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Chapter 2: Market Analysis

1. Marketing research involves studying company customers and competitors along with the overall industry and environment. Ans: True

2. Effective marketing research begins with a customer analysis. Ans: False

3. Political forces are the part of an environmental analysis that includes laws, regulations, and regulatory agencies that impact marketing. Ans: True

4. Social forces that impact business include changing demographics or population characteristics, shifting cultural and sub-cultural trends, and rising educational levels. Ans: True

5. In an environmental analysis, economic forces include such items as the price and availability of raw materials along with the unemployment rate. Ans: True

6. As the price elasticity of a product increases, managers become less concerned about raising the product's price. Ans: False

7. Technological forces in the environment include new products created by technology as well as product improvements and improvements in production methods. Ans: True

8. Semi-controllable factors in the environment have an impact on a company, but the company's leaders are able to exert some influence to reduce the impact. Ans: True

9. When Looking Fit Tanning Salon conducted an environmental analysis, the marketing team discovered that some states were considering legislation that would make it illegal for anyone under the age of 18 to tan without parental consent. This is an example of an analysis of semi-controllable forces. Ans: False

10. When Looking Fit Tanning Salon's marketing managers conducted an environmental analysis, they found that tanning has become a lifestyle for a large segment of the U.S. population. This is an example of an analysis of competitive forces. Ans: False

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11. When Looking Fit Tanning Salon's marketing managers conducted an environmental analysis, they found that the fastest growing segment of individuals who use tanning salons is females from 16-19 years of age. This is an example of an analysis of economic forces. Ans: False

12. When Looking Fit Tanning Salon's marketing managers conducted an environmental analysis, they found an increase in the demand for new sunless products that provide an immediate cosmetic, tanned look without any UV exposure. This is an example of an analysis of technological forces. Ans: True

13. A competitive analysis involves constant surveillance of ongoing and anticipated industry trends. Ans: True

14. A competitive analysis begins with identifying the various levels of competition and the companies in the various levels. Ans: True

15. In a competitive analysis, the advantage of monitoring the web sites and advertisements of competitors is that the information gathered would be the same as would be seen by customers. Ans: True

16. In a competitive analysis, if a marketing manager wanted to see the competition as other people see them, then the best sources of such information would be web sites and advertisements by the competitors. Ans: False

17. In a competitive analysis, the advantage of collecting information through news articles and from trade and professional organizations is that the information will always be from a neutral source. Ans: False

18. Analyzing the competition can help a marketing manager learn how the organization and its products are perceived by customers. Ans: True

19. Brand parity is the situation where brands are perceived to be highly similar. Ans: True

20. Brand equity is the situation where brands are perceived to be highly similar. Ans: False

21. The two methods marketers use to establish a product's position in the marketplace are product differentiation and market segmentation. Ans: True

22. Product positioning is solely based on the place a good or service occupies in the marketplace relative to its competitors. Ans: False

23. In developing a product positioning approach, one of the components that must be considered is the frame of reference or product category. Ans: True

24. In developing the product positioning approach, one of the components that must be considered is the point of differentiation or uniqueness of the product. Ans: True

25. When BMW marketing materials stress the engineering and handling of the vehicles, the company is using a product positioning strategy based on product attributes. Ans: True

26. When Arm & Hammer advertises that its baking soda is excellent for putting on carpet to make it smell fresh, the company is using a product positioning strategy based on price. Ans: False

27. When positioning a product relative to competitors, the approach works best when a well known-brand is compared to a lesser known brand. Ans: False

28. Apple computers positioned its products as having superior graphics and therefore as being an ideal choice for graphic designers and for use in elementary and high schools. This is an example of positioning by product users. Ans: True

29. Cadillac promotes itself as the elite, best of the luxury cars, which is an example of positioning by attribute. Ans: False

30. The key to successful product positioning is finding a position a brand can occupy that is either unique or superior. Ans: True

31. Perceptual mapping can be used to investigate and determine the optimal market segmentation strategy for a product. Ans: False

32. Perceptual mapping is a useful tool in assessing product positioning because it identifies important purchase criteria and provides a visual representation of where a brand stands in relation to competitors. Ans: True

33. When brand parity exists, the marketing department is often forced to compete on price. Ans: True

34. When brand equity exists, the marketing department is often forced to compete on price. Ans: False

35. Product differentiation can be created in two ways: (1) an actual product difference and (2) the perception of a difference. Ans: True

36. Market segmentation involves categorizing customers into groups and the positioning the firm's product within the group. Ans: False

37. Most marketers understand demographic segmentation. Unfortunately, many stop with demographic variables and do not use psychographic, behavioral, or geographic segmentation to better understand the various market segments. Ans: True

38. Behavioral segmentation variables are used to examine consumer mental characteristics and predispositions connected to purchasing habits. Ans: False

39. Psychographic segmentation variables include personality, lifestyles, activities, interests, and opinions. Ans: True

40. Behavioral segmentation identifies segments by how consumers use a product, the benefits derived from products, and how often the product is purchased and used. Ans: True

41. In the business-to-business sector, demographic segmentation is the same as firmographic segmentation. Ans: True

42. In the business-to-business sector, segmenting by the number of employees or the sales volume of firms is firmographic segmentation. Ans: True

43. In the business-to-business sector, segmenting by quantity purchased or the frequency of purchases is firmographic segmentation. Ans: False

44. Once the market segmentation is complete, the firm's marketing manager must identify the segment or segments to pursue. The most important criterion in this selection process is the growth potential of the market segments. Ans: False

45. When identifying which market segment or segments to pursue, after a good product/market match has been identified, the next step is to examine the levels of competition within the market segments. Ans: False

46. In identifying which market segment or segments to pursue, company leaders will examine the retention potential and the lifetime value of potential customers, because the cost of acquiring new customers is much higher than the cost of retaining current customers. Ans: True

47. In identifying which market segment or segments to pursue, if a market segment is deemed to be viable from the standpoint of size and growth, then the analysis turns to the ability to retain customers and the level of competition within the segment. Ans: False

