Wichita State University

MKT 801

Practice Questions with ANSWERS for Capons 3^rd Edition

Chapter 1

Mkt 801: Martin (Spring 2015)

True or False Questions

1)All things being equal, product extension is more distant from the firm’s technological base than product expansion and is therefore more risky.

2. The firm with an operations orientation typically focuses upon reducing unit costs.

3. Making the decision is the final stage of the purchase-decision process.

4. The marketing mix is the total benefits package the firm offers to its customers.

5. The defection rate is the number of customers at the end of the year, divided by the number of customers at the start of the year.

6. Several product lines make up each product class (or sub-category).

7. Life cycles are the most common means for describing, over time, the evolution of markets and products, product classes, product forms, product lines, and product items.

8. According to Maslow’s hierarchy of needs, friendship is an example of a physiological need.

9. Whereas the pioneer firm places extensive effort in producing new-to-the-world products and services via high investment in research, follow-the-leader firms focus attention on development.  

10. Primary data implies that the information is already available but needs to be collected, sorted, and given meaning in the context of the questions management wants to answer.

11. Derived from anthropology, a wiki is an observational method where researchers spend a day in the life of their customers.

12. The discount rate is typically provided by the firm’s Chief Financial Officer.

13. Satisfied customers are less likely to defect, and they may also be willing to buy more.

14. Examples of technical data include reverse engineering competitors’ products, benchmarking product design, or disassembling products to estimate manufacturing costs and supply-chain processes.

15. Quantitative data about competitors includes measures like profitability and market share.

16. The line organization that sets out the basic responsibilities and reporting relationships in a competitor’s organization is referred to as culture.

17. The Delphi method is a time-based method used to forecast sales.

118. The Principle of Selectivity and Concentration focuses on key issues of realizing the danger of attempting too much and dissipating the impact of limited resources by spreading them over too many alternatives.

119. The Principle of Customer Value is about choosing the firm’s battles.

20. According to the text, speed is the major advantage of the internal development method of achieving growth.

21. Principle orientation is the self-orientation of the VALS framework that is guided by abstract idealized criteria.

22. The 80:20 rule indicates that 80 percent of a firm’s revenue is derived from 20 percent of its customers.

23. Introduction is the stage of the product life cycle in which firms typically offer a single product design, sometimes with erratic quality, and prices that may not cover total costs.

24. A firm’s current direct competitors offer current customers similar benefits with similar products, technology, and/or business models.

“Multiple Choice” Questions…

25.                                         embraces the various ways the firm communicates with its customers— informing and persuading customers to purchase its products.

a.) price

b.) promotion

c.) product

d.) distribution

26. External sources of analyzing the availability dimension of competition include all of the following sources EXCEPT:

a.) Customers’ surveys

b.) Distribution and logistic personnel

c.) Reports of channels

d.) Competitors’ statements

27. Which of the following principles states that to assure success, all elements in design and execution must be carefully integrated and coordinated?

a.) The Principle of Selectivity and Concentration b.) The Principle of Customer Value

c.) The Principle of Differential Advantage

d.) The Principle of Integration

28.                                  is/are the most common means for describing, over time, the evolution of markets and products, product classes, product forms, product lines, and product items.

a.) Perceptual mapping b.) Conjoint analysis

c.) Life cycles

d.) Target marketing

29. Positive synergy reflects the notion that                                  . a.) 2 + 2 = 3

b.) 2 + 2 = 5

c.) 5 – 3 = 2

d.) 5 – 3 = 3

30. Incorporating activities previously conducted by customers is referred to as                                  . a.) forward horizontal integration

b.) forward vertical integration

c.) backward horizontal integration d.) backward vertical integration

31. In which of the following stages of the product life cycle is price a major competitive weapon, often squeezing distributor margins?

a.) Introduction

b.) Late growth

c.) Maturity d.) Decline

32. Detergents and kitchen appliances are examples of which of the following stages of the product life cycle?

a.) Introduction b.) Late growth

c.) Maturity

d.) Decline

33. Which of the following statements is TRUE?

a.) If sales revenues are greater than costs, the firm earns a profit.

b.) If sales revenues are less than costs, the firm earns a profit. c.) If costs are greater than sales revenue, the firm earns a profit. d.) All of the statements are incorrect.

