MKT -C4 – Flashcard
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1. Marketers can control the external environment in which their organizations operate.
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ANS: F Although marketers can control the marketing mix and perhaps influence the external environment, they cannot control the external environment in which their organizations operate.
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2. Champion Lyte is a sugar-free sports drink designed to replenish electrolytes lost during activity or illness. Since the product was designed primarily for diabetics, health care professionals who treat diabetics are its primary target market.
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ANS: F The target market consists of the diabetics for whom the product was designed.
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3. Companies use environmental management when they implement strategies that attempt to shape the external environment within which they operate.
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T
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4. Social change is perhaps the most difficult external variable for marketing managers to forecast, influence, or integrate into marketing plans.
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T
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5. The practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, traditional lifestyle is known as aggregate lifestyles.
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ANS: F The term is component lifestyles.
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6. The phenomenon of working women has had a greater effect on marketing than has any other social change.
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T
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7. Psychography is the study of people's vital statistics such as their ages and locations.
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ANS: F Demography is the study of such vital statistics.
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8. Generation Y is the most ethnically diverse generation the nation has ever seen.
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T
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9. Generation Y is the first generation of latchkey children--products of dual-career and/or divorced households.
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ANS: F Generation X was the first generation of latchkey children.
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10. The Hispanic population is driving minority growth in the United States.
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T
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11. Multiculturalism occurs when all major ethnic groups in an area are roughly equally represented.
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T
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12. Rising incomes mean a higher standard of living.
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ANS: F Not necessarily. Increased standards of living are a function of purchasing power, which is measured by comparing income to the relative cost of a set standard of goods and services in different geographic areas.
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13. Inflation is a measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year.
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T
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14. An economic recession increases demand for products and services.
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ANS: F A recession is a period of economic activity characterized by negative growth, which reduces demand for goods and services.
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15. Basic research attempts to develop new or improved products.
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ANS: F This is applied research. Basic research attempts to expand the frontiers of knowledge but is not aimed at a specific, pragmatic problem.
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16. Champion Lyte is a sugar-free sports drink. In developing the product, its manufacturer thoroughly studied the legal restrictions on the drink's ingredients, packaging, manufacturing, and labeling and has abided by all such restrictions. In this way, the manufacturer of Champion Lyte drinks conducted its examination of all political and legal factors that might affect the product's marketing.
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ANS: F Legal restrictions govern decisions in ALL areas of the marketing mix, not just in the areas the manufacturer checked.
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17. The Sherman Act of 1890 establishes protection for trademarks.
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ANS: F The Lanham Act of 1946 establishes protection of trademarks.
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18. Marketers need a thorough understanding of the laws established by the federal government, state governments, and regulatory agencies.
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T
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19. After Hal Li purchased and installed a woodburning stove to heat his family home, the stove caught fire and damaged much of the house. He believes the stove had inadequate insulation. Li should voice his concerns to the Federal Trade Commission (FTC).
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ANS: F The Consumer Product Safety Commission is designed to protect the health and safety of consumers.
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20. Nearly 50 nations have, or are developing, privacy legislation.
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T
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21. The Gramm-Leach-Bliley Act is aimed at the healthcare industry.
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ANS: F This act is aimed at financial companies and requires those corporations to tell their customers how they use their personal information and to have policies to prevent fraudulent access to it.
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22. The competitive environment of a business encompasses the number of competitors the firm must face, the relative size of these competitors, regulatory agencies, and the degree of interdependence within the industry.
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ANS: F Regulatory agencies are political and legal factors.
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1. A(n) _____ is a defined group that managers feel is most likely to buy a firm's product. a. target market b. buying center c. aggregated unit d. consumer cluster e. demographic sample
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A
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2. Which of the following statements best describes the typical target market? a. A target market will remain stable over time, including the same group of consumers. b. Target markets change over time as consumers drop in or out of the market, and as tastes change. c. Target markets are not strongly affected by changes in the external environment. d. Target markets only change when the features and benefits of the product offering change. e. Target markets cannot be specifically defined according to age, income, or location because these factors are continually changing
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ANS: B Target markets are defined and described, but they are always changing in response to the environment.
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3. Colorific recently began competing with Crayola coloring products. At the beginning of the school year, the _____ for Colorific products consists of back-to-school shoppers. a. target market b. buying center c. mass market d. consumer sample e. aggregated demography
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ANS: A A target market is a defined group that managers feel is most likely to buy its products.
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4. The publisher of Ebony magazine has forged an alliance with Dan River, Inc. to create luxury bed and bath products for the newly developed Ebony Home brand. Ebony Home will use the publisher's long history and expertise to market to the African American market. The African American market is the _____ for the Ebony Home brand. a. target market b. buying center c. aggregated unit d. consumer cluster e. demographic sample
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ANS: A A target market is a defined group that managers feel is most likely to buy a firm's product.