48. When conducting a customer analysis, the marketing team thinks about the three different types of customers: consumers, other businesses, and non-profit organizations. Ans: True

49. A customer analysis should answer the questions of who, where, when, and what. The “how” has been answered as part of the competitive analysis. Ans: False

50. In terms of conducting a customer analysis, the demographic and psychographic profiles of customers are developed when answering the “what” question. Ans: False

51. In terms of conducting the “where” in a customer analysis, the location or locations in which products are purchased are determined as well as any other products that are typically purchased with it. Ans: True

52. In conducting a customer analysis, the question of “when” is often tied closely to the question of “where.” Ans: True

53. When a problem or desire is triggered, a consumer first conducts an external search in which he or she examines information that can be used to solve the problem. Ans: False

54. During internal information search for information, a consumer who is neutral about the last brand purchased is the most likely to spend at least some time thinking about other brands. Ans: True

55. In an internal search for information, share of mind deals with brand recall and whether the consumer would consider the brand. Ans: False

56. If a brand creates a high share of mind, then it will almost always have a high share of heart. Ans: False

57. When measuring share of mind and share of heart, typically, for most brands, share of heart scores will be higher than share of mind scores. Ans: False

58. As brand parity increases within a product category, there will be less distance separating brands in terms of share of heart scores. Ans: True

59. When a consumer cannot satisfy a need for a good or service identified in an internal search, the individual will conduct an external search for additional information. Ans: True

60. When evaluating alternatives, consumers will evaluate alternative products as well as alternative brands within a product category. Ans: True

61. In evaluating alternatives, the third stage in the consumer decision-making process, consumers choose the brand they like the best or have the most positive feelings toward using the evoked set method of evaluation. Ans: False

62. Brands that a person will not consider for a purchase make up the inert set. Ans: False

63. In evaluating alternative brands, the multiattribute approach tends to be used for low involvement products that are not socially visible. Ans: False

64. The market potential is the total number of individuals, or businesses that could potentially purchase a particular product. Ans: True

65. Market demand is the total current existing demand for a product divided by the market share for each company. Ans: False

66. The sum of all brands sold within a product industry is called market potential. Ans: False

67. Company or brand demand is often referred to as the penetration rate. Ans: False

68. In terms of factors that influence the rate of market penetration, the greater the level of awareness for a new product, normally the higher the penetration rate will be. Ans: True

69. In terms of factors that influence the rate of market penetration, product availability is often an issue early in the release of a new product. Ans: True

70. In estimating brand demand, customer surveys are used in industries where the number of buyers is relatively small. Ans: True

71. For consumer goods companies and other types of high volume sales situations, an excellent method of estimating demand is customer surveys. Ans: False

72. If the sales force estimate approach is used to estimate demand for a product, the estimates provided tend to be inflated when the estimates are not going to be used to set quotas for salespeople. Ans: True

73. All of the quantitative methods of estimating brand demand rely on past sales histories for their projections of future sales. Ans: True

74. For current products on the market in relatively stable markets, quantitative methods of estimating brand demand work well. Ans: True

75. In using trend projections to estimate brand demand, the more demand in the past fluctuates, the more reliable a trend projection becomes. Ans: False

76. In the quantitative methods for estimating demand, the trend projection technique allows for normal business or economic cycles. Ans: False

77. Among the quantitative methods for estimating brand demand, the exponential smoothing method is the most sophisticated form of forecasting and is often the most accurate. Ans: False

78. A market research program typically includes all of the following analyses except A) environmental analysis C) product package analysis B) competitive/industry analysis D) product positioning analysis Ans: C

79. Effective marketing research begins with a(n) A) environmental analysis C) market segment analysis B) competitive/industry analysis D) customer analysis Ans: A

80. An environmental analysis includes monitoring of all of the following forces except A) political forces B) customer forces C) social forces D) economic forces Ans: B

81. An environmental analysis includes monitoring of all of the following forces except A) technological forces C) social forces B) semi-controllable forces D) psychological forces Ans: D

82. In an environmental analysis, which consists of laws, regulations, and regulatory agencies that impact marketing activities? A) political forces C) economic forces B) social forces D) technological forces Ans: A

83. In conducting an environmental analysis, the marketing manager becomes concerned about the possibility that corporate income taxes may be increased during the next legislative session. This is an example of an analysis of A) political forces C) economic forces B) social forces D) technological forces Ans: A

84. In an environmental analysis, which forces that impact businesses include changing demographics or population characteristics, shifting cultural and sub-cultural trends, and rising educational levels? A) political forces C) economic forces B) social forces D) technological forces Ans: B

85. In conducting an environmental analysis, the marketing manager has noticed that most households do not consist of a traditional husband, wife and child group and often include individuals living together, both of the same sex of from different genders. This is an example of an analysis of A) political forces C) economic forces B) social forces D) technological forces Ans: B

86. All of the following are social forces impact marketing except A) aging population as baby boomers retire B) shifting of population from northern and eastern United States to more southern and western states C) demand for greater product quality D) size and composition of family units Ans: C

87. While conducting an environmental analysis, a marketing manager becomes concerned about an increase in the price of gasoline products and the corresponding increase that will this will cause for transportation. This is an example of an analysis of A) political forces C) economic forces B) social forces D) technological forces Ans: C

88. Which not an economic force that impacts marketing? A) levels of economic growth B) employment and unemployment rate C) prices and availability of raw materials D) product safety regulations Ans: D

89. In an environmental analysis, which create new products, product improvements, and improvements in production methods? A) political forces C) economic forces B) social forces D) technological forces Ans: D

90. In an environmental analysis, which impact a company, but company leaders are able to respond and exert some influence in return? A) political forces C) economic forces B) semi-controllable forces D) technological forces Ans: B

91. In an environmental analysis, semi-controllable variables include all of the following except A) raw materials B) the local community C) suppliers D) financial institutions Ans: A

