteristics (as do most college students). Geographic regions ( residents of the M ississippi delta), religious beliefs (Quakers), or ethnic background (Vietnamese Americans) are all considered possible bases for subcultures. PTS: 1 REF: 159160 OBJ: 05-5 TYPE: App TOP: AACSB Diversity | TB&E Model Customer 48. A(n) _____ is a group of people who are considered nearly equal in community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms. a. extended family b. subculture c. dissociative group d. social class e. procreational family A NS: D PTS: 1 REF: 160 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 05-5 TYPE: Def 49. To develop a promotional campaign for vocational education to target working-class consumers, which of the following alternatives might you employ? a. a campaign that shows family and community members participating in vocational classes to i mprove their lives b. a campaign emphasizing that those who participate in vocational classes will look better to others c. a campaign showing how much participation in vocational classes will improve society as a whole d. a campaign showing participants in the vocational classes with the time and money to vacation in far away and exotic places e. a campaign appealing to self-actualization needs ANS: A The working-class person depends on relatives and community for economic and emotional support. PTS: 1 REF: 161 OBJ: 055 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 50. As a m arketing tool in the United States, social class: a. is useful for lifestyle distinctions between groups b. is just a simple measure of income level c. offers few insights concerning consumer behavior d. is not used because the United States is a classless society e. has demonstrated that all classes of consumers shop in the same stores ANS: A L ifestyles do d iffer between the existing classes in the United States, offering useful insights for m arketers. PTS: 1 REF: 161 OBJ: 05-5 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Customer 51. Social in fluences on consumer buying decisions include: a. society, culture, and family b. reference groups, society, opinion leaders, and family c. personality, lifestyle, and reference groups d. reference groups, opinion leaders, and family e. lifestyle, reference groups, and family ANS: D Lifestyle and personality are individual i n fluences. Culture and society are cultural factors. PTS: 1 REF: 162 OBJ: 05-6 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Customer 52. Which of the following s tatements about reference groups is t rue? a. Reference groups stimulate, but do not constrain, consumption behavior. b. Reference groups have strong influence on all brands and product purchases. c. A person can only belong to one reference group. d. Reference g roups serve as information sources and in fluence perceptions. e. All of the statements about reference groups are t rue. ANS: D Reference groups directly inf luence consumer behavior and provide signals (information) for appropriate behavior. PTS: 1 REF: 163-164 O BJ: 05-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer 53. A d irect reference group is composed of: a. face-to-face membership groups that touch people's l ives directly b. only friends, neighbors, and relatives c. role models on television and in the movies d. people the individual does not want to be associated with e. people an individual aspires to be like ANS: A PTS: 1 REF: 163 OBJ: 05-6 TYPE: Def TOP: AACSB Reflective T hinking | TB &E Model Customer 54. Elliott loves to compete in mountain biking. He subscribes to all the bicycling magazines and reads them as soon as they arrive each month. Champion bikers like Golden Brainard, Chris Sheppard, and Carl Swenson are often used i n the product advertisements in these magazines. The ads convince Elliott to buy these p roducts because these champions are a(n) _____ group for Elliott. a. secondary reference b. p rimary reference c. aspirational d. nonaspirational e. direct reference ANS: C Aspirational g roups are those groups someone would like to join but of which he or she is currently not a member. PTS: 1 REF: 163 OBJ: 05-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer | TB&E Model Product 55. Jared is looking for a new house, and a realtor has suggested he look at homes in the Whispering Pines subdivision, where housing prices s tart at $500,000. Jared, however, would rather move into a more modest neighborhood. He t hinks spending that much money on a house is wasteful and materialistic. The people who l ive in Whispering Pines are best described as part of Jared's _____ group. a. nonaspirational b. direct reference c. membership d. integrated e. aspirational ANS: A A nonaspirational group is a group the consumer attempts to maintain distance from and does not want to imi tate in purchase behavior. PTS: 1 REF: 164 OBJ: 05-6 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 56. Opinion leaders are: a. wealthy, well-educated individuals b. experts on all high-involvement consumer goods c. usually the same individuals for all social classes d. people who influence others e. easy to locate and target ANS: D An opinion leader can influence the purchasing behavior of others in the reference group. However, opinion leaders are not always i n fluential, not the same for all social classes, and not always wealthy or well educated. Opinion leaders rapidly change and are a casual, often inconspicuous, phenomenon. PTS: 1 REF: 165 OBJ: 05-6 TYPE: Def TOP: AACSB Reflective Thinking | TB &E Model Customer 57. A few years ago, the Australian footwear and accessories brand UGG was an unknown b rand in the United States. A few tabloid shots of actresses like Kate Hudson and Cameron D iaz parading around in their UGG boots were instrumental in making the brand popular i n the U.S. market; sales haven’t let up since. Diaz and Hudson more than likely acted as: a. b. c. d. e. opinion leaders laggards early instigators gatekeepers aspirational adopters ANS: A T he target market for UGG wants to emulate Diaz and Hudson. PTS: 1 REF: 165 OBJ: 05-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E M odel Product 58. You are the brand manager for a new line of allergy relief drugs. Which of the following methods might you employ to use opinion leadership/reference groups to help stimulate demand for your products? a. Create ads that show the typical consumer performing a healthy lifestyle activity. b. Develop a promotional campaign that tells customers they "deserve to use" these products. c. Drop the price of your new products to t he point where customers will realize they are getting a bargain. d. Develop a promotional campaign that emphasizes safety and security needs being fulfilled by these health-care p roducts. e. Use a series of ads showing different health-care associations and societies endorsing the use of these health-care products. ANS: E The endorsements use the sanctioning or referral power of sources possessing high credibility. PTS: 1 REF: 165 OBJ: 05-6 TYPE: App TOP: AACSB Analytic | TB&E Model Customer | TB&E Model Product 59. Becca, a college student, tends to buy the same brands of toothpaste, shampoo, and deodorant as her _____, which is often the strongest source of group in fluence upon the i ndividual for many product purchases. a. psychographic group b. social class c. family d. subculture e. dissociative group ANS: C The family is the most important social institution for many consumers. PTS: 1 REF: 166 OBJ: 05-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model Product 60. Because her mother only went to the supermarket once a month, this is how Moniq prefers to do her grocery shopping. One of the reasons Moniq is such an efficient shopper is that, like her mother, M oniq believes, "Waste not, want not." The passing down of norms and values to Moniq is an example of: a. consumerism b. the socialization process c. acculturation d. the roles opinion leaders play in business decision making e. the role of society in consumer decision m aking ANS: B The socialization process is the passing down of cultural values and norms t o children. PTS: 1 REF: 166 OBJ: 05-6 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer | TB &E Model Product 61. Madison announced to her family last n ight that she wanted a pair of inline skates. Her sister Bailey said she thought i t was a s tupid idea. Their mother Wanda said Madison deserved a special t reat for winning the science fair. Because her father Ned said nothing, Madison knew she was not getting the skates. In terms of the roles played by family members in the consumer decision-making p rocess: a. Madison was the initiator, and Ned had no role at all. b. Bailey was the initiator, and Wanda was the decision maker. c. Madison was an in fluencer, and Wanda was the decision maker. d. Madison was the initiator, and Ned was the decision maker. e. Madison was the initiator, and Bailey had no role at all. ANS: D Madison suggested the purchase and was the initiator. Wanda and Bailey both t r ied to inf luence the purchase. Ned was the decision maker. PTS: 1 REF: 166 OBJ: 05-6 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer | TB &E Model Product 62. A pet food manufacturer has int roduced a new vegetarian cat food and spent a large amount of money on the packaging, nationwide t elevision advertising, coupons, and store displays. After a successful int roduction period w ith sales higher than expected, sales suddenly dropped off dramatically. Subsequent r esearch revealed that cats quickly became t i red of the food and refused to eat it. The pet food manufacturer that forgot cats can also play an important role in the family decision p rocess as a(n): a. instigator b. consumer c. decision maker d. purchaser e. selector ANS: B Here consumer is used to denote the user of the good or service. This question emphasizes how wide a difference there can be between consumer and purchaser. PTS: 1 REF: 166-167 O BJ: 05-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer | TB&E M odel Product 63. All of the following are examples of individual factors that affect the decision-making process for consumers EXCEPT: a. gender b. age c. reference groups d. l ifestyles e. personality ANS: C Reference groups are a social influence. PTS: 1 REF: 167 O BJ: 05-7 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Customer 64. Women account for about 50 percent of the luxury car market. Male car designers at Cadillac are going about their work with paper clips on their fingers to simulate what it feels like to women with long fingernails to operate buttons, knobs, and other interior features. They are responding to _____ inf luences on consumer buying decisions. a. cultural b. social c. physiological d. psychological e. individual ANS: E Gender is an indivi ual in fluence on consumer buying decisions. PTS: 1 REF: 167 OBJ: 05-7 TYPE: App TOP: A ACSB Diversity | TB&E Model Product | TB &E Model Customer 65. _____ is an orderly series of stages in which consumers' attitudes and behavioral tendencies change over time. a. Socialization b. The wheel of consumerism c. The family life cycle d. Lifestyle consumption e. Acculturation ANS: C PTS: 1 REF: 168-169 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 05-7 TYPE: Def 66. An individual's _____ is a composite of psychological makeup and environmental forces. I t provides consistency to an i ndividual's reactions to situations. a. acculturation b. socialization c. personality d. autonomy e. atti tude ANS: C Autonomy is a common personality t rait. PTS: 1 REF: 169 O BJ: 05-7 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Customer 67. _____ is how consumers perceive themselves in terms of atti tudes, perceptions, beliefs, and selfevaluations. a. Socialization b. Personality c. Socialization d. Normalization e. Selfconcept ANS: E PTS: 1 REF: 169 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 05-7 TYPE: Def 68. Sam knows that if he had been allowed to be an actor, he would have been as successful as his favorite actor Tom Hanks. He feels his acting ability and his stage presence are as least as good as Tom Hanks’. Since Sam really admires H anks, he has recently grown his hair as Hanks did for his role in The Da Vinci Code. Sam’s new look reflects his: a. superego b. compliant orientation c. ideal self-image d. real self-image e. socialization process ANS: C Ideal self-image represents the way an individual would like to be. PTS: 1 REF: 169 OBJ: 05-7 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Customer 69. Clayton’s purchase behavior is inf luenced by his love of rodeo, h is pat riotism, a fascination with agriculture, his love of country music, and his belief that everyone needs to enjoy life. All of these things are part of which personal influence on the consumer decision-making process? a. attitude b. personality c. beliefs d. lifestyle e. experiential learning ANS: D Lifestyle is defined by one's activities, interests, and opinions. PTS: 1 REF: 170 OBJ: 05-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 70. One method of categorizing consumers refers to a large group of older men (called Rugged Traditionalists) who believe in the t raditional, old-school gender roles, who p refer NASCAR to all other types of sports, who would use a straight razor for shaving if t hey could find one, and prize convenience above all other qualities in a retail store. The Rugged Traditionalist is described in terms of how _____ inf luences affect his consumer decision making. a. psychological b. individual c. social d. situational e. cultural ANS: B The p reference for NASCAR and the belief in t raditional gender roles are both lifestyle descriptors. Lifestyle, personality, and self-concept are all individual inf luences. PTS: 1 REF: 167 OBJ: 05-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 71. Studies of how consumers relate to Internet entertainment classify them into nine d ifferent groups. One category is "Mouse Potatoes," who spend most of their t ime online, w ho want the most current gadgets, and who believe the world pictured in the cartoon The Jetsons will someday exist. This is a description of the _____ of "Mouse Potatoes." a. selfimage b. cultural bias c. lifestyle d. demographics e. socialization process ANS: C Lifestyles a re defined by activities, interests, and opinions. PTS: 1 REF: 170 OBJ: 05-7 TYPE: App T OP: AACSB Analytic | AACSB Technology | TB &E Model Customer | TB &E Model O nline/Computer 72. To analyze consumer lifestyles, marketers look at consumers': a. activities, interests, and opinions b. behavior, personality, and social class c. geography, demography, and psychographics d. income, gender, and life objectives e. activities, personality, and demography ANS: A PTS: 1 REF: 170 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 05-7 TYPE: Def 73. _____ is the analytical technique used to examine consumer lifestyles and to categorize consumers. a. An acculturation analysis b. A consumer audit c. Socialization d. Psychographics e. Demography ANS: D PTS: 1 REF: 170 T OP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 05-7 TYPE: Def 74. Several years ago, Procter & Gamble added bleach to its laundry detergent Oxydol, but people didn't believe i t was different because it looked the same. So P&G added blue beads t o the normally white detergent. Though the blue beads had nothing to do with the b leaching action, consumers could "see" the difference. In this case, consumers were organizing stimuli into a meaningful picture. This process is called: a. exposure b. perception c. retention d. cognition e. selection ANS: B The process of selecting, organizing, and interpreting the stimuli that are bombarding consumers daily is called perception. Color is a cue that plays a key role in a consumer's perception. PTS: 1 REF: 171 OBJ: 05-8 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model P roduct 75. Sixty percent of drinkers of whiskey in Great Bri tain are over 50. The dangers associated with an aging market are obvious. Whiskey manufacturers have taken staid t raditional symbols of their whiskey and placed them in incongruous situations to appeal to a youthful market. Which psychological influence on consumers' purchase of whiskey are t he manufacturers t rying to change? a. value b. perception c. reference group d. personality e. age ANS: B Only perception is an example of a psychological influence. In addition, the m anufacturers are t rying to change how young consumers perceive whiskey as an alcoholic beverage. PTS: 1 REF: 171 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer | TB &E Model Product 76. Sixty percent of drinkers of whiskey in G reat Bri tain are over 50. The dangers of an aging market are obvious. Whiskey m anufacturers have taken staid t raditional symbols of their whiskey and placed them in i ncongruous situations to appeal to a youthful market. If young consumers saw these a ttempts to influence their purchasing behavior as r idiculous because they believe whiskey is an old person's drink, they would miss the advertising message the manufacturers hoped t o send. _____ would have occurred. a. Perceptual generalization b. Stimulus discrimination c. Perceptual discrimination d. Selective distortion e. Stimulus generalization ANS: D Young consumers would miss the intended meaning of the communication because they would distort its meaning based on their beliefs. PTS: 1 REF: 171 OBJ: 05-8 TYPE: App T OP: AACSB Analytic | TB&E Model Customer | TB&E Model Product 77. A few years ago, Toro int roduced a small, lightweight snowblower called the Snow Pup. Even though the p roduct worked great, sales failed to meet expectations because consumers perceived the name to mean that the Snow Pup was a toy or too light to do any serious snow removal. T his is how _____ can influence the consumer decision-making process. a. selective d istortion b. incorrect problem recognition c. lifestyle dissonance d. asocialization e. selective exposure ANS: A Researchers have found that cues such as brand names inf luence consumers' perception of products and brands. PTS: 1 REF: 171 OBJ: 05-8 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 78. On any g iven day, a person may be subjected to over 2,500 advertising messages but may only be aware of 10 to 20 of them. This is called: a. selective distortion b. selective learning c. sporadic reinforcement d. intermit tent selectivity e. selective exposure ANS: E Consumers use selective exposure to decide which stimuli to select (attend to) and which to ignore. PTS: 1 REF: 171 OBJ: 05-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model Product 79. Sami Lin is developing an advertising campaign t argeted to the same young audience that watched the X Games (a weeklong competition in a variety of extreme sports) on television. Which of the following actions might Lin take to help enhance the chances her targeted customers will pay attention to her ads? a. Use neutral sounds and colors that are similar to the programs the ads follow, so there is not m uch difference between the program and the ads. b. Create sexy ads to break through the ad clutter. c. Create ads that emphasize the least crucial att r ibutes of the brand to get customers to think about the ads. d. Use elderly celebrity spokespersons to endorse the p roducts as a grandparent would. e. Present the ads in a foreign language. ANS: B Research has indicated that sexier ads are more memorable among the younger audience. PTS: 1 REF: 171 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | TB &E Model Promotion 80. Manning bought a Schwinn Circuit bike for $1,300. A fter the purchase, he read an article about bicycles made by the Giant Bicycle Company, w hich makes a bike with most of the same features as the Schwinn Circuit. Manning p rocessed this newly received information to make i t more consistent with his prior opinion t hat the Schwinn is better than the Giant bike. Manning engaged in: a. intermit tent r einforcement b. faulty selectivity c. selective distortion d. selective retention e. selective exposure ANS: C Selective distortion occurs when consumers change or distort information t hat conflicts with their feelings or beliefs. PTS: 1 REF: 171 OBJ: 05-8 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 81. When consumers change or distort information that conflicts with their feelings or beliefs, it is called: a. selective distortion b. selective dissonance c. intermit tent reinforcement d. selective retention e. selective exposure ANS: A PTS: 1 REF: 171 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 05-8 TYPE: Def 82. Families of police officers often alter information they hear about officers who die in the line of duty. This _____ a llows them to live and function while their loved one is engaged in a potentially dangerous job without constant anxiety. a. selective retention b. c. d. e. selective distortion selective exposure faulty selectivity adaptive stimulus ANS: B Selective distortion involves changing or distorting the communication message to make the message seemingly agree with p reconceived opinion. PTS: 1 REF: 171 OBJ: 05-8 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 83. Cassandra, an accounting major, read an article s tating that accounting graduates are receiving the highest starting salary offers for business majors. The article also stated that marketing majors start with lower salaries but surpass all other majors' salaries within ten years. A week later Cassandra doesn't r emember reading this last part of the article, just the fi rst part. This is an example of: a. selective distortion b. selective exposure c. intermit tent reinforcement d. selective socialization e. selective retention ANS: E Selective retention is the process whereby a consumer remembers only information that supports personal feelings or beliefs. PTS: 1 REF: 172 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 84. _____ occurs when consumers remember only information that supports their personal feelings or beliefs. a. In termit tent reinforcement b. Selective exposure c. Selective retention d. Faulty selectivity e. Selective distortion ANS: C PTS: 1 REF: 172 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 05-8 TYPE: Def 85. In the late 1990s, DaimlerChrysler established a department solely to work on the sound of its car doors. The company understood the connection consumers make between sound and quality. This was one of the ways the automobile manufacturer was attuned to consumers’: a. self-image b. personality c. lifestyle d. perception e. reference groups ANS: D The process of selecting, organizing, and interpreting the stimuli that are bombarding consumers daily is called perception. (According to a global research project regarding the role of the senses in creating brand experiences, sight is the most important, followed by smell. Touch ranked lowest.) PTS: 1 REF: 171-172 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 86. An ad for Boys & Girls Club of America calls i t "the positive place for kids" and shows a sample membership card. To which of Maslow's needs does this ad most likely appeal? a. physiological b. social c. esteem d. safety e. self-actualization ANS: B PTS: 1 REF: 173 | 174 TOP: AACSB Reflective Thinking | TB &E Model Promotion OBJ: 05-8 TYPE: App 87. Ranked from the lowest to the highest level, Maslow's hierarchy of needs model includes: a. safety, esteem, social, physiological, and self-actualization needs b. physiological, social, esteem, economic, and self-actualization needs c. psychological, safety, economic, esteem, and social needs d. physiological, safety, social, esteem, and selfactualization needs e. safety, economic, social, esteem, and self-development needs ANS: D PTS: 1 REF: 173 | 174 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 058 TYPE: Def 88. According to Maslow's hierarchy of needs model, the fi rst needs most people would t ry to satisfy are their _____ needs. a. safety b. physiological c. economic d. esteem e. derived ANS: B PTS: 1 REF: 173 | 174 TOP: AACSB Reflective Thinking | TB&E M odel Customer OBJ: 05-8 TYPE: Def 89. Moss Security is a home security business. I ts slogan, “Alarmed? You should be,” is designed to appeal to consumers’: a. esteem needs b. economic needs c. safety needs d. physiological needs e. social needs ANS: C The security company’s selling point is the safety it provides. PTS: 1 REF: 173 OBJ: 05-8 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Promotion 90. Advocacy groups lobbying for support money may be inflating the number of people who suffer or die from particular m aladies such as AIDS, cancer, and Alzheimer's. These groups are using fear as a m arketing tool to specifically target the _____ needs in Maslow's hierarchy. a. esteem b. safety c. physiological d. social e. self-actualization ANS: B These fear appeals target safety needs. PTS: 1 REF: 173 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer 91. Ralph played mediocre golf for over 20 years. Then he retired and vowed to improve his golf game by buying one of the new golf clubs that promise increased d istance and have a $700 price tag. According to Maslow's hierarchy of needs, Ralph is most l ikely t rying to satisfy his _____ needs. a. social b. safety c. self-actualization d. physiological e. psychological ANS: C Ralph is engaged in a self-improvement process. PTS: 1 REF: 174175 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | T B &E Model Product 92. The slogan used by the manufacturer of Jaguar automobiles, “ Don't dream it. Drive it.” was intended to appeal to consumers’: a. physiological needs b. social needs c. safety needs d. esteem needs e. self-actualization needs ANS: E The slogan i ndicates that the ownership of the car will allow the user to realize his or her full potential. PTS: 1 REF: 174-175 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer | TB&E Model Product 93. If an advertiser wanted to create ads for a r estaurant that stimulate the self-actualization motivation, i t would create ads that: a. emphasize hunger b. emphasize that only those people who want to tell others they have r isen to the top of their profession use the restaurant c. inform consumers about the cleanliness of the food preparation areas and procedures d. show people enjoying others' company while eating in the restaurant e. indicate eating in the restaurant is what "you have earned and deserve" ANS: E Self-actualization needs stress self-fulfillment and selfexpression, or reaching the point in life at which "people are what they feel they should be." PTS: 1 REF: 174-175 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Promotion 94. The process that creates changes in behavior is called: a. selective adaptation b. c. d. e. learning involvement manipulation attitude adjustment behavior normalization OBJ: 05-8 TYPE: Def ANS: B PTS: 1 REF: 175 TOP: AACSB Reflective T hinking | TB &E Model Strategy 95. Manufacturers of consumer goods often give away t r ial sizes of new products to encourage: a. experiential learning b. selective perception c. continuous reinforcement d. conceptual learning e. problem recognition ANS: A T rial behavior reinforces experiential learning, often leading to repeat behavior. PTS: 1 REF: 175 O BJ: 05-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 96. S tarbucks coffee company introduced four premium f lavors of Starbucks ice cream hoping consumers would t ransfer their love of Starbucks coffee to ice cream. With only a li t tle p ublicity and a one-time limi ted outdoor campaign, quarts of Starbucks coffee ice cream f lew off the shelves. Starbucks used _____ to promote its new frozen product. a. stimulus d iscrimination b. selective retention c. stimulus generalization d. social learning e. product r einforcement ANS: C Stimulus generalization occurs when one response (positive atti tude for a product) is extended to a second, similar stimulus (new product, same brand). PTS: 1 REF: 175 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 97. Kent Longino is the marketing vice-president for Andersen, one of the largest m anufacturers of windows in the world. He is directing the int roduction of a glass-encased sunroom that can be assembled in a weekend. He wants to capitalize on Andersen's existing r eputation. Which learning method should he attempt to stimulate when int roducing the new product? a. conceptual learning b. experiential learning c. repetition learning d. s timulus generalization e. stimulus discrimination ANS: D Marketers often use a successful, well-known brand name for a family of products because it gives consumers familiari ty with and knowledge about each product in the brand family. PTS: 1 REF: 175 O BJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 98. Celestial Seasonings is a well-recognized brand of tea. I t has differentiated i tself from t raditional teas by producing herbal teas and teas using the more exotic white tea leaves. I t has recently int roduced Celestial Seasonings Tea Dreams ice cream, a product it hopes will be successful due to consumers' awareness of the brand. Celestial Seasonings is relying on _____ to make i ts new product a success. a. conceptual learning b. experiential learning c. r epetition learning d. stimulus generalization e. stimulus discrimination ANS: D Marketers often use a successful, well-known brand name for a family of products because it gives consumers familiarity with and knowledge about each product in the brand family. PTS: 1 REF: 175 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 99. TAG Heuer is a prestigious brand of watch that is sold as a luxury product. I t has a r eputation based on quality and attention to details. When the company introduces new t imepieces, i t can count on a wellestablished market already existing for the new product d ue to: a. perceptual generalization b. stimulus discrimination c. perceptual discrimination d. selective distortion e. stimulus generalization ANS: E This is an example of stimulus generalization. I ts consumers assume that any product with the TAG Heuer brand is worth p urchasing. PTS: 1 REF: 175 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 100. There are many t ravel agencies in the world. One of the largest is Thomas Cook, which is in England. The slogan the t ravel agency has used for years is, " Don't just book it. Thomas Cook i t." The slogan implies that if you are making any t ravel p lans, you should call the Thomas Cook agency and not some other agency. What learning t heory is Thomas Cook relying on with this advertising claim? a. selective retention b. s timulus discrimination c. perceptual generalization d. selective generalization e. stimulus generalization ANS: B Stimulus discrimination occurs when consumers learn to d ifferentiate among similar products. PTS: 1 REF: 176 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 101. _____ is the ability to differentiate between similar objects such as packages of different brands of aspirin. I t is a learned behavior. a. I ncentive discrimination b. Stimulus generalization c. Selective perception d. Selective generalization e. Stimulus discrimination ANS: E PTS: 1 REF: 176 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 05-8 TYPE: Def 102. Christian Pawl holds the opinion that the Black Diamond Skylight three-person three-season tent is the most amazing tent on the market. He thinks the tent is equally good in pouring west coast rain or sweltering desert heat. Pawl is so convinced of the tent’s versatili ty that he would have been willing to pay much more than the $430 retail price of this tent. This is a description of Pawl’s _____ about the Black Diamond tent a. beliefs b. attitudes c. standards d. motives e. valuations ANS: A A belief is often developed about the att r ibutes of a product. Att itudes, however, are more complex and encompass values. PTS: 1 REF: 176 OBJ: 05-8 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 103. Connors Bros., a maritime seafood products manufacturer, plans to market its sardines to Ontario consumers through a campaign pushing the li t t le fish as a positive food choice. The campaign aims to nullify t he notion that sardines are boring by stressing their health benefits and their savory qualities. Connor Bros. is t rying to: a. change negative beliefs about product att ributes b. i nt roduce new product att r ibutes c. create new beliefs toward changed product att r ibutes d. d iscover atti tudes toward its product's att ributes e. strengthen existing positive beliefs about product att ributes ANS: A PTS: 1 REF: 177 OBJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product 104. An attitude toward a product is: a. easy to change b. a person's point of view about the product c. the same as a belief d. the same as "intention to buy" e. of short duration ANS: B "Point of v iew" is a simpler way to state "learned tendency to respond consistently." Both denote an opinion, which can change over time. PTS: 1 REF: 176 OBJ: 05-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 105. _____ tend to be more enduring and complex than beliefs, because they rest on an individual’s value system. a. Motivational cues b. Cultures c. Lifestyles d. Perceptions e. Atti tudes ANS: E PTS: 1 REF: 176 TOP: A ACSB Reflective Thinking | TB&E Model Customer OBJ: 05-8 TYPE: Def 106. Many consumers think of Post Grape-Nuts cereal as a product their grandfathers ate. This makes i t unacceptable to a large part of the consumer market. Without changing the product, Post r an a series of Grape-Nuts ads that described the sweet, nutty taste of the cereal and encouraged people to t ry i t as a topping on yogurt for something good to eat. Post was t rying t o: a. add new beliefs about product att ributes b. discover attitudes toward the product a tt r ibutes c. strengthen existing positive beliefs about product att r ibutes d. appeal to existing beliefs about product att ributes e. create new beliefs toward changed product a tt r ibutes ANS: A Existing negative beliefs about product att r ibutes are the most fi rmly entrenched and difficult to change. PTS: 1 REF: 178 OBJ: 05-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product 107. A few years ago, t ea was a product with relatively li t t le growth and was considered to be a product for the old and the middle-aged. Then tea manufacturers started promoting the health benefits of t ea. Since the introduction of the research on how tea provides the body with useful antioxidants, tea consumption has increased by more than 25 percent, and i t appears i ts market share will continue to grow, especially among young women in their twenties. This is an i llustration of how promotion can: a. change the importance of beliefs about product a tt r ibutes b. change beliefs about product att ributes c. add new beliefs about product a tt r ibutes d. reinforce current beliefs about product att r ibutes e. discover consumer needs about product att ributes ANS: B The companies were attempting to change beliefs about a p roduct att r ibute from negative to positive. PTS: 1 REF: 177 OBJ: 05-8 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 108. In the 1970’s, Mobil ran an extensive campaign to convince drivers that detergent additives to Mobil’s gasoline actually cleaned car engines. Mobil’s campaign was an attempt to: a. create new beliefs toward changed product att r ibutes b. strengthen existing positive beliefs about product att ributes c. appeal to existing beliefs about product att ributes d. discover atti tudes toward its p roduct's att r ibutes e. create new beliefs about the product att r ibutes ANS: E Mobil was t rying to make customers see it as different from other brands of fuel. PTS: 1 REF: 178 O BJ: 05-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product New Car Purchase Zena has been promoted to vice-president at the management consulting fi rm she works for. Her status has led her to consider the need for a new car. Her t rusty lit t le Volkswagen Beetle had over 100,000 miles on i t and no longer seemed appropriate. Susanne, another vice-president, suggested that Zena consider a car produced in the United S tates because the consulting fi rm she works for has a policy of supporting U.S. businesses. Zena began her quest for a new car by visiting several car dealers and obtaining pamphlets on the models she is considering. She also made a t r ip to the library to study Consumer Reports magazine and other consumer rating publications to see what the experts think. F inally, after evaluating all options, Zena decided to purchase a new Chrysler. She believes t he car is a good fi t with her new image and position in her company. Now that she has p urchased the car, she has seen more advertisements touting i ts features than she ever noticed before. She also has noticed many models of her car on the road. Zena thinks the fact that so many others are driving the same model car as hers is proof that she made a good decision. 109. Refer to New Car Purchase. Zena's visits to the dealers and to the l ibrary best represent which step of the consumer decision-making process? a. need r ecognition b. information search c. evaluation of alternatives d. stimulus e. postpurchase behavior ANS: B These activities best represent information search. Zena must collect the i nformation before she can begin evaluating alternatives. PTS: 1 REF: 148 OBJ: 05-2 TOP: A ACSB Reflective Thinking | TB&E Model Customer 110. Refer to New Car Purchase. In noticing similar cars on the road and advertising supporting her decision, Zena is reducing feelings of inner tension. The feelings of inner tension are called: a. selective retention b. perceptual distortion c. postpurchase action d. cognitive dissonance e. response attitudes A NS: D Cognitive dissonance is the term for postpurchase tension and anxiety. PTS: 1 REF: 151 OBJ: 05-3 TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model P roduct 111. Refer to New Car Purchase. Which type of consumer buying decision does Zena's purchase represent? a. routine response b. limi ted decision making c. extensive decision making d. impulse buying e. motivational response ANS: C Consumers practice extensive decision making when purchasing unfamiliar, expensive products or an i nfrequently bought i tem. PTS: 1 REF: 153 OBJ: 05-4 TOP: AACSB Reflective Thinking | T B &E Model Customer 112. Refer to New Car Purchase. Zena spent a considerable amount of time and effort on her new car purchase. This suggests the car is a(n) _____ product for Zena. a. impulse b. low-involvement c. routine response d. nondurable e. high-involvement A NS: E A consumer who deliberately searches for information about products and brands in order to evaluate them thoroughly is most likely engaging in high-involvement decision m aking. PTS: 1 REF: 153 OBJ: 05-4 TOP: AACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 113. Refer to New Car Purchase. Susanne has influenced Zena's choice of a new automobile. In this instance, Susanne is acting as a(n): a. dissociative r eference b. purchase catalyst c. gatekeeper d. social reference e. opinion leader ANS: E Susanne is acting as an opinion leader in that she represents the reference group Zena is now a part of. PTS: 1 REF: 165 OBJ: 05-6 TOP: AACSB Reflective Thinking | TB &E Model Customer 114. Refer to New Car Purchase. If you evaluate Zena's choice of a Chrysler based on Maslow's needs hierarchy, the car was bought to meet _____ needs. a. self-actualization b. security c. social and esteem d. safety e. physiological ANS: C Zena purchased the car to meet social needs. The car provides Zena with a sense of belonging in her new position. PTS: 1 REF: 173-174 OBJ: 05-8 TOP: AACSB Reflective Thinking | TB &E Model Customer Coca-Cola I t is almost 100 degrees outside, and Ed is on his way to the supermarket to buy g roceries. His air conditioner is broken, so he is hot and thi rsty. Ed notices a billboard featuring an ice-cold Coca-Cola. Ed remembers he is out of Coke. Once in the store, Ed heads straight for the soft-drink aisle and picks up a twelve-pack of Coke. 115. Refer to Coca-Cola. Ed's Coke purchase best represents which type of consumer buying decision? a. r outine response behavior b. c. d. e. limited decision making extensive decision making situation convenience motivational response ANS: A The fact Ed is out of Coca-Cola suggests i t is a frequently purchased product, typically a routine response behavior. PTS: 1 REF: 152 OBJ: 05-4 TOP: AACSB Reflective Thinking | TB&E Model Customer 116. Refer t o Coca-Cola. Ed knows M ichael Jordan (a former basketball all-star) drinks Gatorade, and he thinks he can be more like Jordan if he drinks it. Because Ed very much wants to be like Jordan, he purchases Gatorade in addition to Coke. In this example, M ichael Jordan is acting as a(n): a. purchase catalyst b. opinion leader c. consumer advocate d. dissociative r eference e. cultural icon ANS: B An opinion leader is a person who influences others. PTS: 1 REF: 165 OBJ: 05-6 TOP: AACSB Reflective Thinking | TB&E Model Customer | TB &E M odel Product 117. Refer to Coca-Cola. According to Maslow's hierarchy of needs model, w hich need was Ed t rying to satisfy when he purchased the Coke? a. self-actualization b. esteem c. safety d. social e. physiological ANS: E Thirst is a physiological need on Maslow's h ierarchy. PTS: 1 REF: 173 OBJ: 05-8 TOP: AACSB Reflective Thinking | TB &E Model Customer Day Care Fiona is considering a day-care facility for her five-week-old daughter K ate. She has been visiting daycare centers for the past two weeks and has interviewed caregivers at eight different centers. I t is extremely important to Fiona that Kate be s timulated intellectually and fed according to schedule. After considering all eight day-care centers, Fiona chose PerfectCare. While she is quite pleased with her choice, she does continue to wonder if she made the correct decision. 118. Refer to Day Care. Fiona's visits to t he daycare centers and interviews with the caregivers represent which step of the consumer decision process? a. postpurchase behavior b. stimulus c. evaluation of a lternatives d. information rejection e. need recognition ANS: C These activities best r epresent evaluation of alternatives. PTS: 1 REF: 151 OBJ: 05-2 TOP: AACSB Reflective T hinking | TB &E Model Customer 119. Refer to Day Care. Fiona's uncertainty about w hether she made the correct decision and the feelings that go along with this uncertainty a re called: a. selective retention b. perceptual distortion c. postpurchase action d. cognitive d issonance e. routine response ANS: D Cognitive dissonance is the term for postpurchase t ension and anxiety. PTS: 1 REF: 151 OBJ: 05-3 TOP: AACSB Reflective Thinking | TB &E M odel Customer 120. Refer to Day Care. Fiona spent a significant amount of t ime and effort in selecting the day-care center for Kate. This suggests the center is a(n) _____ p roduct for Fiona. a. impulse b. low-involvement c. routine response d. convenience e. highinvolvement ANS: E A consumer who deliberately searches for information about products and evaluates alternatives thoroughly is most likely engaging in high-involvement decision m aking. PTS: 1 REF: 153 OBJ: 05-4 TOP: AACSB Technology | TB &E Model Product 121. Refer to Day Care. Fiona's selection of a day-care facility represents which type of consumer buying decision? a. routine response b. limited decision making c. extensive decision m aking d. impulse buying e. motivational response ANS: C Consumers practice extensive decision making when purchasing products that are extremely important to them. PTS: 1 REF: 153 OBJ: 05-4 TOP: AACSB Reflective Thinking | TB&E Model Customer 122. Refer t o Day Care. Shannon, Fiona's best friend, recommended PerfectCare because she takes her daughter there. Shannon was acting as a(n): a. family member b. c. d. e. opinion leader d issociative reference busybody gatekeeper ANS: B An opinion leader is a person who i n fluences others. PTS: 1 REF: 165 OBJ: 05-6 TOP: AACSB Reflective Thinking | TB&E M odel Customer Interface In terface, a manufacturer of f loor covering products, has recently entered into an agreement with Cargill, Inc. and Dow Chemical Company to develop a carpeting manufactured from corn fiber, rather than the t raditional nylon. In terface hopes t o develop a biodegradable carpet ti le that will be sold to the public at prices only slightly h igher than nylon carpet t iles. In terface's CEO has repeatedly said the mission of his company is to look for manufacturing materials that are renewable and are not petroleum dependent. 123. Refer to In terface. A consumer who was in the market for f loor covering would be most likely to locate information on the biodegradable f loor tiles during which s tage of the consumer decision-making process? a. evaluation of alternatives b. internal i nformation search c. external information search d. need recognition e. postpurchase behavior ANS: C The information would come from an outside source since it is a new p roduct. PTS: 1 REF: 148 OBJ: 05-2 TOP: AACSB Reflective Thinking | TB &E Model Customer 124. Refer to In terface. Which of the following is the BEST example of a nonmarketing-controlled information source for f loor t iling? a. a store display showing the various colors of t iles available b. an ad in Better Homes & Gardens for f loor tiles c. a salesperson at a store that specializes in f loor coverings d. a brochure explaining why the corn-based f loor t iles are superior to nylon ones e. a discussion with co-workers about the best f loor t iles to buy ANS: E Any kind of word-of-mouth communication or discussion about a product would be an example of nonmarketing-controlled information sources. PTS: 1 REF: 148 OBJ: 05-2 TOP: AACSB Reflective Thinking | TB &E Model Customer 125. Refer to In terface. To reduce potential _____, Interface could include a letter in every box of corn-fiber carpet ti les congratulating the buyer on helping to protect the environment. a. cognitive dissonance b. buyer repentance c. consumer affectation d. affective dissonance e. consumer cognition ANS: A Postpurchase messages are one way marketing managers can r educe cognitive dissonance. PTS: 1 REF: 151-152 OBJ: 05-3 TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model Product 126. Refer to In terface. Which of the following is an example of a culture influence on consumer buying decisions? a. personality of the buyer b. how much the buyer knows about actions he or she can take to save the environment c. lifestyle of the buyer d. the buyer's motivation for buying the cornfiber carpet tile e. none of these are examples of cultural inf luences ANS: E Personality and l ifestyle are examples of individual factors. Knowledge and motivation are examples of psychological factors. PTS: 1 REF: 156 OBJ: 05-5 TOP: AACSB Reflective Thinking | TB &E M odel Customer 127. Refer to In terface. In terface is hoping its sales will be driven by the enduring belief that people should protect our environment for our children. This belief is an example of how _____ inf luence(s) consumer buying decisions. a. political b. culture c. i ndividuality d. psychological needs e. family ANS: B This belief that people should protect and save the environment is an example of a cultural value. PTS: 1 REF: 156 OBJ: 05-5 T OP: AACSB Reflective Thinking | TB&E Model Customer Women's Athletic Wear Between 1987 and 2000, the market for women's athletic wear increased by more than $3 b illion while the market for men's athletic wear remained unchanged. Women are no longer satisfied with sporting goods stores that act as if they are serving women's needs by carrying jogging bras and biking shorts and otherwise assuming women can use male gear. L ike men, women want a product that will increase their performance, but they also want something else--a product that will be in tune with their bodies. 128. Refer to Women's A thletic Wear. One of the biggest differences between men and women consumers is that men tend to stay loyal to a store. Women are much more ready to shop around--perhaps, because they demand more from their products than men. Andrea wants to start jogging, but she has been told she needs to find a well-fit t ing jogging bra. Andrea is at the first s tage of the: a. product differentiation b. consumer decision-making process c. market segment d. product positioning e. selective perception ANS: B PTS: 1 REF: 146 OBJ: 05-2 T OP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product 129. Refer to Women's Athletic Wear. Andrea purchased a copy of Fit magazine because it contained an article about selecting the r ight jogging bra. The acquiring of the magazine i ndicates Andrea is engaged in: a. finding an external information source b. deciding w hether she has a want or a need c. locating an internal information source d. avoiding i nformation generalization e. avoiding problems with selective retention ANS: A PTS: 1 REF: 148 OBJ: 05-2 TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E M odel Product 130. Refer to Women's Athletic Wear. Andrea has decided she will buy either a N ike or a Reebok bra because these brands are designed to offer the greatest support for women athletes. These two brands would be her: a. cognitive choices b. perceptual favorites c. choice criteria d. evoked set e. comparative set ANS: D PTS: 1 REF: 150 OBJ: 05-2 TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 131. Refer to Women's Athletic Wear. One of the problems in the past with women's athletic wear was t hat the clothing was not designed to fit the female anatomy. Women would buy the clothing needed to enjoy a sport and learn about i ts inadequacies after they had worn the i tem for a w hile. In other words, many women in years past experienced: a. evoked dissatisfaction b. perceptual inaptitude c. elapsed motivation d. a conditioned reflex e. cognitive dissonance A NS: E PTS: 1 REF: 151 OBJ: 05-3 TOP: AACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 132. Refer to Women's Athletic Wear. Which of the following factors influence how involved women are in the purchase of athletic gear? a. level of participation in the sport b. perceived r isks from buying ill-fi t ted helmets, shoes, etc. c. how well athletics clothes bought in the past have fi t d. whether the sports is done in a g roup or individual setting e. all of the choices influence involvement ANS: E PTS: 1 REF: 153-154 OBJ: 05-4 TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E M odel Product 133. Refer to Women's Athletic Wear. The enduring belief that it is a person's responsibility to take good care of his or her body and engage in regular exercise to ensure its well-being is an example of a: a. b. c. d. e. perceptual dilemma value marketinginformation source cognitive atti tude conditioned impulse OBJ: 05-5 ANS: B PTS: 1 REF: 157 TOP: AACSB Reflective Thinking | TB&E Model Customer 134. Refer to Women's A thletic Wear. The use of tennis stars Venus and Serena Williams in Nike ads indicates how m arketers use the concept of _____ to promote products to women. a. opinion leaders b. cognitive satisfaction c. personal inf luences d. situational influences e. lifestyle definition A NS: A PTS: 1 REF: 165 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 05-6 135. Refer to Women's Athletic Wear. To capture the female market for sports atti re, sporting goods retailers are t rying to change customers' _____ the stores by sprucing up t heir stores, brightening interiors, and setting up women's sections in the fronts of the s tores. a. cognitions about b. subliminal interactions with c. perceptions of d. selective motivation in e. evoked atti tudes toward ANS: C PTS: 1 REF: 171 OBJ: 05-8 TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Creativity 136. Refer to Women's Athletic Wear. The fact that many women do not develop store loyalty and perceive a ll athletic clothes retailers to be similar indicates a tendency to engage in: a. stimulus generalization b. subliminal perception c. generalized learning d. stimulus discrimination e. selective distortion ANS: A PTS: 1 REF: 175-176 TOP: AACSB Reflective Thinking | TB &E M odel Customer OBJ: 05-8 137. Refer to Women's Athletic Wear. To reach the women's m arket, Nike has created Nike Goddess stores that it hopes will offer the atmosphere and merchandise to attract and keep female athletes coming back. Nike is t rying to cause its women customers to use: a. stimulus generalization b. subliminal perception c. generalized learning d. stimulus discrimination e. selective distortion ANS: D PTS: 1 REF: 176 OBJ: 058 TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB &E Model Customer ESSAY 1. Why do marketers study consumer behavior? ANS: A marketer must understand consumer behavior to develop a proper marketing mix. A thorough knowledge of consumer behavior can assist the marketer in selecting the proper target market according to values, l ifestyles, and demographic and social characteristics. Fur thermore, an understanding of culture and personality variables can also reduce uncertainty when creating a marketing m ix. PTS: 1 REF: 146 OBJ: 05-1 TOP: AACSB Analytic | TB&E Model Customer 2. Assume t he your current small television set (for which you paid $69.99 several years ago) has developed wavy lines across the screen and makes the people in your favorite programs sound as though they are using cheap walkie-talkie radios. Therefore, you have decided to work all summer to save money for the ultimate $1,200 high-definition television with surround sound. Trace the steps of your decision process for purchasing your new television. A NS: For this high-involvement decision process, you would use extensive decision-making and go through the following steps: 1. 