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5. The external environment _____. a. can be controlled in much the same manner as the internal marketing mix b. cannot be influenced by marketing managers c. does not change over time d. does not have an impact on Fortune 500 companies e. must be continually monitored by marketing managers
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ANS: E The goal in gathering the environmental data is to identify future market opportunities and threats.
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6. All of the following are factors in the external environment affecting marketing EXCEPT: a. marketing mix b. economic conditions c. technology d. political and legal factors e. competition
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ANS: A The marketing mix is created by the company.
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Susan is the director of marketing for a company that sells recreational vehicles and is developing a marketing plan to cover the next five years of business. Which of the following is an uncontrollable factor Susan must consider in her plan? a. place or distribution factors b. media buying factors c. economic factors d. promotional literature e. pricing strategy for warranty services
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ANS: C All but economic factors are controllable factors.
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8. Marketing managers cannot control _____, but they can sometimes influence it. a. where advertising is placed b. the external environment c. the sales force d. the distribution strategy e. product pricing
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ANS: B The external environment is basically uncontrollable, but the other four answers are part of the marketing mix.
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. When a company engages in _____, it is implementing strategies that attempt to shape the external environment in which it operates. a. synergistic control b. environmental management c. environmental control d. market control e. reactive management
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ANS: B Environmental management means attempting to influence external environmental factors.
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The Michigan State Legislature tried to pass a bill requiring concert promoters and venue operators to print parental warnings on tickets and advertisements for concerts and shows by performers whose recordings had content advisory labels. Promoters and venue operators prevented the passage of this bill, arguing that it would require them to make value judgments for which they were ill-equipped. The promoters and operators engaged in_____. a. internal marketing b. illegal practices c. environmental management d. reengineering e. corporate espionage
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ANS: C Environmental management means attempting to influence external environmental factors.
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11. _____ factors are environmental factors that include our attitudes, values, and lifestyles. a. Social b. Economic c. Political d. Competitive e. Demographic
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ANS: A Social factors, such as attitudes, values, and lifestyles, influence consumers' behavior.
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Which of the following is the most difficult for marketing managers to forecast, influence, or integrate into marketing plans? a. technology b. social change c. demography d. competition e. economic conditions
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ANS: B Social factors and changes are difficult to foresee, because they are usually slow and/or small changes.
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Many people in the United States choose to drink light beer because they value thin and fit bodies. In Europe, light beers have had little success because flavor is valued more highly. For international beer manufacturers, this difference illustrates how _____ influence(s) marketing. a. demography b. competition c. social factors d. economic conditions e. technology
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ANS: C Values are an example of social factors and influence the products that people buy.
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In Asia, Procter & Gamble (P&G) discovered that consumers like to experiment with different brands of shampoos and shy away from the family-size bottles so popular with Americans. Now it sells single-use sachets of shampoo in Asia. P&G responded to _____ factors when it changed its Asian packaging. a. demographic b. competitive c. technological d. social e. component lifestyle
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ANS: D Social factors influence the products people buy.
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Shark fin soup is a favorite Thai food. When a San Francisco-based organization claimed that the leading producer's soup contained mercury poison, its sales plummeted. The popularity of this soup in Thailand represents a(n) _____ factor while Thailand's lax enforcement of environmental protection and consumer protection regulations are a(n) _____ factor. a. economic; technological b. social; technological c. social; political and legal d. competitive; economic e. social; technological
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ANS: C Food preferences are a cultural issue, and the lax enforcement of environmental protection laws is a legal/political factor.
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Consumers' concern for health issues affects the way food is marketed. For example, marketers must now list the number of grams of transfat on a product's nutrition label because it has recently come to light that this type of fat is harmful. Consumers' concern for health issues is a(n) _____ factor. a. economic b. political and legal c. technological d. demographic e. social
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ANS: E Social factors include our attitudes, values, and lifestyles.
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Quaker Oats and other cereal manufacturers have developed what they call "breakfast-with-one-hand" products—no-mess breakfast bars and drinks that can be consumed while commuting. The popularity of on-the-go food is largely the result of changes in _____ factors. a. natural environmental b. demographic c. technological d. social e. political
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ANS: D Social factors include our attitudes, values, and lifestyles.
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What do self-sufficiency, upward mobility, work ethic, and conformity have in common? a. These are no longer valued attitudes b. They are attitudes that can easily be changed c. These are three perceptions that Americans have of the Asian lifestyle d. These are three of the core values that influence lifestyles in the United States e. They are the determinants of a component lifestyle
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ANS: D
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A(n) _____ is the practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, traditional lifestyle. a. aggregated lifestyle b. component lifestyle c. psychographic mode of living d. demographically defined lifestyle e. targeted lifestyle
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ANS: B This is the definition of component lifestyles.
