Download Examination #1

Principles of Marketing
Examination #1
September 14, 2010
Name: ____________________________
Answer the following multiple-choice questions by selecting the response that best addresses the question and
placing the corresponding letter in the space provided to the left. Make sure that your responses are legible and
that you answer all questions. Each question is worth two points.
1. B
1. A highly profitable, short-term customer is referred to by which of the following terms?
A) true friend
B) butterfly
C) stranger
D) barnacle
2. B
2. A radio station that carries news, features, and editorial opinions about your area is best
classified as which type of public?
A) financial
B) media
C) citizen-action
D) local
3. B
3. A society's basic values, perceptions, preferences, and behaviors are all part of its ________
environment.
A) social
B) cultural
C) political
D) cultural-economic
4. B
4. A sound marketing strategy begins with which of the following steps?
A) positioning
B) customer analysis
C) differentiation
D) SWOT analysis
5. B
5. After management has identified the key businesses making up its company, what is the next
step?
A) identify businesses in which to invest
B) assess the attractiveness of its SBUs
C) decide whether to harvest any businesses
D) complete short-range planning
6. B
6. All of the following are accurate guidelines for a company's mission statement EXCEPT which
one?
A) A mission statement should be realistic.
B) A mission statement should focus on sales or profits.
C) A mission statement should be specific.
D) A mission statement should motivate employees.
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7. B
7. Ben & Jerry's challenges all stakeholders, including employees, top management, and even ice
cream scoopers in their stores, to consider individual and community welfare in their day-to-day
decisions. Actions such as this by companies seizing the opportunity to do well by doing good
reflects which of the following concepts?
A) virtual marketing
B) social responsibility
C) profit marketing
D) myopia
8. A
8. Business legislation has been created for three basic reasons: to protect companies from each
other, to protect consumers, and to ________.
A) protect the interests of society
B) regulate prices
C) regulate monopolies
D) promote environmental sustainability
9. B
9. Cause-related marketing is ________.
A) a primary form of environmental awareness
B) a primary form of corporate giving
C) a response to corporate political problems
D) an attempt to influence customers' core beliefs
10. D
10. Cultural forecasters have noted a renewed American interest in ________.
A) dominating and taming nature
B) the fine arts
C) work as a source of satisfaction and self-definition
D) spirituality
11. A
11. Evaluating the results of marketing strategies and plans and taking corrective action to ensure
that objectives are attained is called ________.
A) marketing control
B) strategic control
C) operating control
D) developmental control
12. C
12. If Under Armour, the successful maker of moisture-wicking shirts and shorts, considered
introducing a line of Under Armour fitness equipment, the company would be considering
________.
A) marketing controls
B) market development
C) diversification
D) market penetration
13. D
13. In a SWOT analysis, which of the following refers to factors in the external environment?
A) strengths
B) strategies
C) weaknesses
D) opportunities
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14. D
14. In a SWOT analysis, which of the following would be considered a strength?
A) internal limitations
B) trends in the market
C) favorable factors in the environment
D) internal resources
15. A
15. In the four Ps of the marketing mix, design, packaging, services, and variety all fall under the
category of ________.
A) product
B) price
C) promotion
D) place
16. C
16. Making more sales without changing a firm's products is ________.
A) market development
B) market growth
C) market penetration
D) product development
17. B
17. Over the past 50 years, which of the following groups of workers has become smaller?
A) managers
B) manufacturers
C) professionals
D) telecommuters
18. B
18. Rachel Patino works for a wholesale company called Distributors Unlimited. She is responsible
for buying and selling goods at a profit to small retailers. What is her market?
A) business
B) reseller
C) wholesale
D) retail
19. D
19. Stew Leonard, owner/operator of supermarkets, reacts adversely to losing a single customer
sale. He feels that this amounts to losing the entire stream of future purchases that a customer is
likely to make if he or she remains in the area. This is an illustration of which of the following
concepts?
