Marketing Management Topic 22

1) Appointing teams to manage customer-value-building processes and break down walls between departments is part of which of the following business practices?
A) reengineering
B) outsourcing
C) benchmarking
D) supplier partnering
E) customer partnering
A
Page Ref: 624
Objective: 1
Difficulty: Easy
2) ________ involves buying more goods and services from external domestic or foreign vendors.
A) Merging
B) Broadening
C) Outsourcing
D) Globalizing
E) Accelerating
C
Page Ref: 624
Objective: 1
Difficulty: Easy
3) ________ involves studying “best practice companies” to improve performance.
A) Empowering
B) Globalizing
C) Flattening
D) Benchmarking
E) Focusing
D
Page Ref: 624
Objective: 1
Difficulty: Easy
4) Merging involves ________.
A) reducing the number of organizational levels to get closer to the customer
B) removing barriers that separate organizational departments
C) partnering with fewer but better value-adding suppliers
D) working more closely with customers to add value to their operations
E) acquiring firms in the same or complementary industries
E
Page Ref: 624
Objective: 1
Difficulty: Moderate
5) Which of the following business practices involves reducing the number of organizational levels to get closer to the customer?
A) flattening
B) globalizing
C) decentralization
D) merging
E) justifying
A
Page Ref: 624
Objective: 1
Difficulty: Easy
6) Which of the following business practices focuses specifically on designing the organization and setting up processes to respond quickly to changes in the environment?
A) benchmarking
B) outsourcing
C) focusing
D) accelerating
E) globalizing
D
Page Ref: 624
Objective: 1
Difficulty: Easy
7) As a business practice, broadening involves _________.
A) acquiring or merging with firms in the same or complementary industries to gain economies of scale and scope
B) factoring the interests of customers, employees, shareholders, and other stakeholders into the activities of the enterprise
C) buying more goods and services from outside domestic or foreign vendors
D) appointing teams to manage customer-value-building processes and break down walls between departments
E) becoming more accountable by measuring, analyzing, and documenting the effects of marketing actions
B
Page Ref: 624
Objective: 1
Difficulty: Moderate
8) As a marketing practice, monitoring involves ________.
A) designing the organization and setting up processes to respond quickly to changes in the environment
B) becoming more accountable by measuring, analyzing, and documenting the effects of marketing actions
C) tracking what is said online and elsewhere and studying customers, competitors, and others to improve business practices
D) determining the most profitable businesses and customers and expending greater organizational resources to capitalize on them
E) factoring the interests of customers, employees, shareholders, and other stakeholders into the activities of the enterprise
C
Page Ref: 624
Objective: 1
Difficulty: Moderate
9) The role of marketing in the organization is changing. Traditionally marketers have played the roles of ________, charged with understanding customers’ needs and transmitting their voice to various functional areas.
A) middlemen
B) opinion leaders
C) clients
D) influencers
E) end consumers
A
Page Ref: 625
Objective: 2
Difficulty: Easy
10) Which of the following observations is true?
A) In today’s business environment, marketers are mainly middlemen.
B) Marketing has the sole ownership of customer interactions.
C) Only when all employees realize their job is to create, serve, and satisfy customers does the company become an effective marketer.
D) Marketers must clearly differentiate all customer-facing processes, such that every customer receives a personalized marketing message.
E) Marketers must avoid collaborating with other organizational departments, as it blurs functional responsibilities.
C
Page Ref: 625
Objective: 2
Difficulty: Moderate
11) ________ requires that everyone in the organization accept the concepts and goals of marketing and engage in choosing, providing, and communicating customer value.
A) Internal marketing
B) Corporate communications
C) Integrated marketing communications
D) Supply chain management
E) Employee engagement
A
Page Ref: 625
Objective: 2
AACSB: Analytic skills
Difficulty: Easy
12) The most common form of marketing organization consists of ________ reporting to a marketing vice president who coordinates their activities.
A) zonal managers
B) functional specialists
C) product managers
D) area market specialists
E) brand managers
B
Page Ref: 625
Objective: 2
Difficulty: Easy
13) Which of the following is the main advantage of a functional marketing organization?
A) easy coordination
B) lower staff requirements
C) administrative simplicity
D) reduced competition between functional groups
E) smooth working relationships
C
Page Ref: 627
Objective: 2
Difficulty: Moderate
14) A company selling in a national market often organizes its sales force along ________.
A) functional groups
B) geographic lines
C) product teams
D) brand groups
E) product categories
B
Page Ref: 627
Objective: 2
Difficulty: Easy
15) A product-management organization makes sense if ________.
A) the company’s products are quite varied
B) there are very few products in the company’s portfolio
C) the company is pursuing a low cost strategy
D) the company’s products satisfy similar customer needs
E) the company is vertically integrated
A
Page Ref: 627
Objective: 2
Difficulty: Moderate
16) A product- or brand-management organization is characterized as a(n) ________ system.
A) hub-and-spoke
B) waterfall
C) internal marketing
D) top-down
E) lateral
A
Page Ref: 627
Objective: 2
Difficulty: Easy
17) A disadvantage of the product-management organization is that ________.
A) it marginalizes a company’s smaller brands
B) it reduces organizational responsiveness to new products in the market place
C) product managers generally exercise authority outside their areas of responsibility
D) it prevents product managers from gaining sufficient expertise in their product areas
E) it fails to build long-term strengths as brand managers normally manage brands for only short periods
E
Page Ref: 628
Objective: 2
Difficulty: Moderate
18) A product-management organization ________.