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Lance is a 30-year old, single professional who enjoys hiking, college sports, and poetry. He lives with his girlfriend but does not have plans to get married in the near future. He leads a life much different from his father who married right after high school, had children, and worked for the same company his entire career. More and more in the U.S., consumers like Lance are enjoying _____, piecing together a variety of interests, products, and services instead of conforming to traditional stereotypes. a. well-defined segments b. component lifestyles c. simple multipurpose products d. conformity and cohesiveness e. modular market mixes
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ANS: B Component lifestyles are the practice of choosing goods and services that meet one's diverse needs and interests rather than conforming to a single, traditional lifestyle.
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Kendra teaches high school science. She is also a wine expert, a PTA president, and an accomplished sculptor. Her other interests include scrapbooking, gourmet cooking, and NASCAR. Marketers would categorize Kendra as _____. a. fitting into a caregiver segment b. a member of the typical education-based target segment c. not belonging to any target market d. having a component lifestyle e. having a conforming lifestyle
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ANS: D A component lifestyle pieces together products and services that fit a variety of interests and needs, and does not conform to any particular stereotype.
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If you were to ask Americans what they most desire to make their lives easier, most will want more time. This feeling that there are not enough hours in a day is an example of a(n) _____ factor that has strongly influenced the marketing environment. a. social b. economic c. legal d. demographic e. component lifestyle
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ANS: A Social factors include our attitudes, values, and lifestyles. Lack of time is due to consumers' lifestyles.
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Lee Siracca owns two horses, brews his own beer, participates in the civic arts commission, enjoys talk radio, hikes on wilderness trails, and competes in rodeos. All of these diverse needs and interests influence his choices of the goods and services he buys. Lee has a_____. a. component lifestyle b. demographically oriented lifestyle c. multicultural demographic position d. fragmented market orientation e. segmented buying strategy
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ANS: A A component lifestyle pieces together products and services that fit a variety of interests and needs, and does not conform to any particular stereotype.
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The growth of dual-income families has resulted in: a. burnout b. a sense of entitlement c. decreased discretionary income d. decreased GNP e. increased purchasing power
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ANS: E Dual-income families have the money to exercise more options when purchasing.
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Which of the following events has had the greatest effect on marketing? a. the growing number of one-child families b. the increasing number of immigrants from Northern Europe c. the growing number of people on the Internet d. the increasing number of working women e. the growing number of people of retirement age who are continuing work
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ANS: D The phenomenon of working women has probably had a greater effect on marketing than any other social change
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The study of people's vital statistics, such as their ages, births, deaths, and locations, is called: a. cultural sociology b. psychometrics c. ecology d. ethnography e. demography
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ANS: E This is the definition of demography.
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Zimmer Centralpulse is the world's largest producer of replacement hips and knees for orthopedic surgery. It is particularly interested in marketing in the southwestern United States, where a large aging population lives. Which external environmental element most directly explains its continued growth? a. economic conditions b. political conditions c. culture d. demography e. social forces
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ANS: D Demography considers the age of the target market.
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Which of the following is NOT a demographic characteristic of a population? a. income level b. age c. values d. education e. birthrate
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ANS: C Values are a social factor.
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Riot Media is a media and toy company that capitalizes on the "gross-out" humor enjoyed by boys ages 8 through 14. In other words, it targets _____. a. members of Generation X b. a cohort generation c. tweens d. baby boomers e. the baby bridging generation
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ANS: C Tweens are described as pre- and early adolescents.
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Girls between the ages of 8 and 14 are one of the growing markets for high-end shoe manufacturers. These girls want styles that are both youthful and grown-up looking. They are _____. a. members of Generation X b. a cohort generation c. tweens d. baby boomers e. the baby bridging generation
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ANS: C Tweens are described as pre- and early adolescents
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Which of the following statements about Generation Y is true? a. Its members were born between 1965 and 1978. b. It is over three times as large as Generation X. c. The members of Generation Y are pressed for time and spend more on personal services than any other age group. d. Members of Generation Y are the first generation of latchkey kids. e. All of these statements are true.
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ANS: B The other descriptions are of Generation X.
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_____ are strongly attached to technology, tend to be skeptical consumers, and demand the latest fashion trends in record time. a. Generation Xers b. members of the cohort generation c. baby boomers d. Generation Yers e. members of the baby bridging generation
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ANS: D Gen Yers tend to be impatient, family-oriented, inquisitive, opinionated, diverse, time managers, "street smart," and connected.
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Consumers born between 1965 and 1978 form a group called _____. a. tweens b. yuppies c. cohort markets d. America's mass market e. Generation X
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E
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Merissa Champlain designs and sells clothes for young working women. Her marketing managers recently told her that she'll be in financial trouble unless she starts designing clothes suited to Gen Yers. Why is this? a. Gen Yers are picky b. Gen Yers are more multicultural c. Baby boomers provide all of the disposable income for Gen Y members d. Demographically, Gen Yers are an extremely large group of consumers e. Gen Yers are easily swayed by traditional promotion media
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ANS: D The size of this group makes them especially important to all marketers.