2. 3. 5. 6. NEED RECOGNITION: Your present t elevision has wavy lines and poor sound quality, and you desire a new television set. I NFORMATION SEARCH: You check both internal and external sources of information such as your own knowledge, opinions of peers, information from magazines, and the advice of television sales personnel. EVALUATION OF ALTERNATIVES: You consider product a tt r ibutes of various television brands and models in an evoked set. These att ributes might i nclude sound quality, looks, price, warranty, brand name reputation, components, and so on. PURCHASE: You buy the hi-def television after judging alternatives. POSTPURCHASE B EHAVIOR: You are satisfied with your purchase, which was the result of extensive decision making. Alternatively, you are dissatisfied with your purchase, return the t elevision, and begin the process again. PTS: 1 REF: 146-152 OBJ: 05-2 | 05-3 TOP: AACSB A nalytic | TB&E Model Customer 3. Assume you have decided to purchase a new f latscreen television with surround sound. Describe your internal information search. Then name the two types of external information sources. For each source, give two specific examples of information sources you might use. ANS: An internal information search is the p rocess of recalling past information stored in memory. This stored information would come f rom previous experience with television sets. By searching your memory, you could r emember good and bad features--such as weight, sound quality, picture quality, etc.--you have seen on other sets. MARKETING-CONTROLLED information sources could include m ass-media advertising about f latscreen televisions (radio, television, newspaper, or directmail); sales promotion (contests, sweepstakes, displays, premiums, etc.); salespeople at electronics stores; and finally, product labels and warranties for televisions. N ONMARKETING-CONTROLLED information sources could include personal experience ( trying out or observing television sets); personal sources (family, friends, acquaintances, and coworkers); and public sources (Underwri ters Laboratories, Consumer Reports, or other consumer-rating organizations). PTS: 1 REF: 148-149 OBJ: 05-2 TOP: AACSB Analytic | T B &E Model Product 4. Assume you have decided to purchase a mobile telephone. List and b riefly describe three factors that may affect the extent of your information search. ANS: S tudents will determine numerous factors that will affect the extent of an information search. Some possible examples follow: PERCEIVED RISK. Because the decision to p urchase a mobile phone may be relatively r isky due to high cost, the consumer may spend more t ime searching for alternatives or gathering information. Social r isks may also cause t he consumer to be more careful in the search because the mobile telephone is an example of "conspicuous consumption" and is socially visible. Also, i t takes effort and t ime to gather i nformation. At a certain point, the consumer may decide the value of additional i nformation about mobile phones is not worth the effort to obtain the information. K NOWLEDGE. If the consumer knows lit t le about the product, a more extensive i nformation search would be necessary to give the consumer enough knowledge to feel confident about making a decision. People lacking confidence about information will continue an information search even if they are extremely knowledgeable. PRIOR E XPERIENCE WITH THE PRODUCT. If the consumer has already had experience with a certain brand of mobile telephone, the information search will be limited because brand p references may have already been established, and the perceived r isk will be lower. I NTEREST. How important is the mobile telephone in solving a problem or satisfying needs and wants? If the mobile phone is simply "neat to have" and the consumer has other phones, t he information search might not be as extensive as the one for a consumer who finds a mobile phone vital to his or her job. More interested consumers spend more t ime searching for information and alternatives. I NVOLVEMENT LEVEL. A mobile telephone may be a h igh-involvement product for a student and a low-involvement product for an executive. The h igher the level of involvement, the more extensive the information search is likely to be. O ther i tems students might mention include confidence in one's decision-making abilit ies, p rior experience with the product class, and in fluence of reference groups and other motivations. PTS: 1 REF: 149-150 | 152-153 TOP: AACSB Analytic | TB&E Model Product 5. How can marketers and consumers reduce cognitive dissonance? OBJ: 05-2 | 05-4 ANS: Cognitive dissonance can be reduced by both consumers and marketers. Consumers can t ake steps to reduce dissonance by obtaining new information that reinforces their positive i deas about the product and by avoiding information that contradicts the purchase decision. F inally, consumers can choose to return the product. Marketers can help consumers reduce d issonance by communicating with them. Postpurchase letters, dissonance-reducing s tatements in instructions, and advertising that displays superiority over competing brands can all relieve dissonance. PTS: 1 REF: 151-152 OBJ: 05-3 TOP: AACSB Analytic | TB&E M odel Customer | TB&E Model Product 6. Assume you and some of your fellow students have decided to dine at a five-star restaurant upon successfully completing this marketing class. What type of consumer decision making will take place? Why did you choose this t ype? ANS: Acquiring information about an unfamiliar brand in a familiar product category is called limi ted decision making. In this case, limited decision making will take place for t he following reasons: • • • • The student will seek information about alternative r estaurants. The student may rely on the advice of other students to help decide on the r estaurants, which may take more t ime. An extensive amount of effort in terms of i nformation seeking is not reasonably possible. The costs and r isks involved are moderate. PTS: 1 REF: 153 OBJ: 05-4 TOP: AACSB Analytic | TB &E Model Customer 7. Assume you have gone to the corner convenience store to pick up a bar of your usual brand of deodorant soap. What type of decision making will take place? How would this differ from the decision m aking that would take place if the store was out of your regular brand? ANS: With a lowinvolvement product such as bars of soap, routine response behavior would take place, because the product is low priced and the same brand is frequently purchased. The p urchase would be habitual. If the store was out of the regular brand, limi ted decision m aking would take place. Acquiring information about an unfamiliar brand in a familiar p roduct category (such as soap) is called limi ted decision making. Some effort would have to be expended on evaluating alternatives or comparing prices if the consumer was pricesensitive. PTS: 1 REF: 151-153 OBJ: 05-4 TOP: AACSB Analytic | TB &E Model Product 8. W hat is extensive decision making? When would a person use extensive decision making? Name two products that would require extensive decision making when purchased for the f irst t ime and would require limi ted decision making in subsequent purchases. ANS: A consumer practices extensive decision making when purchasing an unfamiliar, expensive p roduct or an infrequently bought i tem. This process is the most complex type of decision m aking because the buyer uses many criteria for evaluating alternative brands and spends m uch time seeking information. Buying a car, an appliance, a stereo system, or other expensive, durable i tem would require extensive decision making for the first purchase. However, as the purchase is repeated, the buyer may feel experienced in decision making and may step back to limi ted decision making. For example, a person who has bought several cars may resort to the heuristic, "I have always bought Fords and have been satisfied, so my next car will be a Ford." PTS: 1 REF: 153 OBJ: 05-4 TOP: AACSB Analytic | T B&E Model Customer 9. Assume you have been invited to join a social club whose members typically wear leather bombardier jackets. You have never bought or worn a leather jacket before. List and briefly describe four factors that could in fluence your level of i nvolvement in the purchase of the leather jacket. How involved will you be in this purchase and why? ANS: The factors that affect involvement level are previous experience, interest, perceived r isk of negative consequences, situation, and social visibili ty. PREVIOUS E XPERIENCE. Because there is no previous experience with the product, level of i nvolvement will be higher because of unfamiliari ty with the product. I NTEREST. Areas of i nterest vary by individual. The student may or may not be interested in leather jackets. However, purchasing the leather jacket indicates an interest in the social group and p robably a high level of involvement. PERCEIVED RISK OF NEGATIVE CONSEQUENCES. Several types of r isks are involved in the purchase. With an expensive j acket, loss of purchasing power and opportunity costs result in financial r isk. A social r isk is taken, because wearing a leather jacket may cause a positive or negative reaction from other peer groups. For example, animal r ights activists might criticize the purchase of a leather jacket, or other peer groups might view the purchase as frivolous. Finally, there is a psychological r isk involved in the form of anxiety or concern about whether the "right" j acket has been purchased and is acceptable to other members of the social club. S ITUATION. The circumstances of the social club make the leather jacket a highinvolvement purchase. SOCIAL VISIBI L I TY. Because a leather jacket is a social and public d isplay, wearing the jacket makes a statement about the individual. This would also make t he purchase a high-involvement one. PTS: 1 REF: 153-154 OBJ: 05-4 TOP: AACSB A nalytic | TB&E Model Customer | TB&E Model Product 10. Most consumer decision m aking is in a low-involvement setting; therefore, a consumer is often not seeking many of t he products marketers are t rying to sell. What tactics can a marketer use to increase sales of a low-involvement product? Explain the logic of your reasoning. ANS: Because problem r ecognition for low-involvement purchases rarely occurs until the consumer is in the store, t he marketer must use attention-getting devices in the store. These include attractive packaging and in-store displays. Marketers can also provide incentives in the form of sales p romotions, including coupons, cents-off deals, rebates, and two-for-one offers. Finally, m arketers can link a product to a higher-involvement issue. For example, toothpaste can be p romoted as a product that fights plaque and cavities. Breakfast cereal can be promoted as a health food that reduces the r isk of cancer. PTS: 1 REF: 154-155 OBJ: 05-4 TOP: A ACSBAnalytic | TB&E Model Strategy 11. What is the difference between culture and subculture? Why do marketing managers need to understand culture and subculture? ANS: C ULTURE is the set of values, norms, attitudes, and other meaningful symbols that shape h uman behavior and the products of that behavior as they are t ransmitted from one generation to the next. Culture is environmentally oriented and dynamic. I t also gives order t o society by establishing common expectations. SUBCULTURES are subdivisions of culture on the basis of such things as demographic characteristics, geographic regions, political beliefs, religious beliefs, and national and ethnic backgrounds. Subcultures are homogeneous groups that share elements of the overall culture as well as unique elements. W ithin subcultures there are even greater similari ties in people's attitudes, values, and actions than within the broader culture. Without understanding culture, a fi rm has lit tle chance of effectively penetrating the market. As more companies expand their operations g lobally, the need to understand the cultures of foreign count ries becomes more important. M arketers should become familiar with the culture and adapt to it, or marketers can a ttempt to bring their own culture to other count ries. Marketers should also identify subcultures and then design special marketing programs to serve their needs. PTS: 1 REF: 156-157 | 159-160 OBJ: 05-5 TOP: AACSB Analytic | AACSB Diversity | TB&E Model Customer 12. List and briefly describe all categories of informal and formal reference g roups that affect your consumer purchase decision-making process. In doing so, demonstrate a sense of HOW these groups in fluence the process. ANS: Reference groups can be divided into two categories: DIRECT and I ND IRECT. Direct reference groups involve face-to-face membership groups that directly touch the life of the person. Indirect groups a re nonmembership groups. Direct groups have two subcategories: PRIMARY and SECONDARY reference groups. Primary membership groups include all groups with which t he student would interact regularly in an informal, face-to-face manner, such as family, f riends, and fellow students or employees. In teraction with secondary membership groups is less consistent and more formal. These might include clubs, fraternities/sororities, religious g roups, or professional groups. Indirect groups have two subcategories: ASPIRATIONAL and NONASPIRATIONAL. Aspirational groups are those of which the student is currently not a member but would like to be. These might include fraternities, sororities, campus g roups, or other clubs that the student wishes to join. Nonaspirational groups are those f rom which the student wishes to maintain a distance. These might include competing f raternities or sororit ies, failing students, or unsuccessful workers. PTS: 1 REF: 163-165 O BJ: 05-6 TOP: AACSB Analytic | TB &E Model Customer 13. List and briefly describe the f ive different roles various family members can play to influence the purchase decisionmaking process for a new houseboat. ANS: THE I N IT IATOR would be the person who i nitiates or suggests the purchase process. THE I NFLUENCER would be a person whose opinion is valued in the decision-making process. THE DECISION MAKER is the person or persons who actually make the decision to buy. THE PURCHASER is the individual who actually exchanges money for the product. THE CONSUMER is the user of the houseboat either as a passenger or as captain. PTS: 1 REF: 166-167 OBJ: 05-6 TOP: AACSB Analytic | T B &E Model Customer 14. The activities, values, and goals of reference groups directly i n fluence consumer behavior. What are reference groups? What are the three important i mplications reference groups have for marketers? ANS: Reference groups are groups in society that influence an individual's purchasing behavior. Those implications are: (1) they serve as information sources and inf luence perceptions, (2) they affect an individual's aspiration levels, and (3) their norms either constrain or stimulate consumer behavior. PTS: 1 REF: 163-167 OBJ: 05-6 TOP: AACSB Analytic | TB &E Model Customer 15. Define selfconcept. Choose a product (i.e., a good, service, or idea), and use that product to illustrate how a marketer would apply the idea of self-concept to market the product. ANS: Selfconcept is how an individual perceives himself or herself in terms of attitudes, perceptions, beliefs, and self-evaluations. Through self-concepts, consumers define their identity, which i n tu rn provides for consistent behavior. Self-concept is a combination of the ideal self-image and the real self-image. For any product chosen, the marketer would promote the product as a match to real self-image or a support for attaining the ideal self-image. The concept of self is important to marketers because i t helps explain the relationship between individuals' perceptions of themselves and their consumer behavior as expressed through their personalities. For examples, marketers of deodorant develop promotional ads linking use of t he product with success and popularity. PTS: 1 REF: 169-170 OBJ: 05-7 TOP: AACSB A nalytic | TB&E Model Customer | TB&E Model Product 16. Name and briefly define the t hree types of selective perception. Use an example to illustrate your work. ANS: SELECTIVE EXPOSURE occurs when consumers decide to notice some messages and i gnore others. The consumer is exposed only to those messages he or she wishes to process. Usually, the chosen messages are ones that are consistent with the consumer's attitudes and/or beliefs. SELECTIVE DISTORTION occurs when consumers change or distort i nformation that conflicts with their feelings or beliefs. The information may be interpreted i ncorrectly by the consumer. SELECTIVE RETENTION is the process whereby a consumer r emembers only that information that supports personal feelings or beliefs. PTS: 1 REF: 171-172 OBJ: 05-8 TOP: AACSB Reflective Thinking | TB &E Model Customer 17. Assume a consumer is inspecting the package of a new cereal. The label on the box is packed with fact-filled nut r i tion information. Give specific examples of what might occur during the selective perception process, including selective exposure, distortion, and retention. ANS: SELECTIVE EXPOSURE occurs when consumers decide to notice some messages and i gnore others. The consumer will be exposed to some of the messages on the cereal box. For example, the consumer might read parts of the nut ri t ion information but ignore the muffin r ecipes. SELECTIVE DISTORTION occurs when consumers change or distort information t hat conflicts with their feelings or beliefs. The information may be interpreted incorrectly by the consumer. For example, the consumer may look at the chart of U.S. Recommended Daily Allowances and note that the cereal is very nut r i tious. He or she may also read the i ngredients but miss the fact that the primary ingredient is sugar. SELECTIVE RETENTION is the process whereby a consumer remembers only that information that supports personal feelings or beliefs. When shopping for more cereal a week later, the consumer may have forgotten the price of the cereal and some of the relevant nut r i tion i nformation. However, the consumer may specifically remember that the cereal is high in f iber. PTS: 1 REF: 171-172 OBJ: 05-8 TOP: AACSB Analytic | TB&E Model Customer | T B &E Model Product 18. Define each level of Maslow's hierarchy of needs. For each of the f ive levels, briefly describe a marketing message appealing to this need level. ANS: P HYSIOLOGICAL NEEDS are the most basic level of human needs. These needs include food, water, and shelter. Text examples include thi rst-quenching Gatorade or satisfying h unger by eating a hamburger. SAFETY NEEDS include security and freedom from pain and discomfort. Examples include safety features in cars such as air bags, antilock brakes, and reinforced construction as well as home security systems. SOCIAL NEEDS involve a sense of belonging and love. Examples could include any messages advertising that the use of the product will bring love. These products might include cosmetics, clothes, jewelry, vacation packages, and perfume. ESTEEM NEEDS include self-respect, feelings of accomplishment, prestige, fame, and recognition. Examples include messages about Brooks B rothers clothiers, BMW and Lexus cars, and NeimanMarcus stores. SELFACTUALIZATION is the highest human need. I t refers to self-fulfillment and selfexpression. Examples are the message from the U.S. Army to "be all that you can be" and A merican Express advertisements. PTS: 1 REF: 173-174 OBJ: 05-8 TOP: AACSB Analytic | T B &E Model Customer 19. How do marketers differentiate between beliefs and atti tudes? A NS: Both beliefs and attitudes are closely linked to values. A belief is defined as an organized pattern of knowledge that individuals hold to be t rue about their world. Consumers form beliefs about products based on knowledge, faith, or hearsay. Sets of beliefs form the basis for an attitude. An atti tude is a learned tendency to respond consistently toward a given object. Atti tudes tend to be more enduring and complex than beliefs. A tt itudes also encompass an individual's value system, which represents personal s tandards of good and bad, r ight and wrong, and so forth. PTS: 1 REF: 176 OBJ: 05-8 TOP: A ACSB Reflective Thinking | TB&E Model Customer 20. Apply the three methods of changing attitudes or beliefs about brands to possibili ties for the marketing activities of Kellogg's Corn Flakes (or another breakfast cereal you are more familiar with). ANS: C HANGING BEL IEFS ABOUT ATTRIBUTES. Kellogg's could work to promote the image of a family cereal by changing consumers' beliefs about children's cereals. Any negative beliefs or misconceptions should also be changed. For example, consumers may believe the cereal is high in sugar, when actually it is not. CHANGING THE I MPORTANCE OF B EL IEFS. Kellogg's could start emphasizing certain att r ibutes that already exist. These m ight include environmental concerns (a package made of 100 percent recycled materials), or consumer preferences (the favorite choice of all consumers). ADDING NEW BEL IEFS. Kellogg's could t ry to expand the consumption habits of consumers by stating, "Corn f lakes a re not just for breakfast anymore." Kellogg's could also emphasize additional att r ibutes to t he ones already in use, such as more nut r ients (100 percent of the U.S. Recommended Daily Allowance), cancer prevention (high fiber), or patriotism (the American family and a r ed, white, and blue package). PTS: 1 REF: 177-178 OBJ: 05-8 TOP: AACSB Analytic | A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 21. Define s timulus generalization and stimulus discrimination and give an example of how each is used. ANS: Stimulus generalization occurs when one response is extended to a second s timulus similar to the first. Any product line extension will be a satisfactory example. S timulus discrimination occurs when consumers learn to differentiate among similar p roducts. There are many examples of stimulus discrimination. Students' examples should indicate how superficial differences are emphasized in promotions. PTS: 1 REF: 175-176 OBJ: 05-8 TOP: AACSB Reflective Thinking | TB&E Model Customer Chapter 6—Business Marketing TRUE/FALSE 1. Shimano sells the fishing and golfing equipment it manufactures to sporting goods stores, which in tu rn sell the equipment to anglers and golfers. Shimano is engaged in business marketing. ANS: T Shimano sells to a r eseller. PTS: 1 REF: 186 OBJ: 06-1 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Strategy 2. For a product to be called a business product, i t must be used to m anufacture other products, become part of another product, facilitate the normal operations of a fi rm, or be acquired for resale with no substantial change in form. ANS: T PTS: 1 REF: 186 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-1 T YPE: Comp 3. The emergence of the Internet has made buying and selling in the business m arket a process that is only efficient for the largest producer to pursue. ANS: F Even the smallest businesses are finding they are able to compete successfully with their largest competitors as a result of the In ternet. See Exhibit 6.1 PTS: 1 REF: 187 OBJ: 06-2 TYPE: Comp TOP: AACSB Technology | TB &E Model Online/Computer 4. Improved customer loyalty was developed by United Airlines through a strategic alliance with Starbucks. O nboard its planes, United now serves Starbucks gourmet coffee in cups that bear the logos of both companies. ANS: T One of the purposes of strategic alliances is relationship m arketing. PTS: 1 REF: 189 OBJ: 06-3 TYPE: App TOP: AACSB Technology | TB&E Model O nline/Computer | TB&E International Perspective 5. A keiretsu is an example of how s trategic alliances can make efficient use of relationship marketing. ANS: T PTS: 1 REF: 190 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-3 TYPE: Def 6. Any f i rm that purchases goods and services to make a profit by using them to produce other goods is part of the producer segment of the business market. ANS: T PTS: 1 REF: 191 T OP: AACSB Reflective Thinking | TB&E Model Product 7. The reseller market is the same as the retailer market. ANS: F The reseller market includes both retailers and w holesalers. PTS: 1 REF: 191 OBJ: 06-4 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Strategy 8. The government sector (federal, state and local) is a major segment of the business market ANS: T PTS: 1 REF: 191 TOP: AACSB Reflective Thinking | T B&E Model Strategy OBJ: 06-4 TYPE: Comp OBJ: 06-4 TYPE: Def 9. The single largest customer in the world is the U.S. federal government. ANS: T PTS: 1 REF: 192 TOP: A ACSB Reflective Thinking | TB&E Model Customer 10. The In ternet has eliminated the need for distributors. ANS: F This has not occurred although many experts thought it would. Relationships with knowledgeable distr ibutors have remained important. PTS: 1 REF: 188 OBJ: 06-2 TYPE: Comp TOP: AACSB Technology | TB&E Model Dist ribution 11. N A ICS is an industry classification system used by most nations of the world. ANS: F As its name indicates, NAICS (North American Industry Classification System) has been adopted only by Mexico, Canada, and the United States. PTS: 1 REF: 193 OBJ: 06-5 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Strategy 12. One useful aspect of the North American Industry Classification System (NAICS) is that it helps organizations i dentify potential new customers. ANS: T PTS: 1 REF: 193 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 06-5 TYPE: Comp OBJ: 06-4 TYPE: Def 13. If D uPont runs advertisements encouraging people to buy clothing that contains Lycra (a D uPont product), this would be an attempt to influence derived demand. ANS: T PTS: 1 REF: 194 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E Model Promotion 14. A decline in the availability of tungsten will slow p roduction of light filaments, which will in tu rn reduce the demand for light bulbs. This is an example of f luctuating demand. ANS: F This question describes joint demand. Joint demand occurs when two or more i tems are used together in a final product. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 15. W hile consumer and business markets differ in many ways, the volatili ty of demand for p roducts is about the same for each type of market. ANS: F The demand for business p roducts tends to be more unstable than the demand for consumer products. PTS: 1 REF: 195 OBJ: 06-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Strategy 16. U nlike consumer product channels of distribution, which usually have one or more i ntermediaries, channels of distribution for business products are often direct. ANS: T PTS: 1 REF: 196 OBJ: 06-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model D istribution 17. Most business marketers emphasize personal selling as their primary communications tool. ANS: T PTS: 1 REF: 197 TOP: AACSB Communication | TB &E M odel Strategy OBJ: 06-6 TYPE: Comp 18. Another commonly used term for accessory equipment is installations. ANS: F Another commonly used term for major equipment is i nstallations. PTS: 1 REF: 198 OBJ: 06-7 TYPE: Def TOP: AACSB Reflective Thinking | T B &E Model Product 19. Individual producers of raw materials have great f lexibility in p ricing their products. ANS: F Prices of raw materials are set by the market, and individual p roducers have li t t le pricing f lexibili ty. PTS: 1 REF: 198 OBJ: 06-7 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Product 20. I tems that are ready for assembly and that retain their identities when incorporated into another product are called completion parts. ANS: F I tems that are ready for assembly and that retain their identities w hen incorporated into another product are called component parts. PTS: 1 REF: 198 OBJ: 06-7 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product 21. Consumable i tems that do not become part of the final product are called supplies. ANS: T PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-7 TYPE: Def 22. Because formal commit tees are often established to purchase business products, members of buying centers can be readily identified on formal organizational charts. ANS: F Buying centers do not appear on formal organizational charts. PTS: 1 REF: 200 OBJ: 06-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 23. The role of gatekeeper is often filled by a receptionist. ANS: T PTS: 1 REF: 200 TOP: AACSB Reflective Thinking | T B&E Model Strategy OBJ: 06-8 TYPE: Comp 24. For several years, the California Association of Pistachio Growers (CAPG) has purchased decorative tins for shipping i ts p roducts from Decorative Ar ts, Inc. CAPG likes the attractiveness of the Decorative Ar ts t ins but wants to have metal dividers added to the tins i t buys. This would be an example of a new buy ANS: F Adding features is an example of a modified rebuy. PTS: 1 REF: 202 O BJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 25. A lthough customer service has in the past been an important factor in business buyer-seller r elationships, its importance has been waning in the last decade. ANS: F Business m arketers are increasingly recognizing the importance of customer service. PTS: 1 REF: 203 OBJ: 06-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Customer M ULTIPLE CHOICE 1. A product is defined as a business product rather than consumer good on the basis of its: a. intended use b. physical characteristics c. price d. distribution method e. tangible att r ibutes ANS: A PTS: 1 REF: 186 OBJ: 06-1 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Product 2. The Solar Group, a M ississippibased mailbox manufacturer, sells mailboxes to contractors who are building megasubdivisions, to hardware stores, and directly to new homeowners. What k ind of products is t he Solar Group selling? a. business products only b. both business and consumer goods c. i nstallations d. consumer goods only e. supplies ANS: B Products are classified as either business or consumer goods, based on the intended use of the product. Obviously, some of t he mailboxes are sold for business use and some for personal use. PTS: 1 REF: 186 OBJ: 06-1 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 3. Which of the following is the best example of a sale that could only take place in the business market? a. A park ranger is purchasing an azalea bush for her garden. b. A music store owner is ordering the newest Faith Hi ll CD for her mother. c. A dentist is buying postage stamps to m ail invitations to his son's birthday party. d. A university controller is ordering more computers for classroom labs. e. All of these are examples of business sales. ANS: D When p rofessionals buy i tems for their own personal use, these purchases are part of the consumer market. PTS: 1 REF: 186 OBJ: 06-1 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Product 4. Business marketing does NOT include goods and services that: a. become part of another product b. are used to manufacture other products c. are used for personal consumption d. facilitate the normal operations of an organization e. are acquired for resale ANS: C In tended use is the key factor in the classification of a business versus a personal good. Use for personal consumption classifies the good or service as a consumer p roduct. PTS: 1 REF: 186 OBJ: 06-1 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Strategy 5. Which type of customer do business marketers NOT serve? a. i nstitutions and nonprofits b. producers c. resellers and wholesalers d. governments e. p rivate consumers ANS: E In tended use, either for business or personal consumption, determines if a customer is a business customer. Private consumer signals personal or family consumption. PTS: 1 REF: 191 OBJ: 06-4 TYPE: Def TOP: AACSB Reflective T hinking | TB &E Model Customer 6. Since GE began accepting bids via the Internet, the length of the bidding process in GE's lighting division has been reduced from 21 days to 10. Since requesting the bids is easier, purchasing agents approach more potential vendors. The ability to locate more vendors has lowered the cost of goods by 5 to 15 percent. GE's experience illustrates: a. how using the In ternet decreases competition b. how business m arketing is becoming global c. how business marketing is using the Internet to become more efficient d. how the use of the In ternet has influenced consumer markets to become l arger and more powerful than business markets e. how the In ternet increases efficiency in data exchange ANS: C Business markets will continue to be larger and more powerful than consumer markets with the use of the Internet. I t will increase competition by allowing for more vendors. PTS: 1 REF: 188 OBJ: 06-2 TYPE: App TOP: AACSB Technology | TB&E M odel Online/Computer 7. Which of the following is NOT a benefit businesses experience f rom buying and selling their goods and services on the Internet? a. access to around-theclock ordering b. elimination of the need for distr ibutors c. a greater selection of products and vendors d. lower prices due to increased competition e. the ability to buy products customized to their needs ANS: B The In ternet has not eliminated the need for distr ibutors. D isintermediation has occurred less frequently than was expected. PTS: 1 REF: 188 OBJ: 06-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 8. A cooperative agreement between business fi rms is a: a. shared capital contract b. global partner development strategy c. strategic alliance d. joint contract e. comarketing effort A NS: C PTS: 1 REF: 189 TOP: AACSB Reflective Thinking | TB &E Model Strategy OBJ: 06-3 TYPE: Def 9. Sometimes a _____ is created for the purpose of sharing resources. This was why the Donnelly Corporation, a company that designs, manufactures, and markets automotive parts, joined with Applied Films Laboratory, Inc. to manufacture and supply t he world market with display coated glass for liquid crystal displays (LCDs). a. shared capital contract b. global partner development strategy c. strategic alliance d. cobranding effort e. market cooperative ANS: C A strategic alliance is a cooperative agreement between business fi rms. PTS: 1 REF: 189 OBJ: 06-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Strategy 10. K inko’s Service Corporation of Ventura (copy centers) and Xerox E ngineering Systems have worked together to establish a nationwide network for faxing l arge-format documents. In other words, the two companies have joined in a: a. retail cooperative b. direct investment venture c. t ransactional relationship d. strategic alliance e. synergistic relationship ANS: D A strategic alliance is a cooperative agreement between business fi rms. PTS: 1 REF: 189 OBJ: 06-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Marketing Plan 11. Businesses typically enter into strategic alliances to: a. gain access to markets or technology b. facilitate faster entry of new products to market c. lower costs d. achieve increased productivity e. do all of these ANS: E PTS: 1 REF: 189 TOP: A ACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-3 TYPE: Comp 12. A keiretsu is a(n): a. type of strategic alliance commonly found in Japan b. method of business ecommerce found in Asia c. In ternet site that offers its customers access to various l anguages that they can use to conduct their business d. form of relationship marketing t hat is illegal in the United States e. bribe ANS: A PTS: 1 REF: 190 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 06-3 TYPE: Def 13. In Japan, reciprocity and personal relationships contribute to the development of: a. global ventures b. amae c. agricola d. keiretsu e. an independent network of small retailers ANS: B PTS: 1 REF: 190 O BJ: 06-3 TYPE: Def TOP: AACSB Diversity | TB &E Model International Perspective 14. According to the text, another commonly used name for producers is: a. fabricators b. i nstallers c. original equipment manufacturers d. product providers e. component networks A NS: C PTS: 1 REF: 191 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-4 TYPE: Def 15. Caterpillar, the manufacturer of earthmoving equipment, uses completed drivetrains (enginestransmissions-axles), drivetrain components, electronic controls, hydraulic and electrohydraulic components and systems, cooling systems, and u ndercar riage t rack systems produced by other organizations in its manufacturing process. Caterpillar is an example of a(n): a. fabricator b. installer c. original equipment m anufacturer d. product provider e. component network ANS: C An original equipment m anufacturer is an organization that buys business goods and incorporates them into the p roducts it produces and sells. PTS: 1 REF: 191 OBJ: 06-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 16. Nissan Motor and Mazda Motor announced i n January 2006 that the companies have signed an agreement under which Nissan will continue to supply Mazda with light commercial vehicles (LCVs) on an OEM basis. This means that: a. Nissan is an installer of original materials b. there will be no f luctuating demand c. there will be no derived demand d. Mazda will be the producer e. Nissan is an O EM ANS: E An original equipment manufacturer is an organization that buys business goods and incorporates them into the products it produces and sells. PTS: 1 REF: 191 OBJ: 06-4 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Strategy 17. Berry Radiateurs SA buys components from other manufactures to construct its radiators, which a re used by several European car manufacturers. Ber ry would be part of the _____ sector of t he business market. a. channel b. reseller c. producer d. government e. dist ributor ANS: C A nother name for an OEM is a producer. PTS: 1 REF: 191 OBJ: 06-4 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer 18. Ed Rodney works for the state of M innesota as a advocate of state growth and development. He devises ways to encourage businesses to relocate to the state. In other words, Rodney is involved in business m arketing. He is compiling a list of potential businesses that might be willing to move their operations to M innesota. Which of the following possible clients should he include in his l ist? a. any family that takes an annual vacation b. newlyweds c. families that enjoy hiking d. companies that have growing sales e. students on spring break ANS: D The other "clients" are end-user consumers, not business customers. PTS: 1 REF: 191 OBJ: 06-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Marketing Plan 19. A particular segment of the business market includes those individuals and organizations t hat purchase goods and services for the purpose of making a profit. They achieve this goal by using purchased goods and services to make other goods, to become part of other goods, or to facilitate the daily operations of the organization. This group is called the _____ segment of the business market. a. institution b. reseller c. wholesaler d. producer e. government ANS: D PTS: 1 REF: 191 TOP: AACSB Reflective Thinking | TB &E Model P roduct OBJ: 06-4 TYPE: Def 20. Businesses that buy finished goods and sell and d istribute them for a profit are called: a. inventory carriers b. producers c. distr ibution networks d. resellers e. business facilitators ANS: D PTS: 1 REF: 191 OBJ: 06-4 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Pricing 21. In the past 24 years, Mothers Work has grown from a small, mail-order catalog business headquartered inside the founder's home, to the world's largest seller of maternity apparel, w ith nearly 1,600 locations. In terms of the business market, Mothers Work would be best classified as a(n): a. reseller b. producer c. distribution network d. inventory carrier e. business facilitator ANS: A Mothers Work purchases finished goods and resells them; i t does not produce the goods or change their form. PTS: 1 REF: 191 OBJ: 06-4 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy 22. Hensley Poult ry is a w holesaler that buys poult ry food and health products from Provini, Inc., feeding systems f rom Big Dutchman, Inc. and incubation systems from Copca Corp. Hensley then sells those p roducts to poult ry producers and farmers' cooperatives in Iowa. Hensley Poultry could be best classified as a(n): a. producer b. distribution network c. inventory carrier d. specialty retailer e. reseller ANS: E PTS: 1 REF: 191 OBJ: 06-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Distribution 23. The U.S. government is: a. not a business market segment b. the world's largest single customer c. an organization accounting for over 50 percent of the U.S. gross national product d. mainly a military equipment purchaser e. using one centralized purchasing office for the entire government ANS:B The U.S. federal government is the world's largest customer. The other alternatives are false because various b ranches of the government have separate purchasing departments, and billions of dollars a re spent on food, clothing, desks, and other standard supply i tems (not just mili tary hardware). PTS: 1 REF: 192 OBJ: 06-4 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Customer 24. One segment of the business market has primary goals that d iffer from the ordinary business goals such as profit, market share, or return on i nvestment. This segment includes many schools, churches, and civic clubs and is often called the _____ market. a. institution b. OEM c. service d. provider e. reseller ANS: A I nstitutions such as schools, churches, and hospitals have service or activity goals, but not p rofit goals, yet are an important business market. PTS: 1 REF: 192 OBJ: 06-4 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Customer 25. Which of the following is t he BEST example of an institution market? a. the National Park Service b. a company that sells exclusively on the In ternet c. JCPenney department stores d. Vanderbilt University Hospital, a nonprofit institution e. a company that does not t rade i ts stock on an i nternational stock exchange ANS: D Examples of institutions include schools, churches, and hospitals that have service or activity goals, but not profit goals. PTS: 1 REF: 192 OBJ: 06-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 26. Organon Teknina sells inexpensive equipment to detect E.coli, listeria, or salmonella bacteria in food. T he company serves not-for-profit institutions that need to regularly check food quality. O rganon Teknina would be LEAST likely to sell to: a. Montgomery County school system b. a l arge pediatr ic hospital c. a chain of Mexican restaurants d. a chain of church-sponsored retirement homes e. American Red Cross emergency shelter ki tchens ANS: C The only example of a for-profit organization in the list is the restaurants, and they would not be a customer of an institutional-only food supplier. To answer this question, students will have t o remember that institutions are not operated for profit. PTS: 1 REF: 192 OBJ: 06-4 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Customer 27. What would a U.S. company that manufactures the lighted signs used in amusement parks, at outdoor sports a renas, for restaurant promotion, and by state departments of t ransportation on the sides of roads use to facilitate i ts market segmentation and targeting if it wanted data that were r eadily available and usable? a. a large amount of marketing research, including scanner data and focus groups b. other competing fi rms as a strategic alliance referral service c. government bidding processes d. the North American Industry Classification System e. derived demand ANS: D NAICS codes enhance companies' marketing efforts. PTS: 1 REF: 193 OBJ: 06-5 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 28. T he government uses a system called NAICS to classify North American business establishments. NAICS stands for: a. Non-American Industry Classification System b. North and South American Institutional Coding Services c. Non-American Industrial Corporation System d. North American Institut ion Code System e. North American I ndustry Classification System ANS: E PTS: 1 REF: 193 TOP: AACSB Reflective Thinking | T B&E Model Strategy OBJ: 06-5 TYPE: Def 29. Imagine you are the research director of a major industrial marketing fi rm. You need to select an NA ICS code that defines the most homogeneous group of companies in a particular group of highly competitive companies. W hich of the following codes might you use? a. 7432 b. c. d. e. 532 19 7 999 ANS: A The more digits in a code, the more homogeneous the group will be. The alternatives presented i n this question are to illustrate the point that more digits results in a more homogeneous g rouping. They may or may not be actual NAICS codes. PTS: 1 REF: 193-194 OBJ: 06-5 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 30. NAICS data are helpful for analyzing, segmenting, and targeting markets. The system was developed by: a. l arge manufacturers in United States and Mexico that produce similar goods b. the North A merican Free Trade Agreement partners c. Brazil, Chile, Argentina, Canada, and the U nited States working together in a joint venture d. the SIC commit tee e. the U.S. government ANS: B NAICS is an industry classification system that replaced the standard i ndustrial classification (SIC) system in 1997 for the North American Free Trade A greement partners. The partners include the United States, Canada, and Mexico. PTS: 1 REF: 193 OBJ: 06-5 TYPE: Def TOP: AACSB Reflective Thinking | TB &E Model Strategy 31. Managers can use the NAICS data to: a. create a more focused mission statement b. eliminate r isk c. classify consumer behavior d. identify potential new customers e. determine purchase motives ANS: D NAICS data, when compared from year to year, can p inpoint which industries are growing and, hopefully, identify market opportunit ies. PTS: 1 REF: 193 OBJ: 06-5 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model S trategy 32. Which of the following statements does NOT describe the business market? a. O rganizational buying decisions are usually made independently by a purchasing agent w hile consumer buying decisions are made jointly. b. Business customers tend to be more geographically concentrated, and customers in consumer markets tend to be more geographically dispersed. c. The channel of distribution is more often direct for business m arkets than for consumer markets. d. Purchasing by businesses is a more formal process t han it is in consumer markets. e. Business marketers tend to have far fewer customers t han consumer marketers. ANS: A Organizational buying decisions usually involve many more people than a consumer purchase. Review Learning Outcome 6. PTS: 1 REF: 197 OBJ: 06-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 33. The demand for consumer goods often affects the demand for business products. This characteristic of business markets is called _____ demand. a. elastic b. inelastic c. f luctuating d. derived e. joint ANS: D PTS: 1 REF: 194 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 06-6 TYPE: Def 34. The demand for polyethylene film used to w rap meat prepared for sale in supermarkets is dependent on consumers' demand for meat. T his is an example of _____ demand. a. inelastic b. derived c. joint d. f luctuating e. elastic A NS: B Derived demand for a business product comes from the original consumer demand. PTS: 1 REF: 194 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 35. Inland Eastex manufactures a heavy paper stock that is used for printing covers for many different types and sizes of consumer magazines. Consumer magazine sales determine how much paper Inland Eastex sells. This is an example of: a. joint b. inelastic c. elastic d. congruent e. derived ANS: E Derived demand for a business product comes from the original consumer demand. PTS: 1 REF: 194 OBJ: 06-6 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model P roduct 36. When the demand for packaged beer fell by 8 percent in one year, the demand for aluminum beer cans and glass beer bottles fell also because the demand for beer containers is an example of a(n) _____ demand. a. joint b. inelastic c. elastic d. f luctuating e. derived ANS: E The demand for beer containers is driven by the consumer demand for beer; t herefore, the containers have a derived demand. PTS: 1 REF: 194 OBJ: 06-6 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 37. Bàbolina Tetra is a H ungarian company that has genetically created a chicken that is guaranteed to produce u niform brown eggs with strong shells. I t breeds and sells young chicks to farmers all over E urope who want to sell eggs in local markets. When consumers began to worry about cholesterol content and stopped eating as many eggs, the demand for the Tetra hen also declined. This would be an example of _____ demand. a. derived b. elastic c. multiplying d. bundled e. inelastic ANS: A Demand for hens is derived from consumers' demands for eggs, w hich has declined. PTS: 1 REF: 194 OBJ: 06-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 38. An acute shortage of heavy-duty ti res is threatening t o disrupt operations in mining and construction sites around the world. According to one m ine operator, "I've got the coal and market, and I have the t rucks to haul the coal, but I don't have the ti res. I’d be willing to pay double the price if I could get the ti res I need." The demand for heavy-duty ti res is: a. joint b. inelastic c. elastic d. congruent e. derived ANS: B W hen demand for a product is inelastic, an increase or decrease in the price of the product w ill not significantly affect demand for the product. