Multiple Choice Answers

1. Good marketing is no accident, but a result of careful planning and ________.
a. execution
b. selling
c. strategies
d. tactics
e. research

2. The most formal definition of marketing is ________.
a. meeting needs profitably
b. identifying and meeting human and social needs
c. the 4Ps (Product, Price, Place, Promotion)
d. an organizational function and a set of processes for creating, communicating, and delivering, value to customers, and for managing customer relationships in ways that benefit the organization and its stake holders.
e. improving the quality of life for consumers

3. Charles Revson of Revlon observed: “In the factory, we make cosmetics; in the store, ________.”
a. we make profits
b. we challenge competitors
c. we implement ads
d. we sell hope
e. we sell quality

4. A key ingredient of the marketing management process is insightful, ________ marketing strategies and plans that can guide marketing activities.
a. creative
b. measurable
c. macro
d. micro
e. niche

5. The task of any business is to deliver ________ at a profit.
a. customer needs
b. products
c. customer value
d. products and services
e. improved quality

6. Today, the “mass-market” is actually splintering into numerous ________, each with its own wants, perceptions, preferences, and buying criteria.
a. micromarkets
b. market targets
c. macromarkets
d. customer cliques
e. demographic units

7. The Japanese have refined the value delivery process to include a component that emphasizes ________.
a. zero servicing
b. zero customer feedback time
c. zero promotion
d. zero dependency on intermediaries
e. zero marketing costs

8. The firm’s success depends not only on how well each department performs its work, but also on how well the various departmental activities are coordinated to conduct ________.
a. core strategies
b. satellite businesses
c. core values
d. core business processes
e. core technologies

9. The major responsibility for identifying significant marketplace changes falls to the ________.
a. Ministry of Labor & Social Affairs
b. company’s marketers
c. American Marketing Association
d. industry lobby groups found in Washington, D.C.
e. marketing research industry

10. Marketers have extensive information about how consumption patterns vary across countries. On a per capita basis within Western Europe, the ________ smoke the most cigarettes.
a. Swiss
b. Greeks
c. Irish
d. Austrians
e. French

11. The company’s marketing information system should be a cross between what managers think they need, what managers really need, and ________.
a. what the marketing research department is able to do
b. what consumers are willing to share
c. what the competition is doing
d. what is acceptable industry practice
e. what is economically feasible

12. A ________ is “unpredictable, short-lived, and without social, economic, and political significance.”
a. fad
b. fashion
c. trend
d. megatrend
e. style

13. Which of the following countries is known for having 99 percent of its population literate?
a. England
b. Germany
c. France
d. United States
e. Japan

14. The twenty-first century saw ________ markets grow more rapidly again due to a higher birth rate, a lower death rate, and rapid growth from foreign immigration.
a. suburban
b. urban
c. rural
d. coastal
e. secondary

15. ________ is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.
a. Marketing intelligence
b. MIS (marketing information system)
c. Marketing research
d. Demographics
e. Marketing management

16. Companies normally budget marketing research at ________ percent of company sales.
a. 1 to 2
b. 2 to 3
c. 4
d. 6.5
e. 10 to 12

17. All of the following would be among the ways that small companies can conduct marketing research in creative and affordable ways EXCEPT ________.
a. using the Internet
b. engaging students to design and carry out projects
c. checking out rivals
d. engaging professors to design and carry out projects
e. hiring syndicated-service research firms to conduct projects

18. The marketing manager needs to know the cost of the research project before approving it. During which of the following stages of the marketing research process would such a consideration most likely take place?
a. Step 1—defining the problem.
b. Step 1—creating decision alternatives.
c. Step 1—drafting the research objectives.
d. Step 2—develop the research plan.
e. Step 3—information collection.