A) often proves to be cost-effective
B) simplifies the process of developing a national strategy
C) focuses on building market share rather than customer relationships
D) reduces an organization’s staffing requirements
E) allows product managers to achieve functional expertise
C
Page Ref: 628
Objective: 2
Difficulty: Moderate
19) There are three types of product-team structures. These are ________.
A) vertical, triangular, and horizontal product teams
B) vertical, horizontal, and circular product teams
C) horizontal, vertical, and rectangular product teams
D) horizontal, vertical, and flattened product teams
E) vertical, rectangular, and circular product teams
A
Page Ref: 628
Objective: 2
Difficulty: Easy
20) Which of the following is true about a brand-asset management team (BAMT)?
A) A BAMT is part of the triangular and vertical product team structures.
B) BAMTs often report directly to the organization’s chief branding officer.
C) BAMTs are a traditional, tried and tested means of managing brands.
D) Companies with a product-management organization often have only one BAMT.
E) The BAMT consists of key representatives from functions affecting the brand’s performance.
E
Page Ref: 628
Objective: 2
Difficulty: Moderate
21) One of the options in a product-management organization is to eliminate product manager positions for minor products and assign two or more products to each remaining manager. Under what conditions is this alternative feasible?
A) when the product mix is highly diverse
B) when there are very few products in the company’s portfolio
C) when two or more products serve a similar set of needs
D) when customers fall into different user groups
E) when the company produces many products for many markets
C
Page Ref: 628
Objective: 2
Difficulty: Moderate
22) When customers fall into different user groups with distinct buying preferences and practices, a ________ is desirable.
A) market-management organization
B) product-management organization
C) brand-management organization
D) geographic organization
E) functional organization
A
Page Ref: 629
Objective: 2
Difficulty: Easy
23) Companies that produce many products for many markets may adopt a ________ marketing organization.
A) flat
B) brand
C) product
D) matrix
E) top-down
D
Page Ref: 629
Objective: 2
Difficulty: Easy
24) Which of the following is true regarding a matrix-management organization?
A) It proves to be cost-effective in the long run.
B) It often creates conflicts regarding authority and responsibility for marketing activities.
C) It hampers the flow of information among marketing personnel.
D) It fosters a strong sense of accountability for performance among product and market managers.
E) It is best suited to companies that offer a small range of products to niche markets.
B
Page Ref: 629
Objective: 2
Difficulty: Moderate
25) Transforming into a true market-driven company requires organizing around ________.
A) sales
B) customer segments
C) products
D) functions
E) brands
B
Page Ref: 630
Objective: 2
Difficulty: Easy
26) Which of the following is true of building a creative marketing organization?
A) It is enough if firms are customer-oriented.
B) Companies must watch trends and be ready to capitalize on them.
C) Firms should focus more on efficiency rather than innovation.
D) Companies should attempt to minimize risks as much as possible.
E) Firms should focus on protecting their existing markets and physical resources.
B
Page Ref: 630-631
Objective: 2
Difficulty: Moderate
27) Rising customer expectations, evolving employee goals and ambitions, and tighter government legislation and pressure are driving companies to ________.
A) operate leaner manufacturing facilities
B) manage shorter supply chains
C) operate flatter organizations
D) practice a higher level of corporate social responsibility
E) vertically integrate
D
Page Ref: 631
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
28) In order to promote ethical cultures, companies should do all of the following EXCEPT ________.
A) disseminate a written code of ethics
B) build a company tradition of ethical behavior
C) hold people responsible for observing ethical and legal guidelines
D) ensure every employee knows and observes relevant laws
E) encourage business practices that are not clearly ethical or unethical
E
Page Ref: 633
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
29) ________ gives products the appearance of being more environmentally friendly without living up to that promise.
A) Ambush marketing
B) Greenwashing
C) Astroturfing
D) Viral marketing
E) Green politics
B
Page Ref: 635
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
30) ________ refers to the ability to meet humanity’s needs without harming future generations.
A) Greenwashing
B) Sustainability
C) Ecological footprinting
D) Scalability
E) Legal practice
B
Page Ref: 635
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
31) Cause-related marketing is part of ________.
A) sustainability
B) corporate societal marketing
C) social media
D) global marketing
E) community marketing
B
Page Ref: 636
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
32) Cause marketing has a particularly interested audience in civic-minded ________.
A) Millennial consumers
B) baby boomers
C) Gen Xers
D) Gen Yers
E) shadow boomers
A
Page Ref: 637
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
33) Cadbury’s “Sports for Schools” promotion offered sports and fitness equipment for schools in exchange for vouchers. The problem was that the public and media saw a perverse incentive for children to eat more chocolate, a product associated with obesity. Which of the following best summarizes Cadbury’s problem?
A) Customers felt that the cause was not in sync with the company’s brand image.
B) Consumers did not value the cause Cadbury was promoting.
C) Customers questioned the link between the product and the cause and saw the firm as self-serving and exploitive.
D) Consumers resented being sold an inferior product on the back of a cause-marketing program.
E) Consumers felt that the campaign did not make a sufficient attempt to change the target audience’s behavior.
C
Page Ref: 637
Objective: 3
AACSB: Analytic skills
Difficulty: Moderate
34) Which of the following is true regarding cause-related marketing?
A) The positive impact of cause-related marketing can be increased through sporadic involvement with numerous causes.
B) Many companies focus on multiple causes to simplify execution and maximize impact.
C) Limiting support to a single cause increases the pool of stakeholders who can transfer positive feelings from the cause to the firm.
D) Most firms choose causes that fit their corporate or brand image and matter to their employees and shareholders.