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 39. When demand for a product is _____, an increase or decrease in the price of the product will not significantly affect demand for the product. a. responsive b. elastic c. inelastic d. derived e. bundled ANS: C PTS: 1 REF: 195 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-6 T YPE: Def 40. Lanover Manufacturing supplies windshield wiper blades to General Motors and Ford. A sudden jump in the price of rubber and its substitutes has forced Lanover and other wiper blades manufacturers to double the price of the wiper blades. This increase in p rice has not affected sales volume for wiper blades. The price did not change because demand for windshield wiper blades is: a. inelastic b. secure c. bundled d. elastic e. resistant A NS: A A change in price has not really made a change in quantity demanded; therefore, t he good is price inelastic. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 41. Due to rapidly r ising overhead costs and increases in r aw material prices, Framarx Corporation was forced to raise the price of its waxed and coated paper by 35 percent. (The paper is used between frozen hamburger patties to keep t he patties from freezing together.) Framarx is the leading manufacturer in this industry, and its competitors will follow suit. While the sales force for Framarx believes the price i ncrease will result in a drop in sales, its marketing manager disagrees because the demand for the waxed and coated paper is more than likely: a. resistant b. inelastic c. derived d. elastic e. bundled ANS: B A good is price inelastic if a change in price causes li t tle or no change in demand. Paper used between hamburger patties is a fairly insignificant cost i tem i n the production of hamburger and might even be considered a necessity item. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 42. D uring the fi rst years of this century, the number of packages arriving at households has more than doubled. An increase in the price of the cardboard boxes in which these packages a re shipped will have lit tle effect on the amount of shipping done; the demand for the boxes w ill continue to increase. Therefore, you know the demand for the cardboard boxes is: a. r esistant b. inelastic c. derived d. elastic e. bundled ANS: B A product is price inelastic if a change in price causes li t t le or no change in demand. Boxes are a fairly insignificant cost i tem in the overall costs of a product and might even be considered a necessity i tem. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 43. Although the price of a chemical added to paint to protect surfaces from mold and m ildew has almost doubled, the price of paint only rose an average of 5 percent, and the demand for both paint and the chemical that eliminates mold and mildew remained stable. T he demand for this chemical is: a. elastic b. derived c. bundled d. inelastic e. changeresistant ANS: D A good is price inelastic if a change in price leads to a small change in quantity demanded or does not significantly affect demand for the product. PTS: 1 REF: 195 O BJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | TB &E M odel Pricing 44. When two or more items are used in combination to produce a final p roduct, they are said to have _____ demand. a. derived b. inelastic c. joint d. f luctuating e. elastic ANS: C PTS: 1 REF: 195 TOP: AACSB Reflective Thinking | TB&E Model Product O BJ: 06-6 TYPE: Def 45. Grote manufactures a slicing machine for any boneless food. The m achine will cut up to 1,200 slices per minute and is portable in that it can be rolled out of t he work area when it is not in use. The wheels are especially made to meet federal safety r equirements. A decline in the availability of the specialized wheels will slow down the p roduction of the slicing machines and in tu rn reduce the sales of the blades that fit in the m achine. A condition of _____ demand exists. a. bundled b. incremental c. functional d. developmental e. joint ANS: E Joint demand occurs when two or more items are used t ogether in a final product. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 46. A decline in the availability of bicycle handle bars will decrease Huffy Bicycle Company's production of bicycles. Decreased production in turn r educes Huffy's demand for bicycle seats. This is because the products in this situation have _____ demand. a. inelastic b. joint c. elastic d. congruent e. derived ANS: B When two or more i tems are used in combination in the final product, they have a joint demand. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 47. Which of the following pairs of products BEST illustrates the concept of joint demand? a. a p umpkin and the set of tools used to carve it b. a thermometer and a barometer c. a g randfather clock pendulum and a grandfather clock case d. canola oil and sunflower oil e. chocolate and vanilla ice cream ANS: C When two or more i tems are used in combination in t he final product, they have a joint demand. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 48. As a result of the _____, a small i ncrease or decrease in consumer demand can produce a much larger change in demand for t he facilities and equipment needed to manufacture the consumer product. a. demand f luctuation principle b. joint demand principle or division effect c. inelastic demand effect d. m ultiplier effect e. derived force effect ANS: D PTS: 1 REF: 195 OBJ: 06-6 TYPE: Def TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model Product 49. In the six months following the September 11 attacks, consumer demand for large American f lags saw a 200 percent increase, but the Eagle Manufacturing Company had a 500 percent increase i n orders for the special machine that mass produces the larger f lags. This dramatic i ncrease is due to the: a. demand f luctuator principle b. joint demand principle or division effect c. inelastic demand effect d. circumlocution effect e. accelerator principle ANS: E I ncreased consumer demand leading to a larger increase in demand for manufacturing equipment to make the consumer product is known as the multiplier effect of demand or as t he accelerator principle. PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 50. White Wave is a small company that manufactures several f lavors of soy milk coffee creamers for people who are lactose-intolerant. White Wave typically places large orders for the soy it uses to manufacture its creamers. This order size is an example of _____ and would give White Wave an advantage over other buyers of soy. a. purchase volume b. joint demand c. f luctuating demand d. sales volume e. m ultiplier effect ANS: A PTS: 1 REF: 195 OBJ: 06-6 TYPE: App TOP: AACSB Diversity | T B &E Model Strategy 51. Which of the following pieces of information can be used by a m anufacturer searching for the location for a new factory? a. Just like individual consumers, business consumers are dispersed proportionally across the United States, and location does not matter. b. The company's best location will be in the geographic center of t he United States. c. I ts salespeople will have to t ravel throughout all of the fifty states because business consumers are widely dispersed. d. More than half of U.S. industrial buyers operate in seven states. e. The new facility should be located in New York or California because over half of the nation's industr ial buyers are in those two states. ANS: D M ore than half of the nation's industrial buyers are located in seven states: New York, California, Pennsylvania, I l linois, Ohio, Michigan, and New Jersey. PTS: 1 REF: 196 OBJ: 06-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Distribution 52. Buyers i n the business market tend to _____ than buyers in the consumer market. a. use reciprocity less b. purchase in much smaller quantities c. buy more products that have a reduced p robability of being affected by derived demand d. generate more stable demand t rends e. be much more geographically concentrated ANS: E Over one-half of all U.S. business consumers are concentrated in just seven of the fifty states. PTS: 1 REF: 196 OBJ: 06-6 T YPE: Def TOP: AACSB Reflective Thinking | TB &E Model Distribution 53. The d istribution structure in business marketing typically: a. includes at least one wholesaler b. is direct c. is complex and multistage d. uses a three-step channel e. uses retail distributors A NS: B PTS: 1 REF: 196 OBJ: 06-6 TYPE: Def TOP: AACSB Reflective Thinking | TB &E M odel Dist ribution 54. Paula Yoder and Fran Katz created several gluten-free bread and dessert mixes when Yoder’s husband developed a severe allergy to wheat. The mixes were i nitially sold to friends and friends of friends, but they have gradually changed their customer base. Their mixes are now sold to a catalog retailer that markets the mixes nationwide under the brand name Delicious. With this change in customers, Yoder and K atz should expect: a. derived demand issues to emerge b. a more formal purchasing p rocess c. to have to deal smaller order sizes d. a greater reliance on advertising to gain new customers e. less use of reciprocity ANS: B Yoder and Katz are leaving the consumer m arket and entering the business market. Businesses tend to be more formal in purchasing p rocedures and perform more paperwork and more analysis. PTS: 1 REF: 196 OBJ: 06-6 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 55. _____ is the bargaining between buyers and sellers on product specifications, delivery dates, payment t erms, and other pricing matters and is commonplace in business marketing. a. Negotiation b. Need mediation c. Customerization d. Purchase arbitration e. Disintermediation ANS: A PTS: 1 REF: 196-197 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-6 T YPE: Def 56. If a business needs a particular good or service and decides to look among its own customers for a provider of that good or service, the business is: a. working to create p urchase arbitration b. opening i tself up to prosecution for illegal activities c. acting u nethically d. t rying to eliminate derived demand bar riers e. practicing reciprocity ANS: E PTS: 1 REF: 197 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-6 T YPE: Def 57. Dallas Graphics is a small printing company that has just moved into a building in a new industrial park. The owner of the company believes everyone should do h is or her part to keep the earth green. He wants to landscape the front of the building and build an employee picnic area on the side. When looking for a landscaper, the company owner looked no fur ther than his own customer list. He chose to buy the services of a l andscaper that had hired Dallas Graphics to print a recent promotional brochure. The p urchase by Dallas Graphics is: a. an example of nested demand b. an example of an illegal i n fluence c. a normal business practice called reciprocity d. unethical by all standards e. a normal business practice called circular buying ANS: C Reciprocity is the normal business p ractice of using customers as suppliers of goods or services. PTS: 1 REF: 197 OBJ: 06-6 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 58. _____ occurs w hen a bakery decides to buy its office supplies from a company that regularly buys muffins and pastries for i ts employees. a. Reciprocity b. Joint demand c. Elastic demand d. Derived demand e. Bidding conformity ANS: A Reciprocity is the normal business practice of using customers as suppliers of goods or services. PTS: 1 REF: 197 OBJ: 06-6 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Strategy 59. Claas is Europe’s largest m anufacturer of combine harvesters. I ts marketing manager discovered a prospect for his company’s product in Russia by looking for large farm owners from the former Soviet Union w here i ts products had not been sold. Which of the following questions would be the LEAST i mportant to answer prior to visiting the farm owner? a. What are the buying objectives of t he farm owner? b. Who are the major people involved in making the decision within the farm? c. What kind of reciprocity will be demanded by the farm owner? d. At what stage of t he buying decision process is the farm owner? e. What role does each employee play in the farm's buying center? ANS: C There is no concern for reciprocity because there is no reason t o believe that the farm equipment manufacturer is interested in buying what is produced on a farm. PTS: 1 REF: 197 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Strategy 60. Ty Pruit t sells embroidery machines used to embroider logos, names, and other designs on shirts, caps, umbrellas, etc. to people in the personalization business. The machines range in price from $39,000 to $75,000. He wants to stimulate business among some of his customers who cannot afford to buy his embroidery machines, but whose business would benefit from the use of one. Which of the following actions is most appropriate in this example? a. Develop leasing options for business customers. b. Create f ull and complete reciprocity to ensure customer cash f low. c. Manage derived demand to keep the customers' demand at the highest possible levels. d. Create an environment with n umerous joint demand opportunities for his customers. e. Set up a straight-rebuy ordering system. ANS: A Leasing allows fi rms to do business with customers that cannot afford to buy. PTS: 1 REF: 197 OBJ: 06-6 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer | TB&E Model Pricing 61. _____ is the primary promotional method for t he sale of all business products. a. Direct mail b. Advertising c. Personal selling d. Public r elations e. Trade promotions ANS: C Business sales tend to be large in dollar amounts and quantities and may require negotiation and thus may rely heavily on the salesperson's ability to communicate and work with the customer. PTS: 1 REF: 197 OBJ: 06-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Promotion 62. Personal selling is pervasive in organizational markets because: a. most of the situations involve fairly low cost i tems b. c. d. e. there are few avenues for effective advertising of organizational goods organizational salespeople seldom speak the language of their customers i t is the most i nexpensive method of promotion many organizational products are complex and require expertise on the salesperson's part ANS: E While it is t rue that personal selling is expensive, and many specialized technical publications and other advertising vehicles are available, other forms of promotion are not as effective as personal selling. PTS: 1 REF: 197 O BJ: 06-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Promotion 63. Metal Supermarkets sells small quantities and responds to specialized metal requests that b igger suppliers will not handle. M ichael Anderson, the marketing manager for a Metal Supermarket franchise, must develop a marketing strategy for the upcoming year. Which of t he following marketing actions is Anderson LEAST likely to employ as part of his m arketing strategy for the upcoming year? a. Increase the size of his sales force so new companies will have a salesperson to call upon them. b. Lower the prices of his metal to keep competitors from entering the field. c. Emphasize advertising in the company's p romotion strategy to ensure he persuades potential buyers of the quality of his company and its products. d. Make sure his product lines include enough different i tems to meet every demand. e. Delete products that are requested less than six t imes per year. ANS: D I t would be financial suicide to carry every possible i tem customers might request. I ts competitive advantage is the availability of unusual requests. PTS: 1 REF: 197 OBJ: 06-6 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 64. I t is important t hat marketers understand the classification of the business product they are selling because: a. OEM markets often act just like the consumer markets b. personal selling is the most important promotional strategy for all business marketing classifications c. d istribution channels are almost always direct for all business selling d. raw materials demonstrate extreme f lexibili ty in pricing e. promotion and distribution strategies tend to vary depending upon the classification ANS: E Some products such as raw materials rely more heavily on personal sales and direct distribution. Others such as supplies need advertising and wider distribution. Knowing the classification of the product is important so the marketer can understand which strategies will fit the product. PTS: 1 REF: 198-199 O BJ: 06-7 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 65. W hich of the following is the BEST example of an installation? a. a baseball stadium b. a checkout counter c. a lifeguard stand d. a file cabinet e. original artwork ANS: A An i nstallation, also called major equipment, is expensive and large. PTS: 1 REF: 197-198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 66. Parking garages, $500,000 printing presses, privately owner warehouses, and oil well drilling p latforms are depreciated over t ime rather than expensed in the year they are purchased. T hese are classified as: a. processed materials b. accessory equipment c. installations d. supplies e. component parts ANS: C An installation, also called major equipment, is expensive and large. PTS: 1 REF: 197-198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 67. Claas is Europe’s largest manufacturer of combine harvesters. As farming becomes more professional and more intensive, farmers are buying more sophisticated machines, which Claas can supply. The expensive machines sold by C laas would be examples of: a. installations b. component parts c. accessory equipment d. p rocessed materials e. minor equipment ANS: A An installation, also called major equipment, is expensive and large. PTS: 1 REF: 197-198 OBJ: 06-7 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 68. A company that installs and m aintains signs along interstate highways has a t ruck equipped with a 158-foot crane that is capable of lifting up to 15 tons. The company's accountant depreciated the value of the vehicle over several years. What type of business product is the t ruck with crane? a. major equipment b. component part c. processed material d. fabricating i tem e. accessory equipment ANS: A An installation, also called major equipment, is expensive and large. PTS: 1 REF: 197-198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Strategy 69. Store mannequins, notebook computers, fax machine, and grocery carts a re typically classified as _____ because they are not expensive, have short useful lives, and a re frequently purchased from local distributors. a. b. c. d. e. accessory equipment mobile equipment component parts processed materials supplies ANS: A Accessory equipment is generally less expensive and short-lived compared to major equipment and is used in the conducting of business. Accessory equipment also tends to be purchased by a widely d ispersed market. PTS: 1 REF: 198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Strategy 70. For a police department, fi rearms, computers, printers, fax m achines, and patrol vehicles are all examples of _____ because they are shown as expenses on the yearly accounting statements. a. mobile installation b. component part c. processed m aterial d. supply e. accessory equipment ANS: E Accessory equipment is generally less expensive and shorter-lived than major equipment. PTS: 1 REF: 198 OBJ: 06-7 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy 71. Which of the following is the B EST example of accessory equipment? a. a parking lot b. a store display rack c. car batteries d. a r iver barge e. light bulbs ANS: BAccessory equipment is generally less expensive and short-lived compared to major equipment and is used in the conducting of business. Accessory equipment also tends to be purchased by a widely dispersed market. L ight bulbs are supplies. Car batteries would be classified as MRO i tems. PTS: 1 REF: 198 O BJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 72. F inished i tems ready for assembly or products that need very li t tle processing before they become a part of some other product are called: a. supplies b. raw materials c. accessory equipment d. processed materials e. component parts ANS: E PTS: 1 REF: 198 TOP: A ACSB Reflective Thinking | TB&E Model Product OBJ: 06-7 TYPE: Def 73. Within the business market, drawer handles that are purchased by cabinet manufacturers are examples of: a. supplies b. raw materials c. accessory equipment d. processed materials e. component parts ANS: E Component parts are either finished i tems ready for assembly or p roducts that need very lit t le processing before becoming a part of some other product. PTS: 1 REF: 198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 74. Inland Eastex manufactures a heavy paper stock that is used as magazine covers. When a p ublisher of several consumer magazines orders heavy paper stock from Inland Eastex, t he paper is an example of: a. business supplies b. OEM parts c. component parts d. p rocessed materials e. raw materials ANS: C Component parts are either finished i tems r eady for assembly or products that need very lit t le processing before becoming a part of some other product. PTS: 1 REF: 198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model Product 75. PAS Systems has developed an unobtrusive f lashlight-alcohol detector. The f lashlight readings are inadmissible in court but are used by police officers to decide whether to hold someone for a sobriety test. Each one costs $600. The manufacturer assembles a breathalyzer from one supplier with a slightly modified f lashlight case from another supplier to make the new product. The b reathalyzer and the f lashlight case are examples of: a. major equipment b. component parts c. processed materials d. integrated parts e. accessory equipment ANS: B PTS: 1 REF: 198 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-7 TYPE: App 76. Delicious is a small company that manufactures several wheat-free products for consumers who cannot digest gluten. For this manufacturer, r ice f lour, which will be used in i ts manufacturing process, is a(n) a. accessory equipment b. fabricating material c. component part d. integrated material e. processed material ANS: E Processed materials a re products used directly in manufacturing other products. PTS: 1 REF: 199 OBJ: 06-7 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 77. Products that have had some processing, are used directly in the production of other products, and do not retain their identity in the final product are called: a. raw materials b. supplies c. processed m aterials d. component parts e. replacement parts ANS: C PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-7 TYPE: Def 78. A dog food m anufacturer purchases processed meat by-products that it uses in the manufacture of a d ry dog food. These processed meat by-products are examples of: a. raw materials b. OEM p roducts c. processed materials d. component parts e. replacement parts ANS: C Processed m aterials are used in the manufacture of another product and usually lose their original i dentity. PTS: 1 REF: 199 OBJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Product 79. Metalcrafter Enterprise manufactures stamped brass door plates, brass n umbers, and other decorative brass t r im for homes. Every month Metalcrafter purchases sheets of brass, which are classified as: a. processed materials b. fabricating supplies c. raw m aterials d. component parts e. replacement parts ANS: A Processed materials are used in t he manufacture of another product and usually lose their original identity. PTS: 1 REF: 199 OBJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 80. P roducts such as copper, peanuts, soybean, and bauxite that become part of finished p roducts are examples of: a. supplies b. OEM parts c. component parts d. processed m aterials e. raw materials ANS: E Raw materials are unprocessed extractive or agricultural products. PTS: 1 REF: 198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 81. One brand of tomato sauce advertises that the t omatoes it uses are processed within 24 hours of being picked to ensure product freshness. T he fresh tomatoes it buys from growers are examples of: a. OEM parts b. raw materials c. component parts d. processed materials e. supplies ANS: B Tomatoes are an agricultural p roduct. Agricultural products are a type of raw material. PTS: 1 REF: 198 OBJ: 06-7 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model P romotion 82. Farmer Pat Stein provides local restaurants with organic fruits and vegetables that have been grown without the use of pesticides or chemical fertilizers. Pat S tein is a supplier of: a. accessory parts b. supplies c. raw materials d. unprocessed extractive products e. processed materials ANS: C Raw materials are unprocessed extractive or agricultural products. PTS: 1 REF: 198 OBJ: 06-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 83. At Garbino Metalware Welding, the shop foreman orders cutting oil, special hand cleaner, and sanding paper almost every month. T hese i tems would be classified as: a. replacement parts b. provisions c. OEM parts d. accessory equipment e. supplies ANS: E Supplies are consumable, inexpensive i tems that do not become part of the final product and are routinely bought. PTS: 1 REF: 199 OBJ: 067 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 84. _____ are consumable, inexpensive, and often standardized i tems that do not become part of the final p roduct. a. Processed materials b. Supplies c. Provisions d. Accessory equipment e. Replacement parts ANS: B PTS: 1 REF: 199 OBJ: 06-7 TYPE: Def TOP: AACSB Reflective T hinking | TB &E Model Product 85. Another name for business supplies like pens, paper, and file folders is: a. processing goods b. components c. OEM parts d. MRO i tems e. accessories ANS: D PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | TB&E Model P roduct OBJ: 06-7 TYPE: Def 86. PAS Systems has developed an unobtrusive f lashlightalcohol detector. The f lashlight readings are inadmissible in court but are used by police officers to decide whether to hold someone for a sobriety test. Batteries for the f lashlights would be an example of: a. major equipment b. component parts c. processed materials d. supplies e. accessory equipment ANS: D PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | T B&E Model Strategy 87. Business services: a. are capital i tems b. are never outsourced c. are not used in reciprocity arrangements d. typically become part of the finished product e. are expense i tems ANS: E PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | TB &E M odel Strategy OBJ: 06-7 TYPE: Def OBJ: 06-7 TYPE: App 88. An employment agency specializes in providing nannies. The agency hired a management consulting fi rm to r esearch how it can reduce its employee tu rnover and make more efficient use of customer r eferrals. This consulting fi rm provided the employment agency with: a. OEMs b. processed services c. business services d. accessory services e. service supplies ANS: C PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-7 TYPE: App 89. B idFair.com is an Internet company where nurses who want to work extra shifts can list t heir names, credentials, experience, and salary requirements. Hospitals and assisted l iving centers can use this site to locate temporary nursing staff. Hospitals pay a small fee each time they hire a nurse from this site. BidFair.com is an example of a(n): a. service i ntegrator b. job source c. business service d. extended service e. component service ANS: C PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 06-7 T YPE: App 90. Which of the following statements about buying centers is t rue? a. The most efficient buying centers have no more than five members. b. No one individual should assume more than two buying center roles. c. Buying centers are clearly labeled on all organizational charts. d. While the composition of buying centers varies among industries, i t is basically the same for each company within a particular industry. e. None of these s tatements about buying centers is t rue. ANS: E Buying centers can have more than five members. They are not shown on organizational charts. One person may assume all of the buying center roles. Even within industr ies, the composition of buying centers varies. PTS: 1 REF: 200 OBJ: 06-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model S trategy 91. The _____ is the set of all persons in an organization who become involved in t he purchasing process. a. buying center b. stakeholder commit tee c. ad hoc purchasing s taff d. board of directors e. comptroller's staff ANS: A PTS: 1 REF: 200 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-8 TYPE: Def 92. The buying center: a. w ill be composed of the same decision makers as long as the purchasing process lasts b. is t ypically on the formal organizational chart under the vice-president for operations c. r equires all purchasing participants to be employed by the purchasing department d. refers t o all those organizational members who become involved in the purchasing process e. r egularly generates formal announcements of who is in the buying center ANS: D The buying center is not a formal, well-defined group. I t is simply all the people who become i nvolved in the purchasing process within the company, no matter what their department or position. PTS: 1 REF: 200 OBJ: 06-8 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Strategy 93. _____ are NOT one of the roles found within a buying center. a. I n f luencers/Evaluators b. Gatekeepers c. Suppliers d. Users e. Ini tiators ANS: C PTS: 1 REF: 200 TOP: AACSB Reflective Thinking | TB &E Model Strategy OBJ: 06-8 TYPE: Def 94. You are assistant marketing research director of J.E. Grote Company, Inc., a m anufacturer of meat processing equipment. How can you find out who is in the buying center at Walrose, a company that makes heat-and-serve meals that feature sliced chicken and/or turkey? a. Look at the formal organization chart of Walrose. b. Get a copy of Walrose's phone directory, where all buying center members are listed. c. Contact the operators of the meat processing equipment used at Walrose, and probe them as to who was i nvolved in the purchase of their present equipment. d. Locate the decider at Walrose and t hat will constitute the sole name that will be a member of i ts buying center. e. Wait for Walrose to make a formal announcement of who will be placed on the Buyer Center Commit tee. ANS: C There is no formal buying center structure. I t changes from decision to decision, as well as at different stages of the decision-making process. PTS: 1 REF: 200-201 O BJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 95. The company mechanic suggested to the owner of Lincoln Cab Company that to increase the cars' fuel efficiency the fi rm should install Cherry Bomb glasspack muf flers in all of the cabs. The owner, who was pleased the mechanic was concerned about the firm’s p rofitability, instructed the mechanic to install the new mufflers. In terms of the buying center, the mechanic filled the roles of: a. init iator and inf luencer b. decider and gatekeeper c. initiator, decider, and user d. user, influencer, and gatekeeper e. user and decider ANS: A O ne person can fill multiple roles in a buying center. The drivers will be the users. PTS: 1 REF: 200 OBJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 96. Robin Elan works as a salesperson for a company that provides customized motivational seminars to medium-sized businesses. She often talks to several different people before she locates someone who can give her a purchase order or a refusal. In terms of the buying center, she has the most t rouble identifying the _____ for the seminars. a. decider b. i n fluencer c. purchaser d. gatekeeper e. user ANS: A The person who has the formal or i nformal power to approve the buying decision is often difficult to locate. PTS: 1 REF: 200 O BJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 97. The _____ is the member of the buying center who regulates the f low of information. a. decider b. influencer c. purchaser d. gatekeeper e. user ANS: D PTS: 1 REF: 200 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-8 TYPE: Def 98. When Tim was calling on a potential customer, he found the school principal he wanted to see was too busy t o meet with him. The principal's secretary offered to look through Tim's product brochures and pass them on to the principal if Tim's product was potentially useful. Which role in the buying center does the secretary have? a. purchaser b. buyer c. gatekeeper d. decider e. user A NS: C A gatekeeper is anyone who regulates the f low of information in a purchasing situation. PTS: 1 REF: 200 OBJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 99. PAS Systems has developed a new product--an unobtrusive f lashlight-alcohol detector. The f lashlight readings are inadmissible in court but are used by police officers to decide whether to hold someone for a sobriety test. Each one costs $600. A fter seeing a prototype brought back by one of its employees from a highway safety convention, the Georgia Governor's Office of Highway Safety decided to equip every DU I officer with one. In this example, the individual who attended the convention had the roles of _____ in the buying center. a. buyer and decider b. decider and user c. gatekeeper and i n fluencer d. initiator and decider e. purchaser and gatekeeper ANS: C As an inf luencer, t he person brought the f lashlight to the attention of his or her office. As a gatekeeper, the person determined whether to show the f lashlight or keep the information private. PTS: 1 REF: 200 OBJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 100. Since i t has been medically proven that watching fish reduces anxiety, many physicians' offices have installed large fish tanks in their waiting rooms. There has been a t ank in Dr. McKinnon's office for six years. Yesterday, his receptionist went to the pet store and purchased three replacement goldfish after a patient commented on the fact that there were no living fish in the aquarium. Which of the following statements correctly describes t he buying center? a. The patient was the decider. b. The patient was the gatekeeper. c. The r eceptionist was a decider, purchaser, and initiator. d. The patient was an initiator and an i n fluencer. e. The receptionist was a gatekeeper. ANS: D The patient noticed the absence of f ish and by bringing it to the office staff's attention caused them to buy more fish. PTS: 1 REF: 200 OBJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 101. Business buyers use a variety of criteria to evaluate alternative products and suppliers. The three most important criteria, in order of importance, are usually: a. p rice, sales support, and service b. quality, service, and price c. reputation, price, and capability d. price, delivery t ime, and product reliability e. service, quality, and reputation A NS: B PTS: 1 REF: 201 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-8 TYPE: Comp 102. The three most important evaluative criteria for business-tobusiness purchases are quality, price, and: a. competitive offers b. service c. reliability d. assurance e. existing relationships ANS: B PTS: 1 REF: 201 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 06-8 TYPE: Def 103. In terms of how business buyers evaluate products and suppliers, the most important criterion is: a. price b. behavior c. quality d. personal relationships e. reciprocity ANS: C PTS: 1 REF: 201 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-8 TYPE: Comp 104. The Dallas M orning News needed a new printing press basically like the one that needed to be r eplaced. The fi rm’s familiari ty with the product and its manufacturer caused i t to approach two companies--one in the United States and one in Japan--to see which could offer the better deal. I t negotiated with both companies and quickly decided to buy from the Japanese manufacturer when it offered to sell a press for $2.2 million less than i ts U.S. competitor. Which evaluative criterion appears to have been most important in making this p urchase decision? a. price b. familiarity with the product c. reliabili ty d. the availability of r eplacement parts e. buyer/seller relationship ANS: A The two other evaluative criteria d iscussed in the text are quality and service. PTS: 1 REF: 201 OBJ: 06-8 TYPE: App TOP: A ACSB Analytic | AACSB Diversity | TB&E Model Pricing | TB &E Model Customer | T B &E In ternational Perspective | TB &E Model Product 105. The Boise Printing Press Company has been purchasing all of i ts small machined shafts and gears fr m a machine shop for about $130,000 annually. If Boise buys two lathes, a drill press, and a m illing machine, it could produce these parts i tself. The equipment, materials, and two m achinists would cost the company $450,000 over five years, a savings of $200,000. Should Boise pursue this option? a. No, because the best solution would be to spend the money on r esearch and development to eliminate the shafts and gears in the printing presses. b. Yes, because i t is cheaper to make rather than to buy. c. No, because i t is not a large enough savings to justify the change. d. No, because it is cheaper to buy these parts than make t hem. e. Yes, but only if this is the best use of the company's resources and the money cannot be used to increase profit even more with some other project. ANS: E A make or buy decision is always a t radeoff with no clear solution. PTS: 1 REF: 201-202 OBJ: 06-8 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 106. A _____ is a situation r equiring the purchase of a product for the first time. a. straight rebuy b. value buy c. modified rebuy d. new buy e. make-or-buy ANS: D PTS: 1 REF: 202 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 06-8 TYPE: Def 107. A new-buy situation refers to t he: a. setting of new standards for current vendors b. establishment of a new buying center c. resolution of new conflict between buyer and seller d. search for replacement vendors for s tandard, currently used parts e. purchase of a product or service when a new demand a rises ANS: E A new need (new demand) signifies that this is a new-buy situation. PTS: 1 REF: 202 OBJ: 06-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 108. A small police department wants to buy a machine with which it can perform alcohol b reath tests. I t has never had this capability before but feels it is an essential tool as the community grows. The machine costs about $5,000, which is almost 75 percent of the department's entire supply budget. This purchase would be an example of a(n) _____ situation. a. extensive buying b. low-involvement buying c. new-buy d. modified-rebuy e. s traight-rebuy ANS: C Because this a new product line, i t requires careful vendor analysis t o ensure the r ight supplier is found; hence, a new-buy process will be employed. PTS: 1 REF: 202 OBJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 109. A school system has been given a grant to purchase computers for i ts visually handicapped students. The computers will convert students' spoken language to words on t he computer monitor that can be saved to a disk. With a tap on the mouse, the computer w ill read to the student whatever is on i ts screen. Since the school has never had such a system before, the purchase of these computers will be a: a. value engineering task b. modified rebuy c. straight rebuy d. new buy e. derived rebuy ANS: D Because this a new p roduct line, it requires careful vendor analysis to ensure the r ight supplier is found; hence, a new-buy process will be employed. PTS: 1 REF: 202 OBJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 110. PAS Systems has developed a new p roduct--an unobtrusive f lashlight-alcohol detector. The f lashlight readings are i nadmissible in court but are used by police officers to decide whether to hold someone for a sobriety test. Each one costs $600. The decision of the Georgia Governor's Office of H ighway Safety to equip every DUI officer with one would be an example of a(n): a. new buy b. l imi ted rebuy c. institutional buy d. rebuy sourcing e. buying innovation ANS: A Because t he state of Georgia has never purchased the product before, i t is a new buy. PTS: 1 REF: 202 OBJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 111. T he Dallas Morning News needed a new printing press basically like the one that needed to be replaced. The fi rm’s familiari ty with the product and its manufacturer caused i t to approach two companies--one in the United States and one in Japan--to see which could offer the better deal. I t negotiated with both companies and quickly decided to buy from the Japanese manufacturer when it offered to sell a press for $2.2 million less than i ts U.S. competitor. This purchase was an example of a: a. contingency buy b. modified rebuy c. negotiated buying system d. straight rebuy e. new buying situation ANS: B Familiari ty w ith the product and its manufacturers made it a modified rebuy. PTS: 1 REF: 202 OBJ: 06-8 TYPE: App TOP: AACSB Analytic | AACSB Diversity | TB &E Model Pricing | TB&E M odel In ternational Perspective | TB &E Model Customer | TB &E Model Product 112. A company that uses a Grote brand meat slicing machine typically buys a replacement blade once a year, and it has done so for the last five years. A new company is offering a blade for t he Grote machine for $200, which is less expensive than buying one from Grote (a savings of about $50). I t is t ime to buy a new blade, and you are in charge of the purchase. You will be most likely engaging in a: a. value engineering task b. modified rebuy c. straight rebuy d. new task e. derived rebuy ANS: B When a previously purchased i tem needs to be reordered, but with changes or additions, it is a modified-rebuy task. PTS: 1 REF: 202 OBJ: 06-8 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 113. Which of the following is the best example of a modified-rebuy situation? a. the purchase of a r eplacement hamster as the class mascot b. bidding on a new high school multi-purpose gymnasium to replace one built in 1963 c. the purchase of three large screen computer monitors to replace smaller monitors d. the annual purchase of calendar refills for the desks of all company executives e. the monthly updating of computer virus protection ANS: C W hen a previously purchased item needs to be reordered, but with changes or additions, it is a modified-rebuy task. PTS: 1 REF: 202 OBJ: 06-8 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 114. A _____ buying situation is normally less critical and less time-consuming than a new-buy situation. a. synergistic rebuy b. value buy c. negotiated rebuy d. modified rebuy e. make-or-buy ANS: D PTS: 1 REF: 202 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-8 TYPE: Def 115. One common i nstrument used in _____ situations is the purchasing contract. a. reciprocal b. straightrebuy c. new-buy d. extended-rebuy e. modified-rebuy ANS: B Purchasing contracts are used with products that are bought often and in high volume. PTS: 1 REF: 202 OBJ: 06-8 T YPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy 116. A routine p urchasing situation in which the purchaser is not looking for new information or at other suppliers is called a: a. modified rebuy b. value buy c. synergistic buy d. straight rebuy e. m ake-or-buy ANS: D PTS: 1 REF: 202 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 06-8 TYPE: Def 117. The elementary school teacher sent the following memo t o her school's principal for his authorization: Will: Please order another two cases of construction paper, and twelve more glue sticks from our supplier. I'll need this by next T hursday. Thank you. --Heather This buying situation should be described as a: a. make-orbuy b. value buy c. new buy d. modified rebuy e. straight rebuy ANS: E A straight rebuy is a simple repurchase of i tems (no changes) without seeking a new supplier. PTS: 1 REF: 202 O BJ: 06-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 118. Since i t has been medically proven that watching fish reduces anxiety, many physicians' offices have installed large fish tanks in their waiting rooms. There has been a tank in Dr. M cKinnon's office for six years. Yesterday, his receptionist went to the pet store and p urchased three replacement goldfish for $3.30. This purchase was most likely an example of a(n) _____ buying situation. a. need-related buy b. limi ted rebuy c. straight rebuy d. r ebuy sourcing e. institution buy ANS: C PTS: 1 REF: 202 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 06-8 TYPE: App 119. Business marketers i ncreasingly recognize the importance of _____ as a major component of marketing s trategies. a. customer service b. price collusion c. ethnocentrism d. the divider effect e. competitive advertising ANS: A Customer service has become the focus, rather than p roducts or other aspects of the marketing mix, for successful marketing strategies. PTS: 1 REF: 203 OBJ: 06-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model S trategy Et ruscan Railing Company Et ruscan Railing Company makes railing that is used i n sports arenas, nursing home corridors, queue houses at amusement parks, and many other places that are not as obvious. I ts railing is molded into bicycle racks. You may also see city governments using the railing to make walkways over ravines and creek banks safer for pedestrian t raffic. Hospitals also use the railing in their physical therapy departments, to keep the lines straight in the hospital cafeteria, and to prevent patients f rom falling out of hospital beds. 120. Refer to Et ruscan Railing Company. Et ruscan Railing sells: a. consumer products b. business products c. supplies d. consumer and business p roducts e. major equipment ANS: B Each market discussed in the scenario is a business m arket, based on the intended use of the product. PTS: 1 REF: 186 OBJ: 06-1 TOP: AACSB Reflective Thinking | TB&E Model Product 121. Refer to Et ruscan Railing Company. When E t ruscan sells railing to contractors to use in building loading docks in accordance with federal government regulations, i t is selling to: a. government b. institutions c. resellers d. p roducers e. consumers ANS: D Producers use the products to facilitate their daily operations. PTS: 1 REF: 191 OBJ: 06-4 TOP: AACSB Reflective Thinking | TB&E Model S trategy 122. Refer to Et ruscan Railing Company. When Et ruscan sells railings to r efurbish a private university's football stadium, it is selling to a(n): a. intermediary b. i nstitution c. reseller d. producer e. consumer ANS: B Institutions are nonprofit organizations like state-operated universities. PTS: 1 REF: 192 OBJ: 06-4 TOP: AACSB Reflective Thinking | TB&E Model Product 123. Refer to Et ruscan Railing Company. E t ruscan has experienced a strong increase in railing sales as a result of the growth of college football. This increase in the demand for railings as a result of the demand for new football stadiums is called _____ demand. a. joint b. derived c. inelastic d. f luctuating e. elastic ANS: B Demand for railing is driven by the growth of college football. PTS: 1 REF: 194 OBJ: 06-6 TOP: AACSB Reflective Thinking | TB &E Model Strategy 124. Refer to E t ruscan Railing Company. Companies that make bicycle racks for bike safekeeping in p ublic places receive the railing as 30-foot lengths of pipe. For these companies, Et ruscan r ailing is: a. supplies b. accessory equipment c. an installation d. processed material e. raw m aterial ANS: D Processed materials are products used directly in manufacturing other p roducts. They have had some processing. PTS: 1 REF: 199 OBJ: 06-7 TOP: AACSB Reflective Thinking | TB&E Model Product Laptop Computers Jason Lee, the warehouse m anager for a small manufacturer of valves used in heating and cooling systems, wants all of the company's sales force to record each sale on a laptop computer and send the i nformation to the office at the end of each workday. This use of technology will make the p rocessing of orders quicker. Lee has suggested his idea to the salespeople at a quarterly meeting, and they concur that the plan is excellent. Lee then discussed this option with the company president Wilson Arno, who agreed to buy laptops for all the salespeople. Arno contacted the company's purchasing agent Ron Talbot and authorized the purchase. 125. Refer to Laptop Computers. Lee, Arno, Talbot, and the company's sales force were all i nvolved in the decision-making process for the laptop computer purchase. These people r epresent a: a. purchasing group b. decision board c. purchasing department d. planning g roup e. buying center ANS: E A buying center includes all those persons in an organization who become involved in the purchasing process. PTS: 1 REF: 200 OBJ: 06-8 T OP: AACSB Reflective Thinking | TB&E Model Strategy 126. Refer to Laptop Computers. T he role Lee played in the laptop computer purchase was: a. decider b. gatekeeper c. i n fluencer d. initiator e. user ANS: D The initiator is the person who fi rst suggests making t he purchase. PTS: 1 REF: 200 OBJ: 06-8 TOP: AACSB Reflective Thinking | TB &E Model S trategy 127. Refer to Laptop Computers. Which role are the salespeople playing in the decision-making process for the computer laptops? a. initiators b. gatekeepers c. deciders d. p urchasers e. users ANS: E The sales force will use the laptop computers. PTS: 1 REF: 200 O BJ: 06-8 TOP: AACSB Reflective Thinking | TB &E Model Strategy 128. Refer to Laptop Computers. Which role is Arno playing in the decision-making process? a. gatekeeper b. p urchaser c. user d. decider e. ini tiator ANS: D Arno made the final decision and authorized t he purchase of the laptop computers. PTS: 1 REF: 200 OBJ: 06-8 TOP: AACSB Reflective T hinking | TB &E Model Strategy 129. Refer to Laptop Computers. Which role is Ron Talbot playing in the decision-making process? a. initiator b. decider c. purchaser d. gatekeeper e. influencer ANS: C Talbot actually negotiated the purchase of the laptop computers. PTS: 1 REF: 200 OBJ: 06-8 TOP: AACSB Reflective Thinking | TB &E Model S trategy Lucent Technologies Because AT&T Corporation wanted to become a big player in t he booming market for outsourcing computer services, i t set up Lucent Technologies to m anage corporate clients' worldwide computer networks. Lucent Technologies assists corporations in global network and computer management by drawing on AT&T's worldwide digital network and i ts computer hardware and software businesses. I t also r elies on the expertise of technicians at Bell Laboratories. 