19. Some marketers prefer more ________ methods for gauging consumer opinion because consumer actions do not always match their answers to survey questions.
a. quantitative
b. qualitative c.
d. covert
e. subliminal

20. If a marketing researcher selects the most accessible population members, he or she would have selected the ________ sampling method.
a. simple random
b. stratified random
c. cluster
d. judgment
e. convenience

21. ________ are adept at building customer relationships, not just products; they are skilled in market engineering, not just product engineering.
a. Profit-centered companies
b. Customer-centered companies
c. Production-centered companies
d. Sales-centered companies
e. Promotion-centered companies

22. ________ is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
a. Perceived usefulness
b. Failure avoidance rate
c. Report rating
d. Customer perceived value
e. Competitors market share rate

23. One key to customer retention is ________. It would be wise for a company to measure this factor frequently.
a. heavy promotion
b. deep discounts for intermediaries
c. to have an ethics officer
d. customer satisfaction
e. to have customers on the board of directors

24. A ________ customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling, and servicing that customer.
a. profitable
b. semi-profitable
c. unprofitable
d. niche
e. target

25. ________ is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.
a. Target marketing
b. Psychographic segmentation
c. Psychology
d. Consumer behavior
a. Product differentiation

26. The fundamental determinant of a person’s wants and behavior is the person’s ________.
a. psyche
b. national origin
c. culture
d. peer group
e. family tree

27. A person’s ________ consist(s) of all the groups that have a direct (face-to-face) or indirect influence on his/her attitudes or behavior.
a. culture
b. subculture
c. psychographics
d. reference groups
e. demographics

28. Webster and Wind define ________ as the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.
a. marketing channels
b. organizational buying
c. demand-oriented buying
d. purchasing
e. inventory control

29. The demand for business goods is ultimately derived from the demand for ________.
a. raw materials
b. consumer goods
c. electronics
d. business solutions
e. e-commerce
30. Some customers are willing to handle price-oriented buyers by setting a lower price, but establishing restrictive conditions. All of the following would be among those conditions EXCEPT ________.
a. limiting the quantity that can be purchased
b. no refunds
c. no adjustments
d. no services
e. no customer advertising

Marketing managers do NOT usually commission ____________.
ecological surveys
There are _____________ categories of specialist services that are often placed with outside agencies.
The second step of an effective market research process is to _______________.
develop the research plan
A focus group consists of _____________ .
6 to 10 people
Commonly used primary research techniques include four of the following but not ____________ .
guessing sample responses
A sampling plan calls for ______________ decisions.
Subjects (respondents) can be contacted by _________.
all these methods
How many barriers restrict the usage of marketing research?
An MDSS is ____________________ .
a marketing decision support system
Companies normally budget marketing research at 1-2 per cent of company sales.
Ethnographic research is an observational approach that uses concepts and tools from anthropology and other social science disciplines.
The most scientifically valid research is experimental research.
The data collection phase of marketing is generally the most prone to error.
There are five characteristics of good marketing research.
Companies can prepare as many as 90 different types of demand estimates for six different product levels, five space levels and three time periods.
The size of a market hinges on the number of buyers who might exist for a particular market offer.
The AC Nielsen six-monthly survey is conducted online with 21,000 consumers across Europe.