A) share of customer
B) market share
C) profitability
D) customer lifetime value
20. D
20. The ________ environment consists of factors that affect consumer purchasing power and
spending patterns.
A) cultural
B) political
C) technological
D) economic
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21. C
21. The BCG growth-share matrix classifies four types of SBUs. They are ________, ________,
________, and ________.
A) product; price; promotion; placement
B) sales; market share; price; promotion
C) stars; cash cows; question marks; dogs
D) planning; organizing; leading; controlling
22. D
22. The best known product portfolio planning method was developed by which of the following?
A) Philip Kotler
B) Harvard University
C) the SRI Consulting Firm
D) the Boston Consulting Group
23. D
23. The collection of businesses and products that make up a company is called its ________.
A) strategic business unit
B) mission statement
C) strategic plan
D) business portfolio
24. C
24. The first four steps of the marketing process focus on which one of the following actions?
A) understanding the market
B) delivering customer service
C) creating value for customers
D) capturing value from customers
25. B
25. The natural resources that are needed as inputs by marketers or that are affected by marketing
activities are referred to as the ________.
A) raw material market
B) natural environment
C) green movement
D) factors of production
26. C
26. The primary concern for consumers with the boom in Internet marketing is ________.
A) pornography
B) false advertising
C) privacy
D) sustainability
27. D
27. The process of dividing a market into distinct groups of buyers with different needs,
characteristics, or behaviors is called ________.
A) market targeting
B) positioning
C) marketing strategy
D) market segmentation
28. C
28. The three areas of consideration that should be balanced in the societal marketing concept are
consumer wants, society's interests, and which third element?
A) human welfare
B) long-term needs
C) company profits
D) short-run wants
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29. B
29. What do we call human needs that are shaped by individual personality and culture?
A) Deprivations
B) Wants
C) Demands
D) Values
30. C
30. What movement has encouraged marketers to pursue environmentally sustainable strategies?
A) the EPA
B) the black market
C) the green movement
D) the SOHO movement
31. D
31. What term refers to sellers being preoccupied with their own products and losing sight of
underlying consumer needs?
A) Selling myopia
B) Marketing management
C) Value proposition
D) Marketing myopia
32. A
32. What term refers to the art and science of choosing target markets and building profitable
relationships with them?
A) marketing management
B) positioning
C) segmentation
D) selling
33. A
33. What term refers to the set of actual and potential buyers of a product?
A) A market
B) An audience
C) A group
D) A segment
34. B
34. When backed by buying power, what do wants become?
A) social needs
B) demands
C) physical needs
D) self-esteem need
35. D
35. Which of the following concepts calls for aggressive selling and focuses on generating
transactions to obtain profitable sales?
A) marketing
B) production
C) product
D) selling
36. C
36. Which of the following is a potential downside to using patriotic themes in marketing
programs?
A) Levels of patriotism fluctuate rapidly.
B) Patriotism has been on the decline in the past decade.
C) Such promotions can be viewed as attempts to gain from others' triumph or tragedy.
D) Americans are less confident in political organizations.
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37. C
37. Which of the following is a result of regulations set up by the Food and Drug Administration
and the Consumer Product Safety Commission?
A) The time lag between new product ideas and their introduction to the market has decreased.
B) Spending on research and development has decreased.
C) Research costs for companies have grown.
D) More companies have failed to meet safety standards.
38. C
38. Which of the following is an example of consumer-generated marketing?
A) Toyota's presence in online communities
B) Nike's Nike Plus running Web site
C) BMW's use of brand-related consumer videos posted on video-sharing Web sites
D) Neiman Marcus's InCircle Rewards program for its best customers
39. B
39. Which of the following is currently the fastest-growing form of marketing?
A) consumer-generated marketing
B) online marketing
C) mass media marketing
D) social marketing
40. A
40. Which of the following is determined by a customer's personal evaluation of the benefits and
costs of a market offering relative to those of competing offers?