130. Refer to Lucent Technologies. Lucent Technologies sells: a. consumer products b. business products c. supplies d. consumer and business products e. installations ANS: B Based on the intended use of the product, the market is a business market. PTS: 1 REF: 186 OBJ: 06-1 TOP: A ACSB Reflective Thinking | TB&E Model Product 131. Refer to Lucent Technologies. L ucent Technologies depends on AT&T, but also has found it necessary to form cooperative partnerships with other technology, telecommunications, and software fi rms, such as Lotus Development. Lucent has found it necessary to form: a. strategic alliances b. relationship contracts c. outsourcing vendor liaisons d. bargaining positioning grids e. market groupings A NS: A Cooperative relationships are strategic alliances. PTS: 1 REF: 189 OBJ: 06-3 TOP: A ACSB Reflective Thinking | TB&E Model Strategy 132. Refer to Lucent Technologies. F irst National Bank of Chicago, one of AT&T's customers, claims the new network helped t he bank win a huge contract from the U.S. Treasury. For classification purposes, First National Bank would be which type of customer? a. producer b. reseller c. government d. i nstitution e. wholesaler ANS: A Businesses that purchase goods and services for the p urpose of making a profit are producers. PTS: 1 REF: 191 OBJ: 06-4 TOP: AACSB Reflective Thinking | TB&E Model Strategy 133. Refer to Lucent Technologies. Consumers u tilizing the First National Bank of Chicago to purchase U.S. Treasury bonds will affect the demand for and use of the AT&T network computer system capabilities. This is called: a. joint demand b. inelastic demand c. derived demand d. f luctuating demand e. elastic demand ANS: C The demand for consumer goods often affects the demand for business p roducts. PTS: 1 REF: 194 OBJ: 06-6 TOP: AACSB Reflective Thinking | TB&E Model Customer 134. Refer to Lucent Technologies. AT&T requires i ts customers to purchase all t he necessary technology to run the network. This requires expensive machinery that will be purchased and then depreciated over time. The machinery is classified as: a. processed m aterials b. accessory equipment c. installations d. supplies e. component parts ANS: C I nstallations (major equipment) is expensive and depreciated over a long period of t ime. PTS: 1 REF: 197-198 OBJ: 06-7 TOP: AACSB Reflective Thinking | TB &E Model Product Baseball Dir t Dir t is not dir t when it comes to baseball fields. About two-thirds of the pro baseball fields got their dirt from a dir t farm in New Jersey called Partac Peat. The company markets a secret mix for the infield (resilient), the warning t rack (extra crunchy), and the pitcher's mounds (firm). Mounds come in red, brown, orange, and gray colors. Roger Bossard, the White Sox head groundskeeper, scouted nationwide for dir t before settling on t he mix provided by Partac Peat. (He uses sand under the grassy areas of the playing field.) 135. Refer to Baseball Di r t. Some of the dir t sold by Partac Peat goes to make clay tennis court surfaces. As the number of people playing tennis increases so does the demand for new clay courts and, therefore, the demand for Partac Peat clay. This occurs because the demand for Partac Peat is: a. inelastic b. intangible c. heterogeneous d. derived e. elastic A NS: D As consumers demand more space to play tennis, the demand for the materials to m ake new tennis courts increase. PTS: 1 REF: 194 OBJ: 06-6 TOP: AACSB Reflective T hinking | TB &E Model Customer 136. Refer to Baseball Di r t. Because Partac Peat is a business product, the primary promotional method used for its sale is: a. t rade promotions b. slotting allowances c. personal selling d. advertising in consumer magazines e. publicity A NS: C PTS: 1 REF: 197 OBJ: 06-6 TOP: AACSB Reflective Thinking | TB &E Model P roduct | TB&E Model Promotion 137. Refer to Baseball Dir t. An increase in the price of Partac Peat will not affect the demand for the product because many groundskeepers believe there is no substitute for the product. Thus, demand for Partac Peat is: a. inelastic b. intangible c. heterogeneous d. synergistic e. elastic ANS: A Inelastic demand means an i ncrease or a decrease in price will not significantly affect product demand. PTS: 1 REF: 195 OBJ: 06-6 TOP: AACSB Reflective Thinking | TB &E Model Product | TB &E Model P ricing 138. Refer to Baseball Dir t. What type of business product would Partac Peat be since it is used in the making of baseball fields? a. equipment b. accessory equipment c. capital i tem d. processed materials e. component parts ANS: E The dir t is purchased from Partac Peat because it needs to be used in the construction of the baseball fields. The dir t r eceives no fur ther processing. PTS: 1 REF: 198 OBJ: 06-7 TOP: AACSB Reflective T hinking | TB &E Model Product 139. Refer to Baseball Di r t. Roger Bossard, the White Sox head groundskeeper, most likely did NOT assume which of the following buying center roles since he has the authority to buy whatever is needed to make the baseball field the best p laying surface possible? a. gatekeeper b. decider c. evaluator d. inf luencer e. ini tiator ANS: A S ince he occupies most of the roles himself, he would not be restricting the f low of i nformation to himself. PTS: 1 REF: 200 OBJ: 06-8 TOP: AACSB Reflective Thinking | T B &E Model Strategy 140. Refer to Baseball Dir t. The first t ime Roger Bossard purchased Partac Peat, it was most likely an example of which type of buying situation? a. modified r ebuy b. new buy c. habitual buying decision d. buying heuristics e. straight rebuy ANS: B PTS: 1 REF: 202 TOP: AACSB Reflective Thinking | TB&E Model Strategy Claxton F ruitcakes One common Christmas t radition in many households is the Claxton fruitcake. T he fruitcake bakery in Claxton, Georgia, makes about 6 million pounds of fruitcake annually and has $12 million in sales. One fruitcake batch weighs 375 pounds. About 70 percent of that weight is fruits and nuts. A single batch is divided into 34 loaf pans that hold 11 pounds each. Loaves are cooked for 100 minutes at 375 degrees. The bakery can cook 6,000 pounds at a t ime. During the baking season (August-December), the bakery uses a t ractor-t railer load of raisins each day. The suggested retail price of a one-pound Claxton f ruitcake is $3.69. 141. Refer to Claxton Fruitcakes. Because demand for raisins to bake i nto the fruitcakes does not change on the basis of the price f luctuations of dried fruits, C laxton's demand for raisins is an example of _____ demand. a. inelastic b. derived c. f luctuating d. elastic e. joint ANS: A PTS: 1 REF: 195 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 06-6 OBJ: 06-8 142. Refer to Claxton Fruitcakes. In terms of business-to-business products, the large ovens in which the cakes are baked are examples of: a. component parts b. MRO equipment c. specialty equipment d. processed supplies e. major equipment ANS: E The ovens would be examples of installations just like an assembly line. PTS: 1 REF: 197-198 OBJ: 06-7 TOP: AACSB Reflective Thinking | TB &E M odel Product 143. Refer to Claxton Fruitcakes. In terms of business-to-business products, t he f lour used in frui tcakes is an example of: a. OEM supplies b. installations c. MRO supplies d. processed materials e. accessory supplies ANS: D PTS: 1 REF: 199 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 06-7 144. Refer to Claxton Frui tcakes. In December, many corporations give Claxton fruitcakes to their customers as a way of t hanking them for their business. Which answer best describes what is happening in the buying center?: a. The person who decides that gifts would be appropriate would be the i nitiator. b. The person who has the formal authority to select Claxton fruitcakes as the appropriate gift is the decider. c. The person who prevents other members of the buying center from seeing promotional material from other companies selling similarly priced gift i deas is an example of a gatekeeper. d. The salespeople who remind management how much t heir customers enjoyed Claxton fruitcake last year are examples of inf luencers. e. all of the choices are t rue ANS: E PTS: 1 REF: 200 OBJ: 06-8 TOP: AACSB Reflective Thinking | T B &E Model Customer | TB &E Model Promotion 145. Refer to Claxton Fruitcakes. Any company that purchased Claxton fruitcakes to give to i ts customers would t reat this p urchase like any other purchase and evaluate the cake and the company in terms of: a. demand, value, and promotion b. quality, service, and price c. order t ime and delivery time d. customer relationships, costs, and ethical behavior e. time requirements, order speed, and customer reactions ANS: B PTS: 1 REF: 201 OBJ: 06-8 TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model Promotion 146. Refer to Claxton F ruitcakes. For a corporation that has been giving its key customers Claxton fruitcakes since 1950, placing the order for cakes to be delivered this year would be an example of a _____ because some negotiation about price and quantity must occur each year. a. new buy b. contingency buy c. modified rebuy d. situational buy e. straight rebuy ANS: C PTS: 1 REF: 202 OBJ: 06-8 TOP: AACSB Reflective Thinking | TB &E Model Customer | TB &E M odel Promotion ESSAY 1. What is business marketing? What basic types of goods and services are marketed between businesses? ANS: Business marketing is defined in the text as "the marketing of goods and services to individuals and organizations for purposes other t han personal consumption." The differentiating factor between business marketing and consumer marketing is the intended use of the product or service, not physical characteristics. Goods and services marketed between businesses include those products (1) t hat are used to manufacture other products, (2) that become part of another product, (3) t hat facilitate the normal operations of a fi rm, or (4) that are acquired for resale without any substantial change in form. PTS: 1 REF: 186 | 191 OBJ: 06-1 | 06-4 TOP: AACSB A nalytic | TB&E Model Strategy 2. What is a strategic alliance? How is i t linked to r elationship marketing? ANS: A strategic alliance, sometimes called a strategic partnership, is a cooperative agreement between business fi rms--often in the business m arket, between supplier and customer. Frequently, strategic alliances take the form of l icensing or distribution agreements, joint ventures, research and development consortia, or partnerships involving mult inational partnerships. The two key features that characterize most successful strategic alliances are carefully chosen partners and a situation in which both parties benefit from the relationship. Strategic alliances are therefore connected to r elationship marketing, which is defined as a strategy that entails seeking and establishing long-term partnerships with customers. PTS: 1 REF: 189 OBJ: 06-3 TOP: AACSB Analytic | T B&E Model Strategy 3. Are strategic alliances a purely American phenomenon? Explain your answer. ANS: Students should use the existence of keiretsu in Japan as an argument against strategic alliances being a purely American phenomenon. The keiretsu like other s trategic alliances is a network of interlocking corporate affiliates that work together in cooperative efforts for the betterment of all members. PTS: 1 REF: 190 OBJ: 06-3 TOP: A ACSB Analytic | AACSB Diversity | TB&E Model Strategy | TB&E Model International Perspective 4. Br iefly describe the four major categories of customers in business m arketing. Give examples of companies or organizations in each category. ANS: PRODUCERS include individuals and organizations that purchase goods and services for t he purpose of making a profit by using them to produce other goods, to become part of other goods, or to facilitate the daily operations of a fi rm. Examples include General Motors, Coca-Cola, and IB M. RESELLERS include those wholesale and retail businesses that buy f inished goods and resell them for a profit. Examples could include any grocery store, f urniture store, or retail clothing store. GOVERNMENT organizations include a large n umber of buying units that purchase goods and services. The federal government as well as state, county, and city governments are all examples. I NSTITUTIONS are nonprofit organizations that have different primary goals from ordinary businesses. This category i ncludes schools, churches, hospitals, clubs, foundations, and labor unions. PTS: 1 REF: 191-192 OBJ: 06-4 TOP: AACSB Analytic | TB &E Model Strategy 5. Describe the reseller m arket. Why do businesses use the services of business product distr ibutors? ANS: The r eseller market includes retail and wholesale businesses that buy finished goods and resell t hem for a profit. Retailers sell to final consumers, and wholesalers sell to retailers and other organizational customers. Business product distributors are wholesalers who buy business products and resell them to business customers. These distributors often carry m uch stock and have sales forces that call on business customers. Businesses that wish to p urchase items typically buy from these local distributors rather than from large m anufacturers. PTS: 1 REF: 191 OBJ: 06-4 TOP: AACSB Analytic | TB&E Model Product | T B &E Model Distr ibution 6. As you read in the chapter, a major segment of the business m arket is governments. What do you think are the advantages and disadvantages of doing business with the government? Describe two advantages and two disadvantages. What advantages and disadvantages would you imagine small businesses experience when t rying t o conduct business with the government? ANS: ADVANTAGES include (1) the large n umber of government organizations, (2) the large variety of goods and services needed by governments, (3) centralized buying capabilities, (4) volume purchases, and (5) improved s tandardization and professionalism. Advantages for small businesses include (1) the government will pay its bills, (2) as a government contractor, small businesses gain credibility, (3) the government buys nearly everything, (4) the government usually does not subject suppliers to abrupt cancellations in recessions, (5) with progress payments, the government acts as a financing source to small businesses, and (6) the government is a more objective purchaser than many companies. DISADVANTAGES include (1) the large n umber of agencies and buyers that must be contacted, (2) increased paperwork and other administrative costs, and (3) no guarantee of getting the business because of the bidding p rocess. Disadvantages for small businesses include (1) difficulty in learning to bid for government orders, (2) government bureaucrats may feel more comfortable with big company suppliers, (3) the businessgovernment relationship must be reestablished with new government personnel, (4) government specifications may change, (5) the government's t ime requirements for delivery may be unreasonably short, and (6) the time the government t akes to pay may be unreasonably long. PTS: 1 REF: 191-192 OBJ: 06-4 TOP: AACSB A nalytic | TB&E Model Strategy 7. A major segment of the business market is made up of i nstitutions. Marketers should be aware of the differences between institutions and other businesses. Name and briefly describe two of these differences. ANS: Institutions seek to achieve goals that differ from ordinary business goals such as profit, market share, or return on investment. The institutional market also is characterized by great diversity. I nstitutional organizations include schools, hospitals, colleges and universities, churches, l abor unions, civic clubs, foundations, and so on. These diverse organizations have vastly d ifferent needs and buying behaviors. PTS: 1 REF: 192 OBJ: 06-4 TOP: AACSB Analytic | T B &E Model Strategy 8. A Brazilian manufacturer of solar cells used as a renewable source of energy in all types of structures would like to begin distribution and sales in the United S tates, Canada, and Mexico. The manufacturer has hired you to investigate NAICS data for such products in North America. What is the NAICS system? What other helpful kinds of i nformation can be found in this source? ANS: The North American Industry Classification System (NAICS) is a set of numerical codes assigned by the U.S., Mexican, and Canadian governments to classify business and government organizations according to primary economic activity. The system assigns numbers to economic divisions, industry groups, and p roduct classifications. This system replaced the previously used standard industry code (SIC) system when the North American Free Trade Agreement was signed. Businesses and i ndividuals could use (NAICS) data for market analysis, segmentation, and targeting. The N A ICS system will provide the requested sales volume information at an industry level as well as information on the number of fi rms, number of employees, and geographic b reakdowns of the industry. PTS: 1 REF: 193-194 OBJ: 06-5 TOP: AACSB Analytic | TB&E M odel Strategy 9. Name and briefly describe six of the major differences between business and consumer markets. ANS: DEMAND. There are several differences between organizational and consumer demand. Organizational demand is derived from the demand of consumer products, tends to be price inelastic, has joint demand with related products used in combination with the final product, and tends to f luctuate more than consumer demand. PURCHASE VOLUME. Business customers buy in much larger quantities (both in single orders and in total annual volume) than do consumers. NU MBER OF CUSTOMERS. B usiness marketers tend to have far fewer customers than consumer marketers. L OCATION OF BUYERS. Unlike consumer markets, business customers tend to be geographically concentrated. DISTRIBUTION STRUCTURE. Channels of distribution tend t o be much shorter in business marketing. Direct channels are also more common. N ATURE OF BUYING. Business buying is usually more formalized with responsibility assigned to buying centers or purchasing agents. NATURE OF BUYING I NFLUENCE. M ore people are involved in business purchasing decisions than in consumer purchases, because many levels and departments of the firm are involved in the purchase. USE OF RECIPROCITY. Business purchasers often buy from their customers, and vice versa. USE O F LEASING. Businesses often lease equipment, unlike consumers who more often p urchase products. PRIMARY PROMOTIONAL METHOD. Personal selling is often emphasized in business marketing, while advertising is emphasized in consumer m arketing. PTS: 1 REF: 194-197 OBJ: 06-6 TOP: AACSB Analytic | TB&E Model Customer 10. Business customers have different wants and needs than consumers. Name three d ifferent needs of business-to-business customers. Are there any ways business purchasing behavior is similar to consumer buying behavior? If so, describe the similari ties. ANS: B usiness customers prefer to buy in large amounts from more direct sources (fewer m iddlemen). Business buyers tend to be fewer and more geographically concentrated than consumer buyers. Business customers usually approach purchasing more formally. P rofessionally t rained purchasing agents are often used because negotiations are typically complex. Finally, business customers may prefer reciprocity and lease options. There are several similari ties between both types of buying behavior. First, both types of buyers use a decision process to make choices, although the steps can be different. Additionally, the personal makeup of individual buyers in a business-to-business purchasing situation continues to inf luence the purchase. Finally, both types of buyers react to environmental and situational factors when making a purchasing decision, including the influence of other r ole players (household members versus other organization members), in fluence of culture (either subcultures or organizational culture), or other environmental conditions (lifestyle or work style). PTS: 1 REF: 195-197 OBJ: 06-6 TOP: AACSB Analytic | TB&E Model Customer 11. Explain the four ways demand in business markets differs from demand in consumer markets. ANS: DERIVED DEMAND. The demand for business-to-business p roducts is derived from the demand for consumer products. This is because organizations buy products to be used directly or indirectly in the production of consumer products. T herefore, fi rms must carefully monitor demand patterns in final consumer markets. I NE LASTIC DEMAND. The demand for business-to-business products tends to be price i nelastic. This means changes in price will not significantly affect demand for the product ( unlike consumer markets). JOINT DEMAND. Most business products involve the combination of many components into a final product. Joint demand occurs when two or more i tems are used in combination in a final product. The text provides an example of m icrocomputer disk drives and memory chips. Joint demand is much more common in business markets. FLUCTUATING DEMAND. The demand for business products tends to be more unstable than the demand for consumer products. The multiplier effect explains how a slight change in consumer demand can result in a significant change in demand for business products. PTS: 1 REF: 194-195 OBJ: 06-6 TOP: AACSB Analytic | TB&E Model Customer 12. What is reciprocity? Is it illegal or unethical? Why or why not? ANS: Reciprocity is when business purchasers choose to buy from their customers. The practice is neither unethical nor illegal unless one party coerces the other into the reciprocal p urchasing arrangement and the result is unfair competition. Reciprocity is generally considered to be a reasonable business practice, because i t makes sense to patronize fi rms t hat help your organization achieve i ts sales and profit goals. PTS: 1 REF: 197 OBJ: 06-6 T OP: AACSB Analytic | TB&E Model Customer 13. Briefly define and describe each of the categories of business goods and services. Give two specific examples of goods or services t hat fit into each category. ANS: MAJOR EQUIPMENT (or installations) consists of capital goods that are depreciated over t ime. These goods are often custom designed and therefore often sold by personal selling and distributed directly. Text examples include large m achinery, mainframe computers, blast furnaces, generators, airplanes, and buildings. ACCESSORY EQUIPMENT is shorter-lived than major equipment and is often charged as an expense in the year i t is purchased. Advertising and local distributors play a role in the sale of accessory equipment. Text examples include portable power tools, word processors, and fax machines. RAW MATERIALS are unprocessed extractive or agricultural products t hat are used as "ingredients" in other finished goods. Personal selling, direct channels, and p rice inflexibility characterize the marketing of raw materials. Text examples include m ineral ore, t imber, wheat, and fish. COMPONENT PARTS are either finished i tems ready for assembly or products that need lit tle processing to become part of another product. Component parts sometimes retain their identity, often need replacement in the final p roduct, and are marketed through OEM and replacement markets. Text examples include spark plugs, motors, and automobile ti res. PROCESSED MATERIALS are used directly in t he manufacturing of other products and do not retain their identity in the final product. Text examples include sheet metal, plastics, corn syrup, lumber, and specialty steel. The m aterials may be custom-processed, so price and service are important in vendor selection. SUPPLIES (or MRO i tems) are consumable i tems that are not part of the final product. T hey are relatively inexpensive and have a short life. Text examples include lubricants, cleaning supplies, pencils, and paper. BUSINESS SERVICES are expense i tems that are not part of the final product. When i t is costeffective, fi rms often retain outside companies t o provide services. Text examples include janitorial, advertising, legal, consulting, r esearch, and maintenance services. PTS: 1 REF: 197-199 OBJ: 06-7 TOP: AACSB Analytic | T B&E Model Product | TB &E Model Distr ibution 14. Two important markets for many component parts are the OEM market and the replacement market. What does OEM stand for? Contrast characteristics of the OEM market and the replacement market, also called t he “aftermarket”. ANS: The original equipment manufacturer (OEM) market is characterized by most of the features found in business markets, including inelastic and joint demand, large purchase volumes, few customers, geographically concentrated customers, direct distribution, professional buying, complex negotiation, deep price d iscounting, and heavy emphasis on personal selling. Profit margins for OEMs are often small, but high volumes allow for substantial profits. The replacement market is characterized by buyers who purchase component parts to replace worn-out parts. Replacement markets tend to exhibit more characteristics of consumer markets such as small purchase volumes, geographically dispersed customers, and an emphasis on advertising. PTS: 1 REF: 198-199 OBJ: 06-7 TOP: AACSB Analytic | TB&E Model Strategy 15. Assume you are the vice-president of marketing in a medium-sized company that i ncludes the following departments: marketing, finance, purchasing, data processing, and p roduction. The sales force manager has mentioned to you that one of the salespersons t hought laptop computers would help the sales force become more efficient. The sales m anager requests that ten laptops be purchased. I llustrate the six buying decision roles t hat would take place for the purchase of these laptops. ANS: The I N IT IATOR of the buying decision could be identified as the salesperson who identified the need but more likely would be the sales force manager who suggested the purchase be made. I NFLUENCERS/EVALUATORS might include the finance office (which would control the amount of dollars available for spending), members of the sales force (who might provide i nformation about laptops competitors are using), and the data-processing department ( which would have a good knowledge of alternative laptop models). GATEKEEPERS could i nclude the data-processing department (which would approve of only certain laptop models t hat are compatible with existing systems) and the purchasing department (which would r ecommend matches with likely vendors). The DECIDER might be the president of the company, the vice-president of marketing, or the sales force manager; the decider is the person with the power to approve the brand of laptop. The PURCHASER will be the p urchasing agent in the purchasing department who will negotiate the terms of the sale. USERS will include all sales force members who will use the laptops. PTS: 1 REF: 200 OBJ: 06-8 TOP: AACSB Analytic | TB&E Model Strategy 16. What is a buying center? What are some implications of buying centers to the marketing manager? ANS: The buying center is N OT a place. A buying center includes all those persons in an organization who become i nvolved in the purchasing process. Membership varies from company to company. M arketers must identify the players in the decision-making unit so that interaction can t ake place. Once the members of the buying center are identified, the marketer should i dentify the role(s) played by each member and their relative influence. This determines w here sales efforts should be concentrated. Finally, a marketer should identify each member's evaluative criteria to focus on correct att ributes in a sales presentation. PTS: 1 REF: 200-201 OBJ: 06-8 TOP: AACSB Analytic | TB&E Model Strategy 17. Business buyers use a variety of criteria to evaluate alternative products and suppliers. Name and define specific aspects of the three most important criteria. ANS: The three criteria, in order of i mportance, are quality, service, and price. QUALITY. Quality refers to technical suitability. E valuation of quality also applies to the salesperson and the company: The salesperson should be reputable and the company should be financially responsible. SERVICE. Buyers seek to buy satisfactory service as well as satisfactory products. Services may include needs assessment analyses, installation, t raining, maintenance, and repair. Service also entails delivering exactly what was ordered when it is scheduled to be delivered. Buyers also welcome services that help them sell their finished products. PRICE. Business buyers usually want to buy at the lowest prices, as long as the product quality and service r equirements are met. PTS: 1 REF: 201 OBJ: 06-8 TOP: AACSB Analytic | TB &E Model P roduct 18. Cascade Landscaping Service (CLS) has decided to purchase computer-assisteddesign (CAD) software for landscape design. Describe the conditions under which each of t he three business buying situations would take place. ANS: NEW BUY. A new buy is a situation requiring the purchase of a product or service for the first t ime. In this case, CLS has no experience buying such software or has not established any relationship with a vendor of the CAD software. CLS may be a new or small company that currently does not have any type of CAD software. Alternatively, CLS may be value engineering and finding a less expensive alternative than drawing the designs by hand or simply attempting to work t hem out as the project progresses. MODIF IED REBUY. In this case, CLS would have experience with CAD software in general and an established relationship with software vendors. The focus would be on the new need of more structured plans to show customers. STRAIGHT REBUY. In this case, the purchase of CAD software would be a routine p urchase decision or a reorder of previously ordered software from the same vendor. Perhaps, CLS is a reseller of supplies for landscaping including software. PTS: 1 REF: 202 O BJ: 06-8 TOP: AACSB Analytic | TB &E Model Strategy 19. Why is customer service an i mportant factor in business marketing? ANS: Business marketers are increasingly r ecognizing the importance of customer service as a major component of successful m arketing strategies. Customer service is often a critical factor used in vendor analysis and can be a key differentiating factor in vendor choice. Core service skills offered with a p roduct can be more important than the product itself. PTS: 1 REF: 203-204 OBJ: 06-8 T OP: AACSB Analytic | TB&E Model Customer 20. You overhear a salesperson saying, "I don't do anything with my straight-rebuy customers because they don't expect any service." Comment on his statement. ANS: Suppliers and their sales staff must remember not to t ake straight-rebuy relationships for granted. Retaining existing customers is much easier t han attracting new ones. The salesperson's statements indicates that unless he changes h is attitude, his buyers may purchase from another source. PTS: 1 REF: 203 OBJ: 06-8 T OP: AACSB Analytic | TB&E Model Strategy Chapter 7—Segmenting and Targeting M arkets TRUE/FALSE 1. AkPharm, Inc. has developed Cat-Sip, a lactose-free milk designed to be digestible by cats. The market for this product is cats. ANS: F Animals are not able to make purchases and, therefore, cannot be called a market although the animals' owners would constitute a market. PTS: 1 REF: 212 OBJ: 07-1 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 2. Global Travel Agency is a small business t hat creates personalized vacations for its customers and is now in the process of identifying g roups of t ravelers who have relatively similar vacation dreams. The business is engaged in t he process of market segmentation. ANS: T PTS: 1 REF: 212 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 07-1 TYPE: App 3. A market segment is deemed to have substantiality if it contains a large numbers of potential customers. ANS: F Substantiality of a segment refers to a segment being large enough to warrant developing and maintaining a special marketing mix. This does not necessarily require large numbers of potential customers. PTS: 1 REF: 213 OBJ: 07-3 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Strategy 4. A segmentation plan must produce segments that exhibit responsiveness. In other words, if all customers are equally concerned about p rotecting the environment, there is no need to offer regular and all-natural versions to the segment. ANS: T PTS: 1 REF: 214 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 07-3 TYPE: Comp 5. Geography, psychographics, and benefits sought are examples of possible segmentation variables used by marketers. ANS: T PTS: 1 REF: 214 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-4 TYPE: Def 6. U.S. paint manufacturers t raditionally use different formulae for developing paint to be used in t he humid Southeast, the frigid M idwest, and the hot and dry Southwest. This is an example of how demographic segmentation is used. ANS: F Regional marketing is an example of using geographic segmentation variables. PTS: 1 REF: 214-215 OBJ: 07-4 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Distribution 7. A market segmentation study done by the University of Thessaly in Greece classified recreational skiers in terms of their gender, age, and educational levels. The study used demographic segmentation variables. ANS: T PTS: 1 REF: 215 TOP: AACSB Reflective Thinking | T B &E Model Customer OBJ: 07-4 TYPE: App 8. Clearing Skies Press published a book by Robert Ruark entit led Keeping the Baby Alive Till Your Wife Gets Home. I t is an advice book for new fathers. The market for this books is based on demographics. ANS: T PTS: 1 REF: 215 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model D istribution 9. The H ispanic American market can always be t reated as a single segment. A NS: F In many instances, the Hispanic American market is not one segment but several. PTS: 1 REF: 219 OBJ: 07-4 TYPE: Def TOP: AACSB Reflective Thinking | AACSB D iversity | TB&E Model Customer 10. Clearing Skies Press published a book by Robert Ruark entitled Keeping the Baby Alive Till Your Wife Gets Home. I t is an advice book for new fathers. An appropriate market segment for this book could be based on the family life cycle. ANS: T PTS: 1 REF: 219 TOP: AACSB Reflective Thinking | TB&E Model Customer O BJ: 07-4 TYPE: App 11. When Holiday Inn used the slogan, "Pleasing people the world over,” it was relying on demographic segmentation. ANS: F This is more reflective of benefit segmentation. There is no suggestion of use of any of the segmentation variables associated w ith demographic segmentation in the slogan. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion 12. Five s tatistically distinct health segments in the general population have been identified. One of t hese segments is referred to as “Avid Partners.” Avid Partners are information-driven. T hey are characterized by their high interest in acquiring health-care knowledge, their perception of themselves as "partners" in decisions that are made about their medical care, t heir lack of loyalty to specific physicians, and their resulting willingness to change physicians. The primary segmentation variables used to identify these health segments was psychographic ANS: T PTS: 1 REF: 221 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 07-4 TYPE: Def 13. Reality-based television shows are targeted to people w ho like to believe they could become a part of such a show and find their way to fame and fortune. This is an example of psychographic segmentation. ANS: T PTS: 1 REF: 221 TOP: A ACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-4 TYPE: App 14. H K M agazine is a free, Hong Kong-based English-language weekly magazine published by Asia C ity Publishing Limi ted. I t targets young metropolitans with a focus on how to live well in t he city. I ts publisher most likely used geodemographic variables to segment its market. A NS: T Geodemographics combines geographic, demographic, and lifestyle segmentation. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 15. The slogan used by GlaxoSmithKline, "Disease has no greater enemy" i ndicates the pharmaceutical company relies heavily on benefit segmentation variables. A NS: T PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Marketing Plan 16. Sav-On Stores, which operates a number of Piggly Wiggly grocery s tores, learned that 25 percent of i ts shopping base is responsible for a substantial majority of its revenue. This is the general idea posited by the 80/20 principle. ANS: T PTS: 1 REF: 223 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-4 TYPE: App 17. C lorox targets individuals who buy lots of cleaning products (heavy users). Some of these users are mainly interested in cleaning bathrooms, while others are more concerned with k itchen cleanliness. Clorox doesn't approach these two groups differently but addresses both types of people as heavy users. This is an example of how companies use benefit segmentation. ANS: F Because Clorox does not segment based on benefits sought but only on usage, this is an example of usage rate segmentation. PTS: 1 REF: 223 OBJ: 07-4 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 18. The business market consists of four broad segments. They are producers, resellers, governments, and regions. A NS: F The four segments are producers, resellers, institutions, and governments. PTS: 1 REF: 223 OBJ: 07-5 TYPE: Def TOP: AACSB Reflective Thinking | TB &E Model Strategy 19. Segmentation by customer type occurs when business marketers segment their markets by income, occupation, and educational variables. ANS: F Segmentation by customer type a llows business marketers to tailor their marketing mixes to the unique needs of particular t ypes of organizations or industr ies. PTS: 1 REF: 224 OBJ: 07-5 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Customer 20. Once a marketer is aware of all possible segmentation variables, choosing which variables to use is a simple, scientific process. ANS: F Selecting segmentation variables is never simple or scientific; i t is a creative process, l imi ted primarily by the marketer's imagination. PTS: 1 REF: 225 OBJ: 07-6 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Strategy 21. Festive Holiday T ruf f les is a small confectionary company in Washington. I ts owner has been heard to say she engages in m ass marketing. Marketers would call her strategy an undifferentiated targeting strategy. A NS: T PTS: 1 REF: 226 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-7 TYPE: App 22. One reason marketers use market segmentation as a tool is that once completed, the process need not be repeated. ANS: F Market segmentation is an ongoing p rocess. Because external forces may change something in the marketer's environment, m arketers must be able to react to those changes as they occur. PTS: 1 REF: 225-226 OBJ: 07-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy 23. Pitkin E nterprises produces animal figurines for children and young adults. For children, it makes hard-to-break figurines that are promoted and distributed in the same manner as the delicate, porcelain ones made for young adults. Pitkin engages in multisegment targeting. A NS: T PTS: 1 REF: 228 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-7 TYPE: App 24. The difference between one-to-one marketing and the t raditional massmarketing approach is difficult to articulate. ANS: F The text compares the difference between one-to-one marketing and the t raditional mass marketingapproach compares to shooting a r i f le versus a shotgun. PTS: 1 REF: 230 OBJ: 07-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Marketing Plan 25. One of the forces influencing the g rowth of one-to-one marketing is more demanding and t ime-poor consumers. ANS: T Other i n fluences include a more diverse society, a declining brand loyalty, and the explosion of new media alternatives. PTS: 1 REF: 230-231 OBJ: 07-8 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy 26. One of the t rends that will lead to the continued growth of one-to-one marketing is the perception by consumers that they have more things to do and less time in which to do them. ANS: T PTS: 1 REF: 230 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 07-8 TYPE: Comp 27. To position a p roduct, a manufacturer must develop a marketing mix to influence potential consumers' overall image of that product. ANS: T PTS: 1 REF: 231 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 07-9 TYPE: Def 28. Ol' Roy (the Wal-Mar t store brand) dry dog food is sold at minimal cost with no promotion. Kal-Kan Foods markets Pedigree dry dog food and spends t ime and money to develop ads to show the relationships between dogs and t heir owners. Since the two companies' products provide the same level of nut r ients to dogs, t hese products are undifferentiated. ANS: F Although the products have many similarities, t hese products are probably perceived as very different and are, therefore, differentiated. PTS: 1 REF: 231 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct M ULTIPLE CHOICE 1. A _____ is a group of people or organizations that has wants and needs that can be satisfied by particular product categories, has the ability to p urchase these products, and is willing to exchange resources for the products. a. fi rm b. buyer c. market d. consumer e. target ANS: C PTS: 1 REF: 212 TOP: AACSB Reflective T hinking | TB &E Model Customer OBJ: 07-1 TYPE: Def 2. A group of middle school s tudents stop by a sporting goods store. The store has just received a new shipment of highend racing bicycles. The bicycles range in price from $1,200 to $3,000. All of the students want one of these new bikes, but none has the means to buy one. Is this group of consumers a potential market for the expensive bikes? a. Yes, they are a potential market since they a re all about the same age. b. No, they do not have the ability to purchase at this time. c. No, to qualify as a market, they must need the product. d. Yes, they are a market because t his product could satisfy their consumer wants and desires. e. Yes, they are a market because this group shares relatively similar product needs and purchasing characteristics. A NS: B A market is a group of people or organizations that has wants and needs that can be satisfied by particular product categories, has the ability to purchase these products, and is willing to exchange resources for the products. There is no suggestion of ability in this case. PTS: 1 REF: 212 OBJ: 07-1 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer 3. A market is people or organizations that have: a. the ability, willingness, and power to buy b. a medium of exchange and products they desire c. needs and wants and an ability and willingness to buy d. unmet needs or wants and products or services that satisfy those unmet needs or wants e. communication, financial, and capital resources ANS: C A m arket is defined as having four imperative characteristics: people or organizations, needs and wants, ability, and willingness to buy. PTS: 1 REF: 212 OBJ: 07-1 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Customer 4. A(n) _____ is a subgroup of i ndividuals or organizations sharing one or more characteristics that cause them to have r elatively similar product needs. a. market universe b. market segment c. aggregated m arket d. segmentation base e. population sample ANS: B PTS: 1 REF: 212 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 07-1 TYPE: Def 5. _____ is the process of dividing a market into meaningful groups that are relatively similar and identifiable. a. Perceptual mapping b. Positioning c. M icromarketing d. Market sampling e. Market segmentation ANS: E PTS: 1 REF: 212 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 07-1 TYPE: Def 6. E&V Bridal Studios is a wedding consulting business designed to appeal to East Asians. At one t ime i t used the same marketing mix for all of its customers, but i t has discovered that i t needs a different marketing mix to appeal to its ethnic customers. For example, Chinese brides want elaborate red gowns, and Vietnamese b rides wear a brocaded gown with long sleeves and a Mandarin collar. E &V Br idal Studios uses a procedure called _____ to divide i ts large market. a. micromarketing b. positioning c. m arket segmentation d. cannibalization e. perceptual mapping ANS: C Dividing one large m arket into divisions based on a variable such as size is called market segmentation. PTS: 1 REF: 212 OBJ: 07-1 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 7. The purpose of market segmentation is to: a. reduce the market down to a specific size t hat the fi rm can handle b. divide the market into equal size and profit regions for sales t er r i tories c. group a large number of markets together enabling a company to serve them simultaneously d. develop a generalized definition of the market as a whole e. enable the m arketer to tailor marketing mixes to meet the needs of one or more specific groups ANS: E T he purpose of segmentation is to group similar consumers and to serve their needs with a specialized marketing mix. PTS: 1 REF: 212 OBJ: 07-1 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy 8. Hildy Webb and LaTishe Brown own C reative Catering and would like to improve customer satisfaction and increase repeat business. When you ask them to describe a typical customer, they say i t is impossible and explain that with corporate functions, family affairs, and fund-raisers, they do not have a t ypical customer. You suggest it is t ime for market segmentation because: a. i t will enable t hem to build an accurate description of customer needs by group and to design a marketing m ix to fit each segment b. Creative Catering needs to reduce the size of the market it serves c. Creative Catering needs to learn how to group these markets together into one market to serve all of them adequately d. it will help develop a generalized definition of the market as a w hole and reveal the optimal marketing mix for this market e. this will position the company in the minds of its consumers as compared to its competitors ANS: A The purpose of segmentation is to group similar consumers and to serve their needs with a specialized m arketing mix. PTS: 1 REF: 212 OBJ: 07-1 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 9. Market segmentation can assist marketers to do all of the following EXCEPT: a. develop more precise definitions of customer needs and wants b. i dentify which variable base should be used for segmenting c. more accurately define m arketing objectives d. improve resource allocation e. evaluate performance ANS: B Market segmentation itself does not signal which base should be used, but it will define needs and wants, and help marketers define marketing objectives, improve resource allocation, and evaluate performance. PTS: 1 REF: 213 OBJ: 07-1 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Strategy 10. The process of market segmentation involves b reaking down a heterogeneous market into homogeneous and identifiable segments. If this p rocess is carried to i ts extreme, then one could say that: a. this is the reason segmentation cannot be used by small fi rms b. all individuals have the same needs in spite of cultural d ifferences c. everyone belongs to the same segment d. segmentation controls the demand for products e. every individual in the world is a market segment ANS: E The ultimate segmentation would have each individual occupying his or her own segment, because everyone has somewhat different needs. PTS: 1 REF: 212 OBJ: 07-1 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Customer 11. ProtecTV is a product that selectively mutes words and phrases some people find objectionable. I t can be connected to a t elevision, VCR, DVD player, or a satelli te TV system. The manufacturer of ProtecTV t argeted parents who did not want their children exposed to what they consider to be offensive language. The primary market segment for ProtecTV is: a. all parents b. educators c. children under the age of 12 d. parents with preteens in their households e. all those i nterested in screening out offensive language ANS: D PTS: 1 REF: 212 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 07-1 TYPE: App 12. Market segmentation helps businesses to: a. define customer needs and wants more precisely b. more accurately define marketing objectives c. more efficiently allocate resources d. better evaluate their performances e. do all of these things ANS: E PTS: 1 REF: 213 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-2 TYPE: Comp 13. Which of the following is NOT one of the four criteria identified in the text for successful market segmentation? a. substantiality b. identifiability and measurability c. accountability d. accessibility e. responsiveness ANS: C The four criteria are substantiality, identifiability and measurability, accessibili ty, and responsiveness. PTS: 1 REF: 213-214 OBJ: 07-3 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Strategy 14. To be useful, a segmentation scheme must produce segments that meet four basic criteria. The criteria are: a. segmentable, targetable, reliable, and homogeneous b. tangibility, f lexibility, causality, and accessibility c. substantiality, identifiability and measurabili ty, accessibility, and r esponsiveness d. reliability, f lexibility, tangibility, and accessibili ty e. responsiveness, r eliability, homogeneity, and causality ANS: C PTS: 1 REF: 213-214 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 07-3 TYPE: Comp 15. A manufacturer of lenses used in microscopes, binoculars, and telescopes has segmented its market into scientific equipment manufacturers, sporting equipment manufacturers, and retailers who sell r eplacement lenses. In order for this segmentation scheme to be successful, all of the following criteria must be met EXCEPT: a. substantiality b. accessibili ty c. identifiability and measurability d. complexity e. responsiveness ANS: D Complexity is not a criterion; simplicity would be preferred. PTS: 1 REF: 213-214 OBJ: 07-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 16. According to the criterion of _____ a selected segment must be large enough to warrant developing and maintaining a special m arketing mix. Serving the specific needs of this segment must be commercially viable, even if the number of potential customers is small. a. b. c. d. e. causality accountability r esponsiveness accessibili ty substantiality OBJ: 07-3 TYPE: Def ANS: E PTS: 1 REF: 213 T OP: AACSB Reflective Thinking | TB&E Model Strategy 17. The marketing researcher for Chickadee, a manufacturer of designer clothing for infants and toddlers, has submitted a r eport on potential segments for expansion of i ts marketing efforts. She noted an increase of p rofessional women over the age of 35 who are leaving their jobs to have their fi rst babies. She described this segment as having substantiality. This means it: a. has enough special s tores, magazines, and other outlets that it will be possible to direct advertisements at this g roup b. is large enough to permit a profitable market effort toward its members c. exhibits a response rate to marketing variables different from the rates of other segments d. is too large and needs to be reduced to a more easily identifiable and measurable size e. w ill be difficult to develop a product to match this group of buyers ANS: B Substantiality means the selected segment will be large enough to warrant developing and maintaining a special marketing mix. Serving the specific needs of this segment must be commercially v iable, even if the number of potential customers is small. PTS: 1 REF: 213 OBJ: 07-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 18. DCS Corporation makes barbecue grills. I t has expanded into high-priced, multi-purpose grills for people who want to be able to cook all their food outside. Facing lit tle competition, DCS designed an excellent line of specialty grills, had good distribution, used effective promotion w ith this market, and within four years had a respectable market share. Yet financial losses every year have caused DCS to decide to drop this line. The reason could be that this m arket segment, relative to the resources devoted to it, lacked: a. reliabili ty b. i dentifiability and measurability c. substantiality