Power prices use price as a key strategic tool. These power prices have discovered the highly ________ effect of price on the bottom line.
A. direct
B. dramatic
C. soothing
D. Leveraged
E. abrasive
Some intermediaries use the following: strategic planning, advanced information systems, sophisticated marketing tools, measure performance on a return-on-investment basis, segment their markets, improve their target marketing and positioning, and ________.
A. dominant the manufacturers they do business with
B. contend with dwindling customer bases
C. aggressively pursue market expansion and diversification strategies
D. aggressively pursue take over strategies
E. aggressively “squeeze” manufacturer margins
Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with ________ products.
A. similar
B. identical
C. commodity-type
D. over the Internet
Major retailer types include the following EXCEPT ________.
A. the Internet
B. specialty store
C. superstore
D. catalog showroom
E. discount store
Following the ________ approach to target market selection encompasses a strong knowledge of the segment’s needs, a strong market presence, and operating economies through specializing in production, distribution, and promotion.
selective specialization
market specialization
full market coverage
product specialization
single-segment concentration
To reach Generation Y, rock band Foo Fighters created a digital street team that sends targeted e-mail messages to members who “get the latest news, exclusive audio/video sneak previews, tons of chances to win great Foo Fighters prizes, and become part of the Foo Fighters Family.” Which of the following techniques for reaching Generation Y are the Foo Fighters using?
Unconventional sports
Computer games
Online buzz
Cool events
Student ambassadors
A company can add new products through acquisition or development. The acquisition route can take three forms. The company can buy other companies, it can acquire patents from other companies, or it can buy a ________ or _________ from another company.
license/receive permission
franchise/acquire rights
New-to-the- world products are ________.
new products that allow a company to enter an established market for the first time
new products that provide improved performance or greater perceived value and replace existing products
existing products that are targeted to new markets or market segments
new products that supplement established product lines (package sizes, flavors, and so on)
new products that create an entirely new market
The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting target markets is ________.
logistics can become a nightmare
competitors can easily copy any new product introductions
e-commerce becomes difficult for the company
the product may be supplanted by an entirely new technology
no synergy exists
Which of the following statements best defines a work group?
A work group interacts primarily to share information, rather than to engage in work that requires joint effort.
A work group consists of 3 or more people from across departmental or functional lines.
A work group is a group comprised of 10 or more people
A work group consists of 3 or more people who take on self-supervising responsibilities.
The performance of a work group is generally greater than the sum of its inputs from individual members.
The traditional view of conflict is the belief that conflict is _____.
Which of the following is NOT included in the definition of conflict?
disruption of tasks
negative effects
something that is cared about
Which of the following statements about leadership is true?
Formal rights enable managers to lead effectively.
leaders are hierarchically superior to followers.
Nonsanctioned leadership is as important as or more important than formal influence.
managers are leaders.
leaders are managers
bargaining is negotiation that seeks to divide a fixed pie.
Danielle wants to become a surgeon, not only because achieving this goal will give her self-respect and autonomy, but also because she wants a job with high status and recognition from others. Which of Maslow’s needs is Danielle trying to fill?
Which of the following qualities is NOT found in work groups?
A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.
marketing research system
marketing intelligence system
vertical system
product management system
marketing information system
Is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
Perceived usefulness
Customer perceived value
Competitors market share rate
Report rating
Failure avoidance rate
is any good, service, or idea that is perceived by someone as new.
creative product
new idea
A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors’ published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence.
sales force surrogates
advisory panels
customer feedback systems
external networks
Most established companies focus on ________ when it comes to innovation.
incremental innovation
demand innovation
competitive innovation
everyday innovation
continuous innovation
consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
A marketing information system
A promotional campaign
A marketing database
A marketing intelligence system
A marketing research system
The value proposition consists of a cluster of benefits the company promises to deliver; it is
customer expectations
Customer loyalty to the company
business processes
total customer satisfaction
customer experience with the company
Purchase decisions are based on how consumers perceive prices and what they consider to be the ________ price—not the marketer’s stated price.
current sale price
current actual
referent price
last purchased price
consists of a group of customers who share a similar set of needs and wants.
market segment
market target
market level
market slice
market group
Marketers usually identify niches by ________.
examining the demographics section of The Handbook of Marketing
dividing a segment into sub-segments
producing products that can be used in a variety of ways
allowing consumers to gravitate toward product brands
conducting VALS test
Which of the following is generally considered to be the last step in the marketing research process?
Make the decision.
Present the findings.
Draft the report
Control the environment.
Analyze the information.
is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.
Marketing intelligence
Marketing management
Marketing research
MIS (marketing information system)

With respect to the sampling plan, three decisions must be made. The decisions are: the sampling unit—who is to be surveyed? Sample size—how many people should be surveyed? And ________.
sampling procedure—how should the respondents be chosen?
sample cost—how much does sampling cost?
sample supervisor—who will lead the sampling effort?
sample security—how to protect the sample data?
surveyor skill—who will do the surveying?
communicates a company’s intended value positioning of its product or brand to the market.
Physical evidence
A company has total fixed costs of $120,000 and a contribution margin ratio of 20%. The total sales necessary to break even are
A company requires $1,020,000 in sales to meet its net income target. Its contribution margin is 30%, and fixed costs are $180,000. What is the target net income?
At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $32,000. How much is the selling price per unit?
Not enough information
The last step in activity-based costing is to
identify and classify the major activities involved in the manufacture of specific products.
compute the activity-based overhead rate per cost driver.
identify the cost driver that has a strong correlation to the activity cost pool.
assign manufacturing overhead costs for each activity cost pool to products.
A well-designed activity-based costing system starts with
assigning manufacturing overhead costs for each activity cost pool to products.
computing the activity-based overhead rate.
analyzing the activities performed to manufacture a product.
identifying the activity-cost pools.
Identify which of the following statements about perfection standards is true.
They usually result in unfavorable variances.
They are expressions of the most efficient performance possible.
It is generally believed that they have a negative influence on employee morale.
All of these answers are correct
In a process cost system
a Work in Process account is maintained for each process.
a materials requisition must identify the job on which the materials will be used.
one Work in Process account is maintained for all the processes, similar to a job order cost system.
a Work in Process account is maintained for each product.