A) customer-perceived value
B) customer satisfaction
C) customer-perceived performance
D) customer relationship management
41. D
41. Which of the following is NOT a step in the strategic planning process?
A) defining the company mission
B) setting company objectives and goals
C) designing the business portfolio
D) identifying the company's culture
42. D
42. Which of the following is NOT a type of factor in a company's macroenvironment?
A) demographic
B) economic
C) technological
D) competitor
43. A
43. Which of the following is the final step in the marketing process is?
A) capturing value from customers
B) creating customer loyalty
C) creating customer lifetime value
D) understanding the marketplace
44. C
44. Which of the following is the first step in strategic planning?
A) set objectives and goals
B) develop the business portfolio
C) define the company mission
D) plan marketing strategies
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45. B
45. Which of the following is the term for customers who make repeat purchases and tell others
about their positive experiences with a product or service?
A) satisfied customers
B) customer evangelists
C) butterflies
D) full partners
46. A
46. Which of the following marketing management concepts is most closely aligned with the
philosophy of continuous product improvement and the belief that customers will choose
products that offer high quality, performance, and innovative features?
A) product
B) production
C) customer
D) marketing
47. A
47. Which of the following marketing management orientations focuses primarily on improving
efficiencies along the supply chain?
A) production concept
B) product concept
C) selling concept
D) marketing concept
48. D
48. Which of the following measures the profits generated by investments in marketing activities?
A) SWOT analysis
B) marketing audits
C) executive summaries
D) marketing ROI
49. C
49. Which of the following strategies would a company most likely use to increase customer
satisfaction?
A) decreasing variety of services offered
B) lengthening the supply chain
C) lowering prices
D) "firing" unprofitable customers
50. A
50. Which of the following terms is used to describe the factors and forces outside marketing that
affect marketing management's ability to build and maintain successful relationships with target
customers?
A) the marketing environment
B) strategic planning
C) target markets
D) the marketing mix
51. C
51. Which of the following terms refers to the total combined customer lifetime values of all the
company's current and potential customers?
A) Share of customer
B) Customer lifetime value
C) Customer equity
D) Share of market
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52. C
52. Which of the following terms reflects the set of marketing tools a firm uses to implement its
marketing strategy?
A) promotion mix
B) product mix
C) marketing mix
D) TQM
53. B
53. Which term describes the act of obtaining a desired object from someone by offering something
in return?
A) A value proposition
B) Exchange
C) Bribery
D) Value
54. B
54. Which term refers to low-growth, high share businesses or products. They generate a lot of cash
that the firm uses to pay its bills and support other SBUs that need investment.
A) Stars
B) Cash cows
C) Question marks
D) Dogs
55. B
55. Which term refers to the place a product occupies in the consumer's mind relative to
competitors' products?
A) Product placement
B) Product position
C) Market segmentation
D) Market targeting
56. D
56. Which term refers to the process of selecting which segments of a population of customers to
serve?
A) market segmentation
B) positioning
C) customization
D) target marketing
57. B
57. Which type of organization helps companies to stock and move goods from their points of
origin to their destination?
A) financial intermediary
B) physical distribution firm
C) marketing service firm
D) reseller
58. B
58. Workers, managers, and members of the board of directors are all part of a company's
________.
A) general public
B) internal public
C) local public
D) market public
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59. B
59. You are directed to study the actors close to the company that affect its ability to serve its
customers–departments within the company, suppliers, marketing intermediaries, customer
markets, competitors, and publics. What are you studying?
A) the macroenvironment
B) the microenvironment
C) the marketing environment
D) the global environment
60. A
60. Your marketing department is currently researching the size, density, location, age, and
occupations of your target market. Which environment is being researched?
1. demographic
2. psychographic
3. economic
4. cultural
Of the following fifteen short answer questions, select ten (and only ten) to answer. Each response
should be succinct, yet fully address the issues posed. In most cases, 2-3 sentences will suffice.
Please make sure that your writing is legible. Each question answered is worth four points. Only
the first ten questions attempted will be graded.
