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Midterm Exam, Mark 6361, Monday, Fall 2008 Name: __________________________________ UH ID: __________________________________ Please write your UH ID# on the scantron as well and blacken the matching circles. Multiple Choice: Each questions worth 2 points. Choose the one alternative that best completes the statement or answers the question. 1. Marketing intelligence, according to the textbook a) has no cost because it comes from internal records b) will be more relevant for business marketers than for consumer marketers c) refers to information about happenings in the marketing environment d) reflects results in previous quarters e) must be experimental to be valid 2. We said in class that it can be misleading to associate any marketing-relevant characteristics with a particular age group, because a) International variation is more significant; a 25-year-old in Japan is not like a 25year-old in France b) One’s cohort may matter more than age; people born in 1978 have certain tastes and perspectives related to the world they grew up in based on their year of birth c) Social class differences are more significant than age differences. For example, 9-year-olds from working class families have different priorities from the priorities of 9-year-olds in middle class families d) Roles -- expectations associated with who one is – mean that all age groups are basically alike as consumers e) Economic differences outweigh age differences even for purchases that are not significant in cost 3. Considering how to move “prospects” into the role of first-time customers, we said in class that a) salespeople cannot be helpful in this effort because they are likely to be working on commission b) a company will be wiser to spend its marketing funds turning suspects into prospects c) whatever method is chosen will require funds that might otherwise be spent turning repeat customers into clients d) a company cannot aspire to gain first-time customers from prospects, only from suspects e) a company cannot aspire to gain first-time customers from prospects, only from those recruited by partners 4. Brand can play a number of specific roles within a company’s brand portfolio. For example, a __________ is positioned to compete directly with one or more competitors’ brands so that more important and profitable brands retain their desired positioning. a) cash cow b) mid-market brand c) low end, entry level brand d) high end, prestige brand e) flanker 5. _________ is the ability to prepare, on a mass basis, individually designed products to meet each customer’s requirements. a) Concentrated marketing b) Clustered marketing c) Specialized d) Niching e) Mass customization 6. We said in class that structural ties between a marketing company and a customer include a) attending social events with customers – for instance baseball games b) meeting customers at college alumni events c) cutting prices for the purpose of taking a customer away from a competitor d) developing systems to enable customers to order “automatically” e) investing in one’s own delivery fleet to save money, then passing those savings on to customers 7. Which of the following is true? a) If marketers raise expectations too high, the buyer is likely to be disappointed. b) If the company sets expectations too low, the buyer is likely to be disappointed. c) If marketers raise expectations too high, they will soon have many copycat offerings competing in the marketplace. d) If marketers raise expectations too high, they won’t attract enough customers. e) If the company sets expectations too low, exceeding buyers’ expectation becomes difficult. 8. Marketers are advised to define a strategic business unit (SBU) in terms of : a) production process employed, key material(s) employed, price level b) customer groups served, customer needs met, technology employed c) relative market share, length of time the company has been in this business, uniqueness of its offering compared to competitors d) management strength, autonomy within the parent company, relation of this SBU’s products to the company’s other products e) price, product, promotion, and distribution 2 9. Aaron’s hunting and fishing activities, his interest in military history, and his opinions about an all-volunteer army reflect his _________. a) demographics b) personality c) social class d) lifestyle e) self-concept 10. A new supplier, according to the textbook, is least likely to make a sale to a prospect involved in which of the following buying situations? a) Direct purchase b) Functional rebuy c) Modified rebuy d) Straight rebuy e) New task 11. We said in class that Heinz catsup can be viewed as a product that delivers extra value; they do so by a) targeting the eaters of specific ethnic foods with labels in various languages b) targeting older people with easy-squeeze bottles c) targeting restaurant customers with containers showing the restaurant’s name d) targeting children the many different colors of catsup e) targeting customers who prefer an upscale catsup by using glass containers as well as plastic 12. We said in class that it costs less to attract buyers a) in a growing product category b) when a company has low share and attributes that to low awareness of the brand c) when a company has low share and attributes that to low marketing spending d) when a company has purchased its