34.                                        implies that the information is already available but needs to be collected, sorted, and given meaning in the context of the questions management wants to answer.

a.) Primary data

b.) Secondary data

c.) Hypothetical data d.) Syndicated data

35. What is the calculated retention rate if a firm starts the year with 100 customers and ends the year with 80 of these same customers?

a.) 60 percent

b.) 70 percent

c.) 80 percent

d.) 90 percent

36. Working through third parties like distributors and selling agents is an example of which of the following approaches for acquiring customers?

a.) Independent marketing activities b.) Churning activities

c.) Channel strategies

d.) Firm and business unit acquisitions

37. According to the text, the best-known marketing manifestation of selectivity and concentration is

                                  .

a.) related diversification

b.) identifying and targeting market segments

c.) geographic expansion d.) reverse engineering

38. Which of the following best describes the scenario that starts with the competitor’s current strategy and considers what might emerge?

a.) Emergent scenarios

b.) Unconstrained what-if scenarios c.)   Constrained what-if scenarios d.) Technological scenarios

39. Disadvantages of internal development include all of the following EXCEPT: a.) Resource access

b.) Expertise c.) Time

d.) Cost

40. Which of the following accurately describes the 20:80:20 rule?

a.) 20 percent of the firm’s revenues are derived from 80 percent of its customers, which represents 20% of the firm’s losses.

b.) 20 percent of the firm’s expenses are derived from 80 percent of its customers, which represents 20% of the firm’s losses.

c.) There is an 20 percent probability that a firm will acquire 80 new customers annually. d.) There is a 20 percent probability that a firm will lose 80% of its customers annually.

41. All of the following are examples of internal orientations based on marketing as a philosophy EXCEPT:

a.) operations orientation b.) sales orientation

c.) finance orientation

d.) marketing orientation

42.  All of the following are basic types of secondary data EXCEPT: a Public data

b Company data

c Technical analysis

d Experimentation

43. Practical people with constructive skills who value self-sufficiency are called                                      

according to the VALS Lifestyle Framework. a.) actualizers

b.) achievers c.) strivers

d.) makers

44.                                        is the maximum market-level sales the firm expects to occur in a future time period.

a Target market

b Market potential

c Market share

d Market segment

45. Which of the following is the first of the six marketing imperatives?

a.) Determine and recommend which markets to address

b.) Identify and target market segments c.) Set strategic direction and positioning d.) Design the marketing offer

46. Which of the following marketing imperative states that the firm should design the market offer using the                tools of the marketing mix: product, promotion, distribution (place), and, prices?

a.) Marketing Imperative 1 b.) Marketing Imperative 2 c.) Marketing Imperative 3

d.) Marketing Imperative 4

47. All of the following are characteristics of superior customer databases EXCEPT:

a.) expensive

b.) accessible c.) relevant d.) accurate

48. Which of the following is NOT mentioned in the text as a specific benefit from a reward program?

a.) Makes loyal customers more price-sensitive.

b.) Encourages loyal customers to spend more with the firm.

c.) Stimulates loyal customers to spread positive word of mouth. d.) The firm gains insight into customer behavior.

49. An initial broad approach to defining a market ensures against                                     . a.) product imitation

b.) marketing segmentation

c.) marketing myopia

d.) marketing innovation

50. The                                    is the probability that a customer at the start of the year will still be a customer at the end of the year.

