An Overview of Marketing Chapter 3 Answer Key

EXAM 1 POOL ITEMS Chapter 3 (Current text edition chapters 3 & 4) MULTIPLE CHOICE 1._____ is the concern of business for the long-range welfare of both the company and its relationships to the society within which it operates. a. Consumerism b. Corporate social responsibility c. Cultural sensitivity d. Conventional morality e. Environmental consideration ANS: B 3. Corporate social responsibility is defined as the: a. belief that the legal system defines ethical behavior b. development of inclusive codes of ethics c. rules by which social rewards are attained d. concern for social welfare by businesses e. coordination of social programs for publicity purposes ANS: D 4. Corporate social responsibility: a. is mandated by federal law b. requires companies to sacrifice economic performance for the sake of their stakeholders c. does not influence competition d. may not always result in profit and growth e. is unaffected by environmental changes ANS: D 7. _____ is the idea that socially responsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profit and help the world at the same time. a. Sustainability b. Philanthropy c. Cause marketing d. Creative ethics e. International ethics ANS: A 9. The pyramid of corporate social responsibilities contains all of the following components EXCEPT: a. economic responsibilities b. ethical responsibilities EXAM 1 POOL ITEMS c. cultural responsibilities d. legal responsibilities e. philanthropic responsibilities ANS: C See Review Learning Outcome 1. 15. The four components of the pyramid of corporate social responsibility are: a. sustainability, creativity, profit, and culture b. organizational culture, creativity imagery, economic performance, and objectivity c. organizational, financial, social, and cultural responsibilities d. sustainability, legality, creativity, and competition e. economic, legal, ethical, and philanthropic responsibilities ANS: E 16. Which of the following statements describes ethics? a. Ethics are the moral principles or values that generally govern the conduct of an individual. b. Ethics is the standard of behavior by which conduct is judged. c. Morals are a foundation for ethical behavior. d. Ethical values are situation specific and time oriented. e. All of the statements describe ethics. ANS: E 17. Which of the following sayings best describes how people with conventional morality act? a. Don't put all of your eggs in one basket. b. When in Rome, do as the Romans do. c. Be wary of strangers bearing gifts. d. A rolling stone gathers no moss. e. Don't count your chickens before they hatch. ANS: B 20. The use of ethical decision making: a. can be influenced by top managers b. is influenced by the probability of harmful outcomes c. depends on the number of people to be affected d. depends on the magnitude of possible consequences e. is accurately described by all of the choices ANS: E 22. Which of the following factors does NOT tend to influence ethical decision making and judgments? EXAM 1 POOL ITEMS a. b. c. d. e. probability of a harmful outcome length of time between decision and the onset of consequences level of multiculturalism number of people to be affected potential magnitude of the consequences ANS: C 24. A human resources manager is creating a code of ethics for the employees of the retirement home she works for. Which of the following is NOT an ethics principle she should keep in mind as she creates this code? a. The principles should not upset current retirement home workers and future job applicants. b. Any decisions should be fair to all concerned: retirement home nurses, cleaning personnel, and administrative staff. c. Input on the code should be gained from other knowledgeable individuals or groups. d. Principles can deviate from common practices because of the prestigious nature of the facility. e. She should not have to pull rank or use coercion to implement her ethics code. ANS: D An unethical code would presume that the company is an exception to a common practice in the industry. 25. 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 ANS: A 27. Which of the following statements best describes the typical target market? a. A target market will remain stable over time, with 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. ANS: B Target markets are defined and described, but they are always changing in response to environmental changes. EXAM 1 POOL ITEMS 29. 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 ANS: E 30. The external environment is a strong influence on a target market and can be a source of _____ for the marketing manager. a. opportunities and threats b. threats and strengths c. environmental loopholes d. opportunities and weaknesses e. product myopia ANS: A The external environment can provide opportunities to serve new and changing needs, as well as warnings about changes that could threaten the current position of the firm. Students will need to remember what a SWOT analysis is to answer this question. 