92. When Looking Fit Tanning Salon's marketing team conducted an environmental analysis, they found that California was considering legislation that would make it illegal for anyone under the age of 18 to tan without a doctor's or surgeon's prescription. This is an example of an analysis of A) political forces C) economic forces B) semi-controllable forces D) social forces Ans: A

93. When Looking Fit Tanning Salon's marketing managers conducted an environmental analysis, they found that tanning has become a lifestyle for a large segment of the U.S. population. This is an example of an analysis of A) political forces C) economic forces B) semi-controllable forces D) social forces

Ans: D

94. When Looking Fit Tanning Salon's marketing managers conducted an environmental analysis, they found that the fastest growing segment of individuals who use tanning salons is females from 16-19 years of age. This is an example of an analysis of A) political forces C) economic forces B) semi-controllable forces D) social forces Ans: D

95. When Looking Fit Tanning Salon's marketing managers conducted an environmental analysis, they discovered that tanning involves spending disposable income and therefore it was impacted by local economic conditions. This is an example of an analysis of A) political forces C) economic forces B) semi-controllable forces D) social forces Ans: C

96. When Looking Fit Tanning Salon's marketing managers conducted an environmental analysis, they found an increase in the demand for new sunless products that provide an immediate cosmetic, tanned look without any UV exposure. This is an example of an analysis of A) technological forces C) economic forces B) semi-controllable forces D) social forces Ans: A

97. A competitive/industry analysis involves a(n) A) systematic monitoring of political, economic, and technological forces operating in an industry B) constant surveillance of ongoing and anticipated industry trends C) analysis of social trends that can impact the firm and the industry in which it operates D) monitoring only those firms that are considered to be direct competitors Ans: B

98. When marketing teams do not closely watch competitors and industry trends then the company may fail to A) recognize opportunities and lose customers to competitors B) see problems and as a result lose customer to competitors

C) bid on jobs that allow competitors to win D) see who they are competing with and what advantages the primary competitor may have Ans: A

99. When considering the layers of competition of a discount retailer such as K-Mart, the direct competitors are A) discount stores including Target and Wal-Mart B) specialty stores such as Old Navy, Lane Bryant, and Gap C) department stores such as JC Penney, Belk's, and Dillard's D) other stores, including Bass Pro, Circuit City and Office Depot Ans: A

100. When considering the layers of competition of a fast food restaurant such as Burger King, competitors at the first or primary level of competition would be A) fast food restaurants that have menus similar to Burger King B) restaurants other than fast foods that offer hamburgers and similar menu choices C) fast food restaurants that emphasize other foods such as chicken or pizza and not hamburgers D) all other establishments that sell food Ans: A

101. Once competitors have been identified in the competitive analysis, which question will not be asked? A) What are the competitor's strengths and weaknesses? B) What product positioning strategies do competitors use? C) What is the target market for each competitor?

D) Who are the suppliers for each of the competitors? Ans: D

102. Once competitors have been identified in the competitive analysis, which question will not be asked? A) Who are the customers in each market? B) Why do individuals buy from a competitor? C) What type of political forces do the competitors face? D) What type of marketing programs do the competitors use? Ans: C

103. In conducting a competitive analysis, if a marketing manager wants to gather information that would be similar to or the same as customers would receive, the best sources of such information would be A) news articles B) web sites and advertisements of competitors C) trade and professional associations D) online forums and blogs Ans: B

104. In conducting a competitive analysis, if a marketing manager wants to gather information about competitors from the standpoint of what others think, then the best sources would be A) customers B) web sites and advertisements of competitors C) news articles and trade and professional associations D) web sites, online forums, and blogs Ans: C

105. In conducting a competitive analysis, internal sources of information that can be used by a marketing manager would come from A) the firm's customers and its salespeople B) web sites and advertisements of competitors C) news articles and trade and professional associations

D) online forums, and blogs Ans: A

106. Jeff believes Nike is the best brand of athletic shoes. This is an example of A) brand parity B) brand equity C) brand positioning D) competitive analysis Ans: B

107. When consumers believe a particular company's goods and services are different and better than competing brands, it is called A) brand parity B) brand equity C) brand positioning D) competitive analysis Ans: B

108. When consumers believe there are no real differences among brands, it is called A) brand parity B) brand equity C) brand positioning D) competitive analysis Ans: A

109. Hanna does not believe there are not any significant differences in the brands of computers. This situation is known as A) brand parity B) brand equity C) brand positioning D) competitive analysis Ans: A

110. The two methods marketers use to establish a product's position in the marketplace are A) product price and product quality B) product differentiation and market segmentation C) product distribution and product promotion D) product price and product differentiation Ans: B

111. Product positioning involves the place a good or service occupies in the mind of consumers A) relative to its brand equity C) relative to the competition B) relative to its brand parity position D) relative to its price and performance Ans: C

112. In developing a product positioning statement, which is not one of the components to be considered? A) the target audience C) the frame of reference or category B) the good or service D) the price Ans: D

113. Which is not a product positioning strategy? A) value B) attributes C) use or application D) competitors Ans: A

114. Which is not a product positioning strategy? A) product user B) product image C) product class D) cultural symbol Ans: B

115. In positioning a product by which approach suggests the brand has a unique feature that is superior in some way? A) attribute B) use or application C) competitors D) product user Ans: A

116. An advertisement by Toyota for its hybrid car touts the excellent gas mileage the vehicle gets. This is an example of product positioning by A) attribute B) use or application C) product class D) product user Ans: A

117. Which positions a product by the ways it is used? A) attribute B) use or application C) competitors D) product user Ans: B

118. Scott developed a fertilizer that is excellent for pastures and is not poisonous or harmful to livestock. This is an example of product positioning by A) attribute B) use or application C) product class D) product user Ans: B

119. Ford ran a series of ads showing how the F-150 is a better vehicle than a truck made by Chevrolet. This is an example of product positioning by A) attribute B) competitor C) product class D) product user Ans: B

120. When using the product positioning strategy of comparing the brand to a competing brand, it works best if a A) lesser known brand is compared to a well-known brand B) lesser known brand is compared to another brand that is not as well known C) well-known brand is compared to another well-known brand D) well-known brand is compared to a lesser known brand Ans: A