d. accessibili ty e. causality ANS: C Substantiality means the selected segment is large enough to warrant developing and m aintaining a special marketing mix. Serving the specific needs of this segment must be commercially viable. Based on four years of losses, this one apparently was not. PTS: 1 REF: 213 OBJ: 07-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 19. United Social Service Agency wants to identify segments by their readiness to participate in a drug and alcohol program or in prenatal care. The agency will need to gauge whether there are enough people to justify setting up the service. The FIRST segmentation criterion problem that would greet this proposal is: a. responsiveness b. i dentifiability and measurability c. accessibility d. substantiality e. responsibility ANS: B I dentifiability and measurability is the fi rst problem: how many people who are willing, i ndifferent, or unwilling to participate are there? The agency needs this number to gauge if t here are enough of them. If there were enough of them, they would probably be responsive t o a special program. PTS: 1 REF: 213 OBJ: 07-3 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 20. The city of Blossom Valley has a job t raining p rogram for the homeless but has had a difficult t ime reaching this group with information about the program even though radio and television stations have provided public service advertisements free of charge. This illustrates a segmentation problem with: a. substantiality b. identifiability and measurabili ty c. responsiveness d. accessibili ty e. accountability ANS: D Accessibility is the ability to communicate information about the p roduct offering to the segment. PTS: 1 REF: 214 OBJ: 07-3 TYPE: App TOP: AACSB Reflective Thinking | AACSB Communication | TB&E Model Promotion 21. Market r esearchers estimate thousands of Americans have high blood pressure and do not know it because they do not have annual medical exams. A pharmaceutical company that has developed a medicine to reduce blood pressure should not count on this group to be a good t arget market because the group lacks: a. both accessibility and responsiveness b. accountability c. both accessibility and substantiality d. substantiality, identifiability, and measurability e. reliability and responsiveness ANS: A Marketers cannot reach someone w ho does not know he or she has a problem and if he or she is reached, there will be no r esponse. PTS: 1 REF: 214 OBJ: 07-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Customer 22. SRD Research Fi rm has conducted marketing research on the m arket for concrete siding for homes. The research fi rm has determined there are t housands of homeowners who want the security, safety, warmth, and stability provided by concrete siding. These homeowners are generally mar r ied and between 25 and 54 years of age. They tend to live in suburban neighborhoods and most subscribe to lifestyle magazines. I f you were interpreting these results, you might suggest that SRD: a. conduct additional r esearch because it has no idea about the measurability of its segments b. examine the r esearch report again to see if it can determine segment accessibili ty c. conduct a follow-up analysis to determine if the segments it might choose would respond differently from other segments to its marketing strategy d. not segment the concrete siding market because the only market for siding is contractors who build the homes e. segment the concrete siding m arket based on the information provided and concentrate its efforts on suburban homeowners between 25 and 54 who read lifestyle magazines ANS: C The only criterion SRD has not determined is market responsiveness. PTS: 1 REF: 213-214 OBJ: 07-3 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Strategy 23. Every six months or so, some manufacturer int roduces a new shape or color for the boxes that house the hardware t o run PCs. These companies contend beige is boring, and people are ready for "something f un." These manufacturers ignore the fact most Americans like their technology in plain w rappers. These bright colors and odd shapes have failed because the market segment to w hich they are targeted lacks: a. substantiality b. identifiability and measurability c. r esponsiveness d. reliability e. accessibility ANS: C I t is not difficult to locate the large m arket for PCs—they are readily identifiable and accessible for other computer products. T hey are just not responsive to the oddball designs and colors. PTS: 1 REF: 214 OBJ: 07-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 24. The r equirement for a market segment to be responsive means: a. over half of the consumers in t he identified segment will be actively interested in the product b. all the segments i dentified by a marketer should respond to the marketing mix c. all the segments identified by a marketer should not respond to the marketing mix d. the segments identified by a m arketer should not differ in the level of their responsiveness to the marketing mix e. the segment identified by a marketer should differ in how i t responds to the marketing mix w hen compared to another segment confronted with the same mix ANS: E The target segment should respond differently to the market mix compared to other segments. PTS: 1 REF: 214 OBJ: 07-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model S trategy 25. If a market segment is especially motivated by coupons in newspapers, which segmentation success criterion is most influential in the success of this program? a. r esponsiveness b. identifiability and measurability c. substantiality d. accessibili ty e. f unctionality ANS: A Responsiveness is in force when a target segment responds differently ( hopefully more positively) to the marketing mix than other segments. PTS: 1 REF: 214OBJ: 07-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB &E M odel Promotion 26. The M iddleton Health Club has a new fitness program for expectant mothers. After f l iers were placed at the offices of area obstetricians, M iddleton's class filled u p within two days. Which segmentation success criterion was most influential in the success of this promotion? a. substantiality b. identifiabili ty c. measurabili ty d. causality e. r esponsiveness ANS: E Responsiveness is in force when a target segment responds d ifferently (hopefully more positively) to the marketing mix than other segments. PTS: 1 REF: 214 OBJ: 07-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model P romotion 27. _____ are characteristics of individuals, groups, or organizations that m arketers use to divide a total market into segments. a. Differentiation guides b. Segmentation bases c. Perceptual maps d. Responsiveness quotients e. Accessibility quotients ANS: B PTS: 1 REF: 214 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 07-4 TYPE: Def 28. E &V Br idal Studios is a wedding consulting business t argeted to East Asians. I t accommodates the various cultures by providing services to appeal to Koreans, Vietnamese, Chinese, and Japanese customers. E&V Bridal Studios m arkets its services to its customers by using ethnicity to divide its customers into segments. Ethnicity is i ts primary: a. perceived image b. accessibility quotient c. environmental control d. segmentation base e. differentiation guide ANS: D A segmentation base is the characteristic used to segment the market. PTS: 1 REF: 214 OBJ: 07-4 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Promotion 29. Listerine Essential Care toothpaste is designed to reduce plaque and to prevent gingivitis. I ts ads state, "After age 35, 3 out of 4 adults have some form of gum disease." The toothpaste is targeted to the m arket segment over the age of 35. This age variable that has been used to distinguish the m arket for this toothpaste is an example of a(n): a. perceived variable b. accessibility quotient c. mass market d. segmentation base e. differentiation guide ANS: D A segmentation base is the characteristic used to segment the market. PTS: 1 REF: 214 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 30. Mi li tary Spouses is the only publication in the world that targets readers who "are mar r ied to the m ilitary." I ts content reflects the unique set of challenges, hardships, and rewards to those w hose spouses are in the military. The marital status that has been used to distinguish the m arket for this magazine is an example of a(n): a. perceived variable b. accessibility quotient c. mass market d. segmentation base e. differentiation guide ANS: D A segmentation base is the characteristic used to segment the market. PTS: 1 REF: 214 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 31. Cindy Patel is the new owner of a stationery shop in Chicago. She understands the need to segment her m arket, and available marketing research indicates there is much demand in the community for personalized gifts. Patel has few resources and cannot engage in intensive consumer research to precisely identify a segment. Which of the following strategies would you suggest she employ? a. Develop an undifferentiated strategy, because i t is not a large community and she could create a single marketing mix that would serve the entire community. b. Employ a macrosegmentation strategy because the data needed for such a s trategy are both easy to get and fi t her needs exactly. c. Use a single-variable strategy because i t offers an inexpensive alternative that would not require much experience to employ. d. Use a multiple-variable segmentation strategy because it is easier to use than singlevariable segmentation. e. Conduct a VALS investigation of her buying market. ANS: C T hough less precise, single-variable segmentation has the advantage of being simpler and easier to use than multiple-variable segmentation. PTS: 1 REF: 214 OBJ: 07-4 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy 32. _____ is the segmenting of m arkets based on the region of the country or the world, market size, market density ( number of people within a certain unit of land), or climate. a. Community segmentation b. Geographic segmentation c. Geodemographic segmentation d. PRIZM segmentation e. Demonstratable regionalization ANS: B PTS: 1 REF: 214 TOP: AACSB Diversity | TB &E M odel Dist ribution OBJ: 07-4 TYPE: Def 33. You would expect to find more stores targeting h unters in Idaho than in Delaware because hunting is a more popular pastime in the Rocky M ountain state than i t is in the Eastern Seaboard state. A national chain of sporting goods s tores would likely use _____ segmentation when stocking hunting merchandise. a. geographic b. economic c. demographic d. benefit e. geodemographic ANS: A The most logical base for segmentation of a product that is used more in one area than another is geographic. PTS: 1 REF: 214-215 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | A ACSB Diversity | TB&E Model Distribution 34. A manufacturer of blankets knows heavy 100 percent wool blankets sell better in the New England area where the winters are harsh and that lighter-weight blankets sell better in the Southeast market where mild winters r equire fewer and lighter covers for the bed. Segmenting the market according to climate is an example of _____ segmentation. a. psychographic b. lifestyle c. perceptual d. demographic e. geographic ANS: E Geographic segmentation includes segmenting markets by climate. PTS: 1 REF: 214-215 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Customer 35. Almost all cell phones sold in the United States sold are black or gray. A lmost all cell phones sold in Europe are color, and very few black phones are sold. A cell p hone manufacturer knowing this information could use _____ segmentation when selling i ts phones internationally. a. geographic b. economic c. demographic d. benefit e. multipositioning ANS: A Geographic segmentation includes segmenting markets by region of the count ry or world. PTS: 1 REF: 214-215 OBJ: 07-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer | TB &E Model International Perspective 36. Budweiser beer was one of the official sponsors of the 2006 World Cup soccer championship held in Germany. As such, Budweiser beer was the only beer available in the soccer stadium where t he games were played. Germans were outraged because they prefer dark, more full-bodied beer and equate drinking Bud beer to drinking water. In this case, _____ segmentation was not incorporated into the marketing strategy. a. geographic b. economic c. demographic d. usage-rate e. multi-positioning ANS: A Geographic segmentation includes segmenting m arkets by region of the count ry or world. PTS: 1 REF: 214-215 OBJ: 07-4 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer | TB &E Model International Perspective 37. Which of the following statements is NOT a reason why consumer goods companies take a regional approach to marketing, rather than a national approach? a. M any fi rms need to find new ways to generate sales because of sluggish and intensely competitive markets. b. A regional approach gives marketing managers control over the competitive environment. c. Computerized checkout stations with scanners enable retailers t o assess accurately which brands sell the best in each region. d. Many packaged goods m anufacturers are int roducing new regional brands intended to appeal to local preferences. e. A more regional approach allows companies to react more quickly to competition. ANS: B T he competitive environment is one of the noncontrollable factors in a company's environment. PTS: 1 REF: 214-215 OBJ: 07-4 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Distribution | TB&E Model Strategy 38. Marketers use _____ to segment markets because this information is widely available, and factors such as age or gender are often related to consumer purchasing and consumption behavior. a. benefits b. psychographics c. demographics d. usage rates e. sociocultural att r ibutes ANS: C PTS: 1 REF: 215 OBJ: 07-4 TYPE: Def TOP: AACSB Reflective Thinking | TB &E Model D istribution | TB&E Model Strategy 39. Income, ethnic background, gender, and age are a ll examples of _____ segmentation bases. a. geodemographic b. organizational c. demographic d. socioeconomic e. psychographic ANS: C PTS: 1 REF: 215 OBJ: 07-4 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Distr ibution | TB&E Model Strategy 40. Prudential Financial, Inc. has int roduced two commercials targeted to African A merican and H ispanic audiences. Referred to as "This Much" and "Happy Bir thday," the t elevision commercials capture family activities that take place in households across A merica and show how life has lit tle ways of reminding families of the importance of having l ife insurance protection. In this way, the insurance provider’s segmentation plan for this p romotional campaign is based on _____ segmentation. a. demographic b. sociocultural a tt r ibutes c. psychographic d. usage rate e. geodemographic ANS: A Ethnicity and stage in family life cycle are demographic variables for segmentation. PTS: 1 REF: 215 OBJ: 07-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 41. Finding that having to pester mom to take them to get their film processed inhibited kids from taking p ictures, Kodak int roduced a camera set that included a single-use camera packaged with an envelope to mail the film back to Kodak for developing. Kodak's segmentation plan used _____ segmentation. a. ethnicity b. income c. age d. gender e. occupation ANS: C Attracting children is a popular strategy for companies that hope to instill brand loyalty early. PTS: 1 REF: 215 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 42. While most marketing to Generation Y t r ies so hard to be hip that i t borders on parody, Vans has kept the decades-old brand real and vital for Gen Yers. Marketing programs the footwear manufacturer uses to reach Gen Yers include the Vans Skate Parks, which operate i n malls around the country; the wildly successful Vans Warped Tour for alternative music; and the Vans Triple Crown, the brand's answer to the X Games. The segmentation plan used by Vans relies heavily on _____ segmentation. a. ethnicity b. income c. age d. gender e. occupation ANS: C Gen Y consists of people born between 1979 and 1994. PTS: 1 REF: 215 O BJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Customer 43. Redbook magazine targets what i t calls "Redbook jugglers," defined as 25- to 44-year-old women who must juggle family, husband, and job. According to a Redbook ad, "She's the p roduct of the ‘me generation,’ the thi r ty-something woman who balances home, family, and career— more than any generation before her, she refuses to put her pleasures aside. She's old enough to know what she wants. And young enough to get it." This is an example of _____ segmentation. a. demographic and psychographic b. benefit desired and usage rate c. geodemographic and benefit desired d. demographic and usage rate e. benefit desired and demographic ANS: A Thir ty-something women indicate demographic segmentation. The j uggling act describes her lifestyle. PTS: 1 REF: 215 | 221 OBJ: 07-4 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Customer 44. SM: The Magazine for Single Mothers was int roduced by Mystic Publications, Inc. in the fall of 2006. The fi rst national b i-monthly consumer magazine for single mothers, SM has an independent editorial spirit and addresses the distinctive legal, family, and financial concerns of the many single mothers in the United States. The segmentation base used to define the publication’s target m arket was based on _____ variables. a. geodemographic b. geographic c. demographic d. l ifestyle e. psychographic ANS: C Gender and family life-cycle stage are demographic variables. PTS: 1 REF: 217 | 219 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Promotion | TB &E Model Customer 45. E &V Br idal Studios is a wedding consulting business targeted to East Asians. I t accommodates the various cultures by p roviding services to appeal to Koreans, Vietnamese, Chinese, and Japanese customers. E &V Bridal Studios relies on a(n) ____ segmentation variable to identify i ts market. a. geographic b. sociocultural c. socioeconomic d. usage rate e. demographic ANS: E Ethnicity is a demographic variable. PTS: 1 REF: 218 OBJ: 07-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy | TB&E Model Customer 46. Clearing Skies Press p ublished a book by Robert Ruark entitled Keeping the Baby Alive Till Your Wife Gets Home. I t is an advice book for new fathers. What demographic variables have been used to define the market for this book? a. benefit desired and lifestyle b. gender and family lifecycle stage c. age, gender, and personality d. benefit desired and gender e. usage-rate and l ifestyle ANS: B Benefit desired, personality, and lifestyle are not demographic variables. PTS: 1 REF: 217 | 219 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Strategy | TB &E Model Customer 47. General M ills, Inc., is the owner of the Betty C rocker brand. The Betty Crocker catalog sells cooking equipment and tableware and was i nitially targeted to women 45 and older. In 2001, General M ills decided to revamp the catalog to reach women between the ages of 25 and 45. What demographic variables did General Mills use to segment i ts market? a. b. c. d. e. gender and age lifestyle, gender, and age gender, age, benefit, and family life cycle benefit and age benefit and gender ANS: A L ifestyle and benefit are not demographic variables. PTS: 1 REF: 215 | 217 OBJ: 07-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer 48. Women have been t reated as second-class citizens by the sporting goods i ndustry, but in 2002, sporting goods manufacturers and retailers began aggressively p ursuing this market. Nike opened two womenonly boutiques called Nike Goddess to test how receptive women are to its new merchandising concepts. Which type of demographic segmentation is the sporting goods industry using? a. lifestyle b. usage rate c. benefit d. age e. gender ANS: E Gender is a demographic variable--benefit and lifestyle are not. PTS: 1 REF: 217 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy | T B&E Model Customer 49. Johnson Publishing Company, the world’s largest African A merican-owned publishing company and home of Ebony magazine, has forged an alliance w ith Dan River, Inc., to create luxury bed and bath products for the newly developed Ebony Home brand. This brand will use the strong relationship the publisher has with the African A merican market to sell the brand. What form of demographic segmentation will be used to m arket the Ebony Home brand? a. geographic b. income c. ethnic d. benefit e. lifestyle ANS: C O nly ethnic segmentation is a demographic variable. PTS: 1 REF: 218 OBJ: 07-4 TYPE: A pp TOP: AACSB Reflective Thinking | AACSB Diversity | TB&E Model Customer 50. In M iami, the most popular Cuban radio station starts broadcasting in Russian for two hours daily to reach the 300,000 Russian-speaking people that live in South Florida. The radio s tation is using _____ segmentation. a. usage rate b. ethnic c. socioeconomic d. geographic e. gender ANS: B PTS: 1 REF: 218 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | A ACSB Diversity | TB&E Model Customer 51. Heineken threw a winning party for the B illboard Latin Music Awards. Music and beer made a good mix for Heineken and Billboard m agazine. White Plains, NY-based Heineken became a ti t le sponsor of t rade magazine B illboard's annual Latin Music Awards as a means of extending its two-year-old Heineken en Vivo (Heineken Live) music-driven promotion platform targeted to Hispanic Americans. How does sponsorship of this event benefit Heineken? a. I t allows Heineken to use niche m arketing to reach a segment that lacks accessibility. b. Statistics indicate Hispanic A mericans are migrating to northeastern cities where Heineken is popular. c. I t allows the beer manufacturer to take advantage of this large segment of the U.S. population. d. H ispanic Americans do not drink any beverages with caffeine, so beer is a logical choice. e. H ispanic Americans have consumption patterns similar to other wealthy American g roupings, which is the market Heineken targets. ANS: C The U.S. Hispanic population consists of roughly 42 million people. PTS: 1 REF: 219 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | AACSB Diversity | TB&E Model Customer 52. ProtecTV is a product t hat selectively mutes words and phrases some people find objectionable. I t can be connected to a television, VCR, DVD player, or a satellite TV system. The manufacturer of P rotecTV targeted parents who did not want their children exposed to what they consider to be offensive language. What demographic segmentation variable has its manufacturer used t o identify i ts target market? a. gender b. benefit c. usage rate d. family life cycle e. ethnic A NS: D The segment is a family with young children. PTS: 1 REF: 219 OBJ: 07-4 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Strategy | TB&E Model Customer 53. The demographic factors of gender, age, and income often do not sufficiently explain w hy consumer buying behavior varies. Frequently, differences in consumption patterns among people of the same age and gender result from their being in different stages of: a. i nternalization b. segmentation c. the family life cycle d. perceptual positioning e. m icromarkets ANS: C PTS: 1 REF: 219 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 07-4 TYPE: Comp 54. Which of the following businesses would be most likely t o use family life-cycle segmentation? a. businesses that produce and market computer software and hardware b. the snack industry c. fast-food restaurants d. business-tobusiness marketers e. wedding planners, couples-only resorts, and day-care centers ANS: E People in different stages of the family life cycle would be most likely getting mar ried, going on a couples-only t r ip, or needing the services of a day-care center. PTS: 1 REF: 219 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 55. _____ segmentation is based on personality, motives, and lifestyle. a. Psychographic b. Demographic c. Benefit d. Family life cycle e. Character ANS: A PTS: 1 REF: 221 TOP: A ACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-4 TYPE: Def 56. Ten T housand Villages is a nonprofit retail store that sells gift i tems made by artisans from over 30 different count ries. This store provides employment to craftspeople in developing nations and markets their handiwork at a fair price. The store defines its market segment as people w ho believe in helping others and who feel good about helping others whenever possible. T he store uses _____ segmentation. a. demographic b. psychographic c. geodemographic d. ethnic e. geographic ANS: B Psychographic segmentation is based on motives, personality, and lifestyle. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Strategy 57. NASCAR racing fans are some of the most diverse and loyal fans i n the world. They will stand in the pouring rain, the freezing cold, or the blistering heat for hours to shake the hand and get the autograph of a NASCAR super driver. These fans are not concentrated in any one area, but are dispersed throughout the United States. A Web site designed to market NASCAR memorabilia would be most likely to be successful if it used _____ segmentation to determine i ts target market. a. demographic b. psychographic c. geodemographic d. usage rate e. family life cycle ANS: B Since the audience is diverse, demographic segmentation would not be nearly as useful as psychographic segmentation t hat emphasized the fans' lifestyles. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 58. Atomic Ranch is a new magazine that t argets people who grew up in ranch-style houses, now own ranch-style houses, and appreciate articles about the history of the style and sensitive makeovers that keep the essential ranch style while allowing for modern conveniences. Similar to magazines that t arget people who love Victorian houses, this new publication relies on _____ variables to i dentify its target market. a. psychographic b. demographic c. usage rate d. geodemographic e. family life cycle ANS: A These magazines are aimed at helping people achieve a certain l ifestyle. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Customer 59. Magazines like Martha Stewart Living, Better Homes & Gardens, and other magazines targeted to people who are interested in improving their personal spaces r ely on _____ segmentation. a. psychographic b. demographic c. usage rate d. geodemographic e. family life cycle ANS: A These magazines are aimed at helping people achieve a certain lifestyle. They emphasize the motive variable. PTS: 1 REF: 221 OBJ: 07-4 T YPE: Def TOP: AACSB Reflective Thinking | TB &E Model Customer 60. The James H ardie Siding Company sells concrete siding. I t was having lit t le luck targeting contractors because concrete siding is difficult to install and shows every f law if a house is incorrectly f ramed. So Hardie decided to target homeowners who wanted the security of knowing their siding was guaranteed not to rot or crack for 50 years. In terms of psychographic segmentation, the siding company used the _____ variable. a. lifestyle b. motives c. benefits d. demographic e. personality ANS: B Marketers of baby products and life insurance appeal t o consumers’ emotional motives to protect the family and things the family value. In this example, the siding company does the same thing. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy 61. _____ divides individuals i nto groups according to the way they spend their time, the importance of i tems in their surroundings, their beliefs, and socioeconomic characteristics. a. Life-cycle segmentation b. Temporal segmentation c. Lifestyle segmentation d. M icrosegmentation e. M acrosegmentation ANS: C PTS: 1 REF: 221 OBJ: 07-4 TYPE: Def TOP: AACSB Reflective T hinking | AACSB Diversity | TB&E Model Customer 62. In Li t tle Rock, Arkansas, everyone who is anybody in society can't wait to get a copy of Soiree magazine. The m agazine is targeted to the upper middle and upper classes in Li t tle Rock and features a rticles on how they work and play. The editor of Soiree magazine is relying on _____ segmentation. a. geodemographic b. graphic c. benefit d. socioeconomic e. income ANS: A I ncome and social class are demographic variables. What people do is a psychographic variable. The fact that the magazine is targeted to Li t tle Rock is geographic segmentation. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model S trategy | TB&E Model Customer 63. You are an advertising manager for a company that sells health and fitness equipment to upscale professionals between the ages of 25 and 45. Your fi rm advertises during drive t ime on easy listening radio stations and on TV on the A &E and the Discovery channels. You are most likely to segment this market on the basis of: a. region b. usage c. stage of family life cycle d. lifestyle e. gender ANS: D Lifestyle segmentation in this instance is the r ight choice because the spending of leisure t ime is key w hen the advertising is employed. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Promotion 64. _____ is a method that clusters potential customers into neighborhood lifestyle categories and is a combination of geographic, demographic, and lifestyle segmentation. a. Geodemographic segmentation b. M icrosegmentation c. Sociocultural clustering d. Acculturation e. Lifestyle segmentation A NS: A PTS: 1 REF: 221 TOP: AACSB Reflective Thinking | TB &E Model Customer OBJ: 07-4 TYPE: Def 65. What is PRIZM? a. a software program for classifying consumers psychographically b. a method of dividing the United States into 66 manageable submarkets c. a way to identify the importance of ethnic origin to the proposed target m arket d. a software program for storing purchase habit data e. the method of market segmentation used by businesses in the service industry ANS: A PTS: 1 REF: 221-222 TOP: A ACSB Reflective Thinking | TB&E Model Customer OBJ: 07-4 TYPE: Def 66. Which of t he following statements best describes the reason marketers find geodemographic segmentation so effective? a. A bird in the hand is worth two in the bush. b. Every action has an opposite and equal reaction. c. A r i f le is more exact than a shotgun. d. Don’t put all of your eggs in one basket. e. Birds of a feather f lock together. ANS: E Geodemographic segmentation is a method that clusters potential customers into neighborhood lifestyle categories and is a combination of geographic, demographic, and lifestyle segmentation. PTS: 1 REF: 221 OBJ: 07-4 TYPE: Comp TOP: AACSB Analytic | TB&E Model Customer 67. K raft Foods plans to tailor different ads for different neighborhoods in the same region. For example, viewers watching a cable show in a Hispanic neighborhood in Chicago would see different ads during the same commercial breaks as non-Hispanics living in a different neighborhood. K raft's strategy best exemplifies _____ segmentation. a. sociocultural b. l ifestyle c. cluster benefit d. geodemographics e. systematic geographic ANS: D Geodemographic segmentation clusters potential customers into neighborhood lifestyle categories. I t combines geographic, demographic, and lifestyle segmentation. PTS: 1 REF: 221 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | AACSB Diversity | TB&E M odel Customer | TB&E Model Promotion 68. If you wanted to int roduce a magazine devoted to providing information on how to live off the land in Canada, you would be likely t o target western Canadian men who have a strong need for individualism and limi ted government regulations. In other words, you would probably use _____ segmentation. a. sociocultural b. geodemographic c. attitudinal d. usage rate e. situational ANS: B Location is a geographic variable. Gender is a demographic variable. A strong need for individualism is a psychographic variable. PTS: 1 REF: 221 OBJ: 07-4 TYPE: Def TOP: AACSB Reflective T hinking | TB &E Model Strategy | TB&E Model Customer 69. _____ is the process of g rouping customers into market segments according to what is sought from the product. a. Benefit segmentation b. Value-added segmentation c. Lifestyle segmentation d. M acrosegmentation e. Psychographic segmentation ANS: A PTS: 1 REF: 222 OBJ: 07-4 T YPE: Def TOP: AACSB Reflective Thinking | TB &E Model Strategy | TB&E Model Customer 70. ThermaCare air-activated heat wraps are meant to be wrapped around sore m uscles and joints. The product is advertised as a powerful pain reliever and a source of deep muscle relaxation. I ts soothing warmth can work at night while you sleep to restore your body. The manufacturer of ThermaCare heat wraps is using _____ segmentation. a. geodemographic b. functional c. benefit d. socioeconomic e. feature-based ANS: C The benefit sought is freedom from pain. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Strategy 71. Kar ry-Li te, the m anufacturer of lightweight suitcases with wheels, uses as its slogan, "Takes the 'lug' out of l uggage." This slogan illustrates the use of _____ segmentation. a. geodemographic b. benefit c. functional d. usage-rate e. feature-based ANS: B The benefit sought is easy-tocarry luggage. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product | TB&E Model Customer 72. The Grief Store sells keepsake urns, cremation urns, funeral jewelry, and books on how to cope with the grief resulting from the death of a loved one. The Grief Store is apparently using _____ segmentation. a. benefit b. l ifestyle c. motive d. gender e. family lifestyle ANS: A The benefit sought at the store is a way to cope with the death. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Strategy 73. There are many furniture manufacturers. Tall Paul's Tall Mall is the only one that makes furni ture to meet the needs of people who are over 6'6" t all. These people find furniture designed for average-sized people to be cramped and u ncomfortable. Tall Paul's uses _____ segmentation. a. geodemographic b. usage rate c. demographic d. psychographic e. benefit ANS: E The consumers are described by the type of benefit they seek. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Product | TB &E Model Customer 74. Reader's Digest magazine plans to send to millions of people with different medical conditions, such as high blood pressure or h igh cholesterol, a booklet filled with articles and prescription-drug ads, all about the very condition each subscriber has. Reader's Digest is applying benefit segmentation, which is: a. developed on the basis of what a product will do for the customer rather than on buyer characteristics b. used to market to organizations but not to consumers c. not permit ting m arketing managers to build consumer profiles d. simply choosing the most economical and beneficial demographic variable as a segmentation variable, to keep company costs low e. t he strategy of building a competitive advantage over the competition ANS: A Customer p rofiles can be developed by examining demographic information associated with people seeking certain benefits. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 75. When asked to name a brand of sports drink, most people will answer Gatorade, and some will respond with Powerade also. But people with d iabetes who still need to replenish electrolytes lost during activity or illness cannot drink t hese sports drinks because they are high in sugar and thus cannot be drunk by diabetics. As a result, a manufacturer has developed Champion Lyte, which contains no sugar. The m anufacturer of Champion Lyte has used _____ segmentation to identify i ts market. a. geodemographic b. usage-rate c. demographic d. psychographic e. benefit ANS: E The consumers can be described by the type of benefit they seek. PTS: 1 REF: 235-236 OBJ: 074 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | TB&E Model Customer 76. ProtecTV is a product that selectively mutes words and phrases some people f ind objectionable. I t can be connected to a television, VCR, DVD player, or a satellite TV system. The manufacturer of ProtecTV targeted parents who did not want their children exposed to what they consider to be offensive language. By helping parents who want to p rotect the innocence of their children, ProtecTV is using _____ segmentation. a. usage-rate b. demographic c. geodemographic d. competitive e. benefit ANS: E ProtecTV is designed to satisfy parents' needs to protect their children. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer 77. An 18-year-old college freshman might be a "party animal" living in a dorm. Another 18-year old freshman might be a husband with a small child and a full-t ime job. If you were in charge of a marketing program aimed at these men, what segmentation technique would be t he easiest to employ that might help you to distinguish between them? a. age cohort analysis b. benefit c. product differentiation d. concentration e. gender ANS: B Because each is likely to pursue different benefits from their respective purchases, benefit segmentation is the only method for distinguishing between them. PTS: 1 REF: 222 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB &E Model Customer 78. The public t ransportation system in the San Francisco area conducted a survey that revealed respondents could be assigned to one of four categories: (1) people who never utilized mass t ransit, (2) people who utilized mass t ransit in the past but not now, (3) people who utilized mass t ransit occasionally, and (4) people who utilized mass t ransit r egularly. These groups have significantly different perceptions about t ransportation a lternatives. This is an example of _____ segmentation. a. demographic b. benefit c. aggregate d. economic e. usage-rate ANS: E Segmenting users by amount purchased or consumed is usage-rate segmentation. PTS: 1 REF: 223 OBJ: 07-4 TYPE: App TOP: AACSB D iversity | TB&E Model Customer 79. Five statistically distinct health segments in the general population have been identified. One basis for this segmentation was whether a consumer had regular check-ups or only sought medical t reatment when injured or sick. T he research indicates _____ segmentation could be used by health providers to reach these m arket segments. a. b. c. d. e. demographic aggregate democratic economic usage-rate ANS: E Segmenting users by amount purchased or consumed is usage-rate segmentation. PTS: 1 REF: 223 OBJ: 07-4 TYPE: App TOP: AACSB Diversity | TB &E Model Customer 80. Why a re many retail fi rms interested in customer loyalty cards and programs? a. Roughly 80 percent of the profit comes from 20 percent of the sales. b. Roughly 80 percent of a fi rm's customers are repeat business. c. Roughly 50 percent of a fi rm's customers purchase 80 percent of the sales volume of the product. d. Roughly 20 percent of a fi rm's customers p urchase 80 percent of the sales volume of the product. e. Sales are equally divided among heavy, medium, and light users, but they all need slightly different products. ANS: D The 80/20 principle proposes that a minority of a fi rm's customers purchase a majority of the volume of the product. PTS: 1 REF: 223 OBJ: 07-4 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Strategy | TB&E Model Customer 81. Ever since Hunter got his new Shell MasterCard, which gives him a 5 percent rebate on all purchases of Shell gas, he w ill only buy gas at stores that sell Shell gas. Shell int roduced its credit card plan as a means of implementing _____ segmentation. a. lifestyle b. motive c. usage-rate d. demographic e. personality ANS: C PTS: 1 REF: 223 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer 82. A number of p lastic surgery groups in Great Bri tain are making use of loyalty cards. Patients who have f ive procedures performed at their offices will receive either a free procedure or a discount off another more complex surgical procedure. Aimed at patients who get maintenance t reatments such as Botox or regular face peels, the loyalty cards may be used toward any t ype of surgical procedure. This is an example of segmentation by: a. demographic b. benefit c. aggregate d. economic e. usage-rate ANS: E Segmenting users by amount purchased or consumed is usage-rate segmentation. PTS: 1 REF: 223 OBJ: 07-4 TYPE: App TOP: AACSB D iversity | TB&E Model Customer 83. General Mil ls offers a deal where its cereal users can collect box tops and submit them to General M ills to earn money for their children's schools. This program, called the Box Tops for Education Program, is a means of changing l ight users into heavier users. In other words, it is a form of _____ segmentation. a. lifestyle b. motive c. usage-rate d. demographic e. personality ANS: C PTS: 1 REF: 223 OBJ: 07-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model P romotion 84. The _____ proposes that a minority of a fi rm's customers purchase a majority of the volume of the product. a. majority fallacy b. equity fallacy c. 80/20 principle d. cannibalization rule e. optimizer principle ANS: C PTS: 1 REF: 223 TOP: AACSB Reflective T hinking | TB &E Model Strategy OBJ: 07-4 TYPE: Def 85. Train collectors Jack McCoy and Sandro Dias have decided to open a store that sells t rain memorabilia--everything from toy t rain sets to full-sized railroad signs. After 18 months in business, they have noticed most of their sales are to the same small group of customers (about 40 people) even though t hey have records to show there are over 200 active t rain collectors within a 50-mile radius of their store. Their retailing experience is supportive of the: a. optimizer principle b. minmax rule c. majority fallacy d. rule of demand e. 80/20 principle ANS: E The 80/20 principle p roposes that a minority of a fi rm's customers purchase a majority of the volume of the p roduct. PTS: 1 REF: 223 OBJ: 07-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Strategy | TB &E Model Customer 86. Business marketers focus on four broad m arket segments. Which of the following is NOT one of those segments? a. institutions b. p roducers c. households d. resellers e. governments ANS: C PTS: 1 REF: 223 OBJ: 07-5 T YPE: Def TOP: AACSB Reflective Thinking | TB &E Model Strategy | TB&E Model Customer 87. Nearly everyone has eaten instant mashed potatoes. Manufacturers of instant potato f lakes sell to resellers, institutional food services, and movie production companies. ( Instant potato f lakes are typically used in movies when the scene calls for falling snow.) T he manufacturers of instant potato f lakes would most likely segment their market according to: a. company characteristics b. the buying process c. financial terms d. customer r elationship objectives e. length of distribution channel ANS: A Each of the buyers of potato f lakes have distinct characteristics to be met. PTS: 1 REF: 223-224 OBJ: 07-5 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Strategy 88. Tower Fasteners developed a commanding position in the fastener industry by having in s tock over 150,000 different types of fasteners. Tower's primary market is defined as companies with a need for specialized fasteners. All of the following are characteristics of t he buying organization that Tower can use for segmentation EXCEPT: a. psychographic variables b. the method the company uses to make purchases c. geographic location d. personal characteristics of purchase decision makers e. company size ANS: A Psychographic variables are used in the consumer market. PTS: 1 REF: 223-224 OBJ: 07-5 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy 89. Ayres Corporation. makes a irplanes. I t sells about 50 planes a year to be used as crop dusters. I t sells another 75 a year to delivery companies. In addition, it manufactures another dozen or so that are used for fire fighting and about six a year that are sold for military t ransport purposes. Ayres Corporation uses _____ variables. a. demographic b. company characteristics c. benefit d. buyer ethnicity e. usage rate ANS: B Company characteristics include type of company and p roduct use. PTS: 1 REF: 223-224 OBJ: 07-5 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Strategy 90. Fi rms can be categorized by the type of purchasing strategy t hey use. _____ usually contact familiar suppliers and place an order with the fi rst that can meet product and delivery requirements. a. Strugglers b. Actualizers c. Optimizers d. Satisficers e. Experiencers ANS: D PTS: 1 REF: 224 OBJ: 07-5 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 91. Terri LaVoile operates a plumbing and electrical supply store. He has categorized i ts business customers by their purchasing strategy. LaVoile has found i t much easier to serve and satisfy the ______, who usually recontact familiar suppliers and place an order immediately if product and delivery requirements are acceptable. a. adopters b. adaptors c. optimizers d. i nnovators e. satisficers ANS: E Satisficers use a simple, quick purchasing strategy of looking for the first available adequate supplier. PTS: 1 REF: 224 OBJ: 07-5 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Customer 92. Fi rms can be categorized by t he type of purchasing strategy used. _____ consider numerous, even unfamiliar suppliers and solicit and analyze options. a. Satisficers b. Strivers c. Optimizers d. Actualizers e. I nnovators ANS: C PTS: 1 REF: 224 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 07-5 TYPE: Def 93. Hale Professional Landscaping, Inc. finds that the most d ifficult fi rms to provide service for are the _____. This group considers numerous, even u nfamiliar suppliers, solicits bids, and carefully analyzes options; therefore, it requires a h igher level of customer service and follow-up on quotations. a. actualizers b. strivers c. satisficers d. optimizers e. early adopters ANS: D Fi rms that use an optimizer purchase s trategy consider many suppliers and carefully analyze options. PTS: 1 REF: 224 OBJ: 07-5 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 94. June LaVista owns a health and fi tness gym. After dividing her customers into four segments based on i ncome range, age, level of fi tness, and other selected segmentation descriptors, she wrote out a description of each segment's size, expected growth, frequency of exercise, and overall p rofit potential. LaVista engaged in: a. profiling and analyzing her market segments b. positioning her products to her market segments c. targeting promotions to her market segments d. differentiating her market segments e. concentrating her marketing mix on the most profitable marketing segments ANS: A The next step after the selection of segmentation descriptors is the profiling and analysis of the segments. PTS: 1 REF: 225 O BJ: 07-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 95. After selecting a market for study and choosing bases for segmenting that market, the next step is t o: a. select segmentation descriptors b. implement and maintain a marketing mix c. design a marketing mix d. profile and analyze segments e. select target markets ANS: A Once a segmentation basis is determined, segmentation descriptors are the next step. PTS: 1 REF: 225 OBJ: 07-6 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Strategy 96. T he Hudson-May Company manufactures and installs above-ground swimming pools. When t he company began in 1989, i t completed a thorough examination of i ts business customers. I t grouped the customers into three segments based on size, geographic region, and benefits sought. Would you recommend a new segmentation analysis this year? a. No, once every 20 years is about average. b. Yes, I would recommend one be done regularly because of the r apidly changing nature of most markets. c. No, consumer markets are not rapidly changing or developing like business goods markets. d. Yes, a new analysis would be in order, but i t should use different bases to get some variety. e. No, segmentation is rarely done by consumer marketers because it simply is not useful. ANS: B The rapidly changing nature of m arkets dictates a regular reexamination of the segmentation process. PTS: 1 REF: 225 O BJ: 07-6 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 97. M arket segmentation: a. is a scientific technique for selecting ways to attract specific population samples b. is rarely done by consumer products companies c. only needs to be done once for each product d. should be redone periodically e. should be done every time a p roduct enters a new stage of i ts life cycle ANS: D The rapidly changing nature of markets d ictates a regular reexamination of the segmentation process. PTS: 1 REF: 225 OBJ: 07-6 T YPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Strategy 98. A(n) _____ is a g roup of people or organizations for whom an organization designs, implements, and m aintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges. a. heterogeneous segment b. target market c. responsive segment d. aggregated market e. undifferentiated target ANS: B PTS: 1 REF: 226 TOP: AACSB Reflective Thinking | TB&E Model Customer OBJ: 07-7 TYPE: Def 99. The debate over gay m ar r iages is causing a great deal of furor, but i t has done lit t le to deplete the importance of t he affluent gay market to businesses. Georgia Pacific and M i tchell Gold, a furniture m anufacturer, are two companies that have implemented and maintained marketing mixes designed to meet the needs of lesbians and gays. To these companies and others, lesbians and gays are a desirable: a. market sample b. target market c. perceived market d. f unctional market e. market base ANS: B A target market is a group of people for which an organization designs, implements, and maintains a marketing mix. PTS: 1 REF: 226 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 100. Sure Fit, I nc. has begun a rebranding strategy to let customers know it no longer only produces slipcovers, but now also carries a line of rugs, window t reatments, and bedding. I ts _____ is described as women with average annual household income of $60,000 or more. a. market audience b. market differentiation c. perceived market d. target market e. aggregated m arket ANS: D The target market is a group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group. PTS: 1 REF: 226 OBJ: 07-7 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Customer 101. In 2006, Coca-Cola int roduced Coke Zero in Great B r itain in order to appeal to Brit ish men who do not drink diet sodas because they consider t hem feminine beverages. The product was dubbed "Bloke Coke" by the Brit ish media. B r it ish men who disdain diet drinks are the _____ for Coke Zero in Great Bri tain. a. market sample b. target market c. perceived market d. functional market e. market base ANS: B A t arget market is a group of people for which an organization designs, implements, and m aintains a marketing mix. PTS: 1 REF: 226 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 102. Today's typical recreation vehicle owner is white, 50 years old, and mar ried. With a mean household income of $71,900, they are more affluent than average and tend to own their homes. They spend approximately 19 days a year in their rolling homes. On the way, they're more likely than average to listen to count ry music or all-talk radio. They also prefer Velveeta to r icotta or feta cheese. This describes the _____ for recreation vehicles. a. market audience b. market differentiation c. perceived market d. target market e. aggregated market ANS: A The target market is a g roup of people or organizations for which an organization designs, implements, and