31. Marketing managers cannot control _____, but they can at times influence it. a. where advertising is placed b. the external environment c. the sales force d. the distribution strategy e. how products are priced ANS: B The external environment is basically uncontrollable, but the other four answers are part of the marketing mix. 33. What is apparently the most difficult external variable for marketing managers to forecast, influence, or integrate into marketing plans? a. technology b. social factors c. demography d. competition e. economic conditions ANS: B Social factors and changes are difficult to foresee, because they are usually slow and/or small changes. Also, it is very difficult for one company to affect social factors in any appreciable manner. EXAM 1 POOL ITEMS 35. 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. transactional management d. market control e. reactive management ANS: B 38. _____ factors are the environmental factors concerned with the changes in people's values, lifestyles, and family roles. a. Social b. Economic c. Political d. Competitive e. Demographic ANS: A 43. Consumer preference for low-carb diets has greatly modified the way food is being marketed. This concern with health issues is an example of a(n) _____ factor. a. economic b. political and legal c. technological d. demographic e. social ANS: E 45. What do self-sufficiency, upward mobility, 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 have influenced lifestyles in the United States. e. They are the determinants of a component lifestyle. ANS: D The fourth value is work ethic. EXAM 1 POOL ITEMS 48. 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 ANS: B 55. 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 ANS: E 56. Which of the following events has had a greater effect on marketing than any other social change? 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 ANS: D 58. 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 ANS: E 59. Which of the following is NOT a demographic characteristic of a population? a. income level b. age c. values d. education e. birthrate ANS: C Values are a social factor. EXAM 1 POOL ITEMS 69.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 ANS: C 71. A furniture retailer that specializes in selling entire rooms of furniture has hired you to identify 25 geographic target markets that can be described as 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 equally represented ANS: E Multicultural societies are not defined by geography, history, or products produced, but by the racial and ethnic composition of the population. 74. The higher your _____, the higher your purchasing power: a. gross income b. social class c. disposable income d. cost of living e. inflation index 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. 76. Factors, such as 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 ANS: A EXAM 1 POOL ITEMS 77. _____ 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 ANS: B 78. When income is high relative to the cost of living, consumers _____. a. have more discretionary income b. begin anticipating a period of price deceleration c. stop buying luxury goods and services d. have significantly less disposable income e. anticipate price escalation by stockpiling ANS: A 79. _____ is the primary determinant of a person's earnings. a. Multiculturalism b. Lifestyle c. Education d. The aging of the baby boomers e. Global competition ANS: C 80. ____ 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 ANS: A 81. When planning marketing strategies during times of inflation, marketers must be aware inflation causes consumers to: a. purchase more goods and services to support their psychological selves, such as counseling and stress management training b. consume more meals away from home c. buy in small quantities until inflation is over d. decrease their brand loyalty to products they have traditionally used e. put more money into savings accounts because prices are too high ANS: D In times of inflation, consumers are more price conscious and less brand-loyal. EXAM 1 POOL ITEMS 82. A period of economic activity when income, production, and employment tend to fall, reducing overall demand, is called: a. stagnation b. an inflation c. a recession d. price escalation e. a depression ANS: C 85. Which of the following strategies is appropriate for a marketer to use during a time of economic recession? a. Promote product value. b. Maintain and improve customer services. c. Emphasize top-of-the-line products in promotions. d. Offer products that are economical and efficient. e. Do all of these. ANS: E 86. Which of the following is sometimes an effective weapon for fighting inflation and recession? a. technology b. line extensions c. increased capital gains taxes d. introducing product-line extensions e. reducing R&D expenditures ANS: A 87. Research that attempts to expand the frontiers of knowledge rather than solving a specific, pragmatic problem is called: a. technical diversity b. reactive research c. applied research d. experiential research e. basic research ANS: E 100. Laws and regulations of various governments and their ongoing development and change are an example of _____ factors and are part of all organizations' external environment. a. economic investment b. political and legal c. research and development d. competitive EXAM 1 POOL ITEMS e. demographic ANS: B 101. 