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The group of people in the United States who were born between 1946 and 1964 are known as: a. Generation Xers b. gray markets c. synergistic cohorts d. the baby bust generation e. baby boomers
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ANS: E Baby boomers are considered to be America's mass market.
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Which of the following represents the largest group of consumers in the United States? a. tweens b. Gen Y c. Gen X d. baby boomers e. boomerangs
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ANS: D Baby boomers comprise 77 million people, Gen X 40 million, Gen Y 60 million, and Tweens 29 million.
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The majority of Hispanic Americans are of _____ descent. a. Mexican b. Puerto Rican c. Spanish d. South American e. Cuban
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ANS: A Nearly 60 percent of Hispanic Americans are of Mexican descent. The next largest group, Puerto Ricans, make up just under 10 percent of Hispanics. All others each account for less than 5 percent of all Hispanics.
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Which ethnic group has the highest average family income? a. Hispanic Americans b. African Americans c. Asian Americans d. South Americans e. Cuban Americans
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ANS: C Asian Americans, who represent only 4.2 percent of the U.S. population, have the highest average family income of all groups
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A multicultural society is characterized by: a. a population of recent immigrants that are closely related by custom and tradition b. a conglomeration of small and large ethnic groups that have little in common c. even distribution of all ethnic groups in a geographic region d. effective mass-marketing techniques e. one large dominating racial or ethnic group in a geographic area
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ANS: C Multiculturalism occurs when all major ethnic groups in an area are roughly equally represented.
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40. Consider a small southern town where almost half the residents are African Americans and the rest whites. Nearly all of the residents can trace their ancestors' arrivals in the community back at least four generations. This town is an example of a: a. market aggregation b. mass market c. psychographic target market d. metropolitan statistical area e. multicultural society
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ANS: E Multiculturalism occurs when all major ethnic groups in an area are roughly equally represented.
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A company that specializes in planning and organizing large family reunions has hired you to identify 25 geographic target markets that are also examples of multicultural societies. What types of locations should you offer this firm? a. cities that have historically had low immigration rates b. traditional test markets c. regions that are dominated by one ethnic group and that have multiple smaller ethnic groups d. unindustrialized areas e. locations in which all major ethnic groups in the area are roughly equally represented
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ANS: E Multicultural societies are ones in which all major ethnic groups in an area are roughly equally represented.
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Interest rates, inflation, and consumer income that influence the marketing environment are called _____ factors. a. economic b. socio-demographic c. political d. government e. consumption
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ANS: A The three economic areas of greatest concern to most marketers are consumers' incomes, inflation, and recession.
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After-tax income is referred to as: a. gross income b. marginal income c. purchasing income d. unencumbered income e. disposable income
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ANS: E Disposable income is what consumers have left after paying taxes.
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China's new 5 percent tax on disposable wooden chopsticks, reflecting concerns about deforestation, has been praised by environmentalists. The move is hitting hard at the Japanese who consume 25 billion sets of wooden chopsticks annually. Almost all of the chopsticks used in Japan come from China. The price of wooden chopsticks in Japan has increased by almost 50 percent. The price increase influences which factor of the external environment of restaurant owners in Japan? a. economic b. technological c. demographic d. social e. ethnicity
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ANS: A Purchasing power may be diminished, especially for restaurants.
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Four dollar a gallon gasoline was unimaginable when mechanical gas pumps first appeared in the United States in the 1930s. Their spinning dials cannot register sales beyond $99.99, which will not fill up many SUVs. The pumps can be modernized for about $650, but the company that provides this service has a huge backlog. This is an example of how _____ factors affect small convenience stores and service stations. a. technological and cultural b. competitive and natural c. economic and technological d. cultural and economic e. demographic and marketing mix
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ANS: C The retrofittings for the pumps are a technological factor, and the increasing price of gas is an economic factor.
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_____ is measured by comparing the relative cost of a standard of goods and services in different geographic areas. a. Gross individual profit b. Purchasing power c. Net profit d. Relative pricing e. Price escalation
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ANS: B Another way to think of purchasing power is income minus the cost of living (i.e., expenses).
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47. The higher your _____, the higher your purchasing power: a. gross income b. social class c. disposable income d. cost of living e. inflation index
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ANS: C Purchasing power is measured by comparing income to the relative cost of a set standard of goods an services. It is a aligned with net income, or income minus a standard set of expenses. Assuming a constant income, the higher the cost of living (the expenses), the lower the purchasing power is.
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48. All of the following are taken into account in a cost of living index EXCEPT: a. income b. housing c. food and groceries d. health care e. entertainment
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ANS: A In general, a cost of living index takes into account housing, food and groceries, transportation, utilities, health care, and miscellaneous expenses such as clothing, services, and entertainment.