121. Which positions a product by suggesting the brand is superior for a specific segment of consumers? A) attribute B) use or application C) product class D) product user Ans: D

122. For individuals who are on a low-sodium diet, V8 has created a 100% vegetable juice that is low on sodium, contains no fat, and only has 50 calories. This is an example of product positioning by A) attribute B) use or application C) product class D) product user Ans: D

123. Orange juice has always been considered a breakfast drink. Recently, the orange juice industry has tried to re-position orange juice as being a beverage that can be consumed at anytime of the day. This is an example of product positioning by A) attribute B) use or application C) product class D) product user Ans: C

124. Which positions a product by suggesting the brand is superior within a product category? A) attribute B) use or application C) product class D) product user Ans: C

125. Wal-Mart has activity promoted the store as having “everyday low prices” and the price leader in the retail industry. This is an example of product positioning by A) attribute C) product class B) use or application D) price/quality relationship Ans: D

126. Stetson ran a series of advertisements that connected the cologne to the symbolism of a rugged, American cowboy. This is an example of product positioning by A) attribute B) cultural symbol C) product class D) price/quality relationship Ans: B

127. Perceptual mapping can be used to investigate and determine which type of strategy for a product? A) pricing C) product positioning B) marketing segmentation D) product differentiation Ans: C

128. Perceptual maps may help a marketing team determine how to proceed in strengthening or changing a product's position. Two approaches that may be used to reach these goals are A) product differentiation and market segmentation

B) product pricing and product quality C) product differentiation and industry differentiation D) changing the criteria consumers use to determine a purchase and the importance of each of the criteria Ans: A

129. When brand parity exists, marketing departments are often forced to compete based on A) quality B) value C) product differences D) price Ans: D

130. When a high level of brand equity is present, the marketing team can focus on A) perceived quality C) unique differences and advantages B) value and image D) price Ans: C

131. Product differentiation can be created in two ways: A) perceived quality and value B) an actual difference or a perceived difference C) unique differences and product advantages D) price and quality Ans: B

132. Categorizing customers into groups and identifying the characteristics of each of these groups is A) market segmentation C) market development B) product positioning D) product differentiation Ans: A

133. Demographic segmentation variables include all of the following except A) gender B) personality C) age D) ethnicity Ans: B

134. Psychographic segmentation variables include all of the following except A) lifestyles B) personality C) activities D) benefit Ans: D

125. The AIO measures of activities, interests, and opinions are part of which type of segmentation? A) demographic B) psychographic C) behavioral D) geographic Ans: B

136. Marlene is part of a consumer segment that enjoys outdoor activities, such as hiking, camping, and outdoor sports. Her life revolves around spending time outdoors. This would be an example of which type of consumer segmentation. A) demographic B) psychographic C) behavioral D) geographic Ans: B

137. Which type of consumer segmentation is used to examine mental characteristics and predispositions that are connected to purchasing habits? A) Demographic B) Psychographic C) Behavioral D) Geographic Ans: B

138. Which is not used for consumer segmentation? A) demographics B) psychographics C) firmographics D) behavioral Ans: C

139. Which is not a behavioral segmentation variable? A) lifestyles B) usage rate C) occasion D) benefit Ans: A

140. Which segmentation variable would not be used for the consumer market for swimsuits? A) gender B) occasion C) age D) activities Ans: B

141. Which type of segmentation identifies segments by how consumers use a product, the benefits they derive from that product, and how often the product is purchased or used. A) Demographic B) Psychographic C) Behavioral D) Geographic Ans: C

142. Which is not a form of behavioral segmentation? A) benefit B) usage rate C) occasion D) activities Ans: D

143. A large number of flowers are sold on Valentine's Day and, as a result, florists often target men with advertisements that encourage them to purchase flowers for their female significant others. The primary method of consumer segmentation being used is A) demographic B) psychographic C) behavioral D) geographic Ans: C

144. Which type of segmentation targets the location of a company or the location of potential buyers. A) Demographic B) Psychographic C) Behavioral D) Geographic Ans: D

145. In the fitness industry, a common method of segmenting the market is asking why individuals exercise. Responses tend to be to lose weight, to maintain a healthy body, or to build muscle mass. This is an example of which type of segmentation? A) demographic B) psychographic C) behavioral D) geographic Ans: C

146. In business-to-business segmentation, which variables include the number of employees, sales volume, and number of locations? A) demographic or firmographic C) behavioral B) psychographic D) geographic Ans: A

147. In business-to-business segmentation, which variables include the ways a company conducts business, how decisions are made, and factors such as the firm's culture, growth orientation, and customer focus? A) demographic or firmographic C) behavioral B) psychographic D) geographic Ans: B

148. In business-to-business segmentation, which variables consist of the benefits a company derives from a product, the quantity purchased, the frequency of purchases, the timing of purchases, and the occasions for which the product is purchased? A) demographic or firmographic C) behavioral B) psychographic D) geographic Ans: C

149. In business-to-business segmentation, which type of segmentation refers to the actual location of the business? A) demographic or firmographic C) behavioral B) psychographic D) geographic Ans: D

150. Manufacturers of various automobile parts have built factories around large automobile assembly plants. Which type of segmentation is being used? A) demographic or firmographic C) behavioral

B) psychographic D) geographic Ans: D

151. All of the following are criteria that must be considered when identifying which segment or segments are firm should pursue. The most important, however, is A) product/market match C) sales potential B) segment size D) growth potential Ans: A

152. In identifying which market segment or segments to pursue, after it has been decided there is a good product/market match, the next step is to examine A) reachability B) responsiveness and retention potential C) segment size, sales potential, and growth potential D) level of competition Ans: C

153. In identifying which market segment or segments to pursue, when a market segment is deemed to be viable from the standpoint of size and growth, the analysis turns to A) reachability and responsiveness C) retention potential B) level of competition D) product/market match Ans: A