suppliers and therefore integrated backwards e) when a company has purchased retail outlets and therefore integrated forwards 3 13. In marketing to consumers, a business must allocate marketing dollars among the five stages of the consumer buying process. An example from the class discussion led to the observation that a) New product marketers should be most concerned with postpurchase behavior, since they depend on recommendations b) Information search deserves the greatest share of marketing dollars for familiar products c) A retail store might spend marketing dollars enhancing the experience of shopping if they believe that evaluation of alternatives is critical to the purchase choice d) Any consumer marketer is best advised to spend the greatest portion of their budget on “closing,” except for online marketers e) The marketing budget should be divided equally among the five stages of the buying process unless there is a reason to emphasize one over the other 14. We talked in class about PRIZM to make the point that a) Lifestyle segmentation is easier to accomplish than demographic segmentation b) Segmentation by types of neighborhoods can be helpful for finding similar segments in different cities c) Demographic segmentation is only helpful for retailers d) Demographic segmentation considers activities, interests, and opinions e) A segment and a sector are different words for the same concept 15. The textbook compares marketing research contact methods and suggests: a) phone contact if the primary concern is honest answers b) an online interview if the primary concern is ability to learn more about the nonverbal reactions of the individual interviewed c) telephone if the primary concern is gathering information quickly and clarifying questions that respondents do not understand d) mail if the primary concern is achieving a high response rate e) door-to-door surveys if the primary concern is saving money on interviewing 16. Which of the following is a statement from the textbook? a) You should never “fire” your worst customers. b) The least profitable 10-20% of customers can actually reduce profits by 50%200% per account. c) For every 20 customers, a company will make 80 percent more profit. d) The number of unprofitable customers is equal to the number of profitable ones. e) The best customers outspend others by a ratio of 5 to 1 in retailing. 4 17. Which of the following is an example of a behavioral segmentation variable? a) Education level b) Family life cycle c) Stage of readiness to buy d) Lifestyle e) Occupation 18. We said in class that it is unwise to market to people one at a time if there is a way to reach them more efficiently. That idea would be illustrated by: a) communicating to parents of children with asthma as a way to deliver a message to allergists about the availability of an air filter b) communicating to industrial distributors the advantages of a particular component that they market to business buyers c) advertising to dog owners to reach veterinarians d) setting up a booth at an art fair to promote athletic shoes e) setting up a booth at an athletic event to promote subscriptions to Architectural Digest 19. The buying department for a nursing home is informed that the price of the ibuprofen used for patient medication has increased by 15 percent. They order a new supply anyway, knowing that they can pass the increase on to the clients. This is an example of business products having __________ demand. a) routine b) inelastic c) volatile d) accelerated e) elastic 20. How might focus group research be particularly useful? We said in class that it might be if a) It allows the moderator to observe reactions of people who are not speaking b) It permits threatening questions to be asked in a setting where only a few others will know what each person says in response c) It provides quantitative data d) It allows for experimentation, meaning that a control group is employed e) It is conducted on the Web 21. When a(n) __________ cannot be differentiated easily, the key to competitive success may lie in adding valued __________ and improving their quality. a) idea; creativity b) tangible product; services c) service; tangible products d) value proposition; creative responses e) idea; designs 5 22. Looking at the slides posted from Nick Grahmann’s talk on Champion Technologies made clear his basic point, that a) a “red ocean” strategy is particularly appropriate in industrial markets b) a technically competent company may not understand what customers value c) a marketing department in a science-based organization will focus on scientists from customer organizations d) an industrial marketer takes a risk if it seeks to become a trusted advisor e) moving from vendor to preferred supplier is the ideal for any business-tobusiness marketer 23. Which of the following is true of the U.S. government as a market? a) The U.S. government is the largest customer in the world. b) Most purchases by the U.S. government are in the billions of dollars, usually for technology. c) The U.S. government will always award the contract to the lowest bidder. d) A comprehensive bid proposal might take as much as a few days to prepare and “weigh in” at a few dozen pages. e) Cost minimization drives buying decisions made by the U.S. government. 