Practice Test #2 Test Answers – Flashcards
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Which of the following statements is true of marketing? a) Marketing should begin with the production process followed by potential customer needs. b) Marketing only occurs when two or more parties are willing to exchange one thing for another thing. c) Marketing activities are limited to selling and advertising. d) Marketing only applies to for-profit (not nonprofit) organizations. e) A marketing exchange focuses on making a single transaction.
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Answer = b, Marketing only occurs when two or more parties are willing to exchange one thing for another thing. Marketing focuses on facilitating exchanges. In fact, marketing does not occur unless two or more parties are willing to exchange something for something else. For example, in a pure subsistence economy—when each family unit produces everything it consumes—there is no need to exchange goods and services and no marketing is involved.
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From the perspective of macro-marketing, the discrepancy between the small quantity of a product that individual consumers need and the large quantity that firms produce exists because a) businesses can satisfy customers better when they have b) large inventory surpluses. c) firms seek to benefit from economies of scale. it is necessary to achieve customer satisfaction. d) society has evolved past a subsistence economy. e) businesses prefer to store products for long periods.
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Answer = c, firms seek to benefit from economies of scale. Many manufacturers prefer mass production with its economies of scale, which means that as a company produces larger numbers of a particular
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Which of the following activities is part of the production process? a) making goods or performing services b) identifying competing companies c) estimating the prices potential customers are willing to pay d) determining how many people will want to purchase goods or services e) deciding whether to sell goods directly to consumers or through retailers
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Answer = a, making goods or performing services Production refers to the process of actually making goods or performing services. Marketing, on the other hand, provides needed direction for production and helps make sure that the right goods and services are produced in the necessary amounts, and that they find their way to consumers.
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What is the purpose of a S.W.O.T. analysis? a) to identify a company's weaknesses so it can develop a plan to correct them b) to study the competition and determine their strengths and weaknesses c) to develop screening criteria that will help a company identify what marketing strategy to pursue d) to spot threats to a company's marketing strategy and devise ways to strengthen that strategy to overcome them e) to generate a list of opportunities that are a good fit for a company's current marketing strategy
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Answer = c, to develop screening criteria that will help a company identify what marketing strategy to pursue A S.W.O.T. analysis aids a company in developing a marketing strategy by helping it to develop screening criteria.
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Target marketing differs from mass marketing in that target marketing a) is tailored to fit some specific target customers while mass marketing aims at everyone with roughly the same marketing mix. b) is more effective than mass marketing, but is only practical for large firms with significant resources. c) is limited to large market segments while mass marketing is limited to markets that are small and clearly defined. d) considers everyone to be a potential customer while mass marketing considers only a specific group or groups of people to be potential customers. e) is limited to fairly heterogeneous market segments while mass marketing is limited to fairly homogeneous market segments.
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Answer = a, is tailored to fit some specific target customers while mass marketing aims at everyone with roughly the same marketing mix Target marketing involves creating a marketing strategy that is focused on a particular group of customers. In contrast, mass marketing—the typical production-oriented approach—vaguely aims at "everyone" with the same marketing mix.
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Which of the following is true of publicity? a) It involves the internal marketing of a product or service. b) It involves the use of coupons, samples, events, and contests. c) It is a form of personal communication. d) It is an unpaid form of communication. e) It is explicitly sponsored by an advertiser.
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Answer = d, It is an unpaid form of communication. Publicity refers to any unpaid form of nonpersonal presentation of ideas, goods, or services—including getting favorable coverage in newspaper stories or on television.
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Which of the following statements is true of target marketing? a) Target marketing considers everyone to be a potential customer. b) Target marketing vaguely aims at "everyone" with the same marketing mix. c) Target marketing applies only for small market segments. d) Target marketing is limited to fairly homogeneous market segments. e) Target marketing is typical of a production-oriented approach.
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Answer = d, Target marketing is limited to fairly homogeneous market segments. Target marketing is not limited to small market segments—only to fairly homogeneous ones. A very large market—even what is sometimes called the "mass market"—may be fairly homogeneous, and a target marketer will deliberately aim at it.
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Which of the following federal laws passed by the U.S. Congress prohibits fake advertising allowances and limits quantity discounts? a) Clayton Act b) Magnuson-Moss Act c) Consumer Product Safety Act d) Sherman Act e) Robinson-Patman Act
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Answer = e, Robinson-Patman Act The Robinson-Patman Act seeks prohibits "fake" advertising allowances and limits quantity discounts.