E) In order to avoid public backlash, firms are advised to adopt a hard-sell approach to their cause efforts.
D
Page Ref: 637-638
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
35) ________ by nonprofit or government organizations furthers a cause.
A) Corporate societal marketing
B) Brand marketing
C) Causal marketing
D) Social marketing
E) Place marketing
D
Page Ref: 640
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
36) Social marketing programs designed to discourage cigarette smoking or excessive consumption of alcohol are examples of ________.
A) cognitive campaigns
B) active campaigns
C) behavioral campaigns
D) value campaigns
E) normative campaigns
C
Page Ref: 640
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
37) A social marketing program which aims to alter ideas about abortion is an example of a(n) ________.
A) cognitive campaign
B) active campaign
C) behavioral campaign
D) value campaign
E) normative campaign
D
Page Ref: 640
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
38) Which of the following represents the objective of a cognitive social marketing campaign?
A) Motivate people with obesity to eat healthy and exercise more often.
B) Change public attitudes and stereotypes associated with people who are obese.
C) Explain the different causes of obesity and how it can be prevented.
D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity.
E) Help people with obesity to implement lifestyle changes.
C
Page Ref: 640
Objective: 3
AACSB: Analytic skills
Difficulty: Moderate
39) Which of the following represents the objective of a social marketing campaign aimed at changing people’s actions?
A) Motivate people with obesity to eat healthy and exercise more often.
B) Change public attitudes and stereotypes associated with people who are obese.
C) Explain the different causes of obesity and how it can be prevented.
D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity.
E) Help people with obesity to implement lifestyle changes.
D
Page Ref: 640
Objective: 3
AACSB: Analytic skills
Difficulty: Moderate
40) Which of the following represents the objective of a social marketing campaign aimed at changing people’s values?
A) Motivate people with obesity to eat healthy and exercise more often.
B) Change public attitudes and stereotypes associated with people who are obese.
C) Explain the different causes of obesity and how it can be prevented.
D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity.
E) Help people with obesity implement to lifestyle changes.
B
Page Ref: 640
Objective: 3
AACSB: Analytic skills
Difficulty: Moderate
41) Which of the following represents the objective of a social marketing campaign aimed at changing people’s behavior?
A) Motivate people with obesity to eat healthy and exercise more often.
B) Change public attitudes and stereotypes associated with people who are obese.
C) Explain the different causes of obesity and how it can be prevented.
D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity.
E) Attract people with obesity to sign up for a one-time free medical check up.
A
Page Ref: 640
Objective: 3
AACSB: Analytic skills
Difficulty: Moderate
42) Which of the following should be done to increase the likelihood that social marketing programs will be successful?
A) Choose target markets that are the least ready to respond.
B) Promote multiple, doable behaviors in clear, simple terms.
C) Make it easy to adopt the behavior.
D) Adopt a soft sell approach, as opposed to attention grabbing messages.
E) Explain the benefits in an exaggerated manner.
C
Page Ref: 641
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
43) The first step in the social marketing planning process is ________.
A) determining the focus of the program
B) selecting the target audience
C) setting objectives and goals
D) designing the market offering
E) finding a source of funding
A
Page Ref: 641
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
44) ________ software provides a set of Web-based applications that automate and integrate project management, campaign management, budget management, asset management, brand management, customer relationship management, and knowledge management.
A) Marketing dashboard
B) Enterprise resource planning
C) Supply chain management
D) Marketing resource management
E) Enterprise campaign management
D
Page Ref: 642
Objective: 5
AACSB: Use of IT
Difficulty: Easy
45) ________ is the process that turns marketing plans into action assignments and ensures that such assignments are executed in a manner that accomplishes the plan’s stated objectives.
A) Marketing implementation
B) Marketing research
C) Marketing analysis
D) Brand management
E) Product management
A
Page Ref: 642
Objective: 5
Difficulty: Easy
46) ________ is the process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments.
A) Marketing control
B) Marketing implementation
C) Test marketing
D) Market watch
E) Market analysis
A
Page Ref: 643
Objective: 5
Difficulty: Easy
47) Top and middle management are primarily responsible for ________.
A) annual-plan control
B) efficiency control
C) profitability control
D) technological control
E) innovation control
A
Page Ref: 643
Objective: 5
Difficulty: Easy
48) Who is primarily responsible for efficiency control?
A) BAMT
B) marketing auditor
C) middle management
D) line and staff management
E) top management
D
Page Ref: 643
Objective: 5
Difficulty: Easy
49) The purpose of profitability control is to ________.
A) examine whether the planned results are being achieved
B) examine where the company is making and losing money
C) evaluate and improve the spending efficiency and impact of marketing expenditures
D) examine whether the company is pursuing its best opportunities with respect to markets, products, and channels
E) understand the efficiency of the sales force, advertising, sales promotion, and distribution
B
Page Ref: 643
Objective: 5
Difficulty: Moderate
50) The ________ is primarily responsible for strategic control.
A) line and staff management
B) marketing auditor
C) marketing controller
D) middle management
E) BAMT
B
Page Ref: 643
Objective: 5
Difficulty: Easy
51) The purpose of strategic control is to ________.
A) examine whether the planned results are being achieved
B) examine where the company is making and losing money
C) evaluate and improve the spending efficiency and impact of marketing expenditures
D) examine whether the company is pursuing its best opportunities with respect to markets, products, and channels
E) understand the efficiency of the sales force, advertising, sales promotion, and distribution
D
Page Ref: 643
Objective: 5
Difficulty: Moderate
52) Marketing effectiveness rating instruments and marketing audits are approaches to ________.