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_____ is measure of the decrease in the value of money, expressed as the percentage reduction in value since the previous year. a. Inflation b. Recession c. Depression d. Consumer break-even e. Price escalation
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ANS: A This is the definition of inflation.
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A period of economic activity characterized by negative growth, which reduces demand for goods and services, is called: a. stagnation b. inflation c. recession d. price escalation e. parity
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ANS: C A recession is a period of economic activity characterized by negative growth.
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The main product for Zamperla Industries is gondola cars for amusement park rides and ski lifts. Its marketing department constantly monitors trends in the external environment that might affect the firm. Which economic factor may pose a major threat to this company? a. few competitors in this industry b. technological improvements that are automating production of cars c. a recession d. increasing interest in the environment and recycling e. existing legislation requiring licensing of all amusement park rides
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ANS: C A recession is a period of economic activity characterized by negative growth, which reduces demand for goods and services.
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Shabby Chic fashion boutique has responded to economic trends by placing an emphasis on improving the quality of merchandise it offers, improving customer service, and reducing its cost of goods sold because consumers are not shopping as much as they used to due to lower purchasing power. Shabby Chic is apparently dealing with which level of economic activity? a. stagflation b. recession c. inflation d. stagnation e. distension
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ANS: B All the described techniques are used to counter the effects of reduced demand during recession.
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Blogs created by consumers can be used to assess customer attitudes toward new products as well as customer perceptions of new products. Marketers' ability to search for key words used in the blogs is an example of a change in the _____ factor of the external environment. a. psychographic b. technological c. competitive d. demographic e. economic
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ANS: B Blogging exists in the technological environment
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In the future, electrical power may come from quantum nucleonics, a form of nuclear power that produces no residual radiation. The ability to use this form of power will require equipment adaptations, but it will solve the world's need for clean and efficient power. When quantum nucleonics is developed, it will be an example of how _____ factors can affect an organization. a. technological b. competitive c. economic d. cultural e. demographic
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ANS: A Quantum nucleonics is part of the technological environment.
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Commercial truck drivers have really suffered financially as a result of increasing diesel fuel prices. As they look for ways to make their trucks perform more efficiently, manufacturers have created truck body designs that are more aerodynamically sound. This is an example of how _____ factors can help during recessionary periods. a. technological b. competitive c. economic d. cultural e. demographic
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ANS: A Technology enables more efficient product designs.
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The two types of research are: a. basic and applied b. primary and secondary c. profit and not-for-profit d. domestic and global e. basic and advanced
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ANS: A Basic research attempts to expand the frontiers of knowledge but is not aimed at a specific, pragmatic problem. Applied research, in contrast, attempts to develop new or improved products.
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Which type of research is also called pure research and attempts to expand the frontiers of knowledge but is not aimed at a specific, pragmatic problem? a. applied b. basic c. primary d. secondary e. synergistic
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ANS: B Basic research aims to confirm an existing theory or to learn more about a concept or phenomenon.
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Juan is a marketing professor researching consumer decision-making processes. Specifically, he is examining if including a picture in a print advertisement is more effective than not including a picture in influencing readers' attitude toward the advertisement and brand advertised. He is not researching any specific brand, but rather he is interested in testing Dual Coding theory that predicts that pictures will have a more positive impact on attitudes. Juan is conducting _____ research. a. secondary b. basic c. applied d. complex e. synergistic
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ANS: B Basic research aims to expand the frontiers of knowledge but is not aimed at a specific, pragmatic problem.
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Which type of research attempts to develop new or improved products? a. basic b. synergistic c. secondary d. primary e. applied
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ANS: E Applied research is focused on a specific marketing problem, such as developing new or improved products.
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A marketing researcher is conducting a focus group interview with a group of working mothers to learn how Kraft can better meet their needs for convenience foods. What type of research does this represent? a. basic b. applied c. secondary d. synergistic e. idiosyncratic
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ANS: B Applied research attempts to develop new or improved products.
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Almost any product in India, from tap water to milk, has traces of toxins due to the overuse and misuse of insecticides by Indian farmers, but the government expects multinational corporations (MNCs) operating in India to produce food that is toxin-free. In this way both _____ factors influence the operating environment for foreign firms. a. social and technological b. legal and technological c. economic and legal d. economic and social e. technological and demographic
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ANS: B It is technological in that the insecticides are a product of technology. The expectations for MNCs are a product of the legal environment
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62. Laws and regulations of various governments and their ongoing development and change are an example of _____ factors that are part of all organizations' external environment. a. economic investment b. political and legal c. research and development d. competitive e. demographic
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ANS: B Every aspect of the marketing mix is subject to laws and regulations, which are part of the political and legal environment.