m aintains a marketing mix intended to meet the needs of that group. PTS: 1 REF: 226 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 103. John Sichner, editor and publisher of Beverage Digest, a t rade journal for beverage producers, w rote, "In this day and age, one product can't be the answer for all consumers." In other words, Sichner was opposing the use of: a. repositioning b. reengineering c. one-to-one m arketing d. undifferentiated targeting e. niche marketing ANS: D With an u ndifferentiated targeting strategy, the market is viewed as one big market with no i ndividual segments and uses a single marketing mix. PTS: 1 REF: 226 OBJ: 07-7 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product | TB &E Model Customer 104. Candace Popwell makes and markets Festive Holiday T ruf f les candy. The confectionary company owner views the world as one big market with no individual segments and t r ies to reach it with only one marketing mix. Her essentially mass-market p hilosophy indicates she probably uses a(n) _____ strategy. a. multisegment targeting b. u niversal product c. concentrated targeting d. undifferentiated targeting e. product d ifferentiation ANS: D With an undifferentiated targeting strategy, the market is viewed as one big market with no individual segments and uses a single marketing mix. PTS: 1 REF: 226 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 105. A mobile home manufacturer has decided to add concession food t railers to i ts product line. I f all the current competitors in that market use a differentiated product market strategy, w hich strategy would make the LEAST sense for the manufacturer to implement? a. p roduct differentiation strategy b. specialized product strategy c. concentrated targeting s trategy d. multisegment targeting strategy e. undifferentiated targeting strategy ANS: E A n undifferentiated strategy would give the company no product advantage against entrenched competitors. PTS: 1 REF: 226-227 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 106. Your fi rm is producing a car battery that is safe to discard in normal household t rash. All other batteries on the market contain chemicals that are harmful and that can pollute underground water supplies and should be d iscarded with caution. Which of the following marketing segmentation options might you choose? a. concentrated b. differentiated c. multisegment marketing d. undifferentiated e. s trategic demand ANS: D This approach is used for developing a single marketing mix a imed at the entire market. I t often is used by fi rms having no discernible competition. PTS: 1 REF: 226-227 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Product 107. A(n) _____ strategy entails selecting one segment of a market to target, and focuses on understanding the needs, motives, and satisfactions of the members of that segment, as well as on developing a highly specialized marketing mix. a. universal product b. undifferentiated targeting c. concentrated targeting d. market development e. product development ANS: C PTS: 1 REF: 227 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 07-7 TYPE: Def 108. Tall Paul's Tall Mall designs and sells household f urniture and furnishings to people who are over 6'6" tall--a rather small target market. Tall Paul's Tall Mall uses a(n) _____ targeting strategy. a. benefit b. undifferentiated c. m ultisegment marketing d. universal product code e. concentrated ANS: E The company has established people taller than 6'6" as its niche. PTS: 1 REF: 227 OBJ: 07-7 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Strategy 109. When a fi rm uses a concentrated targeting strategy, it can: a. view the total market as receptive to its product b. offer a highly specialized marketing mix c. reach customers in two or more segments that m ight otherwise be missed d. avoid the danger of putting all resources in one micromarket e. concentrate on one generalized product to fit the mass market, maximizing sales volume A NS: B Concentrated targeting focuses on one target market and develops a highly specialized mix. PTS: 1 REF: 227 OBJ: 07-7 TYPE: Comp TOP: AACSB Reflective Thinking | T B&E Model Strategy 110. E&V Bridal Studios, a wedding consulting business, only works with Eastern Asian customers who want to use their cultural heritage in their wedding ceremonies. What type of segmentation strategy does the wedding consultant use? a. market aggregation b. undifferentiated targeting c. multisegment marketing d. concentrated targeting e. limi ted demand ANS: D E&V Bridal Studios concentrates on the segment of East Asians, who want a t raditional wedding. PTS: 1 REF: 227 OBJ: 07-7 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Strategy 111. In the off-highway i ndustry, there are a number of machines that are built for highly specialized applications. T hese machines, such as underground drilling jumbos, harvesting and specialty agriculture equipment, and mining scalers, are built in low volume and require an equally low volume of specialized components. Vastech L LC, a customized manufacturer of drive-t rain products, uses _____ to reach its market. a. market aggregation b. undifferentiated targeting c. m ultisegment marketing d. concentrated targeting e. limi ted demand ANS: D Concentrated t argeting focuses on one target market and develops a highly specialized mix. PTS: 1 REF: 227 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 112. Companies that adopt a concentrated marketing strategy violate which of the following old sayings? a. You can't bake a pie without breaking some eggs. b. Don't count your chickens before they hatch. c. Don't put all of your eggs in one basket. d. The grass is always greener on the other side of the fence. e. A rolling stone gathers no moss. ANS: C PTS: 1 REF: 228 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-7 TYPE: Comp 113. S touffer's offers gourmet entrees for one segment of the frozen dinner market and Lean Cuisine for another segment that wants both good taste and low calories. When Stouffer's chose to serve two welldefined market segments and develop distinct marketing mixes for each, i t was implementing a(n) _____ strategy. a. market integration b. concentrated t argeting c. undifferentiated targeting d. multisegment targeting e. heterogeneous positioning ANS: D PTS: 1 REF: 228 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 07-7 TYPE: App 114. Ayres Corporation makes airplanes. I t sells about 50 p lanes a year to be used as crop dusters. I t sells another 75 a year to delivery companies. In addition, i t manufactures another dozen or so that are used for fire fighting, and it sells about six a year for mili tary t ransport purposes. What type of targeting strategy is Ayres using? a. demand positioning b. concentrated targeting c. undifferentiated targeting d. m ultisegment targeting e. market differentiation ANS: D Ayres has chosen at least four well-defined markets to target. PTS: 1 REF: 228 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Strategy 115. Pharmaceutical f i rms market many brands of cold remedies with highly similar ingredients. The primary d ifference among the brands is their promotions that emphasize that various brands will t reat different symptoms, such as runny noses, headaches, and fever. This is one way to p ractice: a. concentrated segmenting b. segment differentiation c. multisegment targeting d. i ntegrated targeting e. multiple-use product marketing ANS: C Different promotional appeals rather than completely different marketing mixes may be used as the basis for a m ultisegment strategy. PTS: 1 REF: 229 OBJ: 07-7 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Promotion 116. You are the president of a new, capital-r ich fi rm and you must decide on your fi rm's targeting approach. Three large subgroups exist in your market that have never had their unique needs served. If you don't act now, others will seize the opportunity. You should use a(n): a. b. c. d. e. multisegment s trategy single product with a concentrated strategy product differentiation approach concentrated or niche targeting strategy undifferentiated strategy ANS: A Producing d ifferent products for different segments is worthwhile in this case because it serves customer needs better and gives the fi rm a preemptive position in all three segments. PTS: 1 REF: 228-229 OBJ: 07-7 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model S trategy 117. With multisegment targeting, a company could benefit from all of the following EXCEPT: a. greater sales volume b. greater product design and management cost c. higher profits d. larger market share e. economies of scale in manufacturing ANS: B C reating and supporting different marketing mixes requires more company resources than j ust designing one mix, which is not a benefit. PTS: 1 REF: 229 OBJ: 07-7 TYPE: Comp T OP: AACSB Reflective Thinking | TB&E Model Strategy 118. _____ is one of the potential d isadvantages associated with a multisegment strategy. a. Inadequate demand b. Demarketing c. Lower profits d. Cannibalization e. Loss of synergy ANS: D PTS: 1 REF: 229 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-7 TYPE: Comp 119. Pharmaceutical fi rms have int roduced new over-the-counter antacids that block the p roduction of stomach acids while still marketing t raditional antacids. Traditional antacids t reat heartburn by neutralizing stomach acid. If sales of the new acid blockers reduce sales of the t raditional antacids, then _____ has occurred. a. demarketing b. cannibalization c. u ndifferentiation d. repositioning e. perceptual confusion ANS: B Cannibalization occurs w hen sales of a new product cut into sales of a fi rm's existing products. PTS: 1 REF: 229 O BJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy 120. W hen Procter & Gamble (P&G) introduced L iquid Tide to a new segment, consumers in the t raditional powdered detergent segment switched to the liquid product. Rather than real sales growth, P&G simply experienced the shifting of existing customers to a new product. T his exemplifies a drawback of multisegment targeting strategy called: a. demarketing b. selective perception c. undifferentiation d. cannibalization e. market repositioning ANS: D Cannibalization occurs when sales of a new product cut into sales of a fi rm's existing p roducts. PTS: 1 REF: 229 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product | TB&E Model Customer 121. Clorox saw sales of its bleach products suffer when it int roduced laundry detergents with bleach as an added ingredient. This is an example of: a. demarketing b. cannibalization c. undifferentiation d. repositioning e. perceptual confusion ANS: B Cannibalization occurs when sales of a new product cut into sales PTS: 1 REF: 229 OBJ: 07-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Product | TB&E Model Customer 122. M irage Resorts in Las Vegas has a system t hat allows hotel clerks instantaneous access to a client's gambling history to determine w hat sort of room or complimentary services will provide the guests with the highest level of service. The resort is practicing: a. firewall marketing b. one-to-one marketing c. an application of the 80/20 rule d. t ransactional marketing e. marketing through technology A NS: B One-to-one marketing is an individualized method of marketing to customers. PTS: 1 REF: 230 OBJ: 07-8 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model S trategy 123. Disney is offering to print story books about your child. Each 30-page book w ill be personalized throughout based on information the parents provide. These books are based on th child’s favorite Disney movies. For $20 a month, a new book will be created each month just for your child. This is an example of: a. an application of the 80/20 rule b. fi rewall marketing c. one-to-one marketing d. t ransformational marketing e. data mining ANS: C One-to-one m arketing is an individualized method of marketing to customers. PTS: 1 REF: 230 OBJ: 07-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Customer 124. The d ifference between the one-to-one marketing approach and the t raditional mass marketing approach can be compared to the difference between: a. sunshine and moonlight b. drawing circles and drawing squares c. fi r ing a r i f le and fi ring a shotgun d. boning a fish and d ressing a chicken e. eating with your fingers and eating with a fork ANS: C PTS: 1 REF: 230 TOP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-8 TYPE: Comp 125. T he basic goal of one-to-one marketing is to: a. increase the market for the product category t o new and current customers b. eliminate the use of mass media for promotion and locate a d irect communications channel c. increase operating costs and locate new customers d. r educe the number of company employees and increase overall sales e. reduce costs through customer retention and increase revenue through customer loyalty ANS: E PTS: 1 REF: 230 T OP: AACSB Reflective Thinking | TB&E Model Strategy OBJ: 07-8 TYPE: Comp 126. W hich of the following t rends will lead to the continuing growth of one-to-one marketing? a. t he growing number of customers who do not have t ime to spend shopping b. the fact consumers do not want to be t reated like the masses c. technology that allows the collection of detailed information on customers d. the use of reward systems to increase brand loyalty e. all of the choices ANS: E PTS: 1 REF: 230-231 TOP: AACSB Reflective Thinking | TB&E M odel Strategy OBJ: 07-8 TYPE: Comp 127. The Ritz Carlton hotel chain is renowned for i ts service and individual t reatment of i ts customers. All service staff and employees have note pads and are taught to record every li t t le piece of information they learn about a customer. If a business t raveler ordered soft pillows, only wanted mar tinis in his mini bar, and needed access to a fax machine, he would find all of these amenities in his room when he arrived. The Ritz Carlton is basing its one-to-one marketing on which of the following t rends? a. the growing number of customers who do not have time to spend shopping b. the fact consumers do not want to be t reated like the masses c. data mining capabilities d. the use of reward systems to increase brand loyalty e. the growing market for luxury products A NS: B Consumers are more and more likely to equate good service with personalized service. PTS: 1 REF: 230 OBJ: 07-8 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Customer 128. Mattel is t rying several different strategies to sustain brand growth i n slow markets. I t has developed a line of high-fashion clothes to be sold under the Barbie l abel as well as a perfume for preteen girls. In another move, it announced Barbie would "spend some t ime apart" from Ken, her long-term male doll companion. In addition, Mat tel has developed a line of women's clothing under the Barbie label. Sales of Barbie were f lat in 2003 and fell in 2004. Mattel is _____ the Barbie brand in order to grow. a. repositioning b. demarketing c. reverse engineering d. showcasing e. mass marketing ANS: A Repositioning is changing consumers' perceptions. Mat tel wants the Barbie brand to be viewed as a variety of products--not just the doll and its accoutrements. PTS: 1 REF: 234 OBJ: 07-9 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model S trategy 129. Product positioning is the process of: a. finding the correct location for retail outlets to sell a product category b. finding the r ight channel of distribution for a product c. creating the desired image of the fi rm's product with respect to its competition d. competing w ith competitors' products in the retailers' stores for the best position on the shelf e. pricing t he product to be at a competitive level with other brands on the market ANS: C PTS: 1 REF: 231 OBJ: 07-9 TYPE: Def TOP: AACSB Reflective Thinking | TB &E Model Product | T B &E Model Strategy 130. _____ is the development of a specific marketing mix to i n fluence potential customers' overall perception of a brand, product line, or organization in general, and is related to the place a product occupies in consumers' minds relative to competing offerings. a. Market differentiation b. Diversification c. Combination marketing d. Positioning e. Market aggregation ANS: D PTS: 1 REF: 231 OBJ: 07-9 TYPE: Def TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 131. E veryone tends to go through periods when they feel a need to partake in some kind of exercise and they buy the equipment needed. When they stop the exercise program, the equipment can gather dust or be sold to a store in the Play I t Again Sports retail chain. The P lay I t Again Sports chain carries all kinds of sports equipment at much lower prices than t he typical sporting goods store. Typically, merchandise sold in the store has lit t le, if any, wear. By being both a way for people to get r id of unwanted equipment and a source of newto-you equipment, Play I t Again Sports is emphasizing: a. geographic lifestyles b. public r elations c. the family life cycle d. positioning e. integrated targeting strategy ANS: D P roduct position is the potential customers' overall perception of a brand, product line, or organization in general, and refers to the place a product occupies in consumers' minds r elative to competing offerings. PTS: 1 REF: 231 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Strategy 132. Chandler Kumar owns two antique stores. One is in an upscale neighborhood, and its merchandise is artfully a rranged and priced to indicate product rari ty. The other is in a run-down strip mall and contains some of the same type of merchandise, but the i tems are left in open boxes and p laced haphazardly on shelves. Customers of either store have entirely different perceptions of the stores and would be surprised to know Kumar operates each of them because he uses such differing _____ strategies. a. market integration b. segmentation c. targeting d. positioning e. market combination ANS: D Product position is the potential customers' overall perception of a brand, product line, or organization in general, and refers to the p lace a store occupies in consumers' minds relative to competing offerings. PTS: 1 REF: 231 O BJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | TB&E M odel Strategy 133. There are a number of devices that parents can buy to prevent their children from hearing objectionable language while they watch television. ProtecTV is the only product of its kind that has an expandable dictionary. Parents can add words and p hrases they find offensive, and the additional words will be deleted from soundtracks and captioning. ProtecTV uses a(n) _____ strategy. a. repositioning b. demarketing c. market i ntegration d. undifferentiated targeting e. product differentiation ANS: E PTS: 1 REF: 231 O BJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | TB&E M odel Strategy 134. Products such as bleaches, aspirin, unleaded regular gasoline, and some soaps are distinguished by minor differences, such as brand names, packaging, color, smell, or "secret" additives. With these products, marketers attempt to convince customers t heir product is significantly different from the others and should therefore be demanded over competing brands. These marketers are using: a. cannibalization b. perceptual m apping c. psychographic targeting d. integrated marketing e. product differentiation ANS: E PTS: 1 REF: 231-232 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Product | TB&E Model Strategy 135. For years, fryer chickens sold in grocery stores were perceived to be a rather generic product--one brand of chicken was much like another. T hen Frank Perdue began an advertising campaign to tell consumers his brand of chicken was more tender and a better choice. Perdue brought _____ to the marketing of fryer chickens. a. perceptual mapping b. product differentiation c. psychographic targeting d. m arket innovation e. cannibalization ANS: B Product differentiation strategy is a positioning strategy that fi rms use to distinguish their products from those of competitors. PTS: 1 REF: 231 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Strategy 136. When the Sara Lee Bakery Group int roduced I ron K ids Crustless bread (to save mothers the t ime and effort of slicing the crusts off sandwiches), i t was using: a. PRIZM segmentation b. geodemographic segmentation c. niche m arketing strategy execution d. product differentiation e. a target market chart ANS: D The p urpose of product differentiation is to distinguish one fi rm's products from another's. PTS: 1 REF: 231 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | T B&E Model Strategy 137. Recent research of cell phone features (e.g., calendar, push-totalk, text messaging) used a twodimension _____ with the axes ranging from low- to hightechnological advancement and highentertainment to high utili ty to show how the products a re perceived by consumers. a. perceptual map b. product differentiation graph c. product locator d. target market chart e. predictive model ANS: A Perceptual mapping is a means of d isplaying, in two or more dimensions, the location of products in the customers’ minds. PTS: 1 REF: 232 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Strategy 138. Jell-O could use _____ to determine if consumers perceive a void in snacks that are easy to handle and wholesome and if customers think Jell-O Pudding Pops would fill that void. a. predictive modeling b. a perceptual map c. p roduct positioning d. a t rend analysis e. an internal marketing audit ANS: B The a tt r ibutes of "easy to handle" and "wholesome" would be perceived as significant att r ibutes. PTS: 1 REF: 232 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Customer 139. The closer together two brands are on a perceptual m ap the: a. less perceptually alike they are b. closer their prices are c. more objectively alike t hey are d. more likely an undifferentiated marketing strategy is in effect e. more similarly perceived by consumers they are ANS: E If two products are close on a perceptual map, then consumers are perceiving them to be similar, even if the products actually are not. PTS: 1 REF: 232 OBJ: 07-9 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product | T B&E Model Customer 140. In 2006, Coca-Cola int roduced Coke Zero in Great Bri tain in order to appeal to Bri tish men who do not drink diet sodas because they consider them feminine beverages. The product was dubbed "Bloke Coke" by the Brit ish media. By catering to the Bri tish men who disdain diet sodas, Coca-Cola is using a positioning s trategy based on: a. product class b. price and quality c. use or application d. product user e. competitor ANS: D The strategy focuses on the likes and dislikes of the men who will d rink Coke Zero. PTS: 1 REF: 233 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Product | TB &E Model Customer 141. Clearing Skies Press published a book by Robert Ruark entitled Keeping the Baby Alive Till Your Wife Gets Home. I t is an advice book for new fathers. The book is positioned on the basis of: a. product class b. price and quality c. use or application d. product user e. family life cycle ANS: D The new father is the intended product user. PTS: 1 REF: 233 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 142. The advertisements for Torengos tort illa chips that come in cans like Pringles deliberately compare the product to Fri to-Lay's Tostitos tortilla chips and ask if you really prefer broken chips. Torengos is being positioned by: a. product class b. price and quality c. use or application d. att ribute e. competitor ANS: E Torengos is compared to its competition— Tostitos. PTS: 1 REF: 233 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Product 143. Ad campaigns by Aleve pain reliever emphasize the fact that to get the same relief offered by one Aleve, you would need to take six aspirin or Tylenol and four A dvil. These promotions are using the positioning base of: a. product class b. competitor c. p roduct user d. product merits e. price and quality ANS: B Positioning against competitors is a positioning strategy. PTS: 1 REF: 233 OBJ: 07-9 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 144. The Southern Company is t he largest provider of utilities in the southeastern United States. I t has also been accused of being the biggest source of industrial air pollution in the area. The Southern Company is t rying to change consumer perception of the company by sponsoring a series of television p rograms on how to preserve our environment. The Southern Company is hoping the p rogramming will lead to: a. repositioning b. reengineering c. demarketing d. u ndifferentiated targeting e. one-to-one marketing ANS: A Repositioning means changing t he customers’ perception of a brand in relation to competing brands. PTS: 1 REF: 234 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Strategy 145. H &R Block l aunched a $100 million marketing campaign to parlay the company's intimate knowledge of 20 million customers' finances into other services like mortgages and investment advice. B lock has great brand recognition, but consumers only care about i t four months out of the year. I ts executives figure they can use _____ to make people think of i t as a company offering services year-round. a. repositioning b. reengineering c. demarketing d. u ndifferentiated targeting e. niche marketing ANS: A Repositioning means changing the customers’ perception of a brand in relation to competing brands. PTS: 1 REF: 234 OBJ: 079 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Strategy | TB &E Model Customer 146. To be successful, most businesses focus on customer service. However, the cable industry has a history of poor customer service. Cable companies are facing competition for TV customers who once had no choice but cable if they wanted to see more t han local programs. In the face of this competition from direct broadcast satelli tes, cable companies are t rying to use a _____ strategy to show that they have become customeroriented. a. segmentation b. product differentiation c. targeting d. repositioning e. demarketing ANS: D Repositioning is changing consumers' perception of a brand in relation t o i ts competitors. PTS: 1 REF: 234 OBJ: 07-9 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Strategy | TB&E Model Customer 147. For an engagement r ing, Keishail would rather have a diamond than a cubic zirconium because the diamond is marketed as t he only way to show someone that you really love her and are sincere about your commitment to her. This indicates positioning by: a. product class b. competitor c. product user d. product use e. price and quality ANS: D Stressing the communication skills of a d iamond as a way to prove t rue love is positioning by use. PTS: 1 REF: 233 OBJ: 07-9 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer Turkey Hunting Equipment Around the beginning of fall each year, about 2.7 m illion turkey hunters all over the United States start looking at catalogs for the perfect i tem to guarantee that this year they will kill a wild turkey, the most elusive game bird on t he North American continent. The devoted turkey stalker can stock up on everything from camouflaged turkey hunting socks, turkey license plate holders, vests with huge pockets for toting dead birds, and hunting videos to turkey decoys, turkey earr ings, and turkey callers. Neil Cost is considered the best manufacturer of turkey callers in the world. I t is his only p roduct, and each is highly prized by turkey hunters. I t is not unusual for a turkey hunter t o pay $5,000 for one of Cost's callers. 148. Refer to Turkey Hunting Equipment. Wild t urkey hunters would be defined as a: a. market segment b. market position c. segmentation base d. retail position e. consumer position ANS: A A group of individuals sharing one or more characteristics (in this case love of wild turkey hunting) that cause them to have r elatively similar product needs is called a market segment. PTS: 1 REF: 212 OBJ: 07-1 T OP: AACSB Reflective Thinking | TB&E Model Strategy 149. Refer to Turkey Hunting Equipment. Given that the wild turkey hunters number approximately 2.7 million, it meets t he segmentation criterion of: a. substantiality b. accessibility c. reliability d. r esponsiveness e. functionality ANS: A The segment is large enough to warrant developing and maintaining it as a target market. PTS: 1 REF: 213 OBJ: 07-3 TOP: AACSB Reflective T hinking | TB &E Model Strategy 150. Refer to Turkey Hunting Equipment. Segmenting a m arket based on the fact that people who enjoy hunting typically exhibit a particular l ifestyle is an example of _____ segmentation. a. benefit b. psychographic c. geographic d. geodemographic e. demographic ANS: B Psychographic segmentation is based on lifestyle as well as personality and motive. PTS: 1 REF: 221 OBJ: 07-4 TOP: AACSB Reflective T hinking | TB &E Model Strategy 151. Refer to Turkey Hunting Equipment. What kind of s trategy does Neil Cost use to select his target market? a. concentrated targeting b. m ultisegment c. mass marketing d. undifferentiated e. repositioned ANS: A Cost targets one segment in the market. PTS: 1 REF: 227 OBJ: 07-7 TOP: AACSB Reflective Thinking | T B &E Model Strategy | TB&E Model Customer 152. Refer to Turkey Hunting Equipment. P rimos Hunting Calls is another company that manufactures wild turkey callers. I t claims each of its callers is able to cluck, shriek, and kee-kee (three sounds that have been known t o attract the wild turkey). If you buy one of Cost's callers, you are limited to one sound. In t his way, Primos has implemented a(n) _____ strategy. a. multisegment b. product d ifferentiation c. undifferentiated marketing d. target market e. repositioning ANS: B P roduct differentiation is used to distinguish one company's products from another's. PTS: 1 REF: 231 OBJ: 07-9 TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E M odel Strategy Wrestling Merchandise Market research has shown that 6- to 17-year-old m ales, 18- to 24-year-old females, and 18- to 44year-old males are most likely to watch a t elevised professional wrestling event or to attend a live match. Wrestling events are r egularly broadcast in 120 different countries. Merchandise licensed by World Wrestling E ntertainment (formerly known as the World Wrestling Federation) can be purchased at JCPenney and Wal-Mar t. Clothes for adults are used to reach markets that may not buy action figures, video games, and novelty candy, but who are still proud to sport World W restling Entertainment (WWE) t rademarks. 153. Refer to Wrestling Merchandise. The g roups identified above as strong wrestling fans can be described as: a. market positions b. m arket segments c. positionings d. organizational buyers e. microsegments ANS: B A group of individuals sharing one or more characteristics that cause them to have relatively similar p roduct needs is called a market segment. PTS: 1 REF: 212 OBJ: 07-1 TOP: AACSB Reflective Thinking | TB&E Model Customer 154. Refer to Wrestling Merchandise. The m arketing research revealed that _____ segmentation can be used to identify the biggest fans of professional wrestling. a. benefit b. psychographic c. demographic d. geographic e. geodemographic ANS: C Age is a demographic variable for segmentation. PTS: 1 REF: 215 O BJ: 07-4 TOP: AACSB Reflective Thinking | TB &E Model Customer 155. Refer to W restling Merchandise. Since the WWE must use different methods to reach its three l argest target markets, i t must use: a. undifferentiated targeting b. concentrated or niche t argeting c. multisegment targeting d. demarketing e. repositioning ANS: C A fi rm that chooses to serve two or more well-defined market segments and develops distinct marketing m ixes for each is practicing multisegment targeting. PTS: 1 REF: 228 OBJ: 07-7 TOP: A ACSB Reflective Thinking | TB&E Model Customer 156. Refer to Wrestling Merchandise. P rior to the 1990s, professional wrestling t r ied to compete as a legitimate sport just like football and baseball. Now it uses the term "sports entertainment" when talking about what i t is marketing to its fans. This is an example of the implementation of a(n) _____ strategy. a. multisegment b. product differentiation c. undifferentiated marketing d. target market e. r epositioning ANS: E Repositioning is the changing of consumers' perceptions in relation to t he competition. PTS: 1 REF: 234 OBJ: 07-9 TOP: AACSB Reflective Thinking | TB&E M odel Customer Better World Travelers Club For many years, if car owners wanted to make sure they would not be stranded if their car broke down, they became members of the A merican Automobile Association (AAA). I ts members also received discounts at AAAaffiliated motels as well as access to maps and a t r ip planning service. Recently, a new company offering the same services as AAA has come on the market. Better World Travelers C lub (BWTC) is competing against AAA by offering the same roadside assistance as AAA and at the same time pitching a go-green philosophy. The company is diligently courting the environmentally conscious t raveler. BWTC has agreed to donate one percent of club revenues to environmental organizations that seek to reduce the use of fossil fuel and fight g lobal warming. In addition, its members receive discounts on t ravel to remote wilderness retreats, world-class eco-resorts, and "green" hotels (ones that utilize energy-efficient p ractices). 157. Refer to Better World Travelers Club. BWTC's _____ is environmentally conscious t ravelers. a. market segment b. organizational basis c. aggregated market d. u ndifferentiated market e. market sample ANS: A A group of individuals sharing one or more characteristics that cause them to have relatively similar product needs is called a m arket segment. PTS: 1 REF: 212 OBJ: 07-1 TOP: AACSB Reflective Thinking | TB&E M odel Customer 158. Refer to Better World Travelers Club. In deciding to target the environmentally conscious t raveler, BWTC hoped this group met the criterion of _____. In other words, it had to be sure that this group would react to i ts marketing mix differently f rom other groups. a. reliability b. accessibility c. identifiability and measurabili ty d. r esponsiveness e. substantiality ANS: D PTS: 1 REF: 214 TOP: AACSB Reflective Thinking | T B&E Model Customer OBJ: 07-3 159. Refer to Better World Travelers Club. BWTC's design of t ravel packages that appeal to people who like hiking and camping and packages t hat appeal to those who like resorts would indicate the company is using a(n) _____ base. a. benefit segmentation b. demographic c. psychographic d. geodemographics e. usage-rate segmentation ANS: C PTS: 1 REF: 221 TOP: AACSB Reflective Thinking | TB &E Model S trategy OBJ: 07-4 160. Refer to Better World Travelers Club. BWTC's appeal to those who want to help preserve the environment indicates the company is using a _____ base. a. benefit segmentation b. demographic c. socioeconomic d. geodemographic e. cultural segmentation ANS: A I ts target market is expected to use the product because i t benefits t he environment. PTS: 1 REF: 222 OBJ: 07-4 TOP: AACSB Reflective Thinking | TB &E M odel Strategy 161. Refer to Better World Travelers Club. Because BWTC has chosen to concentrate its efforts on environmentally conscious t ravelers, i t can be said to: a. have found a market niche b. be targeting everyone who owns a car c. be targeting everyone who t akes a vacation d. be targeting everyone who drives e. have adopted a market aggregation s trategy ANS: A BWTC is using a concentrated targeting strategy. PTS: 1 REF: 227 OBJ: 07-7 TOP: AACSB Reflective Thinking | TB &E Model Strategy | TB&E Model Customer 162. Refer to Better World Travelers Club. BWTC's donation to organizations that seek to r educe the use of fossil fuel is a strategy for: a. mass marketing b. reengineering c. r epositioning d. multisegmentation e. product differentiation ANS: E I ts donations will d ifferentiate BWTC's service from the service offered by AAA. PTS: 1 REF: 231 OBJ: 07-9 T OP: AACSB Reflective Thinking | TB&E Model Product 163. Refer to Better World T ravelers Club. What base has BWTC selected for i ts positioning strategy? a. price and quality b. product class c. att r ibute d. product use e. product life cycle ANS: C BWTC wants consumers to associate the organization with saving the environment (a benefit). PTS: 1 REF: 233 OBJ: 07-9 TOP: AACSB Reflective Thinking | TB&E Model Strategy ESSAY 1. W hat are the four criteria that are necessary to define a market? ANS: A market has the following characteristics: • • • • composed of people or organizations the people/organizations have needs and wants that can be satisfied by particular product categories the people/organizations have the ability to purchase the sought products the people/organizations are willing to buy PTS: 1 REF: 212 OBJ: 07-1 TOP: AACSB Analytic | T B &E Model Strategy 2. What is a market segment? Why do companies engage in market segmentation? ANS: A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have relatively similar product needs. All people and all organizations within a given segment have some similar characteristics and needs. T he process of dividing a market into meaningful segments or groups that are relatively similar and identifiable is called market segmentation. The purpose of segmentation is to enable the marketer to tailor marketing mixes to better meet the needs of one or more specific segments. PTS: 1 REF: 212 OBJ: 07-1 TOP: AACSB Analytic | TB&E Model S trategy 3. You are given the following limited information about a market consisting of ten people. Describe all the possible ways to segment this market. Gender Income Male Female Female Male Female Male Male Male Female Female Medium Low Low H igh Low Low M edium High High H igh ANS: There are five possible ways to segment this market: • • • • • One homogeneous market consisting of ten people (one segment) A market consisting of t en individual segments A market composed of two segments based on gender (five males and five females) A market composed of three segments based on income (four low, two medium, four high) A market composed of five segments based on gender and income level (one Male/Low, two Male/Medium, two Male/High, three Female/Low, two Female/High) PTS: 1 REF: 212 OBJ: 07-1 TOP: AACSB Analytic | TB &E Model Strategy 4. Discuss why m arket segmentation is important to the well-being of most companies. ANS: • Segmentation enables marketers to identify groups of customers with similar needs and to analyze characteristics and buying behavior of those groups. • Segmentation provides m arketers with information to help them design marketing mixes specifically matched with characteristics and desires of one or more segments. • Segmentation helps decision makers more accurately define marketing objectives and allocate resources. • Market segmentation helps marketers define customers needs and wants more precisely. PTS: 1 REF: 213 OBJ: 07-2 TOP: AACSB Analytic | TB&E Model Strategy | TB&E Model Customer 5. To be useful, a segmentation scheme must produce segments that meet four basic criteria. Name and briefly describe each of these four criteria. ANS: SUBSTANTIAL I TY. A selected segment must be large enough to warrant developing and maintaining a special marketing m ix (commercially viable). IDENTIF IABI L I TY AND MEASURABIL I TY. The segments m ust be identifiable and their size measurable. Descriptive data regarding demographic, geographic, and/or other relevant characteristics of segment members must be available. ACCESSIBIL I TY. The fi rm must be able to reach members of targeted segments with customized marketing mixes. RESPONSIVENESS. The market segment must respond d ifferently from other segments to marketing mixes; otherwise, there is no need to t reat t hat segment separately. PTS: 1 REF: 213-214 OBJ: 07-3 TOP: AACSB Analytic | TB &E M odel Strategy 6. What is a segmentation base (or segmentation variable)? Name four of t he common segmentation bases used by marketers to segment consumer markets. ANS: A segmentation base (or variable) is a characteristic of individuals, groups, or organizations t hat marketers use to divide a total market into segments. Consumer goods marketers commonly use one or more of the following characteristics to segment markets: • • • • • Geographic--by region, market size, market density, or climate Demographic--such as age, gender, ethnic background, income, or family life-cycle stage Psychographics--such as motives, lifestyles, or personality Benefit--such as less filling or great taste Usage rate-heavy, medium, or light The above list is not exhaustive, and students may come up with other examples of segmentation variables. PTS: 1 REF: 214-223 OBJ: 07-4 TOP: AACSB A nalytic | TB&E Model Strategy | TB &E Model Customer 7. Markets can be segmented using a single variable (such as gender) or by several variables in combination (such as gender, age group, and education). While multiple-variable segmentation is more descriptive and precise than single-variable segmentation, it has several disadvantages. Name three disadvantages of multiple-variable segmentation. ANS: The major d isadvantages of multiple-variable segmentation include: • • • I t is often more difficult to employ than single-variable segmentation. Usable secondary data are less likely to be available to define and describe the segments. As the number of segmentation bases i ncreases, the size of individual segments decreases. This can result in segments that are not large enough to warrant individual t reatment. PTS: 1 REF: 214 OBJ: 07-4 TOP: AACSB A nalytic | TB&E Model Strategy 8. What is geographic segmentation? Name four reasons w hy a company would use a regional marketing approach. Then give a specific example of a company marketing its product(s) regionally. ANS: Geographic segmentation refers to segmenting markets based on region of the count ry or world, market size, market density, or climate. Marketers might adopt a regional approach for the following reasons: • To meet r egional preferences and buying habits. • • • • To find new ways to generate sales volume because of mature markets characterized by slow g rowth and intense competition. Computerized checkout stations with scanners enable retailers to accurately assess which b rands are selling well in which regions. Packaged-goods manufacturers are int roducing new regional brands intended to appeal to local preferences. Consumer goods companies use a regional approach because it allows them to react more quickly to competition. Examples of companies using a regional approach include: • • Cracker Barrel as it designs its product offering to meet the cultural requirements of different regions. Any company selling climate-dependent products such as snowblowers, water and snow skis, and air-conditioning and heating systems. PTS: 1 REF: 214-215 OBJ: 07-4 TOP: AACSB Analytic | TB&E Model S trategy | TB&E Model Customer 9. Marketers use demographic information to segment m arkets because it is widely available and often related to consumers' purchasing and consumption behavior. List four common bases used by marketers for demographic segmentation. For each base listed, give an example of a product specifically targeted to the needs and wants of the segment identified within the base. ANS: Common bases used in demographic segmentation include: • • • • • age gender income ethnic background family l ife cycle Text examples include the following: AGE. Cell phones, magazines, and clothing m arketed to teens; beer, wine, and spirits marketed to people 20-40 years of age; retirement p roperties, health and wellness products, and Vespa scooters marketed to baby boomers are examples of products/services targeted at specific age groups. GENDER. Marketers of clothing, cosmetics, personal-care i tems, magazines, jewelry, footwear commonly use gender as a segmentation variable. INCOME. The housing, clothing, automobile, and food markets a re often segmented by income. Sam’s Club is aimed at lower-income consumers, while Costco attracts more upscale consumers. ETHN IC BACKGROUND. Many products are t argeted specifically to various ethnic groups, especially African Americans, H ispanics, and Asian Americans. FAMILY L IFE CYCLE. Marketers target people in different stages of the family life cycle by noting spending needs. Young singles and mar r ieds buy more cars, f urniture, appliances, and vacations. Mar r ieds with children buy more toys, baby products, and appliances. Middle-ageds buy more luxury i tems and home improvements. The elderly focus spending on medical care. PTS: 1 REF: 215-220 OBJ: 07-4 TOP: AACSB Analytic | T B &E Model Strategy | TB&E Model Customer 10. What is the family life cycle (FLC)? Using the following selected stages from the FLC, briefly describe the lifestyle and p urchasing needs of consumers in that stage: (1) Young single, (2) Young mar ried without children, (3) Young mar ried with children, (4) Middle-aged mar r ied without children, and (5) Older unmar r ied. ANS: The family life cycle is a series of stages determined by a combination of age, marital status, and the presence or absence of children. The FLC is a valuable basis for segmenting markets, because families' needs, income, resources, and expenditures are different in each life-cycle stage. YOUNG SINGLE. Members of this group have few financial burdens, are fashion opinion leaders, and are recreation oriented. They buy ki tchen equipment, basic furniture, cars, vacations, and i tems necessary for the " mating game." YOUNG MARRIED WITHOUT CHI LDREN. This group is financially better off, so members purchase at a high rate. Many durables are bought, such as cars, home appliances, and furniture. Additionally, vacations are still bought. YOUNG M ARRIED WITH CHI LDREN. This group concentrates on home ownership and raising children, so liquid assets are low. They like new and advertised products. They tend to buy appliances, baby items, toys, and some medical products. M IDDLE-AGED MARRIED W ITH NO CHI LDREN. Members of this group enjoy a better financial position and are i nterested in t ravel, recreation, self-education, and home improvements. They tend to buy home improvements, vacations, and luxuries. OLDER UN MARRIED. Cuts in income curtail spending of this group. Purchases are more focused on medical care and medical p roducts. PTS: 1 REF: 219-220 OBJ: 07-4 TOP: AACSB Analytic | TB &E Model Customer 11. What is psychographic segmentation? Why do marketers use psychographic segmentation? List four psychographic variables commonly used as segmentation bases. A NS: Age, gender, income, ethnicity, family life-cycle stage, and other demographic variables are usually helpful in developing segmentation strategies but often do not paint t he entire picture. Psychographic variables can be used to "flesh out" the consumer description. Psychographic variables alone can be used to segment markets, or they can be combined with other segmentation variables. Psychographic variables include: • • • • Personality Motives Lifestyles Geodemographics PTS: 1 REF: 221-222 OBJ: 07-4 TOP: A ACSB Analytic | TB&E Model Strategy | TB&E Model Customer 12. What is geodemographic segmentation? What is the result of geodemographic segmentation? Give one specific example that illustrates this type of segmentation. ANS: Geodemographic segmentation clusters potential customers into neighborhood lifestyle categories. I t is a combination of geographic, demographic, and lifestyle segmentation. The result of geodemographic segmentation is micromarketing, which is the targeting of small geographic regions with specially designed marketing programs. The text example is H-E-B G rocery Company tailoring merchandise in each store to patron preferences. PTS: 1 REF: 221 OBJ: 07-4 TOP: AACSB Analytic | TB &E Model Strategy | TB &E Model Customer 13. W hat is benefit segmentation? For toothpaste, list six benefits that might be sought by consumers. For each benefit, give an existing brand name that best exemplifies segmentation according to that benefit. ANS: Benefit segmentation is the process of g rouping customers into market segments according to different benefits sought from the p roduct. Student answers are likely to vary greatly. Possible benefits for toothpaste could i nclude: Cavity/Decay Prevention--Crest White/Bright Teeth--Ul t ra Bri te, Gleem, M acLeans, Plus White, Rembrandt Fresh Breath--Close-up, Pepsodent Tartar Control-Tar tar Control Crest, Tartar Control Colgate Plaque Reduction--Dental Care, Viadent, Dentagard, Peak, Metadent Stain Remover--Pearl Drops, Topol, Caffree, Zact, Clinomyn, Rembrandt Gingivitis/Gum Disease Prevention--Crest, Colgate, Metadent Flavor/Great Taste--Aim, Colgate, Stripe Fun for K ids--Crest Sparkle, Oral-B Sesame Street, Colgate Jr. No Mess--pump, neat-squeeze, and specially capped toothpastes Sensitive Teeth-Sensodyne, Denquel, Promise All-in-One--Aquafresh Denture Cleaning--Dentu-Creme, Dentu-Gel, Complete Baking Soda--Arm & Hammer, Metadent Low Price--Arm & Hammer, s tore brands, brands on sale PTS: 1 REF: 222-223 OBJ: 07-4 TOP: AACSB Analytic | TB &E M odel Customer | TB&E Model Product 14. What is usage-rate segmentation? What is the 80/20 principle, and how does i t apply to usage-rate segmentation? ANS: Usage-rate segmentation divides a market based on the amount of product customers purchase or consume. The 80/20 principle states that 80 percent of the demand for a product is generated by 20 percent of all customers. While the percentages are not always exact for all p roduct categories, the principle highlights the disproportionate share of the total consumption of many products and focuses marketers on heavy users. PTS: 1 REF: 223 O BJ: 07-4 TOP: AACSB Analytic | TB &E Model Strategy 15. The business market consists of four broad segments. What are these segments? ANS: The four broad segments of the business market are: • • • • producers resellers institutions government PTS: 1 REF: 223 O BJ: 07-5 TOP: AACSB Reflective Thinking | TB &E Model Customer 16. L ist in order the s teps used to segment a market. Then name two subsequent marketing activities. ANS: The four segmentation steps are: 1. 2. 3. 4. 5. 