A) annual-plan control
B) profitability control
C) efficiency control
D) strategic control
E) statistical control
D
Page Ref: 643
Objective: 5
Difficulty: Easy
53) Which of the following is true regarding annual-plan control?
A) This control process begins by identifying the causes of serious performance deviations.
B) The tools used for this purpose are sales analysis, market share analysis, marketing expense-to-sales analysis, and financial analysis.
C) The marketing controller has the primary responsibility for annual-plan control.
D) Its purpose is to evaluate and improve the spending efficiency and impact of marketing expenditures.
E) It measures profitability by product, territory, customer, segment, trade channel, and order size.
B
Page Ref: 643-644
Objective: 5
Difficulty: Moderate
54) Which of the following is an example of a distribution metric used for measuring the performance of marketing plans?
A) effective reach
B) customer acquisition costs
C) market share
D) stocks cover in days
E) response rate
D
Page Ref: 644
Objective: 5
Difficulty: Moderate
55) Your firm has experienced a decline in sales over the last three quarters. You have traced the problems to distribution inefficiencies. Which of the following should you track to ensure that the firm’s distribution efficiency is maximized?
A) average sales per point of sale
B) sales from new products
C) trial rate
D) repurchase rate
E) new customer gains
A
Page Ref: 644
Objective: 5
AACSB: Analytic skills
Difficulty: Moderate
56) A ________ is a comprehensive, systematic, independent, and periodic examination of a company’s or business unit’s marketing environment, objectives, strategies, and activities, with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance.
A) marketing plan
B) test market
C) marketing audit
D) market-based scorecard analysis
E) marketing metric
C
Page Ref: 645
Objective: 5
Difficulty: Easy
57) Which of the following is true regarding a marketing audit?
A) It focuses primarily on a firm’s macromarketing environment.
B) It identifies the most-needed improvements and incorporates them into a corrective-action plan with short- and long-run steps.
C) It is less effective at locating the real source of a problem than a functional audit.
D) It analyzes only those marketing activities that have failed to produce adequate results.
E) It relies solely on company managers for data and opinions.
B
Page Ref: 645
Objective: 5
Difficulty: Moderate
58) To succeed in the future, marketing must ________.
A) become more holistic
B) build brands through promotion rather than performance
C) be more departmental
D) focus on free-spending
E) rely more on mass marketing
A
Page Ref: 645-648
Objective: 5
Difficulty: Moderate
59) Which of the following is likely to be an important trend in marketing in the future?
A) marketing intuition
B) free-spending marketing
C) manual marketing
D) marketing science
E) mass marketing
D
Page Ref: 648
Objective: 5
Difficulty: Moderate
60) Which of the following is a best practice in business and marketing?
A) end-product orientation
B) reacting to competitors
C) vertical integration
D) stockholder driven
E) teamwork
E
Page Ref: 648
Objective: 5
Difficulty: Moderate
61) ________ looks at specific products, territories, and so forth that failed to produce expected sales.
A) Microsales analysis
B) Sales variance analysis
C) Expense-to-sales analysis
D) Full costing analysis
E) Financial analysis
A
Page Ref: 654
Objective: APP
Difficulty: Easy
62) Served market share ________.
A) expresses the company’s sales as a percentage of total market sales
B) is sales as a percentage of the total sales to the market
C) is market share in relationship to the largest competitor
D) is always smaller than overall market share
E) measures the relative contribution of different factors to a gap in sales performance
B
Page Ref: 654
Objective: APP
Difficulty: Moderate
63) ________ is market share in comparison to the largest competitor.
A) Relative market share
B) Served market share
C) Overall market share
D) Market value
E) Target market share
A
Page Ref: 654
Objective: APP
Difficulty: Easy
Airfare (Scenario)
The airfare for an economy class, one-way ticket from Los Angeles to New York is $500. Due to the recession, the airline manages to fill only 100 out of the 150 seats at $400 per seat.

64) How much of the sales performance gap is due to price decline?
A) 28.5 percent
B) 37 percent
C) 2.5 percent
D) 71.4 percent
E) 0.4 percent

A
Page Ref: 654
Objective: APP
AACSB: Analytic skills
Difficulty: Moderate
65) The sales gap due to reduced volume is ________.
A) 0.4 percent
B) 28.5 percent
C) 71.4 percent
D) 2.5 percent
E) 63 percent
C
Page Ref: 654
Objective: APP
AACSB: Analytic skills
Difficulty: Moderate
66) Which of the following is true about market share?
A) Outside forces affect all companies in the same way.
B) A company’s performance should be judged against the average performance of all companies.
C) A decline in market share does not necessarily mean the company is performing worse than other companies.
D) A decline in market share cannot be deliberately engineered.
E) All shifts in market share have marketing significance.
C
Page Ref: 654
Objective: APP
Difficulty: Moderate
67) A(n) ________ of exactly 100 percent means that a company is tied for the market lead. A rise in relative market share means the company is gaining on its leading competitor.
A) overall market share
B) served market share
C) potential market share
D) relative market share
E) actual market share
D
Page Ref: 654
Objective: APP
Difficulty: Moderate
68) Annual-plan control requires making sure the company isn’t overspending to achieve sales goals. The key ratio to watch is ________.
A) stock turnover
B) gross margin
C) return on capital
D) cash flow return on investment
E) marketing expense-to-sales
E
Page Ref: 655
Objective: APP
Difficulty: Easy
69) ________ advocates argue that all costs must ultimately be imputed in order to determine true profitability.