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When Universal Studios Japan opened, health inspectors discovered the theme park had piped industrial use water not suitable for drinking into its drinking fountains. The problem was unanticipated and costly to repair. This is primarily an example of how _____ factors can cause a business to incur unexpected costs. a. social b. economic c. competitive d. cultural e. political and legal
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ANS: E The drinking water is subject to laws and restrictions, which are elements of the political and legal environment
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Every night Universal Studios Japan hosts a fireworks display. The theme park recently came under government investigation when allegations were made that the park was detonating more than 50 pounds of explosives in its nightly fireworks displays. In the small nation, the use of explosives is stringently controlled. This is an example of how _____ factors can influence a business. a. competitive b. legal and political c. economic d. technological e. cultural
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ANS: B Laws and/or regulations regarding the amount of explosives allowed are part of the political and legal environment.
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One of the results of the Americans with Disabilities Act is an increase in the numbers of disabled travelers. Publications like Emerging Horizons, a California-based, 25,000-circulation magazine focus on accessible travel, and businesses, such as Mobility Challenged Vacations Ltd., see that disabled tourists are a growing market. One can argue the increase in tourism by the disabled was due to: a. controllable elements within corporate structures b. legal forces that changed the attractiveness of vacation options c. macroeconomic conditions that made U.S. destinations more competitive relative to international spots d. a shift in regulatory controls from the public sector to the private sector e. competitive forces that changed how disabled tourists perceive vacations
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ANS: B Changes in the legal environment can have a dramatic effect on marketing strategy
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China's new 5 percent tax on disposable wooden chopsticks, reflecting concerns about deforestation, has been praised by environmentalists. The move is hitting hard at the Japanese who consume 25 billion sets of wooden chopsticks annually. Almost all of the chopsticks used in Japan come from China. The requirement for Chinese manufacturers of wooden chopsticks to pay the 5 percent tax is a _____ factor in their external environment. a. competitive b. social c. demographic d. technological e. legal
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ANS: E The tax is an example of government regulation.
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The _____ Act strengthened the Clayton Act to prevent corporate acquisitions that reduce competition. a. Hart-Scott-Rodino b. Lanham-Scott c. Celler-Kefauver Antimerger d. Robinson-Patman e. Sherman
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ANS: C See Exhibit 4.2. The Celler-Kefauver Act bolstered the Clayton Act's provision dealing with interlocking directorates and closed another loophole that had allowed corporate takeovers.
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A cold medicine manufacturer offers a promotion allowance to retailers for setting up displays featuring its products. Retailers are also offered promotional allowances on purchases of the products. Which legislation requires the manufacturer to make these promotion allowances available to all retailers on a proportionately equal basis? a. Hart-Scott-Rodino Act b. Sherman Act c. Celler-Kefauver Antimerger Act d. Robinson-Patman Act e. Lanham Act
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ANS: D
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_____ is a governmental body that has the power to prescribe mandatory safety standards for almost all products consumers use. a. Health and Welfare Agency b. Federal Trade Commission c. Food and Drug Administration d. Federal Communications Commission e. Consumer Product Safety Commission
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ANS: E The sole purpose of the Consumer Product Safety Commission is to protect the health and safety of consumers in and around their homes. The commission has the power to prescribe mandatory safety standards for almost all products consumers use.
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Alex purchased a battery-operated drill, and the first time he used the drill, the battery pack overheated and exploded. After Alex's trip to the emergency room, it was determined that the explosion was due to a problem with how the drill was manufactured. Alex would like to lodge a complaint about the poor quality of the drill's construction. To which federal agency should he complain? a. Labor Department b. Food and Drug Administration c. Federal Trade Commission d. Department of Trade e. Consumer Product Safety Commission
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ANS: E The sole purpose of the Consumer Product Safety Commission is to protect the health and safety of consumers in and around their homes. The commission has the power to prescribe mandatory safety standards for almost all products consumers use.
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The _____ is an agency that prevents the use of unfair methods of competition in commerce. a. Federal Communications Commission b. Commerce Department c. Commission for Fair Trade d. Federal Trade Commission e. Sherman Antitrust Agency
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ANS: D The FTC is authorized to investigate the practices of business combinations and to conduct hearings on antitrust matters and deceptive advertising.
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Many people drink bottled water today, but one national brand of bottled water was not "spring-fresh" as advertised. The water actually came from a well located in the middle of an industrial warehouse facility and next to a industrial waste site. To which organization should the consumers who thought the advertising for the bottled water was misleading complain? a. Consumer Product Safety Commission b. Food and Drug Administration c. Federal Trade Commission d. Federal Communications Commission e. Consumer Protection Agency
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ANS: C The FTC is charged with preventing corporations from using deceptive advertising and unfair methods of competition in commerce.