154. A company's marketing team wants to sell products directly over the Internet but is concerned about the potential negative impact on channel members that also sell the products. The best strategy for the firm is to A) offer only product information online and then refer customers to one of the channel members to make the purchase B) offer the customer a choice. They can make the purchase online or from one of the channel members C) sell the product for the same price that channel members sell it for D) increase the price for an online purchase so customers will prefer purchasing from the channel members Ans: A

155. In order to develop effective marketing plans, the goal of a customer analysis is to A) learn what the competition is doing B) collect detailed information about customers

C) determine the best product differentiation approach D) collect sales and purchase data Ans: B

156. In terms of a customer analysis, the who A) involves determining the most likely times a product is purchased B) is a crucial issue because it examines the benefits sought by customers C) provides a demographic and psychographic profile of customers D) identifies the location or locations where the product is purchased Ans: C

157. Gary is the marketing manager for a large sporting goods store. He has determined his primary customer is males, ages 18-40, who love the outdoors. This is an example of which part of a customer analysis? A) who B) how C) when D) what Ans: A

158. In terms of a customer analysis, the where A) involves determining the most likely times a product is purchased B) is a crucial issue because it examines the benefits sought by customers C) provides a demographic and psychographic profile of customers D) identifies the location or locations where the product is purchased Ans: D

159. Randy is the marketing manager for a consumer goods manufacturer. He has determined that customers often purchase breakfast bars when they purchase hot breakfast foods. This is an example of which part of the customer analysis? A) where B) how C) when D) what Ans: A

160. Renee is responsible for analyzing the various sites a person goes to before and after visiting her company's website. This is an example of which part of a customer analysis? A) where B) how C) when D) what Ans: A

161. When Ford Motor Company developed the retro Mustang that looked like the original 1960s model in 2005, the marketing team did so knowing that baby boomers would see the opportunity to “relive their teenage years.” This is an example of which part of a customer analysis? A) where B) how C) when D) what Ans: D

162. In conducting the "when” component of the customer analysis, it is often tied closely with which part of the customer analysis? A) where B) how C) when D) what Ans: A

163. In terms of a customer analysis, the "when" A) involves determining the most likely times a product is purchased B) is a crucial issue because it examines the benefits sought by customers C) provides a demographic and psychographic profile of customers D) identifies the location or locations where the product is purchased Ans: A

164. In terms of a customer analysis, the "what" A) involves determining the most likely times a product is purchased B) is a crucial issue because it examines the benefits sought by customers C) provides a demographic and psychographic profile of customers D) identifies the location or locations where the product is purchased Ans: B

165. In terms of a customer analysis, the "how" A) involves determining the most likely times a product is purchased B) is a crucial issue because it examines the benefits sought by customers C) provides a demographic and psychographic profile of customers D) involves the entire process used in making a purchase Ans: D

166. The first step in the consumer decision-making process is A) evaluation of alternatives C) problem recognition B) information search D) purchase decision

Ans: C

167. The second step in the consumer decision-making, following the problem recognition sate, is A) evaluation of alternatives C) the purchase decision B) information search D) post-purchase evaluation Ans: B

168. When a problem or desire has been triggered, a consumer will first A) conduct an external search C) identify alternative solutions B) conduct an internal search D) determine if the need is real Ans: B

169. Mindy realizes she needs deodorant because she has run out. If she was satisfied with the last brand she purchased, then in terms of the information search stage of the consumer decision-making process, Mindy is mostly likely to A) spend some time searching externally for information B) purchase the same brand and not go beyond an internal search for information C) consider other brands to make she has purchased the right one D) think about all the various brands she has purchased in the past Ans: B

170. In an internal information search, share of mind A) refers to how much knowledge a consumer has of a particular brand as compared to competing brands B) refers to the amount of time spent on internal information search C) deals with brand recall and whether or not the brand is typically located in consumers' minds D) reflects attitudes or feelings toward a brand and the consumer's willingness to purchase the brand Ans: C

171. In an internal information search, share of heart A) refers to how much knowledge a consumer has of a particular brand as compared to competing brands B) refers to the amount of time spent on internal information search C) deals with brand recall and whether or not the brand is typically located in consumers' minds

D) reflects attitudes or feelings toward a brand and the consumer's willingness to purchase the brand Ans: D

172. Scot Hamels is the marketing manager for a local convenience store. He surveyed 300 individuals in town through random telephone calls. He asked each respondent to identify the first two brands of convenience stores that come to mind. This is an example of measuring A) product positioning C) share of heart B) share of mind D) internal information search processes Ans: B

173. In terms of the relationship between share of mind and share of heart, which of the following statements is false? A) Usually only one or two brands per industry achieve high scores for both. B) It is more common for a brand to score high in share of mind and low in share of heart. C) The share of heart score can be higher than the share of mind score. D) As brand parity increase, the distance between the brands in terms of share of heart declines. Ans: C

174. In terms of understanding the relationship between share of mind and share of heart, the best relative position for a brand to occupy would be to be A) high in share of mind and high in share of heart B) high in share of mind and low in share of heart C) low in share of mind and low in share of heart D) low in share of mind and high in share of heart Ans: A

175. The third step in the consumer decision-making, following the information search, process is A) evaluation of alternatives C) the purchase decision B) problem recognition D) post-purchase evaluation Ans: A

176. In the consumer decision-making process, when consumers evaluate alternatives, which method involves consumers choosing the brand (or product) that they like the best or have the most positive feelings towards? A) affect referral B) evoked set C) multiattribute D) inert Ans: A

177. When evaluating the different brands of HD televisions, Carmen chose Panasonic because she likes the Panasonic brand the best. She has purchased Panasonic products in the past and has really liked them. Which method of evaluating alternatives is being used? A) affect referral B) evoked set C) multiattribute D) inert Ans: A

178. In the consumer decision-making process, when consumers evaluate alternatives, which method models circumstances in which a consumer chooses from a set of brands that are viewed as being acceptable? A) affect referral B) evoked set C) multiattribute D) inert Ans: B