a.) defection rate b.) growth rate

c.) retention rate  d.) discount rate

51. A                                     is uniquely identified, like having a specific size and color. a.) product form

b.) product class

c.) product item

d.) target market

52. Which of the following is NOT an example of a product in the decline stage of the product life cycle?

a.) Carbon paper

b.) Chemical-film cameras

c.) Laptop computers

d.) Videotapes

53. According to the text, all of the following are methods used to increase customer lifetime value EXCEPT:

a.) increase the profit margin

b.) increase the customer retention rate

c.) increase the discount rate

d.) decrease the customer defection rate

54. According to the text, all of the following are approaches to improving customer lifetime value for potential customers EXCEPT:

a.) cutting prices to attract customers

b.) retrieving former customers c.) acquiring new customers

d.) ignoring potential customers

55. The most severe supplier threat is                                   .

a.) forward integration

b.) backward integration c.) cross integration

d.) virtual integration

56.  In which of the following types of projective techniques does the researcher supply a stimulus word to which the respondent offers the first word that comes to mind?

a Word associations

b Role-playing c Story telling d Imagery

57. Which of the following self-orientations of the VALS framework is guided by abstract idealized criteria?

a.) principle-orientation

b.) status-orientation c.) action-orientation d.) people-orientation

58. Which of the following best describes the purchase decision categories is novel and the alternative(s) and potential supplier(s) are often new to the customer?

a.) routinized-response behavior b.) limited problem-solving

c.) extended problem-solving

d.) perceptual problem-solving

59.  Derived from anthropology,                                        is an observational method where researchers spend a day in the life of their customers.

a a focus group b a blog

c ethnographic research

d a wiki

60.                                        has the advantages of being fast and easy to implement and lower cost due to no printing or postage, but the disadvantage of possible non-representative samples because of limited computer use.

a Face-to-face personal interviews b Telephone interviewing

c Mail surveys

d Internet surveys

61. A person exercising indirect influence by providing expertise like specifications can be best described as a                                                               .

a.) gatekeeper

b.) specifier

c.) buyer d.) user

62. A person who provides the firm with the information about the customer is called a(n)

                                            .

a.) information provider

b.) specifier c.)   buyer d.) spoiler

63.                                        concern on the financial aspects like price and credit terms. a.) Functional benefits

b.) Psychological benefits

c.) Economic benefits

d.) Environmental benefits

4.        Which of the following rational decision models is the most studied approach to evaluation and choice?

a.) linear compensatory model

b.) lexicographic model c.) conjunctive model d.) disjunctive model

65. Which of the following best describes the type of family that includes the immediate group of father, mother, and children?

a.) nuclear family

b.) extended family c.) subsidized family d.) situational family

66. Which of the following is the FIRST step in the framework for gaining competitive insight?

a.) Identify

b.) Describe c.) Evaluate d.) Manage

67.                                              includes measures like profitability and market share.

a.) Quantitative data

b.) Qualitative data c.) Subjective data d.) Nominal data

68.                                       are those firms offering similar benefits but with different products, technology, and/or business models?

a.) Direct competitors

b.) Indirect competitors

c.) De novo start-ups

d.) Strategic alliances

69. Examples of which of the following types of data include reverse engineering competitors’ products, benchmarking product design, or disassembling products to estimate manufacturing costs and supply-chain processes?

a Public data

b Company data c Focus groups

d Technical analysis

70. Which of the following is represented by the question: “If I repeat the data collection, would I get the same results?”

a Internal validity

b Reliability

c External validity d Complexity

71. Which of the following is NOT one of the competitive evaluation questions that competitor assessment analysis and game theory helps to answer?

a.) What options does the competitor have to be successful? b.) Is the competitor capable?

c.) What is the profitability index of the firm’s competitor?

d.) oWhat would the competitor have to do to pursue each option?

72. In a competitor’s organization, the behaviors, norms, beliefs, and values that together describe what the competitor stands for and how its members operate and behave is called                                      .

a.) infrastructure b.) processes

c.) culture  d.) value chain

73. The most common causal-factor method for predicting market size is                                    . a judgmental extrapolation

b Delphi method

c linear extrapolation

d multiple regression analysis

74. In which of the following growth approaches does the firm focus on existing products and markets?

a.) Market penetration

b.) Product growth c.) Market growth

d.) Product and market diversification

75. Ski resorts that expand their range of offerings beyond skiing to include ice-skating, downhill sledding, dog-sledding, snowmobiling, and tubing are practicing                                                       .

a.) market expansion b.) product expansion

c.) product extension

d.) market extension