Chap 00119

Chapter 01 The Marketing Management Process

Marketing Management: A Strategic, Decision-Making Approach, 7/e 1

True or False Questions [QUESTION] 1. In the financial markets it is a company’s top line—its sales—that is most important. Answer: False Degree of difficulty: Medium Page: 5 Take-Away: 1 [QUESTION] 2. According to management guru Peter Drucker, everything a company does internally is a cost center. Answer: True Degree of difficulty: Easy Page: 5 Take-Away: 1 [QUESTION] 3. Decreased division and increased specialization of labor are some of the most important changes that occur as societies move from a primitive economy toward higher levels of economic development. Answer: False Degree of difficulty: Medium Page: 6 Take-Away: 1 [QUESTION] 4. An unsatisfied need is a gap between a person’s actual and desired states on some physical or psychological dimension. Answer: True Degree of difficulty: Easy Page: 7 Take-Away: 4 [QUESTION] 5. Marketers and other social forces can create needs deriving from the biological and emotional imperatives of human nature. Answer: False Degree of difficulty: Medium Page: 8 Take-Away: 4 [QUESTION] 6. The laws of probability dictate that at least half of all new products should succeed if a sufficient amount is spent on marketing research.


Test Bank, Chapter 1 2

Answer: False Degree of difficulty: Medium Page: 9 Take-Away: 1 [QUESTION] 7. When people buy products to satisfy their needs, they are really buying the benefits they believe the products provide, rather than the products per se. Answer: True Degree of difficulty: Easy Page: 10-11 Take-Away: 2 [QUESTION] 8. Value is a function of extrinsic product features, service, and price. Answer: False Degree of difficulty: Medium Page: 11 Take-Away: 3 [QUESTION] 9. Lifetime customer value is the present value of a stream of revenue that can be produced by a customer over time. Answer: True Degree of difficulty: Easy Page: 12 Take-Away: 3 [QUESTION] 10. A brand’s value to the company depends on how much value the company thinks the brand provides customers. Answer: False Degree of difficulty: Easy Page: 12 Take-Away: 3 [QUESTION] 11. Each market segment seeks a different set of benefits from the same product category. Answer: True Degree of difficulty: Easy Page: 13 Take-Away: 6 [QUESTION] 12. The four Cs that need to be analyzed before decisions are made concerning specific components of the marketing program are customer, cost, category, and the company itself.



Answer: False Degree of difficulty: Medium Page: 14-15 Take-Away: 5 [QUESTION] 13. IBM has reduced its focus and the proportion of resources it devotes to its traditional computer hardware businesses and is now seeking future growth and profits by investing heavily in developing information engineering, software, and business consulting services. This change in emphasis reflects IBM’s new business-level strategy. Answer: False Degree of difficulty: Medium Page: 15 Take-Away: 6 [QUESTION] 14. The primary purpose of marketing activities is to facilitate and encourage exchange transactions with potential customers. Answer: True Degree of difficulty: Easy Page: 17 Take-Away: 6 [QUESTION] 15. The controllable elements of a marketing program are the product offering; price; promotion; and place. Answer: True Degree of difficulty: Easy Page: 18 Take-Away: 6 [QUESTION] 16. In the first part of a marketing plan, the marketing manager usually details the strategy for the coming period. Answer: False Degree of difficulty: Medium Page: 20 Take-Away: 6 [QUESTION] 17. Internal control of the full range of marketing functions and activities is referred to as vertical integration. Answer: True Degree of difficulty: Medium Page: 22 Take-Away: 1