179. When evaluating the different brands of HD televisions, Carmen considered three different brands, which she considered to be of equal quality. She finally chose Panasonic, but could have gone with the other two. Which method of evaluating alternatives is being used? A) affect referral B) evoked set C) multiattribute D) inert Ans: B

180. In evaluating alternatives, which is the set of brands that a consumer would choose from? A) evoked B) inert C) inept D) hybrid Ans: A

181. In evaluating alternatives, which is the set of brands the consumer will not purchase? A) evoked B) inert C) inept D) hybrid Ans: C

182. In evaluating alternatives, which set contains the brands the consumer knows little or nothing about? A) evoked B) inert C) inept D) hybrid Ans: B

183. Mia had a bad experience at a particular restaurant and will never eat there again. This restaurant would be part of which set of brands? A) evoked set B) inert set C) inept set D) referral set Ans: C

184. Mia wants to purchase a new microwave for her apartment. She notices several different brands on the store shelf she has no knowledge of at all. These brands are part of her A) evoked set B) inert set C) inept set D) referral set Ans: B

185. In the consumer decision-making process, when consumers evaluate alternatives, which method is used for high involvement products and considers each brand's performance on attributes that the consumer feels is important. A) affect referral B) evoked set C) multiattribute D) inert Ans: C

186. When evaluating the different brands of HD televisions, Carmen knows that no one brand will have all of the features she wants. Therefore, she compares the various brands across the attributes she thinks are important and chooses Sony because it scored the best overall. Which method of evaluating alternatives is being used? A) affect referral B) evoked set C) multiattribute D) inert Ans: C

187. The total number of individuals, or businesses, that could potentially purchase a particular product is A) market demand C) company demand B) market potential D) market share Ans: B

188. The total current existing demand for a product, which is the sum of all brands sold within a product industry, is A) market demand C) company demand B) market potential D) market share Ans: A

189. The demand for a particular company's brand is A) market demand C) company or brand demand B) market potential D) industry demand Ans: C

190. Market share measures A) market demand C) company or brand demand B) market potential D) industry demand Ans: C

191. In terms of demand, the penetration rate is the A) market demand divided by market potential B) company or brand demand divided by market potential C) market share divided by market demand D) company or brand demand divided by market demand Ans: A

192. If the market potential for a product is 40 million, the market demand is 16 million, and Brand X demand is 4.8 million, then the market share for Brand X is A) 40% B) 30% C) 12% D) 3% Ans: A

193. If the market potential for a product is 40 million, the market demand is 16 million, and Brand X demand is 4.8 million, then the penetration rate is A) 40% B) 30% C) 12% D) 3% Ans: A

194. All of the following factors influence the market penetration rate for a new product except A) lack of financial resources C) current market demand B) availability of substitutes D) lack of attractive benefits Ans: C

195. Which of the following factors does not influence the market penetration rate for a new product? A) lack of financial resources B) individuals or businesses not aware of the product C) current market demand D) product is not available Ans: C

196. Which is not a primary method of estimating brand demand? A) customer surveys C) sales force estimates B) competitor surveys D) executive opinions Ans: B

197. Which of the following are quantitative methods is not used to estimate brand demand? A) customer surveys C) moving averages B) trend projections D) exponential smoothing Ans: A

198. When estimating brand demand using customer surveys, which statement is false? A) Should be used in industries where the number of buyers is relatively small. B) Should be used in industries where the cost per item is relatively high. C) Is accurate in business-to-business markets where there are limited number of customers. D) Is accurate in business-to-business markets where the projection of future needs are relatively stable. Ans: B

199. The Delphi method of arriving at a brand demand estimate is normally used with which approach? A) customer survey C) executive opinion B) sales force estimate D) quantitative method Ans: C

200. Of the following methods of estimating brand demand, the method that is the most likely to produce biased results is A) customer surveys C) executive opinions B) sales force estimates D) quantitative methods Ans: B

201. Of the following methods of estimating brand demand, which method utilizes historical data to predict future demand? A) customer surveys C) executive opinions B) sales force estimates D) quantitative methods Ans: D

202. Which of the following statements about using quantitative methods to estimate brand demand is false? A) They work well for relatively stable markets. B) They are not as effective when markets experience high levels of fluctuations. C) They are less accurate when significant changes in sales are related to extraneous environmental events.

D) They work well for industries with few buyers and unstable environments. Ans: D

203. Among the quantitative methods for estimating brand demand, which method allows for normal business cycles and economic cycles? A) trend projection C) exponential smoothing B) moving average D) regression analysis Ans: B

204. Among the quantitative methods for estimating brand demand, which method involves adjusting the prediction by a calculation that accounts for any variance in the last period's forecast. A) trend projection C) exponential smoothing B) moving average D) regression analysis Ans: C

205. Among the quantitative methods for estimating brand demand, which method can identify variables that have an impact on demand and how much of an impact each has? A) trend projection C) exponential smoothing B) moving average D) regression analysis Ans: D

206. Among the quantitative methods for estimating brand demand, which method is the most sophisticated form of forecasting and is also often the most accurate? A) trend projection C) exponential smoothing B) moving average D) regression analysis Ans: D

207. If a company spent $125,000 on a direct mail campaign and analysis of results shows the company generated $133,00 in additional revenue, the contribution margin would be A) $8,000 B) -$8,000 C) $133,000 D) there is insufficient data to make the calculation Ans: A

208. If a product sells for $4.39 and the cost per unit to produce it is $3.12, the contribution margin would be A) $4.39 B) $1.27 C) -$1.27 D) there is insufficient data to make the calculation Ans: B

209. If the fixed costs to produce a new product is $100,000, the price per unit is $20.00 and the variable costs per unit is $15.00, then the breakeven point in units is A) 5,000 B) 6,666 C) 20,000 D) there is insufficient data to make the calculation Ans: C

210. What analyses are involved in a typical marketing research program? Ans: 1. Environmental analysis 2. Competitive/Industry analysis 3. Product positioning analysis 4. Market segment analysis 5. Customer analysis

211. Identify the factors or forces that are part of an environmental analysis. Ans: Political forces, social forces, economic forces, technological forces, and semi- controllable forces

212. What is the difference between brand parity and brand equity? Ans: Brand parity is the situation where brands are viewed to be highly similar. Brand equity is the opposite, the brands are perceived to be different and better.