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The _____ is the federal government agency charged with enforcing regulations against selling and distributing adulterated, misbranded, or hazardous products of a specific type. a. Federal Trade Commission b. Consumer Product Protection Commission c. U.S. Justice Department d. Food and Drug Administration e. American Safety League
answer
ANS: D The Food and Drug Administration focused on the safety of food and drugs.
question
All of the following are powers of the Federal Trade Commission EXCEPT: a. restitution b. corrective advertising c. corporal punishment d. consent decree e. cease-and-desist order
answer
ANS: C The powers of the FTC include cease-and-desist order, consent decrees, affirmative disclosure, corrective advertising, restitution, and counteradvertising.
question
When the Federal Trade Commission (FTC) issues a final directive to a firm to stop engaging in an activity the FTC considers illegal, this directive is a(n): a. order to remand b. stopgap measure c. order of cessation d. cease-and-desist order e. corrective action order
answer
ANS: D
question
The Federal Trade Commission (FTC) accused Campbell Soup of deceptive advertising because the soup company's advertising showed bowls of soup that appeared to be full of meat, vegetables, and noodles. The appearance of the soup was altered by the placing of glass marbles in the bottom of the bowl, which caused the ingredients to rise to the top of the bowl. The FTC would have issued a(n) _____ to make Campbell stop running the deceptive ad. a. affirmation order b. cease-and-desist order c. order to remand the promotion d. order of cessation e. stopgap measure
answer
ANS: B See Exhibit 4.4. A final order by the FTC is a cease-and-desist order. It may be challenged by the firm in court
question
Sometimes the Federal Trade Commission (FTC) will require an advertiser to include in its advertisements additional information about the products being promoted. This is to clarify past statements the FTC believes were misleading or unfairly presented to consumers. This practice is called: a. nonfinancial restitution b. affirmative disclosure c. a mandated promotion d. corrective advertising e. a decree of consensus
answer
ANS: D
question
When the Federal Trade Commission (FTC) uses the term "restitution," it means: a. all advertisements must be restored to a truthful, nondeceptive format b. refunds must be made to consumers who were misled by deceptive advertising c. a certain portion of the advertising budget must be allocated to advertisements that explain why previous ads were misleading d. the manufacturer must delete the offending product from its product mix e. new, corrected products must be sent to the consumers
answer
ANS: B See Exhibit 4.4.
question
The Gramm-Leach-Bliley Act is an important law designed to: a. protect the channels of commerce b. restrict alcohol and tobacco advertising c. eliminate certain products from being advertised on children's television programs d. protect consumers from identity theft e. penalize marketers selling merchandise with counterfeit brand names
answer
ANS: D See Exhibit 4.2. This act is aimed at financial companies and requires those corporations to tell their customers how they use their personal information and to have policies that prevent fraudulent access to it.
question
When Miriam went to the specialist, she was asked to sign several official forms that the receptionist handed her so that her primary care doctor could be given the results of her medical examination. The law that requires her permission for the physician's office to hand out personal information about her is the result of legislation determined to: a. protect the channels of commerce b. restrict medical advertising c. eliminate health services from local jurisdiction d. protect consumers from identity theft e. penalize marketers for selling unwanted services
answer
ANS: D
question
The number of firms a company must face, the relative size of these firms, and the degree of interdependence within the industry are all part of its _____ environment. a. demographic b. economic c. political d. competitive e. social
answer
ANS: D Management has little control over the competitive environment confronting a firm.
question
Frito-Lay is considered the king of the salty snack industry with its distribution network of 42 plants, 12,800 delivery people, and more than 900 tractor trailers formed into a retail delivery powerhouse. Smaller manufacturers of salty snacks find that monitoring the activities of Frito-Lay is an effective way to monitor the _____ factors within their external environments. a. bureaucratic b. marketing mix c. competitive d. social e. demographic
answer
ANS: C
question
Abetta, Royal King, Kincade, EquiRoyal, and Amadeus are all manufacturers and marketers of Western-style saddles for horses. Thus, the manufacturers are _____ factors in each other's external environments. a. component lifestyle b. competitive c. economic d. social e. legal and regulatory
answer
ANS: B The competitive environment encompasses the competition a firm must face.
question
When many consumers think of adhesives, they think of 3M because it makes so many kinds of adhesives used in the home. However, the world's largest adhesive producer is Henkel Consumer Adhesive, maker of Loctite and Duct tape. 3M and Henkel are part of each other's _____ environment. a. competitive b. economic c. social d. marketing mix e. legal and political
answer
ANS: A The competitive environment encompasses the number of competitors a firm must face, the relative size of the competitors, and the degree of interdependence within the industry.