[QUESTION] 18. Merchant wholesalers sell goods and services directly to final consumers for their personal, nonbusiness use. Answer: False Degree of difficulty: Easy Page: 22 Take-Away: 6 [QUESTION] 19. Venus prefers to buy a week’s groceries on a single trip to the supermarket rather than engage in separate transactions with a butcher, a baker, and a variety of food processors, thereby increasing transactional efficiency. Answer: True Degree of difficulty: Medium Page: 23 Take-Away: 1 [QUESTION] 20. One benefit of an extensive marketing system is that specialization of labor and economies of scale lead to functional efficiency. Answer: True Degree of difficulty: Medium Page: 23 Take-Away: 1 [QUESTION] 21. A product has greater place utility for a potential customer when it can be purchased with a minimum of risk and shopping time. Answer: False Degree of difficulty: Medium Page: 23 Take-Away: 3 [QUESTION] 22. The title marketing manager is necessarily and intentionally vague because many people are directly involved with an organization’s marketing activities. Answer: True Degree of difficulty: Medium Page: 24 Take-Away: 6 [QUESTION] 23. All marketing activities that are performed in-house are within the domain of the marketing department. Answer: False



Degree of difficulty: Medium Page: 24 Take-Away: 1 [QUESTION] 24. Implementing a marketing plan requires cooperation and coordination across many specialized functional areas, but the final authority should always be the marketing department. In short, marketing should not be “everybody’s business.” Answer: False Degree of difficulty: Medium Page: 24 Take-Away: 1 [QUESTION] 25. A service can be defined as “any activity or benefit that one party can offer another that is essentially intangible and that does not result in the ownership of anything.” Answer: True Degree of difficulty: Easy Page: 25 Take-Away: 3 [QUESTION] 26. The intangible nature of many services can create unique challenges for marketers. Answer: True Degree of difficulty: Easy Page: 25 Take-Away: 3 [QUESTION] 27. Available data suggests that roughly 80 percent of Internet revenues are from Business-to-Consumer (B2C) transactions. Answer: False Degree of difficulty: Easy Page: 26 Take-Away: 1 [QUESTION] 28. Auction sites, such as eBay, QXL are examples of Consumer-to-Consumer (C2C) channels. Answer: True Degree of difficulty: Easy Page: 27 Take-Away: 1 [QUESTION] 29. Information available over the Internet is affecting consumer purchase patterns even when the purchases are made in traditional retail outlets.



Answer: True Degree of difficulty: Easy Page: 27 Take-Away: 6 [QUESTION] 30. Though the boundaries between functional areas still remain, marketing programs are increasingly becoming a group activity. Answer: False Degree of difficulty: Medium Page: 28 Take-Away: 1 Multiple Choice Questions [QUESTION] 31. The most important characteristic of marketing as a business function is its focus on: A. interfunctional responsibilities. B. customer needs. C. barter exchange requirements. D. production efficiencies. E. technological trends. Answer: B Degree of difficulty: Easy Page: 5 Take-Away: 5 [QUESTION] 32. A society cannot reap the full benefits of specialization until it develops the means to facilitate: A. importation of essentials from other societies. B. production of essentials by each member of society. C. the trade and exchange of surpluses among its members. D. countertrade with other societies. E. production of goods in addition to services. Answer: C Degree of difficulty: Easy Page: 6 Take-Away: 1 [QUESTION] 33. “A social process involving the activities necessary to enable individuals and organizations to obtain what they need and want through exchanges with others” is a definition of: A. distribution. B. marketing.



C. barter. D. countertrade. E. industrialization. Answer: B Degree of difficulty: Easy Page: 6 Take-Away: 1 [QUESTION] 34. The utilization of marketing approaches by hospitals, theaters, universities and nonprofit organizations: A. has not changed compared to practices in the past. B. has increased substantially in the recent past. C. is outside the domain of marketing per se. D. is only appropriate in for-profit situations. E. has decreased substantially in the past decade. Answer: B Degree of difficulty: Medium Page: 7 Take-Away: 6 [QUESTION] 35. Those who buy goods and services for their own personal use or the use of others in their immediate household are: A. utilitarian consumers. B. organizational customers. C. intermediaries. D. industrial customers. E. ultimate consumers. Answer: E Degree of difficulty: Medium Page: 7 Take-Away: 2 [QUESTION] 36. Those who buy goods and services for resale, as inputs to production of other goods or services, or for use in the day-to-day operations of the organization are: A. intermediaries. B. ultimate consumers. C. organizational customers. D. utilitarian consumers. E. countertraders. Answer: C Degree of difficulty: Medium Page: 7 Take-Away: 2