61. Why might marketers want to target segments of the population based on lifestyles rather than age
groups?
a. Answer: Too much might be assumed about people in the same age group, and grouping people
by lifestyle may eliminate some of the inaccurate assumptions made regarding age.
62. Give two characteristics of the American family that depict its "nontraditional" nature.
a. Answer: More adults of one or both sexes live together without being married; working women
are making up a larger portion of the workforce; both husband and wife work in the majority of
married-couple families; the percentage of married couples with children is falling; and the
percentage of stay-at-home dads is rising.
63. In terms of ethnic and racial makeup, why is the United States today more accurately characterized as a
"salad bowl" than a "melting pot"?
a. Answer: Individuals hailing from virtually every country in the world live in the United States;
people from these diverse groups mix together, but retain many important ethnic and cultural
differences. The melting pot metaphor is inaccurate because people from diverse cultures and
ethnic groups have not "melted" into one homogeneous culture.
64. Why might it be beneficial for marketers to help develop solutions to problems facing the natural
environment, such as increased pollution and shortages of raw material?
a. Answer: Marketers who help to develop solutions to these problems can gain the advantage of
helping to shape policy that is beneficial to them, as increasingly strict environmental regulations
can be expected in the United States and elsewhere. Environmentally responsible actions will
help a company's public image; they will also help to create a more sustainable market.
65. What is the difference between a core belief and a secondary belief?
a. Answer: A core belief is a stronger, overall belief; an example might be a strong work ethic. A
secondary belief is more open to change; an example might be one's idea that a strong work ethic
can be maintained even while working only part-time.
66. What are some problems with matrix approaches to business portfolio planning?
a. Answer: The BCG and other portfolio planning approaches can be difficult to execute, time
consuming, and also costly to implement. Defining SBUs and the measurement of relative market
share and growth can be a difficult task as well. A serious flaw with these approaches is that,
while they are helpful for classifying current businesses, they offer little or no advice for future
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planning.
67. Define marketing strategy. Discuss the steps in formulating marketing strategy.
a. Answer: The marketing logic by which a company hopes to achieve profitable relationships is
called its marketing strategy. Marketing strategy formulation entails four specific steps: market
segmentation, market targeting, differentiation, and positioning. The process of dividing a market
into distinct groups of buyers with different needs, characteristics, or behavior is called market
segmentation. Market targeting involves evaluating each market segment's attractiveness and
selecting one or more segments to enter. A company should target segments in which it can
profitably generate the greatest customer value and sustain that value over time. Effective
positioning begins with actually differentiating the company's marketing offer so that it gives
consumers greater value. Positioning is defined as creating a distinct image of a product in the
eyes of target consumers. A product's positioning should take advantage of a competitive
advantage within the market target.
68. Marketing departments are organized in several ways. Compare and contrast the most common forms of
marketing organizations.
a. Answer: Some common forms of marketing department organization include functional
organization, geographical organization, product management organization, and market
management organization. Under a functional department organization, a functional specialist,
such as a sales manager, advertising manager, or market research manager, is responsible for all
marketing activities. Under a geographic organization, sales and marketing people are assigned to
specific countries, regions, and districts. Product management organization first appeared at P&G
in 1929. Under this approach, a product manager develops and implements a complete strategy
and marketing program for a specific product or brand. Under a market or customer management
organization, the company is organized around the needs of specific customer segments. In firms
that use this organization, one product line is sold to many different types of markets and
customers that have different needs and preferences. Finally, large companies that produce many
products sold in many geographic areas typically use some combination of these organizational
forms.
69. Briefly discuss how marketers measure return on marketing investment, explaining why this figure can be
difficult to assess.
a. Answer: Marketing ROI (return on investment) is the net return from a marketing investment
divided by the costs of the marketing investment. In other words, ROI is a measure of the profits
generated by investments in a marketing activity. Marketing ROI can be difficult to assess
because the benefits of marketing are not always easily translated in dollar amounts. However,
marketing ROI can be assessed in terms of brand awareness, sales, or market share. Some
companies are now using marketing dashboards, which are single displays showing several sets
of marketing performance measures. And beyond standard performance measures, many
marketers are using customer—centered measures such as customer acquisition, retention, and
lifetime value.