A) Direct-cost approach
B) Full-cost approach
C) Traceable-cost approach
D) Activity based costing approach
E) Fixed cost approach
B
Page Ref: 659
Objective: APP
Difficulty: Easy
Cabot Cars (Scenario)
Cabot, a large car manufacturer, has four popular car brands in different segments. It has a manufacturing facility near Detroit, MI, where parts common to all the four brands are manufactured. Other specific parts like the brake system, windshield, bonnet, locks, and so on are manufactured in separate plants. Each make has its own product manager and support staff. All product managers report to the CEO of the company.

70) The CEO’s annual compensation is an example of a ________.
A) direct cost
B) variable cost
C) traceable common cost
D) non-traceable common cost
E) manufacturing cost

D
Page Ref: 659
Objective: APP
AACSB: Analytic skills
Difficulty: Moderate
71) The cost of the land where the plant which manufactures the common parts is set up falls under ________.
A) traceable common costs
B) non-traceable common costs
C) variable costs
D) manufacturing costs
E) material costs
B
Page Ref: 659
Objective: APP
AACSB: Analytic skills
Difficulty: Moderate
72) Suppose the manufacturer pays a commission on every car sold. Then, the salesperson’s commission is classified as a(n) ________.
A) cost of labor
B) traceable common cost
C) non-traceable common cost
D) advertising cost
E) direct cost
E
Page Ref: 659
Objective: APP
AACSB: Analytic skills
Difficulty: Moderate
73) The cost of operating the common manufacturing facility is a(n) _____.
A) opportunity cost
B) traceable cost
C) non-traceable cost
D) sunk cost
E) differential cost
B
Page Ref: 659
Objective: APP
AACSB: Analytic skills
Difficulty: Moderate
74) The manufacturer launches a brand building advertising campaign. The campaign does not promote any one specific car but is aimed at promoting the company as a whole. Which type of cost does this fall under?
A) direct costs
B) material costs
C) non-traceable costs
D) traceable costs
E) labor costs
C
Page Ref: 659
Objective: APP
AACSB: Analytic skills
Difficulty: Moderate
75) Internal marketing requires that everyone in the organization buy into the concepts and goals of marketing and engage in choosing, providing, and communicating customer value.
TRUE
Page Ref: 625
Objective: 2
Difficulty: Easy
76) Marketing has sole ownership of customer interaction.
FALSE
Page Ref: 625
Objective: 2
Difficulty: Easy
77) A functional organization allows for adequate planning as the number of products and markets of a firm increases.
FALSE
Page Ref: 627
Objective: 2
Difficulty: Easy
78) Companies producing a variety of products and brands often establish a product- (or brand-) management organization.
TRUE
Page Ref: 627
Objective: 2
Difficulty: Easy
79) The product-management organization replaces the functional organization in the firm.
FALSE
Page Ref: 627
Objective: 2
Difficulty: Easy
80) An advantage of the product- and brand-management system is that product and brand managers focus the company on building market share rather than customer relationships.
FALSE
Page Ref: 628
Objective: 2
Difficulty: Easy
81) There are three types of product-teams structures: vertical, triangular, and horizontal.
TRUE
Page Ref: 628
Objective: 2
Difficulty: Easy
82) Because the retail trade tends to think of profitability in terms of product categories, some companies are switching to a category management organizational model.
TRUE
Page Ref: 628-629
Objective: 2
Difficulty: Easy
83) When customers fall into different user groups with distinct buying preferences and practices, a product team structure is desirable.
FALSE
Page Ref: 629
Objective: 2
Difficulty: Easy
84) Market managers are staff people, with duties like those of a product manager.
TRUE
Page Ref: 629
Objective: 2
Difficulty: Easy
85) A customer-management organization deals with individual customers rather than the mass market or market segments.
TRUE
Page Ref: 629
Objective: 2
Difficulty: Easy
86) Many companies now focus on departments as opposed to processes, because processes can be a barrier to smooth performance.
FALSE
Page Ref: 629
Objective: 2
Difficulty: Easy
87) Transforming into a true market-driven company involves organizing around products.
FALSE
Page Ref: 630
Objective: 2
Difficulty: Easy
88) Firms that are viewed as being socially responsible have the added benefit of being able to attract employees.
TRUE
Page Ref: 631
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
89) Companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold their people fully responsible for observing ethics and legal guidelines if they wish to demonstrate ethical behavior.
TRUE
Page Ref: 633
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
90) Although salespeople are legally prohibited from saying things about their products that are not true, they may legally suggest things about competitors’ products that are not true.
FALSE
Page Ref: 633
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
91) Some business practices, such as deceptive advertising, exclusive dealing, and predatory competition, sharply divide critics regarding whether they are clearly unethical or illegal.
FALSE
Page Ref: 633
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
92) Often, the more committed a company is to sustainability and environmental protection, the more dilemmas that can arise.
TRUE
Page Ref: 634
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
93) Sustainability ratings exist, but there is no consistent agreement about what metrics are appropriate.
TRUE
Page Ref: 635
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
94) Because of insincere firms jumping on the “green” bandwagon, consumers bring a healthy skepticism to environmental claims, but they are also unwilling to sacrifice product performance and quality.
TRUE
Page Ref: 635
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
95) Corporate philanthropy as a whole is on the rise.
TRUE
Page Ref: 636
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
96) Cause-related marketing efforts are unlikely to backfire as customers generally view the company’s motives as genuine.
FALSE
Page Ref: 637
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
97) Cash donations are the most productive contribution that businesses can make to a nonprofit or community group.
FALSE
Page Ref: 638
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
98) Many companies focus on multiple cause-related marketing programs to simplify execution and maximize impact.