213. What are the two methods marketers use to develop a position for a product in the marketplace? Ans: 1. Product differentiation 2. Market segmentation

214. What are the two central components or tenets of product positioning? Ans: Product positioning involves the place a good or service occupies: (1) in the minds of consumers and (2) relative to the competition.

215. When developing a product positioning approach, what are the four components to be considered? Ans: 1. Target audience 2. Good or service being sold 3. Frame of reference or category 4. Point of differentiation or uniqueness

216. Name the seven product positioning strategies that can be used. Ans: 1. Attributes 2. Use or application 3. Competitors 4. Product user 5. Product class 6. Price/quality relationship 7. Cultural symbol

217. What are the three conditions for a market segment to be viable? Ans: 1. A distinct group can be identified. 2. Members of the group have money to spend. 3. Members of the group are willing to spend money on a specific good or service.

218. What are the four major categories of consumer segmentation? Give an example of each. Ans: 1. Demographic - gender, age, income, ethnicity, and generations 2. Psychographic - personality, lifestyle, activities, interests, opinions 3. behavioral - benefit, usage rate, occasion 4. Geographic - city, county, state, region, country

219. Identify the five steps in the consumer decision-making process. Ans: 1. Problem recognition 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post-purchase evaluation

220. What are the three methods of evaluating alternatives? Ans: 1. Affect referral 2. Evoked set 3. Multiattribute

221. What factors influence the penetration rate for a product and how quickly market demand grows? Ans: 1. Lack of financial resources 2. Availability of substitutes 3. Lack of attractive benefits 4. Product not available

5. Unaware of product

222. Identify the components of an environmental analysis and explain what each component entails. Ans: 1. Political forces are laws, regulations, and regulatory agencies that impact marketing activities. It also includes actions of governments. 2. Social forces that impact businesses include changing demographics or population characteristics, shifting cultural and sub-cultural trends, and rising educational levels. 3. Economic forces are all of the factors that have an impact on a product's market in a given region, such as prices and availability of raw materials, economic growth, and unemployment rate. 4. Technological forces include new products created by technology as well as product improvements and improvements in production methods. 5. Semi-controllable forces create an impact on a company, but company leaders are able to respond and exert some influence in return.

223. A competitive analysis begins with identifying the various levels of competition. Discuss these different levels of competition and why it is an important component of a competitive analysis. Ans: The first level would be primary competitors that operate in the same market and industry. The second level would be competitors that sell similar type goods or services. The third level would be substitute-type goods or services. The fourth and outer layers would be companies that are competing for the same dollars, but do not operate in the same industry.

224. Once competitors have been identified, what are some of the questions that should be investigated? Ans: What are the competition's strengths and weaknesses? What product positioning strategies do competitors use? What is in the target market for each competitor? Who are the customers in each market? Why do individuals buy from a competitor? What makes the product unique or attractive? What types of marketing programs do the competitors use? How does the competition promote and/or advertise products? What competitive advantage do they seem to possess or promote?

225. Discuss the various sources of competitive information that companies can use without reverting to spying or espionage. Ans: Sources of information include web sites, advertisements, news articles, trade and professional associations, online forums and blogs, competing products and locations, customers, and salespeople.

226. Identify the sources of information that a marketing manager can use to collect competitive information. What types of information can be gathered from each. Ans: 1. Web sites and advertisements of competitors will allow the manager to see the company as customers would see it. 2. Views of other people come from news articles, trade and professional associations, online forums, and blogs. 3. Information can be gained personally through reverse engineering competing products and visiting their locations of business. 4. Internally, a firm can talk to their customers and their own salespeople.

227. Identify the seven product positioning strategies that can be used for a product and describe each one. Ans: 1. Attribute - focus on a unique feature of the product. 2. Use or application - focus on how the product is used. 3. Competitors - compare the product to a competitor, normally a market leader. 4. Product user - focus on who uses the product. 5. Product class - position the product in a particular class of products as being the best. 6. Price/quality relationship - stress either value and low price, or high quality. 7. Cultural symbol - identify the product with a particular symbol or artifact in culture.

228. What is perceptual mapping and how can it be used? Ans: Perceptual mapping is used to investigate and determine the optimal product positioning strategy for a product. A perceptual map has 2 or 3 axis, normally, based on the most important criteria in making the purchase decision. The perceptual map will show how the product is viewed by consumers as compared to competing brands. The perceptual map can provide information on the best product positioning strategy.

229. When is product differentiation used and how is it created? Ans: Product differentiation can be used in brand parity situations to create a perceived or actual differences. In brand equity situation, product differentiation would focus on actual differences and advantages of those differences.

230. Once the market segmentation process is complete, the firm's marketing managers must decide on which segment or segments to pursue. Discuss the criteria that should be used to make this decision. Ans: The following criteria should be used to identify the most profitable segments: 1. Product/market match 2. Segment size 3. Sales potential 4. Growth potential 5. Reachability 6. Responsiveness 7. Retention potential

8. Level of potential

231. Selling products over the Internet can provide a business with additional sales and direct contact with customers; yet this can potentially be detrimental for a firm. Why? Ans: If the products are being sold by other channel members, companies must give careful consideration to the impact it may have on those wholesalers and retailers. Purchases made over the Internet mean lost sales for channel members. This may create an adverse situation where the channel members reduce selling efforts of the company's products. To keep this from happening, some companies offer product information

232. Identify the “W's” in the customer analysis and explain what each represents. Ans: The “W's” are: 1. The who provides a demographic and psychographic profile of customers. 2. The where identifies the location or locations where the product is purchased 3. The when involves determining the most likely times a product is purchased 4. The what is a crucial issue because it examines the benefits sought by customers 5. The how involves how purchases are made and the decision-making process

233. Explain the concepts of share of mind and share of heart. Why are they important? Ans: Share of mind is the top one or two brands recalled from memory, while share of brand is the most preferred brand or brands. Share of mind identifies how well a firm has gotten their brand name out and how well it is lodge in people's minds. Share of heart identifies consumers' preferences for the brand.