[QUESTION] 37. A gap between a person’s actual and desired state on some physical or psychological dimension is a(n): A. unsatisfied need. B. want state. C. market inefficiency. D. demand function. E. intermediary. Answer: A Degree of difficulty: Easy Page: 7 Take-Away: 4 [QUESTION] 38. Factors not created by marketers or other social forces, but flowing from basic biological and psychological human makeup, are: A. needs. B. wants. C. demands. D. urges. E. requirements. Answer: A Degree of difficulty: Easy Page: 7 Take-Away: 4 [QUESTION] 39. When a non-profit organization, like a university, purchases copying paper for its photocopying machines, what is it purchasing? A. A consumer good. B. A consumer service. C. An industrial good. D. An industrial service. E. An emotional good. Answer: C Degree of difficulty: Easy Page: 7 Take-Away: 1 [QUESTION] 40. For some brand loyal customers what does wearing Levi’s 501 jeans provide that other jeans cannot? A. Need fulfillment B. Need creation C. Need recognition



D. Want satisfaction E. Want recognition Answer: D Degree of difficulty: Medium Page: 7 Take-Away: 4 [QUESTION] 41. The desire to drink a Coke instead of orange juice is an example of a(n): A. necessity. B. need. C. demand. D. want. E. requirement. Answer: D Degree of difficulty: Easy Page: 7 Take-Away: 4 [QUESTION] 42. In addition to being provided with physical objects, people’s needs may be satisfied in a less tangible form through: A. differential forms. B. products. C. goods. D. services. E. product modifications. Answer: D Degree of difficulty: Medium Page: 10 Take-Away: 4 [QUESTION] 43. When people buy products to satisfy their wants and needs, instead of buying the products per se, they are buying: A. performance features. B. product attributes. C. benefits. D. physical attributes. E. goods. Answer: C Degree of difficulty: Easy Page: 10 Take-Away: 2 [QUESTION]



44. Studies have shown that, if their complaints were handled satisfactorily, ____ percent of those who complain would do business with the same company again. A. 30 B. 10 C. 50 D. 70 E. 90 Answer: C Degree of difficulty: Easy Page: 12 Take-Away: 3 [QUESTION] 45. When the market is sufficiently homogeneous, a company can practice marketing approaches that are: A. pre-emptive. B. differentiated. C. segmented. D. situational. E. undifferentiated. Answer: E Degree of difficulty: Medium Page: 12 Take-Away: 5 [QUESTION] 46. “Individuals and organizations who are interested and willing to buy a particular product to obtain benefits that will satisfy a specific need or want, and who have the resources to engage in such a transaction” is the definition of a(n): A. industrial buyer. B. segment. C. opportunity. D. focus group. E. market. Answer: E Degree of difficulty: Easy Page: 12 Take-Away: 1 [QUESTION] 47. When the total market for a given product category is fragmented into several groups of people having relatively homogeneous needs, wants, and sought after benefits, these groups are termed: A. market fragmentation. B. a differentiated market. C. a counter-market.