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 ANS: C See Exhibit 3.2. The Celler-Kefauver Act bolstered the Clayton Act's provision dealing with interlocking directorates and closed another loophole that had allowed corporate takeovers. 102.The _____ Act requires large companies to notify the government of their intent to merge. a. Hart-Scott-Rodino b. Sherman c. Celler-Kefauver Antimerger d. Robinson-Patman e. Lanham ANS: A See Exhibit 3.2. 103. The Gramm-Leach-Bliley Act and the Health Insurance Portability and Accountability Act are both important laws 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 ANS: D EXAM 1 POOL ITEMS Chapter 2 3. Strategic plans require: a. long-term resource commitments b. a change in organizational structure c. the addition of new personnel d. new product development e. changes in prices ANS: A Strategic plans are long-range plans that involve developing, organizing, and controlling marketing activities. 4. _____ is the managerial process of creating and maintaining a fit between the organization's objectives and resources and evolving market opportunities. a. Tactical management b. The market audit c. Functional planning d. Environmental scanning e. Strategic planning ANS: E 7. Which of the following statements about a marketing plan is true? a. Marketing plans can exist as oral traditions. b. The marketing plan should be viewed as a series of sequential steps. c. All marketing plans have basically the same content. d. A marketing plan is created so an organization can meet its marketing objectives. e. All of the statements about a marketing plan are true. ANS: D By definition, marketing plans are written. Several steps of the marketing plan can be done at the same time. The content of marketing plans varies. 8. _____ is the process of anticipating events and determining strategies to achieve organizational objectives. a. Planning b. Portfolio evaluation c. Forecasting d. Implementation e. Evaluation ANS: A EXAM 1 POOL ITEMS 10. Marketing plans should be written to do all of the following EXCEPT: a. compare actual and expected performance b. provide clearly stated activities c. create common goals for employees to work toward d. allow managers to enter the marketplace with an awareness of possibilities and problems e. control the elements of the external marketing environment ANS: E Marketing environment variables cannot be controlled. 11. Which of the following is one of the elements of the marketing plan? a. a business mission statement b. a situation analysis c. a target market strategy d. the marketing mix e. all of the choices ANS: E See Exhibit 2.1. 13. The _____ answers the question, "What business are we in, and where are we going?" a. mission statement b. financial statement c. situation analysis d. market strategy e. strategic plan ANS: A 17. The focus of an organization's mission statement should be on: a. the products it wishes to sell b. the market it wishes to serve c. its social responsibilities d. the desires of government regulators e. technologies it understands well ANS: B The choice of the market to serve determines the product and technology decisions. 20. _____ occurs when a business is defined in terms of goods and services rather than by the benefits customers seek from it. EXAM 1 POOL ITEMS a. b. c. d. e. A circle trap A market barrier entry A reactive focus Unempowerment Marketing myopia ANS: E 21. A popular technique for managing a large organization with different technologies and markets is to divide it into: a. strategic business units b. different technologies c. strategic target markets d. design matrices e. tactical segments ANS: A 22. The acronym SBU refers to: a. stock in business units b. strategic business unit c. standard business utilization d. strategic barter units e. samples by units ANS: B 25. An SBU: a. competes with the same companies as the other SBUs in the parent organization b. shares the same mission with all the other SBUs in the parent organization c. controls its business independent of other SBUs in the organization d. usually benefits from the combined corporate raw materials purchases e. still has strategic planning performed back at corporate headquarters ANS: C SBUs have separate business functions from one another and have their own mission statements, markets, and planning. 