6. Select a market or product category for study Choose a basis or bases for segmenting the market Select segmentation descriptors Profile and analyze segments The two subsequent activities are Select target markets Design, i mplement, and maintain appropriate marketing mixes PTS: 1 REF: 225 OBJ: 07-6 TOP: A ACSB Reflective Thinking | TB&E Model Strategy 17. After the market segmentation p rocess, the marketing manager's next task is to select one or more target markets. There a re three general strategies for selecting target markets. Name and briefly define each of t he three strategies. For each strategy, name one advantage and one disadvantage of using t he strategy. ANS: UNDIFFERENTIATED TARGETING STRATEGY. This strategy adopts a mass-market philosophy in which one marketing mix is targeted at the entire market. A dvantages include economies of mass production and lower marketing costs. D isadvantages include susceptibili ty to competitive inroads and a higher likelihood of u nimaginative product offerings with li t t le appeal. CONCENTRATED (OR N ICHE) T ARGETING STRATEGY. This strategy entails the selection of one segment of a market for t argeting. Advantages include concentrated efforts on a highly specialized marketing mix t hat meets target needs, a focus of resources, the ability to compete against larger fi rms, and the ability to establish a strong position in a desirable market segment. Disadvantages i nclude r isky dependence on a single segment, necessity for success, and threat of competitive advances. M ULTISEGMENT TARGETING STRATEGY. When a fi rm chooses t o serve two or more market segments and develops distinct marketing mixes for each segment, it is practicing multisegment targeting. Advantages potentially include greater sales volume, higher profits, larger market share, and economies of scale in manufacturing and marketing. Disadvantages include high costs and cannibalization. PTS: 1 REF: 226-229 O BJ: 07-7 TOP: AACSB Analytic | TB &E Model Strategy 18. Mul tisegment targeting offers m any benefits to fi rms, as well as many additional costs. L ist two benefits and four costs of m ultisegment targeting. ANS: Benefits include potential to achieve: • • • • greater sales volume higher profits larger market share economies of scale Costs include: • • • • • • • p roduct design production promotion inventory marketing research management cannibalization PTS: 1 REF: 228-229 OBJ: 07-7 TOP: AACSB Analytic | TB&E Model S trategy 19. Define cannibalization and product differentiation. How can product d ifferentiation help avoid cannibalization? ANS: Cannibalization occurs when sales of a new product cut into sales of a fi rm's existing products. In this case, the fi rm's products are competing against each other, rather than against the products produced by the fi rm’s competition. Product differentiation serves to distinguish one fi rm's products from those of competitors. Differences can be either real or perceived. Products can be differentiated according to brand names, packaging, color, smell, or other means. Products can also be d ifferentiated according to real benefits such as quality, features, price, etc. A fi rm can use p roduct differentiation to distinguish its own products. Cannibalization is reduced because p roduct differences appeal to different market segments. Positioning tactics can also be used to help differentiate the fi rm's brands from each other in order to avoid cannibalization. PTS: 1 REF: 229 | 231-232 TOP: AACSB Analytic | TB&E Model Product O BJ: 07-7 | 07-9 20. What is one-to-one marketing? What is the primary goal for companies t hat adopt the one-to-one marketing approach? ANS: One-to-one marketing is an i ndividualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer. The goal is to reduce costs t hrough customer retention and increase revenue through customer loyalty. PTS: 1 REF: 230 OBJ: 07-8 TOP: AACSB Analytic | TB &E Model Promotion 21. List the four t rends that have resulted in the continuing growth of one-to-one marketing. ANS: First, the one-sizefits-all marketing of yesteryear no longer fits. Customers do not want to be t reated like the m asses. Second, direct and personal marketing efforts will continues to grow to meet the needs of customers who no longer have the t ime to spend shopping and making purchase decisions. Third, customers will be loyal to those companies and brands that have earned t heir loyalty and reinforced it at every purchase occasion. Fourth, mass-media approaches w ill continue to decline in importance as advances in market research and database t echnology allow marketers to collect more detailed information on their customers, not just t he approximations allowed by demographics but the specific names and addresses. PTS: 1 REF: 230-231 OBJ: 07-8 TYPE: Comp TOP: AACSB Analytic | TB&E Model Customer 22. Name and briefly describe four bases fi rms typically use for positioning or repositioning t heir products/services. ANS: ATTRIBUTE. Products may be associated with an att r ibute, feature, or particular customer benefit. PRICE AND QUAL ITY. Fi rms may stress high p rice as a signal of quality or low price as a signal of value. USE OR APPLICATION. S tressing use situations or special applications effectively positions the product. PRODUCT USER. This position base associates the product with a personality or type of user. PRODUCT CLASS. The product is associated with a particular category of products. COMPETITOR. Positioning against a competitor, such as Avis positioning i tself as No. 2 against Hertz. PTS: 1 REF: 233 OBJ: 07-9 TOP: AACSB Reflective Thinking | TB &E M odel Product | TB&E Model Strategy 23. You are the marketing manager for a food p roducts firm. Your fi rm would like to int roduce a new beverage to the marketplace. You have determined that two important dimensions for positioning a product are (1) n ut r it ional value and (2) age orientation. Place the following beverages on the perceptual m ap provided: Coffee, Orange Juice, Diet Cola, Apple Cider, M ineral Water, M ilk, Herbal Tea, Liquor, Tomato Juice. Assuming the listed beverages comprise all competitive beverages, what position should your fi rm's new beverage have? Describe the new beverage. A NS: Although exact locations will vary by student, likely quadrant locations are shown above. The positioning should indicate there is room for a non-nut r i tious beverage targeted a t children, such as a presweetened punch or a sugared, artificially f lavored and colored soft drink. PTS: 1 REF: 232 OBJ: 07-9 TOP: AACSB Analytic | TB &E Model Distribution | T B &E Model Product | TB&E Model Promotion Chapter 9—Product Concepts TRUE/FALSE 1. A product may be defined as everything, both favorable and unfavorable, t hat a person receives in an exchange. ANS: T PTS: 1 REF: 284 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 09-1 TYPE: Def 2. When consumers buy gasoline, t hey are all more interested in its chemical composition than anything else. ANS: F Consumers do not buy gasoline based on its chemical makeup; they buy products based on t he benefits they deliver. PTS: 1 REF: 284 OBJ: 09-1 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 3. An elementary school teacher p urchased a ream of art paper, a box of crayons, and some modeling clay. These products could be classified as either business goods or consumer goods, depending on the teacher's i ntended use. ANS: T PTS: 1 REF: 284 OBJ: 09-2 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 4. Varig is famous for her pound cakes, and she credits her success to her use of K ing Ar thur f lour. She will only use K ing A r thur f lour and will t ravel to several different stores, if necessary, to find this particular b rand. For Varig, f lour is a shopping product. ANS: F Because Varig is so brand loyal and accepts no substitutes, this is an example of a specialty product. PTS: 1 REF: 285 OBJ: 09-2 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 5. Given the many differences in majors available, living options, and image d ifferences, universities would be classified as a heterogeneous shopping product for most people. ANS: T PTS: 1 REF: 285 OBJ: 09-2 TYPE: Comp TOP: AACSB Reflective Thinking | T B&E Model Product | TB &E Model Customer 6. Inez believes makeup is the most i mportant part of her wardrobe. She spends considerable time comparing the prices, skin t ones, and color options available at various cosmetics counters in department stores. For I nez, makeup is a convenience product. ANS: F For Inez, makeup is a shopping product. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Customer 7. Many cooks believe nothing can beat Bakewell Cream for making delicious biscuits. Loyal customers are willing to go to great lengths to find this p roduct and will accept no substitutes. Bakewell Cream is only marketed in the New E ngland states. For these cooks, Bakewell Cream is a shopping product. ANS: F For these cooks, Bakewell Cream is a specialty product. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 8. YKK is the world's largest manufacturer of sliding fasteners (zippers). I t also manufactures optical components and aluminum architectural parts. These products represent YKK's product l ine. ANS: F These product i tems represent all of the fi rm's products and are unrelated. T he products, in total, represent the fi rm's product mix. PTS: 1 REF: 286 OBJ: 09-3 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 9. YKK is the world's largest m anufacturer of zippers. I t makes over 1,500 different types and styles of zippers. The great variety of zippers made by YKK represents its product mix width. ANS: F The 1,500 types of zippers represent depth in that product line. PTS: 1 REF: 287 OBJ: 09-3 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 10. Product modification occurs w hen changes are made in how the product functions, its quality, or some aesthetic characteristic of the product. ANS: T PTS: 1 REF: 287-288 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 09-3 TYPE: Comp 11. Chef's Catalog built i ts r eputation on selling the highest-quality baking ingredients. The catalog retailer has added a l ine of fine ki tchen tools and wants i ts customers to think of the retailer as a place to buy everything needed to bake the finest breads and desserts--not just for buying the i ngredients. The marketing term for changing consumers' perceptions of the Chef's Catalog is segmentation. ANS: F Changing consumers' perceptions is called repositioning. PTS: 1 REF: 288 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 12. Ocean Spray is known for cranberry juices. When it added Ocean Spray Craisins (dried sweetened cranberr ies to be eaten like raisins), that was an example of a product mix extension for the company. ANS: F I t's an example of a product line extension for the company. PTS: 1 REF: 288 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 13. Isaac Golding, owner of a tutoring service, has developed a design for his fi rm that includes an owl wearing large spectacles and carrying a satchel crammed f ull of books and papers. He plans to use this design on all communications the fi rm sends out. This design is called the fi rm's brand name. ANS: F Such a design would be called the f i rm's brand mark; only the part of the brand that can be spoken--for example, the formal name of the fi rm--would be called the brand name. PTS: 1 REF: 290 OBJ: 09-4 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 14. Brand names such as K leenex, UPS, Sony, Chevrolet, and Kellogg's are likely to have more brand equity than b rand names like Viking, Zojirishi, Schimano, and Thule. ANS: T PTS: 1 REF: 290 TOP: A ACSB Reflective Thinking | TB&E Model Product OBJ: 09-4 TYPE: App 15. Chico likes M ichelin t ires for his bicycle. If he needs new bicycle t i res when M ichelins are not on sale, he is willing to pay a higher price for Michelin rather than buy some other brand of bicycle t i re. Chico could be described as being brand loyal to Michelin. ANS: T PTS: 1 REF: 290 O BJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | TB &E M odel Customer 16. Generic products are those brands whose names have become generic and now identify a class or type of product, such as aspirin, cellophane, thermos, or shredded wheat. ANS: F These are generic brand names, not generic products. PTS: 1 REF: 291 OBJ: 09-4 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product 17. W hen the manufacturer of French's classic yellow mustard int roduced French's Dijon m ustard, French's Honey mustard, and French's Sweet Onion mustard, it was an example of cobranding. ANS: F I t's an example of family branding. PTS: 1 REF: 293 OBJ: 09-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 18. Rights to a t rademark exist as long as the mark is used. If a fi rm does not use i t for two years, the t rademark is considered abandoned, and a new user can claim exclusive ownership of the m ark. ANS: T PTS: 1 REF: 294 TOP: AACSB Reflective Thinking | TB &E Model Product O BJ: 09-4 TYPE: App 19. The most important functions of packaging are to contain and p rotect products, promote products, facilitate product storage, and facilitate recycling. ANS: T P TS: 1 REF: 295 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 09-5 T YPE: Comp 20. When Alec picked up the candy bar, he automatically looked to see its fat content. The information Alec looked for was contained in a nut r i tional label. ANS: T PTS: 1 REF: 297 OBJ: 09-5 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | T B&E Model Customer 21. Due to the t ime required to scan them, universal product codes (UPCs) are typically placed on merchandise that would be classified as shopping p roducts. ANS: F UPCs appear on most i tems in supermarkets and other high-volume outlets. Bar codes also appear on shopping products such as clothing, appliances, high-end w ines, etc. The UPC is essential in supply chain management for a wide variety of products, not just shopping products. PTS: 1 REF: 297 OBJ: 09-5 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 22. A company that wants to market its product g lobally has only two branding strategies available: either use the brand name everywhere or develop a new brand name for each different market. ANS: F There is a third possible b randing strategy--adapt and modify. PTS: 1 REF: 298 OBJ: 09-6 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Strategy 23. Cultural t raits can make a package design successful in one country and a failure in another. ANS: T PTS: 1 REF: 298 OBJ: 09-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model P roduct | TB&E Model Strategy 24. A warranty does not confi rm the quality or performance of a good or service. ANS: F A warranty does, in fact, confirm the quality or performance of a good or service. PTS: 1 REF: 299 OBJ: 09-7 TYPE: Def TOP: AACSB Reflective Thinking | TB&E Model Product 25. All sales have an implied warranty. ANS: T T he Uniform Commercial Code supports the implied warranty that any product or service is f it for the purpose for which it was sold. PTS: 1 REF: 299 OBJ: 09-7 TYPE: Def TOP: A ACSB Reflective Thinking | TB&E Model Product M ULTIPLE CHOICE 1. A _____ is everything, both favorable and unfavorable, that a person receives in an exchange. I t can be t angible, intangible, a service, an idea, or a combination of these things. a. b. c. d. e. brand equity quality warranty t ransaction product OBJ: 09-1 TYPE: Def ANS: E PTS: 1 REF: 284 T OP: AACSB Reflective Thinking | TB&E Model Product 2. The _____ is the starting point i n creating a marketing mix. a. price b. product c. distribution channel d. promotional media e. production line ANS: B The product must be specified before other marketing mix variables can be planned. PTS: 1 REF: 284 OBJ: 09-1 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Product 3. Why is creation of a product the starting point for the m arketing mix? a. The production department must know what to produce first. b. P roduction strategy is the first of the four Ps listed in the marketing mix. c. Determination of the price, promotional campaign, and distribution network cannot begin until the product has been specified. d. Product development takes the longest amount of t ime to complete. e. Actually, the product does not have to be the starting point--promotional strategies are often the starting point. ANS: C The product is the first decision around which the others a re based. PTS: 1 REF: 284 OBJ: 09-1 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Product | TB&E Model Strategy 4. Which of the following is NOT an example of a product's tangible feature? a. brand equity b. packaging c. color d. weight e. size ANS: A PTS: 1 REF: 284 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 09-1 T YPE: Def 5. In the long run, regardless of the effort put into the product management p rocess, the most important factor determining if a consumer product will succeed or fail is: a. the product mix plan b. the way the fi rm implements its production strategy c. the m arketing plan it selects for i ts products d. how well the manufacturer satisfies its customers' needs e. the competition encountered by the manufacturer ANS: D Products succeed because they deliver benefits and satisfy customer needs. PTS: 1 REF: 284 OBJ: 091 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 6. When PaintingsDirect, an online seller of contemporary original art, markets i ts art to home decor buyers for retailers, custom-framing stores, and intermediaries that supply furniture and home furnishings retailers, it is selling _____ products. a. specialty b. consumer c. business d. convenience e. unsought ANS: C Business products are purchased for (1) use in the production of other goods or services, (2) use in an organization's operations, or (3) resale to other customers. PTS: 1 REF: 284 OBJ: 09-2 TYPE: Comp TOP: A ACSB Reflective Thinking | TB&E Model Product 7. The consumer product classification system is based on: a. how the market is segmented b. the way the products are m anufactured c. the way products are used d. the physical att r ibutes of the product e. the amount of effort consumers spend to acquire the product ANS: E Products are classified by t he amount of effort that is normally expended in the acquisition process. PTS: 1 REF: 284 O BJ: 09-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 8. _____ p roducts are purchased with lit tle shopping effort. These products typically are purchased r egularly, usually with lit t le planning, and require wide distribution. a. Convenience b. Specialty c. Branded shopping d. Unbranded shopping e. Generic ANS: A PTS: 1 REF: 284 T OP: AACSB Reflective Thinking | TB&E Model Product OBJ: 09-2 TYPE: Def 9. Arno s topped at a newsstand to buy today’s Wall Street Journal. While he was paying for his newspaper, he noticed a Sudoku puzzle book, which he also purchased. In this example, the p uzzle book is an example of a(n) _____ product. a. specialty b. convenience c. business d. shopping e. unsought ANS: B Convenience products are usually relatively inexpensive i tems t hat receive li t tle shopping effort. An i tem bought on an impulse like the puzzle book is an example. PTS: 1 REF: 284 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Product | TB&E Model Customer 10. While Allison was showing her new infant son t o friends of her grandmother, the baby needed a diaper change, and she had brought none w ith her. She normally uses eco-friendly Seventh Generation brand diapers but settled for Pampers brand diaper because that was the only brand stocked at the small local grocery s tore. For Allison, the recent diaper purchase is an example of buying _____ products. a. homogeneous shopping b. heterogeneous shopping c. convenience d. specialty e. component A NS: C She spent very lit tle shopping effort buying the diaper due to the emergency. PTS: 1 REF: 284 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | T B&E Model Customer 11. Which of the following is the best example of a convenience p roduct? a. the purchase of an engagement r ing b. the weekly purchase of a TV Guide c. a one-of-a-kind bird bath for the garden d. a piano stool for the new piano e. the annual vacation cruise ANS: B This is a relatively inexpensive purchase. and if the individual habitually buys the magazine, she probably did not do any comparison shopping. PTS: 1 REF: 284 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 12. The convenience product marketing strategy includes: a. wide distribution of the p roduct b. higher than ordinary prices c. few retail outlets other than convenience stores d. significantly lower promotion budgets e. products that are not easily substitutable ANS: A To sell large amounts of products that consumers are unwilling to search for, there must be a l arge number of retail outlets. PTS: 1 REF: 284-285 OBJ: 09-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 13. Compared to the other classifications of consumer products, shopping products are: a. widely available so they need lit t le or no p romotion b. usually less expensive than convenience products c. purchased without significant planning d. usually more expensive than convenience products and are found in fewer stores e. purchased immediately after the consumer realizes he or she needs them A NS: D Shopping products are typically i tems such as clothing, automobiles, and major appliances. Consumers usually compare i tems across brands or stores. PTS: 1 REF: 285 O BJ: 09-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 14. H ar r ison wanted a gas water heater. He watched newspaper ads until he found one on sale. For Har r ison the water heater is a(n) _____ product. a. shopping b. convenience c. component d. unsought e. specialty ANS: A Har r ison is comparing ads looking for a low p rice. This is shopping product behavior. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 15. Which of t he following is the best example of a shopping product for most consumers? a. a light bulb for the front porch fixture b. Vital Radiance makeup by Revlon for women over 50 c. a ream of paper for your printer d. a gas grill for the new patio e. a copy of the Wall Street Journal A NS: D Shopping products are typically more expensive than convenience products and are found in fewer shops. Vital Radiance describes a specialty product because of the specification of a brand name, as does The Wall Street Journal PTS: 1 REF: 285 OBJ: 09-2 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 16. The two types of shopping products are: a. unsought and convenience b. generic and family c. exclusive and intensive d. heterogeneous and homogeneous e. consumer and business ANS: D PTS: 1 REF: 285 TOP: AACSB Reflective Thinking | TB&E M odel Product OBJ: 09-2 TYPE: Def 17. _____ are products consumers see as being basically the same, so consumers shop for the lowest price. a. Low-prestige specialty p roducts b. Product equivalents c. Heterogeneous shopping products d. Generic convenience p roducts e. Homogeneous shopping products ANS: E PTS: 1 REF: 285 OBJ: 09-2 TYPE: Def T OP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 18. A ndrea needs to find a kennel for boarding her son’s dogs. There are several different kennels in her community, and Andrea believes all of them to be basically alike. The only feature she is genuinely concerned about is low price. For Andrea, the kennel for boarding dogs would be classified as a(n) _____ product. a. specialty b. unsought c. heterogeneous shopping d. basic convenience e. homogeneous shopping ANS: E Homogeneous products are p roducts that consumers see as being basically the same, so consumers shop for the lowest p rice. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Product | TB&E Model Customer 19. _____ products are seen by consumers to differ i n quality, style, suitabili ty, and lifestyle compatibility. Comparisons between these products a re often quite difficult because they may have unique features and different levels of quality and price. a. Product equivalents b. Comparative convenience products c. Homogeneous shopping products d. Product counterparts e. Heterogeneous shopping p roducts ANS: E PTS: 1 REF: 285 OBJ: 09-2 TYPE: Def TOP: AACSB Reflective Thinking | T B&E Model Product | TB &E Model Customer 20. Which of the following products is most likely to be considered an example of a heterogeneous shopping product? a. an offcampus apartment b. a package of pencils c. a Rolex watch d. a stapler e. a f lea collar ANS: A Heterogeneous shopping products are essentially different. Housing is one of the examples given in the text. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 21. When K i rby wanted a gas grill for his patio, he visited T he Home Depot and Lowe's homeimprovement stores, as well as three other stores that specialize in outside furnishings, in order to find the one with just the features he wanted. I f K i rby represents a typical grill buyer, you know grills are a(n): a. homogeneous luxury p roduct b. shopping specialty good c. operating supply good d. convenience i tem e. heterogeneous shopping good ANS: E Grills would be considered heterogeneous shopping p roducts because consumers perceive various grills to have distinctive qualities such as sizes, shapes, and levels of functionality that match the style of the customer. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | T B &E Model Customer 22. _____ products are searched for extensively, and substitutes are not acceptable. These products may be quite expensive, and often distribution is limi ted. a. E xclusive shopping b. Homogeneous convenience c. Branded shopping d. Specialty e. Heterogeneous convenience ANS: D PTS: 1 REF: 285 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 09-2 TYPE: Def 23. The most exp nsive refrigerator in the world is the Sub-Zero brand. Many consumers believe it to be the best brand made. For people who insist on having the best ki tchen money can buy and will accept no less, the Sub-Zero refrigerator is an example of a(n) _____ product. a. heterogeneous shopping b. specialty c. homogeneous shopping d. convenience e. exclusive A NS: B Sub-Zero refrigerators are expensive, and no substitutes are acceptable. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | T B&E Model Customer 24. One of the most expensive brands of shoes for mountain climbing is the Anasazi brand. Many climbers believe it to be the safest brand made. People w ho want to buy the safest climbing shoes available will accept no other brand of shoe even t hough there are several other manufacturers of climbing shoes. Anasazi brand climbing shoes are an example of a(n) _____ product. a. heterogeneous shopping b. specialty c. homogeneous shopping d. convenience e. exclusive ANS: B Anasazi brand shoes are expensive, and no substitutes are acceptable. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 25. When deciding on distribution plans for specialty products, companies generally ensure that the i tems are: a. b. c. d. e. made available only as private brands made available in a large n umber of stores in a geographic area made available only through the mail distributed to a considerable number of stores in a geographic area distributed to only a few stores in the geographic area ANS: E Specialty products are searched for extensively, and substitutes are not acceptable. These products may be quite expensive, and often distribution is limi ted. PTS: 1 REF: 286 OBJ: 09-2 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model P roduct | TB&E Model Distribution 26. Ever since Mart in saw his fi rst Bianchi EV3 Carbon Centaur Road Bike, he has wanted to purchase one, but he could not afford its $2,500 price tag. He has conducted extensive research on Bianchi bicycles and learned nothing that changed his mind about the bike’s superiority. Finally, at age 35, he has achieved the income level to be able to purchase one. For Mar tin, the Bianchi bike is an example of a(n) _____ product. a. specialty b. consumer c. convenience d. business e. u nsought ANS: A The fact that Mar tin did not consider another brand shows the bike is a specialty product. PTS: 1 REF: 285 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Product | TB &E Model Customer 27. _____ products are products that are not known about or not actively searched for by consumers. These products require aggressive personal selling and highly persuasive advertising. a. H idden b. Specialty c. Equity d. Unsought e. Shopping ANS: D PTS: 1 REF: 286 TOP: AACSB Reflective Thinking | T B&E Model Product OBJ: 09-2 TYPE: Def 28. To leave her neighborhood, Keisha has to d rive through a construction area that is r iddled with metal pieces and nails with the potential to puncture her t i res. She got another f lat t ire just yesterday. The f lat caused her t o miss an important appointment with a prospective customer. Keisha does not know M ichelin has int roduced PAX ti res, which can keep rolling smoothly up to 120 miles, even if completely deflated by a puncture. For Keisha, M ichelin PAX ti res are a(n) _____ product because she doesn't know the product exists. a. heterogeneous shopping b. specialty c. u nsought d. convenience e. exclusive ANS: C New products are often examples of unsought p roducts until promotion reveals their existence. PTS: 1 REF: 286 OBJ: 09-2 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 29. U nsought products typically are products that: a. consumers purchase when they see them i n a convenient location b. consumers definitely don't want c. only require reminder advertising to be successful d. require li t t le or no decision making by the buyer e. consumers don't know about or don't actively look for ANS: E PTS: 1 REF: 286 TOP: A ACSB Reflective Thinking | TB&E Model Product OBJ: 09-2 TYPE: Def 30. Most people u nder the age of 25 have a strong belief in their own personal invincibility. An insurance agency targeting this group for life insurance would find this market segment categorizes t he insurance as a(n) _____ product. a. heterogeneous shopping b. specialty c. unsought d. r elationship e. exclusive ANS: C The buyer does not actively seek to buy this product. PTS: 1 REF: 286 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | T B&E Model Customer 31. A product line is a group of products that are closely related because the: a. products share the same product managers b. products all function in a similar manner and provide similar benefits c. same company developed the idea for each p roduct d. products are all sold under the same brand name e. products are all priced about t he same ANS: B A product line is a group of closely related products offered by the organization that basically perform the same tasks and provide the same benefits. PTS: 1 REF: 286 OBJ: 09-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 32. There are a number of detergents marketed under the Tide brand including detergent w ith and without fabric softener, with and without bleach, with various pleasing smells, and fragrance-free. The large variety of detergents marketed under the Tide brand is an example of a: a. marketing mix b. product line c. product mix d. product equity e. mix consistency ANS: B A product line is a group of closely related products. PTS: 1 REF: 286 O BJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 33. Along w ith soft drinks, Cadbury-Schweppes also markets Dentyne gum, Sour Patch Kids candy, and Mott’s apple juice. This is an abbreviated listing of the company's: a. customer mix b. p roduct line c. product mix d. line depth e. product inconsistency ANS: C An organization's p roduct mix includes all of the products that it sells. PTS: 1 REF: 286 OBJ: 09-3 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 34. Most people recognize B utterball as a brand of turkey, but the Butterball _____ also includes fresh turkey breast cuts, turkey sausages, ground turkey, lunchmeat cold cuts, fresh marinated bone-in, boneless, and whole chicken, frozen chicken products, and But terball stuffing and gravy m ixes. a. marketing equity b. product line c. product mix d. line depth e. product i nconsistency ANS: C An organization's product mix includes all of the products that it sells. PTS: 1 REF: 286 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Product 35. Product mix width may be defined as: a. the number of different product categories found within an industry b. the average number of products within each product l ine in the company c. the average number of products offered by the company d. the n umber of different product lines an organization offers for sale e. the extensiveness of the coverage of the line from high end (expensive) to low end (inexpensive) ANS: D PTS: 1 REF: 287 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 09-3 TYPE: Def 36. P rocter and Gamble (P&G) manufactures Dawn dishwashing liquid. The addition of Dawn D irect Foam dishwashing liquid is a way that P&G can expand the brand’s: a. line width b. b readth mix c. mix width d. line depth e. mix depth ANS: D Product line depth is the n umber of product i tems in a product line. PTS: 1 REF: 287 OBJ: 09-3 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 37. George Weston L imited, a Canadian food processing and distribution company, is one of the world’s largest producers of breads. The company also owns and operates a pulp and paper processing company, a major Canadian dairy, and a sugar refinery. These organizations provide Weston with p roduct: a. line height b. line consistency c. mix width d. line depth e. mix depth ANS: C P roduct mix width refers to the number of different product lines that an organization offers for sale. PTS: 1 REF: 287 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 38. Which of the following is an example of a product modification? a. lowering the price of textbooks b. dropping a product from the product line c. changing the color of a laundry detergent d. changing the amount of management time spent overseeing p roduction e. increasing the number of distribution outlets ANS: C Product modification entails changing one or more of a product's characteristics. PTS: 1 REF: 287 OBJ: 09-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 39. George Weston L imited, a Canadian food processing company, owns the Wonder bread brand. When Weston i nt roduced whole grain white bread, which gives kids the bread texture and color they r ecognize and love and mothers the vitamins they want for their children, i t was an example of a(n): a. product line contraction b. quality modification c. aesthetics modification d. obsolescence factor e. functional modification ANS: E Functional modification is a change in a p roduct’s versatility or effectiveness. PTS: 1 REF: 288 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 40. V8 juice has for years advertised itself as a r efreshing and nut ri t ional drink that contains eight different vegetables, and that is what t he brand name V8 means to most consumers. When the manufacturer of V8 juice i nt roduced V8 Orange and Mango juice, it was an example of a _____ strategy. a. r epositioning b. product line extension c. cannibalization d. disintermediation e. demarketing ANS: B Product line extension is the adding of additional products to an existing product line in order to compete more broadly in the industry. PTS: 1 REF: 288 O BJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 41. Cadbury Schweppes produces several different brands of beverages including 7 Up, Canada D ry, Dr Pepper, Hawaiian Punch, and Snapple. This is an example of Cadbury's: a. product l ine width b. product mix c. product line depth d. product mix inconsistency e. marketing m ix ANS: C Product line depth is the number of product i tems in a product line. PTS: 1 REF: 287 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 42. Even though Bazooka bubble gum had great brand awareness, its sales were s tagnating. The company’s research discovered that children that today prefer softer bubble gum and that i ts Joe character was viewed as an “out-of-date nerd.” As a result, Bazooka created a softer gum and updated Bazooka Joe with a backward hat, wilder hair, and r ipped jeans. Bazooka hopes through this _____ to attract a younger market. a. quality modification b. aesthetic modification c. demarketing d. repositioning e. functional extension ANS: D Repositioning involves changing consumers’ perceptions of a product. PTS: 1 REF: 288 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct 43. A go-cart manufacturer recently added shock absorbers to make the r ide in its go-carts smoother. I t has not changed its prices. This is a (n) _____ modification. a. upsale b. s tyle c. dysfunctional d. repositioning e. quality ANS: E Quality modifications entail changing a product's dependability or durability. PTS: 1 REF: 287-288 OBJ: 09-3 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 44. One of the leading m anufacturers of choir robes has added a fire retardant chemical to the fabric it uses in m aking the robes. The company has not changed i ts prices. This is a(n) _____ modification. a. functional b. c. d. e. obsolescence quality repositioning upward extension ANS: A F unctional modifications are changes in a product's versatility, effectiveness, convenience, or safety. PTS: 1 REF: 288 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E M odel Product 45. Which of the following statements about planned obsolescence is t rue? a. E nvironmentalists support planned obsolescence. b. A company that is interested in p roducing a quality product would never engage in planned obsolescence. c. Style modification creates planned obsolescence. d. Planned obsolescence is not an ethical issue. e. All of the statements about planned obsolescence are t rue. ANS: C Environmentalists consider planned obsolescence a wasteful practice as well as unethical. There are many m anufacturers of quality clothing that engage in planned obsolescence. Planned obsolescence can result from any type of modification. PTS: 1 REF: 288 OBJ: 09-3 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 46. Which of the following s tatements about planned obsolescence is t rue? a. Planned obsolescence describes the p ractice of causing products to become obsolete before they actually need replacement. b. Opponents of planned obsolescence argue the practice is wasteful and unethical. c. M arketers contend that consumers, not manufacturers and marketers, decide when styles a re obsolete. d. Consumers favor style modifications because they like changes in the appearance of goods such as clothing and cars. e. All of these statements about planned obsolescence are t rue. ANS: E PTS: 1 REF: 288 TOP: AACSB Reflective Thinking | TB&E M odel Product 47. A style modification is a(n): a. change in the product's durabili ty or dependability b. safety improvement c. aesthetic product change d. way to add convenience e. improvement in product versatility and effectiveness ANS: C PTS: 1 REF: 288 TOP: A ACSB Reflective Thinking | TB&E Model Product OBJ: 09-3 TYPE: Def OBJ: 09-3 TYPE: Comp 48. For years, many people thought plastic wrap was almost impossible to use and r efused to buy the product. The manufacturer of Saran plastic wrap has spent many advertising dollars advising customers on how to eliminate the problems associated with t he use of plastic wrap. This manufacturer has engaged in: a. diversification b. c. d. e. r epositioning product development product line expansion product mix expansion ANS: B Repositioning is changing consumers' perceptions about a brand. PTS: 1 REF: 288 OBJ: 093 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product | TB&E Model Customer 49. A regional utili ty company needs to change consumers' perceptions of its current service as being harmful to the environment. Which of the following strategies would best allow the company to accomplish this goal? a. contraction of the number of services offered by the utility company b. adding new services to its product line c. r epositioning d. disintermediation e. use of product cannibalization ANS: C Repositioning is a f i rm's attempt to change customer perceptions of a product. PTS: 1 REF: 288 OBJ: 09-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 50. Michelin has developed a new t i re that will keep rolling smoothly for up to 120 miles after it has been punctured. M ichelin has made a(n) _____ modification to its t i res. a. implied b. functional c. adaptive d. aesthetic e. conventional ANS: B The ti re is more effective because it can be driven on following a puncture. PTS: 1 REF: 288 OBJ: 09-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model P romotion 51. The introduction of Tide Simple Pleasures, a laundry detergent inspired by t he natural essences of vanilla and lavender, is an example of a: a. product modification b. b rand mix extension c. product diversification d. brand repositioning e. demographic modification ANS: A A product modification changes one of more of a product’s characteristics--in this example, its smell. PTS: 1 REF: 287 OBJ: 09-3 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 52. _____ commonly occurs soon after s tyle modification. a. b. c. d. e. Implied repositioning Demarketing Marketing innovation P lanned obsolescence Planned functionality ANS: D Planned obsolescence is a term commonly used to describe the practice of modifying a product so that those already sold become obsolete. PTS: 1 REF: 288 OBJ: 09-3 TYPE: Comp TOP: AACSB Reflective T hinking | TB &E Model Product 53. Rexona is the number one brand of deodorant worldwide. Since i t was launched in the 1960s, i t has added an antiperspirant, a stick deodorant, deodorant wipes, and Rexona for Men. These additions are examples of: a. p roduct line extensions b. product portfolio width adjustments c. product i tem contractions d. SBU expansions e. mix repositionings ANS: A Product line extension occurs when a fi rm adds a product to an existing product line to compete more broadly in the industry. PTS: 1 REF: 288 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 54. Cover Girl and Revlon are both recognized as leading manufacturers of cosmetics. Both companies have recently int roduced cosmetics for the over-50 woman who does not have the same concerns as a 20-year-old girl. The introductions of these cosmetics are examples of t he implementation of a _____ strategy. a. portfolio breadth expansion b. product portfolio w idth adjustment c. product item contraction d. product line extension e. repositioned m arketing mix ANS: D Product line extension occurs when a fi rm adds a product to an existing product line to compete more broadly in the industry. PTS: 1 REF: 288 OBJ: 09-3 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model S trategy 55. The most likely reason that Ford stopped producing the Taurus automobile is: a. the car was not contributing to Ford’s profits b. the Taurus brand lacked brand equity c. t he Ford Taurus did not create significant cognitive dissonance d. the automobile's brand could not be t rademarked e. a change in the business market ANS: A This was an example of a product line contraction. PTS: 1 REF: 289 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 56. Due to the fact the Honda Insight (a hybrid car) has never caught on with buyers, Honda decided to stop manufacturing the car in 2006. T his _____ will allow Honda to concentrate its resources on more profitable vehicles. a. p roduct line contraction b. product diversification c. product development strategy d. m arket redeployment e. downsizing ANS: A Product line contraction occurs when a company stops making a product. PTS: 1 REF: 289 OBJ: 09-2 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 57. Alberto-Culver int roduced Baker's Joy in t he mid-1980s as a product for cooks to use to grease and f lour baking pans. The product was not nearly as successful as Alberto-Culver hoped, and i t discontinued the product in 2001. This is an example of the implementation of a _____ strategy. a. repositioning b. cannibalization c. product line extension d. product line contraction e. divestment ANS: D PTS: 1 REF: 289 OBJ: 09-3 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Strategy 58. A _____ is the part of the brand that can be spoken. a. b rand equity b. service mark c. t rademark d. brand name e. certification mark ANS: D PTS: 1 REF: 290 TOP: AACSB Reflective Thinking | TB&E Model Product 59. The _____ is the symbol that cannot be spoken in a brand. a. brand mark b. t rademark c. brand equity d. quality mark e. intangible product ANS: A PTS: 1 REF: 290 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 09-4 TYPE: Def OBJ: 09-4 TYPE: Def 60. Joseph Confectionery has decided to start marketing a line of Christian-oriented candy under the Testamint brand name. The candy maker is optimistic about establishing the brand in the m arketplace and has high hopes of its success. As a marketing consultant, you inform the candy maker that branding can do all of the following EXCEPT: a. b. c. d. e. encourage consumer repeat purchasing ensure a higher margin of profit create product differentiation a id in positioning possibly yield a larger market share ANS: B Nothing can guarantee a h igher profit margin. PTS: 1 REF: 290 OBJ: 09-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 61. According to market research conducted in 2004, Bazooka (a brand of bubble gum) was among the most recognizable brand names in the U nited States even though the gum needed some updating to be competitive in today’s m arket. I ts manufacturer has carefully developed the Bazooka brand name for over 50 years and was willing to make modifications in the product because Bazooka has a valuable: a. b rand loyalty hierarchy b. evoked set c. brand quality standard d. perceptual map e. brand equity ANS: E The term brand equity refers to the t remendous value of company and brand names. PTS: 1 REF: 290 OBJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E M odel Product 62. A(n) _____ refers to brands where at least 20 percent of the product is sold outside the home count ry. a. evoked set b. global brand c. equity brand name d. master b rand e. ethnocentric t rademark ANS: B PTS: 1 REF: 290 TOP: AACSB Reflective T hinking | TB &E Model Product OBJ: 09-4 TYPE: Def 63. Rexona, marketed by Unilever (a D utch company), is the world's number one deodorant brand. The brand is a leader in E urope, South America, Asia, Afr ica, and the Middle East. Rexona is an example of a: a. m aster brand b. global brand c. cannibalized brand d. master brand e. family brand ANS: B A t least 20 percent of a global brand is sold outside its home country. PTS: 1 REF: 290 OBJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 64. A consumer w ho consistently and repeatedly purchases the same brand is said to have: a. brand loyalty b. c. d. e. product equity product loyalty product repetition store loyalty ANS: A Brand loyalty is the consistent preference of the same brand by the same consumer. Product loyalty could easily involve a variety of brands. PTS: 1 REF: 290 OBJ: 09-4 TYPE: Def TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer 65. Brand loyalty can: a. increase product diffusion b. encourage competition c. shorten the amount of t ime a product spends in the maturity stage d. help ensure repeat sales e. sell a bad product A NS: D Brand loyalty ensures repeat and regular sales. PTS: 1 REF: 290 OBJ: 09-4 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 66. In ternet sites for m anufacturers like Sherwin-Williams paint, Toyota, and General Electric can provide these businesses with a nontraditional way to: a. avoid income taxes on international sales b. help t heir product brand names become generic c. diminish brand loyalty d. get away with deceptive market practices because the Web is not regulated e. generate brand awareness A NS: E See Tide.com example in text. PTS: 1 REF: 290 OBJ: 09-4 TYPE: App TOP: AACSB Technology | TB&E Model Product 67. A Boston diamond distributor has developed the f irst branded diamond called Hearts on Fire to help smaller retailers counter the volume jewelers' aggressive price discounting. This move is meant to: a. take away t rademark r ights b. build product identity and customer loyalty c. create a catchy phrase to promote d iamonds d. combat the quality appeal of generic products e. combat low-cost production of generic brands ANS: B Products in categories that t raditionally have not been branded are now attempting to establish brand names that companies hope will build loyalty. PTS: 1 REF: 290 OBJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | TB &E Model Product 68. The brand names used on Del Monte, Pillsbury, Harley-Davidson, and Purina products a re called _____ brands because of who owns them. a. manufacturers' b. private c. family d. i ndividual e. master ANS: A PTS: 1 REF: 292 TOP: AACSB Reflective Thinking | TB&E M odel Product OBJ: 09-4 TYPE: Def 69. About one out of every two fans sold in the United S tates is The Home Depot's Hampton Bay brand. This is an example of a(n) _____ brand. a. m anufacturers' b. international c. family d. private e. corporate ANS: D A private brand is one owned by the retailer. PTS: 1 REF: 292 OBJ: 09-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 70. Supermarket chain Albertsons has rolled out Essensia, a product line consisting of cookies, crackers, frozen foods, and frozen desserts "only available at your local store.” The Essensia brand, which is owned by Albertsons, is an example of a(n) _____ brand. a. master b. private c. family d. manufacturers' e. equity ANS: B M anufacturers must decide whether to use their own names on their products or to d istribute the products with a wholesaler's or retailer's brand name. If they use the name of a w holesaler or retailer, i t is a private branding strategy. PTS: 1 REF: 292 OBJ: 09-4 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 71. Which of the following s tatements describes an advantage to retailers associated with developing their own b rands? a. Dealers must market the brand, thus cutting into the gross margin. b. H igher g ross margins are available on private brands. c. Private brands, particularly those owned by discounters, are perceived to be of a higher quality. d. Dealers often buy in large quantities and thus always have a ready supply. e. Private brands are normally delivered more promptly by the manufacturer. ANS: B Private brands carry higher margins because m anufacturers do not need to promote them. See Exhibit 9.5. PTS: 1 REF: 292-293 OBJ: 094 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 72. A small chain of supermarkets in the western United States sells only manufacturers’ brands. Which of t he following is one of the arguments you could have used to dissuade the supermarket chain owner from selling only manufacturers’ brands? a. A well-known manufacturers’ b rand will not enhance the chain's image. b. Manufacturers rarely spend money advertising t he brand name to consumers. c. Manufacturers typically offer a lower gross margin than could be earned on private label brands. d. Manufacturers force the chain to carry a large i n-store inventory. e. Relying on the manufacturer or wholesaler to deliver a national brand quickly is optimistic at best. ANS: C The dealer will get a higher gross margin on a private b rand. See Exhibit 9.5. PTS: 1 REF: 292-293 OBJ: 09-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product 73. Tyler wants the Coca-Cola Barbie by Mattel for her b irthday. This Mat tel product contains i tems with the Coca-Cola t rademark, and Barbie is wearing an outfit in Coca-Cola red and white. Because both brands are receiving equal t reatment, this is most likely an example of: a. cooperative branding b. ingredient branding c. umbrella branding d. complementary branding e. family branding ANS: A Cooperative b randing occurs when two brands receive equal t reatment and borrow from each other’s b rand equity. PTS: 1 REF: 293 OBJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 74. When a company markets several different products under the same brand name, it is referred to as a(n) _____ brand. a. family b. generic c. bargain d. dealer e. umbrella ANS: A PTS: 1 REF: 293 TOP: AACSB Reflective Thinking | TB &E M odel Product OBJ: 09-4 TYPE: Def 75. Callaway & K irk, a division of Callaway Ar ts & E ntertainment, markets a collection of garden products, home décor, and apparel featuring M iss Spider and her friends, under the Sunny Patch brand name. This would be an example of a(n) _____ branding strategy. a. equity b. family c. private d. individual e. d isintermediation ANS: B Family branding is the marketing of several different products u nder the same brand name. PTS: 1 REF: 293 OBJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 76. Most people recognize But terball as a brand of turkey, but Butterball brand