D. a market segment. E. market homogenization. Answer: D Degree of difficulty: Medium Page: 13 Take-Away: 5 [QUESTION] 48. When a company is attempting to determine what markets to target their product towards as part of its strategic marketing planning activities, which of the following is it attempting to define? A. Why its competitors have not already exploited this niche. B. What the best promotion vehicle would be for this market. C. Which segments have to be targeted. D. How to position the product. E. What its distribution strategy would be. Answer: C Degree of difficulty: Hard Page: 13 Take-Away: 5 [QUESTION] 49. Haier, the rapidly growing Chinese manufacturer of washing machines discussed in the text, modifies its product designs and marketing programs to the needs of customers in Saudi Arabia. The company is: A. trying to provide a unique benefit to a segment of the washing machine market. B. trying to provide a unique benefit to the overall market for washing machines. C. production oriented. D. trying to position its product as a me-too type of washing machine. E. trying to build economies of scale. Answer: A Degree of difficulty: Hard Page: 13 Take-Away: 2 [QUESTION] 50. What is the focus of marketing management? A. Analysis B. Coordination C. Beneficial exchange D. Distribution E. Execution Answer: C Degree of difficulty: Easy Page: 14 Take-Away: 1



[QUESTION] 51. “The process of analyzing, planning, implementing, coordinating, and controlling programs involving the conception, pricing, promotion, and distribution of products, services, and ideas designed to create and maintain beneficial exchanges with target markets for the purpose of achieving organizational objectives” is a definition of: A. marketing communications. B. marketing management. C. marketing strategy. D. strategic management. E. marketing tactics. Answer: B Degree of difficulty: Easy Page: 14 Take-Away: 5 [QUESTION] 52. Analyzing the 4Cs is necessary to provide the foundation for a good strategic marketing plan. Which of the following is NOT one among them? A. Company B. Context C. Customers D. Cost E. Competitors Answer: D Degree of difficulty: Medium Page: 14 Take-Away: 6 [QUESTION] 53. Which aspect of the marketing management process does environmental and competitor analysis represent? A. Marketing program components B. Implementing and controlling marketing programs C. Formulating strategic marketing programs D. Market opportunity analysis E. Strategic market communication Answer: D Degree of difficulty: Medium Page: 15 Take-Away: 5 [QUESTION] 54. What type of strategy states the company’s mission and its strengths and policies for growth? A. Business-level strategy B. Functional strategy



C. Marketing strategy D. Corporate strategy E. Segmentation strategy Answer: D Degree of difficulty: Medium Page: 15 Take-Away: 5 [QUESTION] 55. What type of decision is reflected in an organization’s business-level strategy? A. Choosing suppliers B. Picking an advertising slogan C. Deciding how to compete in its business D. Deciding which products to sell E. Defining its overall purpose Answer: C Degree of difficulty: Medium Page: 16 Take-Away: 6 [QUESTION] 56. When PepsiCo attempts to define which products, promotions, prices, and distribution arrangements to include in its snacks food line, what type of strategy is it pursuing? A. Marketing strategy B. Functional-level strategy C. Corporate strategy D. Operational strategy E. Market segmentation strategy Answer: A Degree of difficulty: Medium Page: 16 Take-Away: 5 [QUESTION] 57. When a company is attempting to differentiate its products to distinguish them from competitors’ products, in which aspect of strategic management planning is the company engaged? A. Market segmentation strategy B. Distribution strategy C. Targeting strategy D. Pricing strategy E. Positioning strategy Answer: E Degree of difficulty: Hard Page: 17 Take-Away: 5



[QUESTION] 58. _____ is the combination of controllable marketing variables that a manager uses to carry out a marketing strategy. A. Advertising B. Pricing strategy C. Market segmentation D. Publicity E. Marketing mix Answer: E Degree of difficulty: Easy Page: 18 Take-Away: 6 [QUESTION] 59. Advertising, personal selling, point-of-purchase displays, and publicity are related to which element of the marketing mix? A. Place B. Product C. Price D. Promotion E. Personnel Answer: D Degree of difficulty: Easy Page: 19 Take-Away: 6 [QUESTION] 60. Quality, features, style, options, brand name, packaging, guarantees and warranties, and service are related to which element of the marketing mix? A. Place B. Price C. Product D. Promotion E. Personnel Answer: C Degree of difficulty: Easy Page: 19 Take-Away: 6 [QUESTION] 61. When a buyer purchases a new Fiat Punto and the purchase price includes free parts and labor on repairs that occur within the first three years or 36,000 miles, whichever comes first, what aspect of the product does this component represent? A. Return policy B. Warranty