are profitability ratios.
Earnings per share and dividend yield
Dividend payout and rate of return in invested capital
Price earnings and current ratio
Gross profit rate and return on sale
The _____ is not one of the three major financial statements.
income statement
statement of equity position
statement of cash flows
Financial statements are helpful to predict the future performance of a company for all of the following reasons except _____.
financial statements are required to give formal projections of management’s assessment of the next period’s financial results
the assets and liabilities of a company provide clues to a company’s future prospects
past performance is often a good indicator of future performance
the evaluation of management’s past performance gives clues to its ability to generate future return
A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is not a reason for this owner to incorporate?
ability to raise capital for expansion
the ease in transferring shares of the corporation’s stock
the prestige of operating as a corporation
desire to limit the owner’s personal liability
Which country does the text describe as becoming the largest producer and consumer of many of the world’s goods?
Which of the following might a company consider to help employees address work-life conflicts?
keeping work-related travel reasonable
relocation assistance
tie manager pay to customer satisfaction
offering off-site quality child-care
reducing workloads
Which of the following is not one of the Caux Round Table Principles for International Business?
Avoidance of Illicit Operations.
Responsibility of Business Beyond Shareholders Toward Stakeholders.
Respect for the Environment.
Promotion of Multiculturalism.
Support for Multilateral Trade.
One study found that manufacturing labor costs about ___ an hour in China, compared to ____ dollars in the United States
Less than $1; about 15
Less than $1; about 40
$2; about 25
Less than $1; about 25
About $2; about 15
Diversity training programs are generally intended to provide a vehicle for _____.
increasing awareness and examining stereotypes
socializing otherwise unmanageable employees
balancing work/life conflicts
eliminating group learning
focusing on individual difference
Which of the following is correct about litigating commercial disputes?
Nearly all states have specialized trial courts that hear commercial disputes.
In all states, commercial disputes must be heard in a limited-jurisdiction court.
Businesses generally dislike the concept of specialized trail courts for commercial disputes because the large numbers of consumers who sue businesses in these courts have led the judges to become generally biased against business.
A few states have established specialized trial courts for commercial disputes.
Commercial disputes, because of their specialized nature, are first heard at the appellate court level
Which article of the United States Constitution deals with the judicial power of the federal government?
Article I.
Article V.
Article IV.
Article III.
Article II.
When an economist says that the demand for a product has increased, this means that:
quantity demanded is greater at each possible price.
the demand curve becomes steeper.
consumers respond to a lower price by buying more.
firms make less of the product available for sale.
When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. This best reflects:
diminishing marginal utility.
the substitution effect.
the rationing function of markets.
the income effect.
Which of the following is NOT a function of functional area information systems?
provides information to managers in the functional areas
provides analysis capabilities to middle level managers and staff
provides data from business events to the corporate database
provides information mainly in the form of reports
supports the managerial tasks of planning, organizing, and controlling operation
The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.
physical, financial
digital, e-commerce
physical, digital
digital, physical
e-commerce, digital
is the integration of economic, social, cultural, and ecological facets of life, enabled by
information technologies.
business environment
A _____ scale is a scale that scores an object or property without making a direct comparison to another object or property.
The quartile deviation is:
In squared units of the original data.
The square root of the variance.
Appropriate only for symmetric distributions.
Based on the middle 50 percent of the observations.
Marketing research is now about a ________ billion industry globally.
An investor’s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?
Selling any stock in this portfolio will lower the beta of the portfolio.
An investor cannot change the risk of this portfolio by her choice about personal leverage (lending or borrowing).
Each stock in the portfolio will have a beta greater than one.
Each stock in the portfolio has its own beta.
Marketing research is now about a ________ billion industry globally.
Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is _________.
caught up in a bear market
being sold by insiders
Says to seek out investments that offer the greatest expected risk-adjusted real return.
The Signaling Principle
The Principle of Self-Interested Behavior
The Principle of Valuable Ideas
The Principle of Incremental Benefits
Under capital rationing, a good tool to use is the __________.
payback method
PI method
NPV method
IRR method
A checking account is __________.
a place to “collect” money between inflows and outflows