is also found on fresh turkey breast cuts, turkey sausages, g round turkey, lunchmeat cold cuts, fresh marinated bone-in, boneless, and whole chicken, f rozen chicken products, and Butterball stuffing and gravy mixes. But terball uses: a. dealer b randing b. brand grouping c. family branding d. generic branding e. cobranding ANS: C Family branding refers to the strategy of marketing several different products under the same brand name. PTS: 1 REF: 293 OBJ: 09-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 77. Procter & Gamble makes Camay soap for people concerned with soft skin and Safeguard for those who want deodorant protection. I t is using a(n) _____ strategy. a. individual branding b. family b randing c. combination branding d. t rademarked branding e. private branding ANS: A An i ndividual brand strategy allows for development of a unique brand image so as to d istinguish the different products. PTS: 1 REF: 293 OBJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 78. Heinz is a leading g lobal food manufacturer. I t manufactures and markets Farleys (baby food), Linda M acCartney Foods (vegetarian meals), and Weight Watcher’s Foods (diet/slimming meals and supplements). The use of these brand names instead of the Heinz name is an example of a(n) _____ branding strategy. a. individual b. synergistic c. umbrella d. family e. p iggyback ANS: A An individual brand strategy allows for development of a unique brand i mage so as to distinguish the different products. PTS: 1 REF: 293 OBJ: 09-4 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 79. Maureen purchased a package of Bounce fabric sheets with Febreeze citrus scent. Since both brands were p rominently listed on the package, this would be an example of: a. equity branding b. cobranding c. conjunctive branding d. private branding e. complementary branding ANS: B Using two or more brand names in conjunction is cobranding. PTS: 1 REF: 293 OBJ: 09-4 T YPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 80. Jennifer p urchased Cascade 2in1 ActionPacs for her dishwasher. The packaging said the product combines the scrubbing power of Cascade with the grease fighting power of Dawn d ishwashing detergent. What type of cobranding does this product represent? a. cooperative b. complementary c. piggyback d. ingredient e. synergistic ANS: D Using two or more brand names in conjunction is cobranding. Ingredient branding identifies the additional brand t hat makes up part of the product. PTS: 1 REF: 293 OBJ: 09-4 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 81. Rosa's husband Phil has a cold. Rosa went t o the store to buy something that would help Phil sleep. Rosa purchased Breathe Right nasal strips embedded with Vicks mentholated vapor rub. The package showed both the B reathe Right and the Vicks brand names. This is an example of _____ branding. a. equity b. ingredient c. family d. private e. functional ANS: B Using two or more brand names in conjunction is cobranding. Ingredient branding identifies the additional brand that makes u p part of the product. PTS: 1 REF: 293 OBJ: 09-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 82. A _____ is a legal term i ndicating the owner's exclusive r ight to use a brand name or other identifying mark. a. t rademark b. patent c. brand d. private brand e. r ight of warranty ANS: A PTS: 1 REF: 294 T OP: AACSB Reflective Thinking | TB&E Model Product OBJ: 09-4 TYPE: Def 83. Rollerblades is a brand name for in-line skates. People often refer to Rollerblades as if it were the product name. The company that makes Rollerblades may someday find i ts brand name becoming a: a. equity brand b. certified name c. t rademark d. faux brand e. generic p roduct name ANS: E If a brand name becomes synonymous with the product category, it can become generic. PTS: 1 REF: 294 OBJ: 09-4 TYPE: App TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 84. When a product name becomes generic,: a. the fi rm must use black-and-white packaging b. competitors are p rohibited by law from using the t rademark c. the price will have to drop to appeal to lowerincome consumers d. the product name is no longer recognized as the exclusive property of one fi rm e. a fi rm can reapply for exclusive t rademark protection at the U.S. Patent Office A NS: D A generic product name can be used by any fi rm and is public property. PTS: 1 REF: 294 OBJ: 09-4 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 85. Your boss has just told you to work on getting t rademark protection for a new brand of backpack the fi rm has developed. The product is to be called the Thermos Pak and has a u nique logo. You tell your boss that this protection will be difficult because: a. thermos is a generic product name b. of the catchy phrase you will need to promote the new brand c. you a lso use abbreviated versions of your brand name like TeePee and T.P. d. brand logo designs, even as unique as yours, cannot be t rademarked e. the shape of your new and u nusual product cannot be legally protected ANS: A A generic product name identifies a p roduct by class or type and cannot be t rademarked. PTS: 1 REF: 294 OBJ: 09-4 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 86. Which of the following is NOT i dentified by the text as one of the major functions of packaging? a. contain the product b. guarantee product quality c. protect the product d. promote the product e. facilitate product s torage, use, and convenience ANS: B PTS: 1 REF: 295 TOP: AACSB Reflective Thinking | T B &E Model Product OBJ: 09-5 TYPE: Comp 87. Sherwin-Williams' paint brand, Dutch Boy, has come up with a packaging innovation that is getting rave reviews. The new Twist & Pour paint is packaged in an all-plastic gallon container with an easy twist-off lid, comfortable side handle, and even a pouring spout. There's no other paint product like i t on t he market. This innovative packaging was most likely designed for which of the following f unctions? a. facilitate product use and convenience b. contain and protect the product c. r educe environmental damage d. facilitate recycling e. promote the product ANS: A The other functions of packaging are containment and protection, promotion, the facilitation of r ecycling, and the reduction of environmental damage. PTS: 1 REF: 296 OBJ: 09-5 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 88. You have to convince your boss that packaging will be the key to increasing sales of the company's new line of i nstant pudding mixes, so you tell him the packaging: a. will cause no environmental damage b. allows products to be shipped more easily c. conforms to government regulations d. can be used to help promote the product e. will conforms to all ethical standards ANS: D P romotion is a prime function of packaging that can help stimulate sales. PTS: 1 REF: 295296 OBJ: 09-5 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 89. W hile Starkist tuna is still available in cans, it is now also available in a 12-ounce familysize pouch. This change in packaging was the result of: a. a repositioning strategy b. a new s trategy of segmenting its market c. a move toward functional obsolescence d. a brand equity strategy e. a master brand strategy ANS: B See C&H sugar and Campbell's examples in text. PTS: 1 REF: 296 OBJ: 09-5 TYPE: App TOP: AACSB Reflective Thinking | T B&E Model Product 90. Notices on Gummy Bear brand vitamin bottles stating that the v itamins are the “best tasting children’s gummy vitamins” would most likely be an example of persuasive labeling if: a. the words "new" and "improved" were also included on the package b. the federal government had not passed the Informational Labeling Act of 1996 c. consumers had not become saturated with promotional campaigns d. they were designed solely to promote the product e. they were intended to create brand equity ANS: D Persuasive labeling focuses on a promotional theme. PTS: 1 REF: 297 OBJ: 09-5 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 91. Notices on Gummy Bear b rand vitamin bottles stating that the vitamins have no artificial colors, f lavors, or p reservatives would most likely be an example of _____ labeling. a. UPC b. demographic c. i nformational d. functional e. environmental ANS: C Informational labeling is designed to help consumers make proper product selections. PTS: 1 REF: 297 OBJ: 09-5 TYPE: App T OP: AACSB Reflective Thinking | TB&E Model Product 92. Which of the following s tatements about bar codes is t rue? a. Bar codes are also called universal pricing codes ( UPCs). b. Bar codes were fi rst used in 2000. c. Bar codes can be read by optical scanners. d. Bar codes cannot be used as a marketing research tool. e. None of these statements about bar codes is t rue. ANS: C Bar codes are the same as universal product codes. They were f irst developed in 1974. Also bar codes can be used in single-source research. PTS: 1 REF: 297 OBJ: 09-5 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model Product 93. T he two types of package labeling in common usage today are: a. informational and persuasive b. promotional and nonpromotional c. functional and persuasive d. governmentmandated and seller-controlled e. motivational and required ANS: A PTS: 1 REF: 297 TOP: A ACSB Reflective Thinking | TB&E Model Product OBJ: 09-5 TYPE: Def 94. Labels that contain standard promotional claims like "new," "improved," and "super" are examples of _____ labels. a. descriptive b. functional c. repositioning d. informational e. persuasive ANS: E Persuasive labels primarily focus on a promotional theme or logo and t ry to sell the customer on a new or changed feature. PTS: 1 REF: 297 OBJ: 09-5 TYPE: App TOP: A ACSB Reflective Thinking | TB&E Model Product 95. Mia's new raincoat contains a label t hat reads "Professional dry clean only." This is an example of a(n) _____ label. a. data b. u nion mandated c. persuasive d. informational e. functional ANS: D Informational labeling is designed to help consumers in making proper product selections and to lower cognitive d issonance after the purchase. These labels often include care and use information and an explanation of construction standards. PTS: 1 REF: 297 OBJ: 09-5 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 96. Which of the following is NOT one of the f unctions of universal product codes (UPCs)? a. allow scanners to match codes with brand names, package sizes, and prices b. print product and price information on cash register t apes c. assist retailers in preparing records of customer purchases d. allow retailers to accurately t rack sales and control inventories e. provide the detailed nut r i tional i nformation required by the FDA ANS: E Universal product codes do not contain nut r i tional i nformation. PTS: 1 REF: 297 OBJ: 09-5 TYPE: Comp TOP: AACSB Reflective Thinking | T B &E Model Product 97. Which of the following does NOT need to be a branding and packaging consideration for companies considering global marketing? a. whether to use one b rand name with no adaptation to local markets or to use one name but adapt and modify it for each local market b. t ranslation or pronunciation problems with brand names c. d ifferent currencies in each count ry, exchange rates, and final retail prices d. whether to use different brand names in different markets for the same products e. product labeling, package aesthetics, and climate considerations ANS: C Currency and pricing considerations a re not the prime considerations when considering global branding and packaging s trategies. PTS: 1 REF: 298-299 OBJ: 09-6 TYPE: Comp TOP: AACSB Reflective Thinking | T B&E Model Product 98. Which of the following is NOT an important consideration for a F rench manufacturer that wants to market its products in Canada? a. There may be aesthetic issues associated with developing a packaging strategy. b. Alternative messages could be developed for promoting the brand. c. Keeping the current brand names will allow t he fi rm to capitalize on current domestic brand equity. d. Sturdy packaging will be needed t o ship the products to Canada. e. Unique labels may be required by the Canadian government. ANS: C Brand equity in France will mean li t t le to most Canada buyers since t hey will be unaware of i t. PTS: 1 REF: 298-299 OBJ: 09-6 TYPE: Comp TOP: AACSB Reflective Thinking | TB&E Model Product 99. Three aspects of packaging that are especially important in international marketing are labeling, aesthetics, and: a. price b. length of distribution channel c. counterfeiting potential d. warranties e. climate considerations ANS: E PTS: 1 REF: 298 OBJ: 09-6 TYPE: Comp TOP: AACSB Analytic | T B &E Model Product | TB&E Model Strategy 100. Lands' End, a catalog retailer, offers a w r it ten satisfaction guarantee on all merchandise i t sells. In other words, Lands' End gives i ts customers a(n) _____ warranty. a. implied b. descriptive c. limited d. full e. express ANS: E PTS: 1 REF: 299 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 09-7 T YPE: App 101. The label on Darwin's new blazer that reads "Will Not Shrink" is an example of a(n) _____ warranty. a. descriptive b. limi ted c. implied d. express e. superfluous A NS: D An express warranty is any wri t ten guarantee. PTS: 1 REF: 299 OBJ: 09-7 TYPE: A pp TOP: AACSB Reflective Thinking | TB &E Model Product 102. Realizing that its p roduct needed a warranty to gain rapid market acceptance, the manufacturer of a hightech system for investigating accidents produced: a. a statement for salespeople to read to p rospective buyers b. an acknowledgment of company responsibilities for salespeople to build into presentations c. a label stating the product is of the highest quality and backed by years of manufacturing experience d. an advertisement stating that buyers would not perceive the purchase of this product as r isky e. a wri t ten guarantee that the product would work as promised and that it is fit for the purpose for which i t was sold ANS: E A wri t ten guarantee is an express warranty. This guarantee states what is contained in an implied warranty. PTS: 1 REF: 299 OBJ: 09-7 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product 103. The statement on the toothpaste box that brushing twice a day w ith this paste will remove 90 percent of all tar tar from the user's teeth is an example of a(n): a. implied warranty b. functional label c. UPC disclaimer d. express warranty e. u niversal warranty ANS: D An express warranty is any wri t ten guarantee. PTS: 1 REF: 299 OBJ: 09-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Product 104. D ue to the existence of a(n) _____, Shannon had every reason to believe the antacid he p urchased would relieve his stomach problems if he followed the directions on the box. a. i mplied warranty b. functional label c. persuasive label d. express warranty e. universal warranty ANS: A An implied warranty states that a product is fi t for the purpose for which i t was sold. PTS: 1 REF: 299 OBJ: 09-7 TYPE: App TOP: AACSB Reflective Thinking | T B &E Model Product | TB&E Model Customer 105. Under the _____, all sales have an i mplied warranty. a. Label Law b. Lanham Act c. Bill of Rights d. Good Housekeeping Seal e. Uniform Commercial Code ANS: E The Uniform Commercial Code regulates all sales. PTS: 1 REF: 299 OBJ: 09-7 TYPE: Comp TOP: AACSB Reflective Thinking | TB &E Model P roduct 106. Bijon purchased a dishwasher yesterday and attempted to wash dishes with it t oday. After he ran the washer, his dishes looked no cleaner than when Bijon had loaded t hem into his new dishwasher. Under the _____, Bijon has a legal r ight to demand that the d ishwasher perform the job for which i t was purchased. a. Package Labeling Act b. Product L iability Act c. Trademark Protection Act d. Federal Communications Commission e. U niform Commercial Code ANS: E Under the Uniform commercial Code, all sales carry an u nwri t ten guarantee that the good or service is fit for the purpose for which it was sold. PTS: 1 REF: 299 OBJ: 09-7 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Customer Alberto Culver Company The Alberto Culver Company m anufactures a wide variety of products from hairspray to seasonings. A large number of t hese products are intended for personal use. The company is divided into three key d ivisions: toiletries, household, and professional. The toiletries division sells hair care b rands such as Alberto VO5, Alberto, and Bold Hold. Additionally, this division handles the F DS line of feminine deodorant products. The household division sells brands such as M rs. Dash seasonings, Papa Dash salt substitute, Baker's Joy, Sugar Twin, and Static Guard. T he professional division sells brands such as Tresemme, TCB, and Indola. Each of the b rands listed above contains many individual products with varying formulations, such as t he Alberto styling products, which include mousse, gel, spritz, spray-in conditioner, and hairspray. 107. Refer to Alberto Culver Company. Based on their intended use, Alberto Culver's toiletries division products could best be classified as _____ products. a. industrial b. consumer c. business d. convenience e. unsought ANS: B A consumer product is p urchased to satisfy an individual's personal wants. PTS: 1 REF: 284 OBJ: 09-1 TOP: A ACSB Reflective Thinking | TB&E Model Product 108. Refer to Alberto Culver Company. T he moisturizing version of Alberto mousse could be called a: a. product mix b. product i tem c. product depth d. product width e. product consistency ANS: B A product i tem is a specific version of a product that can be distinguished as a distinct offering among Alberto Culver's p roducts PTS: 1 REF: 286 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB &E Model P roduct 109. Refer to Alberto Culver Company. All the products that Alberto Culver sells in each of its three divisions is the company's product: a. i tem b. depth c. width d. mix e. m arketing consistency ANS: D The organization's product mix includes all the products it sells. PTS: 1 REF: 286 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB &E Model Product 110. Refer to Alberto Culver Company. The toiletries, household, and professional divisions compose Alberto Culver's product mix: a. depth b. length c. width d. reliability e. consistency ANS: C Product mix width refers to the number of product lines that an organization offers. PTS: 1 REF: 287 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB&E M odel Product 111. Refer to Alberto Culver Company. If a marketer looks only at the t oiletries division and notes the brands and items within only that division, he or she is analyzing the _____ of the product line. a. width b. length c. depth d. levels e. consistency A NS: C Product line depth is the number of product i tems in a product line. PTS: 1 REF: 287 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB &E Model Product 112. Refer to A lberto Culver Company. Why would the Alberto Culver Company be interested in i ncreasing i ts product depth? a. to capitalize on economies of scale in production b. to a ttract buyers with different preferences c. to increase sales and profits by fur ther segmenting the market d. to capitalize on economies of scale in marketing e. to do all of t hese things ANS: E PTS: 1 REF: 287 TOP: AACSB Reflective Thinking | TB &E Model P roduct Choice Homes, Inc. OBJ: 09-3 Choice Homes, Inc., based in Texas, built its r eputation by building high-quality new homes, often at prices less than "used" ones. Choice Homes used mass-purchasing power, innovative high-tech communications among employees to coordinate the building process, and other entrepreneurial strategies to hold costs down. I ts homes are primarily targeted at fi rst-time homeowners-to-be in an effort to get people out of apartments so they can experience the "American Dream" of home ownership for the same price as rent. Choice Homes later developed the "Choice Classic" b rand name for higher-end homes targeted at wealthier dual-income couples. The Choice C lassic name was designed to capitalize on the reputation of Choice Homes, especially for current Choice home owners who are ready to "move up" to a larger home. Recently, Choice Homes started a third line of homes called "Reflections," which are expensive, customdesigned homes located in exclusive, prestigious neighborhoods. 113. Refer to Choice Homes, Inc. Kur t McKinney has just received a large inheritance and wants to have his "dream" home built. He knows exactly the architectural design he wants. He wants a particular Reflections home. The type of consumer product he wishes to buy is best classified as a(n): a. shopping product b. convenience product c. nondurable good d. specialty product e. unsought product ANS: D McKinney is searching for an expensive i tem for which he will not accept a substitute. PTS: 1 REF: 285 OBJ: 09-2 TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 114. Refer to Choice Homes, Inc. The three different brands of homes (Choice, Choice Classic, and Reflections) r epresent the fi rm's: a. line portfolio b. mix depth c. line breadth d. product line e. product i temization ANS: D PTS: 1 REF: 286 TOP: AACSB Reflective Thinking | TB&E Model P roduct OBJ: 09-3 115. Refer to Choice Homes, Inc. Choice Homes is considering acquiring a mortgage and t i t le company to add to i ts marketing power in selling homes. This acquisition would expand the fi rm's: a. product mix width b. line breadth c. product i tem w idth d. product line length e. product breadth ANS: A By adding more product lines, Choice is expanding its product mix. PTS: 1 REF: 287 OBJ: 09-3 TOP: AACSB Reflective T hinking | TB &E Model Product 116. Refer to Choice Homes, Inc. Choice Homes is considering the development of a new category of small homes designed to replace lowincome housing in the inner city. This strategy represents a: a. quality modification b. c. d. e. product line extension style modification product line contraction functional modification A NS: B Modifications are for existing product lines and i tems. A new line represents an extension. PTS: 1 REF: 288 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB&E Model P roduct | TB&E Model Strategy 117. Refer to Choice Homes, Inc. In a recent survey, Choice Homes' customers indicated that they thought their homes were high quality, made lots of r eferrals to friends, and planned to buy a Choice Classic or Reflections home in the future. T he customers' reactions indicate that Choice Homes has achieved: a. achieved generic s tatus b. become a private brand c. brand equity d. superficial skills e. brand superiority A NS: C Brand equity indicates the brand has value because of i ts high awareness, perceived quality, and brand loyalty among customers. PTS: 1 REF: 290 OBJ: 09-4 TOP: A ACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer Silicon G raphics, Inc. Ever wonder how video game dragons were created? Or ask yourself how the m akers of the movie Perfect Storm created and filmed those gigantic waves? The same computers that created these images have also helped design everything from jumbo jets to an ice-cream-bar shape that minimizes melting in the midday sun. And by giving doctors ways to locate tumors with pinpoint precision, these machines are instilling new hope in v ictims of once-inoperable brain cancer. I t's all the work of the most magical computer m aker on the planet, Silicon Graphics, Inc. (SGI). From movies to molecular science, i nteractive TV to hyperactive video games, the digital imagery conjured up by SGI t echnology is pushing the computer industry into a new dimension--the third one, to be exact. I ts engineering workstations and computer servers t ransform reams of data into 3-D i mages. In an industry marked by huge hype, SGI is the genuine article--a t ruly innovative company with clearly unique products. 118. Refer to Silicon Graphics, Inc. SGI is concerned about the success of its products with its various customers. Regardless of the effort put i nto the product management process, in the long run, the most important factor determining if SGI will succeed or fail is: a. SGI's product mix plan b. the way SGI i mplements its plan c. the brand names it selects for its products d. the satisfaction of SGI's customers' needs e. the competition SGI encounters ANS: D Products succeed because they deliver benefits and satisfy customer needs. PTS: 1 REF: 284 OBJ: 09-1 TOP: AACSB Reflective Thinking | TB&E Model Product | TB &E Model Customer 119. Refer to Silicon G raphics, Inc. All the products (engineering centers and computer servers) offered by SGI a re closely related, though a lit tle different based on the target markets. These products m ake up SGI's: a. marketing mix b. product line c. line depth d. mix dynamics e. marketing l ine ANS: B A product line is a group of closely related products offered by the organization t hat basically perform the same tasks and provide the same benefits. PTS: 1 REF: 286 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB&E Model Product 120. Refer to Silicon G raphics, Inc. SGI wants to create a three-dimensional fi rearms t raining system by using t he same computer technology i t currently uses. This t raining system would simulate actual situations by projecting images on screens and allow police SWAT teams to practice their r esponses. I t would be an example of a(n): a. marketing mix expansion b. increase in m arketing line breadth c. decrease in product mix width d. product line contraction e. i ncrease in product line depth ANS: E Since i t is described as similar to existing products, it would represent an addition to the product line. PTS: 1 REF: 287 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB&E Model Product 121. Refer to Silicon Graphics, Inc. Most companies have customers--SGI has a fan. Ar tist Peter Max is using SGI computers exclusively to create his famous graphics. He refuses to use any other company’s computers. T his is an example of: a. brand equity b. brand quality c. brand loyalty d. product diffusion e. product innovation ANS: C Brand loyalty is the consistent preference for the same brand by the same consumer. PTS: 1 REF: 290 OBJ: 09-4 TOP: AACSB Reflective Thinking | T B &E Model Product | TB&E Model Customer 122. Refer to Silicon Graphics, Inc. Despite t he wide variety of technological applications for the same product, customers know their SGI product is fit for the purpose for which it was sold because of the: a. express warranty b. implied warranty c. Uniform Congressional Code d. packaging labeling e. product characteristics ANS: B PTS: 1 REF: 299 TOP: AACSB Reflective Thinking | TB &E Model P roduct Hardie Siding Products OBJ: 09-7 James Hardie began selling fiber cement siding p roducts in the United States in 1989 to leading builders, lumberyards, and home i mprovement centers. Even though ads guaranteed the product would not rot or crack for 50 years, many builders hated the product. I t was heavy to install, and i t showed every f law in a bad framing job. In 1997, Hardie decided to run ads in t raditional lifestyle magazines and emphasize the emotional appeal of houses made with strong, weather-resistant materials. Soon consumers began asking their builders or remodelers to use the product. Trade ads were used to explain how builders could take advantage of the interest created by the ads in l ifestyle magazines. By 2000, the Hardieplank was the number one brand siding in North A merica. James Hardie is now the third most recognized brand of building material in the world. 123. Refer to Hardie Siding Products. Hardieplank siding is best described as a(n) _____ product. a. business b. specialty c. unsought d. shopping e. convenience ANS: A This p roduct is used to manufacture houses. Consumers are not purchasing it directly; contractors (businesses) purchase the siding to use on clients’ projects. PTS: 1 REF: 284 O BJ: 09-2 TOP: AACSB Reflective Thinking | TB &E Model Product 124. Refer to Hardie Siding Products. Hardieplank siding is an example of a product: a. line b. mix c. reference point d. i tem e. standardization ANS: D Hardieplank is a specific i tem made by the company. PTS: 1 REF: 286 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB &E Model P roduct 125. Refer to Hardie Siding Products. Hardie now makes multiple types of fibercement siding products. There are different widths, textures, and profiles. The different t ypes of siding the company makes are called i ts product: a. line b. mix c. reference point d. i tem e. standardization ANS: A The siding is a group of closely related products. PTS: 1 REF: 286 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB &E Model Product 126. Refer to H ardie Siding Products. By changing the focus of i ts promotion from the building industry t o homeowners who saw their homes as sources of security, warmth, and stability, Hardie Siding used a _____ strategy. a. market penetration b. repositioning c. product penetration d. harvesting e. divestment ANS: B The company changed consumers' perceptions of the b rand. PTS: 1 REF: 288 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB &E Model P roduct | TB&E Model Strategy 127. Refer to Hardie Siding Products. Since all of the siding products sold by Hardie are sold under the Hardie brand name, it is clear that the company uses a _____ strategy. a. family branding b. private branding c. business branding d. cobranding e. repositioning ANS: A PTS: 1 REF: 293 OBJ: 09-4 TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Strategy 128. Refer to Hardie Siding P roducts. What type of warranty is Hardie offering in i ts promotions? a. implied b. r esponsive c. intangible d. express e. valid ANS: D There is a wr it ten guarantee in the ads. PTS: 1 REF: 299 OBJ: 09-7 TOP: AACSB Reflective Thinking | TB&E Model Product | T B &E Model Promotion Claxton Fruitcakes A common Christmas t radition in many households is the Claxton fruitcake. The fruitcake bakery in Claxton, Georgia, makes about 6 m illion pounds of fruitcake annually and has $12 million in sales. One fruitcake batch weighs 375 pounds. About 70 percent of that weight is fruits and nuts. A single batch is d ivided into 34 loaf pans that hold 11 pounds each. Loaves are cooked for 100 minutes at 375 degrees. The bakery can cook 6,000 pounds at a t ime. During the baking season (August-December), the bakery uses a t ractor-t railer load of raisins daily. The suggested retail price of a one-pound Claxton fruitcake is $3.69. 129. Refer to Claxton Fruitcakes. W hat type of consumer product is the Claxton frui tcake for people who believe it to be an i ntegral part of a mer ry Christmas? a. shopping product b. specialty product c. unsought p roduct d. component material e. component part ANS: B These people will specifically seek out the Claxton brand fruitcake. PTS: 1 REF: 285 OBJ: 09-2 TOP: AACSB Reflective T hinking | TB &E Model Product | TB&E Model Customer 130. Refer to Claxton F ruitcakes. Frui tcake is all the bakery manufactures. In terms of dimensions of product offering, Claxton Bakery has a(n) _____. a. wide product mix b. emotional positioning s trategy c. shallow product line d. deep product line e. broad product extension mix ANS: C PTS: 1 REF: 286 OBJ: 09-2 TOP: AACSB Reflective Thinking | TB&E Model Product | T B &E Model Customer 131. Refer to Claxton Fruitcakes. There are numerous jokes about t he indestructibili ty of fruitcake--many of them derogatory. To change its consumer image, C laxton periodically engages in public relations campaigns in which it describes frui tcakes i n terms of family Christmas t raditions. Attempts to move the fruitcake from being perceived by consumers as the butt of jokes to a comfort food is an example of a(n) _____ s trategy. a. contraction b. expansion c. demographic d. diversification e. repositioning ANS: E PTS: 1 REF: 288 OBJ: 09-3 TOP: AACSB Reflective Thinking | TB&E Model Product | T B &E Model Customer 132. Refer to Claxton Frui tcakes. Why is brand equity important for t he Claxton brand? a. I t facilitates the implementation of an international repositioning s trategy. b. I t means that its customers are extremely brand loyal. c. I t means the target m arket is unchanging. d. I t means the product line has greater depth than width. e. I t guarantees an annual profit. ANS: B Profits are never guaranteed. Target markets change over time. PTS: 1 REF: 290 OBJ: 09-4 TOP: AACSB Reflective Thinking | TB&E Model P roduct 133. Refer to Claxton Frui tcakes. Claxton is an example of a _____ brand. a. generic b. manufacturer's c. private d. family e. geographic ANS: B PTS: 1 REF: 292 TOP: AACSB Reflective Thinking | TB&E Model Product OBJ: 09-4 134. Refer to Claxton Fruitcakes. T he fruitcake baker that packages its cakes in metal cans is most likely using its packaging t o: a. reposition the product b. create a niche market c. deal with problems commonly found i n the decline stage of the product life cycle d. create an environmental appeal e. contain and protect the cakes during shipment ANS: E PTS: 1 REF: 295 TOP: AACSB Reflective T hinking | TB &E Model Product ESSAY 1. How would a marketer define the term p roduct? ANS: A product is everything, both favorable and unfavorable, that a consumer r eceives in an exchange. A product may be a tangible good, a service, an idea, or any combination of these three. PTS: 1 REF: 284 OBJ: 09-1 TOP: AACSB Analytic | TB&E M odel Product 2. Products can be classified as either business/industrial or consumer p roducts. What is the difference between business products and consumer products? Why is i t important to know about these classifications? ANS: A product's classification depends on t he buyer's intentions. Business products are purchased for (1) use in the production of other goods or services, (2) use in an organization's operations, or (3) resale to other customers. Consumer products are purchased to satisfy an individual's personal wants. The same item can be classified as either a business or a consumer product depending on the i ntended use. I t is important to know about these product classifications because business and consumer products are marketed differently. These two target markets require different d istribution, promotion, and pricing strategies. PTS: 1 REF: 284 OBJ: 09-2 TOP: AACSB A nalytic | TB&E Model Product | TB&E Model Customer 3. Name and briefly define the four categories of consumer products. For each category, list three specific examples of p roducts that would most likely be classified in that category. ANS: CONVENIENCE PRODUCTS are relatively inexpensive i tems that require li t t le shopping effort. The p roducts are bought regularly, usually without significant planning. Convenience products may include candy, soft drinks, combs, aspirin, small hardware i tems, dry cleaning, car wash services, and so on. OBJ: 09-5 SHOPPING PRODUCTS are usually more expensive t han convenience products and are found in fewer stores. Consumers spend some effort comparing brands and stores. Shopping products may include washers, dryers, r efrigerators, televisions, furniture, clothing, housing, choice of university, and so on. SPECIALTY PRODUCTS are those exclusive i tems for which consumers are willing to search extensively. Consumers are extremely reluctant to accept substitutes for specialty p roducts. Brand names and service quality are important. Fine watches, luxury cars, expensive stereo equipment, gourmet restaurants, and specialized medical services could all be considered specialty products. UNSOUGHT PRODUCTS are those that the buyer does not know about or does not actively seek to buy. These products include insurance, burial p lots, encyclopedias, and so on. PTS: 1 REF: 284-286 OBJ: 09-2 TOP: AACSB Analytic | T B &E Model Product | TB&E Model Customer 4. What is the difference between a homogeneous shopping product and a heterogeneous shopping product? Give specific examples of products that fi t into each category to help illustrate your answer. ANS: Homogeneous shopping products are those that consumers see as being basically the same. T he main purpose of shopping is to find the lowest-priced product that has the required features. Appliances and televisions are homogeneous shopping products for many people. Heterogeneous shopping products are those that consumers see as different in terms of quality, style, suitability, and lifestyle compatibility. Comparisons among heterogeneous shopping products are difficult because the alternatives possess unique features as well as d ifferent prices and quality levels. These products may include furniture, clothing, housing, and the choice of a university. PTS: 1 REF: 285 OBJ: 09-2 TOP: AACSB Analytic | TB&E M odel Product 5. The Crayola brand is currently placed on a wide variety of products, i ncluding crayons (standard and f luorescent colors packaged in a wide variety of box sizes), m arkers (regular and washable), paints (watercolor and acrylic), scissors, glue, and children's clothing. Using this illustration as an example, answer the following questions: W hat is a product i tem? A product line? A product mix? ANS: A PRODUCT ITEM is a specific version of a product that can be designated as a distinct offering among an organization's products. Any single product identified in the Crayola example could be an i tem. For example, a crayon package with 64 colors and a sharpener, or an eight-pack of washable markers, and so on. A PRODUCT L I NE is a group of closely related products offered by the organization. One could identify two Crayola product lines: arts and crafts, and clothing. Alternatively, three product lines could be identified: clothing, d rawing/painting i tems, and supplies. Finally, as many as six product lines could be i nterpreted: crayons, markers, paints, scissors, glue, and clothing. A PRODUCT M IX includes all of the products and i tem varieties that the company offers for sale. All C rayola items and package variations identified above make up Crayola's product mix. PTS: 1 REF: 286 OBJ: 09-3 TOP: AACSB Analytic | TB &E Model Product 6. Organizations derive several benefits from organizing related product i tems into product lines. Briefly describe four of these benefits. ANS: ADVERTISING ECONOMIES. Product lines provide economies of scale, because several products can be advertised under the umbrella of the l ine. Additionally, advertising a product line can enhance the corporate name. PACKAGE U N IFORMIT IES. All packages in the line may have a common look without causing any p roduct i tem to lose its individual identity. Thus, one i tem in a line can advertise another. STANDARDIZED COMPONENTS. Product lines provide an opportunity to standardize components, thus reducing manufacturing and inventory costs. EFFICIENT SALES AND D ISTRIBUTION. Product lines enable sales personnel to provide a full range of product a lternatives to their customers. Distributors and retailers are often more willing to stock t he company's products if a full line is offered. Transportation and warehousing costs are a lso likely to be less for product lines than for a collection of individual i tems. EQUIVALENT QUALITY. A brand name symbolizes a certain quality level to buyers. Purchasers expect all products in a line to be of comparable quality, so fur ther evaluation of i ndividual product i tems need not take place. PTS: 1 REF: 286-287 OBJ: 09-3 TOP: AACSB A nalytic | TB&E Model Product 7. Smith-Binney's Crayola makes various products, all t argeted toward elementary school children. Drawing, painting, and supply i tems are sold a t convenience stores, toy stores, and grocery stores. Clothing is sold in department stores. C rayola might arrange its product i tems in the following way: Drawing/Painting Crayons, r egular wax Crayons, f luorescent Markers, regular Markers, washable Watercolor paints Acrylic paints Chalk Supplies Crayon sharpeners Paint brushes Scissors Glue Storage cases Textiles Boys' clothing Girls' clothing Bed and bath linens What is the product mix width for Crayola? What is i ts product line depth? ANS: Product mix width refers to the number of p roduct lines that an organization offers. In this case, the width of the product mix is three. P roduct line depth is the number of product i tems in a product line. There are seven i tems i n the drawing/painting line, five i tems in the supplies line, and three i tems in the clothing l ine. PTS: 1 REF: 287 OBJ: 09-3 TOP: AACSB Analytic | TB&E Model Product 8. You are t he product manager for a line of patio furniture manufactured for a company called SeaBreeze Enterprises. Your assignment is to modify the existing products in the product l ine. Name and describe the three categories of modification options that you could propose t o SeaBreeze's management. Give an example under each category of a modification you could make. ANS: QUALITY MODIFICATIONS entail changing the product's dependability or durability. SeaBreeze could reduce the product quality of some of its offerings to enable a lower price, which would appeal to a broader or price-sensitive target market. SeaBreeze could also increase quality, which would give the corporation a competitive advantage, encourage brand loyalty, allow higher prices, or provide new market segmentation opportunities. FUNCTIONAL MODIF ICATIONS are changes in a product's versatili ty, effectiveness, convenience, or safety. SeaBreeze could add further capabilities to its patio f urniture such as making it mildewresistant, designing i t to fold and store easily, and adding wider seats for greater comfort. The furni ture could also add a safety feature to p revent unfolded furniture from collapsing when someone sits in it. STYLE M ODIFICATIONS are aesthetic product changes. SeaBreeze could make its furniture in fashionable colors or add designer cushions. I t could even personalize the furniture by letting customers order the color combinations they want. Team logos could be licensed, and t he furniture sold to fans. PTS: 1 REF: 287-288 OBJ: 09-3 TOP: AACSB Analytic | TB&E M odel Product 9. What is a brand? What is the difference between a brand name, a brand m ark, a t rademark, and a service mark? ANS: A brand is a name, term, symbol, design, or combination of these that identifies a seller's products and differentiates them from competitors' products. A brand name is that part of a brand that can be spoken. The brand m ark is the part of the brand that cannot be spoken--a picture, logo, special decoration, or design. A t rademark is a legal term indicating the owner has the exclusive r ight to use the b rand name or other identifying mark; others are prohibited from using the brand without permission. A service mark performs the same functions as a t rademark but for services. PTS: 1 REF: 290 | 294 OBJ: 09-4 TOP: AACSB Analytic | TB&E Model Product 10. What a re the three main objectives or benefits of branding? How do the concepts of brand equity and brand loyalty fit into these objectives? Use these three objectives to briefly evaluate B uick's brand name for its new electric car, named Impact. ANS: Branding has three main objectives: identification, repeat sales, and new-product sales. In terms of identification, b randing allows marketers to distinguish their products from all others. Brands become familiar to consumers as indicators of quality. Brand equity refers to the value of a wellrecognized brand name. Customers can readily identify a Buick product, although the name I mpact will not be familiar at first. Repeat sales come from satisfied customers who r ecognize which brands to purchase again and which brands to avoid. Branding also helps word-of-mouth and mass media promotion. Brand loyalty occurs when a consumer consistently prefers one brand over all others. There are customers who are brand loyal to t he Buick brand name, but brand loyalty to the Impact name may take some time. Newproduct sales may be stimulated by the Buick name, but the name Impact may conjure i mages of car crashes for some consumers. Other consumers may feel that the name has positive connotations of excitement. PTS: 1 REF: 290 OBJ: 09-4 TOP: AACSB Analytic | T B &E Model Product 11. Name and briefly describe six branding alternative strategies. A NS: GENERIC PRODUCTS. A fi rm may decide not to brand at all. MANUFACTURER'S BRANDS. A fi rm can place the manufacturer's name on the product. These brands may be either individual or family branded. PRIVATE BRANDS. A retailer or wholesaler may choose to put its own name on products it carries. I ND IV IDUAL BRANDS. A fi rm may use d ifferent brand names for different products, especially when products vary greatly in use, performance, or quality. FAMILY BRANDS. A company may market several different p roducts under the umbrella of the same brand name. This facilitates the int roduction of new, related products. COBRANDING. Two or more brand names may be placed on a p roduct or i ts package. PTS: 1 REF: 290-294 OBJ: 09-4 TOP: AACSB Analytic | TB&E M odel Product 12. List and briefly define the three different types of cobranding. ANS: I NGREDIENT BRANDING identifies the brand of a part that makes up a product, COOPERATIVE BRANDING occurs when two brands receiving equal t reatment borrow f rom each other's brand equity. COMPLEMENTARY BRANDING occurs when products are advertised or marketed together to suggest usage. PTS: 1 REF: 293-294 OBJ: 09-4 TOP: A ACSB Analytic | TB&E Model Product 13. You are the brand manager for the Fatal Vision ( FV) goggles that simulate how the world looks to someone who is seriously intoxicated. The goggles make the user feel disoriented and dizzy and are used in teen driving courses. The F V goggles wrap around the wearer's face to make sure they distort all areas of vision and come in bright orange to distinguish them from other goggles. The slogan used in the p romotion of the goggles asks, "Orange you glad you don't drink and drive?" What aspects of t his product qualify for t rademark protection? ANS: Parts of a brand or other product i dentification that qualify for t rademark protection include shapes (the goggles wrap a round the face), ornamental color or design (bright orange), and the slogan, and the abbreviation. Thus, many aspects of the FV brand can be t rademarked. PTS: 1 REF: 294 O BJ: 09-4 TOP: AACSB Analytic | TB &E Model Product 14. Packaging is an important component of the product strategy. List and briefly describe the four major functions of packaging. ANS: CONTAIN AND PROTECT PRODUCTS. Packaging contains products in l iquid, granular, or other divisible forms. Packaging allows fi rms to market products in specific quantit ies. Physical protection of the product is also necessary because most p roducts are handled often between manufacture and final consumption. Packages protect p roducts from breakage, light, heat, cold, infestation, spoilage, and so on. PROMOTE PRODUCTS. A key role of packaging is promotion. Labels not only provide brand i dentification, ingredient listings, feature specifications, and directions, but also use designs, colors, shapes, and materials to influence consumers' perceptions and buying behavior. A package differentiates a product from competing products and may associate a new product with a family of other products from the same manufacturer. Packages are the l ast opportunity marketers have to inf luence buyers before they make purchase decisions. T his promotional role differentiates the product from competitors' products and establishes t he brand's image. FACIL ITATE STORAGE, USE, AND CONVENIENCE. Packages can m ake products easier to ship, store, and stock on shelves. Additionally, package features or designs can make packages convenient. Features such as disposable packages, easy opening devices, and reusability are a plus. Package size can also be used to segment markets. FACIL ITATE RECYCLING AND REDUCE ENVIRONMENTAL DAMAGE. Environmental compatibili ty is preferred, if not demanded, by consumers. Packages should be recyclable, b iodegradable, and reusable. PTS: 1 REF: 295-297 OBJ: 09-5 TOP: AACSB Analytic | T B &E Model Product 15. An integral part of any package is its label. There are two basic l abeling strategies. Name and describe each of the two strategies. ANS: PERSUASIVE L ABEL ING focuses on a promotional theme or logo, with information for the consumer of secondary importance. The promotional theme may contain the words "new," "improved," or "super." I NFORMATIONAL LABEL ING is designed to help consumers make proper p roduct selections and lower postpurchase cognitive dissonance. These labels may explain construction standards, color selection, cleaning instructions, or other use information. PTS: 1 REF: 297 OBJ: 09-5 TOP: AACSB Analytic | TB &E Model Product | TB&E Model S trategy 16. You are the U.S. brand manager of the Fluffit family of products. The products i nclude a wide variety of synthetic and natural stuffing materials for furniture cushions, sleeping bags, quilts, and winter coats. The brand is a favorite among home repair enthusiasts and hobbyists of various kinds. Your firm would like to enter several foreign m arkets. Name and describe the three major alternative brand name choices for this global s trategy. Discuss the viability of each alternative for Fluffit. ANS: ONE BRAND NAME E VERYWHERE. This strategy is useful when the company markets mainly one product and t he brand name does not have negative connotations in any local market. Advantages of a one-brand strategy are greater identification of the product from market to market and ease of coordinating promotion from market to market. This strategy may be difficult for Fluffit because the variety of products are sold. Additionally, it is not likely that "fluff" carries the same meaning in all languages or communicates the benefits of the product. A DAPTATIONS AND MODIFICATIONS. If the Fluffi t name is not pronounceable in the local language, the brand name is owned by someone else, or the brand has a negative connotation in the local language, minor modifications can make the brand name more suitable. This could be a viable alternative for Fluffit. DIFFERENT BRAND NAMES I N D IFFERENT MARKETS. Local brand names are often used when t ranslation or p ronunciation problems occur, when the marketer wants the brand to appear to be a local b rand, or when regulations require localization. This could also be a viable alternative for F luffi t. PTS: 1 REF: 298 OBJ: 09-6 TOP: AACSB Analytic | TB &E Model Product 17. A warranty is a protection and information device intended to confi rm the quality of performance of a good or service. What is the difference between an express warranty and an implied warranty? ANS: An express warranty is made in wri ting and may range from a simple statement to an extensive document. An implied warranty is an unwri t ten guarantee that the good or service is fit for the purpose for which i t was sold. All sales have an implied warranty under the Uniform Commercial Code. PTS: 1 REF: 299 OBJ: 09-7 T OP: AACSB Analytic | TB&E Model Product 18. Distinguish between an implied warranty and an express warranty. Give one example of each. ANS: An express warranty is a w ri t ten guarantee. Examples include "Will not shrink, "No i roning required," "Precooked," etc. An implied warranty is an unwrit ten guarantee that the good or service is fi t for the p urpose for which i t was sold. Examples are numerous--all should include the concept that t he product does what i t was intended to do. PTS: 1 REF: 299 OBJ: 09-7 TYPE: Def TOP: A ACSB Analytic | TB&E Model Product ...
View Full Document

Page1 / 289

New Microsoft Office Word Document - Chapter 1—An...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online