FALSE
Page Ref: 638
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
99) Social marketing is a new trend in marketing.
FALSE
Page Ref: 640
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
100) Social marketing programs designed to motivate people to donate blood or attract people for mass immunization are examples of cognitive campaigns.
FALSE
Page Ref: 640
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
101) Social marketing programs take little time to develop and are generally easy to implement.
FALSE
Page Ref: 642
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
102) The actual success of a social marketing program should be evaluated in terms of the program objectives.
TRUE
Page Ref: 642
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
103) Desktop marketing gives marketers information and decision structures on computer dashboards.
TRUE
Page Ref: 643
Objective: 5
Difficulty: Easy
104) Profitability control is the prime responsibility of line and staff management.
FALSE
Page Ref: 643
Objective: 5
Difficulty: Easy
105) Annual-plan control involves the use of financial analysis to evaluate the performance of marketing plans.
TRUE
Page Ref: 643
Objective: 5
Difficulty: Easy
106) The annual plan control process begins with measuring performance.
FALSE
Page Ref: 643-644
Objective: 5
Difficulty: Easy
107) Repurchase rate is a sales metric that is used to evaluate the performance of marketing plans.
FALSE
Page Ref: 644
Objective: 5
Difficulty: Easy
108) The ratio of promoters to detractors is a customer metric that is used to evaluate the performance of marketing plans.
TRUE
Page Ref: 644
Objective: 5
Difficulty: Easy
109) A marketing audit is an orderly examination of the organization’s macro- and micromarketing environments, marketing objectives and strategies, marketing systems, and specific activities.
TRUE
Page Ref: 645
Objective: 5
Difficulty: Easy
110) Self-audits tend to provide more objective information than audits conducted by external consultants.
FALSE
Page Ref: 645
Objective: 5
Difficulty: Easy
111) A marketing audit only benefits a company that is in trouble; companies in good health do not need to conduct them.
FALSE
Page Ref: 645
Objective: 5
Difficulty: Easy
112) To succeed in the future, marketing must be more holistic and less departmental.
TRUE
Page Ref: 645
Objective: 4
Difficulty: Easy
113) In the future, there will be greater emphasis on precision marketing as opposed to mass marketing.
TRUE
Page Ref: 648
Objective: 4
Difficulty: Easy
114) In the context of overall market share, customer loyalty refers to the percentage of all customers who buy from the company.
FALSE
Page Ref: 655
Objective: APP
Difficulty: Easy
115) The first step in conducting a marketing profitability analysis involves assigning functional expenses to marketing entities.
FALSE
Page Ref: 657
Objective: APP
Difficulty: Easy
116) Operating management is most effective in controlling direct costs and traceable common costs.
TRUE
Page Ref: 659
Objective: APP
Difficulty: Easy
117) List and define some of the important shifts that have taken place in business and marketing practices.
1. Reengineering is the appointment of teams to manage customer-value-building processes and break down walls between departments.
2. Outsourcing involves buying more goods and services from outside domestic or foreign vendors.
3. Benchmarking is the study of “best practice companies” to improve performance.
4. Supplier partnering focuses on partnering with fewer but better value-adding suppliers.
5. Customer partnering entails working more closely with customers to add value to their operations.
6. Merging involves acquiring or merging with firms in the same or complementary industries to gain economies of scale and scope.
7. Globalizing focuses on increasing the effort to “think global” and “act local.”
8. Flattening refers to reducing the number of organizational levels to get closer to the customer.
9. Focusing involves determining the most profitable businesses and customers and focusing on them.
10. Accelerating involves designing the organization and setting up processes to respond more quickly to changes in the environment.
11. Empowering means encouraging and empowering personnel to produce more ideas and take more initiative.
12. Justifying means becoming more accountable by measuring, analyzing, and documenting the effects of marketing actions.
13. Broadening involves factoring the interests of customers, employees, shareholders, and other stakeholders into the activities of the enterprise.
14. Monitoring involves tracking what is said online and elsewhere and studying customers, competitors, and others to improve business practices.
Page Ref: 624
Objective: 1
Difficulty: Moderate
118) Describe the functional organization of a marketing department in terms of its structure, advantages, and disadvantages.
The most common form of marketing organization consists of functional specialists reporting to a marketing vice president. The main advantage of a functional marketing organization is its administrative simplicity. It can be quite a challenge for the department to develop smooth working relationships, however. This form also can result in inadequate planning as the number of products and markets increases and each functional group vies for budget and status. The marketing vice president constantly weighs competing claims and faces a difficult coordination problem.
Page Ref: 627
Objective: 2
Difficulty: Moderate
119) Explain the product- or brand-management organization and list its advantages and disadvantages.
Companies producing a variety of products and brands often establish a product- (or brand-) management organization.
The product- or brand-management organization does not replace the functional organization, but serves as another layer of management. A product-management organization makes sense if the company’s products are quite different, or if the sheer number of products is beyond the ability of a functional organization to handle. Product and brand management is sometimes characterized as a hub-and-spoke system.
The product-management organization has several advantages. The product manager can concentrate on developing a cost-effective marketing mix for the product and can react more quickly to new products in the marketplace; the company’s smaller brands have a product advocate.
The disadvantages are that product managers are not given enough authority, they become experts in their product area but rarely achieve functional expertise. The product-management system is costly and brand managers normally manage a brand only for a short time. The fragmentation of markets makes it harder to develop a national strategy. In addition to this, product and brand managers focus on market share and not in building customer relationships.
Page Ref: 627-628
Objective: 2
Difficulty: Moderate
120) What is a market-management organization?