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Which of the following is true of the economic environment? a) It can change rapidly. b) It has little effect on what customers buy. c) It is only of concern when changes are widespread. d) It is only important in wealthy countries. e) It refers to micro-economic factors.
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Answer = a, It can change rapidly. The economic environment refers to macro-economic factors that affect patterns of consumer and business spending such as national income, economic growth, and inflation. The rise and fall of the economy in general, within certain industries, or in specific parts of the world can have big impacts on what customers buy. Changes in the economic environment can happen rapidly.
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Which of the following is not an element of the external market environment? a) political and legal environment b) economic environment c) direct environment d) cultural and social environment e) technological environment
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Answer = c, direct environment There are four areas of the external market environment: technological, economic, cultural and social, and political and legal. The direct market environment includes customers, the company, and competitors.
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Which of the following is not an example of how the economic environment may affect marketing strategy planning? a) With the national income on the rise, many people in the United States have the purchasing power to afford expensive bicycles. b) Both bicycle manufacturers and bicycle retailers are adjusting marketing strategies as a result of the recession. c) Because of exchange rates, imported bicycles are cheaper than those made in the United States. d) The demand for bicycles is increasing because consumers are becoming more health conscious. e) The price of bicycles is rising because of inflation.
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Answer = d, The demand for bicycles is increasing because consumers are becoming more health conscious. The economic environment refers to macro-economic factors that affect patterns of consumer and business spending such as national income, economic growth, and inflation. The rise and fall of the economy in general, within certain industries, or in specific parts of the world can have big impacts on what customers buy. Changes in consumer tastes are also important to marketing strategy planning but are not an aspect of the economic environment.
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When segmenting a broad product-market, it is especially important that marketers create segments a) that are simple. b) that are as large as possible. c) where the members of a given segment are as similar as possible. d) that are operational. e) that are very distinct from each other.
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Answer = b, that are as large as possible. The most important criteria for a good market segment is that it be operational, meaning that the firm is capable of applying it to identify customers and adjusting the marketing mix.
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Having segmented its broad product-market, Martinez Corp. has decided to treat its two chosen submarkets as separate target markets, with each requiring different marketing mixes. Which of the following approaches to developing market-oriented strategies is Martinez Corp. applying in this scenario? a) separate target market approach b) single target market approach c) combined target market approach d) general target market approach e) multiple target market approach
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Answer = e, multiple target market approach The multiple target market approach involves segmenting the market and choosing two or more segments, and then treating each as a separate target market needing a different marketing mix.
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Which of the following statements about clustering techniques for segmenting is true? a) Clustering techniques try to find dissimilar patterns within sets of customer-related data. b) A variation of the clustering approach relies on customer relationship management. c) Clustering searches all the data for heterogeneous groups of people. d) Clustering approaches avoid the use of computers. e) All of these statements about clustering techniques are true.
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Answer = b, A variation of the clustering approach relies on customer relationship management. A variation of the clustering approach relies on customer relationship management (CRM), where the seller fine-tunes the marketing effort with information from a detailed customer database.
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Which of the following statements is true of generic markets? a) The generic market includes only three of four aspects of the product-market definition—customer needs, customer types, and geographic area. It does not include product type. b) In a generic market, sellers have to focus primarily on how one seller's product is better than that of another producer. c) In a generic market, similar product types compete with each other. d) A generic market description looks at markets narrowly and from a supplier's viewpoint. e) In a generic market, customers' needs differ from each other significantly.
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Answer = a, The generic market includes only three of four aspects of the product-market definition—customer needs, customer types, and geographic area. It does not include product type. The complete product-market definition includes a four-part description: product type (type of good and type of service), customer (user) needs, customer types, and geographic area. A generic market description doesn't include any product-type terms.
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Which of the following types of segmenting dimensions are most helpful in understanding how customers in a target market decide exactly which brands of product to buy? a) qualifying dimension b) determining dimensions c) primary dimensions d) distinguishing dimensions e) informing dimensions
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Answer = b, determining dimensions Determining dimensions are those that actually affect the customer's purchase of a specific product or brand in a product- market.
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Which of the following statements is true of using a combined target market approach to developing market-oriented strategies? a) It requires more investment than developing different marketing mixes for different segments. b) This approach is especially attractive for firms with limited resources. c) It results in diseconomies of scale. d)This approach involves fine-tuning each element of the marketing mix to appeal to each of the smaller submarkets. e) People who follow this approach are referred to as "segmenters."
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Answer = b, This approach is especially attractive for firms with limited resources. A combined target market approach may help achieve some economies of scale. It may also require less investment than developing different marketing mixes for different segments—making it especially attractive for firms with limited resources.