C. Sales promotion D. Allowance E. Spare parts availability Answer: B Degree of difficulty: Medium Page: 19 Take-Away: 2 [QUESTION] 62. The primary advantage to direct distribution for a firm like Dell computers is: A. more control over channel activities. B. less hassle for the customer. C. broader market coverage. D. lower distribution costs. E. less hassle for the firm. Answer: A Degree of difficulty: Hard Page: 22 Take-Away: 6 [QUESTION] 63. Dell Computer’s reliance on the Internet to attract customers and process orders together with a flexible manufacturing system that produces computers to order and minimizes finished inventories, and Canon’s reliance on its own factories, salesforce, and distribution facilities to produce and market its copiers and printers are examples of a: A. vertically integrated distribution system. B. horizontally integrated distribution system. C. wheel-and-spoke distribution system. D. cohesive distribution system. E. pyramid selling system. Answer: A Degree of difficulty: Hard Page: 22 Take-Away: 6 [QUESTION] 64. Groups of institutions, or middlemen, that distribute goods are known as: A. pyramid distribution systems. B. cohesive distribution system. C. horizontal distribution systems. D. wheel-and-spoke distribution systems. E. marketing channels. Answer: E Degree of difficulty: Medium Page: 22 Take-Away: 6



[QUESTION] 65. A manufacturer’s representative for General Electric is an example of which type of “middleman?” A. Retailers B. Agent middlemen C. Merchant wholesalers D. Facilitating agents E. Commissioned agents Answer: B Degree of difficulty: Medium Page: 22 Take-Away: 6 [QUESTION] 66. Those who sell goods and services directly to final consumers for their personal, nonbusiness use are: A. retailers. B. agent middlemen. C. merchant wholesalers. D. facilitating agents. E. commissioned agents. Answer: A Degree of difficulty: Easy Page: 22 Take-Away: 6 [QUESTION] 67. In developed countries, approximately what percentage of the retail price of consumer products consists of the costs of marketing and distribution of these products? A. 10 percent B. 30 percent C. 50 percent D. 70 percent E. 90 percent Answer: C Degree of difficulty: Medium Page: 23 Take-Away: 5 [QUESTION] 68. Because manufacturers and their agents can perform exchange activities at a lower cost than individual consumers, we say that they have achieved: A. price efficiency. B. functional efficiency. C. transaction efficiency.



D. vertical integration. E. horizontal integration. Answer: B Degree of difficulty: Hard Page: 23 Take-Away: 1 [QUESTION] 69. When a consumer purchases a product at a convenient location and when she is ready to use the product, we say that the product has achieved _________ utility and _________ utility, respectively. A. time; place B. place; time C. possession; place D. possession; functional E. time; possession Answer: B Degree of difficulty: Easy Page: 23 Take-Away: 3 [QUESTION] 70. What factor has changed in the past 10 years that has made the customer service function far more important to the firm’s financial success? A. global population levels. B. global competition levels. C. database marketing. D. wireless communications. E. market fragmentation. Answer: B Degree of difficulty: Hard Page: 26 Take-Away: 3 Essay Questions [QUESTION] 71. How many transactions must occur for three manufacturers to sell to each of three consumers (a) without and (b) with a distributor? What does this indicate about the efficiency introduced by “middlemen”? Answer: Without a distributor, each of the three manufacturers must contact each of the three consumers separately, for a total of nine transactions. With a distributor, each of the three manufacturers must contact the distributor once, and the distributor must contact each consumer once, for a total of six transactions. From the standpoint of total system transactions, the distributor based system is one-third more efficient.