Many companies sell their products to differing markets. When customers fall into different user groups with distinct buying preferences and practices, a market-management organization is desirable. Market managers supervise several market-development managers, market specialists, or industry specialists and draw on functional services as needed. Market managers of important markets might even have functional specialists reporting to them. Market managers are staff (not line) people, with duties like those of product managers. They develop long-range and annual plans for their markets and are judged by their market’s growth and profitability. Because this system organizes marketing activity to meet the needs of distinct customer groups, it shares many advantages and disadvantages of product-management systems.
Page Ref: 629
Objective: 2
Difficulty: Moderate
121) Many companies are beginning to realize that they are not really market and customer driven, they are product and sales driven. In the attempt to transform themselves into true market-driven companies, firms are required to change. Describe and explain what changes are necessary.
To be truly market-driven, companies need to develop a company-wide passion for customers, organize around customer segments instead of around products, and develop a deep understanding of customers through qualitative and quantitative research. Additionally, the organization must be creative; the firm must build capability in strategic innovation and imagination. This capability comes from assembling tools, processes, skills, and measures that let the firm generate more and better new ideas than its competitors.
Page Ref: 630
Objective: 2
Difficulty: Easy
122) What is sustainability? How is it related to the concept of greenwashing?
Sustainability is the ability to meet humanity’s needs without harming future generations. It now tops many corporate agendas. Major corporations outline in great detail how they are trying to improve the long-term impact of their actions on communities and the environment.
Heightened interest in sustainability has also unfortunately resulted in greenwashing, which gives products the appearance of being environmentally friendly without living up to that promise. Because of insincere firms jumping on the green bandwagon, consumers bring a healthy skepticism to environmental claims, but they are also unwilling to sacrifice product performance and quality. Many firms are rising to the challenge and are using the need for sustainability to fuel innovation.
Page Ref: 635-636
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
123) Identify some of the brand benefits that can accrue to a company that engages in cause marketing.
A successful cause-marketing program can improve social welfare, create differentiated brand positioning, build strong consumer bonds, enhance the company’s public image, create a reservoir of goodwill, boost internal morale and galvanize employees, drive sales, and increase the firm’s market value. Consumers may develop a strong, unique bond with the firm running the cause-marketing that transcends normal marketplace transactions. Specifically, cause marketing can (1) build brand awareness, (2) enhance brand image, (3) establish brand credibility, (4) evoke brand feelings, (5) create a sense of brand community, and (6) elicit brand engagement.
Page Ref: 637
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
124) Identify three key success factors in developing and implementing a social marketing program.
Students may choose three of the following key success factors presented in the text: (1) choose target markets that are most ready to respond; (2) promote a single, doable behavior in clear, simple terms; (3) explain the benefits in compelling terms; (4) make it easy to adopt the behavior; (5) develop attention-grabbing messages and media; and (6) consider an education-entertainment approach.
Page Ref: 641
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
125) Briefly explain the concept of annual-plan control.
Annual-plan control ensures the company achieves the sales, profits, and other goals established in its annual plan. At its heart is management by objectives. First, management sets monthly or quarterly goals. Second, it monitors performance in the marketplace. Third, management determines the causes of serious performance deviations. Fourth, it takes corrective action to close gaps between goals and performance.
This control model applies to all levels of the organization. Top management sets annual sales and profit goals; each product manager, regional district manager, sales manager, and sales rep is committed to attaining specified levels of sales and costs. Each period, top management reviews and interprets the results. Marketers today have better marketing metrics for measuring the performance of marketing plans. Four tools for the purpose are sales analysis, market share analysis, marketing expense-to-sales analysis, and financial analysis.
Page Ref: 643-644
Objective: 5
Difficulty: Moderate
126) What is a marketing audit? Explain the four characteristics of a marketing audit.
A marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s or business unit’s marketing environment, objectives, strategies, and activities, with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance.
A marketing audit should be: (1) comprehensive it covers all the major marketing activities of a business; (2) systematic it is an orderly examination of the organization’s macro- and micromarketing environments, marketing objectives and strategies, marketing systems, and specific activities; (3) independent outside consultants bring the necessary objectivity, broad experience in a number of industries, familiarity with the industry being audited, and undivided time and attention; and (4) periodic firms typically initiate marketing audits only after failing to review their marketing operations during good times, with resulting problems. A periodic marketing audit can benefit companies in good health as well as those in trouble.
Page Ref: 645
Objective: 5
Difficulty: Moderate
127) What is a brand-asset management team (BAMT)?
Triangular and horizontal product-team approaches let each major brand be run by a brand-asset management team (BAMT) consisting of key representatives from functions that affect the brand’s performance. The company consists of several BAMTs that periodically report to a BAMT directors committee, which itself reports to a chief branding officer.
Page Ref: 628
Objective: 2
Difficulty: Easy
128) Define a category-management organization.
A category-management organization is where a company focuses on product categories to manage its brands.
Page Ref: 628
Objective: 2
Difficulty: Easy
129) What is a customer-management organization? When should it be adopted?
A customer-management organization deals with individual customers rather than the mass market or even market segments. It is suitable when a close customer relationship is advantageous, such as when customers have diverse and complex requirements and buy an integrated bundle of products and services.
Page Ref: 629
Objective: 2
Difficulty: Easy
130) What are some of the forces that are driving companies to practice corporate social responsibility?
A number of forces are driving companies to practice a higher level of corporate social responsibility, such as rising customer expectations, evolving employee goals and ambitions, tighter government legislation and pressure, investor interest in social criteria, media scrutiny, and changing business procurement practices.