27. After management agrees on a mission statement, it must set objectives. Which of the following is NOT a characteristic of a good objective? a. profitable b. realistic c. measurable d. time-specific e. consistent EXAM 1 POOL ITEMS ANS: A Good objectives are not necessarily stated in terms of profit. 28.A _____ is defined as a statement of what is to be accomplished through marketing activities. a. mission statement b. business plan c. marketing objective d. goal-driven directive e. marketing criteria ANS: C 30. When an organization creates a mission statement that is too narrow, _____ results. a. marketing synergy b. marketing myopia c. directional marketing d. an internal threat e. sustainable competitive advantage ANS: B Marketing myopia defines a business in terms of goods and services rather than in terms of benefits customers seek. See Review Learning Outcome 2. 35. For marketing objectives to be realized, they must meet all of the following criteria EXCEPT: a. be consistent with organization objectives b. be measurable c. be attainable d. be challenging e. be set within a one-year time frame ANS: E There is no one-year time frame restriction for marketing objectives although specifying a particular time frame makes an objective more clear and precise. 37. A _____ is a formal study conducted by an organization to ascertain its current status and capabilities and its future expectations. EXAM 1 POOL ITEMS a. b. c. d. e. situation analysis marketing audit trend analysis strategic alternative selection competitive advantage audit ANS: A 39. The SWOT acronym refers to a firm’s analysis of its: a. sales, width of product mix, observations, and technology b. situations, wealth, organizational strengths, and target markets c. strengths, weaknesses, opportunities, and threats d. service levels, willingness to spend, organizational culture, and total revenues e. strategies, willingness to change, objectives, and trends ANS: C 43. _____ is defined as the collection and interpretation of information about forces, events, and relationships that may affect the organization. a. Market sampling b. An internal audit c. Opportunity analysis d. Environmental scanning e. Stakeholder analysis ANS: D 61. _____ show costs declining at a predictable rate as experience with a product increases. a. Liquidity growth curves b. EOQ graphs c. Breakeven analyses d. Experience curves e. Supply/demand curves ANS: D 62. Which of the following is NOT a source of a cost competitive advantage? a. reengineering b. experience curves c. break-even analyses d. efficient labor e. production innovation ANS: C EXAM 1 POOL ITEMS 67. Which of the following is a type of strategic alternative that matches products and markets? a. vertical integration b. product penetration c. divestment d. horizontal integration e. market penetration ANS: E 68. _____ is a strategy of increasing market share for present products in existing markets. a. Market penetration b. Product development c. Market development d. Diversification e. Product penetration ANS: A 70. _____ is a strategy that attracts new customers to existing products. a. Product development b. Market development c. Market penetration d. Product penetration e. Diversification ANS: B 75. _____ is a strategy that creates new products for present markets. a. Product penetration b. Market penetration c. Product development d. Market development e. Diversification ANS: C 76. _____ is the strategy of increasing sales by introducing new products into new markets. a. Product penetration b. Product development c. Market penetration d. Market development e. Diversification ANS: E EXAM 1 POOL ITEMS 102. A(n) _____ describes and estimates the size and sales potential of market segments of interest to the firm and assesses key competitors in these market segments. a. marketing orientation b. environmental scan c. marketing mix audit d. target market strategy e. market opportunity analysis ANS: E 105. The _____ is the unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. a. internal environmental mix b. marketing mix c. product mix d. product line e. market portfolio ANS: B 106. The starting point of any firm's marketing mix is the: a. analysis of what production equipment is available and owned by the company b. design of the promotion campaign to be used for the product c. selection of the places through which the good or service will be sold d. determination of the product's price, enabling future revenues and budgets to be estimated e. development of the good or service to be sold ANS: E The product is the starting point for any marketing mix. Without it, pricing, distribution, and promotion are irrelevant. The production capacity can be changed to fit the proposed product. 109. Making sure products are available when and where customers want them is the job of which element of the marketing mix? a. advertising strategies b. production strategies c. product strategies d. promotion strategies e. distribution strategies ANS: E Distribution strategies make products available when and where customers want them.