70. Compare the selling and marketing concepts, listing the key components of each philosophy.
a. Answer: The selling concept reflects an inside-out philosophy, while the marketing concept takes
an outside-in perspective. The selling concept is typically practiced when an organization is
marketing products or services that buyers do not normally think of purchasing, such as insurance
or blood donation. Aggressive selling focuses on creating sales transaction rather than on building
long-term relationships with customers, with the aim of selling what the company makes rather
than making what the customer wants. The marketing concept, on the other hand, is based upon
identifying the needs and wants of target markets and then satisfying those needs and wants better
than competitors do. In contrast to the selling concept, marketing focuses on the customer, not the
product, and the path to profits.
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71. Briefly explain the societal marketing concept. Give an example of an organization that has effectively
used the societal marketing concept.
a. Answer: According to this concept, firms will succeed if they take underlying consumer needs
and society's well being into account over the long term. A pure marketing concept can damage
consumers' long-run welfare by focusing exclusively on satisfying consumers' short-run wants.
Over a long period of time, this too-narrow focus can be damaging to the company. In setting
their marketing strategies, marketers today need to balance company profits, consumer wants, and
society's interests. Johnson & Johnson is an example of a company that has successfully
implemented the societal marketing concept. The organization stresses honesty, integrity, and
putting people before profits, an ethic that helped Johnson & Johnson quickly address and recover
from the poisonous tampering of Tylenol capsules in 1982.
72. The aim of customer relationship management is to create not just customer satisfaction, but customer
delight. Explain.
a. Answer: Customer satisfaction cannot be taken for granted. Because brand loyalty is dependent
upon strong customer satisfaction, companies strive to retain, satisfy, and even delight current
customers. Firms create customer delight by promising only what they can deliver and then
delivering more than what they promised. They also create emotional relationships with key
customers. Delighted customers make repeated purchases and become customers for life. More
importantly, they also essentially become an unpaid sales force for the firm as "customer
evangelists" who tell other potential customers about their positive experiences with the product.
73. Define customer equity and explain why it is important to a company.
a. Answer: Customer equity is the sum of the lifetime values of all a company's current and
potential customers. Customer equity is dependent upon customer loyalty from a firm's profitable
customers. Because customer equity is a reflection of a company's future, companies must
manage it carefully, viewing customers as assets that need to be maximized.
74. Explain how the Internet has transformed the way in which we do business today.
a. Answer: The Internet links individuals and businesses of all types to each other. The Internet
allows firms access to exciting new marketspaces. The Internet has spawned an entirely new
breed of "click only" companies–the "dot-coms." The post-Internet frenzy of the late 1990s has
introduced companies that are both savvy and face promising futures. These companies use a set
of new Web technologies to reach customers, including blogs (web logs), cell phones, video
games, and social networking sites. "Brick-and-mortar" companies of the past are now "clickand-mortar" companies, with online presences aimed at attracting new customers and
strengthening bonds with current customers. Approximately 70% of American Internet users now
shop online, making a Web presence a necessity for any organization.
75. One of the major developments in marketing can be summed up in one word: relationships. Define
customer relationship management and its associated tools and levels of relationships.
a. Answer: Customer Relationship Management (CRM) is the process of building and maintaining
profitable customer relationships by delivering superior customer value and satisfaction. A
company with mostly low-margin customers is likely to seek basic relationships, using brandbuilding advertising and sales promotion. An organization with few customers and high margins,
on the other hand, will work to create key partnerships with select customers. To create stronger
bonds with customers, some marketers use tools such as financial benefits or rewards based on
frequency of purchase. Other tools include social benefits, like offering key customers the
opportunity to network and create communities through club marketing programs. To retain
current customers and remain profitable, companies today are going beyond transactional
marketing to customer relationship management. The key is to create and sustain relationships for
the long term.
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