234. Identify and explain the three primary methods consumers use to evaluate alternative products and brands. Ans: 1. Affect referral - the consumer purchases the brand he or she likes the best, or has the most positive feelings toward. 2. Evoked set - the consumer chooses from a group of brands that are considered feasible. 3. Multiiattribute - the consumer compares brands across multiple attributes and chooses the brand that scores the best overall.

235. Discuss the terms market potential, market demand, market share, and penetration rate. Ans: Market potential is the total number of individuals, or businesses, that could potentially purchase a product. Market demand is the sum of all brands sold within a product category and is total existing demand. Market share is the demand for a particular brand. Penetration rate is the market demand divided by the market potential.

236. The market potential for cell phones in China is 835 million. The current demand is 276 million. LG has sold 27 million phones. What is LG's market share? Ans: 9.8% (27/276)

237. The market potential for cell phones in China is 835 million. The current demand is 276 million. LG has sold 27 million phones. What is the market penetration rate of cell phones in China? Ans: 33.1% (276/835)

238. Identify and discuss the factors that influence the market penetration rate for a new product. Ans: 1. Market penetration is affected by the number of people or businesses that are aware of the product. 2. Product availability can be an issue early in the release of a new product. 3. Lack of attractive benefits can slow the adoption of a new product. 4. If comparable substitutes are available, then the penetration rate is slower. 5. Lack of financial resources. While consumers may like a new product, they may not have resources to purchase it.

239. Identify and describe the four major methods of estimating brand demand. What are the advantages and disadvantages of each? Ans: 1. Customer surveys are used in industries where the number of buyers is relatively small. These types of surveys are relatively accurate in business-to- business markets where there are a limited number of customers and projections of future needs are relatively stable. 2. For consumer good companies and other types of high volume sales situations, a sales force estimate is often used. When asking members of the sales force for estimates, researchers must be careful about how the information is gathered and how it is used to avoid a bias in the estimates. The goal is to avoid biasing results. When the estimates are used to set sales quotas, the salespeople tend to provide lower numbers so the quotas are not as difficult to reach. When the estimates are not used for quotas, then salespeople might be more optimistic and suggest higher numbers. Many companies use the latter method and then adjust the sales estimates with a set reduction percentage, knowing that salespeople tend to inflate what they believe they will sell. 3. A third approach is executive opinion. This method avoids some of the pitfalls of the sales force estimate since experts and/or executives are asked their opinion. Typically this method employs the Delphi technique to arrive at the final demand estimate. The Delphi method involves receiving an initial estimate from each executive. The first batch is then sent back to the group. Members are asked to re- evaluate their initial estimate and send in a new one based on a review of what other executives submitted. This iterative process continues until all of the executives agree on a specific number or range for the forecast. The advantage of the executive opinion approach is that company leaders often have the most specific knowledge about the market. It may, however, be hard to recruit executives to participate and if the Delphi method is used, because it can become time consuming. 4. For current products on the market, quantitative methods are often used. These base future projection on past sales histories. They work well for relatively stable markets. They are not as effective when markets experience high levels of

fluctuation, or are not stable. Quantitative methods are also less accurate when significant changes in sales are related to extraneous environmental events.

240. The sales revenue for a company is $538,200. The cost of goods sold is 60%. The company spent $42,000 on promotions and $25,000 on advertising. What is the contribution margin in dollars and in percen? Ans: Revenue $538,200 C of G Sold (%) 60% C of G Sold $322,920 Promotions $42,000 Ad Expenditures $25,000 Contribution ($) $148,280 Contribution (%) 27.55%

241. The sales revenue for a company is $623,400 and the cost of goods sold is $382,000. The company spent $47,000 on marketing. What is the contribution margin in dollars in in percent? Ans: Revenue $623,400

C of G Sold $382,000 Marketing $47,000

Contribution ($) $194,400 Contribution (%) 31.18%

242. The selling price of a product is $19.99 and the cost to produce it is $13.99. Fixed costs are estimated to be $42,000. How many units must be sold to break even? Ans: Selling price $19.99 Variable costs $13.99 Contribution Margin $6.00 Fixed costs $42,000 Break-even 7,000

243. A new product costs $8.50 to produce and will sell for $12.70. Fixed costs are estimated at $210,000. What is the break even number of units? Ans: Selling price $12.70 Variable costs $8.50 Contribution Margin $4.20 Fixed costs $210,000 Break-even 50,000

244. Sales for Litsch Services for 2006 through 2009 are listed below. Based on a linear regression model, the trend line was estimated at $28,0000. Using trend analysis, what would be the sales forecast for 2010? 2006 Sales $448,200 2007 Sales $452,000 2008 Sales $482,500 2009 Sales $477,000 Ans: $505,000 (477,000+28,000)

245. Sales for Litsch Services for 2006 through 2009 are listed below. Based on a linear regression model, the beta coefficient was 15,0000. Using trend analysis, what would be the sales forecast for 2010? 2006 Sales $448,200 2007 Sales $452,000 2008 Sales $482,500 2009 Sales $477,000 Ans: $492,000 (477,000+15,000)

246. Sales for Litsch Services for 2006 through 2009 are listed below. Using a 3-month moving average, what is the sales forecast for 2010? 2006 Sales $448,200 2007 Sales $452,000 2008 Sales $482,500 2009 Sales $477,000 Ans: $470,500 (452,000+482,500+477,000/3)

247. Sales for Litsch Services for 2006 through 2009 are listed below. The forecast for 2009 was $503,000. Based on a smoothing coefficient of 0.25, use the exponential smoothing procedure to forecast sales for 2010. 2006 Sales $448,200 2007 Sales $452,000 2008 Sales $482,500 2009 Sales $477,000 Ans: $483,500 (477,000*.75+503,000*.25)

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