24. The value delivery model of marketing focuses on which of the following? a) making and selling products b) having and holding customers c) finding and communicating with the customer d) placing marketing at the beginning of the process e) serving the profitable mass market 25. What are the two solutions to unprofitable customers? a) lower fees; reduce service b) lower fees; increase service c) raise fees; increase service d) raise fees; reduce service e) there is only one solution to unprofitable customers, to fire them 26. The following is a key function of the CMO: a) create a business scorecard b) lobby for a favorable government policy c) manage new product development d) gather meaningful customer insights e) develop a data security policy 6 27. After working for a roofing contractor for ten years, Cameron Gomez finally established his own operation. Unfortunately, Cameron’s first six months have been disappointing. He decided to conduct a marketing research study to gather preliminary data to shed light on the nature of the problem and suggest some new ideas. He needs to conduct __________ research. a) exploratory b) causal c) secondary d) descriptive e) observational 28. A __________ is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the marketer’s cost stream of attracting, selling, and servicing that person, household, or company. a) good customer b) sales customer c) profitable customer d) strong customer e) marketing accountant 29. Research by Voicestream Wireless revealed that it serves two different kinds of consumers: chatterboxes who seemed to live on the phone and those that make lots of short calls. Based on this research, it should use a(n) __________ segmentation strategy. a) age-based b) usage rate c) user status d) loyalty status e) occupation-based 30. Firms that offer tailored programs for several different market segments engage in __________ marketing. a) differentiated b) single-segment concentration c) undifferentiated d) market specialization e) product specialization Please turn to the next page to answer the 40-point “memo” question. Then on the page after THAT (p. 9) you can receive 3 points of extra credit by filling out the one-page research questionnaire. 7 I will grade only one memo, and only what you write, legibly, on this side of this page. But please feel free to draft a “practice” version on the back of any page of this exam and then copy it onto this page after a careful rereading and editing. Segmentation and targeting are important ideas in marketing. Please write a memo to William Van Pelt, owner of a new retail textbook store in the recently-constructed building across the street from Bauer’s faculty parking lot. Tell him briefly what these concepts are, making clear how they differ. Then suggest one specific application of each for his business, and justify your suggestions. All but 15 of you chose this question. You could earn up to 20 points for describing the concepts (without merely using the word “segment” and “target,”) and then up to 10 each for one suggestion of a way to segment his market and one suggestion about targeting. Segmentation was sensibly described as a process of grouping or categorizing potential buyers in a population on the basis of some commonality. Almost everyone gave examples, most commonly student status (graduate/undergrad, day/night, business/law as a major. But some perfectly sensible papers recommended segmenting the market of students by parking site and targeting those who park in the lot next to the bookstore. What I looked for was an answer that met the criteria in the book --- large enough and accessible, principally. You can probably target freshmen by buying from UH a mailing list of incoming freshmen. You probably cannot count, let alone access, “students who don’t like the UC bookstore.” I did hope to see HOW you would target a chosen segment. If it’s students with cars in the parking lot next to the store, I understand your choice of flyers under the windshield wipers. If it’s freshmen, it’s stocking lots of UHidentified backpacks and mugs and shirts for which they are presumably the ideal market. If it’s users of the wellness center, it’s stocking energy drinks and workout clothes. You lost two points for every error. Spelling errors were way too frequent. The most common factual error was to say that targeting is “choosing one segment to focus on,” although the book made clear that marketers can target more than one segment. If you disregarded the instruction to write only on one side of the page, I took off five points. Marketing involves working with scarce resources and doing the best you can. For this question, space was your scarce resource. Or Briefly explain in a memo to Mr. Van Pelt what the textbook tells you about creating customer value, satisfaction, and loyalty. Then give him two specific ideas that use one or more of those concepts to improve his profitability, and justify your suggestions. Most people who chose this question were able to explain value/satisfaction/loyalty, but some failed to realize that while value may be perceived, and thereby lead to purchase, the other two matter only after using the product. You could earn up to 20 points for explaining the three concepts and up to 10 for each suggestion. Most commonly, one suggestion for creating loyalty involved the equivalent of a frequent buyer program, which was fine. As above, I took off two points per error and five for disregarding space limitations. 8 9