an account that acts like a reservoir
useful because you can add money in any amount
all of these
__________ says that if you transfer risk to another party, you must offer a return that fully compensates for the amount of risk transferred.
The Principle of Self-Interested
The Principle of Incremental Benefits
The Risk-Return Trade-Off Principle
The Behavioral Principle
A key variable covered in our text for the Black-Scholes OPM is __________.
the riskless APR with continuous compounding
transaction costs.
Dimensions of risk include __________.
uncertainty about yesterday’s outcome
the impossibility of the same return
the certainty of a negative outcome
uncertainty about the future outcome
According to the Principle of Risk-Return Trade-Off, investors require a higher return to compensate for __________.
greater risk
less risk
lack of diversification
Which of these investments would you expect to have the highest rate of return for the next 20 years?
anybody’s guess
intermediate-term U.S. government bonds
long-term corporate bonds
U.S. Treasury bills
The conversion price (for a convertible security) is usually adjusted __________.
for a new debt offering.
for stock splits.
for cash dividends.
all of these
Which (if any) statement is false?
The Principle of Self-Interested Behavior suggests that self-interested capital market transactions force market prices toward being fair prices.
The Principle of Two-Sided Transactions states that intense capital market competition to get and use information to take advantage of arbitrage opportunities eliminates such opportunities.
The Principle of Signaling states that information in the transactions of others can be valuable, such as providing an accurate measure of current market value, or information about expected future value.
none of these answers are correct.
Which of the following is (are) true?
The Principle of Capital Market Efficiency states that differences between financial assets are measured primarily in terms of risk and return. Investors choose the highest return for a given risk level.
The Principle of Comparative Advantage states that people apply the Principles of Self-Interested Behavior, Two-Sided Transactions, and Signaling to an environment characterized by similar financial assets, low transaction costs, and intense competition leads to capital market efficiency.
The Principle of Valuable Ideas states that new ideas can provide value when first introduced, even in an efficient capital market.
all of these answers are correct.
A transfer price exists when two segments of the same organization sell _____.
the same service to competitors
a product in a foreign country
a service to each other
a product to the same customer
Incremental analysis would be appropriate for
acceptance of an order at a special price.
a retain or replace equipment decision.
a sell or process further decision.
all of the answers are correct
Undertaker Corporation has a joint process that produces three products: P, G, and A.
Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $25,000. Other relevant data are as follows:
Sales Value Costs after Sales Value
Product at Split-off Split-off at Completion
P $62,000 $5,000 $88,000
G 12,500 6,500 19,000
A 9,400 5,000 12,000
Product G _____.
an be processed further or sold at split off; there is no difference in profit.
should be processed further to increase profits by $19,000.
should be sold at split off since processing further would only reduce profits by $6,500.
should be processed further to increase profits by $6,500.
It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?
$30,000 increase
$6,000 decrease
$4,000 decrease
$4,000 increase
The steps to determining capacity requirements include:
A. Using decision trees to evaluate capacity alternatives
B. Calculating equipment and labor requirements to meet product line forecasts
C. Projecting labor and equipment availabilities over the planning horizon
D. B and C
Which of the following does not appear as a separate section on the cash budget?
Capital expenditures
Cash disbursements
Cash receipts
An all-equity-financed firm would __________. A. pay corporate income taxes if its taxable income is positive. B. not pay any income taxes because interest would exactly offset its taxable income. C. pay corporate income taxes because it would have interest expense. D. not pay corporate income taxes because it would have no interest expense.

A profitable firm would __________. A. pay corporate income taxes because it would have interest expense. B. pay corporate income taxes because it would not have interest expense. C. pay corporate income taxes if it had a positive taxable income. D. none of these

An investor’s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true? A. Each stock in the portfolio will have a beta greater than one. B. Each stock in the portfolio has its own beta. C. Selling any stock in this portfolio will lower the beta of the portfolio. D. An investor cannot change the risk of this portfolio by her choice about personal leverage (lending or borrowing).

Boeing Corporation is a world leader in commercial aircraft. In the face of competition, Boeing often faces a critical __________ decision: whether to develop a new generation of passenger aircraft. A. dividend B. present value C. payback D. capital budgeting
The capital budgeting process can be broken down into five steps. These steps include which of the following? A. Generate ideas for capital budgeting projects B. Prepare proposals C. Review existing projects and facilities D. all of these