Page Ref: 631
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
131) How can firms promote ethical behavior among their employees?
Companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold their people fully responsible for observing ethical and legal guidelines. Organizations must also ensure that every employee knows and observes relevant laws.
Page Ref: 633
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
132) Corporate philanthropy can pose problems even when done with the best intentions. Explain.
Philanthropic efforts by companies can be overlooked—even resented—if the company is seen as exploitive or fails to live up to a “good guys” image.
Page Ref: 634
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
133) Explain the concept of greenwashing along with an example.
Greenwashing gives products the appearance of being environmentally friendly without living up to that promise. An automobile manufacturer who promotes its cars as being environmentally friendly when the company is in fact a major polluter, would be an example of greenwashing.
Page Ref: 635
Objective: 3
AACSB: Analytic skills
Difficulty: Moderate
134) Define cause-related marketing. What is the difference between cause-related marketing and social marketing?
Cause-related marketing links the firm’s contributions to a designated cause to customers’ engaging directly or indirectly in revenue-producing transactions with the firm. Cause-related marketing supports a cause whereas social marketing by nonprofit or government organizations furthers a cause.
Page Ref: 636; 640
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Moderate
135) Give an example of a cognitive social marketing campaign.
Cognitive campaigns try to educate and inform people. A cognitive campaign might explain the nutritional value of different foods or demonstrate the importance of conservation.
Page Ref: 640
Objective: 3
AACSB: Ethical understanding and reasoning abilities
Difficulty: Easy
136) Suicide is one of the leading causes of death worldwide. Develop the possible objectives of a social marketing campaign which aims to change people’s cognitions, values, behaviors, and actions related to suicide.
Cognitive—To promote awareness about the risk factors associated with suicide and how it can be prevented.
Action—To motivate people to volunteer for a crisis hotline service aimed at providing support to people with suicidal tendencies.
Behavioral—To reduce the incidence of suicide by discouraging substance abuse.
Value – To eliminate the stigma associated with suicidal people.
Page Ref: 640
Objective: 3
AACSB: Analytic skills
Difficulty: Moderate
137) Define marketing implementation.
Marketing implementation is the process that turns marketing plans into action assignments and ensures that such assignments are executed in a manner that accomplishes the plan’s stated objectives.
Page Ref: 642
Objective: 3
Difficulty: Easy
138) What is marketing control? List the four types of marketing control.
Marketing control is the process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments. The four types of needed marketing control are: annual-plan control, profitability control, efficiency control, and strategic control.
Page Ref: 643
Objective: 5
Difficulty: Easy
139) What is the purpose of profitability control?
The purpose of profitability control is to examine where the company is making and losing money. Companies should measure the profitability of their products, territories, customer groups, segments, trade channels, and order sizes to help determine whether to expand, reduce, or eliminate any products or marketing activities.
Page Ref: 644
Objective: 5
Difficulty: Moderate
140) How can a firm periodically reassess its strategic approach to the marketplace?
Each company should periodically reassess its strategic approach to the marketplace with a good marketing audit. Companies can also perform marketing excellence reviews and ethical/social responsibility reviews.
Page Ref: 645
Objective: 5
Difficulty: Easy
141) List some of the marketing trends that are likely to emerge in the near future.
The coming years will see:
• The demise of the marketing department and the rise of holistic marketing
• The demise of free-spending marketing and the rise of ROI marketing
• The demise of marketing intuition and the rise of marketing science
• The demise of manual marketing and the rise of both automated and creative marketing
• The demise of mass marketing and the rise of precision marketing
Page Ref: 648
Objective: 4
Difficulty: Moderate
142) Define sale-variance analysis and microsales analysis.
Sales-variance analysis measures the relative contribution of different factors to a gap in sales performance. Microsales analysis looks at specific products, territories, and so forth that failed to produce expected sales.
Page Ref: 654
Objective: APP
Difficulty: Easy
143) What are the steps involved in marketing profitability analysis?
The steps involved in marketing profitability analysis are as follows:
Step 1: Identifying functional expenses
Step 2: Assigning functional expenses to marketing entities
Step 3: Preparing a profit-and-loss statement for each marketing entity
Page Ref: 656-657
Objective: APP
Difficulty: Moderate
144) What are direct, traceable common, and nontraceable common costs? Give an example of each.
Direct costs are costs that we can assign directly to the proper marketing entities, such as materials costs and sales-force salaries. Traceable common costs are incurred indirectly but can be attributed on a plausible basis to various marketing entities, such as rent expenses. Nontraceable common costs are costs whose assignments are highly arbitrary, such as “corporate image” expenditures.
Page Ref: 659
Objective: APP
Difficulty: Moderate
145) What is the full-cost approach of evaluating a marketing entity’s performance?
When evaluating a marketing entity’s performance, the major controversy is about whether to allocate the nontraceable common costs to the marketing entity. Such allocation is called the full-cost approach, and its advocates argue that all costs must ultimately be imputed in order to determine true profitability. However, this argument confuses the use of accounting for financial reporting with its use for managerial decision making.
Page Ref: 659
Objective: APP
Difficulty: Moderate
146) Full costing allocates nontraceable common costs to marketing entities and has three major weaknesses. What are they?
Full costing has three major weaknesses: (1) The relative profitability of different marketing entities can shift radically when we replace one arbitrary way to allocate nontraceable common costs by another; (2) the arbitrariness demoralizes managers, who feel their performance is judged adversely; and (3) the inclusion of nontraceable common costs could weaken efforts at real cost control.
Page Ref: 659
Objective: APP
Difficulty: Moderate