Degree of difficulty: Medium Page: 6 Take-Away: 1 [QUESTION] 72. What conditions must exist before an exchange occurs? Answer: There must be (1) at least two parties, both of whom: (2) offer something of value, (3) are aware of the other’s existence, (4) are free to accept or reject the other’s offer, and (5) are willing to negotiate. Degree of difficulty: Easy Page: 6 Take-Away: 1 [QUESTION] 73. Distinguish between an ultimate consumer and an organizational customer. Provide an example of each. Answer: An example of the former is when a customer buys a shirt; the latter is when a store’s management buys racks of clothing. Degree of difficulty: Medium Page: 7 Take-Away: 5 [QUESTION] 74. Discuss the value of long-term customer relationships. Answer: As global markets have become increasingly competitive and volatile, many firms have turned their attention to building a continuing long-term relationship between the organization and the customer as the ultimate objective of a successful marketing strategy. They are taking action to increase lifetime customer value —the present value of a stream of revenue that can be produced by a customer over time. For an automobile manufacturer, for instance, the lifetime value of a first-time car buyer who can be kept satisfied and loyal to the manufacturer—buying all future new cars from the same company—is well over a million dollars. Degree of difficulty: Medium Page: 12 Take-Away: 3 [QUESTION] 75. Discuss brand equity. Answer: The assets—including customers’ perceptions of a product’s benefits and value, their positive past experiences, and their loyalty over time—linked to a brand’s name and symbol constitute the brand’s equity. Brand equity reflects the value of the brand name and logo as promotional tools for attracting future buyers and building market share and profitability. A brand’s value to



the company depends on how much value customers think the brand provides for them; value creation cuts both ways. Degree of difficulty: Medium Page: 12 Take-Away: 6 [QUESTION] 76. What are the important questions which a marketing manager must ask in order to define a target market? Answer: Questions such as: “Which customer needs or wants are not being well-satisfied by our competitors?,”, “How do potential segments differ by important demographic dimensions, in benefits desired, and in choice criteria?”, “Which segments should we target and why have we chosen these segments?”, and “How will we position our product so that we can differentiate it from our competitors’ offerings?” are typical questions that have to be answered in order to define a target market. Degree of difficulty: Medium Page: 13 Take-Away: 5 [QUESTION] 77. What elements should be analyzed for a good strategic marketing plan? Answer: The analysis necessary to provide the foundation for a good strategic marketing plan should focus on four elements of the overall environment that may influence a given strategy’s appropriateness and ultimate success: (1) the company’s internal resources, capabilities, and strategies; (2) the environmental context —such as broad social, economic, and technology trends—in which the firm will compete; (3) the needs, wants, and characteristics of current and potential customers; and (4) the relative strengths and weaknesses of competitors and trends in the competitive environment. Marketers refer to these elements as the 4Cs. Degree of difficulty: Hard Page: 15-16 Take-Away: 5 [QUESTION] 78. Compare and contrast the three levels of organizational strategy. Answer: Corporate strategy reflects the company’s mission and provides direction for decisions about what business it should pursue, how it should allocate its available resources, and its growth policies. Business-level strategy addresses how the business intends to compete in its industry. Functional strategy, such as marketing, involves decisions about implementation of specific tactics to reach business-level goals (e.g., what products to offer a given market segment). Degree of difficulty: Hard Page: 15-16 Take-Away: 6



[QUESTION] 79. List and describe the four types of marketing intermediaries. Answer: 1. Merchant wholesalers take title to the goods they sell and sell primarily to other resellers. 2. Agent middlemen also sell to other resellers and industrial or commercial customers but they do not take title to the goods they sell. 3. Retailers sell to ultimate consumers. 4. Facilitating agents, like advertising agencies and railroads, provide specialized marketing functions. Degree of difficulty: Medium Page: 22 Take-Away: 5 [QUESTION] 80. Describe and provide an example of each of the three types of product utility. Answer: Lunch at a fast-food restaurant is a combination of the (1) lunch (possession utility), (2) being conveniently located (place utility), (3) when you are ready for lunch (time utility). Degree of difficulty: Medium Page: 23 Take-Away: 5

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Chap 00119