question
NARRBEGIN: E-cigarettes E-cigarettes Smoking inflames non-smokers and claims the lives of more than 400,000 smokers each year, so the electronic cigarette is a welcomed alternative. Electronic cigarettes, called e-cigarettes, are battery-powered devices that emit a vapor from nicotine, flavorings, and other chemicals. It looks like a cigarette and allows smokers to inhale the nicotine vapor in places where smoking is not allowed. The product has been touted as a means to quit smoking as well. However, critics, especially the Food and Drug Administration, claim that "vaping" poses risks. In fact, the FDA claims its tests revealed a toxic chemical that is found in anti-freeze as well as other carcinogens. The FDA blocked a shipment of the product from China and banned the sale of this product in the United States. In addition to the safety issue, the FDA is concerned that children might be attracted to this product because they come in flavors other than traditional menthol, such as bubble gum, chocolate, and strawberry. The FDA wants this product to go through the same rigorous testing that drugs must go through before being marketed. However, the FDA's authority over this product is questioned. While Congress has recently given the FDA authority over tobacco products, this is not a tobacco product and the Electronic Cigarette Association is fighting the ban. NARREND 85. Refer to E-cigarettes. E-cigarette manufacturers claim they are not trying to sell this product to children. Rather, they are offering an alternative to combustible tobacco for committed smokers. These smokers comprise the manufacturers': a. target market b. buying center c. consumer cluster d. demographic sample e. mass market
answer
ANS: A A target market is a defined group that managers feel is most likely to buy a firm's product.
question
Refer to E-cigarettes. In 1964, 42% of Americans smoked, but now that rate has dropped below 20%. Which environmental factor has had the greatest impact on this trend? a. technological factors b. economic factors c. competitive factors d. demographic factors e. social factors
answer
ANS: E Many of the smoking bans have resulted from social pressure to limit smoking.
question
Refer to E-cigarettes. The e-cigarette has been heralded as an innovative product that serves a need for smokers by helping them quit the habit. This innovative product was developed from changes in which environment? a. demographic b. technological c. economic d. social e. competitive
answer
ANS: B Innovation is part of the technological environment.
question
Refer to E-cigarettes. The FDA is part of which environmental factor affecting the marketing of this product? a. demographic b. technological c. political and legal d. competitive e. economic
answer
ANS: C The FDA is federal regulatory agency.
question
Refer to E-cigarettes. Marketers of the e-cigarette claim that they are not marketing the product to children, particularly because a starter kit costs over $100. Which economic factor are the marketers claiming will likely keep this product out of the hands of children? a. income b. inflation c. recession d. purchasing power e. interest rates
answer
ANS: A The purchaser of this product must have a large enough income to purchase this relatively expensive product
question
NARRBEGIN: Dog Spa Dog Spa Kelly Tumlin wants to open a dog grooming salon that will offer healthy, natural pet care and holistic pet products. All of the products sold at the salon will be of the highest quality and made of all-natural ingredients. Tumlin wants to pamper pets just like a spa pampers their owners. To determine the feasibility of the grooming salon, Tumlin hired a marketing researcher who studied all the market information available and determined that single, white-collar workers between the ages of 30 and 60 were the most likely people to use the services proposed by Tumlin. The researcher also determined the west side of the city offers the best location for the enterprise even though zoning regulations are much stricter in that area. NARREND 90. Refer to Dog Spa. The group of consumers identified by the researcher as most likely to avail themselves of the services offered by Tumlin's grooming salon is called a: a. target market b. buying center c. mass market d. consumer cluster e. demography
answer
ANS: A A defined group of consumers that is most likely to buy a firm's product is a target market
question
Refer to Dog Spa. The fact that people would actually treat their dogs to a luxurious spa treatment reflects a change in _____ factors within the external environment. a. demographic b. social c. technological d. geographic e. political
answer
ANS: B Social factors includes our attitudes, values, and lifestyles.
question
. Refer to Dog Spa. Describing the market for Tumlin's grooming salon in terms of how old they are and their marital state reflects the use of _____ characteristics. a. psychographic b. demographic c. anthropological d. geographic e. sociological
answer
ANS: B Vital statistics such as age, race, income, and marital status are demographic characteristics.
question
Refer to Dog Spa. Tumlin is developing a strategic marketing plan to cover the first five years of the salon's business. She must be sure to consider which of the following uncontrollable factors in her plan? a. place or distribution factors b. media buying factors c. demographic factors d. dining area layout factors e. pricing for services
answer
ANS: C All but demographic factors are controllable marketing mix factors.
question
What type of research did the marketing consultant perform for Tumlin? a. basic b. preliminary c. applied d. causal e. factorial
answer
ANS: C Applied research attempts to develop new or improved products. The research conducted by the consultant provided information to Tumlin to better develop the service.
question
Refer to Dog Spa. The uncontrollable environmental factors Tumlin faces in terms of zoning restrictions for the new dog salon represent _____ factors. a. economic b. political and legal c. research and development d. cultural e. demographic
answer
ANS: B The laws and regulations of various governments represent uncontrollable political and legal factors.