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Segmenting and combining are two alternate approaches to developing market-oriented strategies. Which of the following statements concerning these approaches is true? a) A segmenter assumes that the whole market consists of a fairly homogeneous group of customers. b) Segmenters try to develop a marketing mix that will have general appeal to several market segments. c) Combiners treat each submarket as a separate target market. d) A combiner looks at various submarkets for similarities rather than differences. e) Both segmenters and combiners try to satisfy few people very well rather than many people fairly well.
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Answer = d, A combiner looks at various submarkets for similarities rather than differences. Combiners try to increase the size of their target market(s) by combining two or more segments and pleasing a relatively large group of people fairly well. They look at various submarkets for similarities rather than differences. Segmenters try to appeal to specific market segments using unique marketing mixes for each segment. They look for differences and aim to satisfy a few people very well.
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Which of the following is true of the Lanham Act? a) It specifies which types of marks can be protected. b) It requires that foreign companies first register their marks in their home countries. c) It applies only to goods shipped in interstate commerce. d) It only applies to consumer products, not raw materials sold to manufacturers. e) It forces companies to register their trademarks and service marks.
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Answer = a, It specifies which types of marks can be protected. The Lanham Act specifies what kinds of marks can be protected and the exact method of protecting them. It applies to goods shipped in both interstate and foreign commerce. It does not force registration, either domestically or in foreign nations.
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The Magnuson-Moss Act requires that a) all warranties be associated with services. b) all warranties last for at least one year. c) all firms provide written warranties for all products. d) warranties be offered for products but not services. e) a warranty must be clearly written, if one is offered.
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Answer = e, a warranty must be clearly written, if one is offered. The federal Magnuson-Moss Act (of 1975) says that producers must provide a clearly written warranty if they choose to offer any warranty. The warranty does not have to be strong.
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A key difference between supplies and components is that a) components, unlike supplies, are used by businesses. b) supplies, unlike components, are produced from raw materials. c) supplies, unlike components, are typically tangible. d) components, unlike supplies, become part of a finished product. e) supplies, unlike components, are business products.
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Answer = d, components, unlike supplies, become part of a finished product. Components are processed expense items that become part of a finished product. In contrast, supplies do not become part of a finished product.
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Pia's clothing company wants to diversify by acquiring a brand of accessories. Pia has found a brand that is well-known and performs well year after year, and her company is willing to pay a premium price because of this. The value of the brand to Pia's company is its a) brand equity. b) product assortment. c) brand insistence. d) line length. e) brand recognition.
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Answer = a, brand equity. The value of a brand to its current owner or a company that wants to acquire it is known as brand equity. This is the brand's overall strength in the market.
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Which of the following conditions would not be favorable to branding? a) easy identification of products by brand or trademark b) growing demand for a product c) the existence of economies of scale in production d) fluctuations in product quality due to inevitable variations in raw materials e) the possibility of dependable and widespread availability
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Answer = d, fluctuations in product quality due to inevitable variations in raw materials The following are some of the conditions that are favorable to successful branding: Dependable and widespread availability is possible. When customers start using a brand, they want to be able to continue using it. There are economies of scale. If the branding is really successful, costs should drop and profits should increase. The product is easy to label and identify by brand or trademark. Demand is strong enough that the market price can be high enough to make the branding effort profitable. By contrast, if a product's quality is liable to vary considerably over time then branding may not be advisable since customers expect brands to be consistent.
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Which of the following statements is true of the characteristics of services? a) Services are tangible items. b) Service quality is always consistent. c) Services are typically mass-produced. d) Services are perishable. e) Services are physical things; they can be seen and touched.
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Answer = d, Services are perishable. Services are perishable. They cannot be produced and then stored to sell at a future time when more customers want to buy. This makes it difficult to balance supply and demand, especially if demand varies a lot.
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A difference between goods and services is that a) customers can own goods, but they cannot keep services. b) goods are intangible items while services are tangible items. c) it is often difficult to achieve economies of scale with goods, but it is easy to achieve economies of scale with services. d) services are typically mass-produced in factories while goods are produced in person. e) the quality of services is often more consistent than the quality of goods.
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Answer = a, customers can own goods, but they cannot keep services. A good is a tangible item. It is usually easy to know exactly what one will get before one decides to buy a good, and once purchased, the item is in one's possession. In contrast, services are not physical—they are intangible. When one provides a customer with a service, the customer cannot keep it. Rather, a service is experienced, used, or consumed.
